Islam Economic System - Essay Example

Order 215641 Islam Economic System Todayabout1billion Muslims are spread over 40 predominantly Muslim countries and 5 continents, and their numbers are growing at a rate unmatched by that of any other religion in the world. Despite the political and ethnic diversity of Muslim countries, a core set of beliefs continues to provide the basis for a shared identity and affinity among Muslims. Yet the radically different political, economic, and cultural conditions under which contemporary Muslims live make it difficult to identify what constitutes standard Islamic practice in the modern world. Many contemporary Muslims draw on the historical legacy of Islam as they confront the challenges of modern life. Islam is a significant, growing, and dynamic presence in the world. (Microsoft Encarta 2007) "Though 'Capitalistic' in nature, the Islamic economic system is not, however, based on the European or American capitalist economic principles, which in no way heed moral or ethical conceptions. The Islamic system obeys fully and unconditionally the dictates of moral and ethical doctrines. The difference between the Islamic and the capitalist economic systems is thus a cardinal and fundamental one. "The Islamic economic system also laid down the principle of the equality of value between labor and capital, by recognizing that labor should be accorded equal consideration with capital--in fact that it can itself be regarded as form of 'capital'. (https://www.vedamsbooks.com/no34563.htm - 3k ) Islam's economic system is not merely a matter of broad appeal to voluntary charity; rather, it gives a more comprehensive approach or view of economic life, which in turn is based on the basic teaching in the tenets of Islam. Despite the universality of the Islamic laws, the economic systems could vary since there are communist, socialist, capitalist, and Islamic economic systems. Each is based on goals, principals, or philosophies which are quite unique to that particular ideology. (ww1.islamonline.net/servlet/Satellitec=Article_C&cid=1154235106363&pagename=Zone-English-Discove... - 43k) The following is a summary of some key aspects of the Islamic Economic system: Islam recognized that humans will undertake a number of actions to survive. These range from the buying of food, taking ownership of property, selling goods, investment, agriculture, taking loans, exchanging currency, taking up employment and giving work, setting up a company, importing and exporting abroad, disposing of assets etc. In this regard, Islam made a distinction between the economic system and economic science i.e. it views them as two separate issues. This is because there is a fundamental difference between the method of production of goods and services (economic science) from the manner of their distribution (economic system). The production of goods and services follow no particular viewpoint in life. A conveyor belt is neither Capitalist, Islamic nor is Communist .It is universal. Questions as to how processes can be made more technological, how mechanisms and robots can improve productivity and how inventions can improve the process of manufacturing do not follow any specific viewpoint in life. This means basic facts on productivity, marketing and manufacturing (economic science) remain the same irrespective of belief or location. This is similar to scientific facts. These are the same whether in China or the US because they are not influenced by any belief. They are questions based upon the reality i.e. understanding the reality at hand leads one to a conclusion. So the fact Inflation occurs when there is too much money chasing too few goods does not change if one is a Christian or if an atheist becomes Muslim or if one moves form China to the US. This is no different to the fact that wood burns whatever your religion or weather you're in the UK or the North Pole. The distribution of resources, how goods and services should be given to the public, whether they should go to the rich or the orphans, aristocracy or the landlords is not a discussion upon the reality i.e. understanding the reality at hand does not lead one to a conclusion. The manner that defines how to distribute the wealth, how to possess it, and how to spend or dispose of it (economic system) can never be a taken from the reality around us, as the reality does not explain this. The goods and what they are made of do not manifest themselves with answers of whom they should go to. Neither is there any evidence from looking purely at the goods nor services themselves of an indication of a way of deciding how they should be distributed. Therefore the answer must emanate from some point external to the reality i.e. a belief system or ideology. 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 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 organized these instincts and needs in a way that ensures the satisfaction of them all, such as the needs of the stomach and the need to reproduce and others. However, this organization 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 utilized 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 Shari'ah aims to secure the satisfaction of all basic needs (food, clothing and housing) completely for every citizen of the Khilafah State. Islam defined the manner by which humans acquire wealth to prevent a minority of the populace from controlling the majority of the wealth so that the majority of people are not deprived of satisfying some of their needs. Via qiyas (anological deduction) the following verse in the Qur'an ensures this situation never arises: "That it (i.e. the nations wealth) does not become a commodity between the rich among you" [TMQ Al-Hashr: 7] This verse was discussing the issue of the rich receiving wealth and addressed the Khaleefah to ensure the wealth is not distributed in a manner where it remains amongst the rich alone. The Islamic economic system is built upon three principles: 1. Ownership 2. Disposal of ownership 3. The distribution of wealth amongst the people In order to facilitate the acquisition of goods and services Islam put forward rules related to the manner of possessing wealth without any complications. Islam defined the legal means of ownership, and it defined the contracts through which possession can take place. This left humanity free to develop the styles and means by which they earn, as Islam did not interfere in the production of wealth. Islam defines the legal means of ownership and contracts in general guidelines that include legal principles and rules, under which numerous issues belong and against which numerous rules are measured by qiyas (analogical deduction). Thus Islam allowed