How the Khilafah will industrialise the Muslim world

The Muslim world today lags far behind the industrial nations of the world. Whilst the West went through industrialisation 150 years ago the Muslim world has remained largely de-industrialised and in many cases is reliant on the developed world.

Industrialisation can be defined as when an economy is geared around manufacturing and this then acts as a stimulus to other sectors of the economy. An example of this was the British Empire, which made manufacturing central to its economy, the manufacturing of ships, ammunitions and mining propelled Britain into a global superpower with the ability to rapidly mobilise for war and colonialism. In times of peace such industries were used for civilian purposes.

This is the fundamental reason for any nation wanting to industrialise, having a manufacturing base makes a nation self-sufficient and independent from other states. By not industrialising a nation will be politically and economically reliant on other nations for its vital interests such as defence, industry and economic productivity. This last scenario aptly describes the state of the Islamic world today.

Why has the Muslim world failed to industrialise?

For a neutral observer it is shocking that the Muslim world, which has an abundance of diverse minerals and resources, is so poor and has failed to industrialise. For example, Iraq singularly possesses 10% of the world’s oil reserves. A more unfamiliar fact is that Kuwait also sits on 10% of the world’s oil reserves. By studying the reality of all the nations, which comprise the Muslim world, that is North Africa, the Middle East, South Asia, Indonesia and Malaysia it is very clear to see a catalogue of errors and examples of widespread economic mismanagement.

The lack of a political vision and clear direction in the Muslim lands and the insistence of the Muslim rulers who prefer pursuing short term pragmatic policies is a historical problem since the destruction of the Khilafah in 1924 C.E.

Turkey has been unable to reach its potential due to mostly questionable and politically motivated policies imposed by the IMF and World Bank. Pakistan under the behest of the World Bank concentrates on the export of textiles ensuring the manufacturing base never develops.

The Arab countries have never developed manufacturing industries, even in the oil sector due mainly on the part of the desire by western oil companies who want to control the refining of crude and through it their hold on oil production and oil producing countries. In 2006 the Middle East produced 31.2% of the world’s crude oil. A mere 3.2% was actually refined within the region. Indonesia throughout the 1980’s and 1990’s liberalised its economy leaving it open for foreign investment, which eventually resulted in the Asian Crisis in 1997, which it still hasn’t recovered from. Today it remains straddled with debts of over $140 billion.

The Muslim world implements a whole host of contradictory policies which ensure their economies are unable to provide for the needs of the people. The result is that people have to devout all their time and effort in working to sustain themselves rather than to contribute to the necessary work needed for the nation to become a major world power. Hence in order to industrialise the Muslims need to be convinced of why this is necessary and why it should sacrifice for such a vision.

An example of this is what the US achieved when it abandoned the consumer economy and went through industrialisation on the eve of World War 2. The U.S. government began expanding the national defence system, spending large amounts of money to produce ships, aircrafts, weapons, and other war material. This stimulated industrial growth and unemployment declined rapidly. After the United States entered the war in December 1941, all sectors of the economy were mobilised to support the war effort. Industry greatly expanded, and unemployment was replaced by a shortage of workers.

The nation rapidly geared itself for mobilisation of its people and its entire industrial capacity. Throughout the late 1930’s the war industry achieved staggering production goals of 300,000 aircraft, 5,000 cargo ships, 60,000 landing craft, 86,000 tanks. Women workers played a bigger part in industrial production than ever before. Businessmen ignored the effects of the great depression and began to take advantage of generous government contracts. Jobs began to crop up everywhere and people began working for the war effort. The public accepted rationing and price controls for the first time as a way of expressing their support for the war effort. The demand was for a vast quantity of war supplies as soon as possible, regardless of cost. Businesses hired every person in sight, even driving sound trucks up and down city streets begging people to apply for jobs. New workers were needed to replace the 11-million working-age men serving in the military. All the nation's activities such as farming, manufacturing, mining, trade, labour, investment, communications, even education and cultural undertakings were in some way geared towards industrialisation in order to prepare for the war effort.

Alongside this the US brought together their best scientific and engineering minds. The US government identified that there was a possibility to build a fission weapon that would be a useful tool and have huge destructive capabilities. The Manhattan project was born. This project was a result of a race to be the first nation with an atomic bomb due to the strategic power it would give.

