Islam is more than just a religion; Islam is a way of life. The Quran and teachings of Prophet Muhammad (pbuh) provide an outline for the daily life of a Muslim. Islam encompasses all aspects of our existence, from lawful food and drink, to ethics and marriage…Islam covers it all. Part of the aspects that Islam addresses is finance, in which Muslims are expected to deal with matters of finance in a precise manner. Islam has its own financial system; this system is founded on justice and faith, rather than a prospect to make additional capital. Within this financial system, Islam addresses matters such as the prohibition of usury, dealings with banks, and redistribution of wealth through Zakat.
One of the current systems used around the world is capitalism. Capitalism can be defined as a system in which a country’s “trade and industry are controlled by private owners for profit, rather than by the state .” In a capitalist economy, those involved with the business are the ones who regulate the rates of the assets, goods or services involved. With capitalism, making a profit is the foremost importance… no matter the consequences.
Another system that is used around the world is socialism. Socialism can be defined as a system that “advocates the means of production, distribution, and exchange should be owned or regulated by the community as a whole .” In a socialistic economy, society is the main concern as opposed to making a profit. The production of goods and services is dependent on the economic demand of society. The production is based on the needs of the society; socialism focuses on the idea of a society run by everyone, rather than a society run by profit driven elites.
When considering Islam, in reality, Islam in neith...
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...using this bank a Muslim ensures that they are doing anything that displeases Allah (SWT).
With justice and ethics the main purpose in the Islamic finance system, Muslims can be ensured that what they are doing is not displeasing Allah (SWT). Islam’s system is one that is founded on the submission and worship to Allah (SWT), thus the system follows what is ordered by Allah (SWT) and not profit or societal demands. Islam certifies distribution of wealth in a method that follows Islamic ethics. The best part of the Islamic system that it is one that binds man to Allah (SWT), with no additional conditions or purposes.
Works Cited
en.wikipedia.org/wiki/Capitalism
http://en.wikipedia.org/wiki/Socialism
http://www.newhorizon-islamicbanking.com/index.cfm?section=academicarticle&action=view&id=11249
http://islamqa.info/en/30798
http://quran.com/2/275
The definition of a socialism economic system is in the production and distribution of goods that are controlled substantially by the government rather than by private enterprise, and in which cooperation rather than competition guides economic activity. (Dictionary 2016)
Socialism is an economic system characterized by the social ownership of the means of production, and where the production and distribution of goods is determined mainly by central planning. The objective is satisfying economic demands and human needs. It provides a safety net for all people, but without the use of prices, it also creates lots of waste.
...the poor feelings of hatred and animosity that they might have for the rich. Thus, to achieve this goal, zakat fund must be fully utilized to develop the economy of the Muslims so that the wealth of zakat could be regarded as productive assets.
Society was portrayed by the split between two classes of people. Capitalist class, which possesses the methods for creating and dispersing merchandise. Workers class, which offer their work to the capitalist class in return for wages. The economy is controlled by the people & companies who manage organizations and settle on choices with regards to the utilization of assets. In any case, there exists a ‘division of work’ which considers differentiation, ordinarily happening through learning and preparing, further separating the two class framework into sub-classes. One is commonly known as the middle class. Another aspect of capitalism is profit motive. Corporations exist for one sole purpose, to create a profit. The thought process in all corporations is to make and offer products and administrations just for income. Corporations don 't exist exclusively to fulfill individuals ' needs. Despite the fact that a few products or administrations may fulfill needs, they may be accessible if the general population have the assets to pay for them. The third aspect of capitalism is minimal government intervention. Capitalist social trust markets to sit unbothered to work without government interruption. A totally without government industrialist society exists in principle only. “Even in the United States--the poster child for capitalism--the government regulates certain industries, such as the Dodd-Frank Act for financial institutions. By contrast, a purely
All religions have a backbone, a systematic instruction on how to demonstrate devotion to the religion and what it stands for. Those of Islamic faith have pillars; the most fascinating one is the Almsgiving, known as Zakah. The Zakah has been practiced for centuries, although it is not associated with Islamic religion. The Zakah has taught that financial gain and success is Allah’s gift, excess wealth that was not necessity needs to be shared with all of Allah’s children. The Zakah is a privilege that an Islamic person can bestow on others in the name of Allah.
