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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Sukarno, Islam, and Pancasila

 

Sukarno (Indonesia's first president)

served as the link between Islamic economics and Pancasila.

The book “Bung Karno, Islam, and Pancasila”(Ahmad Basarah, 2017) outlines the contemplative thought process through which Bung Karno synthesized Islam and nationalism, ultimately giving birth to Pancasila. Sukarno clearly serves as a strong link connecting Pancasila with Islam.

It is hardly surprising that Pancasila and the Pancasila Economy embody Islamic values. Pancasila was articulated by Sukarno, Hatta, and others who were, in fact, Muslims. Their knowledge, ideas, and intellectual output were deeply informed by the teachings of the Quran and Hadith. A case in point is the speech Sukarno delivered regarding Pancasila at the Chuo Sangi In (Central Advisory Council) building at the time:

"If the Indonesian people are indeed a people—the vast majority of whom are Muslim—and if Islam is truly a religion that burns fervently within the hearts of the populace, then let us, as leaders, mobilize the people to send as many Islamic representatives as possible into this representative body." "Imagine a representative body of 100 people; let us work—work as hard as we possibly can—so that the 60, 70, 80, or 90 delegates sitting in this assembly are Muslims, are Islamic leaders." (from the book “Tjamkan Pancasila: Pancasila Dasar Falsafah Negara”).

Furthermore:

"...In fact, my speech declared that I am anti-monarchy because I am a Muslim; I am a democrat because I am a Muslim; I desire consensus. Therefore, I insist that every head of state—whether a Caliph or an *Amir al-Mu'minin* (Commander of the Faithful)—must be elected by the people." (Bung Karno speaking to Cindy Adams in the book “Penyambung Lidah Rakyat Indonesia”).

Bung Karno had been contemplating the foundation of the state for sixteen years prior to his speech at the BPUPKI. The state foundation he unearthed while exiled on Ende Island (Flores) was shaped by his thoughts on Islam. While meditating beneath a sukun (breadfruit) tree there, Bung Karno said he "received 'inspiration' from God." That is clear.

Even clearer:

"I know that the thoughts I am about to convey are not my own. It is You who revealed them to me. You alone are the Creator. You are the One who constantly guides every breath of my life." "O God, grant me once again Your guidance and inspiration," said Sukarno, recounting the prayer he offered on the night before June 1, 1945.

Sukarno’s thoughts and actions were inseparable from his syncretic cultural background; he sought to synthesize an ideology in the name of unity.

Sukarno recognized plurality as the nation's actual condition. Consequently, he endeavored to find common ground. He strove to cooperate with all elements of society, including diverse schools of thought—and this included embracing Islam. This aligns, of course, with the nature of Islam itself, which—to a certain extent—adapts to the socio-cultural conditions of the society in which it exists (recalling the concept of kalimatun sawa’ bainana wa bainahum—a common word between us and them). Plurality, when well-managed, can be a blessing, as it fosters curiosity, mobility, appreciation, mutual understanding, coexistence, and collaboration.

The term kalimatun sawa’ (from Surah Ali Imran: 64) is derived from Arabic and appears in the Quran. Literally, it means "a shared word," "a point of agreement," or "common ground." It implies that we can engage in dialogue and reconcile the views and ideas of various members of society, regardless of their backgrounds. We acknowledge that plurality is inevitable and that diversity need not—and should not—be forced into uniformity.

Thus, ladies and gentlemen, given the narrative above, it is not surprising that the Pancasila Economy and Sharia economics go hand in hand.

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Parallelism between Pancasila Economics and Sharia Economics

Being on par does not mean being identical. Pancasila Economics and Sharia Economics remain two distinct entities. While they share many similarities, they can also be clearly distinguished from one another. I agree with the view that Pancasila Economics and Sharia Economics cannot be directly compared, as Islam is a religion while Pancasila is an ideology; their conceptual foundations differ. Islam relies on the Quran and Hadith, whereas Pancasila Economics is grounded in the values ​​of the five Sila (principles). The Quran holds a supreme position, being the direct word of God—unchanged, undiminished, and authentic. Consequently, Syed Nawab Haider Naqvi argues that the Islamic economic system is fundamentally different from other economic systems in terms of ethics.

Clearly, the scope of Islam is broader than that of Pancasila, yet there are points of convergence and a mutually beneficial relationship between the two. If one asks which influences the other, it is evident that Islamic Economics has shaped Pancasila Economics (as well as Ekonomi Kerakyatan, or people-centered economics). "The Islamic economic system contributes to shaping people-centered economics."

Pancasila Economics and Sharia Economics: both incorporate social, moral, human, and divine components.

In this section, I highlight numerous writings supporting the view that Pancasila Economics and Sharia Economics share parallels across many aspects.

The common ground between Pancasila Economics and Islamic Economics lies in their emphasis on the human and divine dimensions, the simultaneous fulfillment of individual and social needs, and a balanced approach to material and spiritual well-being—going beyond mere rationality. These elements are absent in conventional, classical, neoclassical, capitalist, liberal, and neoliberal economic models. Mubyarto emphasizes religious morality and divine mandates, alongside justice aimed at social equity and the welfare of the people.

