Know the fundamentals of the Islamic economic system
The principles of the Islamic economic system begin with the differences it has the capitalistic, communistic, socialistic, and mixed economic systems which have existed and are still existing in the world. Islamic economics has seven important characteristics. Some of those may be similar to capitalistic and socialistic systems, but still, they are unique and vibrant thankfully to almighty Allah.
The Islamic economic system itself has organizations and social values that enhance the production and consumption of goods and services, let alone exchange. True Muslims will always lead a life of materialistic gain in an aspect that will inflict respect for others. Moreover, it will make their habitation secure in the world along with providing happiness and peace for the families and ummah.
The fundamentals of the Islamic economic system:
1. Consumption is important:
Basic consumption is an important part of all economies. But one must be just and fair while fulfilling their needs.
2. Government services:
The goverment services are needed as they will eliminate haraam activities from the economic system. In Islam, the black market, gambling, smuggling, dealing in alcohol is strictly forbidden. Moreover, the underprivileged have their basic needs like food, health and clothing. Also, the government is needed to provide security. Hence, Government services are intrigued part of this kind of economic system.
3. No interest or riba in Islamic economic system:
The financial transaction in an Islamic state should happen without riba or interest rate. This means that the financial system does not use interest as part of the lending procedures when running their banks and financial institutions.
4. Private assets are encouraged in the Islamic economic system:
It is very much encouraged in the Islamic economy. Though one cannot use it against the interest of the public or do some haram business. The payment of Zakat for being the owner is necessary.
5. Production is mandatory:
In a capitalistic system, production is absolutely necessary. It fulfills the need of consumers, also it generates employments. In the Islamic economic system, production is an important part of the social fabric which includes a price system.
6. Wealth is required:
Being wealthy is not discouraged in Islam though one has to pay Zakat. The purchase of luxuries is not allowed that much. But if one does charity, he or she is always encouraged.
7. Zakat is what Allah wants us to do:
Zakat is the primary resource for the stability of the underprivileged in Islamic society. It is considered as a kind of worship, in which the wealth collected from the rich to distribute among the poor on a yearly basis. This provides support to the Government by reducing poverty.
Therefore, it is clear that the Islamic economic system is markedly varied from any other economic system. Basic principles of capitalism must be changed considerably to fit Islamic economics. Though it must be said that some of the foundations are similar in terms of the accumulation of wealth.
Actually, the application of opulence and how it influences production makes the Islamic economic system unique in the world.