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An analysis of economic system in Islam

1. Introduction
Geopolitics has traditionally been the study of the relationship and links between political
power and geographic space. The doctrine of Geopolitics gained attention largely through the
work of Sir Helford Mackinder (1) in England and his formulation of the Heartland Theory in
1904. Geopolitics is important because most wars are fought over resources as President
Woodrow Wilson (2) said in 1919:
‘Is there any man, is there any woman, let me say any child here that does not know that the
seed of war in the modern world is industrial and commercial rivalry.
In order to understand the relevance of Islamic Economic System in a global perspective the
following Geo-Political Myths should be kept in mind.

1.1The world is over populated:


Modern research on the genetic structure of human populations suggests that nearly 15,000
years ago the world population was 15 million (the present population of Delhi, India). The
population by the time of Jesus over 2000 years ago had increased to 250 million (about the
same as present day Indonesia). On the eve of the industrial revolution in the 18th century
world population had tripled to about 700 million (nearly the size of current day Europe). In
the two centuries that followed, the global population increased at an annual rate of 6%
reaching 2.5 billion by 1950 and more than doubled in the next 50 years at a rate of 18% to
reach 6 billion on the eve of the 21st century. Although growth rates are slowing, barring
some demographic catastrophe the world population should reach 9 billion by 2050. The
current population of the world stands as of September 2008 at 6.72 billion. The rate of
population growth over the last century has been labeled as the underlying cause of the world
standing on the brink of disaster;
 Sir Helford John Mackinder PC (15 February 1861 – 6 March 1947) was an English
geographer, academic, politician.
 Woodrow Wilson (1856-1924), the 28th U.S. president, served in office from 1913
to 1921 and led America through World War I (1914-1918).
It is argued by the proponents of overpopulation that the huge growth in world population is
responsible for poverty, environmental destruction and social unrest and that economic
development in the third world is impossible as long as populations continue to grow. As a
result, international agencies and governments have developed and implemented numerous
programmers in the third world to curtail the rate of population growth.

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An analysis of economic system in Islam

This alleged overpopulation has to be in relation to something to qualify it being over. That
something is the use of resources. The resources being consumed leading to global
imbalances are attributed to population sizes. However, when all assumptions on the effects
of population growth are scrutinized population increase in no way has ever contributed to
the many ills of the world today and what becomes clear is that there is a clear political
agenda in attributing the increasing global population as the cause of the worlds potential
disaster. This agenda is to shift the real cause away from the lifestyles, living patterns, un-
sustainability of consumerism, poverty and blatant abuse of the third world in order that the
Western world can live off the third world.

The developed world also faces a very serious conundrum; Japan, Russia, Germany,
Switzerland and much of Eastern Europe are experiencing population decline, due to a huge
reduction in births. The rest of the Western world would also have declining populations
were it not for immigration. As population numbers decline in the West relative to the third
world, such countries will have a legitimate right based upon their numbers to demand
greater say in so called international institutes and representation on international bodies.
Although there is no consensus as to why the first nation in the world to industrialize was
Britain, its causes are generally accepted as potentially eight factors, one of them being the
growth in population. Following the union with Scotland in 1707, the British population
stood at 6.5 million; a century later it had doubled to well over 16 million. More importantly,
most of that growth had taken place after 1750 in one of the greatest population explosions in
British history. This increase was critical as it increased the potential labor force and
consumers of commodities.

China and India have also proven that a large population is a good thing. Despite
implementing programmers of population reduction under the influence of the West, China
and India have been unable to curtail the rate of population growth and yet both represent the
fastest growing economies in the world, which contradicts the overpopulation view that more
means more resources being depleted. The world is not overpopulated. There is more than
enough food and resources for the people of the world. However, the lion’s share of this is
consumed by the West.

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An analysis of economic system in Islam

1. World Population 2007


1. World 6.7b
2. Asia 3.9b
3. China 1.3b
4. India 1.1b
5. Africa 887m
6. Europe 774m
7. Latin America 558m
8. North America 332m
9. US 304m
10. Indonesia 231m
11. Brazil 187m
12. Pakistan 163m
13. Bangladesh 158m
**United Nations Department of Economic and Social Affairs – Population Division

1.2. The third world is in poverty because there is not enough food in the
world:
Numerous organizations have researched into the general causes of poverty is the lack of
resources to the nature of the local climate. There is generally no consensus on the causes by
sociologists and think tanks. However, a dominant idea that exists is that only the diffusion of
capitalism with its free markets is the cure. A cursory glance at the world but the third world
in general shows a handful of factors have played a large part in contributing to the poverty in
the world today rather than the shortage of food. The role of IMF and World Bank and their
notorious structural adjustment policies in countries such as Pakistan, Turkey, Indonesia,
Bangladesh and Egypt have directly aided some of the underlying economic problems. The
general solution provided by such institutions is one of trading their way out of poverty. They
were forced to implement policies such as reducing and eliminating grain reserves,
eliminating tariffs on food coming from Europe and the US and removing subsidies for
fertilizer and other agricultural inputs. What this actually means is that Western goods should
be imported rather than allow imports from poorer countries. The theory is that only via trade
will nations pull themselves out of poverty. The development of a market economy with a

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An analysis of economic system in Islam

greater role for the private sector was therefore seen as the key to stimulating economic
growth and removing poverty.
As an example, Bangladesh actually required essential investment in health, education and
infrastructure before they could compete internationally. The World Bank and IMF instead
required Bangladesh to reduce state support to these sectors and concentrate on exports. They
insisted on pushing Bangladesh into markets where they were unable to compete with the
might of the international private sector. Such policies inevitably undermined the economic
development of Bangladesh. Another factor which has handcuffed the third world in poverty
is debt. Africa is being asked to repay its legacy of the colonial era. Africa’s debt is partly the
result of the unjust transfer to them of the debts of the colonizing states, in billions of dollars,
at very high interest rates. It also originates from ‘odious debt’ (3), whereby debt was
incurred as rich countries loaned funds to dictators and corrupt leaders when it was known
that the money would be wasted.
(3) Odious Debt - In international law, odious debt, also known as illegitimate debt, is a legal
theory that says that the national debt incurred by a despotic regime should not be
enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the
regime that incurred them and not debts.
(4) Apartheid debts - are those debts which the newly elected government inherited from the
former apartheid regime mostly in African nations in early nineties.
The industrialization of agriculture through monocropping and over-reliance on chemical
fertilizer and pesticides has effectively created economies of scale such that it is almost
impossible for small farmers to succeed. Genetic modification of seeds yet another layer to
that industrialization, ensuring that large agribusiness companies including Monsanto(5),
Archer Daniels Midland(6), and Cargill(7)continue to post record profits The developed
world continues to argue there is not enough food in the world, with populations rising there
are just too many mouths to feed. Food shortages has also been utilized to explain the rise in
food prices, however this fails to explain why in an increasingly productive and affluent
global food system up to one billion people will likely go hungry? The problem is in the
global food system i.e. the distribution of agricultural goods around the world and more
importantly the corporate monopolization of the world’s food system.

Policies such as structural adjustment demanded by these institutions meant most developing
countries had to not only cut back on health and education, but food stamps and other support

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An analysis of economic system in Islam

for the very poor. Trade barriers and other support mechanisms for local industry also had to
be removed, allowing foreign companies to more easily compete (yet richer countries have
hardly reduced their barriers in return). In addition, most poor countries were strongly
encouraged to concentrate more on exporting cash crops to earn foreign exchange in order to
pay off debts. This resulting reduction in biodiversity of crops and related ecosystems meant
worsening environments and clearing more land or increasing fertilizer use to try and make
up for this. Increasing poverty and inequality thus fueled corruption making the problem even
worse. Food dumping (while calling it aid) by wealthy nations onto poor countries, vast
agricultural subsidies in North America and Europe have all combined and have had various
effects on the poverty in the third world.

(5) Monsanto – An American agrochemical and agricultural biotechnology corporation.(6)


Archer Daniels Midland – The ADM Company is an American global food processing and
commodities trading corporation, headquartered in Chicago, Illinois.(7) Cargill - Founded in
1865, it is the largest privately held corporation in the United States in terms of revenue. The
third world remains poor due to the policies of the West and will remain poor not because of
a shortage of food but due to the excessive consumption of the West: - The West with 20% of
the world population consumes 80% of the world’s agricultural production

 Consumes 86% of the world’s goods


 Consumes 75% of the world’s milk
 Consumes 70% of the world’s Timber
 Consumes 62% of the world’s Water
 Consumes 48% of the world’s energy
 Consumes 45% of all meat and fish

There is more than enough food in the world; the West just consumes the lion’s share of it.