Chapra (with Islamic Economics) and Mubyarto (with Pancasila Economics) "agree" that economics must incorporate social and moral dimensions. In line with this, on a broader level, development must encompass aspects of human life and livelihood.

However, a weakness of both the Pancasila Economy and the Islamic Economy lies in the fact that neither has yet been tested through authentic, unadulterated implementation; the Islamic (or Sharia) economy as currently practiced remains intermingled with Western economic systems.

Common ground between these two economic systems is readily apparent, as they share fundamental principles and values: fostering societal welfare, promoting mutual assistance, and establishing an equitable economy that serves the common good.

According to Juhaya S. Pradja et al. (2021), it can be concluded that there is convergence between the values ​​of the Pancasila Economy and those of the Sharia Economy. Specifically: the value of divinity (Ketuhanan) aligns with the principle of the Divine (mabda’ al-tauhid); the value of humanity (Kemanusiaan) aligns with the principle of equality (mabda’ al-musawa); the value of unity (Persatuan) aligns with the principles of trustworthiness (mabda’ al-amanah) and honesty/truthfulness (mabda’ al-shidiq); the value of people-centeredness (Kerakyatan) aligns with the principles of documentation/written agreement (mabda’ al-kitabah) and public benefit/welfare (mabda’ al-mashlahah); and the value of justice (Keadilan) aligns with the principles of justice (mabda’ al-’adalah) and permissibility (mabda’ al-ibahah).

Thus, the Pancasila Economy and the Sharia Economy are not mutually opposed or negating forces; rather, they form a unified whole capable of synergy. Furthermore, Agus Salihin (2020), in his journal article "Integration and Interconnection of the Pancasila Economy and Islamic Economics," observes: "Historically, the emergence of Islamic economics in recent years reveals many similarities with Indonesia's economic constitution as enshrined in the 1945 Constitution; conversely, it differs from capitalist and socialist economic systems."

These constitutional economic similarities are evident in Article 33, which governs the fundamental principles of the Indonesian economy; it rejects the notion that the ends justify the means, mandating instead that economic activity be grounded in the principle of kinship (asas kekeluargaan). Similarly, Islamic economics places great emphasis on mutual assistance, togetherness, and brotherhood as guiding principles for economic activity.

Additionally, Muhammad Ali Akbar and Moh. Idil Ghufron (2019), in their paper "Synchronization of the Pancasila Economy and Islamic Economics," demonstrate that the Pancasila economy represents economic behavior rooted in the Pancasila ideology. The Pancasila economy teaches that realizing social justice—through shared welfare and prosperity—requires collective effort, as exemplified by the spirit of gotong-royong (mutual cooperation).

"...the Pancasila economy is an economic system that does not conflict with Islamic economics. Indeed, both systems share a common goal: the realization of shared welfare and social justice."

Furthermore, Muhammad Ali Akbar and Moh. Idil Ghufron (2019), in their paper "Synchronization of the Pancasila Economy and the Islamic Economy," demonstrate that the Pancasila economy represents economic behavior grounded in the ideology of Pancasila. The Pancasila economy teaches that realizing social justice—in the form of shared welfare and prosperity—requires collective effort, as exemplified by the practice of gotong-royong (mutual cooperation).

"...the Pancasila economy is an economic system that does not conflict with the Islamic economy; rather, both systems share a common goal: the realization of shared welfare and social justice."

A study by Alnashr and Muzayyanah (2016) reveals similarities in principle between the Pancasila economy as conceptualized by Mubyarto and that conceptualized by Muhammad Abdul Mannan—specifically, the principles of kinship and brotherhood. In Indonesia, these principles are implemented through the cooperative system.Both are economic systems that prioritize a spirit of kinship and justice. Regarding competition, neither condones the kind of unfettered rivalry that justifies any means to an end; instead, they require economic actors to heed religious and moral considerations and refrain from harming others through illegitimate practices.

Bambang Guritno et al. (2023) further confirm this:

“…an economic framework grounded in Islamic values ​​is highly relevant to the principles of the Pancasila economy, which represents a collective endeavor regarding relationships and cooperation among the Indonesian people.”

Furthermore, through a critical study examining evidence and authenticity regarding Islamic Economics, Pancasila, and welfare levels in Indonesia, Guritno et al. (2023) concluded that Islamic Economics offers a solution to economic crises.

“The universal values ​​of Islamic Economics (Sharia Economics)—which incorporate noble principles in the pursuit of economic welfare—are also an integral part of the Pancasila economic system.” The authors view the implementation of Islamic Economics in Indonesia as a manifestation of the Pancasila Economic System. I repeat: “the implementation of Islamic Economics as a manifestation of the Pancasila Economic System.” The first and fifth principles (Sila) of Pancasila embody values ​​that most closely align with the tenets of Islamic economics.

Both the Pancasila economy and Islamic economics are economic concepts whose foundations, characteristics, and systems align with the teachings of the Qur’an, the holy book of Islam. This “…can strengthen the conviction of the Indonesian people, dispelling any hesitation to practice the Pancasila economy—a noble legacy left by the nation’s founding fathers.”

 

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