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Islamic and secular economic systems: Philosophy of economy and money and its effects upon the society

This world is created by Allah so that everything in this world is in the absolute ownership of Allah and a man is designated as a vicegerent (Khalifah) on earth which means that a man must utilize the resources as a trustee and live in this world according to the commandments of Allah. Since Allah has made this world and all resources belong to Allah, he guides us how to utilize these resources in the best interest of the society and to achieve social welfare into the society.


When we look at conventional or secular and Islamic economic thoughts, the main clash between the two is the difference of rejection and ignorance of revelation and acceptance and obedience of revelation respectively. Conventional economics is the man-made system in which religious values and commandments are not being considered and it is the system which has developed by the particular segment of the society i.e. capitalists in their own interest.

When the capitalists developed and made the system and no religious consideration is being involved in the structure, the capitalists developed the system in which the commercial, banking, marketing and business laws and ethics are set according to the intentions and mindset of the capitalists. Any economic and business system effects and formulates the social life of the people as in the real sense; economics is the sub-subject of the sociology. Therefore, the behaviors, education system and life style of the people are developed keeping in view the certain socio-economic system of the society.

Since it is man-made system and safeguards the interest of the particular segment rather than the consideration of social welfare, this philosophy or behavior leads to ultimate disruption. If we think and explore the main cause of disruption in this area, we can easily understand that the base of bone of contention between these two systems is the difference of definition, status and function of money. Now, we analyze these two definitions in descriptive manner and their effects on the society.

It can easily be understood that the major driving force of the activities is self-interest and profit maximization. This factor leads to greed for more and more money so that the definition of money has been modified in their own interest and the interest is made allowed in the secular economic framework. It is easy way to earn more and more money without taking any risk. The capitalists who have plenty of money can easily increase their money by just making opportunity from the needs of other people who have not enough money to cater their needs.

Generally, we divide modern economics in two parts i.e. Micro Economics and Macro Economics. Micro Economics deals with the individual aspects of the society and Macro Economics deals with the collective aspects of the society. As it is mentioned above, the conventional or secular economics is based upon the objective of self-interest and profit maximization. When this objective is considered while doing economic activities, the individual adopts selfish attitude and would like to do anything that would be beneficial for you without considering the favor of society and the other. On the contrary, on the side of macro economics, the government makes policies to ensure economic development into the society. It is amazing to notice here that on the one side, the secular economics say at one side for self-interest and on the other side, it says for social welfare. When the secular economics is based upon the principle of self-interest, every member of the society follow this principle therefore in the government, people makes policies that are favorable in their self-interest. In this scenario, how do we achieve the goal of social welfare into the society?

In Islam, the main objective of life is not just earning money but as a vicegerent of Allah, the main objective of life is to implement and practice the system and commandments of Allah in the world. The objective to earn money is a secondary objective which can only be achieved keeping in view the commandments of Allah and keeping in view the individual and collective interest of the society and not on the cost of harm to others. Therefore, the factor of self-interest is abolished in Islam with the factor of collective or social interest. In Islam, the monetary obligations in terms of Zakat and Sadqat-ul-Fitr etc. are mandatory and beside these mandatory monetary obligations, the Sadaqa (charity) is encouraged very much. The objective of these orders is to achieve the social welfare and prosperity of the poor segment of the society. The rewards of these mandatory or optional charities have been promised by Allah. These teachings abolish the greed for more and more money and the man takes care of the interest of others.

Islam does not discourage economic activities as these are necessary for human life when the main ambition of life is only earning of wealth. This behavior leads to exploitation, selfishness and greed in the society and people become self-centered without considering the fact that they would never stay in this world but for few days. Allah states in the Quran:

Whatever we are given (here) is (but) a convenience of this life: but that which is with Allah is better and more lasting: (it is) for those who believe and put their trust in their Lord: (Surah 42, Verse 36)

In this context, the Prophet Muhammad (SAW) said: “By Allah, this world is more insignificant in the eye of Allah as it (this dead lamb) is in your eye”. (References: Sahih Muslim, Jam’a Tirmidhi, Sunan Ibn Majah). At one occasion, the Prophet Muhammad (SAW) said: “My stay in this world is like that of wayfarer who stopped to relax under the shade of a tree and then moved on and left to it” (References: Jam’a Tirmidhi, Sunan Ibn Majah).