Poverty Index across the world

Country Percentage of total population living below the


poverty line
1. Sierra Leone 70%
2. Colombia 64%
3. Georgia 54%
4. Kenya 52%
5. Bangladesh 50%
6. Iran 40%

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An analysis of economic system in Islam

7. Pakistan 33%
8. Jordan 30%
9. Indonesia 27%
10. Turkey 20%
11. Egypt 20%
12. Syria 12%
**United Nations 2007

1.3. The third world need to liberalize their economies for them to develop:
The last three decades have seen Capitalism dominate the international development scene. It
has completely monopolized economic development and enforced its formula upon the
world. The Asian tiger economies of China, South Korea, Taiwan, Singapore and Hong Kong
are shown regularly as successful nations who adopted liberalism and progressed. The IMF
alongside the World Bank proclaimed industrialization and the diffusion of liberal economic
ideas would transform traditional economies and societies. These influences would place
poor countries on a path of development similar to that experienced by Western industrialized
nations during the Industrial Revolution.
Today poverty is the state for the majority of the world’s people. Three billion people in the
world live on fewer than two dollars a day; another 1.3 billion people live on less than one
dollar a day. 1.3 billion Have no access to clean water; three billion have no access to
sanitation and two billion have no access to electricity. Liberalism has actually been the cause
of the wealth disparities in the
World and the poverty of the majority of the world’s people face. Liberalism has resulted in
the Western world feeding off the remainder of the world. Liberalism has in no way helped
alleviate poverty, it actually contributed to it, and hence any continuation of liberal economic
policies in the third world will result in the poor getting even poorer.
Liberalism has even created huge wealth disparities in the West and this can be seen by
looking at just the US and the UK. The UK for example generated wealth (GDP) of £2.2
trillion in 2005, this was an increase from the previous year which for liberal economists
means people have more wealth, have more to spend thus they must be happy. However, if
we look at how much
The 60 million population of the UK received of this generated wealth, 2005 statistics from
HM Revenue and Customs show that the richest 10% have more than 50% of the nation’s
wealth and that 40% of the British population shared in only 5% of this wealth. This has
resulted in the majority of the population resorting to borrowing to fund their lifestyles and

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this is why UK consumer debt is more than £1.3 trillion, more than the actual economy. The
US situation is even worse; the US may generate $13 trillion a year in wealth but national
debt is $8.5 trillion. This means US citizen are funding their lifestyles by borrowed money
rather than the $13 trillion the economy generated. In a2005 Harvard report it was calculated
that 10% of the population owned 71% of the wealth, and the top 1% controlled 40%. On the
other hand, the bottom 40% owned less than 1% of the nations.
1. 4. Islam is outdated. Since the development of Capitalism, Islam has
made no contribution to science and technological development – It belongs
in the Stone Age:
For the last two centuries the world has witnessed unprecedented leaps in science and
Technology, the development of railways, aero planes, nuclear technology, the Internet, IVF
and genetically modified food. Such developments have taken place in parallel to the
development of the West, reaching levels unparalleled in history. This monopolization of
technological and scientific inventions had led to the belief that liberal values are a pre-
requisite for development.

Most thinkers, scientists and philosophers claim Islam has no place in the world today. This
view is built upon the premise that none of the Muslim countries have produced anything in
terms of scientific research or technological invention. The West claims that progress in
science and technology occurred when the West rid itself of the authority of the Church and
separated religion from life. For them the church stifled the development of science and
reason as religion is inherently built upon faith and superstition. Only with its removal from
the public sphere did the West manage to launch an industrial revolution and then flourish.
Today for liberals it is who invented science as we know it. They claim they laid its
foundations and have created its numerous branches.
Such a narrative omits a number of historical developments that are not Western and shows
how the West continues to view its history as the history of the world. Such a narrative also
conveniently omits what the West took from previous civilizations and especially the Islamic
civilization. Historically all civilizations have been characterized with some form of
technological and scientific development. The West has documented the contributions the
Romans made to the discipline whilst the Islamic world in the 8th – 10th century translated
the works of the Greeks in the area.

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An analysis of economic system in Islam

Science in essence is the study, research, and experimentation into the observable parts of the
universe. The development of automobiles was due primarily to the development of the
combustion engine. This is where the burning of fuel in an engine acts on the pistons causing
the movement of the solid parts, eventually moving the automobile. This was possible due to
the British Empire who originally used steam and then coal to drive pistons and then
eventually to generate rotary (motion) to move machines. Such developments where based
upon Al-Javari’s (8) work in the 12th century where he invented the crankshaft, and created
rotary motion through the use of rods and cylinders.
He was the first to incorporate it into a machine. A parachute is a device used to slow the
motion of an object through an atmosphere by creating drag. Current day parachutes were
developed from the designs and experiments of the past. In the 9th century, Infernos (9)
invented a primitive version of the parachute. He jumped from the minaret of the Mesquite
Mosque (10) using a huge wing-like cloak to break his fall and landed with minor injuries.
Subsequent Parachutes were made more compact and from stretched linen over a wooden
frame. Then folded silk, was developed as the material for parachutes taking advantage of
silk’s strength and light weight.
(8) Ismail al-Javari (1136–1206) - A Muslim polymath: a scholar, inventor, mechanical
engineer, artisan, artist and mathematician. He is best known for writing The Book of
“Knowledge of Ingenious Mechanical Devices”
(9) Infernos - Abu al-Qasim Abbas ibn FirnasibnWirdas al-Takurini (809–887 A.D.), also
known as Abbas ibnFirnas, was an Andalusian polymath.
(10) Mezquita mosque - One of the greatest Mezquita Mosque is situated in Spain town
Córdoba.
The Islamic golden age is considered to be the period from the 8th century to the 13th
century. During this period, engineers, scholars and traders in the Islamic world contributed
to the arts, agriculture, economics, industry, law, literature, navigation, philosophy, sciences,
and technology, both by preserving and building upon earlier traditions and by adding to
them. Howard Turner (11) mentioned in his book ‘Science in Medieval Islam,’
‘Muslim artists and scientists, princes and laborers together created a unique culture that has
directly and indirectly influenced societies on every continent.’
There were a number of specific elements within Islam that were the driving engine which
motivated Muslims to excel in this field. Muslims made a number of contributions to
Astronomy and eventually to the development of the astronomical clock. A Mechanical

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An analysis of economic system in Islam

lunisolar calendar with a gear train and gear-wheels was invented by Abū Rayhān Al-Bīrūnī
(12) in the 10th century. Based on such designs Taqi al-din (13) invented the mechanical
clock in the 15th century. The need to ascertain the development of the compass, which itself
was based upon the findings Muslims astronomers had collated. Muslims developed the
compass rose which displayed the orientation of the cardinal directions, north, south, east and
west on a map and nautical chart.
(11) Howard Turner - An expert on medieval history and Professor of the History of Arabic
Science, Harvard University
(12) Abū Rayhān al-Bīrūnī (973–1050) – Abū Rayḥān Muḥammad ibn Aḥmad Al-Bīrūnī,
known as Al-Biruni in English, was an Iranian scholar and polymath
(13) Taqi al-Din Muhammad ibnMa'ruf ash-Shami al-Asadi (1526–1585) - was an Ottoman
polymath active in Istanbul. He was the author of more than ninety books on a wide variety
of subjects, including astronomy, clocks, engineering, mathematics, mechanics, optics and
natural philosophy.
Early Muslims understood that Islam views all the material matters which include the
sciences, technology and industry, as merely the study of the reality and a study of how
matter can be manipulated to improve the condition and living standards of humanity. As
many lands came under the fold of the Islamic civilization, urbanization led to a number of
developments. The Arabian Desert had scant water springs making most of the region
uninhabitable. This was overcome by Muslim engineers developing canals from the
Euphrates and Tigris rivers. The swamps around Baghdad were drained, freeing the city of
Malaria. Muslim engineers perfected the waterwheel and constructed elaborate underground
water channels called Qantas (14). This led to the development of advanced domestic water
systems with sewers, public baths, drinking fountains, piped drinking water supplies and
widespread private and public toilet and bathing facilities.
Muslims thinkers, scientists, engineers and experts made significant contributions to science
as well as many other disciplines. Many of these contributions were later used by the West
who made further contributions to the field. The nature of science as a universal subject
means no single civilization can lay claim to inventing it but rather most civilizations have
documented their contributions throughout history which acted as previous information when
experimentation was carried out by latter civilizations.

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1.5. The Industrialized nations developed due to the adoption of free trade
and markets:
Britain is regarded as the fountain of laissez-faire (15) doctrine and the only country to have
practiced free trade. Britain is regarded as the only nation to have developed with little or no
state intervention. However, this cannot be further from the truth since Britain was the first
country to establish infant industry protection. This is where obstacles are placed upon
foreign competition to ensure domestic companies develop with no competitors.
(14) Qantas - An ancient system of a gently sloping underground channel or tunnel
constructed to lead water from the interior of a hill to a dry lower region(15) Laissez-faire –
A French phrase refers to an economic system in which transactions between private parties
are free from government intervention such as regulation, privileges, tariffs and subsidies.
‘Manufactures had to be protected at home from foreign finished products; free exportation
of finished articles had to be secured; and where possible, encouragement had to be given by
bounty and allowance.’
This meant import duties on raw materials were lowered, duties on foreign manufactured
goods were significantly raised. Specifically, Britain banned the imports of superior goods
from some of its colonies if they happened to threaten British industries. The next big change
came in 1846 with the repeal of the Corn Laws, which were import tariffs ostensibly designed
to protect British farmers and landowners against competition from cheap foreign grain
imports. But this was intended to halt the move to industrialization on the continent by
enlarging the export market for British agriculture. Britain’s technological lead that enabled
the shift to a free trade regime had been achieved behind high and long lasting tariff barriers.
The overall liberalization of the British economy was a highly controlled affair overseen by
the state and not achieved through a laissez-faire approach.
US development also occurred in a similar fashion. It wasn’t until after World War 2 that the
US began to liberalize trade and the reasons for this was outlined by Dr Jon Change, an
expert in economic history at Cambridge ‘it was only after World War 2 that the USA – with
its industrial supremacy unchallenged - finally liberalized its trade and started championing
the cause of free trade.’
1.6 Objective of the study
The objectives of this Thesis are categorized into two sections.
 General Objective

