Non-interest based economy

The biggest problem that micronational economies face is inactivity of citizens and of capital. We can also see in macro-national economies that idle capital is a danger to society.

Islam proposes a non-interest based economy. In fact, it forbids interest. When capital is idle, it will not become more with interest, but it will be taxed by ZAKAT.

Here an extract out of Antverpia's Manifesto:

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Zakat is one of the five pillars of Islam - the others being the affirmation that there is no God but Allah and Muhammad is His Messenger; prayers; fasting during the month of Ramadan and pilgrimage to the House of Allah in Makkah. For instance, the Holy Quran commands:

Observe prayer and pay the Zakat and obey the Messenger that you may be shown mercy. (24: 57)

The Arabic word Zakat literally means to purify something and in the context of a mandatory levy would mean that the residual wealth after the deduction of Zakat had rendered it pure and Lawful for the believers.

Zakat being a specific levy imposed upon capital beyond certain thresholds, it can only be utilised for certain categories of expenditure. These have been spelt out in the following verse of the Holy Quran:

Alms are only for the poor and the needy, and for those employed in connection with their collection and distribution, and for those whose hearts are to be comforted, and for the freeing of slaves, and for those burdened with debt, and for those striving in the cause of Allah, and for the wayfarers. This is an ordinance from Allah. Allah is All-knowing, Wise. (9: 60)

The motive force of interest is replaced by the driving force of Zakat. When we examine this system in operation. many other differences between the Islamic economic order and other economic systems come to light. The features of a completely different economy begin to emerge.

No amount of idle money, irrespective of it being large or little, can survive for long without multiplying faster than the rate at which it is taxed. That is precisely how Zakat propels the economy in a truly Islamic state.

Imagine a situation where an individual with a small amount of capital is unable to directly participate in trade and there are no banks to credit him with interest on his deposit. Yet, if the deposit be sufficiently large to be taxable to Zakat, there are revenue collectors who knock at his door each year for a percentage of his capital. Zakat is not beyond a prescribed threshold. Such individuals have only two alternatives; either to personally employ their money profitably or to pool their resources to establish small or big enterprises.

This will promote joint-ventures, partnerships, the forming of small companies or public shareholding in larger companies on a strict profit and loss basis. Such companies will owe nothing to any financial institution to which they have to repay debts with interest. Hypothetically, when you compare the lot of such companies with that of their counterparts in capitalist economies, they will be found facing on completely different platforms during periods of trial and crisis. In the case of trade and industry facing a recession in a capitalist economy, the slow-down in production because of dwindling demand can push them to the brink of liquidation. The interest they have to pay to service their debts will go on mounting relentlessly until it will no longer be possible for such companies to remain afloat.

On the other hand, if an economy is run on Islamic principles, a slowdown in business and trade opportunities will only send trade and industry into a state of hibernation. That is how nature ensures survival of the fittest at the time of extreme stresses and adversities. When the input of energy decreases, output has to be lowered lest energy should drop below the critical level necessary for survival. As there is no relentless pressure of debt servicing in an Islamic financial system, it can withstand far greater pressure and challenges during a recession.

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I think this ZAKAT is a solution to the inactivity of capital in many micronations. And those citizens who don't use their capital, will be punished for their inactivity. There is a similar story in the Holy Bible. A parable about a landlord who gives 'talents' to his servants... (Matthew 25, 14-30).

So, what do you think of it, dear colleages?

Ken Avonts

Regent of the Islamic Republic of
Antverpia

http://users.pandora.be/ir-antverpia