Letters: Islamic economics

This is a comment on an article titled: "A comfortable spot between the market and the state," (The Jakarta Post, April 22) by Aviliani.

I agree 100 percent with this idea. It turns out that Keynes' ideas have become less important. In fact, free market forces wreak havoc on people's lives in times of crisis.

When the financial crisis hit Asia in 1997, Indonesia called the IMF for help.

Then the IMF applied their five formulas: Privatized basic services, independent central banks, a "flexible" workforce, low social spending and total free trade. Instead of getting better results, Indonesia's unemployment rate increased from 4 to 12 percent in 1999.

There are similar experiences in all crisis situations. The IMF advised Russia to use the "shock therapy" of the free market to improve its economy. There was a 50 percent productivity loss, and hunger and starvation on a large scale, in an economy previously able to feed its members.

The promised benefits of free markets never materialized, leaving embarrassed IMF economists looking for excuses for their failure in Russia.

Similarly, free market forces could not eliminate the huge unemployment in the world economy for over twenty years following the Great Depression.

Nearly all advanced economies have learned this lesson and are taking steps to protect their people from the shock of the current economic crisis. We should follow suit and not let industries collapse and throw large amounts of people out of work in the vain hope that the market will automatically provide new opportunities.

When the free market is the extreme on the right and communism on the left, we are searching for the middle road. What kind of ideology is that? In my view, the so-called "Islamic Economics" provides the answer.

Hendri Tanjung
Jakarta