I doubt the state can do a more effective job than markets at determining which actors are “competent” or what “strategic goals” should be pursued. I think markets, through decentralized decision making, allocate resources more efficiently than central planners. Economic systems tend to work best when individuals pursue their own interests within a framework of voluntary exchange and property rights, rather than state imposed direction.Even well intentioned intervention often leads to inefficiencies, rent seeking, and corruption. States tend to favor certain groups (e.g., political allies, bureaucrats) rather than true competence. By commandeering forex earnings, the government is distorting price signals, which are essential for efficient economic decision making. Entrepreneurs, not bureaucrats, should decide how forex is used. Seizing exporter forex earnings and swapping them for local fiat is a form of expropriation. Even if the state compensates exporters with local fiat currency that forced conversion distorts the incentives for production and trade, leading to capital flight and underreporting of forex earnings.State controlled forex distribution can lead to politically connected firms receiving forex allocations, while more efficient businesses suffer. Capital goods and imports are chosen based on government preferences rather than genuine market demand.Misallocation can create artificial industrial booms that eventually collapse when forex shortages or inefficiencies emerge. China’s success wasn’t merely about state directed reverse engineering. It involved significant private enterprise, foreign direct investment, and market-driven incentives. The idea of increasing domestic production and self-sufficiency in capital goods is ofcourse good but with the caveat that this process should occur through voluntary exchange and organic market competition. The key point is that inflation, asset bubbles, and financialisation are primarily caused by government intervention in the economy, especially through central banks controlling money creation. In a fiat system, this control leads to price distortions and malinvestment. While inelastic systems, like a gold standard, have their own flaws, they don’t enable the same level of manipulation. Financialisation is a symptom of this broader issue, where easy riba credit and state policies encourage speculative behavior. In a true free market with a hard money system, these distortions would be minimized, and economic growth would be more stable , organic and sustainable. Yes, supply side inflation did occur during the time of the Prophet Muhammad (peace and blessings be upon him), and the Sahaba requested that he, as the religious and political leader, intervene in the market. However, the Prophet Muhammad (peace and blessings be upon him) refused to do so. Narrated Anas ibn Malik: “People said: Messenger of Allah , prices have shot up, so fix prices for us. Thereupon the Messenger of Allah (&) said: Allah is the one Who fixes prices, Who withholds, gives lavishly and provides, and I hope that when I meet Allah, none of you will have any claim on me for an injustice regarding blood or property.” Reference: Sunan Abi Dawud 3451 In-book reference : Book 24, Hadith 36 English translation : Book 23, Hadith 3444 Imam Shamsuddeen Ibn Qudamah al-Maqdisi (d. 682 A.H.), a Hanbali jurist argues that the Head of State has no right to regulate prices of goods in the market. He quotes the hadith reported by Anas and writes: “Two facts can be derived from the hadith. First, the Prophet (peace and blessings be upon him) did not control prices despite people’s pressure on him which should suggest that it is disallowed. If it were lawful the Prophet (peace and blessings be upon him) would have yielded to their demand. The second point is that the Prophet (peace and blessings be upon him) equated price control with injustice (zulm) and injustice is forbidden. The goods whose price was sought to be controlled were property of a man (trader). And that man cannot be prevented from selling his goods at an agreed upon price by the two parties, i.e. the buyer and the seller (bn Qudamah, 1374:44).” He criticized all forms of price control and concluded that it always led to price rise, discouraged imports and encouraged capital flight, promoted hoarding and inflicted hardship on people. He wrote: “In a way the control of price may give rise to price rise. The traders from outside will not bring their goods in a place where they would be forced to sell them at a price against their wish. The local traders would hide the goods instead of selling. People would get less than their need, so they would offer a higher price to obtain the goods. Both parties (sellers and buyers) would lose; the sellers because they were prevented from selling their goods, and the buyers because they were prevented from fulfilling their needs. So this act will be termed as forbidden (Ibn Qudamah, 1374:44-5).” To be fair there is scholarly debate on this but from my reading the general notion of not interfering in the market seems to be the default position due to the explicit hadith mentioned above, see : https://x.com/SF181_AUS/status/1895094301278806438?t=N1cDgOZ8BEKaxo2S52s47g&s=19… The argument against fiat money is that, in Islam, interest (riba) is haram, and the only way fiat money is created is through interest-based credit expansion. Fiat currencies come into circulation through riba lending. This is a major moral contention against fiat currency. The Prophet (peace and blessings be upon him) condemned fraudulent transactions, and inflating the money supply via fiat riba credit expansion is effectively a form of financial fraud against the population given that it steals their purchasing power. It benefits governments and banks while devaluing the earnings and savings of ordinary people. A hard currency system (such as gold) on the other hand ensures that governments