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Salient Features of Islamic Economics Essay Sample

Salient Features of Islamic Economics Pages
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“Islamic Economics and its Features”
System:
System can be defined as:
“System (from Latin systema, in turn from Greek systēma) is a set of interacting or interdependent entities, real or abstract, forming an integrated whole.”
We can also define system as
“A group of D that interact regularly to perform a task.”
There are many systems regarding state and most important is economics system of a country let us discuss it and explain the economic system of a country with reference to Islam.

Economics system:
An economic system is a system that involves the production, distribution and consumption of goods and services between the entities in a particular society. The economic system is composed of people and institutions, including their relationships to productive resources, such as through the convention of property. In a given economy, it is the systemic means by which problems of economics are addressed, such as the economic problem of scarcity through allocation of finite productive resources. Examples of contemporary economic systems include capitalist systems, socialist systems, and economic system of Islam. Economic systems are the economics category that includes the study of respective systems. We can also define economics system as:

“An organized way in which a state or nation allocates its resources and apportions goods and services in the national community.” As we have discussed above that basically there are four types of economic system let us discuss Islamic economic system and its features in detail.

Islamic Economic System:
Islamic Economic System implies a mood of satisfying the economics needs of the members of organized society in accordance with is injection of Quran and Sunnah. The mood of spending production, distribution and exchange of wealth is determined by the tenor of these injections. In this system the economic activities of the members of the society are regulative by the certain values of which pity, justice, benevolence, cooperation, brotherhood and equality are especially important. The sources and origin of these values are the Holy Quran and the Sunnah of Allah’s Apostle (PBUH). They are eternal and immutable. Consumers, producers and traders are must abide these values. At one level, the state can also use the its powers to implements and enforce these values, however, Islam mostly ensure their implementations and daily affairs of life through its system of education and training and by creating a general climate of piety in the society. Some Fundamental features of Islamic Economics System are written below:

* All the wealth belongs to Allah (SWT):
“And give them of the wealth of Allah which He has given you.” [An-Nur: 33]
* The community is the trustee of the wealth:
“Believe in Allah and His Messenger, and spend whereof He has made you heirs.”[Al-Hadid: 7]
* Hoarding of wealth is prohibited:
“And those who hoard up gold and silver and spend not in the way of Allah; announce to them a painful chastisement.” [At-Tauba: 34]
* Circulation of wealth is a duty:
“Whatsoever Allah may restore unto His Messenger – is due unto Allah and unto His Messenger – the orphans and the needy. So, that it may not be confined to the rich amongst you.” [Al-Hashr: 7]

Every economic system has its own peculiar features, which form its foundation and from which it can be distinguished and recognized. Modern capitalism, which has emerged due to rapid industrialization facilitated by unprecedented human advancement in science and technology, is based on free market economy, non-intervention or very limited intervention of state in economic affairs, interest and banking. Socialism, which has emerged as a reaction to capitalism, believes in complete control of state on economy and full ownership of means of production by the state or community. Feudalism stands for ownership of land by few persons or families and makes majority of people tenants or serfs who work on lands either as servants of the landlords or for meager share in the produce of land.

Islam, on the other hand, believes in justice and fairness in the economic field. According to it, the man is God’s viceroy or deputy in overall divine scheme and he has been given limited rights of ownership of means of production. It recognizes intervention of state in the economic activity for the purpose of ensuring welfare of its citizens. Abolition of interest, institution of sadaqat and Zakat, concept of lawful and unlawful, equitable distribution of wealth, prohibition of hoarding and stress on circulation of wealth, concern for well being of the poor are the distinctive features of the Islamic economic system. We will elaborate and discuss some features of Islamic economy in this chapter as follows:

1. Allah is the Sustainer
2. God is Real Owner of Everything and Man is Merely a Trustee
3. Everything Created for Service and Use of Man
4. Concept of Halal and Haram
5. System of Sadaqat and Zakat
6. Prohibition of Interest
7. Ban on Hoarding of Wealth
8. Policy of Moderation
9. Condemnation of Monasticism and Materialism
10. Equity and not Equality
11. Flexibility
12. Moral values
Now we are going to explain each of the above features in detail which shows the wide existence of Islamic economic system:

