How Islam Can Solve the Economic Problems of Allocation and Distribution of Resources

Islam can provide a better alternative than the prevailing systems, based on its worldview, goals, and strategy. Now let me explain how Islam can provide a moral filter, a motivating system, and a socio-economic restructuring that can solve the problems of allocation and distribution of resources1. The moral filter is derived from the Islamic belief in God’s unity, sovereignty, and justice, which implies that all resources belong to God and are entrusted to human beings as His vicegerents. This means that human beings have to use these resources in accordance with God’s will and guidance, which are revealed in the Qur’an and the Sunnah (the sayings and actions of Prophet Muhammad). These sources provide clear principles and rules for what is permissible and what is prohibited in economic activities, such as honesty, fairness, cooperation, charity, moderation, prohibition of interest, gambling, hoarding, monopoly, fraud, etc. These principles and rules help to ensure that resources are used for fulfilling the needs of all human beings, not just their wants or greed, and that they are not wasted or abused.

The motivating system is derived from the Islamic belief in human dignity, brotherhood, and accountability. This means that human beings are endowed with reason, free will, and moral responsibility, which enable them to choose between right and wrong, and to seek God’s pleasure and reward in this life and the hereafter. This also means that human beings are equal in their rights and obligations, regardless of their race, gender, class, or creed, and that they have to cooperate with each other for the common good. This also means that human beings will be held accountable for their actions on the Day of Judgment, when they will face God’s justice and mercy. These beliefs provide powerful incentives for human beings to work hard, to be productive, to be generous, to be honest, to be just, and to be compassionate.

The socio-economic restructuring is derived from the Islamic belief in social justice and balance. This means that Islam does not accept the status quo of poverty, inequality, oppression, or exploitation. It rather calls for a radical transformation of the socio-economic structures and institutions that perpetuate these evils. It does so by promoting a number of policies and measures that aim at redistributing wealth and income among individuals and groups in society. These include zakat (a compulsory annual levy on wealth), sadaqah (voluntary charity), waqf (endowment), inheritance (which prevents concentration of wealth in few hands), prohibition of interest (which prevents exploitation of borrowers), encouragement of entrepreneurship (which creates opportunities for wealth creation), prohibition of monopoly (which prevents market manipulation), regulation of markets (which prevents fraud and deception), public spending (which provides public goods and services), fiscal discipline (which prevents deficits and debts), etc. These policies and measures help to ensure that everyone has access to the basic necessities of life, such as food, clothing, shelter, education, health care, etc., and that everyone has a fair share in the economic surplus.

History shows that human societies have undergone various changes in their economic systems over time due to various factors such as technological innovations, political revolutions, cultural movements, religious reforms, etc. Sociology shows that human behavior is not only influenced by external factors such as environment, culture or institutions but also by internal factors such as values, beliefs or attitudes. Therefore I argue that it is possible for Muslim societies to change their economic systems in accordance with Islamic teachings if they have the will, the vision, and the commitment to do so.