Islamic Economics System

Islamic economics (Arabic: ‫ )االقتصاد اإلسالمي‬refers to the knowledge of economics or economic activities
and processes in terms of Islamic principles and teachings. Islam has a set of special moral norms and
values about individual and social economic behavior. Therefore, it has its own economic system, which
is based on its philosophical views and is compatible with the Islamic organization of other aspects of
human behavior: social and political systems.

Is a term used to refer to Islamic commercial jurisprudence (Arabic: ‫فقه المعامالت‬, fiqh al-mu'āmalāt), and
also to an ideology of economics based on the teachings of Islam that is mostly similar to the labour
theory of value, which is "labour-based exchange and exchange-based labour".[

Islamic commercial jurisprudence entails the rules of transacting finance or other economic activity in a
Shari'a compliant manner,[5] i.e., a manner conforming to Islamic scripture (Quran and sunnah). Islamic
jurisprudence (fiqh) has traditionally dealt with determining what is required, prohibited, encouraged,
discouraged, or just permissible,[6] according to the revealed word of God (Quran) and the religious
practices established by Muhammad (sunnah). This applied to issues like property, money, employment,
taxes, loans, along with everything else. The social science of economics,[6] on the other hand, works to
describe, analyse and understand production, distribution, and consumption of goods and services,[7]
and studied how to best achieve policy goals, such as full employment, price stability, economic equity
and productivity growth.[8]

Early forms of mercantilism and capitalism are thought to have been developed in the Islamic Golden
Age[9][10][11] from the 9th century and later became dominant in European Muslim territories like Al-
Andalus and the Emirate of Sicily.[12][13]

The Islamic economic concepts taken and applied by the gunpowder empires and various Islamic
kingdoms and sultanates led to systemic changes in their economy. Particularly in the Mughal India,[14]
its wealthiest region of Bengal, a major trading nation of the medieval world, signaled the period of
proto-industrialization,[15][16][17] making direct contribution to the world's first Industrial Revolution
after the British conquests.[18][19][20]

In the mid-twentieth century, campaigns began promoting the idea of specifically Islamic patterns of
economic thought and behavior.[21] By the 1970s, "Islamic economics" was introduced as an academic
discipline in a number of institutions of higher learning throughout the Muslim world and in the West.[5]
The central features of an Islamic economy are often summarized as: (1) the "behavioral norms and
moral foundations" derived from the Quran and Sunnah; (2) collection of zakat and other Islamic taxes,
(3) prohibition of interest (riba) charged on loans.[22][23][24][25]
Advocates of Islamic economics generally describe it as neither socialist nor capitalist, but as a "third
way", an ideal mean with none of the drawbacks of the other two systems.[26][27][28] Among the
claims made for an Islamic economic system by Islamic activists and revivalists are that the gap between
the rich and the poor will be reduced and prosperity enhanced[29][30] by such means as the
discouraging of the hoarding of wealth,[31][32] taxing wealth (through zakat) but not trade, exposing
lenders to risk through profit sharing and venture capital,[33][34][35] discouraging of hoarding of food
for speculation,[36][37][38] and other activities that Islam regards as sinful such as unlawful confiscation
of land.[39][40] However, critics like Timur Kuran have described it as primarily a "vehicle for asserting
the primacy of Islam", with economic reform being a secondary motive.

Recently and as a complement to Islamic economics, the field of Islamic entrepreneurship or

entrepreneurship from an Islamic perspective has gained traction. Islamic entrepreneurship studies the
Muslim entrepreneur, entrepreneurial ventures, and contextual factors impacting entrepreneurship at
the intersection of the Islamic faith and entrepreneurial activities.