1- Allah is the Sustainer
One of the major features of Islamic economic system is the concept that Allah, the Almighty God of universe, is the sustainer and provider. Allah provides livelihood and subsistence to all of His creatures in the universe. It is Allah who has created all means and resources through which man earns his livelihood. Allah, in fact, has committed to feed, sustain and nourish all creatures including human beings. It is Allah who expands or curtails rizq (sustenance). To explain and elaborate this concept further, let us reproduce the relevant verses of the Holy Qur’an and Ahadith of the Prophet of Islam. Verses:

1- And there is not a beast in the earth but the sustenance thereof dependent on Allah. He knoweth its habitation and its repository. All is in a clear record. -(11 : 6)

2- Lo! Thy lord enlarged the provision for which He will, and straitened it (for whom He will). Lo, He was ever Knower, Seer of His slaves. -(17 : 30)

3- O’ mankind! Remember Allah’s grace towards you! Is there any creator other than Allah Who provided for you from the sky and the earth?…-(35 : 3)

4- Have yet seen that which ye cultivate? Is it ye who foster it, or are We the fosterer? – (56: 63-64)

Ahadith:

1- Omar-b-al-Khattab reported : I heard the Messenger of Allah say : If you all had relied on Allah with due reliance, He would have certainly given you provision as He supplies provisions to birds who get up hungry in the morning and return with full belly at dusk. —– (Tirmizi, Ibn Majah) ‘

2- Ali (Allah be pleased with him) said: “I heard the Messenger of Allah (may peace be upon him) saying: ‘(on the Day of Resurrection) when there will be no shade except that of the Throne of Allah, the person who undertakes a journey to earn his livelihood and then returns with it towards his dependents, will be under the shade of Allah’s Throne’.” —– (Masnud Zaid bin Ali)

The conception of God’s Dispensation does not, however, suggest that one should sit idle and wait for sustenance which would automatically come to him. Instead of giving up struggle, Islam rather inspires a person to do his best in order to earn his livelihood by using all lawful (Halal) and fair means. The Qur’an encourages struggle when it says: “And that man hath only that for which he makes effort, and that his effort will be seen”—(53: 39-40). The revealed book of Islam encourages its followers even on Friday to disperse in the land after finishing their prayer and seek of the bounty of God (62:10). Ahadith of Prophet Muhammad (PBUH) also emphasis the importance of struggle and hard work put in for earning livelihood for oneself and one’s family. This concept only emphasizes some basic truths, namely: God provides sustenance to all His creatures by placing sufficient and infinite resources in the earth, everything has been created by God for service of man, and man should exploit these resources and things in lawful manner to earn his subsistence without violating the rights of others.

2- God is Real Owner of Everything and Man is merely a Trustee: The heavens and the earth and everything in the universe belong to Allah. God is the real owner of everything, al-though He has given some rights to man for use of things required by the latter for his existence on the earth. However, the rights given to man are very limited, the real position of man being that of a trustee and a beneficiary. Some of the relevant verses of the Qur’an which highlight this concept are given as under: 1. Unto Allah belonged whatsoever is in the heavens and whatsoever is in the earth; and unto Allah all things are returned.- (3: 109) 2. Unto Allah b elongate whatsoever is in the heavens and whatsoever is in the earth. Allah ever surrounded all things.- (4: 126)

This limited ownership or trusteeship bestowed on man by Allah in respect of the wealth which is given to him is not without significance. The divine wisdom underlying this principle of trusteeship is that man should not hoard his wealth treating it as his absolute ownership and deprive others from its use. Rather the surplus wealth of man must go to his fellow beings who are in want. This principle has been made more clear when the Qur’an says: “……. and bestow upon them of the wealth of Allah which He has bestowed upon you……” (24: 33). Thus the whole scheme of circulation of wealth through charity and Zakat and distribution of wealth through other equitable means envisaged by Islam is based on man’s limited rights as a trustee of wealth which has been bestowed on him by His Lord.

