The financial crisis engulfing the West’s leading economies shows no signs of abating. In desperation to save their economies we have seen the British and American governments announce bailout after bailout in order to revive their economies as the financial sector crashes and industrial output slumps. They have resorted to borrowing ever more huge amounts of cash, mainly financed by surplus rich nations such as China and the oil rich Muslim nations such as Saudi Arabia and the UAE buying their government issued treasury bonds. In desperation, they have even started to print more money, more respectably referred to by Western economists as ‘quantitative easing’, a sure sign of the bankruptcy literally of their economies and most crucially of their fundamental economic and political policies. In a relatively short space of time these apparently wealthy and powerful Western governments have been thrown into panic and disarray. The events since August 2007 have been truly remarkable.

As it has become damningly clear it is the entire banking system in these countries, which over the years leveraged itself many times over in casino style investments, that is at the heart of this Western originated crisis. For years the West has lived off easy money, financed mainly by foreigners to create a mirage of illusionary wealth that never really existed. Instead the illusion was created by huge interest based credit bubbles to dupe their domestic publics into believing all was well and that they were wealthy. In reality they were not and it was inevitable that at some point the penny would drop and the credit bubbles would crash and collapse in on themselves as is now the case.

In attempts to stave off the failure and bankruptcy of their banking systems various Western governments, in particular the British and American governments, have doled out Billions and Billions of either pounds or dollars to save them. These huge sums have so far failed to trickle down to the ordinary Western consumer and thus failed to stimulate their economies. This is why we are seeing huge job losses in both the US and Britain, currently running at over 600,000 and 100,000 jobs per month respectively. The reason for this is that almost all of this money is being used to help clear the huge red ink on the balance sheets of these banks where the actual losses made in these investments – such as the derivatives markets, a market estimated to be $600 trillion as opposed to the total annual world GDP of $60 trillion – are by virtue of the very nature of these financial contracts, still unknown.

What is equally astonishing is that any other business facing such unpayable liabilities would have normally been forced to go into bankruptcy and into some form of administration under capitalist doctrine. Instead the world is being treated to the spectacle by those who preached the superiority of the free market being forced to adopt state sponsored socialism to save these bankrupt banks. The argument provided by these Western governments that the re-capitalisation of these banks is essential to the recovery of the economy does not hold much water with many people; nearly all of this money is being used to underwrite previous bad investments at these banks. That is why we have not seen these banks resume any significant levels of lending again.

Instead many have wondered that a more effective alternative might have been to use just a small portion of this taxpayer money to start new banks from scratch, free from such liabilities. Yet the investors in these business have been amazingly fortunate that not only have they had their debts underwritten by the American and British governments but they have also been lucky enough to retain some sort of shareholding – all for nothing as opposed to losing all ownership to the new owners as is the case with any other business going bust – and still receive billions in taxpayer bailouts. Moreover these Western banks have not only been able to obtain these huge cash handouts from Western governments, but have still had the audacity to award themselves, other executives and other senior employees huge bonuses whilst ordinary people continue to lose their jobs as a result of their decisions – bonuses that encouraged and rewarded such reckless risk taking that is at the heart of this problem in the first place. So the question has to be asked, whose interests did these Western governments really put first?

It is clear that a huge wealth transfer is taking place – from the ordinary people to the banking elite and any other conglomerate of interests who can leech on to this latest capitalist driven gravy train, a transfer that in truth amounts to state sponsored robbery on behalf of these banks. Inevitably this has lead to a huge public backlash in countries such as America, Britain and France. The fury seen at the recent G20 summit in London is only the tip of the iceberg. The examples of the AIG executives in America awarding themselves obscene bonuses using taxpayer money and Sir Fred Goodwin, the former Chief Executive of RBS walking away with a £700,000 per annum pension for life has been simply too much to take for the ordinary taxpayer who in turn faces an inevitable combination of  severe tax rises and public spending cuts in the years ahead. In response and as a diversion from the real issue of the banking bailouts the Democratic controlled US Congress hurriedly passed a law making all such bonuses awarded at such US taxpayer bailed out corporations liable to a special 90% tax. In the UK, Sir Fred Goodwin’s pension has been the subject of much ministerial discussion but a way to revoke his pension has yet to be found.

