There are some major misconceptions about this issue. Muslim societies had monarchs ruling them for a very long period, stretching about a thousand years. Therefore, their system of government was based on monarchy. Excluding the period of the Rightly Guided Caliphs which consisted of a democratic system of governance, the rest of the time it was dynasties that ruled Muslim lands. Once a dynasty establishes its rule, it is very difficult to get rid of that. Under such rule, a despotic government is set up and some people attach their loyalties and allegiances to the ruling dynasty. Some people's interests become vested in perpetuating the rule of the dynasty in power. Then the whole force of the state backs the current dynasty and their supporters. All avenues are blocked for ordinary people to act or even think.
If we survey our history, we will find that this phenomenon has impacted our psyche very negatively. This means that, overall, the monarchical rule has created a sense of considering ourselves as mere subjects. However, there were some exceptions in the form of some great thinkers, academics, scientists, scholars and intellectuals of a very high calibre. But, as a general rule, the society got used to the idea that we were not supposed to "think." A similar situation was created in the realm of religion where the principle of blind following (taqlīd) was established. This principle says that there are a few imāms (eminent religious scholars) who have codified the whole religion and nobody else needs to bother with thinking. Accordingly one just needs to hold on to the robes of one of the imāms and then live one's life in following their religious verdicts. This phenomenon also made its way into the arena of tasawwuf which was supposed to cleanse one spiritually and help one become a person of high morals. Here it took the form of pīr (spiritual guide) and murīd (spiritual disciple) relationship. That is why Iqbal, the great poet and philosopher, lamented that the Muslims have become the victims of monarchy, bigoted religiosity and pīr-ism.
According to Iqbal, these three ideas together have annihilated our self-respect, our confidence, our personality and our individuality making one forget what one should have been. All these have made the society, with few exceptions, servile and inferior to the powers of monarchy, bigoted religiosity andpīrs.
Now the issue is how to set up a government? Will angels come down from the heavens to set up a government? Will God send a divine decree through revelation that I have appointed so and so to govern a state such as Pakistan, Iran, Saudi Arabia, etc? If such a revelation does come down, then there is no longer a problem. But if such revelation is not forthcoming, then the question is who will decide who should govern. Obviously, after God, its human beings who will need to appoint one of them as a ruler.
What is democracy?
It means two things:
1. It is people who decide what system of governance they want, who should be their ruler, what their laws would be, how the government should be run for them etc.
2. However, even though the opinion of the majority is a decisive factor, it does not mean that the minority would be suppressed. Instead, the minority can continue to hold their views and propagate them to influence the public opinion.
Until you accept the second condition (as above) too, you cannot have a democratic culture. These two things constitute democracy. What is against the teachings of the Qur'ān in these two things? What is against the Sunnah and what is against Islam? Which part of it is disbelief (kufr)?
God has created this universe on the principle that human beings have been given the autonomy to choose which religion they wish to follow or abandon. God shall hold people accountable on the Day of Judgment for their choices and the way they exercised their autonomy but, in this world, human beings have been given the freedom to choose. God says in the Qur'ān: "I am going to create such a being to whom I will bestow authority in the earth," (2:30)). God has said in many places in the Qur'an, addressing His prophet (s), that if He wanted all human beings to have a single religion and for all of them to have faith in Him, then He could have done that but decided not to. He also says: "I have made the way clear to people," (76:3) and thus "Whoever wishes, they can believe and whoever wants, they can disbelieve," (18:29). So even in such an important matter as belief, discretionary power has been given to human beings by God Himself.
So the Qur'ān has made it very clear that this world is based on the principles of freedom of thought, freedom of belief and freedom of opinion. God's prophets came to tell people what is right and wrong. Human beings will be held accountable but that will happen on the Day of Judgement, while this world has been established on the principle that here people will make their own decisions. So it is either people who will decide who should govern them, which is a logical and sensible thing; or God, our Creator and our Lord, who will decide. But what is the third option? Who else will decide? So thinkers who consider democracy as kufr should then tell us who, in their opinion, has the authority to decide. Is it God? If so, then I will submit to that because He is our Creator and our Lord. But He has stopped sending the revelations and is not going to send any more prophets. So He is not going to appoint a ruler for us nor can we refer directly to Him for our decisions. Leaving the only other option that people decide these things. If there is a third option, then they (the opponents of democracy) should put that forward.