3- Everything Created for Service and Use of Man:
It is God who has created everything in this universe. Many of the things created by God in the earth are of benefit to man directly or indirectly. Animals, plants, minerals, metals, water, air, fire, land, river, mountains, sea, and even sun, moon, stars, day and night, etc. are all for service to man. Many economic benefits have been placed by God in these things for man. The Qur’an brings this fact to light in its following verses: 1. He it is Who created for you all that is in the earth. Then turned He to the heaven, and fashioned it as seven heavens. And He is Knower of all things. —-2:Al-Baqarah:29

2. And He it is Who hath set for you the stars that ye may guide your course by them amid the darkness of the land and the sea. We have detailed our revelations for a people Who have Knowledge. —-6:Al -An’am:97

3- Concept of Halal and Haram:
Islam has introduced concept of Halal (lawful) and Haram (unlawful) in its economic system. In fact the foundations of the Islamic economy have been laid on this concept. This concept reigns supreme in the realm of production as well as consumption. Certain means of earning livelihood and wealth have been declared unlawful such as interest, bribery, gambling and games of chance, speculation, short weighing and short measuring, business malpractices, etc. Unlawful means of earning are strictly forbidden and a follower of Islam is permitted to earn through lawful and fair means. Similarly in the field of consumption certain items of food are unlawful such as dead animals, blood, swine flesh and animals slaughtered in the name other than that of Allah. Even expenses on certain items such as drinks, narcotics, debauchery, prostitution, pornography, things that promote obscenity and vulgarity, lotteries and gambling are strictly inadmissible. Now let us glance through relevant verses of the Quran and Ahadith of Muhammad (PBUH), the Prophet of Islam, to highlight in brief the concept of Halal and Haram. Verses of the Quran:

1- O mankind! Eat of that which is lawful and wholesome in the earth, and follow not the footsteps of the devil. Lo! he is an open enemy for
you.(2:168) 2. O ye who believe! Eat of the good things wherewith We have provided you, and render thanks to Allah if it is (indeed) He Whom ye worship. He hath forbidden you only carrion, and blood, and swine flesh, and that which hath been immolated to (the name of) any other than Allah. But he who is driven by necessity, neither craving nor transgressing, it is no sin for him. Lo! Allah is Forgiving, Merciful. (2:172-173) Ahadith of Prophet Muhammad (PBUH):

1. Abu Hurairah reported that the messenger of Allah said: Verily Allah is pure. He does not accept but what is pure …..Then he mentioned about a man disheveled in hair and laden with dust, making his journey long and extending his hands towards heaven: O Lord! O Lord! while his food was unlawful, his drink unlawful, his dress unlawful and he was nourished with unlawful things. How he can be responded for that? (Muslim) 2. Abu Masud Al Ansari reported that the messenger of Allah forbade the price of dogs, earnings of prostitute and foretelling of a soothsayer.(Bukhari,Muslim) 5- System of Sadaqat and Zakat

Islamic economic order has introduced a comprehensive system of sadaqat which comprises: compulsory contributions like Zakat, sadaqat Fitr, monetary atonements; and voluntary contributions such as alms-giving, spending in the way of Allah on the poor, donations to charitable cause, waqf, etc. Charity and alms giving is sometimes called by the Qur’an a goodly loan to God Who Himself would compensate the giver manifold and also reward him in the Hereafter. Islam has declared that the poor and destitute have due share in the wealth of the rich and the rich are bound to return the share of the poor without stint. The system of sadaqat ensures equitable distribution of wealth in the Muslim community and makes it certain that the wealth does not remain hoarded in idle channels. Circulation of wealth in productive channels is ensured by enhancing the purchasing power of the poor. Concentration of wealth in few hands is discouraged and the gap between the rich and the poor is bridged. Some of the verses of the Qur’an and Ahadith regarding system of sadaqat are reproduced as follows: Verses of the Qur’an:

1- Establish worship, pay the poor-due, and bow your heads with those who bow (in worship).(2:43) 2. Spend your wealth for the cause of Allah, and be not cast by your own hands to ruin; and do good. Lo! Allah loved the beneficent.(2:195) 3. They ask thee what they shall spend. Say : That which ye spend for good (must go) to parents and near kindred and orphans and the needy and the wayfarers. And what so ever good ye do, lo! Allah is Aware of it.(2:215)

Ahadith of the Prophet:
1. Anas reported that messenger of Allah said: verily charity appeases wrath of the Lord and removes pangs of death.(Tirmizi)

2. Abdullah bin Masud raising the tradition reported. There are three whom Allah loves. A man who gets up at night to read the Book of Allah, and a man giving alms with his right hand which he conceals (I consider that he said) from his left hand, and a man, being in a battalion, encounters the enemies, although his companions are routed.(Tirmizi)

