THE contemporary global economy is driven by leading capital markets, while the way they influence politics is quite awesome. They also impact pricing of a wide range of commodities including gold and oil.

Capital movements in these markets are similar to an electrical impulse. A single variation in one impulse can alter profit and loss outlook in all these markets. The mobility of capital is determined by the game-playing ability of the stakeholders.

Those who possess the capital hire a huge number of imaginative players who, facing their large computer screens, define and shape the outcome of financial transactions. One can make millions or one may lose billions in a single move. The role of regulatory bodies in controlling capital market firms is largely ineffective.

Capital markets are highly volatile and fluctuating.

The basic cause of concern is the skewed control and distribution of capital. When the Riba-free test is applied to financial transactions, they simply fail the test.

This test is very simple. It says that any financial transaction which takes place in ‘multiplication mode’ is a Riba transaction.

That transaction is forbidden and the profits taken thereof are also forbidden in Sharia.

Now apply this simple test to the selling and buying of the shares. You buy a share worth Rs100 and then make a profit of Rs100 in the next 24 hours. How would you then justify this profit given the Riba criteria of Sharia law? You must possess a magic wand to earn 100 per cent profit on financial transactions. Such transactions also have traces of speculation, rumours, game-playing, booking and price fixing of shares.

This flouts another criterion of Sharia law which makes incumbent upon buyers and sellers to undertake a well-informed, transparent, and ethically permissible transaction of their money.

It’s fascinating, but failing the Riba-criterion of the Sharia law.

The other aspect of Riba-driven capital markets is linked with what economist John Maynard Keynes has termed as mans’ inherent psychological necessity towards profit making and then spending that money on satisfaction of wants and desires.

This psychological attribute to engage in endless blind profit-taking leaves the human societies divided and discriminated.

Sharia forbids those financial activities which lead to foul play, and domination of the poor by the wealthy classes.

This globalisation is defined by multinational corporations and world capital markets. Those who cannot create productive capital are tied to the global financial market. Sharia law places man as a trustee of earth and its resources. It also makes binding on those individuals, organisations and nations who make an efficient use of their financial resources to let the poor, the needy, the hungry, the wayfarer, the orphan and the widow share economic prosperity and social harmony.

(The writer works for the University of Management and Technology, Lahore. ahmadelia@gmail.com)