Asian University of Bangladesh

Comparative Economic Systems

Course Code: ECON 2308

Submitted to

Nurun Nahar Akhi

Submitted By

Delowar Hossain

ID: 201710916

Batch: 59th,BBA ,Sec: C

Islamic economic
Islamic economi system is the best economy system for us.
because in Islamic economie system every religion has right in
it. Economy can be defined as the state of a country or region in
terms of the production and consumption of goods and services
and the supply of money. It can also be defined as the process
or system by which goods and services are produced, sold, and
bought in a country or region.

The Islamic economic system is the collection of rules, values

and standards of conduct that organize economic life and
establish relations of production in an Islamic society. These
rules and standards are based on the Islamic order as
recognized in the Koran and Sunna and the corpus of
jurisprudence opus which was developed over the last 1400
years by thousands of jurist, responding to the changing
circumstances and evolving life of Muslims all over the globe.

Three aspects of the economic system are usually referred to as

the major distinguishing elements of any economic system.

Most of the westerners do not realize that Islam has its own
unique economic system.
Different type of economic system

Capitalism
Capitalism is an economic system based on private
ownership of the means of production and their
operation for profit. Characteristics central to
capitalism include private property, capital
accumulation, wage labor, voluntary exchange, a
price system, and competitive markets.

Socialism
A socialist economic system is characterised by
social ownership and operation of the means of
production that may take the form of autonomous
cooperatives or direct public ownership wherein
production is carried out directly for use.

communism
There are number of Philosophy and socio economic systems
that can be described as communication is nurture but in the
most basic seance communisum is all manufacturing means of
production are equally own by the members of state
How Islamic Economics Works!

