Islamic Economic System Essay

Islamic Economic System implies a mood of satisfying the economics needs of the members of organized society in accordance with is injection of Quran and Sunnah. It’s derived from the teachings of the Holy Qur’an and explained in his Ahadith by the Holy Prophet (SWT). This system continued in this original form till the death of the Second Caliph Hazrat Umar (RA). The system believes in the private ownership of the means of production, distribution and exchange which are managed and controlled by individuals or groups of individuals for private profit. Islam enjoins investment of money and other resources; it issues clear injunctions on the legitimate ways of investing them. The Jews confused â€Å"Ribā† with trade; they would call â€Å"Ribā† a kind of trade. Unrestricted economic freedom and non-interference of the state in such freedom is another feature of conventional economy. Competition, which is another feature of conventional, leads to t he destruction of minor enterprises and firms. This encourages merger of smaller business organisations into major ones and thus monopolies or cartels are established. The Institution of banking and interest is the life-blood of conventional form of economy. For business, trade and industry especially for big projects and economic ventures, huge funds are required which no individual or firm can arrange. To pay ‘ZakaÌ„t ’ on ones wealth and property is extremely obligatory for a Muslim. AbuÌ„ Huraira has reported God’s Messenger as saying: â€Å"If God gives anyone property and he does not pay the ‘ZakaÌ„t ’ on it, his property will be made to appear to him on the day of resurrection as a large bald snake with black spots over its eyes. It will be put round his neck on the day of resurrection, then seize his jaws, then say, ‘I am your property; I am your treasure.† The only verses which state not mere ethical norms but rather economic rules or regulations are the verses dealing with zakaat (tax on surplus wealth) and riba (usury/interest). Establish worship, pay the poor-due, and bow your heads with those who bow (in worship). 2:43. In Islam there is no conflict between matter and soul, as there is no separation between economy and religion. Its characteristics, value and essence are appreciated by Muslims and the non-Muslims. The over-arching values of Islamic economics lie in the principle that it is an economic strategy that can achieve unity and harmony between the material and the spiritual life of the people.