Islamic economic Believes
Every economic system has its own peculiar features, which form its foundation andfrom which it can be distinguished and recognised.Islam believes in justice and fairness in the economic field. According to it, the manis God’s viceroy or deputy in overall divine scheme and he has been given limitedrights of ownership of means of production. It recognises intervention of state in theeconomic activity for the purpose of ensuring welfare of its citizens. Abolition of interest, institution of sadaqat and Zakat, concept of lawful and unlawful, equitabledistribution of wealth, prohibition of hoarding and stress on circulation of wealth,concern for well being of the poor are the distinctive features of the Islamiceconomic system.
1- Allah is the Sustainer
One of the major features of Islamic economic system is the concept that Allah, theAlmighty God of universe, is the sustainer and provider. Allah provides livelihoodand subsistence to all of His creatures in the universe. It is Allah who has createdall means and resources through which man earns his livelihood. Allah, in fact, hascommitted to feed, sustain and nourish all creatures including human beings. Theconception of God’s Dispensation does not, however, suggest that one should sitidle and wait for sustenance which would automatically come to him. Instead of giving up struggle, Islam rather inspires a person to do his best in order to earn hislivelihood by using all lawful (Halal) and fair means.
2- God is Real Owner of Everything and Man is merely a Trustee
The heavens and the earth and everything in the universe belongs to Allah. God is thereal owner of everything, al-though He has given some rights to man for use of thingsrequired by the latter for his existence on the earth.
3- Prohibition of Interest
Interest, which forms the foundation of capitalistic system of economy and whichhas not been eliminated even in the socialist system, has been completelyabolished by Islam. Charging of interest is a major sin and the usurers have beengiven the notice of war from God and His messenger.
Ahadith of Muhammad (PBUH):
Islam does not deny the market forces and market economy. Even the profit motive is acceptable to a reasonable extent. Private ownership is not totally negated. Yet, the basic difference between capitalist and Islamic economy is that in secular capitalism, the profit motive or private ownership are given unbridled power to make economic decisions. Their liberty is not controlled by any divine injunctions. If there are some restrictions, they are imposed by human beings and are always subject to change through democratic legislation, which accepts no authority of any super-human power. This attitude has allowed a number of practices which cause imbalances in the society. Interest, gambling, speculative transactions tend to concentrate wealth in the hands of the few. Unhealthy human instincts are exploited to make money through immoral and injurious products. Unbridled profit making creates monopolies which paralyse the market forces or, at least, hinder their natural operation. Thus the capitalist economy which claims to be based on market forces, practically stops the natural process of supply and demand, because these forces can properly work only in an atmosphere of free competition, and not in monopolies. It is sometimes appreciated in a secular capitalist economy that a certain economic activity is not in the interest of the society, yet, it is allowed to be continued because it goes against the interest of some influential circles who dominate the legislature on the strength of their majority. Since every authority beyond the democratic rule is totally denied and 'trust in God' (which is affirmed at the face of every U.S. dollar) has been practically expelled from the socio-economic domain, no divine guidance is recognized to control the economic activities.
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The evils emanating from this attitude can never be curbed unless humanity submits to the divine authority and obeys its commands by accepting them as absolute truth and super-human injunctions which should be followed in any case and at any price. This is exactly what Islam does. After recognizing private ownership, profit motive and market forces, Islam has put certain divine restrictions on the economic activities. These restrictions being imposed by Allah Almighty, Whose knowledge has no limits, cannot be removed by any human authority. The prohibition of riba (usury or interest), gambling, hoarding, dealing in unlawful goods or services, short sales and speculative transactions are some examples of these divine restrictions. All these prohibitions combined together have a cumulative effect of maintaining balance, distributive justice and equality of opportunities.
Source: MuftiMuhammad Taqi Usmani, An Introduction to Islamic Finance. Republished with permission.