Short Answer: Islam is a way of life that is concerned with the economy (in its micro- and macro-levels, as we say in today’s language). However, Islam is not meant to devise specific systems for economy in the sense of a certain system for fiscal policies, risk, banking, and so on. Islam is NOT meant to define and precisely prescribe each and every detail of this life. Human empirical experience is the final judging factor for these kinds of tools and means.
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A classic answer to your question would go along the lines that what is called interest in modern economics is synonymous to what is called riba in the Quran.
And that the Islamic system of economics is an interest-free system that avoids riba in financial dealings on all levels, and thus guarantees prosperity and growth because it avoids sin and injustice, and so on.
Quite frankly, I think that the above typical answer to your question is too vague and full of inaccuracies. So allow me to answer your question in a different way.
Divine vs. Human
The very fact that you are asking for a detailed and “comprehensive” picture of “the Islamic theory of economy” reveals, with all due respect, a common confusion between what is divine and what is human, between what should be according to the scripture and what should be left to our human free thinking, and between what is constant and what is variable in the Islamic way of life.
Although Islam is a comprehensive way of life, it is NOT meant to define and precisely prescribe each and every detail of this life. Thus, Islam has rulings and guidelines that are concerned with politics, courts, family, health, the economy, and so on.
However, talking about “Islamic” politics, for example, does not mean that Islam has a cut-and-dry (let alone “divine”) detailed system of governance (such as a monarchy with a consultation council, a democratic republic in a multi-party style, a federal government with a constitution, a simple direct democracy, or any other specific system of governance).
Nor does “Islamic politics” mean that you must or must not have a constitution, you must or must not have a supreme court, or you must wage war or call for peace with certain countries or groups.
The Islamic system of politics is a system of values. We humans should decide the exact details of the best political system. Examples of these Islamic political values, as mentioned in the Quran, are justice, consultation, and unity.
Consultation (Arabic shura) could take a public and direct form (as the Prophet [peace be upon him] did in various occasions), or could take a form in which only a specific group of people are consulted (as the Prophet also did on various occasions).
This specific group could be chosen according to a leader’s personal choice in a certain environment, according to elections in a parliamentary system or a council-based system, or even according to the tribal structure in a certain society.
None of the above ways is morally wrong and all of the above ways are valid as long as we observe the values of justice, unity, consultation, etc. Any system, from the above list or otherwise, that violates these values is not an Islamic system, whether you call it a democracy, a caliphate, a kingdom, or a sultanate.
Similarly, Islam is a way of life that is concerned with health. The values that form the “Islamic” guidance in this area, according to the Quran and Sunnah (Prophetic example), are cleanliness, seeking medication, moderation in consumption, high morale, and so on.
However, it is not part of the Islamic teaching to prescribe a certain technical method of cleaning one’s home or environment, for example.
Likewise, it is not part of the mission of Muhammad to teach us certain medication or medical procedures (even though it was indeed part of his mission to teach us certain related prayers, or ruqiyah, and to teach us how moral behavior is good for health, etc.).
I find the hadith (prophetic saying or teaching) of pollinating the palm trees to be of specific significance in this regard. Talha narrates:
I was walking with the Prophet when he passed by some people at the tops of their palm trees. He asked: “What are they doing?” They answered: “Pollinating the male into the female.” He replied: “I do not think that this will be of benefit.”When they were told about what the Prophet said, they stopped what they were doing. Later, when the trees shed down their fruits prematurely, the Prophet was told about that. He said: “If it is good for them they should do it. I was just speculating. So pardon me. But if I tell you something about God, then take it because I would never lie about God.” Another narrator said that the Prophet added, “You know your worldly affairs better than I.” (Muslim)
A Way of Life
This hadith shows a matter that the Prophet (peace be upon him) is instructing us to deal with according to human experience rather than revelation. Thus, human empirical experience is to be the final judging factor for these kinds of tools and means.
Similarly, Islam is a way of life that is concerned with the economy (in its micro- and macro-levels, as we say in today’s language).
However, Islam is not meant to devise specific systems for economy in the sense of a certain system for fiscal policies, risk, banking, and so on.
Please continue reading at part two here.
(From Ask About Islam archives)
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