The failure of the Muslim world highlights the level of mismanagement of the resources present today. The real cause of the current economic woes boils down to some very basic factors; a non-ideological viewpoint from the rulers and consequently a lack of political vision for these lands. These two factors mean that despite the abundance of resources these countries will remain subservient both economically and politically to the West since they do not have a consistent basis to build their economy on. This makes the economy disjointed and thus fails to move in a unified direction.

The Khilafah’s s policy to industrialise should centre on the following:

Building a Defence oriented Economy

Most economies are characterized by an emphasis towards a particular sector of the economy – usually using this sector as a stimulus for the remaining part of the economy. Much has been made of the shift of the UK economy from a manufacturing one to a service based one in the late 1980’s. Currently the majority of economic activity is geared to providing services and this is what generates economic activity for the rest of the economy. By contrast, the Khilafah should put a heavy emphasis on the defence industry as the stimulus and power behind the economy. Not only would this create jobs and generate wealth in the economy but also this industry is crucial as a deterrent to other nations who may have designs over the Islamic lands.

Building an economy around defence involves the development of heavy industry such as steel and iron, coal etc as well as arms manufacturing and so forth. The main features of the policy are listed below:

In order to industrialise a forum specifically geared to gaining the support and cooperation of the industrialists should be set up. The main aim of this initiative is to provide incentives, both economic and political, for the major industrialists to develop particular type of factories and businesses geared around heavy industry and the needs of a defence oriented economy. Incentives could include free rental of land in return for the mass production of steel, iron or chemicals to existing businessmen and entrepreneurs. Other incentives could also include the government providing loans to those who wish to start particular businesses in those areas which the state needs development or supplies such as developing chemical spores or extracting metals.

This was the same policy the Japanese used after US occupation ended in 1952 with the help and tacit approval of the US. Japan brought together its best businessmen and entrepreneurs in order to counter the threat of communism, which by then had reached North Korea. As a result Japanese leaders lifted the restrictions on share-ownership allowing the formation of the large conglomerates that have dominated the Japanese economy ever since. These groups, known as keiretsu, were often direct descendents from the pre-war zaibatsu, as is the case with three of the ‘Big Six’ – Mitsui, Mitsubishi and Sumitomo. Key industrialists worked for the aims of the state as they could see the massive amounts of wealth it could make. The US military began buying supplies from Japan, creating enormous demand for Japanese goods. The process of industrialization itself accelerated growth, many workers moved from low-productivity farming and textile production into modern industries. Hence in conjunction with entrepreneurs the production of higher-demand, higher-value goods, such as machinery, gradually replaced lower-demand items, such as textiles. By 1970 much of Japan’s industrial output consisted of products that had not even existed in the Japanese market 20 years earlier, such as colour televisions, petrochemicals, and air conditioners.

These are precisely the types of policies the Islamic world should pursue with regards to gaining private finance and also uniting the key industrial leaders behind the Khilafah State. The Muslim world is not short of rich industrialists and businessmen. Also, when the realization of the potential dividends of such policies become known to the wealthy, then they will move to become part of this economic revival since they would be able to generate wealth previously unheard of in the Muslim world for a long time. This coupled with a concern for the welfare of the people should help generate private investment.

Political vision

The fundamental reason the Muslim world today remains de-industrialised is due to the lack of a political vision. The Muslim rulers have resigned themselves to becoming markets for western multinationals. The concepts of free trade and free markets have always been a ploy by the developed world to stall industrialisation in other countries and turning them into a factory for western consumption. When the political will has been present development has occurred in the Muslim world; Egypt developed a nuclear program in the 1950’s however it gave up its programme after the 1967 defeat to Israel. Pakistan pursued and developed a successful nuclear programme.

For a newly emergent Khilafah a key policy would be to unite its people upon its political vision. Once this is achieved people will inevitably work to achieve the aims of the plan, this will then be presented to the remaining Muslim lands and once they can perceive its direction they will move to enact it. One of the biggest problems in the Muslim lands is the lack of any policies, which will raise the standard of their nation. The Khilafah will need to find its most skilled people and get them to enact this vision, which will give confidence to the masses.

This requires developing the military capability to defend itself and repel any invaders and potential attackers. This thinking will inevitably lead to the development of technology that does not exist in the Muslim world, in order to bring the military on a par with the modern global standard. To do this one must industrialize. To industrialize you need to have the technical expertise and raw materials, which is where a strategy needs to be developed.

