Similarities and differences between The Islamic Economic System and Scientific Socialism

Javed Kaleem Chohan Student MSc Islamic Finance QFIS HBKU Javedkaleem@gmail.com

Abstract Islamic economics is challenged whether it can be called a discipline in the sense of having a clear subject-matter, well-organized body of knowledge, methodology to appraise theories and systematic accumulation of knowledge. Islamic economics is still in the formative stage to be a discipline. Many fundamental issues need to be seriously addressed by the scientific community for Islamic economics to be a legitimate discipline. This essay will highlight the key differences between Islamic economic system and Scientific Socialism. Introduction: System (from Latin systema, in turn from Greek systma) is a set of interacting or interdependent entities, real or abstract, forming an integrated whole. A group of interdependent items that interact regularly to perform a task. An economic system is a system that involves the production, distribution and consumption of goods and services between the entities in a particular society. The economic system is composed of people and institutions, including their relationships to productive resources, such as through the convention of property. In a given economy, it is the systemic means by which problems of economics are addressed, such as the economic problem of scarcity through allocation of finite productive resources. Examples of contemporary economic systems include capitalist systems, socialist systems, and economic system of Islam. Economic systems are the economics category that includes the study of respective systems.

Economic System of Islam Islamic Economic System implies a mood of satisfying the economics needs of the members of organized society in accordance with is injection of Quran and Sunnah. The mood of spending production, distribution and exchange of wealth is determined by the tenor of these injections. In this system the economic activities of the members of the society are regulative by the certain values of which pity, justice, benevolence, cooperation, brotherhood and equality are especially important. The sources and origin of these values are the Holy Quran and the Sunnah of Allahs Apostle (SAW). They are eternal and immutable. Consumers, producers and traders are must abide these values. At one level, the state can also use its powers to implements and enforce these values, however, Islam mostly ensure their implementations and daily affairs of life through its system of education and training. Some Fundamental features of Islamic Economics System are written below.

All the wealth belongs to Allah (SWT): The community is the trustee of the wealth:

"And give them of the wealth of Allah which He has given you." [An-Nur: 33]

"Believe in Allah and His Messenger, and spend whereof He has made you heirs."[Al-Hadid: 7]

Hoarding of wealth is prohibited:

"And those who hoard up gold and silver and spend not in the way of Allah; announce to them a painful chastisement." [At-Tauba: 34]

Circulation of wealth is a duty:

"Whatsoever Allah may restore unto His Messenger - is due unto Allah and unto His Messenger - the orphans and the needy. So, that it may not be confined to the rich amongst you." [Al-Hashr: 7]

Other Economic System There are two economic systems: Capatalism Socialism Capitalism Capitalism is the economic system in which the means of production are distributed to openly competing profit-seeking. Capitalism is not merely an economics system but a peculiar attitude of mind and behavior. Basically it springs out of the notion of the capitalist that he has earned his wealth by his own ability, skills, knowledge and wisdom. Some of the features of capitalism are written below: 1. Private persons and where investments, distribution, income, production and pricing of goods and services are predominantly determined through the operation of a market economy 2. Capitalism is originally defined as a mode of production, where it is characterized by the predominant private ownership of the means of production, distribution and exchange in a mainly market economy 3. Capitalism is usually considered to involve the right of individuals and businesses to trade, incorporate, and employ workers, in goods, services (including finance), labor and land. 4. In Capitalism, state action is confined to defining and enforcing the basic rules of the market though the state may provide a few basic public goods and infrastructure. 5. The most laissez-faire capitalist economies, as measured by indices of economic freedom, include countries like Hong Kong and Canada Socialism Socialism means an economics system in which the mean of production are owned by the state. A central directorate controls the production of goods and services. The directorate decides the nature, quantity, and mood of production of goods. This distribution of goods is also directed by the central body. Socialism refers to a broad set of economic theories of social organization advocating state or collective ownership and administration of the means of production and

distribution of goods, and the creation of an egalitarian society. Modern socialism originated in the late nineteenth-century working class political movement. Karl Marx posited that socialism would be achieved via class struggle and a proletarian revolution which represents the transitional stage between capitalism and communism. Socialists mainly share the belief that capitalism unfairly concentrates power and wealth among a small segment of society that controls capital and creates an unequal society. All socialists advocate the creation of an egalitarian society, in which wealth and power are distributed more evenly, although there is considerable disagreement among socialists over how, and to what extent this could be achieved. Some features of socialism are written below: 1. Socialism is not a discrete philosophy of fixed doctrine and program 2. Its branches advocate a degree of social interventionism and economic rationalization, sometimes opposing each other. 3. Another dividing feature of the socialist movement is the split on how a socialist economy should be established between the reformists and the revolutionaries. 4. Some socialists advocate complete nationalization of the means of production, distribution, and exchange; 5. While others advocate state control of capital within the framework of a market economy. Social democrats propose selective nationalization of key national industries in mixed economies combined with tax-funded welfare programs. 6. In the 1970s and the 1980s, Yugoslavian, Hungarian, Polish and Chinese Communists instituted various forms of market socialism combining co-operative and State ownership models with the free market exchange. 7. This is unlike the earlier theoretical market socialist proposal put forth by Oscar Lange in that it allows market forces, rather than central planners to guide production and exchange. Comparison of Socialism with Islam Socialism and Islam are compared in respect of their basic economic perceptions as under: 1. Ownership: State ownership of all property and means of production, as stated earlier, is the most distinctive feature of socialist economy. Private ownership of property and of all the