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 Specific Objective
1.6.1 General Objective-
 The general objective of this thesis is to become familiar with the economic system in
Islam and also to fulfill the requirement of Economics program.
 In order to get awareness of the terminologies of Islamic economic system among
the students in economics and its impact on the future possibility of providing Islamic
methods of economics.
 This paper examines the implications of the different definitions proposed of Islamic
economics, exploring its scope and attempting to outline its methodology. As we shall
see later in the paper, there seems to be no agreement among Muslim economists
about the definition of Islamic economics, its scope, and relation to conventional
economics, methods and instruments of analysis and even some of its basic
assumptions. This paper is an attempt to reflect on the different opinions about these
issues and an endeavor to settle some of them as far as possible.
 The rebirth of Islamic economics in the early part of the twentieth century was
dominated by scholars and writers with a background in Islamic sciences. This
strongly influenced its scope and methodology, giving Islamic economics a basis of
jurisprudence and common knowledge type of tendency.
 The paper initially deals with the definition of Islamic economics and its scope. It
analyzes the definitions proposed by some writers and show their inadequacy and
sometimes irrelevance to the issue in hand. In the following sections, it deals with
methodological issues. It will outline the main methodological problem by addressing
the question of whether Islamic economics calls for a methodology of its own or, as
an ‘expanded’ economics, it accepts the general framework of the scientific methods
applied in Western economics.
1.6.2 Specific Objective
 To understand and analyze the overall activities of economic system in Islam.
 To evaluate the economic system in Islam.
 To study the operational efficiency of economic system in Islam.
 To be acquainted with the different departments of economic system in Islam.
 To relate theoretical learning with the real life situation.
 Identification of implementation purpose.

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2.0 Literature Review


The collapse of the Soviet Union in 1990 was heralded as a landmark event in history; it was
considered the wholesale rejection of a way of life and end of Communism. The post - WW2
world was dominated by the competition between the Capitalist free market led by the US
and state intervention led by the Soviet Union. Francis Fukuyama considered one of the most
important living public intellectuals considered the development of ideas to have ended in his
‘end of history' thesis as there was no meaningful debate left between Marxism and the
market. The word economy is derived from an old Greek term, which means the planning of
home affairs, such that it’s active members associate in producing the commodities and
performing the services, and all of its members share in enjoying what they possess. Through
time, people extended the meaning of home until it meant the community which is governed
by one State.

Though both economic science and the economic system deal with the economy, their
respective meanings differ significantly. This is because the management of the community’s
affairs in respect of the creation of wealth is one issue, and the management of the people’s
affairs in respect of wealth distribution is another issue entirely. So, the subject of managing
the economic material must be separated from the subject of managing its distribution. The
first is related to the means and the second is connected with the thought. The economic
system must be discussed as a thought that is based upon the viewpoint of life (the creed of a
particular ideology), and economic science must be discussed as a science that has no
relationship with the viewpoint in life.
The most important subject in this context is the economic system, because the economic
problem revolves around mankind’s needs, the means of their satisfaction, and utilizing these
means. Since the means are present in the universe, their production does not cause an
essential problem in satisfying the needs, but rather the needs drive man to produce these
means. However, the real problem presents in the relationships of people i.e. in the society,
results from enabling or restricting people from utilizing these means. This results from the
subject of man’s ownership of these means. This is the basis of the economic problem, which
must be treated. So the economic problem results from the subject of possessing the benefits,
not from producing the means which give the benefit.

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2.1 The Capitalist Economic System

If we examine the Capitalist economic system we find that, in their view, it deals with man’s
needs and the means of satisfying those needs. It only addresses the materialistic side of
man’s life and it is established on three principles:

2.2. View towards needs and unlimited wants against limited resources:
Man has needs that require satisfaction, so there must exist the means to satisfy them. These
needs are purely materialistic; they are either tangible, or intangible. The means of
satisfaction are called commodities and services. Commodities are the means of satisfying the
tangible needs, whereas services are the means of satisfying the intangible needs. What
makes commodities and services satisfy the needs, in their viewpoint, is the benefit in these
commodities and services. This benefit is an attribute which renders the thing desirable for
satisfying a need. Since the need means the economic desire, then the economically
beneficial thing is everything desired, whether it is essential or not, and even if some consider
it beneficial and others consider it harmful. It is considered economically beneficial as long
as there is someone who finds it desirable. This makes them consider things as beneficial
from an economic viewpoint even if the public opinion considers them of no benefit, or
harmful. Thus gambling and wine are beneficial things to the economists since there are
people who want them.

The economist looks upon the means of satisfaction, that is, the commodities and services,
from the viewpoint that they satisfy a need, without taking any other factor into
consideration. Thus, he looks at the needs and the benefits as they are, not as they should be
i.e. he looks at benefit as satisfying a need, without taking anything else into consideration.
So he would look at wine in its capacity of having an economic value because it satisfies the
needs of some people, and he perceives the wine maker as a person who provides a service,
considering this service as having an economic value, because it satisfies the need of some
individuals.
This is the nature of needs in Capitalism and the nature of the means of satisfying these
needs. Hence, the economist does not care about the nature of society, but cares about the
economic material resources (economic commodities), since they satisfy a need. Therefore,
the function of the economist is to supply commodities and services i.e. to provide the means
of satisfying man’s needs, irrespective of any other consideration. Accordingly, the

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economist strives to make available the means of satisfaction. Since the commodities and
services, which are the means of satisfaction, are limited, they are not sufficient to meet all of
man’s needs, because these needs in their view are unlimited and constantly growing. These
needs multiply and increase and they all need complete satisfaction, a situation which cannot
be fulfilled no matter how much commodities and services increase.
2.3 The value of a product which is the basis of most economic research
and study:
The value of the product means its degree of importance, whether relative to a particular
person or relative to another thing. In the first case, it is called ‘the value of the benefit’. In
the second case, it is called the ‘value of exchange’. The value of the benefit of a thing can be
summarized as: the value of benefit of any unit of a thing is evaluated by its marginal benefit
i.e. by the benefit of the unit that satisfies the weakest need. They called this ‘The Theory of
Marginal Utility’. This means that the benefit is not evaluated according to the viewpoint of
the producer alone i.e. evaluated by the costs of its production, since this would mean
consideration of supply without demand. Nor is it evaluated from the viewpoint of the
consumer alone i.e. evaluated by its benefit and desirability, as well as looking at its relative
shortage, because this would mean the consideration of demand without supply. In fact, they
claim that benefit should be observed from the viewpoint of supply and demand together.
Thus the benefit of a thing is assessed at the last point that satisfies the need i.e. at the
minimum point of satisfaction. Therefore, the value of a loaf of bread is assessed at the
minimum point of hunger not at its maximum, and at a time when there is an availability of
bread in the market, not at a time when there is a shortage.
2.4 Price is the exchange value of a thing with money:
The price is the cornerstone of the Capitalist economic system. In modern history, the value
of exchange has been identified by one of its values, and this type of value has become
predominant. In developed communities, the values of commodities are not related to each
other but are related to a certain commodity called money. The exchange ratio of a
commodity or a service with money is called its price. The price therefore, is the amount of
exchange of a commodity or a service relative to money. Hence, the difference between the
value of exchange and the price is that the value of exchange is the ratio of an exchange of
one thing with another, whether that thing is money, commodities, or services; while the
price is the exchange value of a thing with money. This means that it is possible that the

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prices of all goods rise at any one time, and all fall at any one time, whilst it is impossible that
the exchange values of all commodities relative to each other rise or drop at any one time. It
is also possible for prices of commodities to change without resulting in a change in their
value of exchange.
2.5 Role of price in production, consumption, and distribution:
As for the role which the price plays in production, consumption, and distribution, it is the
price mechanism that decides which of the producers will enter the production race and
which will be excluded. In the same manner, price decides which of the consumers will
satisfy their needs and which consumers will not be able to do so. The production cost of a
commodity is the principal factor which governs its supply in the market, while the benefit of
the commodity is the principal factor which governs the demand in the market for it, and both
are measured by the price. Therefore, the study of supply and demand is the fundamental
issue in the Capitalist economy.

2.5.1 Price is the incentive for production:


The price mechanism in the view of the Capitalists is the ideal method of distribution of
commodities and services amongst individuals in society, since the benefits are the result of
the efforts which man expends. So, unless the compensation is equal to the effort, then, no
doubt, the level of production will drop. Therefore, the ideal method to distribute
commodities and services in a society is that which guarantees the highest possible level of
production. They consider that the price mechanism produces economic equilibrium
automatically, since it gives the consumers the choice to decide for themselves the
distribution of the resources owned by the society over the various economic activities,
through the consumers demand for some commodities and their turning away from others.
Hence they spend their income by buying what they need or what they like. Thus, the
consumer who dislikes wine will abstain from buying it and spends his income on other
things. If the number of consumers who dislike wine increased, or if all came to dislike it,
then the production of wine becomes unprofitable due to decreasing demand. Thus,
production of wine would stop naturally, and the same rule applies to other commodities and
services. The consumers themselves define the level and kind of production by being left free
to decide what to buy and what to leave.

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An analysis of economic system in Islam

2.5.2 Price is the means which regulates distribution:


Man likes to satisfy all of his needs completely and he strives to obtain the commodities and
services which satisfy these needs. Had every human being been left free to satisfy his needs
he would not stop short of possessing and consuming whatever commodity he likes. Since
everyman strives for this same aim, everybody has to stop in satisfying his needs at the limit
at which he can afford to exchange his efforts with others efforts, that is at the limit of the
monetary compensation which he receives for expending his effort i.e. at the limit of the
price. Therefore, the price is the constraint which acts naturally to restrict man in his
possession and consumption to a level which is proportional to his income. So the existence
of the price makes man think, evaluate, and differentiate between his competing needs which
require satisfaction, and he takes what he finds necessary, and leaves what he finds of less
importance. So, the price is the tool which regulates the distribution of utilities required by
individuals.

