Assessing Of Economic Systems In Islam Politics

Essay add: 19-06-2017, 16:19   /   Views: 2

Economic System in Islam was published in 2004. The writer has not written the book, rather he has edited it. The book is about economic system given by Islam. The intention of the writer is to present Islam as a complete code of life that guides human beings in every aspect of life. The book covers teachings of Islam regarding economic sphere of life. For this, S. Ganjoo has selected articles on Islam's economic system by different highly qualified religious scholars. In each article, there is comparison of Islamic economic system with capitalism, communism and socialism. The comparison has been done with predisposition that Islamic economics system, being a divine system, is free from all faults naturally inherited by man-made capitalism, communism and socialism. There is thorough discussion on each of above said system. All writers agree that Islamic economic system is a middle and flawless path between two extremes of capitalism and socialism.

The book contains 183 pages including eleven articles and index in the end. Articles also contain name of writers, some of them footnotes and references. The book is for academics, students, and general public, and it serves the purpose, as simple terminology has been used.

The writer has not written the book himself, rather he has edited it and has given in it articles of different scholars. But, by studying all articles we can draw a common thesis out of them. The Islamic economic system is ''Capitalist" in nature, but it differs from European Capitalism with respect to its fundamental principles. Unlike European capitalism, Islam does not allow absolute freedom in economic activities; rather it imposes restrictions so that all such activities can be beneficial for the whole community, not for an individual only. Therefore, Islamic economic system is the only solution of economic problems faced by the world due to capitalism, socialism and communism. Each writer develops his thesis by critically analyzing advantages and disadvantages of three prevailing economic systems, and then he argues how Islamic economic system is the best one.


Capitalization is based on three basic principles: personal gain, as a target; competition, as a means; and freedom, as a prerequisite. Capitalism allows private ownership, and it gives absolute freedom to an individual. It is based on policy of Laissez faire (let the individual do as he pleases). The state has nothing to do with business. It is an individual that decides what to produce, how much to produce, where to sell, at what price to sell. Capitalist economists say that such freedoms encourage healthy competition among individuals that speeds up economic progress. These principles have brought tremendous economic progress to Europe along with numerous problems as well. Capitalism has promoted reprehensible class system, concentration of wealth into a few hands, and disintegrated society. Inflation, deflation, and economic depression are frequent in Europe. Labour is exploited by capitalist. Hoarding and monopolistic practices are rampant to ensure maximum profit. Even, companies burn or sink their productions in the sea to retain highest prices and profits. Resultantly, industrialization in Europe proved a curse instead of blessing for humanity.


Communism emerged as a reaction to capitalism, another extreme against the existing one. Communism is based on absolute nationalization in which state owns land, real property, and capital, and exploits these on behalf of whole community. It is state that decides quantity, distribution, and prices of consumer goods and commodities. These goods are distributed on the principle: "from each according to his ability, and to each according to his need". Whereas, Soviet Constitution of 1936 states: ''from each according to his ability, to each according to the measure of work he renders: and whoever does not work has no right to eat.'' It is aimed at making everyone to do work, ensuring welfare of the whole community, and a class-less society. Defects with this system are that it is un-natural and denies basic human instinct of ownership. It has reduced an individual from human being to a social cog that works like machines and is free from sentiments, having no importance at all. Resultantly, nowhere in the world, communism in its pure form is found, nor it is possible in future.

Socialist Economic System

When supporters of communism found it difficult to impose pure communism, they introduced socialism as a step towards communism. In socialism abolition of private property is partial, not absolute. State controls heavy industries, foreign trade, banks, major domestic trading organizations, and public utilities. Private enterprise consists of less important industries and minor commercial and trading organizations. This system is more practical than communism, but, according to Mahmood-al-Labadidi, it has failed in uprooting evils like unjust dues charged by banks for monetary transactions, usury, and loans. Nationalization put industries and banks under bureaucratic control, and government servants cannot be loyal with these industries or banks as an individual owner can be. Furthermore, it produces a huge bureaucratic structure that causes more corruption, exploitation, and red-tapism. In this way socialism proves to be a hurdle in the way of national progress.

