The economic system of Islam is mainly based upon the Quran and the Sunnah

Unlike other economic systems which are the products of human mind, the economic system of Islam is mainly based upon the Quran and the Sunnah or traditions of the Prophet.

Islam regulates the needs of society, means of livelihood, and ways of earning and spending, in its own way. It is significant to note that Buddhism hated wealth, while Judaism set, for wealth, a racial basis.

It makes a distinction between a Jew and a non-Jew in that it allows usury with a non-Jew and forbids it to a Jew.

Christia­nity holds that ‘it is difficult for a rich man to enter the realm of Heavens’ and prefers the life of a cave, while Islam prohibits monasticism and lays stress on active life.

The Quran gives man full sanction to harness the forces of Nature, but makes one condition that he should not be unmindful of his brethren-in-want.

The economic system of Islam demands an equitable distribution of wealth. It postulates the principle that God is the Creator of all things and wealth intrinsically belongs to Him.

The talent itself which man applies to the process of production is but a gift from God. Hence, God claims a share in what is produced and declares that His share must go to those in want.

And, as such, it calls upon the rich to give in addition to Saket or poor-due, ‘whatever is surplus’ to the poor and the needy (2: 219). Wealth is to serve useful purposes and not to be accumulated in a few hands (59: 7).

Economic system of Islam has its own philosophy which is neither Capitalism, nor Communism, nor even European Socialism but a harmonious blend of the material with the spiritual.

High moral standards are, therefore, prescribed in the pursuit of wealth. ‘Be moderate,’ said the Prophet, ‘in this pursuit’ which implies that ‘one should take what is lawful and avoid the unlawful’ (Bin Majah).

The balance maintained by Islam between Capitalism and Communism is aptly described by Prof. Gibb of the University of Oxford:

Within the Western world, Islam still maintains the balance between exaggerated opposites.

Opposed equally to the anarchy of European nationalism and the regimentation of Russian Com­munism, it has not yet succumbed to that obsession with the economic side of life which is characteristic of present-day Europe and present-day Russia alike.

Social ethic has been admirably summed up by Professor Massignon: Islam has the merit of stand­ing for a very equalitarian conception of the contribution of each citizen by the to the resources of the community.

It is hostile to unrestricted exchange, to banking capital, to state loans, to indirect taxes on objects of prime necessity, but it holds to the rights of the father and the husband, to private property and to commercial capital.

Here, again, it occupies an intermediate position between the doctrine of bourgeois capitalism and Bolshevist Communism’ (Gibb, Whither Islam, London, 1932, p. 379).

The social ethic of Islam is embodied in the Prophet’s con­ception of mankind as ‘a fold, every member of which is a keeper unto other and accountable for the entire fold’.

Under such con­ception there can be neither exploitation, nor selfishness, nor greedy grasp of wealth. The economic system based on such conception is necessarily humane and good. For details, we refer the reader to our work, Economics and Islam.