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An analysis of economic system in Islam

3.0 Methodology

The present research work is both descriptive and analytical in nature. This section includes
brief discussion on Study area, Data sources, Data collection Method, Variables chosen for
the Study, Techniques of data analysis and Sample design. The aim of this thesis is to gain a
deeper understanding about the Islamic System in Islam particularly focused on Economics,
and also explains capitalist economy and socialist economy. In case study part it tries to
analyze the economic principle in Islam, their economically viability, how to solve the
problem of shortage of wealth and how it is socially benefit the peoples and finally explains
about the data sources used for the study.

To reach a conclusion this paper collects and organizes the information from various sources.
This part of the thesis contains which data sources I have used to gather all the related
information about Economic System in Islam. There are two types of data sources:

3.1 Data Collection Method

3.1.1 Primary Sources


Primary data collected from Islamic sources. The revealed messages in Islam (Al-Quran), the
evidences from messenger of Islam, the historical reference from Islamic Empires throughout
the fourteen centuries. After that I collected data from the world class Islamic scholars’
articles and books.

3.1.2. Secondary Sources


Secondary data collected from secondary Islamic sources. The classic scholar’s analysis,
where described the Islamic economic system and its applications.

3.2 Limitations of the study


I have faced some limitations for preparing this thesis. These are as follows:
 As an intern it was difficult for me to collect information about the economic system
in Islam from rough materials like Arabic Contexts.
 It was very difficult to collect information from various personal for their research
work.
 There is no Islamic economic system run in the world. So, I had to rely on theoretical
contexts than practical.

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An analysis of economic system in Islam

 Scholars are so much busy with their regular activities. So they cannot provide
enough time for discussion.
 Lack of availability of information and data, as in many cases updated data were not
available.
 Some of the scholars were less interested to respond to my questionnaire.

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An analysis of economic system in Islam

4.0 Findings of the Islamic Economic System:


By studying Capitalist Economy thoroughly, the falsehood of the Capitalist economic system
can be shown from many aspects:

4.1 Mixing the Needs and the Means of Satisfaction:

The needs and the means of their satisfaction are considered to be interrelated such that they
are one subject, inseparable from each other, as if one of them is included within the other.
So, the distribution of commodities and services is included in the subject of the production
of these commodities and services. They look at the economy from one angle which includes
the economic commodities and the method of their possession, without separation between
them and without differentiating one of them from the other. Thus, they hold one view
towards the economic science and the economic system without differentiating between
them. However, there is a difference between the economic system and economic science.

4. 2. Needs are only Materialistic:


The reference to the needs which require satisfaction as being purely materialistic is an error,
and contradictory to the reality of needs. In addition to material needs there are moral and
spiritual needs, each requiring satisfaction, and each requiring commodities and services for
their satisfaction.
4.3. Commodities and Services are not related to the structure of the
Society:
The Capitalist economists look to the needs and benefits as they are, not as the society should
be which means that they look at man as a purely materialistic creature, empty of spiritual
needs, ethical thoughts, and moral objectives. Similarly they do not care about how the
society should be structured in terms of moral elevation, by making the virtues the basis for
society’s relationships or what should prevail in the society by way of spiritual elevation. So,
if man does not cheat in selling it is because he believes his trade will profit while if he were
to profit by cheating, then cheating would be legal for him. He does not feed poor people in
response to the order from God for him to give charity; rather he feeds them so that they do
not steal from him. If, however, their starvation increases his wealth then he would leave
them to starve. Thus, the main concern of the Capitalist is to look for the benefit which
satisfies a materialistic need only the individual that looks at others based on his own benefit,

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and establishes economic life on this basis, is the most dangerous person to society and
people. This is from the aspect of needs and benefits.
From the aspect of resources and efforts, which are called commodities and services, the
individual strives for them to obtain them, so as to gain benefit from them. The exchange of
resources and efforts among people creates relationships among them, according to which the
structure of the society is formed. Therefore, it is incorrect to consider a thing as beneficial
just because there is somebody who likes it, whether it is itself harmful or not, and whether it
affects the relationships among people or not, and whether it is prohibited or permitted in the
belief of the people in the society.
Capitalist economy does not lead to an improvement in the level of livelihood for all
individuals, and does not fulfill the basic welfare of every individual. The erroneous aspect in
this view is that the needs which require satisfaction are individual needs; they are needs of a
man. The one who strives to satisfy his needs is the individual, whether he satisfies them
directly such as eating, or he satisfies them through the satisfaction of the whole group such
as the defense of the nation. Therefore, the economic problem is focused on distributing the
means of satisfaction for individuals i.e. the distribution of the funds and benefits to the
members of the nation or people, not on the needs which the nation or the people require
without regard to every individual within the nation. In other words, the problem is the
poverty which befalls the individual not the poverty which befalls the nation. The concern of
the economic system must only be in satisfying the basic needs of every individual, not the
study of producing economic commodity.
Consequently, the study of the factors that affect the size of national production differs from
the study for satisfying all the basic needs of all individuals personally and completely. The
subject of study must be the basic human needs of man, as a human being, and the study of
Distributing the wealth to the members of society to guarantee the satisfaction of all their
basic needs. This should be the subject of study, and should be undertaken in the first place.
Moreover, the treatment of the poverty of a country does not solve the problem of poverty for
individuals, individually. Rather, the treatment of the poverty problems of the individuals,
and the distribution of the wealth of the country among them, motivates all the people of the
country to work in increasing the national income. The study of factors that affect the size of
production and the increase of the national income, should be discussed as economic science,
that is, in the discussion of the economic commodity and its increase, rather than in the
discussion of satisfying the needs, which are regulated by the economic system.

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An analysis of economic system in Islam

4.4 Basic human needs are limited and the resources existent in the world
are certainly sufficient to Satisfy it:
The Capitalists claim that the economic problem which faces any society is the scarcity of
commodities and services. They also claim that the steadily increasing needs, and the
inability to satisfy all of them i.e. the insufficiency of commodities and services to satisfy all
of man’s needs completely, is the basis of the economic problem. This view is erroneous and
in fact contradicts with reality. This is because the needs which must be met are the basic
needs of the individual as a human (food, shelter and clothing), and not the luxuries, although
they too are sought. The basic needs of humans are limited, and the resources and the efforts
which they call the commodities and services existent in the world are certainly sufficient to
satisfy the basic human needs; it is possible to satisfy all of the basic needs of mankind
completely. So, there is no problem in the basic needs, quite apart from considering it the
economic problem that faces society. The economic problem is, in reality, the distribution of
these resources and efforts enabling every individual to satisfy all basic needs completely,
and after that helping them to strive for attaining their luxuries
An increase in the level of production leads to a rise in the level of the wealth of the country
but does not necessarily lead to the complete satisfaction of all the basic needs of each and
every individual. The country could be rich in natural resources, as in the case of Bangladesh,
Nigeria, Indonesia, Venezuela, Brazil and Iraq, but the basic needs of most of their citizens
are not satisfied completely. Therefore, the increase of production by itself, doesn’t solve the
basic problem which must be treated first and foremost, which is the complete satisfaction of
the basic needs of each and every individual, and following that enabling them to satisfy their
luxuries.
4.5 Islamic Economy considers value as being relative and not real:
In Capitalism value is treated as a subjective measurement. Hence, the value of a yard of
clothes the marginal benefit of it assuming its availability in the market. Its value is also the
quantity of commodities and efforts that could be exchanged for it. The value becomes a
price if what is obtained for the yard of cloth is money. These two values, in their view, are
separate, and they have two distinct names; benefit and the value of exchange. The meaning
of value according to this definition is wrong, because the value of any commodity is the
quantity of benefit in it, taking into account the element of scarcity.

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An analysis of economic system in Islam

So the real view towards any commodity is to observe its benefit whilst taking into account
its scarcity, whether it is possessed by man from the start like from hunting, or by exchange
like selling; and whether this was related to the person or related to the thing. So the value is
an objective measurement and not a relative thing.
(16) Basic needs - food, shelter and clothing
Therefore, the subject of value is wrong from its basis, and any subject based on it is
definitely wrong since the basic concept is false. However, if the value of the commodity was
evaluated in terms of its benefit measured by the benefit of a commodity or an effort, then
such an evaluation would be correct and would lead to much greater stability over the short
term. If the value was estimated by the price, the evaluation would be relative not real, and it
comes closer to changing every time according to the market. In this latter situation, it is false
to refer to it as a value, and so the term value would not truly apply to it. It would rather
become a means to obtain money according to the market and not according to what it
possesses of benefits.

4.6 Islamic Economy in crisis:


The 7th December 2006 saw the culmination of a global study - from the World Institute for
Development Economics Research of the United Nations. Some of its findings are
staggering; by gathering research from countries all over the world the study’s findings
concluded that the richest 1% of the world owns 40% of the planet's wealth and that only
10% of the world’s population owned 85% of the world’s assets.\

All of this is at a time when the developing world sits on debts of over $1.2 trillion, 1.3
billion people live on less than one dollar a day; 3 billion live on under two dollars a day; 1.3
billion have no access to clean water; 3 billion have no access to sanitation and 2 billion have
no access to electricity. Although Islamic economy has created some of the richest people in
the world it has also created a vast disparity been the rich and poor and this remains its major
failure. Many of the problems today in terms of the distribution of wealth, poverty and
development are a result of the philosophical underpinnings of capitalism which the UN
study glanced over and only once these causes are assessed can the status quo change for the
developing world.

