ECONOMIC  Systems

The Islamic economic

system (type)

The Islamic Economic System (Type)

It emerges as an alternative to the Western systems based on precise philosophical and economic foundations. Economic thinking is enriched by an additional level of legitimacy, - see the positioning of moral values above the imperative of efficiency. Culture regains its socio-economic determinant role: Religious texts prohibit the recourse to interest, and this brings an important specificity to the financial dimension of the system.

The debate about interest is divided into two contradictory visions. From the perspective of its opponents, the Creator has sufficiently endowed nature with wealth; therefore, the pursuit of profit and the multiplication of wealth is not an end in itself for human beings. On the contrary, liberal capitalists qualify the aforementioned vision as unrealistic, arguing that natural resources are scarce, and individuals are compelled to compete with one another to gain as large a share as possible of the produced wealth.

Islam claims to guide the economy in all its aspects. Sharia (Islamic law) contains a chapter dedicated to economic transactions, as well as numerous provisions regarding taxation and various property subjects. In summary, the Islamic system (Iran, Pakistan, etc.) theoretically resolves the internal contradictions of capitalism by reconciling the distributive effects of the factors of production (capital and labor, primarily) and aligning the determinants of investments according to the standard of productivity. Regarding the banking sector, its first peculiarity is the legal obligation to maintain equivalence between assets and liabilities in the balance sheet to avoid any risk of insolvency.

[see: Tiberiu Brăilean – op. cit., p.192 and following]

Note:

In a new conclusive phrasing, we add that Islam is compatible with the values and structures of capitalism; its ethics resemble those of Protestantism, with an emphasis on distributive efficiency and reducing wasteful consumption. From this derives the commandment to increase saving and investment, economic growth, and job creation.