We all know that the main function of money is a medium of exchange and measure of value. The conventional economics accepts this definition but on the other hand, defines the money as a commodity and earning tool. This is a clear contradiction in the principles of secular economics. When the man would like to achieve the evil objectives and goals, he designs the procedures and mechanisms in unnatural manner. To achieve the objective of more and more money, the conventional economics has also adopted this way.

When anything is based upon the falsehood objectives, it is presented before the public with good objectives and good intentions but in the real sense, the people cannot understand and see the opposite side of the picture which is terrible and causes social unrest into the society.

As mentioned above, conventional economics accepts a function of medium of exchange but on the other hand, it allows taking interest as a price of capital in factor of production. This is absolutely unnatural way. How? We analyze the fact.

This is a natural factor that money is a medium of exchange and a measure of value. If I have a note of denomination of 100, it means that this note is a value of 100. If I exchange this note of 100 with note of 500, it is not justified. When we purchase things, a seller tells or shows price, e.g. PKR 500, on a certain item which means that a certain thing has a value of PKR 500. When we buy the certain item, we get certain benefit from the certain item. We cannot get any benefit from the money itself because it is just denotes a value for exchange anything which has a certain benefit.

In this system, the capitalists who include landlords, industrialists, bankers etc play in the economic mechanism in the every field of the business. They can do anything that leads to earn more and more money. For example, in banking business; the bankers, which are also capitalists, borrow the money from depositors and lend that money to individuals, corporate and SMEs etc. The corporate and SMEs etc. borrow the money from the bank and pays interest over the principal. The cost of the debt i.e. interest will be recovered in the price of goods and services from the people. The bankers pass on some part of the interest to the depositors and some part of the interest becomes the income of the bank. The cost of debt is higher than the cost of deposit therefore the depositors will pay more as compared to earnings of interest on deposit. In actual, the banking is the main weapon of capitalists to exploit the people. The reason is that it encourages and flourishes rich people and causes the concentration of wealth among rich people through a vicious cycle and destroys the objective of equitable distribution of wealth.


On the other side, the individuals and firms, who avails loan facility from the banks, may face losses and damages in the business or in the purchasing and monetary capacity. In this scenario, they are liable to repay the principal alongwith the interest also and when the interest cannot be paid, the penalty is charged. Due to this reason, the people may face severe hardships.

In a real sense, the factor of self-interest and interest-based mechanism is the killer of mankind in economic sense. For this reason, it is announced in Surah Al-Baqara that those people who are involved in interest-based transactions call the war with Allah and His Messenger. Allah warned in Quran: “O you who believe. Fear Allah and give up the Riba that remains outstanding if you are (in truth) believers. If you do not do so, then be sure of being at war with Allah and his Messenger. But, if you repent, then you have your principal. Wrong not, and you shall not be wronged.” (Surah 2, Verses 278-279)

Allah has warned grievous punishment regarding involvement of Riba. Allah states in the Quran: “And for their taking interest even though it was forbidden for them, and their wrongful appropriation of other peoples’ property. We have prepared for those among them who reject faith a grievous punishment (Surah al-Nisa’, verse 161)

The concept of interest and charity is mentioned simultaneously in the Quran to clear the fact that interest is the most disliked and prohibited act and the charity is the best and preferable act in the eyes of Allah. Allah states in the Quran: “That which you give as interest to increase the peoples’ wealth increases not with God; but that which you give in charity, seeking the goodwill of God, multiplies manifold.” (Surah al-Rum, verse 39)