During the last two decades the world witnessed the global food crisis some, soaring oil
prices and some of the largest and spectacular collapse of major banks and companies around

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An analysis of economic system in Islam

the world and the possibility of a severe recession. Northern Rock in Britain, Bear Sterns in
the US, the real estate bubbles in both the US and Europe all crashed in spectacular fashion.
Financial crisis has become such a regular occurrence, many in the West consider the
periodical market failure as part and parcel of Capitalism, and the Economist in its analysis of
the crisis encapsulated this attitude: “excess and calamity are part of the package of Western
finance. And still it is worth it.”

Policies such as the re-distribution of wealth, third world aid and the Make poverty history
campaign alongside the numerous charities do not address the underlying problems hence
they have failed to even halt the problems the third world faces. Hence reform, globalization,
economic openness, more free trade etc are just mere cosmetics which in no way deal with
the underlying issues.

4.7 IMF & WB: Colonial tools to exploit the world

"The United States has viewed all multilateral organizations including the World Bank, as
instruments of foreign policy to be used in support of specific US aims and objectives…US
views regarding how the world economy should be organized, how resources should be
allocated and how investment decisions should be reached were enshrined in the Charter and
the operational policies of the bank."The Brookings Institute (17).

Since the creation of both the International Monetary Fund (IMF) the World Bank (WB) over
60 years ago, both have provided trillions of dollars in loans to poor countries. In addition to
providing financial resources, the World Bank – along with the International Monetary Fund
(IMF) – took the lead in making policy prescriptions to the third world, which it ensures are
adopted by making them “conditions” for lending.

The third world sits on debts of over $1.3 trillion, which has seriously hindered the third
worlds abilities to provide for the basic needs of their citizens, and imposed “conditionality”
interferes with governments’ rights to make sovereign decisions.
However, both multilateral organizations have very little success stories to boast about and
are now seen as tools, which destroy economies. The world bank’s notorious structural
adjustment policies came to be so maligned that its name was changed to ‘PRGF’(18). The
IMF’s bailouts, financial packages and reforms have also become notorious leaving many
nations in poverty and with mountains of debt. Below is a list of some cases: -

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An analysis of economic system in Islam

(17) The Brookings Institution - An American research group founded in 1916 on Think
Tank Row in Washington, D.C.
(18) PRGF- In September 1999, the IMF established the Poverty Reduction and Growth
Facility (PRGF) to make the objectives of poverty reduction and growth more central to
lending operations in its poorest member countries.
Argentina was considered by the IMF to be a model country in its compliance to policy
proposals by the Breton Woods institutions; however, it experienced a catastrophic economic
crisis in 2001, which was caused by IMF-induced budget restrictions — which undercut the
government's ability to sustain national infrastructure in crucial areas such as health,
education, and security. The IMF intervened to ensure its loans would be repaid and enforced
a set of reforms to achieve this. Argentina was ordered to structurally change their economy
to concentrate on exports in order to raise enough money to pay off their debts. Argentina
was forced to remove all barriers to foreign trade and enter the global marketplace this
resulted in the collapse of many local Argentine companies, as economically Argentina was
not ready. Argentina was forced to request further loans to feeds its population which actually
led to nationwide looting in 2001. In December 2001 on the verge of economic meltdown
Argentina defaulted on its $93 billion debt.
The fall of communism in 1990 and the break-up of the Soviet Union represented a
wonderful opportunity for capitalist institutes to transform a huge centralist economy to a
market orientated one. A total of $129 billion poured into Russia with $22 billion by the IMF
and the World Bank implemented a number of its development schemes. The IMF and WB
enforced its export policy as it does to all nations as a result all industry was developed to
produce goods ripe only for export abroad, hence Russia would forever become reliant on
worlds prices and world currency rates. Petroleum, natural gas, metals, and timber accounted
for more than 80% of Russian exports, leaving the country vulnerable to swings in world
prices. Hence when the crisis hit in 1997 Russia was so integrated into the global economy it
wasn’t even able to protect itself. The crisis raised poverty from 2 million to 60 million, a
3000% increase. UNICEF noted that this resulted in 500,000 'extra' deaths per year.
The World Bank in 1976 introduced a Transmigration program (19) (Transmigration V) in
Indonesia. This project was funded after the establishment of the Bank’s OESA
(environmental) office in 1971. Transmigration V was the largest resettlement program ever
attempted and designed ultimately to transfer, over a period of twenty years, 65 million of
Indonesians 165 million inhabitants from the overcrowded islands of Java, Bali, Madura, and

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An analysis of economic system in Islam

Lombok. The WB objectives were: relief of the economic and social problems of the inner
islands, reduction of unemployment on Java, relocation of manpower to the outer islands, the
strengthening of national unity through ethnic integration, and improvement of the living
standard of the poor. The project was a resounding failure it failed as the new settlements
went out of control; a local population fought with the migratory and the tropical forest was
devastated (destroying the lives of indigenous peoples). Many of the settlements were
established in inhospitable sites. The Funding continued through 1987, despite the problems
noted and despite the Bank’s published stipulations (1982) concerning the treatment of
groups to be resettled.
Jamaica was also on the receiving end of an IMF solution. In 1978, one year after Jamaica
first entered a borrowing relationship with the IMF; the Jamaican dollar was still worth more
on the foreign exchange market then the US dollar; by 1995, when Jamaica terminated the
relationship the American dollar had eroded to less than USD 2 cents. The help of the IMF
became highly questionable in the crisis.
These examples along with numerous others clearly illustrate the failure of IMF and World
Bank’s neo-liberal policies. However, understanding their failure is much deeper than any
reform or restructuring can fix, this can be understood if one looks at the origins and the
allocation of decision making powers. It was the US after its new found dominant position
after WW2 that decided international organizations were required to stabilize and maintain
the international financial system and world development.
(19) Transmigration program - was an initiative of the Dutch colonial government, and
later continued by the Indonesian government to move landless people from densely
populated areas of Indonesia to less populous areas of the country.
The US with the most influence in the world at the time ensured the dollar became the central
currency to which all currencies would be pegged even gold was pegged to the dollar; as a
result, what was created was a global economic system that traded in dollars. Thus the US
global economic hegemony was secured, long term, through the vehicles of the IMF and
World Bank, the US still today has the most voting rights in the World Bank amounting to
16.4% double then second placed Japan who has 7.9%. The US has similar veto rule with
17% of IMF voting rights. The US influence was outlined by Mark Weisbrot (20) who said
"The IMF is not really an independent actor; I don't think there's anyone in this town who
would tell you with a straight face that it is not controlled by the US Treasury.”

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An analysis of economic system in Islam

As a result, many moves are being undertaken in Latin America to remove the handcuffs of
the IMF and World Bank which are now spreading to Africa and which the Muslim rulers
should take lessons from and adopt. Poverty in Latin America has not been addressed; a
report by the Centre for Economic and Policy Research found that poverty and inequality in
Latin America increased between 1980 and 2005, when compared with the prior 20-year
period.
As a result, there has been a clear backlash to the disastrous financial failure of the neo-
liberal, “Washington Consensus” (21) economic model, promoted and imposed by the IMF
and the World Bank. Venezuela has announced it is to pull out of the World Bank and IMF,
Ecuador has Expelled the Bank’s representative, declaring him persona non grata. Ecuador’s
new President, Rafael Correa, accused the World Bank of blackmail.
IMF proposals resulted in more than half of Ecuador’s 13 million inhabitants living in
poverty. This poverty was a direct result of an IMF policy, which required Ecuador to collect
and distribute its oil revenue with debt payments given priority. The fund was initially
structured to allocate 70% of resources to service Ecuador’s foreign debt.
(20) Mark Weisbrot - Director of the Washington-based Centre for Economic Policy
Research
(21) The Washington Consensus- is a set of 10 economic policy prescriptions considered to
constitute the "standard" reform package promoted for crisis-wracked developing countries
by IMF, World Bank and United States Department of the Treasury.
The increasing frustration with traditional financing has led to a revolutionary move by the
nations of Latin America. Earlier this year, Venezuela and Argentina launched the new
“Banco del Sur” (Bank of the South), pledging more than $1 billion to get the institution up
and running in the next few months. Several other countries have agreed to join: Brazil,
Bolivia, Ecuador and Paraguay will also be founding members. Additionally, Nicaragua,
several Caribbean countries and even a few Asian nations have expressed interest in
participating in the new multilateral institution. The Bank of the South’s creation underscores
the severity of the disenchantment with the traditional U.S.-dominated instruments for
development finance. From the World Bank to the Inter-American Development Bank (IDB)
(which provides financing exclusively in Latin America and the Caribbean), voting privileges
are based on financial contribution, which makes the U.S. Treasury the single largest
shareholder, bringing with it the largest share of the vote. In the IDB, the U.S. not only

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An analysis of economic system in Islam

