Islam's Response to Contemporary Issues — Page 177
Economic Peace 177 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 large 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 slowdown 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 stay 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.