Islam and the Economic System

There is a wide disagreement about the entity and structure of Islamic economy. One view holds that Islamic economy is composed of the economic rules and laws recorded in jurisprudential (Fiqhi) sources under the titles the forbidden transactions (makassib muharramah), sale (bey’a), limited partnership (mudharabah), share-tenancy (musaqat),sharecropping (muzari’ah), partnership (shirakah), leasing(ijarah), and reward(jualah) etc[1]. Some authors following the lead of Mohammad Baqir Sadr believe that there is a particular economic system in Islam in addition to the said rules. A third group hold that Islam includes a special economics. There is a group of experts who believe that Islam has no economy at all; all that exists in Islam is no more than general ideals and values, and what is supposed to be rules concerning economy belongs to the pre-Islamic period, has nothing to do with Islam, should not be counted as a part of Sharia though accepted at the dawn of Islam[2].

This paper is meant to prove that Islam includes an economic system in addition to economic laws and an economic school. In order to set the scene, we need to clarify what we mean by “system” and “economic system”. We shall do that with the help of notions introduced by Veklav Halsuski in his book Economic Systems; Analysis and Comparison. We shall then proceed to prove our claim by arguments from theology and the Koran as well as traditions especially those pertinent to economic affairs. Finally, we shall propose a solution to the problem how to functionalize the fixed laws of Sharia in the ever-changing society.

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