“owns” a whopping 30% of the vote, but it also holds veto power – an advantage to which no
other member enjoys.
Africa is also following suit, Nigeria recently reached the end of a huge debt elimination
program, which has nearly put an end to its national debt. The program involved the
auctioning of 1.76m oil warrants, with about 21% bought back. Buying back these warrants
will save the country about $11m a year in interest payments. Nigeria will still pay just under
$42m annually at current oil prices, but this is a drop in the ocean compared with its oil-
related earnings and its debt being over nearly $30 billion only a few years ago. Angola in
April cancelled all negotiations with the International Monetary Fund, on the grounds that it
is quite able to maintain economic stability on its own. Angola successfully implemented its
own economic program while relying exclusively on its own resources. During the past few
years, the Angolan economy has gone through massive growth and inflation has been brought
under control by closing its economy to foreign companies, by being centrally driven and by
not operating free markets. Similar policies are also coming from Tanzania.
4.7.1 US Credit Crunch in 2006 and the great recession in the history which
is the inevitable product of Capitalism:
The financial industry created complex financial contracts like derivatives that would
securitize and make money from all forms of risk, this included exotic instruments such as
credit default swaps and subprime loans. Banks continued to sell debt to customers with little
ability to repay them, August 2007 was the point when such debt reached bursting point.
The speculative frenzy that gripped both the American market as well as Europe in the
purchase of real estate which continued to send real estate prices to astronomical levels.
September 2008 has been even worse; historically September and October have been the
months when Stock markets crash and the first two weeks of September have seen some of
the world’s largest companies go Bust. On the 7th September Fannie Mae and Freddie Mac (22)
who together guarantee $5.3 trillion, more than half the outstanding mortgages in the US
collapsed. The US government was forced to intervene putting over $200 billion of tax
payer’s money at stake. These two institutions collapsed because they excessively lent money
to risky Americans during the boom period.
(22) Fannie Mae and Freddie Mac - The Federal National Mortgage Association (Fannie
Mae) an

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An analysis of economic system in Islam

Federal Home Loan Mortgage Corporation (Freddie Mac) are the United States government-
sponsored mortgage loan enterprise.
Then probably the most shocking news began to break that some of Wall Street’s largest
investment banks were on the verge of collapse. Lehman Brothersb (23) filed for bankruptcy
on the 15th September 2008. This was the end for a bank that started in Alabama in 1844 and
came to an abrupt end – in its 2007 annual accounts it had sales of $57 billion and in March
2008 it was named by Business Week magazine in its 50 top performing companies for 2008.
Derivatives in their baffling modern forms – collateralized debt obligations, mortgage debt
obligations, credit default swaps and so on – lie at the heart of the credit crunch. The
philosophy that underpins the growth of derivatives is the idea that risk can be transferred to
institutions more able to take the strain - in theory. The practice is very different, as Warren
Buffett worked out years ago and described derivatives as financial weapons of mass
destruction. All the institutions that have failed found they had brought into the Euphoria of
this new way of making money by moving risk to others, in the end they were all holding
toxic papers which quickly led to huge losses. This whole sage a year on is very revealing of
Capitalism which promotes such type of finance.
(23) Lehman Brothers - one of the largest and oldest US investment banks

4.8 The Islamic Economic System as an alternative:

The Islamic economy follows a philosophy which is very different to Capitalism, as a result
the end objectives both economies attempt to achieve, widely differ and thus it would be
invalid to measure one against the other as they both have different foundations and aims. It
is important to show Islamic economics as much more then Islamic finance and Banking.
Islam has detailed laws on the distribution of wealth and this is its ultimate aim with the
economy - to ensure wealth circulates around the economy so all can share in the wealth that
is generated.

Because all economic systems aim to address the same issues, there are many peripheral
similarities between Islam and the free market. At a doctrinal level however Islam and
Capitalism are two distinct systems. The Islamic economic system is fundamentally about
people and their needs, this is the fundamental principal the Islamic economy is built around.
The Islamic economy is geared towards fulfilling the basic needs of its citizens and these in
origin were defined as food, clothing and accommodation. This forms the basis of the

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An analysis of economic system in Islam

Economic system of Islam, all policies and rules are geared towards achieving such ends.
Islam focuses on the needs of the people and not merely increasing Gross Domestic Product
(GDP).
Islam does not view the human as an economic unit and then look to find the most
economically viable solution thus viewing all problems, whether from marriage to pensions
to drugs to education, from the angle of the economic effect and cost. Neither does Islam
view the human the way the Communists did which is that people are simply matter, just one
aspect of nature, nothing more. Islam views the human as being composed of organic needs
as well as instincts, all of which requires answers on how to satisfy them. So Islam organised
these instincts and needs in a way that ensures the satisfaction of them all, such as the need to
eat and the need to reproduce and others. However, this organisation is not arranged in Islam
by satisfying some of them at the expense of the others, nor by suppressing some of them,
setting others loose, or setting all of them loose. Instead, Islam has co-ordinated the
satisfaction of all of them in a way to ensure comfort, preventing conflicts and a lapse to a
primitive level through the anarchism of instincts.
Through its own economic system, Islam laid down rules for the means to acquire wealth and
commodities, how they can be utilised and their manner of disposal. It certainly did not make
freedom of ownership the basis of the economic system or even the socialist principal of
‘from each according to his ability, to each according to his needs'. It did not define the basic
problem as ‘unlimited wants, limited resources'. Islam views the resources to be ample
enough to completely satisfy the basic needs of all. Therefore, amongst a host of other
detailed rules, one will find the Islamic aims to secure the satisfaction of all basic needs
(food, clothing and housing) completely for every citizen of the state.

4.9 The Basis (Economic Problem) of the Economic System:

The benefit in a thing represents the suitability of that thing to satisfy need of man. Benefit
comprises two elements. One is the extent of desire for that particular thing felt by a human.
The second is the merits existent in the thing and its suitability to satisfy human needs, as
opposed to the need of a particular person. This benefit results from either human effort, the
commodity, or from both of them. The form of human effort includes the intellectual and the
physical effort which he expends to initiate a property or a benefit from a property. The term
commodity includes everything possessed for utilization through buying, leasing or
borrowing, whether by consumption, such as an apple or by usage such as a car; or through

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utilizing it like borrowing machinery or leasing a house. Property includes money such as
gold and silver, commodities such as clothes and foodstuffs, and immovable properties such
as houses and factories and all other things which are possessed.

Since property itself satisfies human needs, and human effort is a means to obtain the
property or its benefit, then the property is the basis of the benefit, whilst man’s effort is only
a means that enables him to obtain the property. Hence, man by his nature strives to obtain
such wealth for possession. Therefore, man’s effort and property are the tools which are used
to satisfy his needs, they are the property which man strives to possess. Therefore, wealth is
the property and the effort together.

The individuals’ acquisition of wealth occurs either from other individuals, such as the
possession of property in the form of a gift, or directly, such as the possession of raw
materials. Acquisition of a commodity is for either:

 Consumption, like possessing an apple,


 Utilization, like owning a house,
 Possession of the benefit of the property, like leasing a house, or
 Possession of the benefit resultant from human effort, like an architect’s
blueprints.
Possession of wealth in all of its forms is either through compensation such as selling and
leasing property, and wages of the employee; or it isn’t compensation such as donations,
grants, presents, inheritance or loans. However, the economic problem lies in the possession
of wealth and not in the creation of wealth. The economic problem results from the viewpoint
towards ownership, from the ill disposition of this ownership, and from the misdistribution of
the wealth amongst people.
The problem doesn’t stem from any other matter, and therefore addressing this aspect is the
basis of the economic system. The basis upon which the economic system is built constitutes
three principles:
 Ownership,
 Disposal of the ownership, and
 The distribution of wealth amongst the people.

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4.10 The View of Islam towards the Economy:


The view of Islam towards wealth differs from its view of utilizing it. Islam considers the
means that produce a benefit a subject different from the subject of possessing the benefit. So
property and human effort are the components of wealth, and they are the means which
produce benefit. Their position in the view of Islam regarding their existence in life and in
regard of their production differs from the question of using them, and from the method of
possessing this benefit. Islam interferes directly in the question of utilizing some properties.
So it prohibits the use of some commodities such as wine and dead foodstuffs. Similarly, it
prohibits benefiting from some of man’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 utilization of the property, and
man’s effort.
However, regarding the method of possessing property 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. This is regarding the
utilization of wealth and the manner of its initial ownership. Regarding generating the
production of wealth, Islam encouraged that through motivating the people generally to earn.
Islam did not interfere in defining the technical manner of increasing production, or the
quantity of production, rather it left that to people to achieve as they like. It makes the use of
wealth, and the method of possessing its benefit as its subject. It does not address the
technical aspects of production of wealth nor the means of the benefit at all.

4.11 Capitalist Companies:

Joint-Stock Companies are companies formed of partners who are unknown to the public.
The founders of the Share Company are all of those who signed the initial contract of the
company. The initial contract is the one which initiates between its signatories a commitment
to work for achieving the common aim, which is the company. Subscription in the company
is undertaken by the commitment of the person to buy one share or more in the proposed
company in exchange for the nominal value of the share. This form of company is one of the
forms of disposal by an individual will, where it is enough for the person to buy the shares so
as to become a partner, whether the other shareholders accept him or not. Subscription occurs
in two ways. In the first instance, the shares of the company are restricted to the founders

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An analysis of economic system in Islam

who distribute them amongst themselves without offering them to the public. This is done by
writing the constitution, which organizes the company and includes the conditions upon
which the company proceeds, then signing it among themselves. Everyone who signs the
constitution is considered a founder and a partner, and once they all have signed, the
company is founded. The second way of subscription is that which is most prevalent in the
world, where a few people establish the company and lay out its constitution.

4.11. 1. Shareholders are partners of property only and there is no partner of body:

The contract of the company is a contract between properties only and there is absolutely no
personal element in it. Thus the properties, rather than their owners, are the partners. These
properties are entered into partnership together without the existence of any person.

