Muslim Scholars
on Islamic Economic

Islamic Economics differs fundamentally from man-made laws and systems in defining economic problem. It represents the only wholly independent, alternative economic paradigm in the world today. It is based on principles revealed from Islamic sources as norms for human welfare that offer a strikingly alternative set of parameters for economic activity. According to its proponents its offers a comprehensive, coherent and better alternative to those currently in use in Western economics.   ..... more

The Shariah defines certain rules that regulate company structure, effectively preventing abuse and corruption. For instance, Islam forbids monopolies by outlawing the hoarding of wealth (Al-Ihtikar), and eliminates copyright or potency laws that would open the avenue for potential monopolies to develop. Also, Islam protects the ownership of businesses and companies by restricting ownership of companies only to those who contribute both capital and effort to the company or business, thus effectively putting the seal on such concepts as "corporate takeover" from ever becoming a reality. Yet, generally we will exhibit the root of Shariah rules to solve those problems in this section.

The Exchange Contract is the most basic of all contracts and the most important building block for a financial and economic system. Most of the financial products, services and instruments are based on this contract. Therefore a thorough understanding of the Shariah-acceptable way of exchange is called for to appreciate how the basic contract in its multifarious and varied forms could be used to design and develop financial products and to provide financial solutions.

The role and realm of reign of each will be specified to the set of assumptions that is derived from the Islamic economic system, which include Zakah, prohibition of interest, moderation in consumption, the Islamic inheritance system, Hisbah, Qirad, and the co-existence of private and social ownership of the means of production. Zakah provides a major means of fiscal policy because it affects the allocation of resources, the level of aggregate demand and the distribution of income as well since the variations in the volume and the timing of collection and disbursement of Zakah creates variations in disposable income and fixed and circulating capital. The economic policy has to do with the role of the government Such a government role is made available through its ownership of the major natural resources and al-Hisbah.

During the height of the great Islamic civilization, trade was among the most important activity in wealth creation. Today in a world that is being rapidly globalized, trade has become even more important, facilitated by the advancements in information and communication technology and the greater capacity and speed of transportation. Whereas in the past trade could be carried out through the barter of goods, the Muslim world would still have to trade with the rest of the world as individual countries or as a regional group or as an Islamic Financial Community.

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