Islamic Economic System

Being capitalist in nature, Islamic system is based on three economic principles: private interest and gain as a target, competition as a means, and freedom as prerequisite condition. However, unlike European capitalism that gives absolute freedom to an individual, Islam imposes moral and ethical doctrines in this regard. For example:

Ownership and exploitation of land with essential condition of common welfare of the whole community

Equality of capital and labor

Prohibition of exploitation through interest, gambling, and leasing of land etc.

Earning of wealth through moral ethics

Doing business in things that do not promote evils in Islamic society

Circulation of wealth and checking gap between haves and have- nots through Zakat, Sadqat, and inheritance laws

Integrating economic activities with religion, so that wealth cannot become a means of exploiting people

Islamic principles on Consumption Loan are as follows.

Principle of genuineness: borrowing is allowed only for genuine physiological needs that are out of means of the borrowing person.

The principle of contract: loan contract must be in written form to safe rights of the creditor.

The principle of payment: Islam discourages conscious delay/deferment of payment of loan.

The principle of help: loans must be given only to help the needy. No interest or any other benefit on loan is allowed by Islam.

The writers also discuss in detail basic features of man-made economic systems, their faults, and problems caused by them. Then they argue that how Islam economic system can solve all these problems. Brief summaries of the articles are as follows:

Fifth article is about economic problems of Muslim world. In this Mr. G.H. Neville-Bagot has talked about economic conditions of Iran, Egypt, Sudan, Malaya, Nigeria, Turkey, Jordan, Lebanon, and Syria. Time period is not mentioned, but we can guess that it was time of 1950s. So, this article seems useless as we are more concerned with present time, not with past. Similarly, tenth article is about rapid economic progress of Kuwait, but the article does not discuss role of Islamic economic system in Kuwait, rather the progress seems to be the result of geographical and natural resources of the country.

Only two writers discuss ways of implementing Islamic Economic System. Mr. Mahmood-al-Lababidi suggests that Islamic economic principles should be part of syllabus at degree and post-graduate levels. According to him, Muslim professors of economics are more interested in borrowing things from Europe, and they do not pay attention on Islamic principles to evolve a full-fledged economic system out of these. Resultantly, youth is becoming more and more alien with Islamic principles. So, according to him, the only way of implementing Islamic economic system is to make it part of syllabus of economics. Ariel in his article ''Islamic Economic System and the Process of Change Over'' gives some practical methods to convert non-Islamic economic system of Muslim countries into Islamic one.

State should start collecting Zakat on voluntary basis during Ramdan and at time of two Ids.

State should introduce a policy of adjusting Zakat towards payment of other taxes.

Collection of Zakat through the medium of specially designed stamps.

To abolish interest, first state should withdraw from its own share of interest to set an example for public.

Then, state should eliminate its own interest liabilities.

To eliminate interest from Banks, the function of Banks should be restricted to making financial transactions only.

Imports or exports at big level should be done by state only.

Insurance companies should be closed as in an Islamic society and disabled or poor persons liability on whole community.

Mr. M.A. Mannan in his article ''Consumption Loan in Islam'' discusses principles of loan in Islam and gives three measures for its implementation in Muslim countries.

Creating consumer co-operatives by the state

Establishing Islamic Banks

Establishing a consumption Credit Fund

Criticism and Analysis

The book consists of comprehensive debate on different economic systems. One thing that we can find very easily is lack of objectivity. The editor has selected articles which speak in favour of Islamic economic system, and criticize any other economic system. Western economists also have reservations against Islamic economic system. For example, Islam banishes interest that is a tool of surplus; without loan banking sector can't work; Islamic Laws of inheritance divide land into small pieces that affect its productivity and so on. Such articles and answers to them should have also been included in the book. Then, there is repetition of same points in all articles, and it seems that editor wants his readers believe in perfection of Islamic economic system just because so many Muslim scholars are advocating it. This fact makes the book a wholehearted attempt to preach Islamic economic system, instead of analyzing it critically. Furthermore, in all articles, we find general analysis of different economic systems. No specific evidences from history have been given. Only two articles are about economic situations of Muslim countries, but it is not clear from them whether these problems were the result of wrong policies of Muslim governments or due to non-Islamic economic system. The book was published in 2004, and articles on economic conditions of the world and Muslim countries were not included in it.

