SYARIAH ECONOMIC SYSTEM FOR BETTER WORLD
APPLYING SYARIAH ECONOMIC SYSTEM TO CHANGE THE GLOBAL ECONOMIC SYSTEM *)
*) This paper was submitted on Global Initiatives Symposium (GIS) 2009 in Taiwan
Introduction
Economic crisis in the world is repeatedly since 1923, 1930, 1940, 1970, 1980, 1990, 1998, 2001, and 2008 for the last time. In the more recent past, economic crisis happened in USA is a cause of globally crisis on finances sector. Lehman Brothers, the biggest security agent in USA, was fall down collapsing stock market in all part of the world.
The crisis is triggered by hosing loan that is got stuck (sub-prime mortgage). Many effects is occurred during the crisis is happened. In USA, many people become unemployment and homeless. Investors in Wall Street Stock Exchange is suffer in financial loss. It was the worst dead loss since 11 September 2001. Stock exchange in Asia such as Japan, Hong Kong, China, Australia, Singapore, India, Taiwan, and South Korea is drastically getting down up to 57%. The similar problem is occurred in Russia, Europe, South America, and North America. In Indonesia that is still on economic crisis since 1998, IHSG felt down about 41 %, on 8 October 2008. It makes government suspend activity on stock market for many days.
Based on history, it can be know that economic crisis is often took place in state applying capitalist economic system. The main cause of the crisis is fundamental economic fragility. The fragility is indicated by imbalance of finance sector and real sector. Finance sector is growing up leaving real sector. Moreover, capitalism economic system does not link between finance sector and real sector. It is designated by virtual transaction by means of derivative transaction.
Capitalism and It Weakness
During 20th century, the century of capitalism economic system development, it can be know some obvious data showing negative implication on applying capitalism economic system, such as incurred national debt on developing country, poverty on the third world country, and economic crisis on finance sector repeatedly. On international interaction, it is showing that capitalism economic system creates non-pure competition in the world; additionally it creates economic exploitation from some countries to the others. Economic lameness between developed countries and the others are not only become economic exploitation, but also become exploitation in the field of laws, socials, and politics.
Capitalism as actualization of liberalism on economy shows a social system based on the recognition of individual rights, including property rights, in which all property are privately owned. On capitalism system, producers are not only delivering for their need, but also involving exchange market on the national or international scope. It brings three root of the matter:
- Removing gold and presenting dollar as currency in the end of World War II causing dollar dominates global economy. Consequently, a little problem on USA economic system will damage other countries economic system.
- National debts will create a big economic problem, because the main debt is larger as long as the country cannot satisfy, appropriate with the debt percentage. Consequently, the crisis will be happened because of insolvency.
- The system used on stock exchange, trading obligations without a requirement to give the commodity, is causing economic problems. It triggers speculation on the market.
Syariah Changing the World Economic System
Syariah economic system is a social science studying economy that is based on Islamic value. Syariah is different from capitalism, socialism, or Welfare State. It is different from capitalism because Syariah opposes exploitation from modal owner to labor. It is also interdicting hoarding of wealth. Additionally, Syariah emphasizes on four characteristics, there are unity, equilibrium, free will, and responsibility.
On syariah system, the amount of active circulation is not a variable that can be determined by government as exogenous variables, it is determined as endogenous variables. It means that the active circulation is similar with the amount of commodity in the real sector. Financial sector is following the growth of real sector. It is very different with capitalism economic system, which is dissociating real sector and finance sector. Accordingly, speculation of currency can be prevented. The speculation damages the world economic system, because of reinforcement and dilution of currency can be occurred suddenly. So, it has to be thwarted, and syariah economic system can do it.
Syariah economic system decides that gold and silver is the only currency. Produce bank currency for substitution has to be covered with gold and silver in the same value. It must be changeable if there is any demand. Thus, currency from certain country cannot dominate currency from the other country. Moreover, the money has fixed intrinsic value. The other positive think of the system is that the syariah economic system interdicts sale of commodity before it is in power of the seller. It is not allowed selling securities, obligation, or stock. As a result, stock market on all part of the world has to be closed.
In Indonesia syariah concept that is applied on bank has been given evidence that defrayal in the bank is always stand up for real sector with high finance to deposit ratio. On the economic crisis in Indonesia in 1998, on contrary with conventional bank that has to be stop payment, syariah bank is still strong to face the crisis. The strength of syariah bank can be understood with studying the product and service that is produced by it. There are some products and services from syariah-based bank.
Mudhorobah. Mudhorobah is an agreement between modal provider and entrepreneur. Every profit that can be reached will be divided according to previously agree on certain ratio. Bank guarantees all of loss risk, except loss that is caused by entrepreneur management misjudgment.
Musyarokah. This concept is applied on joint venture model. Every profit that can be reached will be divided according to previously agree on certain ratio, on contrary the loss will be divided based on equates ratio each side.
Murobahah. Murobahah is quite similar with credit, but there is a difference. Bank will buy goods that are needed by consumer, and then the bank will sell the goods to the consumer with take some profit. The consumer will pay to the bank as credit in price “main price + profit margin”. The installment is flat according to the previously agree.
Wadi’ah. It is as depositing service, which is depositor, can take the fund at any time. In this system, bank must not give bonus to the consumer.
Mudhorobah Deposit. On this system, consumer save their money to the bank in certain time frame. The profit from the investment is divided according to previously agree on certain ratio.
According to the previous mentioned, it can be understood that syariah system is based on previously agree between bank and the consumer. So it is not speculation on the system, and some evidence proof that syariah system can prevent economic crisis.
Conclusion
Economic crisis in the world is caused by capitalism economic system that has fundamental economic fragility characteristic. Virtual transaction on stock market, using dollar as currency, and speculation on the market is the main cause of crisis. Applying syariah economic system that has unity, equilibrium, free will, and responsibility characteristic will overcome the crisis. Some evidence has been proofed it.
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