Thread by @islaminind

Thread
"Economic System of Islam"
Islam lays the foundation of all its systems, whether political, economic, social or any other, on one fundamental principle—that the ultimate sovereignty and ownership belongs only to God Almighty

It is stated in Surah az-Zukhruf that: 43:86
In brief, this verse lays down that the kingdom of the heavens and earth really belongs to God, and everything that exists therein is destined to return to Him.

It is a reminder that all worldly governments, kingdoms and powers are under God’s command and are granted to human beings only as a trust. Man must not consider himself unaccountable just because he has the power and ownership of material wealth that he is given in this world.

He may appear to have authority and ownership on the surface, but in truth he is only holding a trust from God. Human beings are answerable before God that they rightfully discharged the trust that was reposed in them.

There are three basic economic systems that exist in the world today. The first system is not bound by any definite laws or rules; the second system is nationalistic in its approach, while the third is driven by individualism.

Islam does not accept the first system at all, for the Islamic system is based on prescribed principles and laws, which people are enjoined to follow. Islam relies on purpose and wisdom, and does not approve of indiscriminate adoption of economic policies

Islam does not recognize a system that is not based on law. Instead, Islam presents a path that is a combination of the other two systems (nationalistic and individualistic).

Everything that is found in the world has been created by Allah for the benefit of mankind. Mountains, rivers, mineral wealth and other means of human progress are mankind’s collective property, and we all have a share in this collective wealth.

No one may claim that God has created these things only for his own personal use. Man is therefore not free to dispose of his wealth in any way he deems fit; what he can do is circumscribed by God’s prescribed limits.

Islam ordained sympathy for the poor and downtrodden and their uplift was a major concern at its very inception, Muslims are told that if they desired national progress and God’s pleasure then they must try to help the poor and alleviate their sufferings.

Essence of the economic system of Islam lies in an appropriate combination of individual freedom with state intervention. It allows state intervention to a certain extent,but it also provides for individual freedom. A balance btwn these two defines the Islamic economic system.

Individual freedom is granted to enable persons to build up assets and spend them voluntarily in order to gain the spiritual benefits in the life to come. State intervention, on the other hand, is provided in order to protect the poor from economic exploitation by the wealthy.

Islam forbids lending and borrowing of money on interest, which also entails certain limits on commerce. The fact of the matter is that interest has been the most important cause of economic and financial catastrophes in the world.

Interest enables a shrewd and clever businessman to accumulate vast amounts of money, which then enables him to control markets or establish large factories, thereby reducing many people to perpetual economic subservience.

If one were to examine the list of the world’s richest men, it would be found that it was made up of mostly people who owe their rise to interest.

Interest is one of the destructive economic forces in the world & a major hurdle that stops the poor from moving forward. It is thus imperative that mankind rid itself of interest. If rich were unable to borrow money on interest, they would be left with one of the two choices.

They could expand their business by including more people in their partnership, which would of necessity involve spreading the earnings ovr a wider group of people. Or, alternatively, they would not be able to grow their business and become a hindrance to other small businesses.

Either way, there would be a more equitable distribution of wealth. It would also prevent the accumulation of wealth into the hands of a few people, which is extremely dangerous and detrimental for overall economic progress,

even the supporters of Communism do not escape from this trap, they do not find anything wrong with interest even though it is the root of capitalism.

Islam adopts a rather broader definition of interest. According to the Islamic definition, certain transactions, which are generally not considered to fall within its purview, nevertheless fall within its domain and are therefore prohibited.

Islam defines interest as any transaction where the profit is guaranteed. Therefore all trusts, [local monopolistic arrangements] which are set up to guarantee profit by destroying competition, are to be considered un-Islamic

Islam is against any mechanism that leads to guaranteed profit and hence the monopolization of wealth in a few hands. It seeks to ensure that money continues to circulate throughout the economy so that the poorer segment of society also has a chance to improve itself.

Thus, cartels and monopolies are not allowed in an Islamic system of governance. Islam also demands that supplies should not be deliberately withheld from the market with the purpose of artificially boosting prices.

And it does not permit that prices be forced down by artificial means, because, this too enables unscrupulous traders to strangle their rivals by forcing them to sell at reduced prices.

Islam introduced the system of zakat, which is a 2.5% annual tax on wealth that is held in the form of gold, silver, currency or other assets for a period of more than a year. The proceeds of this tax are used to promote welfare of the poor.

Thus, if a person has forty rupees in his possession and he keeps the money for the entire year, he must pay one rupee as zakat to the government.

It should be noted that this is not an income tax on earnings. Instead, zakat is payable on accumulated wealth and is spent for the welfare of the poor. zakat is due on all kinds of wealth, whether coins, animals, produce, jewellery or other tradable assets.

However, jewellery that women use normally, and especially if they also occasionally share it with less fortunate women, is exempt from zakat.

Zakat is paid not only on capital but also on the accumulated profit that it fetches Therefore, a system has been put in place to take away the due right of the poor from the rich every year.

Islam also enjoins individuals to offer voluntary charity. It is prescribed to be given to orphans & the poor & for the care and support of the weak. This emphasis on charity also helps to redistribute the wealth so that it does not excessively accumulate in the hands of a few.

Islam does not allow anyone to leave his estate to any single heir, but instead his property must be distributed to all legal heirs. All sons and daughters are given a legal share, as well as parents, wife, and husband, and, in certain instances, even brothers and sisters.

The Holy Quran states that no one is allowed to deviate from these rules and pass on his property to a single heir. Islamic law forcefully distributes a person’s property after his death to all legal heirs, and every relative must be given the share prescribed in the Holy Quran.

To sum up, the Islamic economic system is based on:

1. Exhortation against undue accumulation of wealth;
2. Curbing the motivation behind undue accumulation of wealth;

3. Insistence on expeditious redistribution of concentrated wealth; and
4. Recognition that it is the State’s responsibility to spend money on meeting the legitimate basic needs of the poor and weak members of society.

Thus In the first place, Islam curbs the inducements and impulses that result in accumulating excessive wealth. Secondly, it forbids spending of money on fulfilling one’s vain desires and other wasteful pursuits.

Thirdly, it disallows all such avenues of generating wealth that provide guaranteed profit. Fourthly, it stipulates the payment of zakat and voluntary charity. If despite all these mechanisms, someone is able to accumulate excessive wealth due to his wit and astuteness,

and there is a danger that his wealth might hinder the progress of the underprivileged, Islam stipulates that his wealth be distributed among the heirs immediately after his demise.

Under this system, no one can remain rich forever and no family can maintain its financial dominance generation after generation or be able to subjugate the poorer sections of the society.

#Islam #Ahmadiyya #economics #economy #EconomicSystemofIslam #ThursdayThoughts #thursdaymorning #thursdayvibes #ThursdayMotivation