Some Islamic leaders have loudly proclaimed that the current economic crisis proves the superiority of their religion and way of life over capitalism and liberal democracy.  As usual they are in a complete state of denial about the moral, intellectual and economic bankruptcy of the fundamentalist world-view they hold which is rooted in Islamic law.  Here are a couple of examples of their empty boasts.

“The collapse of the capitalist system, which is based on usury and securities rather than commodities in markets, shows us that it is undergoing a crisis and that our integrated Islamic philosophy – if properly understood and applied – can replace the Western capitalism,” Qatar’s Gulf Times quoted an influential Sunni cleric, Sheikh Yusuf al-Qaradawi, as saying recently.  He is a spiritual leader of the jihadist Muslim Brotherhood.

"The school of Marxism has collapsed and the sound of the West's cracking liberal democracy is now being heard," supreme leader Ayatollah Ali Khamenei declared.  President Mahmoud Ahmadinejad went further and said that the current financial crisis is a form of divine retribution that marks "the end of capitalism."

The irony in such rants is that the fortunes of the oil-producing countries in the Muslim world are tied directly to the health of the global economy, which drives demand for their oil.  The global economy today is largely based on capitalist principles.

If capitalism falters and demand for Muslim oil dries up as a consequence, the most important Muslim economies as they exist today will die.   That is because they are derivative economies, completely dependent for their economic health on the health of the industrialized countries of the West and of fast-growing China and India – none of which are predominantly Muslim. 

Without the oil resources in the ground that Western oil companies helped them develop in the first place, these Muslim countries would have retained their primitive tribal-based, pre-industrial economies.  And once alternative sources of energy replace oil on a significant scale, their economies will sink to the bottom like a dead weight.

Take the Islamic Republic of Iran as an example, since its leaders have been among the most vociferous in claiming that they have a superior economic and legal system.  Despite the entirely unearned happenstance of possessing large oil reserves, Iran is an economic basket case.  In Iran, the oil sector provides 85% of government revenues.  Even with the high oil prices of the last several years that reached about $145 a barrel as recently as last July, Iran has experienced double-digit unemployment and an inflation rate that climbed as high as 26%.  Now, facing a precipitous drop in oil prices to around $70 a barrel due to declining world consumption when it needs at least $95 a barrel just to keep its head above water, Iran is pressing for OPEC to rescue it from economic ruin by taking immediate concerted action to cut production. 

Iran’s problems run far deeper than the current oil price decline.  Its theocracy has extinguished any spark of individual initiative and innovation that lie at the heart of successful growing economies.  Government controls, widespread corruption, and other rigidities undermine the potential for private-sector-led growth.  The regime’s funding of terrorist organizations and defiance of the UN Security Council’s resolutions condemning its nuclear ambitions have resulted in sharp curtailments of foreign investments and squandered resources. 

Iran had an estimated gross domestic product of $11,700 per capita in 2007.  By contrast, technologically advanced Israel had an estimated gross domestic product of $26,600 per capita in 2007 with no oil resources of its own to speak of.   It is no wonder that an increasing number of educated Iranians have voted with their feet and are seeking a new life and employment overseas, resulting in a significant "brain drain." 

For those who remain behind, political dissent is met with brutal repression, resulting in political imprisonments and executions.  Women have been singled out for especially harsh treatment when they do not toe the fundamentalist line of submission to the will of their male ‘protectors’.  Iran’s misogynist mullahs have forced educated women out of the labor force and universities.  They have ordered the execution and imprisonment of women who dare to protest their inferior status. 

As for any semblance of freedom of conscience, last month the Iranian parliament passed a bill, entitled the "Islamic Penal Code", which would codify the death penalty for any male Iranian who leaves his Islamic faith, according to a report in the UK Telegraph.  Women would get life imprisonment.  Before it becomes officially part of Iranian law, it must pass the Parliament again and be signed by the Ayatollah. Since the bill is following Islamic law (Sharia), this is expected to happen.  In any case, Iranian judges have been applying Sharia and handing down death sentences for what they call apostasy.

In short, Iran is already a bankrupt society because of its adherence to fanatical Islamic principles.  This theocracy’s leaders cannot see anything beyond their own twisted psychotic projections of an Islamic paradise where they can wield absolute power in the name of Allah.   Their claim of victory over capitalism and democracy is a cruel joke against their own people.

Some Islamic apologists claim that Islamic law provides the only true path to an economically just society because it exalts a social contract over wealth creation, places strict limits on risk-taking and prohibits the charging of interest on loans.  That may all sound very utopian, but we have seen the true face of Islamic ‘justice’ up close.   We saw it when the Taliban were ruling Afghanistan.  And we see it today in the Iranian theocracy and the religious establishment in Saudi Arabia, which justify their repression of freedom and which manipulate their subjects under a false claim of divine authority.

In short, where fundamentalist Islamic law governs, we witness nothing but dysfunctional, repressive and stagnant societies in all respects.   They have nothing to teach us and plenty to learn.  As long as our freedoms remain intact, our economy will rebound.  It always does.