Ever since the Western economic model of Capitalism went into meltdown in 2008, plunging the world economy into a rollercoaster of crises, accusations and counter-accusations have been flying around.
Europe repeatedly blamed the US for starting it. At the recent G20 summit in Mexico the European Community President José Manuel Barroso reemphasised it in response to a question: "This crisis was not originated in Europe ... seeing as you mention North America, this crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market."
What is very clear is that greedy financial institutions ran riot over the economy while politicians beholden to corporate interests looked the other way or aided and abetted with generous bailouts to banks from public funds in the name of saving the economy.
If we step back a few decades we find that the failure of the command economy through the demise of Communism in 1989 was trumpeted as the triumph of Capitalism and the market economy.
Francis Fukuyama is famous for declaring it the 'end of history'. Nineteen years later this assertion rings hollow and is being assailed by the inexorable flow of history itself.
In 2008 the market economy experienced the equivalent of a cardiac arrest accompanied by multiple strokes, which it has not been able to recover from.
Western economies remain sluggish and anaemic and several attempts to jump-start them to life have failed.
US type 'quantitative easing' did not relieve the dire situation nor did European style austerity measures, which only succeed in fostering deep social unrest. The quake shaking the foundation of western economies transcends the typical boom-bust phases associated with Capitalism.
Jeffrey Sachs, a famed macroeconomist, noted: "We are not facing a short-term business cycle downturn, but the working out of long-term social, political, and economic trends."
Unsurprisingly the crises have prompted revisionist tendencies and reassessments of the suitability of the untamed market model to guarantee economic wellbeing, stability and overall happiness of society.
The Capitalist model oscillates between two sides; the believers in a self-regulating economy through pure market forces and the elimination of government control - or interference as they see it.
Leaders like Margaret Thatcher and Reagan famously championed this view. The other side advocate a mixed economy where active government supervision of the economy tempers market forces, this is the Keynesian approach. Renowned economists Joseph Stiglitz, Paul Krugman and Jeffrey Sachs are contemporary proponents of this view.
The Keynesian view had greater traction following the Great Depression because of active state involvement in rebuilding failed Western economies.
It is important to note that government economic leadership was necessary in the West at the time considering the Communist bloc posed an existential threat to Western Capitalism.
Socialism appealed to the downtrodden masses of the West with its illusory promises of utopia. The steady encroachment of the Soviet model played a part in persuading Western governments to adopt mixed style economics to safeguard against the ideological propaganda of Communism.
Once again, Western economies lie in tatters and the pendulum is swinging back in favour of the mixed economic model. Politicians, policy makers and economic thinkers are hypnotized and trapped by this oscillation, unable to snap out of it.
In the 1920's free market policies drove Western economies into the Great Depression; then in the 1930's state control and financial regulations were imposed to restore balance through policies like Franklin D. Roosevelt's 'New Deal'.
Reaganomics and Thatcherism followed in the 1980's unleashing free market forces through massive deregulation of key industries, tax cuts for the rich, rolling back spending on public programs like social care and outsourcing government responsibility to the private sector.
This trend accelerated after the breakup of the Soviet Union in 1989 partly due to the absence of an ideological challenger to the dominant Capitalist model, which eventually led to the messy 2008 crash we are still experiencing.
Jeffrey Sachs stated the following: "During the 1980s and onward, the instruments of federal power were increasingly handed over to vested corporate interests to be used for private advantage. The new corporatocracy was underway. And the economy, guided by narrow interests, quickly became divided, unstable, and ultimately vulnerable to the kind of collapse that ensued in 2008."
As bruised and battered governments reach for the levers of state regulation once more the feeling of déjà vu is inescapable.
The proposal of a mixed economy is an inherent recognition of the failure of Adam Smith's 'invisible hand' and Capitalism itself, which results in social defragmentation, economic imbalance and deficits of political accountability, features Western societies are increasingly characterized with. Enforcing government restrictions and regulations to reel in corporate greed is a palliative solution that simply prolongs the pain of Capitalism.
A closer look at the mixed economy model reveals the same principles that make the free market economy regularly implode - deregulation, financial speculation and privatisation of public wealth - underpin it.
These are issues that arise from that pillar of western economic thinking - freedom of ownership. The preachers of the mixed message do not question this tenet; all concur it is indubitable.
Therein lies the problem. It erodes the sense of social responsibility and nurtures a community that focuses on producing wealth rather than distributing it. It promotes and raises self-interest as the sole motivator for human interactions causing addiction with instant gratification and immediate rewards.
Relationships among people become established on personal benefit to the exclusion of all other drivers like accountability that contribute to building a stable and just society.
The exit strategy from this circle of pain is a new way of thinking and approach to economy, a nouveau economic model with a different set of principles and viewpoint altogether. Until the issue facing the West and the world at large is understood in this light we will continue on this rollercoaster to ruin.
An alternative viewpoint of economy is the Islamic perspective that bases man's motivations on his relationship with his Creator first, which then serves to guide him in all his endeavours.
In this manner man is driven by his obedience to his Creator while striving to achieve material progression in life affairs. The Islamic economic policy focuses on satisfying all basic human needs rather than just elevating the overall wealth (GDP) of the nation without consideration of individual requirements.
Furthermore, the classification of property, the manner of its acquisition, utilisation and disposal are all set in clear guidelines.
This prevents the 'free for all' mindset inculcated by the market economy that gambled with people's legitimate needs for home ownership, creating the housing problem and the subprime bubble effect.
Home ownership is a citizen right embedded in the Islamic economy by the rules of Shari'ah and not a financial instrument to enrich corporate interests. Trade and markets are organised by the Shari'ah rules that encourage seeking profit but prohibit speculation and stock trading.
Islam's monetary policy that is based on the bi-metallic standard of gold/silver protects the economy from rampant inflation and fiscal crisis. When coupled with the strong prohibition of interest and financial speculation, it leads to a stable real economy.
This is a brief insight into the manner of laying down a whole new approach to economy provided by Islam and a way forward for humanity.
Mahmud wrote from Gwarimpa, Abuja.
