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The Economic System in Islam is part of a complete set of codes for the whole life.

It is not possible to isolate the Economic system from other parts of Islam because they are interconnected.

A Comparison of Islamic and other Economic Systems
    Socialism Capitalism Communism Islamic Economic System

Rizwan Rashid 11-ENV-78

Such obvious participation further invites concerned people. capitalism. Baghdad. The historic and remarkable participation of Muslims in global and international business activities as well as in establishing mutual cooperation in the area of economy manifest the need to acknowledge and accommodate the significant element of Islamic economic system into changeable economic policies. socialism and communism. engaged in trade and exchange of cultures. The main purpose of this article is to compare the existing economic system and the comparison between capitalist and Islamic economic systems. The Capitalist System 2. China and Southeast Asia in the East. Muslims have participated in global business and even in the exchange of cultures. It is not astonishing to hear cries of socialist . It is needless to say that the evils of this system have made its advocates retreat from many of its values. The Socialist System 3. and Africa in the South. Jerusalem and in the distant part of the world from Morocco and Spain in the West. ideals and laws. This has been experienced since the time of Prophet Muhammad (Peace and Blessing of Allah Be upon Him).A Comparison of Islamic and other Economic Systems Islam gives supreme allusion to brotherhood and socio-economic justice and obliges a balance satisfaction of both the material and the spiritual needs. After his termination in 633 AD at Madina. to India. Islam instructs its economic system which is fundamentally distinct from the existing economic systems. Central Asia in the North. and France. organization and even governments to take as reference in the conduct of business activities. among his followers went and settled to the various places of the world for the propagation of Islam and at the same time. The Islamic System The Capitalist System This system is followed by countries like America. Kufa. Iran. Historically. i.e. Some settled at Basra. The aim of Islamic economic system is not primarily on private earning but rather based on the concept of human well-being and good life. The following systems shall be examined in sequence: 1. England.

individuals will not be allowed to have more than they barely need. Indeed. such as National Health Service. free education etc. and Yugoslavia. then the private sectors are re-nationalized again. Socialism on the other hand. It actually fails the test of securing true representation of all people and protects their interests without some sector being victimized. It is argued that when the difficulties have gone. it is then not surprising at all to find France and England claiming to be Socialist countries! The Democratic values in these countries have been challenged to whether they actually achieve social justice. In other words. It argued that nationalized sectors of economy can be denationalized after that crisis has disappeared.measures. is there any authentic difference between the Capitalist and the Islamic economic system? . and reflect the society’s opinion as a whole. Capitalism views private possession as a basic need which voluntarily fulfills the community’s desires and requirements rather than being in conflict with it. the question arises. Russia. For that reason. and maintains every aspect in the society. This is obviously not healthy. Private capitals must be nationalized according to Socialism. Capitalists consider Nationalization as exceptional cases of remedies for temporary crisis of the nationalized economy. That attitude was a temporary cure for their economic problems. while the government manages. Russia and other Socialist countries wondered at first about the impracticability of their ideas. responsibility and the imaginative power. claims collective ownership as the fundamental concept in its economic system. But the Socialists were confronted in the field of application with difficulties and were forced to recognize private possession. develops. and thought the reason to be the precipitates of Capitalism. because it will deny people the initiative. secures. This system allows but limits the possession of people. The Socialist system Socialist system prevails in China. and self-interest. and the government assumes the ownership and administration of the bulk of the country’s wealth and industries.

There are many other examples of income to the collective possession.” All Muslims thinkers throughout the Islamic history accepted the generalization of this statement to include all natural resources to be under collective ownership. private. and material value.Comparison with Islamic Economic System Both systems allow you to make money. etc. Islam recognized the three kinds of ownership which is: public. ye shall have your capital sums: deal not unjustly and ye shall not be dealt with unjustly?” (Qur’an 2:279) The Prophet (P. the ultimate goal of each system. The reasons for such great differences is the source and hence.B. moral. water and grass. irrespective of their financial status. hospitals.H) said: “People are to share three things. Muslim proceeds in his life keeping in mind the humanitarian.” Collective Possession: This field covers the national wealth which belongs to all people of the Islamic State. The sources of income of this sector of economy are specific and noted. It is the responsibility of the state to ensure that it happens through mechanisms which is defined in Islam. Thus. Prophet Muhammad (P. but they are entirely different in how money is accumulated and spent. which can be consulted in the Islamic legislation books. For example. spiritual.U. There are specific sources of income to this economic sector. Private Possession: “O ye who believe! Eat not your property among yourselves in vanities: but let there be among you traffic and trade by mutual good will” (Qur’an. and to live under one political authority. like so-called (Dead land). 4:29) “But if ye turn back.” (Qur’an 8:1) The Prophet is mentioned here as a representative of the . The evidence of this in Qur’an is the following verse: “They ask you concerning “Anfal” (accessions) say “Anfal” is at the disposal of God and the Apostle. The current man made system denied the private property or emphasized private ownership at the expense of other types of ownership.H) said: “The possession of a Muslim is illegal to his brother except whom he willingly offers to him. On the contrary. so-called (Kharaj land) is one source which is a land naturally productive.U. It is part of mans nature to own. and state ownership. interact with each other since man is a social being.B. Within this frame. Islam in all of its aspect is in harmony with man’s nature. the capitalistic economic system emphasized upon the material value to such an extent that one can killing of an individual for just a quarter. fire. the basic need of each individual has to be satisfied. State’s Possession: State’s possession differs from other kinds of possession not only in the sources of income but in utilization and fields of expenditure also. The bulk of the wealth is expended and utilized in building schools.

