How Economic Systems Are Viewed?

How Economic Systems Are Viewed?

Rahma Suci Sentia

More than 15% of the world’s people remain vulnerable to multidimensional poverty, nearly 80% of the global population lack comprehensive social protection, 2% suffer from chronic hunger, and nearly half of all workers are in informal or precarious employment, 80% of the world’s older population does not have a pension and relies on labour and family for income, the global youth unemployment rate was an estimated 12.7%, almost three times the adult rate (UN, 2015). What’s wrong with our economic system so it cannot attempt the ‘economic system objective’ which is so ‘humanistic’ --full employment, satisfaction of basic human needs, distributive justice, improvement in the quality of economic life, economic power-. In this short essay, the theoretical view of economics system from differences perspective will be discussed. After that, the further analysis will be made on the need of economics reality and specific solution for unsound economic system.

Theoretically, capitalistic and socialistic perspective view economic system is as a materialism tool about ‘what to produce and how to produce and who gets what is produced?’  Both perspectives answer in different way. First, capitalists believe that economic system will reach the objective through motivate individual to maximize its self-interest, whereas socialist look at this perspective lead to huge problem -not considering social benefit-. However, socialists lock the nature of human behaviour (self-interest). Second, ‘self-interest oriented’ make capitalistic view that individuals have capacity to have private ownership, to make economic decision through free market, without the government control. But the assumption that individuals have this such capacity, is not followed by ‘the standard value’.  ‘Value’ is prohibited to enter to the system. As if, everyone is angle, that will just do good thing to system. Socialists consider this problem and think that it should be the government that handle it. However, they forgot the government is a group of human who may be full of mistake too. As the result, their system become so dictatorial.

Now, the current solution which is proposed by many economists is to implement state-capitalism system (mixing capitalism-socialism). They are suprised to China, Russia, Brazil, other emerging countries, which can claim the world as most succesful big economy for its camp with high growth on GDP, the biggest shareholder, the 13 biggest oil and gas firms, and also almost any industry (The Economist, 2012). In term of criticism, I think, their solution is not correct. Current data shows that state-capitalism is like its ‘parent’, it is still not humanize people -- high-level corruption between state and privates (e.g in Indonesia) and big gap of poverty (e.g in China)-. These three perspective’s problem are caused by materialism as main destination- without fixed value-. How can they reach ‘humanistic goal’ but through contradictive ways? In regards to this condition, there are two main points that should implemented by countries around the world regarding economic system. These points is what Islamic perspective has uniqueness in solving this problem.

First, economic system should have fixed knowledge that does not come from the human, because we are forgetful, full of mistake, limited-knowledge (we are not able to know about the detailed reality in the past, present, and future). In Islamic perspective, it has the explicit acceptance of the Divine Revelation as a source of knowledge and value. Thus, as a proposal, value system should be implemented. However, the value should be consistent, not contradictive each other, and full comprehensive. This value consider that human need to fulfil their self-interest, own private ownership, but should be controlled by ‘divine revelation’- Divine revelation is universal so this value can be used together freely by any country in the world.

Secondly, system should establish ‘integrative’ structural institution and financial intermediaries that interrelated work. In Islamic perspective, they have certain polar institutions such as the prohibition of Riba (interest), the private-public mix of property/ownership, the spiritual-material mix of success, Zakah, Awqaf, etc. Each type of institution together play main role in solving the economic problem. For example is bank. Prof. Mehmet Asutay said that the existence of Islamic bank should able to indirectly eradicate poverty. It is how Bank Muamalat Indonesia (http://www.bankmuamalat.co.id/) did, they give the financing to bankable entrepreneur who have partnership to unbankable people in running their business (e.g. as supplier). It is how the spiritual-material mix of success run in Islamic institution

To conclude, the economic systems are differently viewed although the general objectives are similar –humanistic objective-.  A more fundamental reform to economic system should be taken. As long as the systems still view the the ‘standard-fixed values’ which humanize human should be prohibited and there is no existence of integrated institution, the economics objective  will be never reached. (Sentia)