Islam & Capitalism

Many

problems are facing by the human

being, economic is the one of them and its
significance cannot be denied in the life of
human being.
In the very beginning it was said that
economic problem is due to the scarcity.

Capitalism is an Economic
System in which a countrys trade
and industry are controlled by
private owners for profit rather
then controlled by the state.

What is Capitalism?
Capitalism is a social system based on the
recognition of individual rights including property rights, in
which all property is privately owned.
Under capitalism the state is separated from
economics, production and trade just like the state is
separated from religion .

What is Capitalism?
It is the system of laissez faire. It is the system of political
freedom. It is the economic system based on the principle of
private ownership and use of factor of production and individual
freedom in all economic matters.

An economic system in which the means of production

and distribution are privately or corporately owned and
development is proportionate to the accumulation and
reinvestment of profits gained in a free market.

What is Capitalism?
Under this system all farms, factories and other means of
production are the property of private individual and firms. They are
free to use them, any way they like, with a view to making profit. The
desire for profit is the sole consideration with the property owner in
the use of their property.
Beside free and unfettered use of their property, everybody
is free to take up any line of production he likes and is free to enter
in and contract with other fellow citizens for his profit

Right of private property

Freedom of enterprise

Freedom of contract

Freedom to use own property

Freedom of choice by the consumer

Automatic working
Higher efficiency and incentive to hard work
Economic development and prosperity
Optimum utilization of resources

 An

imbalanced system
Distribution of wealth in a few
Concentration of wealth and economic power only
Wasteful competition
Human welfare ignored
Exploitation
Mismanagement

What is Islamic Economics

Islam is a Deen which gives guidance for Aqaid, Ibadat, Muashrat,

Akhlaq & Muamalat.

The humanitarian goal of achieving the well being of all members of the
human family cannot be attained by concentrating primarily on the
material constituents of well-being and making maximization of wealth as
the main objective of Economics.

It is also necessary to raise the spiritual content of well being and reduce
all the symptoms of anomie, like family disintegration, heavy interest
based debt payments, conflict and tensions, crime, alcoholism, drug
addiction, and mental illness, all indicating lack of inner happiness and
contentment in the life of individuals.

What is Islamic Economics

Capitalism as well as Socialism have both failed to lead

mankind to such an overall well-being. It is therefore,
necessary to lay down the contours of a new system
which could help optimize human well-being as per the
divine guidelines of Allah.

Islamic Economic System

Islam accepts the market forces of supply and demandReference of Holy Quran.

In fact Islam gave the concept of Market Forces 1300 years.

Islam accepts the right to private property and accepts the right
to maximize profits. But there are some prohibitions.

Islamic Economic System- The

prohibitions

1.

Divine Prohibitions:
Islam has prohibited some economic activities that are not allowed
at any time at any place.( Interest, Gambling, Hoarding etc.)

2.

Govt. Restrictions:
Islam allows Govt. to intervene where it feels appropriate , but
these restrictions are temporary as per the need of the time.

3.

Moral Considerations & Restrictions:

Life in this world is temporary and there is an eternal life after
words. One has to make this worldly life a way to get the
maximum benefit in the life hereafter.

Factors of Production in
Islamic Economic System

In Islam there are three factors of production

1.Land
2. Labor
3. Entrepreneur

Entrepreneur & Capital is a single factor of production.

As interest is Haram hence the risk of profit & loss is with the
capital.

Anyone investing capital must also take the risk of the

investment.

Right to Wealth in Islam

In both Capitalism & Socialism the right to wealth is with those

factors of production only that have taken part directly in the
process of production.

Islam believes that the original ownership of everything is with

Allah and without Allahs no factor of production can produce
anything.

ALLAH
Factors of Production

Secondary owners of wealth

Zakat, Ushr
Wirasat, Sadqaat
Qurbani,Khiraj

Summary of The Comparison

Capitalism gives unbridled and un-conditional right to profit

motive and private ownership,

Islam gives a balance view among the two extremes by

recognizing the right to private ownership, market forces and
profit motive but under the restrictions of:

1. Divine restrictions
considerations

2. Govt. restrictions

3. Moral

Summary of The Comparison

Islam ensures equitable distribution of wealth

through the concept of primary and secondary
ownership.

All these factors combined have a cumulative effect

of achieving the well being of all members of the
human society.

Islamic Economics System

According to Quaranic verses, every thing in this universe
belongs to God almighty.
"Whatever is in the heavens and whatever is in the earth
belongs to Allah." [Al-Baqarah, 2:284].
He is the real owner of everything
"And Allahs is the kingdom
of the heavens and the earth, and Allah has power over
every things." [Al- Imran, 3:189].

Islamic Economics System

Halal & Haram

Justice

Equality

Cooperation

Brotherhood

kindness

Solution for Economics Problems

Basic rules of Islam

Concentration on ethics and morality

The role of government where required

Solution for Economics Problems

Achieving wealth

Rights of ownership

How to use that Rights?

utilization of capital

Distribution of wealth [

Teaching of the Qur,an Regarding

Economics
Wright

of private ownership
)(
)......(
No concept of equality in economics
Allah says
)..(

Teaching of the Qur,an Regarding

Economics
Distinction

between legal and

illegal

Exaggeration is not allowed