The Alignment of Sharia Economics and People-Centered Economics

Since Pancasila Economics aligns with Sharia Economics, and People-Centered Economics  ("Ekonomi Kerakyatan") aligns with Pancasila Economics, it follows that People-Centered Economics also aligns with Sharia Economics; the three operate in tandem. People-Centered Economics and Sharia Economics share several fundamental similarities, despite originating from different philosophical foundations. Both economic systems emphasize the importance of social justice—specifically through equitable distribution and community empowerment (in the case of People-Centered Economics). People-Centered Economics places the people at the heart of economic development.

Similarly, Sharia Economics encourages active community participation in economic activities, in accordance with Sharia principles. Both systems also agree on the need to avoid harmful economic practices; neither condones practices that disadvantage the public. People-Centered Economics stresses the importance of avoiding monopolies and exploitation, while Sharia Economics prohibits riba (usury/interest) and gharar (uncertainty) in economic transactions. Ultimately, the shared goal is the well-being of the community or the ummah (Muslim community), even if the methods and strategies for achieving this may differ slightly.

Another important point of convergence lies in the recognition that economic activities should serve broader social and moral objectives rather than merely maximize profit. People-Centered Economics views economic development as a means of improving human welfare, reducing poverty, creating employment, and strengthening social cohesion. Likewise, Sharia Economics regards wealth as a trust (amanah) that must be managed responsibly for the benefit of society. Economic success is therefore measured not only by growth and material accumulation, but also by its contribution to justice, human dignity, and social harmony. In both systems, economic policies are expected to produce tangible benefits for the wider community rather than concentrate advantages in the hands of a few.

Furthermore, both approaches acknowledge the strategic role of collective institutions in achieving inclusive development. Cooperatives, community enterprises, mutual-aid organizations, and other forms of collective action are central to People-Centered Economics because they enable communities to participate directly in economic decision-making and benefit-sharing. Similarly, Sharia Economics promotes institutional mechanisms such as zakat, waqf, Islamic cooperatives, and profit-and-loss sharing partnerships that strengthen social solidarity and economic inclusion. As a result, both frameworks offer complementary pathways toward a more equitable economic order—one that balances individual initiative with social responsibility, economic efficiency with justice, and material prosperity with ethical values.

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Similarities and Differences Between the Pancasila Economy and the Sharia Economy

The Pancasila Economy and the Sharia Economy share many fundamental similarities. For instance, both are grounded in the principle of social justice. The fifth principle (Sila) of Pancasila reads, "Social justice for all the people of Indonesia"; indeed, some writers regard this fifth principle as the core of the Pancasila Economy. Similarly, the Sharia Economy emphasizes justice—extending beyond mere wealth distribution to encompass the control of economic resources.

Mutual assistance—or gotong royong (communal cooperation)—serves as a fundamental tenet for both the Pancasila Economy and the Sharia Economy. Both systems share the same goal: achieving societal welfare. The Pancasila Economy strives to create equitable prosperity through economic equalization and social justice. The Sharia Economy likewise aims to achieve the welfare of the community (ummah) by avoiding harmful and unjust economic practices.

Both systems strongly avoid detrimental economic practices. The Pancasila Economy emphasizes the importance of preventing monopolies and exploitation, while the Sharia Economy prohibits riba (usury/interest) and gharar (uncertainty) in economic transactions.

"From the perspective of the Sharia economy, the Pancasila Economy is an economic system aligned with Islamic teachings; both aim to realize social justice and collective welfare by paying attention to the social conditions of the surrounding community to ensure equitable social justice for the people."

"...the concept of the Pancasila Economy and its principles do not conflict with the Islamic economy; while they differ in substance, the essence (fundamental nature) of Pancasila and Islam is not contradictory—in fact, they are in harmony." This approach is highly suitable for Indonesia. Both systems are believed capable of serving as models for realizing justice for all the people.

A Comparison between the Pancasila Economy and the Sharia Economy

Aspect	Pancasila Economy	Sharia Economy	Similarities / Notes
Philosophical Foundation	Based on the values of Pancasila, particularly the Fifth Principle: “Social Justice for All the People of Indonesia.”	Based on Islamic teachings (Sharia) and the objectives of Islamic law (Maqashid al-Shariah).	Both place justice as a central principle of economic life.
Concept of Justice	Emphasizes social justice, equitable development, and fair distribution of economic opportunities.	Emphasizes justice (‘adl) in wealth distribution, resource control, and economic transactions.	Both seek to establish a just and equitable society.
Economic Objective	To achieve shared prosperity and welfare for all Indonesian citizens.	To achieve the welfare (maslahah) of the ummah and society at large.	Both prioritize collective welfare over individual gain.
Social Solidarity	Promotes gotong royong (mutual cooperation) and social responsibility.	Encourages cooperation (ta’awun), solidarity, and mutual assistance.	Both value communal cooperation and social cohesion.
Approach to Economic Equality	Supports economic democratization and equitable access to resources.	Encourages fair distribution of wealth through instruments such as zakat, waqf, and charity.	Both aim to reduce inequality and strengthen social welfare.
Prohibited Economic Practices	Rejects monopolistic practices, exploitation, and economic injustice.	Prohibits riba (usury/interest), gharar (excessive uncertainty), and exploitative transactions.	Both oppose harmful economic practices that disadvantage society.
Role of Ethics	Economic activities should reflect moral values and social responsibility.	Economic activities must comply with Islamic ethical and legal principles.	Both integrate ethics into economic behavior.
Source of Norms	Derived from the Indonesian national ideology and constitutional values.	Derived from the Qur’an, Hadith, and Islamic jurisprudence.	This represents the primary substantive difference between the two systems.
Institutional Orientation	Adapted to Indonesia’s pluralistic and multicultural society.	Rooted in Islamic principles but applicable to broader society through universal values.	Both can operate within Indonesia’s socio-cultural context.

 

Scholarly Perspectives

Perspective	Statement
Compatibility View	From the perspective of the Sharia Economy, the Pancasila Economy is broadly aligned with Islamic teachings because both seek to realize social justice and collective welfare while paying attention to the social conditions of the community.
Harmony View	Many scholars argue that the principles of the Pancasila Economy do not fundamentally contradict Islamic economics. Although they differ in their normative foundations and certain substantive aspects, the essential values of Pancasila and Islam are considered compatible and mutually reinforcing.
Relevance for Indonesia	Both the Pancasila Economy and the Sharia Economy are viewed as suitable frameworks for Indonesia because they emphasize justice, welfare, social responsibility, and the common good.

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