Islamic Economic System

ISLAMIC ECONOMIC SYSTEM • Islamic economic system is a divine system, which is given by God in Quran and explained in Hadith by Holy prophet. • This system has all the merits of Capitalism and • Socialism and do not have any demerit of any of them. • It advocates the welfare of the masses at large and wants to eliminate all the social and economic evils from the society so that material welfare of people may increase and people may have healthy and prosperous life. • It emphasizes the fulfillment of all basic necessities of life without any undue restrictions.

CHARACTERISTICS 1----It allows right of private property, which is allowed in capitalism but not allowed in socialism 2-----It does not allow concentration of wealth in few hands, which is allowed in capitalism but not allowed in socialism. 3---It allows freedom of occupation, a person can adopt any profession of his choice in which he is more capable, which is allowed in capitalism but not allowed in socialism. 4---It stresses on equal distribution of national wealth so that all people may fulfill their basic necessaries of life properly.

CHARACTERISTICS 5---It allows price system and its mechanism but prices should not be unjust and exorbitant and consumers should not be exploited. It is against profiteering, hoarding, black-marketing and smuggling of goods. 6---It does not allow interest. Loan should be on the basis of Qarz-eHasna. Profit on money lent should take the form of Modaraba and Musharka mode of investment. Any investment and undertaking on the basis of profit sharing is permitted in this system. 7--- It allows to earn profit with established business norms and do not allow the business of Haram items such as wine production, gambling, or with which the moral values of people diminishes. Production and supply of these goods and services are allowed in both socialism and capitalism.

CHARACTERISTICS 8---It permits the inheritance system but do not allow “Death Duty” 9--- It forbids unnecessary competition to destroy each other and natural resources are wasted for nothing. 10--It allows free consumption of goods and services as per reasonable need of consumers but consumption for pomp and show is not permitted. 11--It introduces Zakat and Usher system so that requirement of needy persons is fulfilled and wealth is not accumulated in the hands of lucky few. It emphasizes payment of Zakat and Fitra for welfare of all people of society. This increases total consumption and business activity in the economy and there appears no slump or depression in economy.

CHARACTERISTICS 12--There is no class conflict in Islamic economic system, because it advocates Adl ,Ehsan, Sakhawat and payment of Zakat to the needy people of society. 13--It is against misery and accumulation of wealth, rather it advocates people to spend money for reasonable material welfare and not to keep money idle as cash balances. Islam directs to keep the money in circulation so that Effective Demand may continue to increase and economy may prosper.