Islamic Economic System Brief Introduction

Google+ Pinterest LinkedIn Tumblr +

The general characteristics of the Islamic Economic System

The Islamic Concept of Life

The chief characteristic of Islam is that it makes no distinction between the spiritual and the secular in life.

The Scheme of Life

In Islam, man’s entire individual and social life is an exercise in developing and strengthening his relationship with Allah. Man, the starting point of our religion, consists in the acceptance of this relationship by man’s intellect and will; Islam means submission to the will of Allah in all aspects of life. The Islamic code of conduct is known as the Shari‘ah. Its sources are the Qur’an and the Sunnah of the Prophet, blessings and peace be on him.

The final Book of Allah and His final Messenger stand today as the repositories of this truth. Everyone who agrees that the concept of Reality stated by the Prophet, and the Holy Book is true, should step forward and surrender himself to the will of Allah. It is this submission which is called Islam, the result of Man in actual life. And those who of their own freewill accept Allah as their Sovereign, surrender to His Divine will and undertake to regulate their lives in accordance with His commandments, are called Muslims.

All those persons who thus surrender themselves are welded into a community and that is how the ‘Muslim society’ comes into being.

The Economic Principles of Islam

Islam has laid down certain principles and limits for the economic activity of man so that the entire pattern of production, exchange and distribution of wealth may conform to the Islamic standard of justice and equity. Islam does not concern itself with time-bound methods and techniques of economic production or with the details of organizational patterns and mechanisms. Such methods are specific to every age and are evolved in accordance with the needs and requirements of the community and the exigencies of the economic situation. Islam’s concern is that whatever the particular form of economic activity in operation, its underlying principles should always be the same.

According to the Islamic point of view, Allah has created for mankind the earth and all that it contains. It is, therefore, the birthright of every human being o try to secure his share of the world’s wealth and sustenance. Islam does not allow a particular person, class, race or group of people to create a monopoly in certain economic activities: equal opportunities for all are its watchword.

Right of Property

Resources which are provided by nature and which can be used directly by man may be utilised freely, and everyone is entitled to benefit from them according to his needs. Water in the rivers and springs, timber in the forests, fruits of wild plants, wild grass and fodder, air, animals of the jungle, minerals under the surface of the earth and similar other resources cannot be monopolised by anyone nor can restrictions of any sort be imposed on their free use by Allah’s creatures to fulfil their own needs. Of course, people who want to use any of these things for commercial purposes can be required to pay taxes to the state. Or, if there is misuse of the resources, the Government may intervene. But there is nothing to prevent individuals availing themselves of Allah’s earth as long as they do not interfere with the rights of others or of the state.

The Problem of Equality

Allahhas not distributed His gifts and favour equally among mankind but, in His infinite wisdom, has given some individuals more than others. Just as this is true of pleasantness of voice, excellence of physique and intellectual power and so on, so, too, is it the case with the material conditions of life.

Social Justice

Islam does not want this economic race to take place in an atmosphere of moral neutrality and social apathy. The participants should be just and kind to one another. Islam, through its moral injunctions, aims at creating a feeling of mutual love and affection among people, through which they may help their weak and weary brethren, and at the same time create a permanent institution in society to guarantee assistance to those who lack the necessary means and abilities to succeed. People who are unable to take part in the economic race and those who need help to get started in it should receive their share of the blessings of life from this social institution.

To this end Islam has commanded that Zakat should be levied at the rate of two and a half percent per annum on the total accumulated wealth [of each individual]in the country, as well as on invested capital; five percent or ten percent, depending on the method of watering, should be collected on agricultural produce; and twenty percent on certain mineral products. The annual Zakat should also be levied, at a specified rate, on cattle owned by anyone who has more than a certain minimum number. The amount of Zakat thus collected is to be spent on the poor, the orphans and the needy.

Just as political and social freedom is essential for the individual, economic freedom is necessary for a civilized moral existence. Unless we desire to eliminate completely the individuality of man, our social life must have enough freedom for an individual to be able to earn his living, to maintain the integrity of his conscience and to develop his moral and intellectual faculties according to his own inclinations and aptitudes.

Islam does not favor a system of unbridled economic and social freedom which give individuals a blank cheque to achieve their objectives at the possible cost of the good of the community as a whole, or which enables them to misappropriate the wealth of others. Between these two extremes, Islam has adopted the middle course according to which the individual is first called upon, in the interest of the community, to accept certain restrictions, and is then left free to regulate his own affairs. He has freedom of enterprise and competition within a framework which guarantees the good of both the individual and society.

Obligations and Restrictions

Take first the example of earning a living. It condemns as illegal all those means of livelihood which injure, morally or materially, the interests of another individual or of society as a whole. Islamic law categorically rejects as illegal the manufacture and sale of liquor and other intoxicants, adultery, professional dancing, gambling, transactions of a speculative or fraudulent nature, transactions in which the gain of one party is absolutely guaranteed while that of the other part is left uncertain and doubtful, and price manipulation by withholding the sale of the necessities of life.

Islam accepts the right of ownership of an individual over the wealth earned by him by legitimate means; but these rights are not unrestrained. A man can only spend his legitimate wealth in certain specified ways. he may not waste his riches on idle luxury, nor may he use his wealth to behave arrogantly towards his fellows. Certain forms of wasteful expenditure have been unequivocally prohibited at the discretion of an Islamic Government.

One is permitted to accumulate wealth that is left over after meeting one’s legitimate and reasonable commitments and these savings can also be used to produce more wealth; there are, however, restrictions on both these activities. A rich man will, of course, have to pay Zakat at the rate of two and a half percent a year on the accumulation exceeding the specified minimum. He can only invest it in a business which has been declared legitimate. In this connection, he may own the legitimate business himself or he may make his capital available to others on a profit-loss sharing basis. 

Share.

About Author

Leave A Reply