3. Marsad bin Abdullah reported: Some of the companions of the Holy Prophet informed me that he heard the Prophet say: Surely the shade of the believer on the Resurrection Day will be his charity.(Ahmad)

6- Prohibition of Interest
Interest, which forms the foundation of capitalistic system of economy and which has not been eliminated even in the socialist system, has been completely abolished by Islam. Charging of interest is a major sin and the usurers have been given the notice of war from God and His messenger. Following are some of the verses of the Qur’an and Ahadith of Muhammad (PBUH) dealing with interest. Verses of the Qur’an:

1- Those who swallow usury cannot rise up save as he ariseth whom the devil hath prostrated by (his) touch. That is because they say : Trade is just like usury; whereas Allah permitteth trading and forbiddeth usury. He unto whom an admonition from his Lord cometh and (he) refraineth (in obedience there to), he shall keep (the profits of) that which is past, and his affair (henceforth) is with Allah. As for him who returneth (to usury). Such are rightful owners of the Fire. They will abide therein. Allah hath blighted usury and made almsgiving fruitful. Allah loveth not the impious and guilty. (2:275-276)

2- O ye who believe ! Observe your duty to Allah, and give up what remaineth (due to you) from usury, if ye are (in truth) believers. And if ye do not, then be warned of war (against you) from Allah and His messenger. And if ye repent, then ye have your principal (without interest). Wrong not and ye shall not be wronged.(2:278-279)

3- O, ye who believe ! Devour not usury, doubling and quadrupling (the sum lent). Observer your duty to Allah, that ye may be successful. (3:130)

Ahadith of Muhammad (PBUH):
1- Jaber reported that the Messenger of Allah cursed the devourer of usury, its payer, its scribe, and its two witnesses. And he said that they are equal (in sin).-(Muslim)

2- Abdullah-bin-Hanjalah reported that the Messenger of Allah said: A Dirham of usury a man devours with knowledge is greater than thirty-six fornications.(Ahmad, Darqutni) 7- Ban on Hoarding of Wealth:

Hoarding of wealth has been condemned by Islam in very clear terms, and those who hoard wealth and do not spend it for good cause have been threatened with painful doom. Hoarding of wealth is a great evil as it tantamounts to obstruction of flow of God-given wealth from the rich to the poor who are in genuine need of it. Therefore, Islam discourages hoarding of wealth and instead encourages circulation of wealth among all the sections of society. Following verses of the Qur’an and Ahadith of the Prophet of Islam throw light on this subject. Verses of the Qur’an :

1- And let not those who hoard up that which Allah hath bestowed upon them of His bounty think that it is better for them. Nay, it is worse for them. That which they hoard will be their collar on the Day of Resurrection…………-(Al-Imran 3:180) 2- They who hoard up gold and silver and spend in not in the way of Allah, unto them give tidings (O Muhammad) of a painful doom. On the Day when it will (all) be heated in the fire of hell and their foreheads and their flanks and their backs will be branded therewith (and it will be said unto them): Here is that which ye hoarded for yourselves. Now taste of what ye used to hoard.—–(9:At-Taubah:34-35) Ahadith of Prophet Muhammad (PBUH):

1- Abu Hurairah reported that the Messenger of Allah used to store up nothing for the morrow.-(Tirmizi)

2- Ayesha reported that the Messenger of Allah said: This world is an abode for one who has got no abode, and a property for one who has got no property, and one who has got no wisdom hoards for it.(Ahmad, Baihaqi)

8- Policy of Moderation:
Islam follows policy of middle way or moderation and avoids extremes. The two extremes of every action are bad and moderation between them is the best policy according to Islam. Following verses of the Qur’an and Ahadith of Muhammad exhort the Muslims to follow the way of moderation. The verses of the Qur’an :

1- ye, who believe ! Forbid not the good things, which Allah hath made lawful for you, and transgress not. Lo, Allah loveth not transgressors.-(5 : 87)

2- And let not thy hand be chained to thy neck nor open it with a complete opening, lest thou sit down rebuked, denuded.-(17 : 29)

3-  And thou (Muhammad) be not loud voiced in thy worship nor yet silent therein, but follow a way between.-(17 : 110)

