To reduce the gap between the rich and the poor, Islam encourages trade, discourages the hoarding of wealth and outlaws interest (the term is riba in Arabic). Therefore wealth is taxed through Zakat, but trade is not taxed. Profit sharing and venture capital where the lender is exposed to risk are acceptable. Hoarding of food for speculation is also discouraged.
In this article, let us discuss the thought leadership provided by Islamic Economic system.
A Capitalist economic system is one characterised by free markets and the absence of government intervention in the economy.
The points that can be drawn from the above definition are: Islamic Economics is based on the moral and spiritual aspects of the human life. It states that man is not an animal but a vicegerent sent down by God (Almighty Allah) on this earth with purest nature . God (Almighty Allah) has created abundant resources (both actual and potential resources) that support man’s existence on this earth. The resources are unequally distributed all over the globe with wisdom to create a strong relationship among the human beings . It also states that the surplus of a man must go to his fellow beings as an ‘Economic Trust’
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.
“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]
Therefore, Islam urges people to earn, seek the provision and strive. And it made striving to earn the provision compulsory.
However, this does not mean that Islam interfered in the production of wealth, or that it demonstrated the technical matters related to increasing production, or the amount of production, because it has nothing to do with production. Rather it only encourages on working for the earning of property. Many Ahadith came to encourage the earning of property. In one Hadith, the Prophet Muhammad (pbuh) shook the hand of Sa’ad ibn Muadh (ra) and found his hands to be rough.When the Prophet asked about it, Sa’ad said: “I dig with the shovel to maintain my family.” The Prophet (pbuh) kissed Sa’ad’s hands and said: “(They are) two hands which Almighty Allah loves.” The Prophet (pbuh) said: “Nobody would ever eat food that is better than to eat of his own hand’s work.”