.... If the Islamic finance needs to imposed higher risk to their customers, but still follow the rules and regulations that include in Al-Quran and Al-Sunnah. From this, the Islamic finance still can focus on the well being of their customers and wealth.
Islamic finance is a term that reflects financial business that is not contradictory to the principles of Sharia. Conventional finance, particularly conventional banking business, relies on taking deposits from, and providing loans to, the public. Therefore, the banker‑customer relationship is always a debtor‑creditor relationship. A key aspect of conventional banking is the giving or receiving of interest, which is specifically prohibited by Sharia. For example a conventional bank’s fixed deposit product
Based on the concept of usury and gharar under the wisdom of the prohibition of usury and gharar can say that is forbidden in the Islamic concept requires that the damages should exceed the interest and usury, reflects this clearly. Gharar illustrates the flexibility of Islamic law in terms of it being permissible when its benefits outweigh the harms. Through these findings we see a question emerge that deserves to be the focus of a discussion: are all contracts in Islamic banks completely free of usury?
Socialism is a formal economic system that ends up in failure. It gives economy greater social welfare and fewer business instabilities. The Individuals of this economy are paid by the principal of their contribution. Socialism allows people to be equal. Socialist beliefs the economic inequality can be unethical for society and the government reduces it by creating programs to help the poor for example, social security benefits and Medicare. The economy’s activity and production are based on individual intake and demands. It is planned by the Central Planning Authority.
Dar, H., Harvey, D. and Presley, J. 2014. Size, Profitability, and Agency in Profit- and Loss-sharing in Islamic Banking and Finance. [report] Cambridge, Massachusetts: Proceedings of the Second Harvard University Forum on Islamic Finance.
The world’s economies continue to be divided on by whom their means of production benefit, supply, enrich, and protect. Many debates and altercations have been a result of disagreements between capitalists and socialists. Socialists believe the government is essential in providing equality for all and the allocation of capital goods. But the strength of capitalism can be attributed to an incentive structure based upon the three P’s: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights. The failure of socialism can be traced to its neglect of these three incentive-enhancing components. (Perry) Socialism gives power to the government to regulate the goods produced, the amount of goods produced, where the goods are distributed, and the price of the goods. This command system does not allow for the creativity, wealth, and freedom that capitalism supplies the citizens. Capitalism provides a market system that permits companies to regulate the economies themselves. Capitalism offers the world’s economy the freedom to manage itself, diversify, prosper, fail, and freedom from regulation in order to supply the world based on demand and creativity. Capitalism is the only social system that rewards merit, ability and achievement, regardless of one’s birth or station in life. Capitalism is the only social system that rewards virtue and punishes vice. This applies to both the business executive and the carpenter, the lawyer, and the factory worker. (Thomson) Capitalism is the world’s dominant economic system. Within it, the means of production and distribution are owned by individuals: private ownership and free enterprise are believed to lead to more efficiency, lower prices, be...
...ofit. Hence, in terms of risk management Islamic banks are more reliable. In addition, with the increasing population of Muslims all over the world, and the recent economic theories proving Islamic banks’ advantages over traditional banks especially during hard times, I believe that new financial system that are based on Islamic principles will play a very important role in the near future.
...ctices. Thus, in order to counter this challenges, better awareness should be create among the customers that Islamic banking is not only valid to Muslims only. It can be widely use by other religion.
Socialism can be defined as an economy wherein all the resources and the means of production of the economy are owned by the community as a whole and there is an equitable distribution of the goods and the wealth. According to Socialism, people of the economy do not live or work in isolation, but they live as a whole in cooperation. In a Socialist form of system, the goods and services are provided through a central system of government ownership and not private ownership. Everything that is being produced by the people in a Socialist system is a social product and, hence, every individual who contributes in the production of goods is entitled to a share of it. Therefore, based on how much a person has contributed in the society, everyone receives