Islam's General Theory of Economy

It is erroneous to assume that Islam has only one Economic theory which has no relation to other economic theories.

Islam, being the religion of monotheism, looks at mankind with its grievances as a consolidated unit. Since Islam aims at leading humanity to progress and civilization it has to offer everything which secures the realization of all those goals.

In this scrutiny of man in society Islam realizes that every individual is influenced by two different elements :

1. The internal one which controls a man's behavior, dominates his thoughts and shapes his individuality. It is this element which is represented in man's instincts and sentiments.
   
2. The second element stems from the circumstances of the individual in relation to his environment. This attempts to deprive the first element of its power, and having molded the individual, to force him into the community without any sense of his own individuality. This element is represented in man's relations with others, whether son, wife, parents, brothers, relatives or friends.

Islam admits that man, by his nature cannot dispense with either of those two elements. They are inter complementary and upon them the entire human edifice is constructed. It was with this in mind that Islam developed its theory. It outlines for man the way to a happy life, where the individual is not acquisitive at the expense of the interests of the community and the community does not impose upon the individual. It secures, under the shelter of human justice, the good of both individual and the community. This good cannot be reached other than by considering man's individuality and the existence of the community, not only from the materialist point of view, but as has already been said, from all points of view. Islam demands from man that he be a stone in the whole structure of society, and to realize before anything else his relation to existence and his position in it. It stresses this point and underlines it within itself until it reaches the level of faith. His faith calls upon a man to continue with the purification of his soul and to the development of sound principles within his heart and mind. On that basis man organizes his economic and social life and all other aspects of human activity.

Islam purifies the spirit and leads towards what is good; then, on this basis, it constructs the principles of behavior and morality which derive from it, together with an economic system, for it is not possible to sacrifice these principles in pursuit of an economic organization.

Islam does not deny man's individual personality, nor his right of ownership. Nor does it ignore the various instincts which motivate him. On the other hand, it denies the right of the community to safeguard individuality to the extent that the strong become more powerful, and the weak weaker, a process which threatens to eradicate the noble aspects of human conscience and sentiment on which the structure of the family and the whole community is founded.

To achieve perfection, humanity must safeguard man's right to personal activities and the reward he may get from them. At the same time, it has to prevent him from exercising pressure on others and from preventing anybody else from enjoying the rewards of his activities.

Islam has realized all this. It recognizes ownership and inheritance and respects the family, considering them as the fundamental basis of social life. Realizing what may result from the existence of big holdings and the injustice which may be done by the rich, together with the existence of a feeling of unfair treatment due to the disparity of the material rewards to be won by the poor, Islam prevents the existence of big holdings on a basis other than personal effort. Accordingly, it prohibited usury and made inheritance an effective means of splitting big holdings. In this way, no society will have members harboring the hatred and ill-feeling which arise from an unjust disparity in earnings.

Islam has put man, whether as an individual or member of a community, inside a frame which safeguards the relations of individual with the community. Later, it gave man the liberty to reform himself and his existence within the limits prescribed.