Capitalism (part 6)

Author: Mohammad Asem Esmailzahi

Capitalism (part 6)

Characteristics of the Islamic Economic System

1. In order to fully implement an economic system within a society, all principles and laws related to that system must also be applied and enforced so that the outcomes of implementation are desirable. Accordingly, the implementation of the Islamic economic system requires that Islamic laws and regulations prevail in society.

For example, Islam calls for the prohibition of usury (riba). Usury must be declared unlawful through both religious and legal directives. Likewise, Islam requires the collection of Alms (Zakat) and its distribution by the state, which necessitates the establishment of specific regulations by the government. Therefore, implementing the Islamic economic system requires coordination among all components of the social and political structure to achieve its objectives.

1. The Islamic economic system is rich in values derived from Islamic laws and regulations. Since the foundation of the Islamic economic system is Islamic law—and these laws originate from the Qur’an and the Sunnah, both of which are abundant in moral values such as honesty, brotherhood, integrity, justice, benevolence, and countless other ethical virtues—the Islamic economic system itself is also rich in moral values derived from Islamic sources.

2. Although the Islamic economic system is influenced by the degree to which people adhere to moral conduct and religious commitment, its functioning does not rely solely on voluntary actions. For example, despite the fact that the Islamic economic system allows for a high level of voluntary acts such as charity (sadaqah), which are considered voluntary transfer payments, its structure and operation do not depend on charity alone. Rather, it is based on fundamental principles and rules that clearly regulate economic activities. Consequently, the behavior encouraged by the Islamic economic system is not purely religious behavior, but worldly and material behavior organized by legal and social institutions and guided by the system’s rules and mechanisms.

3. The Islamic economic system is a dynamic system. Islam contains both fixed and variable laws: fixed laws have been established by the Lawgiver, while variable laws are entrusted to religious scholars, who formulate them according to prevailing social conditions. Since the Islamic economic system is derived from Islamic law, it likewise possesses this dynamism and flexibility. [1]

Core Elements of the Islamic Economic System

1. The universe belongs to Allah the Exalted. Allah is the true owner of everything in existence; therefore, all forms of ownership exist under His ultimate ownership. Human ownership is a trust from Allah, and humans are accountable to Him for how they use what they own. This perspective fundamentally differs from capitalist and socialist views of ownership: in capitalism, real ownership belongs to individuals; in socialism, to the working class, whereas in Islamic economics, ownership belongs to Allah.

2. Everything in the universe is created by the One God. Accordingly, there is no inherent difference among human beings, and Allah has not created any class of people superior to others, as He says:

(إِنَّ أَكْرَمَكُمْ عِندَ اللَّهِ أَتْقَاكُمْ) Translation: “Indeed, the most honorable of you in the sight of Allah is the most righteous of you.” [2]

All human beings are equal, and the only criterion of superiority is piety.

1. Belief in the Day of Accountability is the third foundational element of the Islamic economic system. Faith in the Day of Judgment has a direct and profound impact on economic behavior. In this case, individuals do not focus solely on worldly benefits; rather, by considering the Hereafter, they adopt moral values such as justice, fairness, and truthfulness as guiding principles in their economic activities, seeking better outcomes in the future as well as immediate benefits.

At this point, a portion of Islamic moral teachings that directly relate to the performance of agents in various economic sectors is presented. [3]

These teachings can be divided into two general categories:

1. Islamic ethical teachings

2. General moral teachings

1. Justice and Fairness

Justice is one of the most comprehensive teachings of Islam. In the Noble Qur’an, from monotheism to prophethood, from leadership to individual ideals and social objectives, everything is founded upon justice. The Qur’an considers the establishment of justice among the most important objectives of the mission of the prophets.

1. Altruism and Benevolence

Benevolence (Ihsan) and good conduct belong to the domain of social practice and commendable norms and are among the moral virtues. In Qur’anic teachings, ihsan is explained in three meanings, one of which is closely linked to faith and the relationship between humans and Allah, and is understood within cognitive, perceptual, and attitudinal domains.

Altruism (ithar) means preferring others over oneself. Technically, it refers to giving to others something that one personally needs. Altruism includes sacrificing life, wealth, status, and dignity in the path of Allah, although it is most commonly used in the context of financial preference for others.

Specific Teachings in Various Economic Sectors

1. Work

Islam regards work and economic activity as valuable acts of worship and strongly condemns unemployment. Laziness is severely criticized in Islam. Work not only generates income but also leads to dignity, intellectual growth, physical health, and spiritual vitality.

A person must possess the necessary expertise for the task undertaken and perform it to the best possible standard.

2. Production

The Noble Qur’an considers the cultivation of the earth as humanity’s mission: (هُوَ أَنْشَأَكُمْ مِنَ الْأَرْضِ وَاسْتَعْمَرَكُمْ فِيهَا) Translation: “He brought you into being from the earth and made you responsible for its development.” [4]

3. Distribution

One of the most important recommendations in Islam is muwasat (solidarity), which means sharing one’s resources with others. The ideal Islamic society is one in which all individuals strive, according to their capacity, to assist other members of society.

4. Trade

Sellers should be content with modest profits and avoid seeking gain through illegitimate means. They must refrain from practices such as collusion to create monopolies, false advertising, short-selling, lying, usury, and concealing defects in goods. Buyers, likewise, must avoid creating purchasing monopolies and interfering in others’ transactions.

The Messenger of Allah (PBUH) said: “Whoever sells a defective product without disclosing its defect will remain under the wrath of Allah, and the angels will continue to curse him.” [5]

He (PBUH) also said: “Whoever deceives us is not one of us.” [6]

5. Consumption

Four levels of consumption can be identified:

1. Meeting essential needs: Consumption at this level is necessary.

2. Sufficiency (kifayah): Consumption up to the level where essential needs are met. This is the preferred level in Islam. Those unable to meet essential needs may receive Alms (Zakat) to reach this level.

3. Consumption beyond sufficiency: As long as it does not reach extravagance, it is undesirable, and strong recommendations for contentment apply.

4. Extravagance, waste, and squandering: This level is prohibited. [7]

Continues…

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References:

[1]. Zivdari, Mahdi, The Confrontation between Faith-Based Ethics and Capitalist Ethics and the Formation of Economic Systems, p. 371, Center for Technology Studies, Sharif University of Technology, 2007, Iran; and Kahf, Monzer, Religion and Economics: The Islamic Economic System and the Science of Islamic Economic Analysis, p. 322, trans. Seyyed Hossein Mir-Moezzi, Summer 2005, Qom–Iran.

[2]. Qur’an, Surah al-Hujurat, 49:13.

[3]. Kahf, Monzer, Religion and Economics: The Islamic Economic System and the Science of Islamic Economic Analysis, p. 179, trans. Seyyed Hossein Mir-Moezzi, Summer 2005, Qom–Iran.

[4]. Qur’an, Surah Hud, 11:61.

[5]. Ibn Majah, Sunan Ibn Majah, vol. 2, p. 755, Book of Trade, Hadith no. 2247, Dar al-Fikr, Beirut.

[6]. Muslim ibn al-Hajjaj, Sahih Muslim, vol. 1, p. 69, Book of Faith, Hadith no. 45, Dar al-Jil & Dar al-Afaq al-Jadidah, Beirut.

[7]. Zivdari, Mahdi, The Confrontation between Faith-Based Ethics and Capitalist Ethics and the Formation of Economic Systems, p. 923, Sharif University of Technology, 2007, Iran; and Sen, Amartya, Ethics and Economics, p. 79, trans. Hassan Fesharaki, Tehran: Shirazeh Publications, 1998.