employment, detailed its rules and left the person to work as a manufacturer, technician, trader, investor etc. Employment was legislated in such a way that by qiyas it also includes representation. This is because the employee represents the employer of the company and is entitled to a salary. Gifts are legislated as a legal means of ownership and by qiyas this can be extended to include donations, grants, charity and rewards as means of ownership. Thus in Islam the means of ownership and the contracts are detailed by the Shari'ah in general outlines and set in such a way as to include any contemporary incident. Islam confined possession to particular means and as a result of this fact ownership came to be defined by the Shari'ah as the possession of goods, services and wealth according to divine means as permitted by the Lawgiver. The Shari'ah has determined the means of ownership by specific cases, which it made clear in a limited, rather than unrestricted form. The Shari'ah has laid down these means in clear general guidelines. These comprise of numerous sections, which are branches of these means and clarifications of their rules. The Shari'ah did not characterise the means by certain general criteria, so no other general means can be included through qiyas. Islam allowed the work of an individual in return for a salary as this is considered, as a legal means of ownership and the core condition for this is that he would be compensated for the effort by being paid a salary for the work. Islam allows the cultivation of land, its farming as well as what is known as agriculture. It allowed the extracting of what is in or on the earth, which means mining, exploration as well as construction. Under this general guideline you also have hunting, brokerage as well as sharecropping. Each of these sections can be extrapolated further by qiyas. By looking at divine rules from the Shari'ah that allow humans to possess property, it becomes apparent that the means of possession in Islam are limited to five which are: 1. Work 2. Inheritance 3. Obtaining wealth for the sake of life 4. The State granting wealth to the citizens 5. Wealth and commodities that individuals take without exchange (gifts, donations and the like). . (www.khilafah.com/kcom/the-khilafah/economy/an-introduction-to-the-islamic-economic-system.html -) Islam is an entire way of life, and Allah's Guidance extends into all areas of our lives. Islam has given detailed regulations for our economic life, which is balanced and fair. Muslims are to recognize that wealth, earnings, and material goods are the property of God, and we are merely His trustees. The principles of Islam aim at establishing a just society wherein everyone will behave responsibly and honestly. The fundamental principles of the Islamic economic system are as follows: Muslims are not to deal in interest. "Those who devour usury will not stand....Allah has permitted trade and forbidden usury.... Allah will deprive usury of all blessing, but will give increase for deeds of charity...." (Qur'an 2:275-6) "O you who believe! Devour not usury, doubled and multiplied. But fear Allah, that you may really prosper." (3:130) This prohibition is for all interest-based transactions, whether giving or receiving, whether dealing with Muslims or non-Muslims. It is reported that the Prophet Muhammad (peace be upon him) cursed those who pay interest, those who receive it, those who write a contract based on it, and those who witness such a contract. It is forbidden to gain property or wealth by fraud, deceit, theft, or other falsehoods. "...Give just measure and weight, and do not withhold from people the things that are their due. And do not do mischief on the earth after it has been set in order. That will be best for you, if you have faith." (7:85) It is particularly hateful for a guardian to take from an orphan's property. "To orphans restore their property (when they reach their age). Do not substitute your worthless things for their good ones, and do not devour their property by mixing it up with your own. For this is indeed a great sin." (4:2) Forbidden are earnings from gambling, lotteries, and the production, sale, and distribution of alcohol. "O you who believe! Intoxicants and gambling, sacrificing to stones, and divination by arrows are an abomination of Satan's handiwork. Eschew such abomination, that you may prosper." (5:90) It is unlawful to hoard food and other basic necessities. Everyone should take what they need and no more. "And let those who covetously withhold of the gifts which Allah has given them of His Grace, think that it is good for them. No, it will be the worse for them. Soon it will tied to their necks like a twisted collar, on the Day of Judgment. To Allah belongs the heritage of the heavens and the earth, and Allah is well-acquainted with all that you do." (3:180) A Muslim should be responsible in spending money. Extravagance and waste are strongly discouraged. "[The Servants of Allah are] Those who, when they spend, are not extravagant and not stingy, but hold a just balance between those extremes." (25:67) "O Children of Adam! Wear your beautiful apparel at every time and place of prayer. Eat and drink, but waste not by excess, for Allah loves not the wasters." (7:31) Payment of Zakat (alms). "And they have been commanded no more than this: to worship Allah, offering Him sincere devotion, being true in faith. To establish regular prayer, and to give zakat. And that is the religion right and straight." (98:5) Every Muslim who owns wealth, more than a certain amount to meet his or her needs, must pay a fixed rate of Zakat to those in need. Zakat is a means of narrowing the gap between the rich and the poor, and to make sure that everyone's needs are met. Muslims are encouraged to give constantly in charity. "Your riches and your children may be but a trial. Whereas Allah, with Him is the highest reward. So fear Allah as much as you can, listen and obey, and spend in charity for the benefit of your own souls. And those saved from the selfishness of their own souls, they are the ones that achieve prosperity." (64:15-16) The Prophet Muhammad once said that "nobody's assets are reduced by charity."(islam.about.com/library/weekly/aa022200a.htm - 28k References: www.khilafah.com/kcom/the-khilafah/economy/an-introduction-to-the-islamic-economic-system.html - 47k - Cached - Similar pages - Note this https://www.vedamsbooks.com/no34563.htm - 3k - Cached - Similar pages islam.about.com/library/weekly/aa022200a.htm - 28k - Cached - Similar pages - ww1.islamonline.net/servlet/Satellitec=Article_C&cid=1154235106363&pagename=Zone-English-Discove... - 43k Microsoft Encarta 2007. 1993-2006 Microsoft Corporation. Read More