 بسم الله الرحمن الرحيم This is section 4.5 of a new approach to Islamic economics. It describes the emergence of capitalism and the social changes created by this. There are a number of different schools of thought in economics like Marxism, socialism, capitalism, and many others. These represent ways of thinking about the economic system. The scientific method leads us to the misconception that these are scientific theories about how an economic works. And then one might think whether or not these are true or false. That's entirely a wrong way of looking at it. The first thing is that there is no normative positive distinction as economists have been taught to believe. These theories are actually ways of looking at society. They describe some causal factors. So in that sense they represent some scientific hypothesis. And they also recommend some policies. So they are also normative. And these two aspects the normative and the positive are so mixed up with each other. It's impossible to separate them out and say that here this part is positive and descriptive and here this part is normative and subjective, idealistic. So prior to the industrial revolution there were two schools of thought about economics. And these represented the interests of different classes. One was the physiocrats who said that agriculture is centrally important to the economy. The wealth of a nation should be measured by how much cultivated land we have and what is the value of agricultural production. And this theory of economics or this way of thinking about the economy corresponded to the perspective of the aristocrats. The landed aristocracy had a real estate and this was their perspective. As opposed to this there were the commercial classes. The bourgeois as it is said that they thought of agriculture as a source of raw materials and also food for the labor that they would use in their factories. They suggested that we should measure the wealth of a nation in terms of gold and silver which comes from commerce. As production and trade increased so did the power of the commercial classes and this is reflected in two events which took place in the 19th century. The corn laws were passed in the 1815 which restricted the import of corn and created greater profits for the landlords. But they were repealed in 1846 to allow for cheaper food for labor and prevent a rise in wages because the labor wage was closely tied to the price of food. And both the repeal was very helpful for the commercial classes. Similarly the poor laws provided a minimum allowance for the masses and this was very useful for the landlords. They kept the poor tied to the land because these poor laws were implemented on the basis of the parish and so you had to stay where you were. But this caused for a dramatic decline in both the availability of labor and the quality of labor. If the people could get a minimum allowance for food then they wouldn't want to work in the harsh conditions of the factory. So ultimately this was repealed in 1834 and this created the labor market. It also caused great hardship for the poor but it also caused great benefit to the industrializing England. One of the key events which took place to create a labor market was the enclosures which was a land grab by the aristocracy and the privatization of public lands. And briefly there was a civil war in England and the monarchy was overthrown. And then the republic that was created was again overthrown by the royalist and a monarch was reinstated. But the landed aristocracy which had helped place the king in power demanded great concessions for this and one of these was that they were allowed to make huge land grabs. And basically this was called a revolution of the rich against the poor by Polanyi. This deprived the poor of access to the land which was their source for living. These large scales enclosures had many consequences. One was that large scale land enabled large scale efficient agriculture providing more food and wool and other resources for production. The poor were displaced from their land and they emerged in the cities looking for food and ways of means of living. And for the first time they intruded on public consciousness because they had been displaced from the social fabric. And so in some sense people have talked about the creation of poverty, the idea of poverty at that time. They also created a labor class which was ready to sell their lives for money because they had no options. And all of these were part of the process which created the conditions favorable for the industrial revolution. The industrial revolution itself was a series of innovations and introduction of large machines which required large scale labor and produces a massive amount of surplus far more than the basic needs of the society. This industrial revolution caused a massive change in politics, economics, society and ways of thinking. And this was the lead to the creation of capitalism. So the question that arose is what to do with this excess of goods. And this led to the creation of a market economy where the markets could be sold and money could be held in return for future consumption. Money became much more widespread and widely used. A market economy was very strongly in conflict with the social economy which came before that. And the market economy has its own different philosophy, culture, politics which are very much in conflict with the social economy. To understand some of these contrasts, in a traditional economy money was used only by the rich, the poor didn't have any money. Basic needs were met by social networks and relationships not by the market. In general market was a peripheral adjunct to society. They used to be fairs every once in a while where people would go and use a little bit of money to buy some exotic goods. But these were peripheral to normal life. Survival in a traditional society depended on social networks. And that meant that placing social needs above individual was central and important and required for survival. And so social economy is based on the principles of generosity, cooperation, taking care of each other and taking care of the weak. And also on regulating the markets which interfere with these values. So we can conclude this section by noting that industrial revolution was a trigger for a massive amount of social change. And it is possible to analyze and understand this change as all being caused by this one single factor of massive surplus production. This led to a consumer economy where the laborers worked to create products and wages and buy these products which they have created. In fact the colonization of the globe was also a consequence of this industrial economy because to find markets for their excess goods they had to roam across the globe and destroy existing self-sufficient economies to create the need for their goods and to create sources for law materials. Also creation of a labor market required, cheapens human lives, puts them for sale and makes money able to buy lives. So in a capitalist economy wealth becomes a goal of life, it can buy everything including human lives. Our market economy makes markets central to life so more or less everything is for sale. And so these are some of the philosophies that emerge in a market economy. بها نربك رب العزة أما يسفون وسلام من المرسلين والحمد لله رب العالمين.