Islamic economics and capitalism. Islamic economic system is a complete system which provides guidance to human beings in their every aspect of life, it doesn’t only discuss about forbiddance of certain deeds but also provides guidance under which we can lead a lawful life
for instance Islam gives complete guidance for trade, purchasing of property even it provides assistance on our daily life issues that how we can deal with such problems under the light of Quran.
Islamic economics and capitalism
Is there any real difference between the Capitalist and the Islamic economic system?
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 Islamic economic system is derived from the only source that is capable of satisfying the needs and desires of everyone, without resulting in chaos. The source of these rules is our Creator.
Islamic Law is derived from Quran and sunnah. Therefore it is believed that making policies and decisions as per the Divine Law will ensure justice to mankind in both worlds.
Their are mainly four types of capitalist in the world:
- The Democratic Capitalist System.
- The Democratic Socialist System.
- The Communist System.
- The Islamic System.
The View of Islam towards the Economy:
utilising some properties. So it prohibits the use of some commodities such as wine and dead foodstuffs. Similarly, it prohibits benefiting from some of human’s actions, such as dancing and prostitution. It also prohibits the trade in commodities that are forbidden to be eaten, whilst prohibiting the hiring actions that are forbidden to be performed. This refers to the utilisation of the funds, and man’s effort. However, regarding the method of possessing funds and man’s effort, Islam has put numerous laws regulating this ownership, such as laws of hunting and land reclamation, and the laws of leasing, manufacturing, inheritance, donations and wills.
The economic policy in Islam is to secure the satisfaction of all basic needs for every individual completely, and to enable him to satisfy his luxuries as much as he can, as a person living in a particular society, which has a certain way of life. So Islam looks at every individual independently rather than the total of individuals who live in the country. It looks at the individual as a human being first, who needs to satisfy all of his basic needs completely, and then it looks to him in his capacity as a particular individual, to enable him to satisfy his amenities as much as possible. Islam looks to him at the same time, considering him a person linked with others by certain relationships run in a certain way, according to a particular fashion. The purpose of the economic policy in Islam is not to only raise the standard of living in the country without looking to secure the rights of life for every individual completely. Nor is it just to provide the means of satisfaction in the society, leaving people free to take from such means as much as they can, without securing the right of livelihood for each individual. Rather, it addresses the basic problems of everyone as human beings, who live according to particular relationships, then enabling them to raise their standard of living and achieve comfort for themselves, according to a particular fashion of life. As such it is different from all other economic policies.
There may be great economic differences among the people, but 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 entrepreneurial 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.
In Islamic economic the best way to reduce the poverty from the economy is called ZAKKAT. It is basically not a tax but it is a kind of tax. The particular amount is deducted from the account of a person who is holding a 7.5 kg gold, 52 kg silver and as same amount of price over a whole year. The amount will be deducted as 2.5% of the ownership as above mentioned. Normally ZAKKAT will be paid to the very poor person of the society, so in this system the reduction of poverty is being planned very well. Because if everyone will pay ZAKKAT to the poor (every year) than the poverty will be eliminated from the society and this is the best way to reduce poverty level from the economy. Under Islamic Economic system there are three different processes to get the loan for different activities. First one MURABAHA which is loans for customers but these are interest free loan. In this, bank provides a loan for the customer and this is a business contract type agreement. If the prices will increases and for example the partner will break the deal, so bank will support the deal. Second MUDABARAH, in these investors will offer their capital after getting the complete intonation about the business or project plans; normally investors know how much risks involved in it. But if the palm will successfully making profit than the profit will distributed between the investors and business owners. In another term we can say that it is a co-ownership agreement between investors and owner of the business. Last but not the least is SUKUK. In this funds normally not collected by the banks it will collect from the markets and will be signed for a special purpose company. In 1998 SUKUK market collapsed and the Islamic scholar named “TAQI USMANI” wasn re-design the SUKUK form and include in a repurchase agreement for the date of its maturity.