The global financial crisis has shaken the foundation of capitalism all over the world, from the rich North to the poor South, from democratic regimes to dictatorial ones. Voices were raised everywhere; I am talking of course about the Muslim writers and intellectuals who predicted the collapse of capitalism, and the bankruptcy of capitalist countries, announcing that the Islamic financial system would soon prevail. After the dust settled around the US financial institutions, and the subsequent impact of the US financial crisis on the global financial system emerged, it became clear that this collapse will not be limited to US financial institutions alone; it will affect many financial institutions worldwide.
This financial collapse has also resulted in a crisis of confidence following the international credit crisis. This crisis further expanded to include the real economy worldwide, and it has shown the extent to which international markets are linked to, and affected by, one another. The prices of oil and basic commodities, and the transport, tourism, and real-estate markets have declined significantly worldwide, while purchasing power has also been weakened. On the other hand unemployment rates worldwide, from New York to Dubai, have soared, and charitable organisations all over the world have suffered. All sectors have suffered, including even the sports sector, for example Honda has pulled out of Formula One racing. No regime or country is immune from this [economic] crisis.
The world has woken up and realised the importance of the tie between the world economy and the US economy, and it has felt the impact of this connection during the economic crisis, more so than it did in times of prosperity. The crisis also revealed the spread of capitalist ideology and its permeation throughout the world’s political regimes, even the autocratic regimes such as China. It also revealed that those most harmed by the economic crisis are the developing countries and the emerging economies around the world, which include many Muslim countries whose economies have sustained heavy losses.
It is expected that many Muslim countries, which had fast-growing economies, will suffer [from the global financial crisis] and experience a decrease in growth, which will have a negative effect on their development projects. There is no doubt that the consequences of this crisis and the subsequent impacts on the Islamic countries mean that those rejoicing at the crisis should reconsider their position, and use a more rational and realistic discourse, especially that we have not witnessed the collapse of the capitalist countries or the disintegration of the capitalist system. Rather, we have seen how the Western world has mobilized all international forces in order for capitalism to overcome its current crisis by making a few amendments to the system.
What truly collapsed was the Anglo-Saxon capitalist model, which calls for a free market system away from the interference of the state, with the least possible amount of legislation and restriction. This crisis has highlighted that the Islamic financial model was not harmed directly by the financial crisis, and also shown that the Islamic financial model is in need of a political regime to adopt, sponsor and support it, as no economic system can prevail without political support. The crisis also revealed the lack of research into the Islamic financial model in various languages so that the world can better understand it.
This was clearly reflected in the lack of publications detailing the Islamic financial system at the Frankfurt Book Fair during the economic crisis. Sales at the fair were predominated by works of Karl Marx, as everybody sought to understand the causes of the crisis and how it could be solved. Undoubtedly this failure to explain the Islamic financial system to the world is due to the lack of research centres specializing in this industry and institutions such as development centres and specialized financial and legal consultancy agencies.
The crisis also revealed the lack of an Islamic financial model that is capable of covering all financial aspects of this system, and is not reduced to Islamic Banking alone. We believe that capitalism is a system that is in a transitional process; the capitalist system is coming to an end in the same way that socialism, feudalism and the bourgeois system came to an end. This is an historical year, and we believe that the solution [to the global financial crisis] is to follow the Islamic financial model, which will undoubtedly prevail, as we are sure that God has decreed that there is a reason for everything.