contradicts the principle of relative scarcity. The Islamic economic system is derived from the only source that is capable of satisfying the needs and desires of everyone. by offering small capital or building a factory for their employment. This is not in keeping with the reality life. it sets guidelines on how these needs and desires are to be fulfilled. The basic needs are guaranteed to every Muslim and non-Muslim living under the rule of Islam. the separation of the Creator from life’s affairs. such as adequate food. we have the freedom to use our minds to prove that a Creator does exist. This theory divides the society such that a small percentage of people hoard almost all the wealth while the rest of society struggles to have a home and food. not creating a system that destroys the lives of human beings. and that Islam is the Creator’s mercy to us to guide our lives and live it with purpose. This means that there always has to be a real or as in the majority of cases. coming from the Creator. we then follow the rules of Islam. but because this in fact. Capitalism is also based on the theory of relative scarcity. Freedom is guaranteed by the state. The system depends upon the separation of church and state or in other words. man is totally free to satisfy his needs in any manner possible as long as he does not legally violate the freedom of others.Islamic Government. Islam. Capitalism is based on the concept that economics is that which examines man’s needs. which are unlimited and how to satisfy these unlimited needs. and clothing while others seem to have too much of one or more. clothing. These needs include the tangible. One needs only to look onto the streets around us to see the devastating results of this form of system. and shelter. Whereas. a forces insufficiency of commodities to meet the needs of the people. shelter. The source of these rules is our Creator. as well as the intangible. there are more than enough goods and commodities to satisfy the needs of everyone. This shows how Islam defines the freedom in our lives. but . Freedom is living by the best system possible. Today. Once we accept Islam freely. some people are left without the fulfillment of their basic needs of food. without resulting in confusion. Islam does not allow this to happen. The Islamic economic system is not based on price as the method of distribution of goods. therefore. It is because of the freedom of satisfying needs that the pornography and alcohol/drug industry are two of the biggest profit making businesses in the Capitalist system. does not deny the needs of humans. such as medicine. education and security. The concept of freedom plays a major role in the Capitalist ideology. One of the basic channels is helping poor people to work. The way in which this wealth is used are many. As human beings. Islam does not share this idea of relative scarcity. The primary goal is to have everyone producing and everyone consuming. but instead.

Islam ordered the Muslims: “Seek the abode of the Hereafter in that. With this view kept in mind always. Islam does not believe in radical changes of the relations of production as a result of changes in the nature of production. while the other is changing with time. reward.rather. and be kind as Allah has been kind to you and seek not corruption in the earth”. (Zakat) is viewed as purifying act. The Islamic economic system is just a part of Islam. they are more successful and productive. everyone can live a happier life because people are allowed to search for the livelihood that suits them best and makes them the happiest. This takes into account the fact that people have different skills. and punishment too. The whole society prospers from this system because when people are doing what makes them happy instead of only what makes them money. which Allah has given you. There must be a permanent set of standards to ensure the satisfaction of the first kind of needs. It makes him think of God’s satisfaction. The needs of man are of two kinds. we should examine and analysis that it is not possible to isolate the Economic system from other parts of Islam because they are interconnected. Never be then of those who doubt”. For example. how to distribute funds and benefits to all citizens. Islam starts from the depths of the human conscience. beside its economic value and importance. Islam starts from man and not from production. and neglect not your portion of the world. It cannot be separated from it and discussed as an individual component. It is the spiritual attitude which the Muslim reflects in life and the great care for morality. (Qur’an 6:114) References: “Economic System in Islam Socialism”By: Abdul Husain Muhammad compared with Capitalism and . Also there must be a changing set of standards which adapts the progress in the means of production. There may be great economic differences among the people and the means to have the basics for life will be provided for all. Islam has a very important advantage which other principles do not have. and proceeds in its endeavors to secure a happy life for all. (Qur’an) Conclusion: The Economic System in Islam is part of a complete set of codes for the whole life. Islam binds man to God. With the basic needs satisfied. one is basic. explained in detail? They know full well to whom we have given the Book that it hath been sent down from thy Lord in truth. “Shall I seek for judge other than God when it is He who hath sent down unto you the Book. motivational levels and entrepreneur desires and there is no sin in high earnings.