Islamic Economy

Islamic Economy

Introduction

The significance of economics in the world cannot be denied. Identifying and choosing the best economic system is one of the many problems that different countries are facing right now. There are fundamentally three major economic systems that are prevalent in the economies of the world. They are socialism, capitalism and the Islamic economic system. This paper intends to compare the economic principles of Islam, with the other economic systems. The two economic systems that which will be discussed in the paper are socialism and capitalism. This paper will also throw light on the advantages and disadvantages of each of the three above mentioned economic systems.

Discussion

Capitalism and Socialism

Capitalism is an economic system in which all the resources of production are owned by the people privately. On the other hand, socialism is an economic system in which all the resources are owned by the public sector or the government of the country. Capitalism and socialism are based on different principles. Capitalism is based on the belief of competition, and it follows the principle that competition is necessary in bringing out the best in people and businesses. Socialism, on the contrary, believe in the principle of cooperation. It follows the principle that cooperation can lead to beneficial results, and it is the best way for the people and businesses to exist. The most basic difference between the two economic systems is the way that wealth is earned, as well as, distributed. In a socialistic economy, everybody works to earn wealth which is then distributed among everyone on an equal basis. On the other hand, in a capitalistic economy, everybody works and create his own wealth that belongs only to him and is not distributed among others.

Capitalism is based on the belief that individuals and groups should own all the resources of production. An organization can be run by only an individual or a group of individuals. All the resources are traded and used by permission and willingness of the owner. It is the job of the government to make sure that the every individual who is into businesses is abiding by some rules and laws that the government makes (www.bukisa.com). The government, however, is not allowed to interfere in the dealings of the individual, except for when it comes to making them abide by the laws (Ingham, 2008).

In a socialistic economy, all sources of production are owned and ruled by the people. This means that all the people get to have their say in the processes of distribution of resources, as well as, the use of resources. There is no proper market in a socialistic economy. Everybody works for everybody else. Everybody is able to get all he needs every time he wants it. They are not asked to pay for the things that they need. Government assigns the duty to distribute wealth among the citizens in a decided manner.

People who believe in the socialistic approach of economy believe that capitalism favors the rich people of the ...