4- Be modest in thy bearing and subdue thy voice. Lo! the harshest of all voices is the voice of the ass.(31 : 19)

Ahadith of the Prophet :
1- Good manners, delay and moderation form a part out of twenty-four parts of Prophethood. -(Mishkat-ul-Masabih)

2- Abu Hurairah reported that the Messenger of Allah said: Moderation in expenditure is half of livelihood, and love for people is half of wisdom, and good questioning is half of learning.-(Bukhari)

3- Matref-b-Abdullah reported that the messenger of Allah said: The best of affairs is their mean. The principle of moderation propounded by the above mentioned texts equally applies in economic field specially in the field of acquisition of wealth and consumption. 9- Condemnation of Monasticism and Materialism

Islam condemns Monasticism as well as Materialism and recommends its followers to adopt middle way between these two extremist ways of life. A spiritual or a monastic lays all the emphasis on moral and spiritual aspect of life and ignores completely material aspect. He regards all economic activity as a vice and economic struggle as a sinful act. The Qur’an, the revealed scripture of Islam, expresses its dislike explicitly for the monastic way of life in its following verses: 1- O ye who believe ! Forbid not the good things which Allah hath made lawful for you, and transgress not. Lo! Allah loveth not transgressors.-(5 : 87) 2- But monasticism they invented. We ordained it not for them-only seeking Allah’s pleasure, and they observed it not with right observance. So we give those of them who believe their reward, but many of them are evil-livers.-(57 : 27) The Prophet of Islam has also discouraged the monastic way of life among his followers. Once he learnt that some companions had taken a vow to fast during the day, pass the night in worship, abstain from meat and fat and renounce intercourse with women.

Thereupon he (peace be on him) delivered a sermon in the course of which he observed : “This is not my creed. Your body has rights over you. You should fast, but eat and drink also. Pray at night, but sleep also. Look at me. I sleep and I pray also. I both keep and omit fasts. I eat both meat and fat. So whoso does not subscribe to my way, he is not of mine.[1]He (peace be on him) then said, “What has happened to people that they have renounced women, good food, perfume, sleep and worldly pleasure? I have never taught you to be a monk or a priest. In my Deen (Creed) there is not provision for renunciation of women or meat nor for abandoning the world. For self-control, I enjoin fast. All the advantages of asceticism can be had from the Jihad of Islam. Worship Allah and do not associate naught with him. Perform Hajj and Umra. Establish Namaz, pay Zakat, and keep fasts in Ramadan. The people who came to ruin before you met this fate because they were hard on themselves and Allah was hard on them too.

It is the remnants of these people that you see in monasteries and convents.2 Some other traditions on the same subject relate that the Holy Prophet (peace be on him) once learned regarding a companion that it was long since he had gone in to his wife and was engaged in prayer day and night. The Holy Prophet (peace be on him) summoned him and ordered that he should go in to his wife at once. ‘I am fasting’, submitted the companion. “Break your fast and proceed,” the Holy Prophet (peace be on him) told him.3Islam does not subscribe to the view of monks and ascetics that satisfaction of physical urges is an impediment in spiritual development. Rather Islam enjoins upon its followers that the things, which Allah has made lawful for them, should be enjoyed as enjoyment of them is piety and renunciation of them is transgression.On the other hand Islam has expressed in unequivocal and unambiguous terms its condemnation of Materialism as well. Materialists are those who lay the entire stress on the material aspect of life.

They ignore moral aspect of life and devote their entire time and energy to the attainment of material ends. They justify every means, right or wrong, to acquire wealth and comforts of this life and utterly disregard moral values, noble causes and human virtues. Following verses of the Qur’an reject materialism which, in fact, is passion for wealth and worldly pleasures: 1- …….But of mankind is he who saith: “Our Lord ! Give unto us in this world” and he hath no portion in the Hereafter.-(2 : 200) 2- Lo ! Those who expect not the meeting with Us but desire the life of the world and feel secure therein, and those who are neglectful of Our revelations; Their home will be the Fire because of what they used to earn.(10 : 7-8) 3- Whoso desireth the life of the world and its pomp, We shall repay them their deeds herein, and therein they will not be wronged. These are they for whom is naught in the Hereafter save the Fire.

