James Fulcher

‘Capitalism, a Very Short Introduction’ by James Fulcher is a 2015 Oxford publication. In Chapter 1, the book broadly introduces the origins of present-day capitalism by going as far back as the 1600s to cover Merchant Capitalism. Then, it discusses the capitalist production and finally, the emergence of the current-day financial capitalism.

It explains in Chapter 4 that capitalism in different countries evolved differently, citing examples of the United States of America, Japan and Sweden. It further elucidates that though all run under capitalist economies and each introduced ‘welfare capitalism’ to solve problems which emerged from the unbridled pursuit of self-interested behaviour, these meant different things to each country.

The common point is the realization that market forces need to operate under greater freedom. Despite this, the variations of capitalism practice did not converge to one all-conquering capitalism, as there is plenty of evidence to show national distinctiveness.

Chapter 5 in the book expounds on a potent question, one which most would agree to in the affirmative, “Has capitalism gone global?” Contrary to common intuition, capitalism became widespread as soon as it came into existence. People in the 15th and 16th century who piloted the routes from Europe to other continents and back were the initiators of global trade.

Though we know of much earlier travel routes through history, the book documents these developments as introduction of capitalism formally.

Travel back in the day was hazardous and slow to say the least. Things were then expedited gradually and then exponentially through the emergence of the communications revolution in the 19th century.

The steam-powered transportation followed. The invention of the telegraph and finally the telephone modernized communication over distance. These developments culminated in an organized global economy.

Manufacturing, telework, tourism, agriculture and currency all became internationally inter-connected. Despite all this, the author argues that while economies have become internationally connected, capitalism in its essence has not really gone global. 

Capitalism is defined by the Cambridge dictionary as, ‘An economic and political system in which property, business, and industry are controlled by private owners rather than by the state, with the purpose of making a profit.’ Following this definition, not every country can be considered ‘capitalist’.

The expansion of countries’ growth happened not necessarily by market-based competition. Rather, it happened by exploiting the weak economic policies of underdeveloped nations during and after colonization.

By definition, then, even if economies have become global, striving to thrive under a profit-maximization model, it is happening at the cost of countries that are continuously forced to export their resources which implies that those countries are not essentially capitalist, or are outright failing under the model. “The flow of money and investment is so unevenly spread across the globe that it is more than a little misleading to describe it as ‘global’.” (Fulcher, 2015)

In addition, all transnational corporations while seeming to be global, are based in specific nation-states somewhere, where their profits are repatriated and where most of their assets lie. These transnational corporations exploit the infrastructure, institutions and power of their home-countries to assist their operations in host countries. Though, they bring in employment, the author argues that they exploit cheap labour, drive out local competitors and ultimately channel the profits back home. This raises the first criticism of capitalism, its exploitative tendency.

The famous ‘Paperclip maximiser theory’ proposed by Nick Bostrom in 2023 can be used to analogize the inevitable reliance on exploitation that comes about through the capitalist model. The thought experiment suggests giving an AI the simple and harmless command of making as many paperclips as possible. Eventually, it would destroy humanity (humans, infrastructure and perhaps even itself) by turning all matter into paperclips. It illustrates how pure goal-driven intelligence without ethical limits can lead to disastrous outcomes.

As expected, the author notes that crises are an implicit characteristic of capitalism, which has been demonstrated ever since the 1970s. Global production increased rapidly, but global demand could not keep pace, leading to bursts of growth bubbles. Debts also, cannot expand indefinitely, especially if people decide to cut spending and borrowing.

The inflated bubbles we celebrate are mere shallow fair-weather friends. The author references the Enron and WorldCom scandals saying that they threaten the normative basis of capitalism, as though this is an anomalous event.

“The true capitalist is motivated by the amoral accumulation of money and this frequently drives particular individuals to bend or break the rules.” (Fulcher, 2015)

Lastly, while criticizing its many features, James notes the astonishing capacity for the resumption of growth when the crisis has passed. Positing that due to lack of viable alternatives and the collapse of state-socialist economies at the end of 1980s, capitalism is an undefeated force and those that desire reform must do so from within it. Despite its many problematic features, he thinks that this is the best possible system humanity has come up with and if supplemented by ethical policies, it has capacity for good.

The author seems to have done a remarkable job at maintaining a neutral analysis and still ending with a realist stance.

To begin with, presenting Capitalism or Socialism as the only two possible ways is a false dichotomy that resides in the Western tradition. Introducing an Islamic approach to it would be an approach of Wasatiyyah i.e. the middle way as the ideal approach.

In principle, the positives that have been demonstrated from the practices of capitalism and socialism can be incorporated, but only those which are genuinely compatible with Islam’s doctrine. Primarily because those practices lie not exclusively in the doctrines of capitalism or socialism, but in the nature of man.

Integration is not adoption of knowledge. It is embedding what is useful from any and every sphere, but within an acceptable paradigm and system of governance. For instance, when we purchase something, we do not think that we are practicing capitalism or socialism, but only that we need to fulfil our needs or wants.

Expounding further, while Islam encourages cooperation, it also encourages competition, which is a fact grossly overlooked in Islamic economics. Islam urges ‘kasb’ which requires efforts in improving skills, productivity, innovation and invention. Pursuit of these goals happen in society and economy and often in a zero-sum situation for the direct parties involved. However, society often benefits from such competition if it remains within the ethical and fair limits. 

However, Islamic economics believes that those that are able to achieve growth in income and welfare, they are expected to take care of those that have not been able to achieve improvement in their living standard.

Ultimately, all resources belong to Allah, what we practice on earth is just a redistribution of those resources. Thus, on the spirit of socialism, there is possibility of taking inspiration to implement an equitable (not equal) redistribution of resources such that the concentration of wealth is mitigated.

Furthermore, unprecedented growth through inflation is avoided in Islamic finance because it pegs financing to the real assets. Ideally, provision of finance to the SMEs and microenterprises shall check monopolies.

The current inflationary model we are using hurts the savers and future generations. While one may assume, that resorting to real assets as currency may slow down growth, one needs to be careful to first define what real growth is. Technological advancements and fancy infrastructure are not priorities for which men need to be exploited and suffer from hunger and extreme poverty. Within the resources given to man, if he is not hasty, he can achieve more of the same, but at an environmentally-friendly and socially responsible pace. Else, overexploitation will leave the world in a worse state than it is right now.

This artificial growth and convenience culture is essentially detrimental to our health, social structures and even our existence. It then follows that the end goal, becomes not profit maximization, but earning a halal, well-deserved profit. Earning money for the sake of maximizing it is pointless, but earning it to provide for development of humanity has barakah.