Tuesday, February 21, 2012

What Are the Ideological Differences Between Islamic and Capitalistic Economic Systems?

Islamic economics and capitalism are not only two different economic systems but they are two different ideologies and philosophies. While giving the executive education to the future leaders of Islamic finance this must be taught at the first place as of the fundamental importance. This must the building block of executive education. At some places both the economic systems seem at poles apart to each other but at some others they share similarities. One should not judge the two systems on the basis of their differences and similarities only, but should look deeper at their philosophies and ideologies to judge their nature. This way helps to understand the nature of these two economic systems, and helps to comprehend further Islamic injunctions, which gives it its parameters.
At the first instance, the good governance of Islamic finance admits the importance of economic life of human beings, consider it necessary, rather indispensable, and a considerable portion of the holy Quran deals with the economic problems of business and finance, yet it does not take it the ultimate goal of human, in fact economic activities do not fall in the categories of "goals" set by God and His Messenger (S.A.W).
This treatment of Quran and Sunnah with economics determines the nature of Islamic economics and finance. Islam takes the economic activity as an obligation of the second order which is done to fulfill some higher obligation and goals of a human life.
So we can say there are two kinds of wealth or two different approaches towards wealth in the Holy Quran. One is materialistic approach this is summarized in the word, "Al Dunya" which is reprehensible and disproved; while the other one is called "Khair" which is the wealth earned or gained through Halal or approved means and spent in the ways approved by God and His Prophet (S.A.W).
"Seek the other world by means of what Allah has bestowed upon you, and do not be negligent about your share in this world. And do good as Allah has done good to you, and do not seek to spread disorder on the earth." (28:77)
Contrary to it, the capitalism and also the socialism take economic life of human as the ultimate goal of life; hence rest of the attitude towards wealth and property is set accordingly. This is the materialistic approach. This approach gives man the complete authority and freedom to exploit his wealth at his will.
The second main aspect of Islamic ideology of economics is that it calls wealth a property of God, and man has acquired a right to exploit it under the instructions of God. The Holy Quran says:
"Give to them from the property of Allah which He has bestowed upon you." (24:33)
This is why the good governance of Islamic economics has to accept the restrictions imposed upon on the property in his possession and surrenders to His will. While the capitalism objects to the restrictions on the wealth and man's right to exploit it.

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