(All) that they contrive here is vain and (all) that they are wont to do is fruitless.—–(11 : 15-16) 4- Whoso desireth that (life) which hasteneth away, We hasten for him therein that We will for whom We please. And afterward We have appointed for him hell; he will endure the heat thereof, condemned, rejected.—–(17 : 18) 5- Rivalry in worldly increase distracteth you. Until ye come to the graves.-(102 : 1-2) 6- Woe unto every slandering traducer, who hath gathered wealth (of this world), and arranged it. He thinketh that his wealth will render him immortal. Nay, but verily he will be flung to the Consuming One.

Ah, what will convey unto thee what the Consuming One is! (It is) the fire of Allah, kindled.-(104 : 1-6) Islam adopts middle way between these two extremist views of life. It advises its followers that their success lies neither in monasticism nor in pure materialism. Therefore, they should neither give themselves up entirely to monasticism or spiritualism disregarding the importance of material means of life; nor they should go to the other extreme and judge everything by the materialistic point of view. They should strike balance between these extremes and follow middle path. The Muslims have been called by the Qur’an the people of the middle way and, therefore, they should not be extremists.

10- Equity and not Equality:
Islam establishes equity, fairness and justice in the production and distribution of wealth, and in ownership of means of livelihood. However it recognizes that like other natural things there is no equality among human beings as regards the economic means and possession of worldly wealth. This inequality has been presented by the Qur’an as a part of Divine Economic order. The Qur’an does not consider these inequalities in the distribution of Divine sustenance as punishment or reward and does not try to eliminate them, because no two individuals have been blessed with hundred percent equal mental and physical abilities. Taking the existence of inequalities as a part of divine scheme, the Qur’an advises its followers not to covet those things in which Allah has made some of them excess others. By exalting some of you over others in rank or by favouring some of you over others in provisions, God in fact tries and tests the human beings whether they are thankful to Him in good circumstances and patient in bad circumstances.

The Qur’an highlights these inequalities in its following verses: * And covet not the thing in which Allah hath made some of you exceed others. Unto men a fortune from that which they have earned, and unto women a fortune from that which they have earned……..-(4 : 32) * He it is Who hath placed you as viceroys of the earth and hath exalted some of you in rank above others. That He may try you by (the test of) that which He hath given you………-(6 : 165) * And Allah hath favoured some of you above others in provision……-(16 : 71) * Lo ! thy Lord enlargeth the provision for whom He will, and straiteneth it (for whom He will)…….-(17 : 30) Is it they who apportion their Lord’s mercy? We have apportioned among them their livelihood in the life of the world, and raised some of them above others in rank that some of them may take labour from others; and the mercy of thy Lord is better than (The wealth) that they amass.-(43 : 32)

The existence of economic inequalities among the people is not only natural but is also a blessing for the purification of human soul and development of human personality. Those who have scarce means of sustenance should thereby learn to be patient and contented and not to be jealous; while those who have abundant resources should thereby learn to be grateful to God, to be kind and benevolent to the poor and to sacrifice their possessions for the cause of God. Islam, in fact, teaches the people to regard the existence of differences in wealth as a test by which God tries them in this world. By granting abundance of wealth to some, God observes how they spend it; whether they consider it as their personal property denying the poor any share in that or they consider themselves as trustees in respect of the wealth bestowed by God and spend it in the way of God for the welfare of their poor brothers.

And God tries the poor by straitening their sustenance whether they lose their trust in God and become jealous of the rich or whether they keep their faith in God and remain patient in the adverse circumstances. However, Islam does not permit the difference in possession of wealth to assume such proportions that few lucky persons live in ease and luxury controlling major portion of community’s wealth while the vast majority of people possessing negligible share in community’s wealth lives a life of abject poverty, misery and hunger. According to Islam, difference in wealth must not exceed natural and reasonable limits, because if it happens the community invites wrath of God and meets its natural end of self-destruction. The Prophet of Islam has said : If anyone spent a night in a town and he remained hungry till morning, the promise of God’s protection for that town comes to an end.

