Characteristics of Islamic

Economic System

Summary of the Previous

Lecture
We discussed the course outlines.
Requirements of the course.
Importance of the subject.

Learning Outcomes
After this lecture your will be able to
understand;
the characteristics of Islamic Economic
System according to the divine instructions
as mentioned in Quran and Hadith.

Salient Features
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

1. Allah is the Sustainer

Verses of the Quran:
1. And there is no creature on earth but that upon
Allah is its provision, and He knows its place of
dwelling and place of storage. All is in a clear
register. (11 : 6)
2. Indeed, your Lord extends provision for whom He
wills and restricts [it]. Indeed He is ever,
concerning His servants, Acquainted and Seeing.
(17 : 30)

1. Allah is the Sustainer

3. And how many a creature carries not its
[own] provision. Allah provides for it and
for you. And He is the Hearing, the
Knowing. (29 : 60)
4. Allah extends provision for whom He wills
of His servants and restricts for him.
Indeed Allah is, of all things, Knowing. (29
: 62)

1. Allah is the Sustainer

5. O mankind, remember the favor of Allah upon you.
Is there any creator other than Allah who provides
for you from the heaven and earth? (35 : 3)
6. And have you seen that [seed] which you sow? Is it
you who makes it grow, or are We the grower?
(56 : 63-64)
7. Or who is it that could provide for you if He
withheld His provision? But they have persisted in
insolence and aversion. (67 : 21)

1. Allah is the Sustainer

Ahadith of Muhammad (PBUH) :
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. Abu Dardaa reported that the Messenger of Allah said:
Certainly provision seeks a servant just as his death
seeks him.
(Abu Nayeem)
3. Jabir b. Abdullah reported : The Messenger of Allah (may
peace be upon him) said: O people, Fear God and cut
your ambitions of livelihood, for a man will not court
death unless he is provided full sustenance (decreed) for
him even if he restrains himself from it. So, fear Allah
and cut your ambitions in search of livelihood. Take

1. Allah is the Sustainer

4. 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 Allahs Throne.
(Masnud Zaid bin Ali)
5. Ali (Allah be pleased with him) said: A person came
to the Prophet of Allah (May peace be upon him) and
asked: O Messenger of Allah: What type of earning is
best? The Prophet (may peace be upon him) said: A
mans work with his hand and every business
transaction which is approved, for Allah loves a
believer who is a craftsman. A person who suffers pain

1. Allah is the Sustainer

Concept of Entrepreneurship in Islam
The Quran encourages struggle when it says: And
that there is not for man except that [good] for which
he strives. And that his effort is going to be seen (53
: 39-40).
O you who have believed, when [the adhan] is called
for the prayer on the day of Jumu'ah [Friday], then
proceed to the remembrance of Allah and leave trade.
That is better for you, if you only knew. And when the
prayer has been concluded, disperse within the land
and seek from the bounty of Allah , and remember
Allah often that you may succeed.(62: 9-10).
In a famous Hadith Prophet (pbuh) said, Alkasibu

2. God is Real Owner of Everything and

Man is merely a Trustee
1. Unto Allah belongs whatsoever is in the heavens
and whatsoever is in the earth; and unto Allah all
things are returned.
(3 : 109)
2. Unto Allah belongs whatsoever is in the heavens
and whatsoever is in the earth. Allah ever
surrounds all things.
(4 : 126)
3. And it is He who has made you viceroys upon the
earth and has raised some of you above others in
degrees [of rank] that He may try you through
what He has given you. Indeed, your Lord is swift
in penalty; but indeed, He is Forgiving and
Merciful.
(6 : 165)
4. Believe in Allah and His Messenger and spend out
of that in which He has made you trustee. For
those who have believed among you and spent,

3. Everything Created for

Service and Use of Man
1. It is He who created for you all of that which is on
the earth. Then He directed Himself to the
heaven, [His being above all creation], and made
them seven heavens, and He is Knowing of all
things.
2:Al-Baqarah:29
2. And it is He who placed for you the stars that you
may be guided by them through the darknesses
of the land and sea. We have detailed the signs
for a people who know.
6:Al-Anam:97

3. Everything Created for Service and Use of

Man

3. It is He who sends down rain from the sky; from it is

drink and from it is foliage (vegetation) in which you
pasture [animals]. He causes to grow for you thereby
the crops, olives, palm trees, grapevines, and from all
the fruits. Indeed in that is a sign for a people who
give thought. And He has subjected for you the night
and day and the sun and moon, and the stars are
subjected by His command. Indeed in that are signs
for a people who reason. And [He has subjected]
whatever He multiplied for you on the earth of varying
colors. Indeed in that is a sign for a people who
remember. And it is He who subjected the sea for you
to eat from it tender meat and to extract from it
ornaments which you wear. And you see the ships
plowing through it, and [He subjected it] that you may
seek of His bounty; and perhaps you will be grateful.
And He has cast into the earth firmly set mountains,