When the Qur'ān guides us in the matter of what system would be right for Muslims, it does not tell us that their system will be based on monarchy. Nor does it say that God will appoint a ruler for them. It says"their affairs are based on their mutual consultation," (42:38). This means that the system (of governance) will come into existence according to their opinion. The Qur'ān is making it clear that human beings have been given the freedom to make their own decisions. In fact, Qur'ān declares that "there is no compulsion in faith," (2:256). The most important thing is God's religion and even in that He has not put compulsion on anyone.
So I say to those who object to democracy that they should tell us whether they will receive a revelation telling them who our rulers should be. Will their Creator have a dialogue with them? What will happen? Will a creature descend from the heavens, announcing that it is going to choose a ruler for us? Will a lucky bird come and sit on someone's head so that we accept him our king? This matter is to be decided by people. What has it got to do with "Eastern" or "Western" democracy?
As far as any defects in a democratic system are concerned, remember that there are two distinct things; one is principles which are perfect and fundamental and they are based on such universal truths that there can be no objection to them. The other thing is their application, which is a human endeavour. Principles have been ingrained within us by God, which is why they are free from any defect. But when they are applied, human beings need to make a system for their application. And mistakes do happen in the process of devising systems for the application of principles. That is why no system developed by human beings will be perfect. The way to improve things made by humans is that the things that are already there should be analyzed to see what imperfections are there and how they can be removed. A contemporary thinker has said that if you try to visualize a perfect hospital, you won't be able to do so. Instead, look at the hospitals present in the world and see what defects are there in them. That will be the start of your journey towards perfection. That is what a human being can do. Any system made by human beings, even if based on the most perfect principle, will have shortcomings and defects. Let us consider how the system of democracy has developed in the West. It started from the time when sovereignty and authority were centred in one person. When someone was elected or appointed, his/her person would become the centre of all authority. But then they changed that process and distributed the authority and power among institutions. Some of those powers were vested in the judiciary while others were given to a parliament while still others were given to the executive to deal with the day-to-day affairs. And then, working very hard, their mutual relationships and boundaries were defined.
The West made great innovations in the field of technology such as the internet, aeroplanes etc. Similarly it also made great strides in the field of social sciences, such as some aspects of the economy. In the same way, it has developed political systems which are good but that doesn't mean that these are free from any defect. There can be no human construct that is totally free from any shortcoming. It is only God's decree or only such basic principles and knowledge given by God that can be free of any shortcoming.
Even in the West, there is no single application of the principle of democracy. There are different models of democracy in Germany, Britain, USA, France etc where the application has been very different.
When we wish to apply a principle in a society, we will have to consider the features of that society. Arabs also had a tribal system and one cannot change the society all of a sudden. In a tribal system, there are some leaders of the tribes and groups which have a role. When we talk of political leaders today, they have achieved their leadership from the mandate given by people. You can hold elections today but 200 years ago it wasn't possible. Modern communication systems have made it possible to hold elections on the same day in the whole country. Even now it is difficult to get the results from remote areas. So in a tribal system, there are natural opinion leaders and the system would be set up with their consultation, As your situation allows gradually, you will go on to adapt that. In a tribal system, they adopted the best possible method of electing a ruler. It was people who had put their trust in the rulers; they had a general vote of confidence. None of them was appointed, not even by the Prophet Muhammad (sws).
In short, Islam teaches us the principle of democracy. The Holy Qur'ān clearly and explicitly commands that the affairs of the Muslims are to be decided with mutual consultation of the citizens. This affirms a key democratic principle. However, if there are any shortcomings in the exercise of the principle these can be identified and resolved. The presence of such problems (in application) does not mean that the principle is wrong.
(Transcribed and translated by Shakil Ahmad)
(Source: Based on "What is the cause of our downfall: Democracy or moral decay?" http://www.meezan.tv/audio/4435/cause-of-our-national-problems:-democracy-or-imm (first 16 minutes) as on 19 December 2013)