This leads to a wider but fundamental question about the fairness of the Western ruling system, about democracy itself. Western leaders, politicians and opinion makers have championed democracy throughout the world as a representative and equitable form of ruling. Democracy they argue asserts the will of the people – ‘rule of the people by the people for the people’. They argue that it allows man to legislate as needed according to the situation, with the superiority of temporal over the spiritual. So the questions that naturally pose themselves are why are these Western governments continuing to bailout these banks at huge expense despite seeing the growing public anger in their countries? Why have they allowed the existing shareholders a continued stake in these bailed out banks when their businesses have actually failed? Why did the American Congress not instead pass a law making it illegal to award any kind of bonus by any taxpayer bailed out corporation instead of allowing an accounting loophole whereby the amount of the desired bonus can be scaled by a factor of ten? Why has the British Parliament failed to pass emergency legislation confiscating the pension of Sir Fred Goodwin? In fact given the complete ability of Western democracies to legislate whatever they want, why have the American, British and other affected Western governments not passed laws severely penalising retrospectively the culprits behind the financial ruin of these Western banks, confiscating the financial gains of the like’s of Lehman Brother’s former CEO Dick Fuld and others of his ilk, making them face jail time as appropriate for their roles?

In the aftermath of the September 11 attacks and other such incidents we saw Western governments in the name of security move swiftly to curtail individual freedoms and bring in new laws to detain alleged terrorists for longer periods of time without charge. Yet in the aftermath of this unfolding financial disaster we have seen Western governments drag their feet. The failure of Western governments to punish these individuals and the banks but instead reward them with huge taxpayer bailouts indicates a deeper profound failure of democracy itself. The reality is that democracy has actually failed to look after the interests of ordinary people in these affected countries in the West. In fact it has actively sought to protect the interests of the rich and powerful elites who have used democracy as a vehicle to achieve their objectives; in this particular situation it is the banking elite who are clearly benefitting. When millions are spent in elections in democracies it is obvious that only the rich, powerful and well connected can afford to indulge in such power play. This is why when Barack Obama raised nearly $750 million in campaign contributions during the American Presidential election expectations for ‘real change’ have to be balanced against the reality that those people who donated such staggering amounts of money will expect, indeed demand, favours back in return in the form of tailor made regulation and legislation. This is why in all major Western democracies there is a very close relationship between legislators, pressure groups, corporate lobbyists and rich individuals; this is a recipe for rule by the rich and the powerful as democracy itself has simply become another commodity for sale. Political control in the West by powerful vested interests and elites has been achieved through a sophisticated guise.

Consequently this is also the same reason why the Western ruling elites hate Islam so much as Islam presents a clear alternative with detailed political, economic and social solutions. The prohibition on interest based transactions, the need to own a commodity before being able to sell it on or the requirement to have your currency fully backed by either gold or silver, the main root causes behind the West’s financial disaster, are enshrined in the Shariah and cannot be legitimised in any way. These elites cannot stand the thought of the revival of an alternative ideological state where the legislation cannot be manipulated for any benefit. The Khilafah will be ruled by implementing the Shariah, which cannot be changed by any man as Allah سبحانه وتعالى is the sovereign with the political ruling authority vested in the people. As Allah سبحانه وتعالى says:

يُرِيدُونَ لِيُطْفِؤُوا نُورَ اللَّهِ بِأَفْوَاهِهِمْ وَاللَّهُ مُتِمُّ نُورِهِ وَلَوْ كَرِهَ الْكَافِرُونَ

“Fain would they put out the light of Allah with their mouths, but Allah will perfect His light however much the disbelievers are averse.” [As-Saff 61:8]

The Khilafah and the Shariah provide a model that ensures that not only is the law consistently applied but also itself does not become subject to a politician’s whim, negotiation or a faustian deal. In contrast not only is the Western economic model facing a crisis of confidence as capitalism fails as an ideology but it’s democratic ruling system also stands exposed as being totally corrupt as it looks after the interests of it’s powerful elites; with it’s widely acknowledged societal problems the whole premise of the Western way of life is under question like never before.

Despite this the Western ruling elites still have the nerve to insist there is no other alternative available as the way forward. Yet Islam provides an alternative, a way of life that has been successfully implemented at state level for over 1300 years; it is sheer intellectual dishonesty by these Western elites to remain in public denial as they seek to protect their interests. In the process though they are giving the ever more growing impression that rather than implementing any sound economic theory, in desperation their crony capitalism is more likely being made up on the back of an envelope as the West sinks further into the abyss.