“God deprives interest of all blessing but blesses charity; He loves not the ungrateful sinner.” (Surah al-Baqarah, verse 276)

“If the debtor is in difficulty, let him have respite until it is easier, but if you forego out of charity, it is better for you if you realize.” (Surah al-Baqarah, verse 281)

In Islam and in a natural way, in case of need, we can help the needy in three ways. We can lend money as Qard which we can demand after a certain period of time. We can lend money as Qard-e-Hasana according to which when the debtor feel easy to pay the money back, he would pay back. The other and the most favorable way is the charity and help without any intention to return the money. In the former two ways, the creditor cannot charge any increment above the principal. The reason is that the money is a measure of value. How can we exchange the money of certain value with the exchange of money with a different value? We can only get money back without any monetary or non-monetary benefit.

When it is decided that taking interest is unnatural act, the next step is to analyze the bad effects of this unnatural and brutal effect on the society? We have discussed above that taking interest creates greed for more and more money into the society. When this greed prevails into the society, the man involves in the race of earning more and more money without any consideration of harm of society and others. The self-interest or interest-based system promotes greed for more and more money and people consider this factor as the basic norm and objective of the society is recognized as earning more and more money. This objective causes various ethical disasters and distress into the society. The greed of money is a curse that every member of the society tries to earn more and more money by ignoring ethical boundaries Therefore, the ethical standards of the society in this scenario are also set according to the wish of the society and it is evident that interest-based transactions, gambling, lotteries, obscenity, vulgarity, shameful acts etc. are not considered as immoral activities and these are protected by socio-economic laws.

The greed for more and more money would make every activity in the society in a pure business and profitability point of view. Every person makes more and more money without realizing and thinking the interest of the others so that every profession into the society also becomes just business rather than realizing the basic ethical objectives of the certain profession.

The greed of money affected even education and health sectors which are, in reality, sacred professions. With respect to education, the students and parents are attracted that after obtaining degree from a certain institute, the student will get good job. This is in actual a buying and selling deal and the main factor is greed of money. The student buys degree from a university and university sells a degree. The universities and institutions charge heavy fee which is, in actual, a price of this degree. The students or parents think that after obtaining the degree from the certain institute, one can get good job and status into the society. The heavy fee is considered as an investment, the return on which one can get after obtaining degree. On both the sides of students and institute, the objective of obtaining education keeping in view becoming a good citizen and applying the knowledge in the best interest of the society is not determined at all. The only objective on both sides is the earning of money. The curriculum of economic and business education has been designed to prepare fresh blood to support brutal capitalist system.

As far as medical profession is concerned, the practitioners in this field also consider this profession as a business and a tool to earn more and more money rather than considering this profession as a tool to serve humanity.

It does not mean that every institution or person is doing such selfish activities. Even in this selfish and brutal mindset, humanity also exists in satisfactory manner. The good people always present into the society that do good deeds and consider the interest of the society.

When the society does not follow any religious guidelines, it would also involve in obscenity and vulgarity to make money but this is allowed in the secular society and it is not considered as immoral activity. We may see and observe obscenity, vulgarity and shameful acts into the society in different kinds. Islam strictly condemns and prohibits these activities. Allah says in Quran: “Surely, those who like that lewdness spreads among the believers, for them there is painful punishment in this world and the Hereafter. Allah knows, and you do not know. (Surah Noor – Verse 19)

“Allah enjoins to do justice and to adopt good behavior and to give relatives (their due rights), and forbids shameful acts, evil deeds and oppressive attitude. He exhorts you, so that you may be mindful.” (Surah Nahl – Verse 90)

After the above-mentioned discussion and analysis, it is proved that the prosperity of this world lies in the following of socio-economic teachings of Islam. As mentioned and explained in the article, Islam condemns self-interest, encourages social welfare, eradicates the greed for money and creates a moral society. It is the responsibility of individual and Ummah to implement and practice these laws once again as these are implemented and practiced in the older days of Islam.

Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of National Bank of Pakistan.

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