The Economic System of Islam — Page 55
55 (say) five rupees. Since everyone would be colluding to sell the commodity at five rupees, consumers would not be able to shop around for the best price and would have no choice but to pay the higher price. Smaller businesses would not have the ability to compete with such trusts. Even if they tried to compete by reducing the price, the trust with its monopolistic power would start a price war, which they would find impossible to win. Thus, all monopolistic arrangements are dangerous both for the country and for the global economy. In connection with certain commercial schemes of Ahmadiyya Muslim Community, I once had the occasion to collect informa- tion concerning the shellac business, which requires only a small capital to set up and is confined to certain areas of India, notably the Patiala state. I was surprised to discover that one single Euro- pean firm had established a monopoly over its trade. On enquiring as to how this monopoly had emerged, I learned that other firms were very small, while this firm was doing business of far greater magnitude. It not only controlled the shellac trade, but was also engaged in trading wheat, cloth, jute and other products. If any business ventured to compete, the European firm would reduce the shellac price so low that a new entrant could not survive for long. In fact the new entrant was often made to sell its remaining inventory to the European firm, which would then recoup its lost earnings by raising the shellac price. That is how the firm managed to maintain its monopoly power and did not allow a competitor to come in. It is as such evident that all monopolistic arrange- ments that seek guaranteed profit hurt public at large, and are therefore against the Islamic precepts.