Profit from an Islamic perspectives: Catholic Response to Zubair Hasan

This snowy weekend I was reading essays on profit when I stumbled upon Zubair Hasan’s Theory of profit from Islamic perspective.

It is a quick informative read that finished with a conclusion I do not agree with.

“In sum, for formulating an integrated operational profit theory let profit be defined as a
surplus over cost, the firm not the entrepreneur be made the focal point of its study, all
rudiments of dynamic change be regarded as its source, and scheme for its sharing
between capital and labor be devised to promote equity, growth, and peace in society.
Such a profit theory will impart realism to economics: both mainstream and Islamic”

My main disagreement with his conclusion is “let profit be defined as a surplus over cost”.

The late Spanish Scholastics had reached a different conclusion. Namely Saravia de la Calle, who said, “If we had to consider labor and risk in order to assess the just price no merchants would ever suffer a loss nor would abundance or scarcity of goods and money enter into the question.”

For Hasan’s search for a real definition of profit, he wanted numbers that could be measured. Yet by turning to “surplus over cost”, Hasan had prescribed the downfall to his theory of profit. For de la Calle correctly points out that “otherwise we would never find a case where merchants justly lose; they would always win.”

For de la Calle and other Scholastics, my source is Faith and Liberty: The Economic Thought of the Late Scholastics by Alejandro Chafuen.

Was Pope John Paul II in support of Capitalism?

This article advocates that he was not. It has many arguments but let us begin with solidarity.

One paragraph in the article states:
"John Paul II criticized the economic systems that lacked solidarity, lacked the biblical and Catholic vision of the “option or love of preference for the poor ,” a phrase coined by Latin American theologians and later refined, which eventually became a key concept of the social teaching of the Church. The phrase appears also in John Paul II's Centes-imus Annus, Pastores Gregis, Tertio Millennio Adveniente and Ecclesia in America . "

Yet the Catechism of the Catholic Church defines solidarity as:

III. HUMAN SOLIDARITY

1939 The principle of solidarity, also articulated in terms of "friendship" or "social charity," is a direct demand of human and Christian brotherhood.⁴⁵

An error, "today abundantly widespread, is disregard for the law of human solidarity and charity, dictated and imposed both by our common origin and by the equality in rational nature of all men, whatever nation they belong to. This law is sealed by the sacrifice of redemption offered by Jesus Christ on the altar of the Cross to his heavenly Father, on behalf of sinful humanity."⁴⁶

1940 Solidarity is manifested in the first place by the distribution of goods and remuneration for work. It also presupposes the effort for a more just social order where tensions are better able to be reduced and conflicts more readily settled by negotiation.

1941 Socio-economic problems can be resolved only with the help of all the forms of solidarity: solidarity of the poor among themselves, between rich and poor, of workers among themselves, between employers and employees in a business, solidarity among nations and peoples. International solidarity is a requirement of the moral order; world peace depends in part upon this.

1942 The virtue of solidarity goes beyond material goods. In spreading the spiritual goods of the faith, the Church has promoted, and often opened new paths for, the development of temporal goods as well. And so throughout the centuries has the Lord's saying been verified: "Seek first his kingdom and his righteousness, and all these things shall be yours as well":⁴⁷

For two thousand years this sentiment has lived and endured in the soul of the Church, impelling souls then and now to the heroic charity of monastic farmers, liberators of slaves, healers of the sick, and messengers of faith, civilization, and science to all generations and all peoples for the sake of creating the social conditions capable of offering to everyone possible a life worthy of man and of a Christian.⁴⁸

Does Capitalism fall short in any of these areas defined by the Catechism or does the author of the article have a misconception of what Capitalism is?

Catholicism and the Sciences

Many are still taught today that Galileo went against the Catholic Church when he proclaimed the Earth went around the sun. This is false, and that it is still taught / believed is very troublesome.

Truth is that many Catholics shared this belief of a helio-centric universe. It was Galileo's interpretation of scripture that caused the troubles, we all read about in history books.

Find more here.

Being a Catholic, does not take away economic logic. Demand curves slope downwards, and a price fix on anything will surely cause a problem in either a shortage or a surplus. As long as we don't make outlandish claims against scripture i.e. Jesus belongs to any political party, believes in any type of governing body, etc.

Thus we can disagree with Catholic Social Teaching as it is not dogmatic. I hope this will be the beginning of my posts against some beliefs held widely within the Church. For instance, that Fair Trade is good for the Third World.