Islamic Economics and Capitalist Economics stand in stark contrast to one another.

The differences—or indeed, the conflicts—run deep, extending from the roots and trunk to the branches, twigs, blossoms, and fruit.

Capitalist Economy	Islamic Economy
Wants are considered needs.	Needs are distinct from wants.
Resources are inherently scarce.	Resources are sufficient; it is human greed and desire that create scarcity.
Competition is the primary basis of economic relations.	Cooperation and harmony are the primary basis of economic relations.
The economic system is viewed as an end in itself.	The economic system is merely a means to achieve broader objectives.
Human desires are unrestricted; pursuing self-interest is an individual right.	Human desires should be controlled and guided by moral principles.
Its methodology largely imitates the physical sciences.	Its foundations are derived from history, particularly the economic management of Medina during the era of the Prophet Muhammad and his Companions.
Human beings are viewed as homo economicus.	Human beings are viewed as homo islamicus (Hosseini, 1992).

 

These differences manifest in many areas. Philosophically, the sources of law for Islamic economics are the Quran and Hadith. These sources embody universal values ​​that encompass not only economic principles but every dimension of human life. In contrast, the foundations of capitalist economics lie in texts such as The Wealth of Nations, The General Theory, and related works; capitalist economic theory is grounded not in divine revelation, but in the assumptions of its thinkers.

Capitalist theory exalts individualism, which leads to rationalism and materialism. Economic success is viewed as a matter of individual agency—a concept known as anthropocentric individualism. Conversely, in Islamic economics, achieving success requires striving to attain the blessings of Allah (SWT); ultimately, whether or not a person succeeds depends on His will.

Capitalist theory posits that acquired wealth becomes the absolute private property of the individual; having earned it through personal effort, the owner is free to use it however they please. Islam, however, teaches that the absolute owner of all wealth is Allah (SWT), while humans serve merely as trustees charged with managing and utilizing it for the common good. Property rights in Islam are governed by Sharia.

All things belong to Allah; humans are permitted only to use and benefit from them. Islamic property rights fall into two categories: private ownership and public ownership. Public property is utilized for the collective interest—examples include roads, rivers, mines, and oil reserves.

Historically, Islamic economics was practiced by the Prophet Muhammad between 569 and 632 CE among the communities of Mecca and Medina. This practice was continued by the Rightly Guided Caliphs (*Khulafaur Rasyidin*) and persisted through the era of Islamic greatness in Turkey. Capitalist economics was constructed by its founders based on specific ideas, concepts, and assumptions. The foundation of classical economics lies in Adam Smith’s 1776 work, ‘The Wealth of Nations’—emerging long after Islamic economics had already been practiced for ten centuries.

Regarding market mechanisms, capitalist economic theory relies on the principle of a "free market with supervision." This implies that the government merely oversees the market without interfering; it acts essentially as a spectator. In contrast, while Islamic economics acknowledges the free market, it mandates that market mechanisms be regulated. This regulation is overseen by the hisbah institution. In instances of abnormal market volatility, the government is required to intervene to resolve the situation.

Concerning the relationship between the monetary and real sectors, capitalist economics is heavily finance-oriented. Even prominent figures in conventional economics have acknowledged a lack of linkage between the monetary and real sectors. Capitalist economics has fostered a system dominated by stock and capital markets, often failing to make a tangible contribution to the real sector.

Conversely, Islamic economics is grounded in the real sector. The financial sector serves primarily as a mechanism to finance transactions or production within the real economy. Islamic economics is fundamentally trade-based; thus, the abolition of interest-based systems and the implementation of profit-and-loss sharing serve as the connecting links between these two sectors.

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