All scholars have relied on Quranic verses and traditions of Holy Prophet (P.B.U.H) in order to prove Islamic Economic System flawless. Again it wins emotional sympathies of the reader. It would have been better if the writers had also included some practical evidences from history and present time in their articles. A natural question arises, that if Islamic Economic System is flawless and absolute, why it cannot have flourished and have been implemented at least in Islamic countries? Why all Muslim countries including Arab states are dependent on America and other European countries?

According to Mahmood-al-Lababidi, faults lies with Muslim professors of economics who are more interested in borrowing theories from Europe and ignoring Islamic principles of economics. To some extent he is right in his opinion. But, religious scholars are also responsible for it. Our scholars tell general masses that worldly progress is detrimental for success in hereafter. Resultantly, public in general, and intellectuals in particular became more and more disinterested in Islamic economic principles.

Ariel has given different methods of converting non-Islamic economic system of Muslim countries into Islamic one. He does not give solutions of some serious hindrances in the way of Islamization of economy. The very first problem is to decide which sharia should be implemented. There are several schools of thought with their respective Islamic economic systems. If state imposes one doctrine, people of other sects or schools of thought severely resist. For examples, Shias do not give Zakat to government. There are variations in decrees regarding laws of inheritance, will, and Waqf by scholars of different sects. One such example is in the book itself. Mahmoud Abu-al-Saud in his article ''Exploitation of Land and Islamic Law: The Leasing of Land" discusses in detail three different opinions on the matter that whether leasing of land is Islamic or unislamic. Each school of thought has its own evidences from Quran and Sunnah. If a government implements anyone of these there, the remaining two will disobey the government in the name of religion, creating further confusions for the state. Measures given by Mr. M.A. Mannan to Islamize loan system in Muslim countries seem impracticable, especially for poor countries like Pakistan that is totally dependent on foreign aid. Uprooting interest from banking system is not possible as it has become an established norm in our society. That is why we see Islamic banks in Pakistan that have tried to make interest according to principles of Islam under supervision of well known Muslim scholars. So, the suggestions of MA Mannan seem highly general, not in accordance with ground realities.

In short, it is very good effort to introduce Islamic Economic System as an alternative to existing economic systems with their inherited flaws. But, to implement Islamic Economic system, the book lacks a lot of comprehensive discussion. The need of the time is to evolve an economic system out of Quranic verses and traditions of Holy Prophet (PBUH), to make a comprehensive planning of introducing Islamic Economic System in Muslim countries by overcoming all hindrances, and presenting a practical model, instead of a theoretical one, before the world.

Summary and General Recommendations

The book is collection of eleven articles non out of which has footnotes, but some of them have endnotes or references. The book has an index, but no bibliography, maps, graphics, or tables.


Book is worth reading, and I would recommend it to people who want to make a comparative study of basic principles of Islamic economic system and other prevailing economic systems in the world. But the comparison is not from economic experts, rather by religious scholars.

Credibility and Objectivity

All articles are credible as they have been written by highly qualified scholars. Though they have discussed general features of all economic systems like laymen, not like economic experts; facts that they have presented are true. However, their sentimental inclination toward Islam mars objectivity of the book. But their argumentative style overcomes this common weakness of their articles.

Style of Presentation of Content

The uniqueness of this book lies in lucid presentation and clarity of thoughts in each article. Simple terminology makes it easy to understand for general public and student. However, some technical words of Muslim Jurisprudence make one or two articles a little bit difficult to comprehend property.

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