The unfortunate conditions obtaining in the Muslim world today have misguided some to regard the Islamic economic system as a form of "Capitalism." Nothing can be farther from truth. Exactly speaking, Islam is a class by itself. But if it can be likened to any of the modern ideologies, that is Socialism. A brief analysis of the economic teachings of Islam in the light of this fact may, therefore, be given, in order to bring into broad relief the role which Islam can play in defeating the challenge of Communism.
(1) Islam is not "Capitalism" because, although it allows private property and gives the scope for personal initiative, it is definitely opposed to the concentration of wealth in the hands of a few. Islam achieves that end by different means, the most important among which are:—
(a) Islam stands for the state-ownership of such "means of production" as the mineral wealth, thus eliminating from its society the steel-barons and the oil-magnates.
(b) Islam prohibits usury and interest in all forms. All students of economics know that the greatest impetus which Capitalism receives today is from the modern system of Banking which functions on the basis of interest. Islam does not permit the rate of interest to rise above zero and conceives the Bank primarily as the medium of commercial transactions.
(c) In the field of Agriculture, Islam does not favour feudal absentee landlordism. Its ideal is the creation of a society of peasant-proprietors.
(d) Among all the systems of Law, the Islamic law of inheritance is the most anti-capitalistic. It stands for the distribution of inherited wealth among the largest number of persons on the basis of the widest margin of relationship.
(e) Islam condemns the hoarding of capital in very strong terms. It imposes a fairly heavy tax on all capital, above a certain minimum standard, for the benefit of the less fortunates.
(2) The Islamic economic system is "socialistic" because:—
(a) From the ultimate point of view, Islam regards the interest of the society above the interest of the individual.
(b) Islam makes it an obligation of the Islamic state to provide for the basic necessities of life, including such 'modem necessities' as health services and free education, for all of its citizens. With that end in view Islam levies a Social Insurance Tax on all persons possessing more than a certain minimum of wealth.
(c) Islam stands for free trade. It is averse to monopolies and favours the participation of the largest number of people in commerce, for which it advocates the creation of Mutual Alliance Societies—Islam's substitute for Capitalistic Banking.
(d) In the field of industry, Islam's ideal is the creation of the "Co-operative Guilds of Workers" where all forms of exploitation as well as unrest and bad blood are eliminated.
(e) Islam, however, does allow private enterprise in industry even as it allows private trade. But then it propounds a socialistic principle of wages. In that connection: (i) It gives freedom to the wage-earner to fix his wages at whatever reasonable level he desires. Simultaneously with this prerogative it safeguards the wage-earner against all possible harm which the 'capitalist' might do to him by closing the doors of livelihood, and for that purpose it creates a fund for the maintenance by the state of all unemployed wage-earners; (ii) The standard of wages which Islam has ordered all the Muslim employers to adhere to is that in which the employee gets the "same to eat" which the employer eats and the "same to wear" which the employer wears. That means equalisation of economic status between the employer and the employee in the basic necessities of life.
(f) Islam does not only demarcate clearly the legitimate (socially good) and the illegitimate (socially evil) means and methods of income but it also limits the legitimate items of expenditure in such a way that in a. truly Islamic society it must become (and it did become in actual fact in the glorious period of Muslim history) impossible to find glaring inequalities in the basic manifestations of economic life. It is in the field of luxuries that most of the social heart-burning is to be found, and Islam sets healthy limits to them. For instance, household articles made of gold and silver have always formed an integral part of aristocratic life. Islam prohibits them definitely. Similarly, Islam prohibits the use of certain types of aristocratic clothes by men. Islam has permitted the Muslims to spend only on such things which have some real utility for the development of human life and it lays down the comprehensive principle that all spare money which one has, after spending on the basic and healthy necessities of life, is a trust of God meant for the improvement of the social health.
(g) As all students of Islam know, Islam establishes "spiritual democracy," "social democracy" and "political democracy" of the most perfect type. The teachings of Islam relating to these three aspects of human life, combined with its economic teachings, if followed in letter and spirit, guarantee the establishment of a classless society where all social conflicts must remain in abeyance.
Only one question pertaining to the present discussion now remains to be answered: How can Islam transmit its spiritual values to the younger generation?
