What is Islamic Economics

Islamic economics has been around over the last few decades. However, it is still in its early stage of development. In contrast, conventional economics has become a well-developed and sophisticated discipline after going through a long process of development over more than a century. Is Islamic economics needed as a new discipline? If so, what is Islamic economics, how does it differ from both capitalism and communism, and to what extent does Islamic Economics present a third way? This work tries to briefly answer these questions.

Islamic economics is economics in accordance with Islamic law. Because the Qur'an spoke against usury in the context of early Muslim society, it generally entails trying to remove or redefine interest rates from financial institutions. In doing so, Islamic economists hope to produce a more 'Islamic society'. However, liberal movements within Islam may deny the need for this field, since they generally see Islam as compatible with modern secular institutions and law. [1].

Islamic economics VS. Capitalism

Is there any real difference between the Capitalist and the Islamic economic system? Both systems are fine for you to make money if you figure out how, but they seem totally different in how money is in and out. The reasons would be the ultimate goal of each system.

Capitalism is based on the concept that economics is what examines man's needs how to satisfy those needs. The concept of freedom plays a major role in the Capitalist ideology. Freedom is guaranteed, therefore, one is free to satisfy his needs in any manner possible.

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. 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.

Capitalism is also based on the theory of relative scarcity. This means that there always has to be an 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 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. 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, like food, clothing, and shelter, as well as the intangible, such as 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. 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. The Islamic economic system is just a part of Islam. It cannot be separated from it and discussed as an individual component.

Islamic economics VS. Communism

Islamic economics does not seek to abolish private property, as was done by communism, nor does it prevent individuals from serving their self-interest. It recognizes the role of the market in the efficient allocation of resources, but does not find competition to be sufficient to safeguard social interest. It tries to promote human brotherhood, socio-economic justice and the well-being of all through an integrated role of moral values, market mechanism, families, society, and ‘good governance.’ This is because of the great emphasis in Islam on human brotherhood and socio-economic justice.

While conventional economics generally considers the behavior and tastes and preferences of individuals as given, Islamic economics does not do so. It places great emphasis on individual and social reform through moral uplift.

How and why it could present a third way

Islam uniquely considers distribution as the economic problem, and Muslims do not share with capitalists and communists as to production. Because Islam differentiates between the basic needs and luxuries, there exists no concept of relative scarcity of resources in Islam. Unlike the current systems, Islam will not impose any limits on the amount of wealth that an individual can acquire, thus creating and maintaining an

incentive to work. The shortsightedness of limiting production stems from the man-made ideologies that fail to understand the nature of creation. Because the Islamic system reflects the wisdom of the Creator, then the implementation of Islam will provide a society conducive to life that will address the needs of humanity based on the correct understanding of life. Muhammad said, "The son of Adam, if he had two valleys of gold, would desire a third and would not be satisfied till he bites the dust."

While generating massive abundance and wealth of resources by eliminating all the restrictions and oppressive systems that prevent production, Islam will safeguard against abuses of exploitation in acquiring wealth by limiting the way in which wealth is acquired. For instance, Islam denies the "free" market of Capitalism which has led to the situation of "survival of the fittest".

In the systems of today, the stock market offers no such protection and allows for any outsider to secure a share in any business or corporation and impose his policies on the company agenda, even if that individual puts no effort or work into the business. Today, food manufacturers have cultivated the art of burning surplus food and dumping surplus milk into the ocean to artificially inflate prices by creating "scarcity," an art that would cease to exist with the implementation of Islam.

Unlike today's system, which opens all doors for anyone to access wealth by any means, Islam categorizes wealth in a systematic way that both protects the right of individuals to access wealth and, simultaneously protects the society and secures the needs of the Umma. Islam mandates vital and natural resources as public property while allowing for unlimited access to luxury items. Also, Islam protects the society by defining certain needs as "prohibited needs." For instance, to protect the honor of the woman, Islam would outlaw all forms of prostitution, pornography, or any type of sexual bombardment that exploits the charms and physical attractiveness of women. In addition, Islam would prohibit alcohol and gambling, killing every industry and institution derived from such filth that has seeped the Capitalist Nations in a downward spiral of corruption, social turmoil, and moral devastation.

In addition, the affectivity with which the Islamic economic systems correctly defines the economic problem and secures the needs of every individual, and eliminates all forms of economic and social corruption, would provide fuel for the foreign policy of the state that would enable the Khalīfah to easily spread Islam ideologically throughout the world.

Islam doesn’t support extreme communism but it doesn’t support extreme capitalism either. It’s somewhere in the middle.

References

[1] From Wiki online http://en.wikipedia.org/wiki/Islamic_economics

Qur'an  The Qur'ān  (Arabic: القرآن al-qurʼān, literally "the recitation"; also called al-qurʼān al-karīm "The Noble Qur'an"; also transliterated as Quran, Koran, and Al-Quran), is the central religious text of Islam.

Muhammad (Arabic محمد muḥammad; also Mohammed, Mohamet, and other variants), 570-632 C.E., was an Arab religious and political leader who established Islam and the Muslim community (Ummah, Arabic: أمة) to whom he preached. He united the tribes of the Arabian Peninsula into a federation of allied tribes with its capital at Medina.

Umma  Umma (Arabic: أمة‎) is an Arabic word meaning community or nation.

Khalīfah  Caliph is the title for the Islamic leader of the Ummah, or community of Islam. It is a transliterated version of the Arabic word خليفة Khalīfah which means "successor" or "representative".