3. Everything Created for

Service and Use of Man
4. And Allah has made for you from your homes a
place of rest and made for you from the hides of
the animals tents which you find light on your
day of travel and your day of encampment; and
from their wool, fur and hair is furnishing and
enjoyment for a time. And Allah has made for
you, from that which He has created, shadows
and has made for you from the mountains,
shelters and has made for you garments which
protect you from the heat and garments which
protect you from your [enemy in] battle. Thus
does He complete His favor upon you that you
might submit [to Him].
16:An-Nahl:80-81

3. Everything Created for Service

and Use of Man
5. Do you not see that Allah has made
subject to you whatever is in the heavens
and whatever is in the earth and amply
(sufficiently) bestowed (granted) upon
you His favors, [both] apparent and
unapparent? But of the people is he who
disputes about Allah without knowledge
or guidance or an enlightening Book
[from Him].
31:Luqman:20

4. Concept of Halal and Haram

Verses of the Quran:
1. O mankind, eat from whatever is on earth [that is] lawful
and good and do not follow the footsteps of Satan. Indeed,
he is to you a clear enemy. (2:168)
2. O you who have believed, eat from the good things which
We have provided for you and be grateful to Allah if it is
[indeed] Him that you worship. He has only forbidden to
you dead animals, blood, the flesh of swine, and that
which has been dedicated to other than Allah . But
whoever is forced [by necessity], neither desiring [it] nor
transgressing [its limit], there is no sin upon him. Indeed,
Allah is Forgiving and Merciful. (2:172-173)
3. And do not consume one another's wealth unjustly or send
it [in bribery] to the rulers in order that [they might aid]
you [to] consume a portion of the wealth of the people in

4. Concept of Halal and Haram

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)
3. Jabir 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 sins) (Muslim)

4. Concept of Halal and

Haram
4. Abdullah-bin-Amr reported that the messenger of
Allah cursed the bribe taker and the bribe giver.
(Abu Daud)
5. Jabir reported that the messenger of
Allah..forbade the sale of wine, dead animals,
pigs and idols (Bukhari,Muslim)
6. Abdullah-bin-Amr reported that the messenger of
Allah prohibited intoxicants, games of chance,
card-playing and Gobairah and he said: Every
intoxicant is unlawful. (Abu Daud)

5. System of Sadaqat and Zakat

Verses of the Quran:
1. And establish prayer and give zakah and bow with
those who bow [in worship and obedience].
(2:43)
2. And spend in the way of Allah and do not throw
[yourselves] with your [own] hands into destruction
[by refraining]. And do good; indeed, Allah loves the
doers of good. (2:195)
3. They ask you, [O Muhammad], what they should
spend. Say, "Whatever you spend of good is [to be]
for parents and relatives and orphans and the
needy and the traveler. And whatever you do of
good - indeed, Allah is Knowing of it.
(2:215)
4. Who is it that would loan Allah a goodly loan so He
may multiply it for him many times over? And it is
Allah who withholds and grants abundance, and to

5. System of Sadaqat and Zakat

1. O you who have believed, spend from that which
We have provided for you before there comes a Day
in which there is no exchange and no friendship and
no intercession. And the disbelievers - they are the
wrongdoers.
(2:254)
2. Never will you attain the good [reward] until you
spend [in the way of Allah ] from that which you
love. And whatever you spend - indeed, Allah is
Knowing of it. (3:92)
3. And from their properties was [given] the right of
the [needy] petitioner and the deprived.
(51:19)
4. Indeed, the men who practice charity and the
women who practice charity and [they who] have

5. System of Sadaqat and Zakat

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)

5. System of Sadaqat and Zakat

Ahadith of the Prophet:
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)
4. Ibn Omar reported that the Messenger of Allah
made obligatory the charity of Fitr one Saa of
dried dates or one Saa of barley upon the slave
and the free, male and female, young and old
from among the Muslims. He directed its payment
before the people go out for the (Eid) prayer.
(Bukhari , Muslim)

5. System of Sadaqat and Zakat

5. Ibn Abbas reported that the Holy Prophet sent Muaz
to Yemen saying: Certainly you will come across a
people, the People of the Book. Call them to bear
witness that there is no God but Allah and that
Muhammad is the Messenger of Allah. If they submit
to that, teach them that Allah has made obligatory
upon them prayer for five times a day and a
night. If they submit to that, teach them that Allah
has made obligatory over them Zakat which will be
taken from the rich and will be given to the poor
among them. If they then obey that, avoid taking the
best part of their property and fear the invocation of
the oppressed, because between it and Allah, there is
no veil. -(Bukhari and Muslim)

