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.
*****