An example of this is what happened to the USSR; The Communists implemented a 5 year plan beginning in 1928, in order to build a heavy industrial base without waiting years for capital accumulation through the expansion of a consumer industry and without reliance on external financing. The Five-Year Plan was a list of economic goals that was designed to strengthen the USSR's economy between 1928 and 1932, making the nation both militarily and industrially self-sufficient. The 5-year plan was to harness all economic activity to the systematic development of heavy industry, thereby transforming the Soviet Union from a primitive agrarian country into a leading industrial and military power. Carrying the plan out, the Stalin regime poured resources into the production of coal, iron, steel, railway equipment, and machine tools. Whole new cities, such as Magnitogorsk in the Urals, were built with enthusiastic participation of young workers and intellectuals. This ambitions plan fostered a sense of mission and helped mobilize support for the regime.

All this shows that prior to any discussion on resources and how they will be converted into useful material, the political will is needed which will then give direction.

Mineral Processing

The Khilafah will need to take control of its own minerals and the industries that extract process and refine them, so as to eliminate reliance on foreign nations. This would be a key objective for industry as raw materials are essential for many industries to function.
Pakistan has considerable natural resources, including oil, gas, gold, chromite, iron ore, coal, bauxite, copper, antimony, sulphur, limestone, marble, sand, rock salt and clays for ceramics to mention but a few. As the state grows, by integrating other Muslim lands it will acquire similar and additional resources. It makes sense to develop internal industries that are capable of extracting and processing these resources so as not to be reliant on foreign expertise.

Most of these resources are currently processed through foreign companies, predominantly the US. These companies are given a share in the resource they extract, for instance oil and gas, and no efforts are made to transfer the skills and technology so Pakistan becomes self sufficient in this activity. The state oil companies are additionally being sold off under the guise of privatisation.

In order to become self-sufficient in mineral processing a number of steps need to be undertaken. All resources, which the Khilafah does not have in its lands, should be imported from countries that do not have any designs on the Islamic lands. This is a policy currently being pursued by China. China’s thirst for oil has resulted in it showering aid, loans (many which have been written off) and grants to African nations in order to procure oil. It has done this by building the necessary refineries including the surrounding infrastructure such as roads, schools, hospitals and offices without actually interfering in the running of the country in contrast to the West’s involvement. A similar policy should be pursued by the Khilafah if needed, however most of the Muslim lands have the advantage of being blessed with abundant mineral resources with only some acute minerals needing to be imported.

The state will also need to develop a policy for the western companies, which exist in the Muslim world. What needs to be understood in regards to them is where exactly the problem lies with them being in the Muslim world. Their current existence has been a problem in that they are given a complete free hand in mining the resources and on many occasions given a share in the resource as payment. Also many of the Muslim rulers and their elites ensure they personally benefit financially which acts as a barrier for the nation actually benefiting from the resource.

The biggest problem is the fact that such companies do not transfer skills or technology to the country they work in. Such companies should be made to sign agreements in order to transfer technologies to the Khilafah. Trade is a powerful tool in security relations. No two nations with a healthy trade relationship will go to war with one another. US-China relations clearly prove this, although both nations view each other as rivals, they cannot go to war, as they both need each other for now. In regards to transferring technology the case of Pakistan’s newly acquired submarines is a good example. Pakistan and France have signed a deal to develop three submarines. One of these will be assembled in France, whilst the remaining two will be assembled in Pakistan. The two submarines being built in Pakistan will be built with the help of French engineers, hence technology transfer will occur. This clearly shows that with the political will industrialisation can happen.

The Khilafah will need to identify machinery and equipment that is required and source this from friendly countries. Pakistan currently has light and heavy manufacturing infrastructure. For instance, machinery for sugar and cement plants, boilers, road rollers, harvesting machinery, ginning machinery etc. The Heavy Mechanical Complex has the facilities to produce light, medium and heavy iron and steel castings. These industries amongst others can be utilized to develop the supply industry for necessary machinery and equipment required for the raw materials industry, as well as other industries.