6. Prohibition of Interest
Verses of the Quran :
1. Those who consume interest cannot stand [on
the Day of Resurrection] except as one stands
who is being beaten by Satan into insanity. That
is because they say, "Trade is [just] like interest."
But Allah has permitted trade and has forbidden
interest. So whoever has received an admonition
(warning) from his Lord and desists (stops) may
have what is past, and his affair rests with Allah .
But whoever returns to [dealing in interest or
usury] - those are the companions of the Fire;
they will abide eternally therein. Allah destroys
interest and gives increase for charities. And
Allah does not like every sinning disbeliever.
(2:275-276)

6. Prohibition of Interest
2. O you who have believed, fear Allah and give up
what remains [due to you] of interest, if you should
be believers. And if you do not, then be informed of
a war [against you] from Allah and His Messenger.
But if you repent, you may have your principal [thus] you do no wrong, nor are you wronged.
(2:278-279)
3. O you who have believed, do not consume usury,
doubled and multiplied, but fear Allah that you
may be successful.(3:130)

6. Prohibition of Interest
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-Hanzalah 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

Verses of the Quran :
1. And let not those who [greedily] withhold what Allah has
given them of His bounty ever think that it is better for them.
Rather, it is worse for them. Their necks will be encircled by
what they withheld on the Day of Resurrection. And to Allah
belongs the heritage of the heavens and the earth. And Allah,
with what you do, is [fully] Acquainted. (Al-Imran 3:180)
2. O you who have believed, indeed many of the scholars and
the monks devour the wealth of people unjustly and avert
[them] from the way of Allah . And those who hoard gold and
silver and spend it not in the way of Allah - give them tidings
(notification) of a painful punishment. (9:At-Taubah:34)

7. Ban on Hoarding of Wealth

3. The Day when it will be heated in the fire of Hell and
seared (burned) therewith will be their foreheads, their
flanks, and their backs, [it will be said], "This is what you
hoarded for yourselves, so taste what you used to hoard.
(9:At-Taubah:35)
4. And what Allah restored to His Messenger from the people
of the towns - it is for Allah and for the Messenger and for
[his] near relatives and orphans and the [stranded]
traveler - so that it will not be a perpetual distribution
among the rich from among you. And whatever the
Messenger has given you - take; and what he has
forbidden you - refrain from. And fear Allah ; indeed, Allah
is severe in penalty. (Al Hashr 59:7)

8. Policy of Moderation
The verses of the Quran :
O you who have believed, do not prohibit the good things which
Allah has made lawful to you and do not transgress. Indeed, Allah
does not like transgressors. (5 : 87)
And do not make your hand [as] chained to your neck or extend it
completely and [thereby] become blamed and insolvent. (17 : 29)
Say, "Call upon Allah or call upon the Most Merciful. Whichever
[name] you call - to Him belong the best names." And do not
recite [too] loudly in your prayer or [too] quietly but seek between
that an [intermediate] way. (17 : 110)
And be moderate in your pace and lower your voice; indeed, the
most disagreeable of sounds is the voice of donkeys. (31 : 19)

8. Policy of Moderation
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)

9. Condemnation of Monasticism and

Materialism

Allah says in Quran

1. O you who have believed, do not prohibit the good
things which Allah has made lawful to you and do
not transgress. Indeed, Allah does not like
transgressors. (5 : 87)
2. .and monasticism, which they innovated; We did
not prescribe it for them except [that they did so]
seeking the approval of Allah . But they did not
observe it with due observance. So We gave the
ones who believed among them their reward, but
many of them are defiantly disobedient. (57 : 27)

10. Equity and not Equality

Quran highlights these inequalities in its following
verses:
1. And do not wish for that by which Allah has made some of
you exceed others. For men is a share of what they have
earned, and for women is a share of what they have
earned. And ask Allah of his bounty. Indeed Allah is ever,
of all things, Knowing. (4 : 32)
2. He it is Who has placed you as viceroys of the earth and
has exalted some of you in rank above others. That He
may try you by (the test of) that which He has given
you(6 : 165)
3. And Allah has favored some of you above others in
provision(16 : 71)

10. Equity and not Equality

4. Indeed, your Lord extends provision for whom He
wills and restricts [it]. Indeed He is ever,
concerning His servants, Acquainted and Seeing.
(17 : 30)
5. Do they distribute the mercy of your Lord? It is We
who have apportioned among them their
livelihood in the life of this world and have raised
some of them above others in degrees [of rank]
that they may make use of one another for
service. But the mercy of your Lord is better than
whatever they accumulate. (43 : 32)

Summary of the Lecture

We discussed the basics of Islamic Economic System
according the Quran and Hadith.
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