Posted by : Ahsan Khan Thursday, 7 February 2013

Capitalism, Communism and Mixed Economics system has purely a materialistic approach in which human social life has no importance. But in Islamic System, the followers of Islam are required to lead a material life in such way that it becomes a source of happiness and respect of others in this world for making secure himself for next world.
Islamic Economic System consist of institutions, organizations and the social values by which natural, human and man made resources are used to produce, exchange, distribute and consume wealth? Goods and services under the guiding principles of Islam to achieve "FALAH" in this world and also other it.
Salient Features of Islamic System
Main characteristics of Economic System of Islam are.
1. The Concept of Private Property
2. Consumption of wealth
3. Production of wealth
4. Distribution of wealth
5. The concept of Zakat
6. Interest free Economy
7. Economic Growth
8. Responsibilities of the Government.

1. The Concept of Private Property
Basic Principles in Islam for Consumption or Investment of private property are:
  • Concept of "HALAL" and "HARAM" for earning or in production and consumption of wealth.
  • A property cannot be used against public interest.
  • Show much as you have something.
  • Real/money Capital cannot be used for gain.
  • Payment of Zakat is compulsory.
2. Consumption of Wealth
In Islamic System uses of luxuries are not allowed because it against the concept of "TAQWA" should have distinguish between "HALAL" and "HARAM"."BUKHAL" and "ISRAF" are to be avoided.
3. Production of Wealth
Price mechanism plays a key role in carrying out the production process in an Islamic Society. As Price system results in the expectations of workers and consumers the Govt. Interferences with the price mechanism to over come the problem. These things are not allowed in Islamic System.
  • Production of drugs, gambling, lotery, music, dance etc.
  • Lending and borrowing on interest
  • Black marketing, Smuggling etc.
4. Distribution of Wealth
Islamic Economics System favour fair (not equal) distribution of wealth in the sence that it should not be confined to any particular section of the society. For fair distribution of wealth Islam gives following steps
  • "BUKHAL" and "ISRAF" are to be avoided.
  • Payment of Zakat
  • Interest not allowed
  • Monopoly of Private firm not allowed
  • Earning from Black Market.
5. The Concept of Zakat
Zakat is a major source of revenue the government in an Islamic state. It levy on all goods and money or on wealth if have to pay yearly on the month of RAJAB or RAMADAN.
6. Interest free Economy
The whole financial system the bank structure in particular is run on the basis "SHARAKAT" and "MUZARABAT" in Islamic state. Therefore, Islamic economics is an interest free economy.
7. Responsibility of the Government
Responsibility of the Islamic Government are
  • Should check un-Islamic activity like gambling, smuggling, black marketing etc.
  • Should secure poor people by giving them necessity of life i.e. food, clothing, health etc.
  • Should provide equal employment opportunity.
  • Social and Economic Security is required to guaranteed by the Govt.
An Islamic Setup provides a graceful economic and social life. it distribute the wealth in all family.

Comparison of Islamic Economic System with other Economic System
Islamic Economic System possesses the character of both capitalism and socialism and it is free from their evils. Following are the comparison of Islamic state with others.
1. Distinguishing Characteristics
Capitalist says "Economic Freedom" to producers and Consumers.
Communism says Economic Equality achieved through state ownership of the means of production.
The distinguish characteristics of an Islamic System is "Economic and Social Justice" so that every body gets his / her due.
2. The Concept of Private Property
In a Capitalist system unlimited liberty and right of ownership for private property is given which has resulted in the capitalist exploitation of workers. Islam allows the right of private ownership and freedom of enterprise in limited capitalism but not leave the property for the long period.
3. Consumption of Wealth
In Capitalism any thing can be consumed while a communist society only consumer goods and services which are allowed to be produced in the country. In Islamic Country only "HALAL" are allowed to be produced and consumed "HARAM" goods and services are not allowed to be produced and consumed.
4. Production of Wealth
Capitalism motive is only profit they produced goods for only profit. In communist society central plan authority made decision what to produce and how much to produce. But in Islamic System only have to produce "HALAL" goods and "HARAM" goods like alcohol drink, drug etc are not allowed.
5. Distribution of Wealth
In Capitalism concentration of wealth is goes on few hand due to unlimited right of ownership and free competition. In communism system dicta for ship is created due to concept of private property. In Islamic System, Due to "ZAKAT" and "SADQAT" automatically wealth transfer to poor from rich.

6. The Role of Interest
The interest made brings equal between saving and investment to promote, capital formation in a capitalist society. In communism, interest does not pay any role for saving and investment. In the Islamic system interest based economic activities are strictly banned. Hence interest is not a source of capital formation in an Islamic.
We conclude that Capitalist and communist are materialistic in nature and they only looking for to satisfy the material wants of the people. But Islamic economic system provides a fine blend of materialism and spiritualism.

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