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What Are the Distinctive Principles of the Islamic Economy?

30 October, 2016
Q As-salamu `alaykum. Dear Sheikh, the Islamic banking and finance has started long decades ago. I would like to know whether we have now an Islamic economic theory comparable/alternative to the Western Capitalist theory. Could you tell us some of the distinctive principles of the Islamic economy that make it different from other existent theories?

Answer

Wa `alaykum as-salamu wa rahmatullahi wa barakatuh.

In the Name of Allah, Most Gracious, Most Merciful.

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.

Dear brother, thank you for trusting us and for your question that shows your interest to be more knowledgeable about Islam and its economic rulings.

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Being compatible to the whole classes of the society, the Islamic economy has established many morals that have been neglected by most economic systems of the world.

In his response to your question, Prof. Dr. Monzer Kahf, a prominent economist and counselor, states:

There are many books in the market about the Islamic economic theory. Yes, we have some good writings which describe the Islamic economic theory; it is better comparable to the conventional theories both in the West and in the East.

Here are some basic features:

1) Respect and protection of private ownership.

2) Assigning certain property to the State under the trusteeship of the government such as minerals.

3) Finance sector is tightly attached to real sector; this is done by restricting finance to be through sale and lease and feature creating. This also is an implication of prohibition of interest.

4) Stressing development and employment.

5) Emphasizing self-reliance and production, etc.

6) Redistribution through market forces and amending them through Zakah and Waqf.

7) Strengthening the market by contract enforcement and fighting corruption, etc.

Allah Almighty knows best.