(1). Introduction. Allah is creator and owner of everything in the universe. All people enjoy equal opportunity and a fair chance to earn livelihood. There is no distinction on the basis of caste, creed or religion. According to Islam the activity of enterprise/commerece must not involve indecency or wrong doing. (2). Objective of Islamic economic system. Objective of Islamic economic system is to encourage economic activity that maximizes human welfare and develop a human being spiritually. (3). What is the Islamic Economic System? Allah provides sustenance. Allah is the real owner; we hold everything in ‘trust’ for Him. Distinction between halaal and haram. Equity (fairness) and not equality in wealth distribution. Principle of moderation — one shouldn’t tilt to any extremities as this can lead to disaster(4) Fundamentals of Islamic Economic System. Golden mean; it is between two extremes of capitalism and communism. Individual and social nature; individual exercise right to earn livelihood at the same time thinks good for overall society. Social obligation is considered. Obligation of lawful earning; Human to exploit natural resources for the betterment in this world and success in hereafter. Islam forbids unchecked materialism. (5). Characteristics of Islamic Economic System. 1. 2. 3. 4. 5. Individual liberty. Right to property. a. Extent and limitation of private property. b. Circulation and concentration of money. Economic inequality within natural limits. Equitable difference. Social security.(6). Comparison between capitalism, communism and Islamic economic systems. 1. Capitalism: individualistic, private property, private gains, prioritization of private benefit over social benefit, profit motives emphasized over welfare motives, no spiritual orientation, secular, morally neutral, earth bounded, exploitative 2. Communism: No individual perspective, no liberty or freedom, equal distribution of benefits irrespective of individual’s work hard, no spiritual orientation, morally neutral and secular (can make people lazy, they will lack initiative to work hard), Earth bounded, equality but not equity (due to equal distribution of wealth irrespective of how hard one works) 3. Islamic: Spiritual and material well being both, zakat, equitable distribution of wealth, private and public benefits both are catered to, brotherhood, circulation of wealth, morally upright activities, both individualism and collectivism. Islam recognizes a triple nature of possession: 1) private: private property, 2) collective: water, gas etc. and 3) state: public welfare hospitals, schools etc.(7). Goals of Islamic economic system. Concept of Halaal and haram. Limited capitalism. Freedom of the individual within the context of social welfare. Prohibition of interest/ hoarding. Laws of conduct of labor. Economic wellbeing of people. Prohibition from begging, Prohibition from all immoral practices of earning livelihood. Harmony between economic and material gains. Universal brotherhood. Social and economic justice. Equal distribution of resources. Circulation of wealth: Contribution of wealth should not be within a few hands. Inheritance according to the law of shariah. (8). Difference between Islamic economic system and capitalism. Private property held in ‘trust’ by man in Islam. No absolute ownership, man is bound by the conditions of the trust as laid down by Allah, which include zakat, equity, brotherhood etc. Government intervention is allowed whenever the need arises to maintain the balance between individual freedom and interest of the society.