Islam, therefore, does not allow the difference between the rich and poor reach uncontrollable limits so as to disturb the peace of society. Although it does not believe in complete equality in possession of economic means, yet it perfectly stands for socio-economic justice. It believes in fair and equitable distribution of incomes and wealth and ensures that the Islamic state should provide for basic human needs to all of its citizens. Many legal and economic measures have been provided to bridge the gulf between the rich and the poor and to establish Islamic welfare state which guarantees provision of social security and secures basic needs to its less fortunate citizens. These aspects of Islamic economy we shall study in subsequent chapters of this book. Here we can safely conclude that Islam believes not in equal distribution but in equitable and just distribution of resources and wealth. 11. Flexibility:

The economic system of Islam is fully capable of absorbing new ideas, institutions and organization. There is no bar here to benefit from human experiences in consumption, production, distribution and exchange of wealth. Islamic economics has the capacity to assimilate joint stock companies, economic planning, social welfare services, insurance and banking institution, modern instruments of money and credit, advance technical equipment and foreign trade co operations, provided that they are not in conflict with the moral values and regulation of Islam. Moral values:

To put into effect a just Islamic economic system, free of any excess or shortening a comprehensive scheme of moral education and training has been drawn up which is linked to a strong and co ordinate system of believes and devotional practices. By effectively regulating economic factors, these moral values protect the economy from internal conflicts and crisis. Besides to promote the measure of economic prosperity, this system effectively uses the authority of state. Other Economic system: some of other economic system is as follow: • Capitalism

• Socialism
Capitalism
Capitalism is the economic system in which the means of production are distributed to openly competing profit-seeking. Capitalism is not merely an economics system but a peculiar attitude of mind and behavior. Basically it springs out of the notion of the capitalist that he has earned his wealth by his own ability, skills, knowledge and wisdom. Socialism

Socialism or communism means an economics system in which the mean of production are owned by the state. A central directorate controls the production of goods and services. The directorate decides the nature, quantity, and mood of production of goods. This distribution of goods is also directed by the central body. Socialism refers to a broad set of economic theories of social organization advocating state or collective ownership and administration of the means of production and distribution of goods, and the creation of Modern socialism originated in the late nineteenth-century working class political movement. Karl Marx posited that socialism would be achieved via class struggle and a proletarian revolution which represents the transitional stage between capitalism and communism.

Socialists mainly share the belief that capitalism unfairly concentrates power and wealth among a small segment of society that controls capital and creates an unequal society. All socialists advocate the creation of an egalitarian society, in which wealth and power are distributed more evenly, although there is considerable disagreement among socialists over how, and to what extent this could be achieved Difference between Islamic economic System and others (Capitalism and Socialism) Here we will discuss the difference between the Islamic and Other Economic System like Capitalism and Socialism briefly by comparing Islamic and Other Economic Systems in respect of their basic concepts.

Comparison of Capitalism with Islam:
Capitalism and Islam are compared in respect of their basic economic concepts as under: 1. Right to ownership:
The existence of right of private ownership of property is the hallmark of capitalism. The system believes in the private ownership of the means of production, distribution and exchange which are managed and controlled by individuals or groups of individuals for private profit. The unrestricted right to own property and earn profits leads to concentration of wealth in few hands. This necessarily disturbs the balance of distribution of wealth and income in society. The economic disparities and the ever-increasing gulf between the rich and the poor sows the seeds of discord and destruction in the capitalist society. Islamic concept of ownership is unique one. Ownership, in reality, belongs to God while some rights only vest in man so that he may fulfill the purpose of God, that is the purpose of community by acting as a trustee for those in need. In other words, what Allah has created for benefit of and service to man belongs collectively to the whole humanity.

Legal ownership by the individual is recognized in Islam but it is subject to the moral obligation that in all wealth all sections of society have the right to share. Thus private or individual ownership in Islam is not unlimited or unrestricted. All the means of production are not placed under private ownership as public ownership of certain things of common utility exists side by side with it in an Islamic state. Islamic state has also the right to nationalize certain things which are under private ownership for the benefit of the community. In this way the limited right of private ownership with law of inheritance which distributes the estate of the deceased among fairly large number of heirs averts concentration of wealth in few hands and thus prevents class-conflict.

