The Garden of Knowledge

بسم الله الرحمن الرحيم

 15 Dhul Hijjah 1443/15 July 2022

All praise is due to Allah, the Cherisher, Sustainer, Nourisher and Provider of the entire creation. May peace, blessings and salutations be upon our Beloved Prophet Muhammed ﷺ.

Capitalist and socialist economic systems are materialistic in nature with the main objective of satisfying the wants of people however the Islamic Economic System provides a fine and fair blend of materialism and spiritualism.

Amongst the distinguishing characteristics we find:

• Capitalists advocate for ‘Economic Freedom’ for consumers and producers, Socialists advocate for ‘Economic Equality’ through state ownership whilst Islam advocates for ‘Economic and Social Justice’ so every person gets his/her due.
• Within Capitalism unlimited liberty and right of ownership for private property exists, Socialism does not allow for private ownership whilst the Islamic Economic System allows for freedom on enterprise in limited capitalism.
• Capitalist systems allow for anything to be consumed and produced, Socialist system only allow goods and services which have been produced in the country to be consumed whilst the Islamic System allows only Halal good and services to be consumed and produced whilst Haram goods are not allowed to be consumed and produced.
• To encourage capital formation in a capitalist society, the interest earned creates a balance between saving and investing. Interest plays no part in the socialist system of saving and investing. Interest-based economic activity are absolutely prohibited under the Islamic economic system. Therefore, in an Islamic economy, interest is not a source of capital formation.

May Allah accept our efforts from us and grant us understanding In Sha Allah!