The Economic System of Islam

We continue with the serialisation of the epic lecture delivered by the Second Worldwide Head of the Ahmadiyya Muslim Community, Hazrat Mirza Bashir-Ud-Din Mahmud Ahmadra later published as a book titled, The Economic System of Islam. In this twelfth part of the series,  state capitalism and its dangers are explored.
To read the first eleven parts, visit our website,


State Capitalism More Dangerous Than Earlier Imperialists

Experience shows that individual businesses are never as successful as companies, and companies are never as successful as trusts and trusts never as powerful as cartels. But companies that are backed or owned by state—as is the case in Russia—could assume power that no individual companies or even weak economies can achieve. Smaller economies, and even bigger economies, can manage to deal with individual private companies, but the state-run collective capitalism is altogether a different matter. Large industrial countries always sought economic influence in small and weak economies, but it still remained possible for such countries to have their own capitalists. Because competition was between individuals, some businesses in smaller countries could withstand the competition from the bigger and better organised enterprises.

State-run capitalism leaves no room for smaller, private companies to succeed. © Oxy_gen |
State-run capitalism leaves no room for smaller, private companies to succeed. © Oxy_gen |

Great Britain is one of the most highly industrialised countries, but that did not deter firms in Holland, Belgium and Switzerland to compete with British firms, simply because the competition was between firms rather than countries. To put it differently, the British army can be expected to prevail over (say) Belgium in a confrontation, but every individual British soldier may not be able to overcome every Belgian soldier. Private capitalism does have its dangers, but it does leave the weak some breathing space. However, when pitted against state capitalism, the weaker and smaller economies have little chance of survival. This is analogous to an army equipped only with clubs having to take on an army equipped with machine guns. But state capitalism —under which the entire economic and political might of one country is pitted against individual traders and manufacturers of another country—threatens to destroy the world economic order. In short, Russian Communism has raised the prospect of a very dangerous form of capitalism, and there are only two ways to deal with that threat:

  1. One possibility is that the entire world adopts the same economic system and becomes a part of the Soviet Union, thereby ending the competition between unequal. Is there any possibility that such a development will take place? Would Great Britain, America and France be prepared to join the Soviet Union so that they could escape the onslaught of Russian competition? Even if that were conceivable, would this ensure that they would gain rights and privileges similar to those enjoyed by Russians themselves? Since that is unlikely, this really is no solution.
  2. The other solution could be for each country to adopt the communist system, but retain its independence. If this were to happen, it would mean that state-owned enterprises would be pitted against each other—a situation that would be even more dangerous. While industrial enterprises of one country competed with individual enterprises of another country earlier, the state enterprise of one country would now compete with the state enterprise of another. Were this eventuality to materialise, we would face continuous warfare instead of occasional wars relieved by varying periods of peace. Commercial caravans would move across the globe, but would require armed forces to defend them. Trade and commerce would be conducted between government officials and not company managers. In such a world, smaller and weaker countries would lose their independence and end up turning into hunting grounds for the bigger, more powerful countries. The major industrial powers would continue to compete, but the competition would be between the governments, not their individual firms.
Individual traders and private companies stand little chance competing with whole countries. © kentoh |
Individual traders and private companies stand little chance competing with whole countries.
© kentoh |

It is no more than a delusion to suppose that when such a stage is reached, people everywhere would rise to the occasion and conclude a just and lasting peace. Russia today is not prepared to share its wealth with the less fortunate. There is no reason to expect that things will be different when it becomes wealthier. If it were disposed that way, it would not have set its eyes on controlling Iran’s oilfields.

Russian Claims of Equality among Nations Belied by its Actions

 Russia deviated from its communist principle of equality for all nations by joining the Big Three. © komisar |
Russia deviated from its communist principle of equality for all nations by joining the Big Three.
© komisar |

By joining the Big Three, Russia has clearly deviated from its stated principle of equality among nations. Where do the smaller and weaker nations stand against the Big Three? No more than a weakling confronting a wrestler. If Communist Russia were true to the principle of absolute equality, it should have sided with the weak nations and insisted that it would not accept any difference in treatment among nations. If men are equal as individuals—that is equal in their rights as human beings—then it follows that all countries, no matter whether they are big or small, are equal in their rights and are entitled to their own healthy and happy life, safe from interference and humiliation. Russia should have asserted the principle in inter-governmental bodies that all governments—weak and powerful—must have an equal voice in protecting their rights. But Russia did not do so, and agreed to settle all important issues through consultations among the Big Three. By its action, Russia demonstrated that its voice must carry greater weight than the voice of smaller countries such as Belgium and Holland. If nations could not have equal rights, how could individuals expect equal treatment? Surely,moral and ethical standards must not differ in their application to individuals and nations. Thus, Russia’s claim of equality has no substance and is mere show. If a big government deserves preferential treatment, why should an expert technician or trader not have an advantage over an inexperienced technician or trader? Giving preferential treatment to a larger country could in fact be more harmful than allowing an individual to excel because of his special skills. Any inequality which is created can be redressed with Islam’s fine principles as discussed above. This brings to mind an incident concerning one of India’s leaders when several Indian political leaders gathered to deliberate on some matters.

Sir Sikander Hayat Khan was an Indian politician and statesman from the Punjab
Sir Sikander Hayat Khan was an Indian politician and statesman from the Punjab

The late Sir Sikander Hayat Khan and Sir Feroze Khan Noon invited me to take part in the meeting, which was held at Shimla and was attended by about seventy or eighty leaders from all over the country. One of the leaders was rather annoyed with the size of the assembly, and said in his speech that such important matters could not conveniently be discussed or settled in large gatherings. He then proposed that only the ‘leaders of leaders’ should meet and let others know of the decision. This is exactly Russia’s position—that the decisions reached by the Big Three should be accepted by all others who lack the right to participate in these meetings. The sole reason for this is that Russia is a military power, while countries like Belgium, France and Holland are less powerful. If military might is the only reason for giving weight to Russia’s voice, it seems highly unlikely that Russia would be prepared to accept others in its economic programme. A country that accords little value to other countries’ views concerning peace cannot be expected to provide food and clothing to them. Once its industry advances, Russia can be expected to seek ‘mandates’ over its markets instead of equal participation. In short, the Soviet Union does not really stand for ‘death to capitalism’—that is only an illusion in the minds of some people. Its real slogan is: death to capitalism where individuals own property and long live the state capitalism of Russia. The consequence of this state of affairs can be predicted—it was possible to withstand the power and influence of individual capitalists, but nobody would be able to compete with state-run capitalism.


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