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1. Basic terms
| Term | Meaning |
|---|---|
| Economy (wealth) | The wealth needed to meet human needs that cannot be obtained without human effort |
| Economic effort | The effort made to obtain these needs |
| Economics | The science that studies this effort |
Human needs
- Basic needs: food, clothing, shelter.
- Needs that arose as society developed: education, security, telecommunications, recreation.
Because people's aims and efforts differ, their economic positions also differ (high, low, middle). The best economic plan is one that meets the needs of all people.
2. Three economic ideas
| Idea | Emphasis | Nature |
|---|---|---|
| Capitalism | Gives most importance to the individual's economic interest | Not balanced |
| Socialism | Rejects individual interest and makes all property public property | Not balanced |
| The Islamic economy | Harmony between individual interest and the interest of society | Balanced (moderate); can give a lasting solution |
- Capitalism and socialism are ideas made by human beings, and they contradict each other.
- Opposing ideas naturally oppose each other; since the Islamic idea differs from both, both of them oppose it.
3. The foundations of the Islamic economy – two kinds
- Doctrinal (based on belief)
- Practical
3.1 Doctrinal foundations
| Principle | Evidence (meaning) |
|---|---|
| All resources belong to Allah; He created them for human beings | 53:31 – whatever is in the heavens and the earth belongs to Allah; 2:29 – He created everything on earth for you |
| A person will be questioned in the Hereafter about wealth | 102:8 – on that Day you will surely be asked about the blessings |
| Society also has a share in an individual's property | 70:24–25 – in their wealth there is a known share for the one who asks and the one who is deprived |
| The result of effort depends on Allah's will | 17:30 – He gives generously or in measure to whom He wills |
| Wealth is given to test a person | 64:15 – your wealth and your children are only a test |
These are the life and spirit of the Islamic economy. Through them come the peace, contentment and tranquillity that capitalism and socialism failed to give.
3.2 Practical foundations
| Foundation | Evidence (meaning) |
|---|---|
| 1. Being grateful to Allah | 27:40 – this is from my Lord's favour, to test whether I am grateful or not |
| 2. Paying society's share through zakat and sadaqah | 9:60 – charity is for the poor, the needy, those who collect it, those whose hearts are to be won (new Muslims), freeing slaves, debtors, the cause of Allah, and travellers |
| 3. Moderation in spending and saving | 17:29 – do not tie your hand to your neck (miserliness), nor stretch it out completely (waste) |
| 4. Making sure there is no interest in any economic activity | 2:275 – those who consume interest will not stand except as one stands who has been driven mad by Satan's touch |
| 5. Completely avoiding bribery, cheating, gambling and exploitation | 2:188 – do not consume one another's wealth wrongfully, nor take it to the authorities (as a bribe) to seize it |
| 6. Scholars solving new problems that arise with changing times through ijtihad | → So the Islamic economy is suitable for every time, place and situation |
| 7. Contracts being witnessed and written down | 2:282 – when you give a loan for a fixed term, write it down |
- There are also many hadiths giving practical explanation of these.
- The Prophet ﷺ was the first to put these foundations into practice; the Muslim community saw their excellent results in the time of the caliphs.
4. The special features of the Islamic economic system
| Feature | Explanation |
|---|---|
| 1. Divine nature | Based on Allah's guidance; it has none of the weaknesses found in human theories |
| 2. Correcting inequalities | An excellent system of distribution – 59:7: wealth must be distributed so that it does not circulate only among the rich |
| 3. Harmony between social and individual interest | This is what makes it different from capitalism and socialism |
| 4. Attending to spiritual and worldly needs at the same time | Other systems give importance only to profit; in the Islamic economy, values, morals, culture and civilisation are as important as profit |
| 5. No injustice to anyone | 2:279 – "You will not wrong, nor be wronged" |
| 6. Flexibility | Economic activities belong to mu'amalat; apart from the few things Islam forbids, everything else is permitted. New matters can be resolved through ijtihad within the Shari'ah |
Mu'amalat (معاملات) = dealings – transactions between people. Barakah (بركة) = Allah's blessing; increase. When the Islamic economy is practised in life, barakah can be seen.
Our duty
To put the principles of the Islamic economy into practice in our personal and social life and so make its excellence known to the world → success in both worlds.
Quick revision
- Capitalism = individual interest; socialism = public ownership; Islam = the balance between the two.
- Two kinds of foundations: doctrinal (belief), practical.
- Doctrines: resources belong to Allah (53:31, 2:29); questioning (102:8); society's share (70:24–25); Allah's will (17:30); a test (64:15).
- Practice: gratitude (27:40), zakat (9:60), moderation (17:29), no interest (2:275), no bribery (2:188), ijtihad, writing (2:282).
- Features: divine, fair distribution (59:7), harmony, spiritual + worldly, no injustice (2:279), flexibility.