Economic system of Islam

The Economic system of Islam 

The basic economic concept in Islam is that absolute ownership of everything belongs to God alone. Man is God's vicegerent on earth. God has subjected to man's service whatsoever is in the heavens and whatsoever is in the earth;..... In this surely are signs for a people who reflect. This has reference to man as such, to the whole of mankind and not to a particular individual or group.

" Allah is he who has appointed you (mankind) his vicegerents on earth. Know then, that he who fails to recognize this dignity and to act in accordance therewith shall be answerable for his neglect and will himself suffer loss and also incur the displeasure of his lord.    (35 : 40) "

 Legal ownership by the individual, that is to say, the right of possession, enjoyment, and transfer of property, is recognized and safeguard in Islam, but all ownership is, as we have seen, subject to the moral obligation that in all wealth all sections of society, and even animals, have a right to share. Part of this obligation is given legal form and is made effective through legal sanctions, but the greater part is secured by voluntary  effort put forth through a desire to achieve the highest moral and spiritual benefit for all concerned. In fact, this supplementing of legal obligations to be discharged through voluntary effort runs through every part of the  Islamic system. Its operation can be observant every sphere. For instance, there are the obligatory prayer services , and supererogatory prayers, and prayer and remembrance of God at all other times. There is the obligatory fast during the month of Ramadan and supererogatory fasts at other times. There is the obligation upon those who can afford it to perform the pilgrimage itself may be repeated as often as a person desires. The same principle holds in the economic sphere.

The object of the Islamic economic system is to secure the widest and most beneficent distribution of wealth through institution set up by it and through moral exhortation. Wealth must remain in constant circulation among all section of the community and should not become the monopoly of the rice.
Islam recognizes the diversity of capacities and talents, which is in itself beneficent , and consequently the diversity in earnings and material rewards. It does not approve of a dead-level equality in the distribution of wealth, as that would defeat the very purpose of the diversity, and would amount to denying the favor of Allah. It is obvious that if the incentive of proportionate reward for labor  effort, skill and talent were to be removed, not only would initiative  and enterprise be adversely affected, but intellectual progress would also be arrested. That is why the theoretical doctrine of equal reward irrespective of the diversity  of skill capacities  and talents that have gone into the production of wealth has never been maintained for long, even where it has been proclaimed as state policy, and has had to be diversity in reward. On the other hand Islam does not leave the principle of competition and of proportionate rewards to work itself out mechanically; that too would lead to hardship and injustice  and would retard the moral and spiritual development of individuals as well as of society as a whole.
The principal economic obligation is the payment of the capital levy called the zakat. The word zakat means that which purifies and that which fosters. All original sources of wealth the sun, the moon, the stars, the earth, the cloud that bring rain, the winds that drive the cloud and carry the pollen, all phenomena of nature are the gift of God to the whole of mankind. Wealth is produced by the application of man's skill and labor to the resources which God ha provided for man's proprieties right to the extent recognized by Islam. In the wealth that is produced, therefore three parties are entitled to share: the workman, whether skilled or unskilled the person who supplies the capital; and the community as representing mankind. The community's share in produced wealth is called the zakat. After this has been set aside for the benefit of the community, the rest is purified and may be divided between the remaining parties that are entitled to share in it.