must justify their spending and cannot easily manipulate currency to fund endless wars or economic inefficiencies. The question of whether the Ummah should overlook the issue of riba, which is directly linked to fiat currencies and all the consequences that result from it, for the sake of industrialization (something you view as an urgent necessity) is an interesting one, particularly when you present China as a tempting example (riba loans played a big part when Deng Xiaoping launched China’s economic reforms in the 80s). I’m personally averse to it for the above reasons and also because I don’t see how riba-based money will yield long-term barakah for the Ummah. What are the trade-offs in this life and the next? As Muslims, we don’t care only about the material realm; we factor in consequences in this life and the afterlife. For example, if you take on a 30-year riba mortgage loan to buy a house, justifying it as a darura (necessity), when you could have easily rented, you get the house (it’s beautiful and has plenty of space) but because you purchased it through an interest bearing contract, Allah is displeased with you. You may then start to face the consequences in other areas of your life, such as you or a loved one getting sick, or some other negative externality due to a lack of barakah. Now, extrapolate that individual scenario to a Muslim nation that decides to industrialize via taking on riba loans. What are the trade-offs and consequences that nation will face? I think this is important to factor in and not overlook, Allahu’Alam. You justify excessive state control under the premise of war and civilizational struggle. However, history shows that states rarely relinquish such control after the conflict ends, leading to long lasting authoritarian economic policies. Austrian economists argue that war destroys wealth, increases state power, and erodes economic freedoms. The ability of riba fiat money to sustain long wars (Iraq , Afghanistan, Syria etc) is precisely why war economies have become more destructive and prolonged in the modern era. Islam recognizes the necessity of war in certain cases but also imposes strict ethical constraints. Economic policies that impoverish the population in order to fund endless wars contradict Islamic principles of justice. The idea that “money isn’t real” is flawed. Money is a medium of exchange and store of value that facilitates economic calculation. It’s not just a nominal abstraction, it reflects the preferences, values, and time preferences of individuals in society. The idea that money doesn’t really matter overlooks the importance of a sound money system in promoting the correct economic signals. Inflationary monetary policies, such as quantitative easing or excessive central bank intervention, distort these signals, leading to misallocations of resources, speculative bubbles, and inefficiencies. These misallocations are not “policy problems” alone but inherent consequences of tampering with the natural price mechanism through inflation / riba monetary manipulation. The notion that modern states can “force productive capital allocation” is problematic. The role of the entrepreneur in coordinating capital allocation is vital. Centralized planning or coercion by the state distorts the discovery process of which capital projects are most valuable. The market, through voluntary exchange and the price system, is the most effective way to allocate capital because it incorporates decentralized knowledge and adjusts for individual preferences, which no state or central authority can replicate. You’re correct that Austrian economists and many libertarians are generally anti-war. Thats to their credit, because war undermines individual freedom, distorts markets, and leads to centralization of power. Islam is not inherently “pro-war”; that’s a oversimplification. Islamic teachings acknowledge conflict, particularly in self-defense, while also promoting peace treaties and reconciliation. You’ve highlighted the Industrial Age, but we are no longer living in it. Yes, industrial production still plays a major role in the global economy, but today, we are in the Information Age (Digital Age), which began with rapid advancements in computers, the internet, digital communication etc… Instead of industrial production being the primary driver of economies, knowledge, data, and technology are now the dominant forces shaping society. I recommend checking out this conversation featuring Saifedean Ammous, the author of The Fiat Standard, Principles of Economics, and The Bitcoin Standard and John Perkins, the author of the famous Confessions of an Economic Hitman. Both of them praise China’s remarkable development, particularly Saifedean who subscribes to the Austrian school of economics. In his view, China is a great capitalist state and fiscally responsible, given that it can’t print foreign exchange / USD like the US can. He also commends China’s general approach of doing business (The government frequently promotes the idea of “making friends, not war”) with other nations instead of facilitating wars like the U.S. does. John Perkins echoes this praise however also strangely presents China as a new player in the economic hitman narrative. Hence his new book “Confessions of an Economic Hit Man, 3rd Edition: China’s EHM Strategy.” Saifedean also argues that China and other nations, particularly developing ones, should hold cash reserves in a harder currency instead of fiat USD (specifically Bitcoin because it preserves wealth over time better than fiat , resistant to sanctions and is permissionless) Both men agree that the global central banking fiat system is deeply flawed and needs to change, as a world run on debt is unsustainable and not benefiting the vast majority of humanity. I encourage you to listen to the full conversation but if you don’t want to for whatever reason please at least have a listen to this 15 minute segment: