Islam gives supreme allusion to brotherhood and socio-economic justice and obliges a balance satisfaction of both the material and the spiritual needs. Islam instructs its economic system which is fundamentally distinct from the existing economic systems, i.e. capitalism, socialism and communism. 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. Historically, Muslims have participated in global business and even in the exchange of cultures. This has been experienced since the time of Prophet Muhammad (Peace and Blessing of Allah Be upon Him). After his termination in 633 AD at Madina, among his followers went and settled to the various places of the world for the propagation of Islam and at the same time, engaged in trade and exchange of cultures. Some settled at Basra, Kufa, Baghdad, Iran, Jerusalem and in the distant part of the world from Morocco and Spain in the West, to India, China and Southeast Asia in the East. Central Asia in the North, and Africa in the South. 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. Such obvious participation further invites concerned people, organization and even governments to take as reference in the conduct of business activities.
The Socialist system prevails in China, Russia, and Yugoslavia. This system allows but limits the possession of people, and the government assumes the ownership and administration of the bulk of the country’s wealth and industries. In other words, individuals will not be allowed to have more than they barely need, while the government manages, develops, secures, and maintains every aspect in the society. This is obviously not healthy, because it will deny people the initiative, responsibility and the imaginative power, and self interest. Indeed, Russia and other Socialist countries wondered at first about the impracticability of their ideas, and thought the reason to be the precipitates of Capitalism. Capitalism views private possession as a basic need which voluntarily fulfils the community’s desires and requirements rather than being in conflict with it. Capitalists consider Nationalization as exceptional cases of remedies for temporary crisis of the nationalized economy. It argued that nationalized sectors of economy can be de-nationalized after that crisis has disappeared. Socialism on the other hand, claims collective ownership as the fundamental concept in its economic system. Private capitals must be nationalized according to Socialism. But the Socialists were confronted in the field of application with difficulties and were forced to recognize private possession. That attitude was a temporary cure for their economic problems. It is argued that when the difficulties have gone, then the private sectors are re-nationalized again. For that reason, the question arises; is there any authentic difference between the Capitalist and the Islamic economic system?
Capitalism is also based on the theory of relative scarcity. This means that there always has to be a real or as in the majority of cases, a forces insufficiency of commodities to meet the needs of the people. This is not in keeping with the reality life. Today, there are more than enough goods and commodities to satisfy the needs of everyone, but because this in fact, contradicts the principle of relative scarcity, some people are left without the fulfillment of their basic needs of food, shelter, and clothing while others seem to have too much of one or more. Islam does not share this idea of relative scarcity. 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. Islam does not allow this to happen. The basic needs are guaranteed to every Muslim and non-Muslim living under the rule of Islam. These needs include the tangible, such as adequate food, clothing, and shelter, as well as the intangible, such as medicine, education and security. The primary goal is to have everyone producing and everyone consuming. The Islamic economic system is not based on price as the method of distribution of goods, but rather, how to distribute funds and benefits to all citizens. With the basic needs satisfied, everyone can live a happier life because people are allowed to search for the livelihood that suits them best and makes them the happiest. The whole society prospers from this system because when people are doing what makes them happy instead of only what makes them money, they are more successful and productive. There may be great economic differences among the people and the means to have the basics for life will be provided for all. This takes into account the fact that people have different skills, motivational levels and entrepreneur desires and there is no sin in high earnings. The Islamic economic system is just a part of Islam. It cannot be separated from it and discussed as an individual component. Islam ordered the Muslims: “Seek the abode of the Hereafter in that, which Allah has given you, and neglect not your portion of the world, and be kind as Allah has been kind to you and seek not corruption in the earth”. (Qur’an)
“Shall I seek for judge other than God when it is He who hath sent down unto you the Book, 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. Never be then of those who doubt”. (Qur’an 6:114)
The main purpose of this article is to compare the existing economic system and the comparison between capitalist and Islamic economic systems. The following systems shall be examined in sequence:
- The Capitalist System
- The Socialist System
- The Islam System
The Capitalist system is followed by countries like America, England, and France. It is needless to say that the evils of this system have made its advocates retreat from many of its values, ideals and laws. It is not astonishing to hear cries of socialist measures, such as National Health Service, free education etc. 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, and reflect the society’s opinion as a whole. It actually fails the test of securing true representation of all people and protects their interests without some sector being victimized.
The Socialist system prevails in China, Russia, and Yugoslavia. This system allows but limits the possession of people, and the government assumes the ownership and administration of the bulk of the country’s wealth and industries. In other words, individuals will not be allowed to have more than they barely need, while the government manages, develops, secures, and maintains every aspect in the society. This is obviously not healthy, because it will deny people the initiative, responsibility and the imaginative power, and self interest. Indeed, Russia and other Socialist countries wondered at first about the impracticability of their ideas, and thought the reason to be the precipitates of Capitalism. Capitalism views private possession as a basic need which voluntarily fulfils the community’s desires and requirements rather than being in conflict with it. Capitalists consider Nationalization as exceptional cases of remedies for temporary crisis of the nationalized economy. It argued that nationalized sectors of economy can be de-nationalized after that crisis has disappeared. Socialism on the other hand, claims collective ownership as the fundamental concept in its economic system. Private capitals must be nationalized according to Socialism. But the Socialists were confronted in the field of application with difficulties and were forced to recognize private possession. That attitude was a temporary cure for their economic problems. It is argued that when the difficulties have gone, then the private sectors are re-nationalized again. For that reason, the question arises; is there any authentic difference between the Capitalist and the Islamic economic system?
Both systems allow you to make money, but they are entirely different in how money is accumulated and spent. The reasons for such great differences is the source and hence, the ultimate goal of each system. Islam in all of its aspect is in harmony with man’s nature. It is part of mans nature to own, interact with each other since man is a social being, and to live under one political authority. Thus, Islam recognized the three kinds of ownership which is: public, private, and state ownership. Within this frame, the basic need of each individual has to be satisfied. It is the responsibility of the state to ensure that it happens through mechanisms which is defined in Islam. The current man made system denied the private property or emphasized private ownership at the expense of other types of ownership. Muslim proceeds in his life keeping in mind the humanitarian, spiritual, moral, and material value. On the contrary, the capitalistic economic system emphasized upon the material value to such an extent that one can killing of an individual for just a quarter.
Islam recognizes three kinds of possessions:
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, 4:29)
“But if ye turn back, ye shall have your capital sums: deal not unjustly and ye shall not be dealt with unjustly?” (Qur’an 2:279)
The Prophet (P.B.U.H) said: “The possession of a Muslim is illegal to his brother except whom he willingly offers to him.”
Collective Possession: This field covers the national wealth which belongs to all people of the Islamic State, irrespective of their financial status. The bulk of the wealth is expended and utilized in building schools, hospitals, etc. The sources of income of this sector of economy are specific and noted. For example, so-called (Kharaj land) is one source which is a land naturally productive. Prophet Muhammad (P.B.U.H) said: “People are to share three things, fire, water and grass.” All Muslims thinkers throughout the Islamic history accepted the generalization of this statement to include all natural resources to be under collective ownership. There are many other examples of income to the collective possession, which can be consulted in the Islamic legislation books.
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. There are specific sources of income to this economic sector, like so-called (Dead land). 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.” (Qur’an 8:1) The Prophet is mentioned here as a representative of the Islamic Government. The way in which this wealth is used are many. One of the basic channels is helping poor people to work, by offering small capital or building a factory for their employment.
Whereas, 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. The system depends upon the separation of church and state or in other words, the separation of the Creator from life’s affairs. The concept of freedom plays a major role in the Capitalist ideology. Freedom is guaranteed by the state; therefore, man is totally free to satisfy his needs in any manner possible as long as he does not legally violate the freedom of others. One needs only to look onto the streets around us to see the devastating results of this form of system. 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. The Islamic economic system is derived from the only source that is capable of satisfying the needs and desires of everyone, without resulting in confusion. The source of these rules is our Creator. Islam, coming from the Creator, does not deny the needs of humans, but instead, it sets guidelines on how these needs and desires are to be fulfilled. As human beings, we have the freedom to use our minds to prove that a Creator does exist, and that Islam is the Creator’s mercy to us to guide our lives and live it with purpose. Once we accept Islam freely, we then follow the rules of Islam. This shows how Islam defines the freedom in our lives. Freedom is living by the best system possible, not creating a system that destroys the lives of human beings.
Capitalism is also based on the theory of relative scarcity. This means that there always has to be a real or as in the majority of cases, a forces insufficiency of commodities to meet the needs of the people. This is not in keeping with the reality life. Today, there are more than enough goods and commodities to satisfy the needs of everyone, but because this in fact, contradicts the principle of relative scarcity, some people are left without the fulfillment of their basic needs of food, shelter, and clothing while others seem to have too much of one or more. Islam does not share this idea of relative scarcity. 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. Islam does not allow this to happen. The basic needs are guaranteed to every Muslim and non-Muslim living under the rule of Islam. These needs include the tangible, such as adequate food, clothing, and shelter, as well as the intangible, such as medicine, education and security. The primary goal is to have everyone producing and everyone consuming. The Islamic economic system is not based on price as the method of distribution of goods, but rather, how to distribute funds and benefits to all citizens. With the basic needs satisfied, everyone can live a happier life because people are allowed to search for the livelihood that suits them best and makes them the happiest. The whole society prospers from this system because when people are doing what makes them happy instead of only what makes them money, they are more successful and productive. There may be great economic differences among the people and the means to have the basics for life will be provided for all. This takes into account the fact that people have different skills, motivational levels and entrepreneur desires and there is no sin in high earnings. The Islamic economic system is just a part of Islam. It cannot be separated from it and discussed as an individual component. Islam ordered the Muslims: “Seek the abode of the Hereafter in that, which Allah has given you, and neglect not your portion of the world, and be kind as Allah has been kind to you and seek not corruption in the earth”. (Qur’an)
Conclusion:
The Economic System in Islam is part of a complete set of codes for the whole life. With this view kept in mind always, we should examine and analysis that it is not possible to isolate the Economic system from other parts of Islam because they are interconnected. For example, (Zakat) is viewed as purifying act, beside its economic value and importance. It is the spiritual attitude which the Muslim reflects in life and the great care for morality.
Islam does not believe in radical changes of the relations of production as a result of changes in the nature of production. Islam starts from man and not from production. The needs of man are of two kinds, one is basic, while the other is changing with time. There must be a permanent set of standards to ensure the satisfaction of the first kind of needs. Also there must be a changing set of standards which adapts the progress in the means of production. Islam has a very important advantage which other principles do not have. Islam binds man to God. It makes him think of God’s satisfaction, reward, and punishment too. Islam starts from the depths of the human conscience, and proceeds in its endeavors to secure a happy life for all.
“Shall I seek for judge other than God when it is He who hath sent down unto you the Book, 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. Never be then of those who doubt”. (Qur’an 6:114)
Note: The above mention systems are reviewed from the book “Economic System in Islam compared with Capitalism and Socialism”
By: Abdul Husain Muhammad – 2nd Edition Published By: World Organization for Islamic Services;
http://blogs.thenewstribe.com/blog/67659/capitalism-and-islam-what-is-the-difference/#.UAxRm2FDPxg
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Financial System: http://www.jewishencyclopedia.com/articles/6116-finance
Financial System: http://www.jewishencyclopedia.com/articles/6116-finance