<Special Feature “Socio-economic Impacts of Islam on Capitalism, Civil Society, and Modernity”>Potential of the Islamic Economy as a Post-capitalist Economic System

Abstract

Modern capitalism is dominated by the mode of market exchange, in other words, the dynamics of capital. However, it does not exist only based on the mode of market exchange, as other economic systems. An inextricable link of ‘state’ and ‘nation’ supports capitalistic market exchange as an external factor that is essential for modern capitalism to work. Therefore, modern capitalism is a composite system comprising capital, nation, and state. Modern capitalism is now encountering difficulties, problems, and challenges. To address these, there have been several attempts to go beyond the existing kind of capitalism such as the Keynesian welfare state system and Soviet-style communism. As historical experiences, however, most movements that attempted to go beyond capitalism made no structural change of the triangle of modern capitalism. The only way is to defeat the triangle of the capital-nation-state, and achieve a new mode of exchange called ‘competitive reciprocity.’ Competitive reciprocity is partially similar to the exchange mode of reciprocity. However, in competitive reciprocity, reciprocal relations cannot be realized by the internal logic of the tribe, community, or family. Instead, the relationship is realized by market exchange without any state intervention. The importance of competitive reciprocity is that this mode of exchange can balance market benefits with social welfare, outside the triangle of modern capitalism. When we consider the characteristics of the waqf system (a traditional Islamic religious trust) which is revitalized in the 2000s, we can easily see that it is akin to the competitive reciprocity. Therefore, it can be concluded that waqf revitalization has great potential to propose an alternative (next-generation) economic system to modern capitalism.