Accordingly, there is no authority for any partner, no matter how many shares he holds, to
take charge of the activities of the company in his capacity as a partner. He also has no right
to work in the company or to control any of its functions in his capacity as a partner. Rather,
the one who takes charge of the activities of the company, works in it, controls and supervises
all of its work is called the Managing Director who is appointed by the board of directors.
This board of directors is elected by the general assembly, in which every person has votes
equal to his shares, not according to his personality, for the real partner is the capital and this
which defines the number of votes. So every share has a vote and not every person has a vote.
Thus, there is no consideration to the subscribing person but the consideration is for the
capital only.
In summary, the share stock company is not established as a company in the first place, for
those who exist is partners of property only and there is no partner of body. The presence of a
partner of body is an essential condition, for the company is established as a company by him
and, without him, it would not have been established. In the share stock company however,
partnership in the view of those who form it, exists by the presence of partners of property
only. The company functions and conducts activity without the existence of a partner of
body. It is thus, an invalid company as it was not established as a company according to
Islam.
4.11.2. Limited Liability:
Moreover, the share company is considered to be permanent, and it is not restricted to the life
of the shareholders. The shareholder may die and yet the company is not dissolved and he

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may become incompetent and still remain a partner in the company. With regard to the
capital of the company, it is divided into equal-valued shares, which are called stocks. The
shareholder is a partner whose personal merits are not thoroughly investigated, and his
responsibility is determined by his share in the company capital. In addition, the partners are
not bound by losses except by the amount of their stocks in the company.
4.11.3. Value of assets and profitability are linked to the market:
The stock notes are considered as registration papers in share, and their values are not the
same, but change according to the profits or losses of the company. This profit or loss is not
the same every year but it can differ. The stocks therefore do not represent the capital
contributed at the time of establishing the company; they represent the capital of the company
at the time of its sale, namely at a specific time. They are like paper currency whose value
falls if the stock market declines and increases according to the market, the profitability of the
company or according to the degree of interest or otherwise of the people in it, for it is a
commodity subject to supply and demand. Stocks transfer from one hand to another similar to
how bank notes move among people, without any clerical measures in the company records if
the stocks are for the bearer (anonymous) and through such measures if they bear their
holders’ names.
The company is considered in profit if the value of the assets of the company is greater than
the value of its liabilities at its annual inventory. Profits are distributed annually at the end of
the financial year of the company. If the value of the company’s assets increased due to
unexpected conditions without there being profits, nothing prevents the company from
distributing this excess. However, if the contrary occurred, and the value of the assets
declined and the company made profits, but the total of its profit and value of its assets was
not greater than its liabilities, then it could not distribute the profits.
4.11.4. Corporate Entity:
The company is considered as a corporate entity, which has the right to sue and its own name
in the courts. It also has its own residence and particular nationality (25). Neither a
shareholder nor any member of its management, in his capacity as partner or in his personal
capacity, fills its place. The only one who has this right is the one who has been authorized to
speak on behalf of the company. The one who has the right of disposal is the company, i.e.
the corporate personality, rather than the person who disposes directly. Shareholders are
partners of property only and not partners of body. The partner of property has absolutely no
right of disposal in the company. The share stock company becomes a corporate personality

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An analysis of economic system in Islam

which has the right of disposal. However, these actions are only accepted in Islam from a
person who has the competence to dispose and is mature and sane, with a discerning mind.
(25) Country of incorporation including where its head office may be registered

4.11.5. There is no offer and acceptance in the contract:

By definition of company in Islam is a contract between two or more persons, in which they
agree to carry out financial work with the intention of gaining profit. It is thus a contract
between two or more persons, so an agreement from only one side is unacceptable. Rather, it
is necessary that the agreement occurs from two or more sides. The contract of the company
must be focused on performing financial work with the aim of making profit, and not on
paying the capital. It is also not enough that the aim is partnership only.

So carrying out the financial work must be limited to the contractors, either by both of them
or by one of them with the capital of the other. The necessity of carrying out financial work
by one of the signatories (partners) in order that the company is legally established makes it
inevitable that there must exist a body in the company upon which the contract is concluded.
If the body existed the company will be established and if the body does not exist in the
company, then it is not established and doesn’t exist in the first place. This is because legally,
a contract is an offer and acceptance between two parties of two or more persons. There must
be two sides in the contract. One of them is entrusted with the offer by speaking first with the
offer of the contract. The joint stock company, the founders agree on the conditions of
partnership. They are not directly and actually involved in the partnership when they agree on
the conditions of the company, rather they only negotiate and agree on the conditions. They
then draw up a document, which represents the constitution of the company. This document
is then signed by everyone who wishes to enter into the partnership, the signature being
considered as an acceptance. Once a person does this, he is then considered as a founder and
a partner. There is one party who agrees on the conditions, and by its acceptance becomes a
partner. It can be seen that the joint stock company is not an agreement between two parties;
rather it is an agreement of one party on certain conditions.

4.11.6 All the decisions in the company are carried out by the board of directors:

Those who carry out the actions in the company are the board of directors who are deputies
for the shareholders that is for the property partners. In Islam, the partner is not allowed to

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An analysis of economic system in Islam

deputies somebody with the right of disposal in the company on his behalf whether he was a
property partner or a body partner. The contract of the company is concluded on him
personally, so he has to act by himself. It is incorrect to deputies or hire somebody who takes
charge of disposal and action in the company on his behalf. From Sharma view, the partner of
property only has no right of disposal in the company, nor has he the right to work in the
company as a partner in any way. The right of disposal and to work in the company is
confined to the partner of body only.

Firstly, they act as deputies for the shareholders, who are the partners by electing them. The
partner should not deputies for himself, because he is the one on whom the company was
concluded. This is similar to the fact that it is also not allowed for somebody to deputies
another person to marry on his behalf. He is, however, allowed to deputies somebody to make
the marriage contract on his behalf. Similarly, he is not allowed to deputies somebody to
enter into partnership on his behalf. However, he is allowed to deputies somebody to
conclude the company contract on his behalf, but not to be a partner on his behalf.
Secondly, the shareholders who are also the partners have deputized the board on behalf of
their properties not on behalf of themselves. The evidence for this is that the election votes
themselves are considered for deputation, and these votes are considered according to the
quantity of shares
And not according to the shareholders. The deputation is thus on behalf of their properties
and not on behalf of their persons.

4.12 The Company (Partnership) in Islam:

Company linguistically means mixing two or more shares together such that neither can be
distinguished from the other. Company in Islamic a contract between two or more persons, in
which they agree to perform financial work with the intention of making profit. The contract
of the company requires the existence of both offer and acceptance, as is the case with all
Islamic contracts. An offer occurs when one party says to the other: ‘I entered into
partnership with you in such and such’ and the other party replies by saying, ‘I accepted.’
These actual words are not necessary but the meaning is. There must occur in the offer and
acceptance something that indicates that one of the parties addressed the other orally or in
writing on the matter of Partnership over something, and the other accepted. Therefore, an
agreement on partnership only does not represent a contract. An agreement to pay money or

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An analysis of economic system in Islam

property for partnership is also not considered a contract as well. Rather, the contract must
include the concept of partnership in something. The condition of validity of the partnership
contract in Islam requires that the contracted matter be a right of disposal and that this right
of disposal, over which the company contract is concluded, is suitable for representation such
that what is gained by the disposal is shared between the two partners.

Partnership is either a partnership of properties or a partnership of contracts. The company of


properties is a company of assets, such as partnership in a property that has been inherited,
bought or gifted. The company of contracts is the subject of discussion regarding increasing
of ownership. From the examination of partnership contracts in Islam, and the divine rules
related to them it can be concluded that there are five types of company in Islam. These are
equal, bodies, two or more, faces and negotiation.

4.12 Economic Policy in Islam:

4.12 1. Islam focuses on the distribution of wealth not just the production:

Islam views the economic problem in a radically different way than Capitalism and
Socialism. Islam focuses on the distribution of wealth not just the production. The problem of
poverty will not be solved by producing more and more for the rich to consume rather it will
be solved by ensuring that basic needs of every individual are satisfied completely. There are
enough resources in the world to satisfy the basic needs of everyone.

Islam looks at every individual by himself rather than the total of individuals who live in the
country. It looks at him as a human being first, who needs to satisfy all of his basic needs
completely. Then it looks to him in his capacity as a particular individual, to enable him to
satisfy his luxuries as much as possible.

4.12.2. The Islamic economy is real and Islam prohibits the current form of financial
markets:
The Islamic economy is based upon wealth generation where participants partake in
investment, employment and trade in the real economy. Islam does not have a dual economy
where the real economy operates alongside a financial sector. The Islamic economy focuses
all participants on the real economy, through employment, company profits, utilization of
land (agriculture) and manufacturing, wealth is generated in only one sector. This brings the

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An analysis of economic system in Islam

huge benefit of wealth only circulating in one sector - the real economy, where all can
participate.