                                                               

The Khilafah should fund industrialisation in three ways

                               

a.       Direct Investments – this makes sense where achieving profits would be difficult if left to industry, such as ship building, space research or operating railway systems. Therefore, the Khilafah should operate these or subsidize their operation.

b.      Work in collaboration with industry – this would be on projects where there is a potential commercial value to the project or government involvement is required to make the project work such as oil exploration.

c.       Incentivise industry to take on projects – this is by giving contracts to industry to manufacture tanks, weapons, ships etc or by providing loads/grants/subsidies to industries that process raw materials for instance, or provide free land for construction projects such as weapons manufacturers.

The Khilafah should look at attracting those who have the ability to help in its development of the defence industry. The Muslim world already has skilled nuclear scientists and engineers as well as petroleum engineers. Due to a lack of opportunities such skilled personnel are forced to go abroad which simply compounds the expertise and technology deficit within the Muslim world. . For example, when Egypt gave up its policy of developing nuclear weapons in 1967 many of its scientists went to Iraq and joined Saddam Hussein’s weapons programme. Abdul Qadir Khan the father of Pakistan’s nuclear programme is currently unemployed.

Pursuing a policy of industrialisation will have a huge stimulus on the economy. What is currently lacking in the Muslim world is any direction or planning in the economic sphere. The majority of the economies are lacking any stimulation and investments and are too dependent on oil and gas exports.

The creation of an advanced defence industry will bring with it a massive injection of investment. This will be coupled with private investment from entrepreneurs keen to capitalize on the returns that will be generated. The first tangible effect that must be understood is that such a policy will create jobs for those previously unemployed. The state may have to finance some training, but the Muslim world is not short of a skilled workforce.

The creation of jobs will naturally increase consumption, as people will possess greater amounts of disposable income. This in turn will increase demand for goods from the general masses. Such an increase in aggregate demand will push the development of other sectors of the economy such as the manufactured goods sector, the consumer goods sector and also demand for some luxuries. This demand will push people to supply these goods further creating more jobs and more wealth in the economy.

Agriculture

In order to pursue a policy of industrialisation it is crucial that any nation must be able to feed itself. It is crucial that the state is not dependent on foreign powers for its agricultural policy, since any development policy would be meaningless without the ability of a nation to provide basic foodstuffs to its people. The Khilafah will also need to develop an independent agricultural policy, which makes use of the arable land, which the Muslim world is blessed with.

Turkey established both an industrial base as well as a sound agrarian policy through state intervention in the post world war period, although since the late 1980’s IMF reforms have stunted this development severely. Consequently, Turkey is currently a net exporter of foodstuffs, cattle and livestock.

With this is mind the future Khilafah state should invest in the latest machinery and agricultural techniques. It is noteworthy to mention that North Korea had a sound agricultural policy in the past, developed after WW2 called the Juch philosophy in three stages along communist lines. North Korea is a country that could potentially trade with the Khilafah since it is looking to export its machinery but finds that the US and European markets are closed due to protectionist measures. The state could create favourable trade terms such that we are able to purchase the North Koran agricultural machinery whilst benefiting from their agricultural techniques.

Conclusion

Although this article is a general outline its policies need to be adapted to the realities of the lands the Khilafah would have under its authority. The Muslim lands are full of resources and expertise and people who would work for the aims of Islam. The current rulers for as long as they remain will ensure there nations never industrialise to reach their true potential and have resigned themselves as remaining as agents for the worlds powers. Germany challenged the British Empire in the early 20th century by industrialising which eventually led to WW1. It again was on the verge of shifting the global balance of power in its favour after industrialising again within a space of 6 years and it took the world powers to come together to halt its progress. The Soviet Union within a space of 20 years rapidly industrialised and for nearly 50 years competed with the US for the role of global superpower. These examples show if the will is present any nation can industrialise and defend itself, whilst without industrialisation it would always fall under the influence of foreign powers. However, a key difference must be noted. Many of the examples of nations that industrialised did so with the aim to conquer or colonise other lands or attain the status of world power.

The Islamic Ummah’s drive for industrialisation and technological advancement must be built upon the Islamic Aqeedah as the driving force and motivation. Guided at all times by the belief in Allah (swt) and his noble Messenger (SAW).

O you who believe! Answer (the call of) Allah and His Messenger when he calls you to that which gives you life; and know that Allah intervenes between man and his heart, and that to Him you shall be gathered.  [TMQ 8:24]

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How the Khilafah will industrialise the Muslim world