2. Economic Freedom:
Unrestricted economic freedom and non-interference of the state in such freedom is another feature of capitalist economy. Every individual is at liberty to initiate, organize and establish any enterprise, business, trade, profession, etc. He has full freedom to earn as much income as he can and spend his wealth in whatever manner he likes. This unrestricted economic freedom generally leads to earning of wealth through foul means such as gambling and prostitution. It also encourages business malpractices such as smuggling, black marketing, profiteering, hoarding, speculation, forward transactions, fraud, exploitation, adulteration, etc. Thus a mad-race for earning wealth becomes order of the day and high social and moral values such as fraternity, brotherhood, mutual help, love, benevolence, truthfulness give place to selfishness, callousness, hatred, falsehood and mistrust.

Capitalism, in fact, has come to signify a religion of money or dollar dictatorship. Islam also allows economic freedom to an individual who is at liberty to earn wealth, own it and spend his wealth at his discretion. But the freedom given by Islam in economic sphere is not unlimited. Islam makes distinction between halal (permitted being lawful) and haram (forbidden being unlawful) in every economic activity embracing vast fields of production, exchange and consumption.2 Similarly consumption of wealth on luxurious living, haram things and extravagant spending is also forbidden. A Muslim is required to pay Zakat and spend whatever he can for the cause of the poor and the destitute. All these regulations promote moral values in Islamic society and eliminate mad-race for wealth and material gains.

3. Monopoly:
Competition, which is another feature of capitalism, leads to the destruction of minor enterprises and firms. This encourages merger of smaller business organizations into major ones and thus monopolies or cartels are established. Monopolies kill free competition, cause inflation in prices and ultimately result into unemployment. Thus labor and consumer are both exploited in such a situation. Moreover, trade-cycles, unplanned production, over-competition, increasing accumulation of capital upset the balance between production and consumption which sometimes leads to economic depressions. Islam forbids unhealthy competition and bans all the ways which lead to it. Islam also disallows establishment of monopolies. The Prophet of Islam is reported to have said whoever monopolies a sinner is. Especially monopolies over food-stuffs or articles of daily use are forbidden by Islam. Commodities and services which are of the common interest of the community are never allowed to be monopolized. 4. Institutions of Interest:

The Institution of banking and interest is the life-blood of capitalistic form of economy. For business, trade and industry especially for big projects and economic ventures, huge funds are required which no individual or firm can arrange. This leads to establishment of banks who borrow capital from depositors and investors on lower rate of interest and lend it to business enterprises on higher rate of interest. Thus the institution of interest has become part and parcel of capitalism. Islam considers interest as the most exploitive institution for humanity and has abolished it root and branch in its every form and manifestation. According to al-Quran taking of interest tantamount to war against God and His Apostle, while according to Prophet Muhammad (PBUH) interest is worse than adultery. Islam builds its economy on interest free basis and promotes profit and partnership as incentive for saving and investment.

5. Exploitation:
Unrestricted right of economic freedom and uncontrolled right of private ownership has practically resulted into exploitation. Economic exploitation of the weak by the strong is an order of the day in a capitalist society. Wealth is the religion of every person (but a few honorable exceptions) and earning of it through fair or foul means is his creed. Consequently, everyone exploits the other economically with a view to gather as much fortune as possible. Islamic economic system, on the other hand, ensures elimination of exploitation of one man by the other. Many effective measures have been taken by Islam to do so. Riba or usury is one of the worst instruments of human exploitation and this has been abolished in all forms by Islam.

6. Distribution of Wealth:
Capitalism does not believe in fair and just distribution of wealth. Since it believers in full economic freedom and private ownership of means of production. Concentration of wealth in few hands takes place while huge majority of the populace is deprived of the very basic necessities of life. The privileged few live in luxury while poverty, ignorance, disease and unemployment is the lot of the multitude. This disturbed balance of distribution of economic resources and unbridgeable gulf between the haves and have-nots ultimately leads to class struggle and ultimate overthrow of the very system.

Islam on the one hand guarantees provision of basic human needs such as food, clothing and shelter to everyone and, on the other hand, ensures fair and equitable distribution of wealth and economic resources among all. For bridging the gulf between the rich and the poor and for ensuring equitable distribution of wealth, Islam has taken many steps such as Zakat and Sadaqat, laws of inheritance and compulsory contributions in the form of taxes and duties. To prevent concentration of wealth in few hands Islamic economic code has taken measures like abolition of interest, prohibition of earning of wealth through haram means, prohibition of hoarding of wealth, etc.

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