Islam and Economics – Reviving the “Thought Leadership”
“But seek the abode of the Hereafter in that which Almighty Allah has given you, and do not neglect your portion of worldly life, and be kind even as Almighty Allah has been kind to you, and seek not corruption in the earth. Verily, Almighty Allah likes not the Musfsidun (those who are mischief-makers, corrupted).” [Quran – 28:77]
The central features of an Islamic economy are summarized as the following: (1) “behavioral norms and moral foundations” derived from the Holy Quran and Prophetic traditions (2) zakat tax as the basis of Islamic fiscal policy, and (3) prohibition of interest.
Capitalist Economic System:
A Capitalist economic system is one characterised by free markets and the absence of government intervention in the economy.
Islam as the system of life gives clear guidelines towards the economic behaviour of an individual and society. All these guidance presented in the Quran and in Sunnah is known as Islamic Economics. The philosophy of Islamic Economics can be derived from the verse in which Almighty Allah (SWT) says: But seek, with that (wealth) which Allah has bestowed on you, the home of the Hereafter, and forget not your portion of legal enjoyment in this world, and do good as Allah has been good to you, and seek not mischief in the land. Verily, Allah likes not the Mufsidun (those who commit great crimes and sins, oppressors, tyrants, mischief-makers, corrupts). (Quran – 28:77)
Benefits of the Gold Standard
If the benefits of the gold standard were to be compared with the fiat (paper currency) standard and other standards, it would be inevitable that the monetary gold standard would become a global standard. These benefits would not allow any other monetary standard to become established. Throughout the history of money and up until the First World War, the whole world operated the gold and silver standards. No other standards were known to the world until then. However, when the colonialists mastered the various styles of economic and financial imperialism, and began using currency as a means of colonialism, they established different monetary standards. They considered bank deposits and non-exchangeable banknotes, which had no reserve of gold or silver, as money, along with gold and silver.
Therefore, it is necessary to explain the benefits of the gold standard, the most important of which are:
System of Zakath (Charity)
1. Zakat is one of the basic principles in the Islamic economics, based on social welfare and fair distribution of wealth. Islam has made zakat a compulsory obligation on every Muslim (Al-Baqarah: 83). Scholars infer that zakat purifies a Muslim’s wealth and also suppresses ego, jealousy, greed and miserliness. It is not a form of tax but rather a divine duty and considered as a right of the poor over the rich, not a charity.
1. It is an obligation on a Muslim to offer assistance to those who needs it according to his means. This can involve financial assistance (sadaqa), public service or any other action to provide help to those in need. Charity purifies the human personality by removing selfishness, greed and materialism. It creates compassion, care, love and kindness among people and it makes a person more thankful to Almighty Allah.
The view of Islam towards wealth differs from its view of utilising it.
2. Islam considers the means that produce a benefit a subject different from the subject of possessing the benefit. So property and human effort are the components of wealth, and they are the means which produce benefit.
3. Their position in the view of Islam regarding their existence in life and in regard of their production differs from the question of using them and from the method of possessing this benefit.
4. Islam interferes directly in the question of utilising some properties. So it prohibits the use of some commodities such as wine and dead foodstuffs. Similarly, it prohibits benefiting from some of man’s actions, such as dancing and prostitution.
5. It also prohibits the trade in commodities that is forbidden to be eaten.
Almighty Allah, Our Creator says the following in Holy Qur’an:
“It is He who created for you all that exists on earth.” [Al-Baqarah: 29]
“Almighty Allah is He Who put at your disposal the sea so that the ships may sail by His command, and so as you may seek His bounty.” [Al-Jathiyah: 12]
“He put at your disposal that which is in the heavens and that which is in the earth, all from Him.” [Al-Jathiyah: 13]
“Let man consider his food. How We pour water in showers. Then split the earth in fragments. And cause the grains to grow therein. And grapes and fresh vegetation. And olives and dates, and enclosed gardens, dense with lofty trees. And fruits and grazes. Provision for you and your cattle.” [‘Abasa: 24-32]
“And We sent down iron, in which is great might, as well as many benefits for mankind.” [Al-Hadid: 25]