Islamic Economy Vs Capitalistic Economy

Islamic Economy Vs Capitalistic Economy
Capitalism and Islam are compared in respect of their basic economic concepts as under:
1. Right to ownership:

Capitalism
o The existence of right of private ownership of property is the hallmark of capitalism.
o It gives unrestricted and unencumbered full rights of ownership to the individual.
o The individual may acquire, own or alienate his property in whatever manner he likes. The system believes in the private ownership of the means of production, distribution and exchange which are managed and controlled by individuals or groups of individuals for private profit.
o The unrestricted right to own property and earn profits leads to concentration of wealth in few hands.
o This necessarily disturbs the balance of distribution of wealth and income in society.
o The economic disparities and the ever-increasing gulf between the rich and the poor sow the seeds of discord and destruction in the capitalist society.
Islam
o Islamic concept of ownership is unique one.
o Ownership, in reality, belongs to God while some rights only vest in man so that he may fulfill the purpose of God, that is the purpose of community by acting as a trustee for those in need. In other words, what Allah has created for benefit of and service to man belongs collectively to the whole humanity.
o Legal ownership by the individual is recognized in Islam but it is subject to the moral obligation that in all wealth all sections of society have the right to share.
o Thus private or individual ownership in Islam is not unlimited or unrestricted. All the means of production are not placed under private ownership as public ownership of certain things of common utility exists side by side with it in an Islamic state.
o Islamic state has also the right to nationalize certain things which are under private ownership for the benefit of the community.
o In this way the limited right of private ownership with law of inheritance which distributes the estate of the deceased among fairly large number of heirs averts concentration of wealth in few hands and thus prevents class-conflict.

2. Institutions of Interest:

Capitalism
o The Institution of banking and interest is the life-blood of capitalistic form of economy.
o For business, trade and industry especially for big projects and economic ventures, huge funds are required which no individual or firm can arrange.
o This leads to establishment of banks who borrow capital from depositors and investors on lower rate of interest and lend it to business enterprises on higher rate of interest.
o Thus the institution of interest has become part and parcel of capitalism.


Islam
o Islam considers interest as the most exploitive institution for humanity and has abolished it root and branch in its every form and manifestation.
o According to al-Qur’an taking of interest tantamount to war against God and His Apostle, while according to Prophet Muhammad (PBUH) interest is worse than adultery.
o Islam builds its economy on interest free basis and promotes profit and partnership as incentive for saving and investment.

3. Distribution of Wealth

Capitalism
o Capitalism does not believe in fair and just distribution of wealth.
o Since it believers in full economic freedom and private ownership of means of production, wide economic disparities exist in capitalistic economy.
o Concentration of wealth in few hands takes
o place while huge majority of the populace is deprived of the very basic necessities of life. The privileged few live in luxury while poverty, ignorance, disease and unemployment is the lot of the multitude.
o This disturbed balance of distribution of economic resources and unbridgeable gulf between the haves and have-nots ultimately leads to class struggle and ultimate overthrow of the very system.
Islam
o Islam on the one hand guarantees provision of basic human needs such as food, clothing and shelter to everyone and, on the other hand, ensures fair and equitable distribution of wealth and economic resources among all.
o It does not tolerate existence of wide disparities among the rich and the poor and tries to eliminate concentration of wealth in few hands.
o For bridging the gulf between the rich and the poor and for ensuring equitable distribution of wealth, Islam has taken many steps such as Zakat and Sadaqat, laws of inheritance and bequest, voluntary charities and compulsory contributions in the form of taxes and duties.
o To prevent concentration of wealth in few hands Islamic economic code has taken measures like abolition of interest, prohibition of earning of wealth through haram means, prohibition of