The Islamic system does not recognize the financial markets in their current form. One is able
to purchase shares and transfer them without actually partaking in the running of the
underlying company that the shares are meant to represent. In Islam ownership is a direct role
in a company and not just a share certificate which in effect the stock market allows to be
traded and re-traded. It is this ability to not have a direct role in a company that allows
excessive speculation. The financial markets are different to the real economy of goods and
services. As the first speaker pointed out this is in fact one of the root problems of
Capitalism, the size of the world’s stock markets are estimated at $51 trillion, the world
derivative markets are valued at $480 trillion, 30 times the size of the US economy and 12
times the size of the world economy!
There are many reasons as to why Public Limited Companies stock markets are harm in
Islam. One of the key reasons being the issue of liability. The public limited company system
gives the public company a distinct quality of limited liability, aimed at protecting major
capitalists and businessmen in case the company fails and incurs losses, in which case, those
who have claims against it would not be able to demand from its investors any compensation
no matter how large the personal assets of the investors are. The financial claims are only
confined to what is left in the company in terms of assets. This system is contradictory to
Islamic laws in every aspect. The Islamic rule obliges all to repay debts in full to the rightful
owners, and it is forbidden to cut anything from them.
4.12.3. Islam is against monopolies and encourages competition:
PLC stock market companies are able to amass huge amounts of wealth today, to the extent
that some companies have more wealth than some countries. In an Islamic system this could
not happen due to the prohibition of PLC’s who are able to generate this wealth by issuing
shares to the public. This has a positive impact on the economy, as huge companies are able
to become monopolies, duopolies or oligopolies which are able to dominate the market place
such as Microsoft, Coca-Cola and Pepsi. Even Capitalist agree that monopolies are negative
externalities and Adam Smith, the founding father of Capitalism dreamed of an economy
with perfect competition an ideal which they can never achieve due to the free market itself.
However, the Islamic economic system leads to this as by applying its rules it would lead to

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An analysis of economic system in Islam

small to medium companies competing with each other in every market which is healthy for
the economy as competition decreases the price and increases quality.
E.g. why should 3 companies dominate the entire soft drinks market in the world as is today?
They completely dominate the market; have enough wealth to buy out any competitors like
Coke did with ‘Thumbs Up’ (26) in India. Monopolies have the power to sell lower grade
goods to the market without us having any choice; we all remember the Pesticide scandal that
took place here.
(26) Thums Up - A brand of cola in India was introduced in 1977 to offset the withdrawal of
The Coca-Cola Company from India.

4.12.4. Islam neither believes in a free market nor a command economy:

The Islamic economic system is neither Capitalist where the market is left free to lead to the
disasters that we are seeing nor Communist where everything is owned and controlled by the
state. Islam distinguishes between public property, state property and private property. Islam
forbids the private ownership of the large resources such as the Oil and Gas that we see the
Western companies fighting over in the Muslim world. The huge revenue generated by public
resources such as Oil and Gas in an Islamic state be utilized for the benefit of the public and
not for the personal interests of the rulers who siphon off the money into their Swiss bank
accounts and spend it for their own pleasure as we see the rulers of the Gulf doing today.

4.12.5. Role of Banks:

The role of banks in Islam will be to collect the nation's deposits and to also act as a central
pool whereby money can be collected and invested in the economy, with the returns being
distributed amongst investors. The banks would only be able to invest what they have in
deposits and cannot create money as this is the role of the central treasury of the state. As
interest is prohibited, the main function of banks will become the pooling of wealth which
can then be invested across the economy aiding wealth distribution and economic growth.

4.12. 6. No Tax on Income:

Islam does not have a concept of income tax; value added tax, excise duties, nor national
insurance contributions. Rather Islam puts the emphasis of taxation on wealth rather than
income. Take the average salary in the UK of £24,000. At current tax rates the tax burden
alongside National Insurance contributions falls at 33%. This alongside indirect taxation

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An analysis of economic system in Islam

(27)as well as council tax, road tax and so forth mean that the real tax burden falls at closer to
the 40-50% mark. This means that the average person in UK is losing between £10,000-
12,000. So at higher wage levels, the monetary amounts lost towards taxation is much
greater.
(27) Indirect taxation - Taxation on spending rather than income
In Islam, although simplified, the wealth tax falls at 2.5%. This means that within one year,
on average one can save at least £10,000. Therefore, two or three people could easily enter
into a business contract such as Partnership Business - an Islamic company where one
provides the Capital and the second partner works with it - to supply some of the demand in
the economy for consumer or manufactured goods thereby creating more employment in the
economy. With no concept of interest rates and hoarding forbidden in Islam wealth will
circulate quickly ensuring the public can purchase what they specifically need, creating
employment and giving all more and more disposable income.

4.13 Revenues of the State Treasury

4.13 1. Zakat

Zakat funds are one of the funds that are placed in the Treasury. Zakat is different from the
other funds in regards with its collection, in regards of with its collected amounts and in
regards with its spending. In regards with its collection, it is collected from the properties of
the Muslims only and not from the non-Muslims. It is, as well, not a general tax, rather one of
the pillars of Islam. It is a specific type of fund that must be paid to the Treasury, whether
there was a need for it or not. The Muslim is not absolved of the duty to pay the Zakat when
it becomes due on his wealth. Its payment is obligatory on the Muslim who owns the
minimum amount eligible for Zakat, after deducting his debts and his needs.
As Zakat is an obligation upon the wealth owned by the individual, it is therefore a monetary
worship and not a physical worship. As for the amount levied, this is a specific amount which
does not increase or decrease. It has been determined as a quarter of the tenth (2.5%) in gold
and silver and the commercial commodities.
As for the disposal of Zakat and the areas of its expenditure, these have also been determined
by a specific limit; thus it could not be paid except for the eight categories Allah mentioned
in the Qur’an. Those who are eligible Zakat are as bellows:

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An analysis of economic system in Islam

1. The needy are those with no money and no income.


2. As for those employed for it, they are those who levy and distribute the Zakat.
3. Those “hearts have been reconciled” are those the State deems appropriate to give
them from the Zakat as an incentive to establish them firmly in Islam.
4. Those in bondage are the slaves; they are given money so that they can be freed. This
category is not existent today.
5. Those in debt are indebted who are unable to pay off their debts.
It is forbidden to pay off from the Zakat funds to any other than from these eight categories,
and it is also forbidden to spend it upon the economic matters of the State. If none of the eight
categories can be found, the Zakat fund should still not be spent on any other area; rather it
should be kept in the Treasury and then paid out to the eight categories whenever the need
arises.
4.13.2. The Head Tax
The Head Tax is a right that the State takes from the Citizens especially from Non-Muslims
as a submission from their part to the rule of the State in exchange of the guarantee of their
security. It is a general fund that can be spent on the welfare of the subjects as a whole. It
becomes due every year and cannot be collected beforehand. The Head Tax is imposed on the
head and not on the wealth; thus it is collected from every individual of Non-Muslims and not
on the basis of the wealth.
4.13.3. The Land Tax
The Land Tax is takes from the Citizens specially imposed upon those lands which are
conquered by Way. The Land Tax in the Arabic language means the rental and the harvest or
the crop. Each land conquered from the enemy after declaring war against them is considered
Land Taxi land. The head of the State reserves the right to estimate the Land Tax, while
taking into consideration the most appropriate way with regard to either on the area of the
land, or the area of the planted part, or by way of estimating the produce.
4.13.4. Taxes
The revenues of the State Treasury as decided by Islam are enough to manage the affairs of
the citizens and to look after their interests. The matter does not require the imposition of
direct or indirect taxes. Therefore, taxes are of those revenues, which Islam placed on the
citizens so as to discharge their interests. It is proper for these collected funds to be called a
tax and to be called a due fund or called otherwise. No taxes are taken other than those

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An analysis of economic system in Islam

revenues which Islam obliged and stated, such as the Head Tax and Land Tax, and those
which Islam obliged the Muslims only to fund their expenditure, such as roads and schools.
So no fees are taken for the courts, the State departments, or for any other service. As for the
customs taxes, they are not considered to be part of the collected taxes, they are rather dealing
with other states the same way they deal with the State, and they are not a tax to meet the
expenses of the State Treasury, and Islam has called them customs, and it prohibited that they
are collected from own citizens. Therefore, the State has the right to collect taxes only in
these instances, in which case it has to proceed as follows:

1. To meet the expenses due upon the State Treasury for the poor, the needy, the
wayfarer and in the carrying out of War.
2. To meet the expenses due upon the State Treasury as compensation, such as the
expenses of the employees and the provisions of the army and the like.
3. To meet what is due upon the State Treasury in the form of services and utilities, such
as the construction of roads, production of water, building of religious buildings,
schools and hospitals and other things whose establishment considered necessary for
the citizens and without which she would be harmed.
4. To meet the expenses due upon the State Treasury that arise in the form of necessity,
such as emergency incidents like famine, floods, earthquakes, an attack by an enemy
and the like.
5. To levy taxes to meet debts which the State incurred in order to carry out an
obligation due upon all the Muslims, from any of the four cases mentioned above or
whatever may have resulted from them, or any matter obliged upon the citizens.

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An analysis of economic system in Islam

5.0. Conclusion
From a Macroeconomic perspective the removal of interest, the financial markets and direct
taxation allows wealth to freely circulate around the economy so all citizens can partake in
the wealth generation process.
The Islamic Economic System is markedly different to capitalistic, socialistic, communistic,
and mixed economic systems. Basic principles of capitalism must be changed considerably to
fit Islamic economics, but it must be said that some of the foundations are similar in terms of
acquisition of wealth. However, it is the application of the wealth and how it ties into
production that makes the economic system of Islam unique in the world.

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An analysis of economic system in Islam

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1. “Geo Political Myth” by Adnan Khan


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have Done So Much Ill and so Little Good, (Penguin Press, 2006), p. 4
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Acronyms
ACTSA - Action for Southern Africa
OESA - Office of Environmental and Scientific Affairs

PRGF - Poverty Reduction and Growth Facility

PLC - Public Limited Companies

GDP - Gross Domestic Product

GNP - Gross National Product

IMF - International Monetary Fund

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