means of production, distribution and exchange is totally abolished. This leads to management of these means of production by the bureaucracy. Bureaucratic running of economic machinery results into inefficiency, low production and collapse since the bureaucrats lack initiative, follow rigid rules and are not trained to run business. Islam does not abolish private ownership of property and does not place all the means of production, distribution and exchange in the hands of the state. Although Islam upholds public ownership of some means of production which are the common utility to the people, but it concedes the rights of private ownership of majority of the means of production and distribution. Unlike socialism, Islam gives economic freedom to an individual who can earn wealth, own it and enjoy it within certain limits provided he does not infringe teachings of Islam in the process of earning, owning and consuming it. 2. Materialism: Socialism, especially scientific socialism rests on a purely materialistic basis. Dialectic materialism or materialistic interpretation of history is the most vital element of Marxism. Marx has sought to explain every event in history on economic grounds. According to him, origin of every activity of man lies in economic factors. Marx does not believe in religion which, in his view, is a bourgeois invention to keep the proletariat under their perpetual control. Engels said: Matter is the only real thing in the world. The communists believe that human reason is just a manifestation of matter and soul has no independent existence of its own but is a product of matter. They hold that all the different stages of human progress are determined by the interplay of conflicting economic forces alone, thus leaving no place for Gods will. Islam is the perfect and final religion revealed by Lord of the universe for the guidance of mankind. Its foremost aim is to ensure falah or well-being of humanity in this world and in the Hereafter. It does not give importance to matter only at the cost of spirit as does a secular ideology like socialism. Islam believes in the material as well as moral and spiritual welfare of its followers at micro and macro level. Followers of Islam believe in one God, in all the Prophets and Holy Scriptures, in the Hereafter, in the moral code and in the universal brotherhood of mankind.

3. Regimentation and Totalitarianism: Communism sets up a totalitarian state in which bourgeois class is liquidated and strong dictatorship of the proletariat class is established. Fundamental rights and civil liberties are crushed and man is rendered merely to the status of an economic animal. In the name of bread he is deprived of freedom of conscience, freedom to think, freedom to speak and freedom to act. In order to achieve economic objectives and in order to work the huge productive machine efficiently, the state becomes all powerful and establishes complete regimentation. Islam, on the contrary, believes in democratic form of government as the Quran, its revealed book, enjoins upon Prophet Muhammad (SAW) to conduct public affairs in consultation with his followers. Islam gives all the fundamental rights and civil liberties to the people living in the Islamic state. Islamic state does not establish dictatorship of any class; neither is it a totalitarian state. The state under Islam does not wither away; rather it becomes indispensable as it discharges all the functions of a traditional state and modern welfare state. 4. Economic Equality-Distribution of wealth: Economic equality is another claim of communism although it has never been realized so far. In theory at least it is claimed that the rights of the individuals in the economic sphere are governed by the principles of equality. Every individual is provided with the necessaries of life according to his needs. Islam, unlike communism, recognizes that there is no equality among human beings as regards the economic means and possession of worldly wealth. The Quran considers these inequalities and disparities in the distribution of wealth as part of Divine economic order and, therefore, does not try to eliminate them by unnatural and artificial means. Islam does not tolerate the existence of unbridgeable gulf between the rich and the poor, but unlike socialism it does not believe in equal distribution of wealth. Actually Islam believes in fair, just and equitable distribution of wealth and in social justice. For ensuring equitable distribution, Islam has taken many steps such as institution of Zakat and Sadaqat, laws of inheritance and bequest, voluntary alms and levy of compulsory contributions in the form of taxes and duties.

5. Market force and planning: In Islamic economic system, individuals have free economic choice within the boundaries of Shariah. Production and price are the factors market mechanism of supply and demand. The system is controlled by Hesba system. In the scientific socialism the economy is planned by the government according to its economic and social targets. There are no markets forces exist.

6. Division of Labor: In Islamic economics according to Ibn Khaldoun the division of labor is the source of values and profit. In scientific Socialism, Marx believes that the division of labor leads to class differentiation and demolish human unity. Conclusion: Scientific Socialism failed as it ignored basic motivations and needs of human nature. The Islamic economic system is an ideal one and ruled by great principles of Shariah. However, it has not been purely practiced in our current time.

Bibliography: http://www.islam.eezzi.com/topics-english/49-islamic-economical-system/100difference-between-islamic-economics-system-and-other-economicssystems.html?start=2