it's not economically spatial five x no inflation no interest, taxes and it's
also free market economy with some characteristics of socialist
economy closely with the economy stops growing, But some people
may just keep the money with the shops and to prevent that was
created reduces the value of money but the money will keep losing its
value they are more likely to spend it as soon as possible.
In addition to that, What disappointed keeping money with your
intuition constantly and the band was painted by listening to others.
That's why it was created in other words if it keeps motivated people to
spend or the economy keeps growing and the other the of Islamic
economic There are other ways to to spend inflation and interest. Well,
whether they support Islamic economics is Resource Based Economy
and not be some money. Money is only use the resources secondary
Islam economics. There's something called his account every year to
come out of your money will be taking it will be given to the code that
you money will be decreasing by 2.5% every year. What's the point to
save money expected to spend them now and keeping them on a
submission before that the money is only used to actually the resources
and these 2.5% will be given to the poor, Which also will be spent. So
there's always an increasing demand when there is an increasing
demand the demand curve shifting right at the Shakedown supplies nor
that there is always a demand this point to keep the gluten inspector to
sell them as soon as possible and small. So the supply also increases
And will begin increasing supply supply curve also shifts the the right
now have a new equilibrium and the price increase, but the production
increase in other words they commit group without inflation. Of course,
there are other factors that can influence it but that's for another video.
What about this best well There is a solution for that economics offers
that issue the fish in the interest of the bank deposit money. Why don't
we do it in a different way. What you deposit your money in the bank
your money will be used to finance the projects which will grow the
economy is coming infrastructure projects or Any other project your
mother would be interesting in the bank but without the interview. So
the increase will come from the profits that we became out of this
project, of course, the projects we feel. But in general, most of the
projects will succeed. So the first money in the bank with keep
increasing interest on it at the same time, the economy keeps growing.
Now let's talk about something more interesting taxes.
1.Property
In the Islamic system, property is a trust. The real owner is Allah
(Subhanahu Wa Ta’ala). Man’s disposal of worldly goods is in the
capacity of a viceroy and a trustee. His rights are, therefore,
circumscribed by the limits Allah has prescribed, and should be
exercised toward the ends Allah has defined. Unlike the capitalist
system, the right to property is not absolute but has limitations and
qualifications enforced not by the power of the government but by the
power of one's faith and desire to be a pious Muslim. Hence, the
common-good and the welfare of fellow Muslims are internalized in the
decision making process of every Muslim. It is Socialism with at the
state.In view of the purposive nature of man's life in the Islamic world
view, even these limited rights of ownership are not devoid of purpose.
Wealth is an instrument in the effective discharge of man
responsibilities as the viceroy of Allah, and the achievement of well
being in the life for himself, his fellow Muslims and fellow human
beings.
2 Distribution
Because al-adl (justice and fairness) is a basic value of the Islamic
economic order, distributive justice is a major concern of the system.
Equitable distribution of income and wealth is therefore an objective by
itself. Operationally, this is accomplished through certain institutions
which form the backbone of the social security in Islam. Examples are a
bound:
3 Zakah
Zakah is the third pillar of the Islamic faith. It is a unique system of
social security. Zakah is not a hand-out from the rich to the poor. It is a
right of the have nots in the wealth of the haves. It is a measure
designed to directly transfer part of the wealth from the well-to-do to the
poor and not to the government. Because the purpose is redistribution
of income and wealth, without creating a class society zakah is levied
on almost every one. Even the not very well to do, pay zakah. He may
then receive the zakat of others at the same time. Zakah is levied
annually on the wealth itself and not on the individual or income, at a
general rate of 2½ % per annum. This is not all. Zakah is a
requirement. However, a Muslim is always engaged not to confine his
charity to that requirement by giving alms (sadaqat).
4 Laws of Inheritance
It would not be possible to guarantee the functioning of the system free
from injustices without a built-in-mechanism to prevent injustice
reproducing itself generation after generation. Studies show that one of
the major causes of inequality in income distribution, is the distribution
of wealth. One major outcome of the Islamic laws of inheritance, is to
prevent concentration of wealth. This is because legacy is distributed in
a pre-set ratios which take into consideration need and closeness to
the deceased. Yet giving the deceased the right to assign part of his
wealth (not exceeding 1/3) to charitable uses.
5 Economic Freedom
Freedom is a cornerstone in the Islamic economic system. In fact, it is
so basic that the whole message of Islam came to free man from all
kind of slavery. Freewill is a necessary condition for the validity of all
contracts. The basic human rights which are now included in the laws
of civilized countries has been a part of legal system of Islam since the
Prophet (P.B.U.H ) . In fact, all the so called Magna Charta has been
enjoyed as the basic individual rights in Islam for centuries.
Furthermore, to guarantee competition in the marketplace and freedom
of transaction, many measures were adopted by the Prophet (P.B.U.H).
Prohibition of monopoly, manipulation of prices and restricting entry to
the market are but a few of these measures.
6 The Islamic Economy is Interest-Free
Today’s trade and commerce in the whole world is run on the basis of
interest based debt. If we look at the money and capital markets in any
country we find that they are basically markets for exchanging financial
obligations and receivables. It is no wonder that just the mere thought
that interest rate may go up (or down) will bring havoc to all sectors of
the economy. Standard economic analysis tells that interest rates play
important roles in the economy. Firstly, that it provides incentives for
savings, and secondly that it performs an allocative function with regard
to capital. The argument goes as follows:
Saving is essential to any economy because on which depends the rate
of investment, and hence the rate of growth of the economy and the As
regards the distributive function of interest,
Interest rate is a financial benchmark. Investments in the real sector
which produce real goods and service will not produce “interest”, but
profit.
8 Is Interest Riba?
It is not difficult to see that interest in conventional banking is riba. It
does fit the definition: an increase stipulated in a loan contract. Credit
provided by the bank to its clients which is based on interest is clearly
so. But even time deposits and current accounts are nothing but loan
contracts (The lender here is the depositor and the borrower is the
bank) with stipulated increase. (current accounts are loans with no
stipulated increase). Furthermore, revolving credit is a type of loan
where interest calculation is based on outstanding debt which is
payment postponed. Claiming that interest is not riba is therefore
unattainable.
9 Time Value of Money
Does the fact that Islam prohibits interest mean that there is no time
value of money in the Islamic economic system? The answer is
negative. Shari’ah does recognize the time value of money. There is
ample evidence to show that monetary value in many Shari’ah
prescribed transactions is attached to time.It is only now that we can
understand the wisdom of such prohibition. Allowing lenders to
generate income from pure monetary transactions (i.e. not involving
goods or services) will create a financial sector in the economy which
generates its income just from the passage of time independently of the
real sector where goods and services are produced. A dichotomy will
then take place in the economy, creating instability (boom and bust)
and redistributing income and wealth in, towards one sector or the
other depending on the state of the economy. Injustice is then created.
Disadvantages of the capitalist and other economies
system
Elimination of Individualism ,There are many disadvantages of
socialism but first come in my mind is the lack of economic
freedom. In socialist economic system everything is controlled
by a centralized body. Individuals are not allowed to own any
assets, everything belongs to the state. Workers are assigned
specific jobs and are not allowed to change them without
consent from the planning authority.
Red-Tapism and Inefficiency ,In socialism there is a lot of
involvement of bureaucracy and are the drivers of all economic
machinery. The work civil servants are not comparable with the
private entrepreneurs. Civil servants merely do the jobs because
it is their duty and they will get paid whatever the consequences.
Thus inefficiency arises and in the long run the economy suffers.
An Artificial System,As a socialist economy is a planned
economy, every aspect of the economy is to be determined by
the government. Forces of demand and supply do not apply
which is one of the disadvantages of socialism. Thus in the long
run the economy becomes state rather than wasted, whereas
these make an economy prosper.
Consumers Suffer,In the final analysis it is the consumer who
loses out. Sovereignty of consumer does not apply in a socialist
economy. Consumers do not enjoy the status of a consumer as
in a capitalist economy. Choices of goods and services are able
to maximize their total satisfaction.
Why we need to stay with Islamic economies system

slamteaches many fundamentals of life that one must

knows but is waiting to learn. If you are a christian or a
Jew, Islam is very alike. Muslims regard Christianity and
Judaisms as cousins in faith. The prophet Isa(a.s.) is
Jesus. We do not believe he died. in our glorious faith
Allah the Greatest took Isa(a.s.) into heaven before hiss
death to protect him. Muslims are very faithful. By Praying
5 times a day every day Allah is with us ever moment of
our lives. The Quran, unlike the Bible, has been
unchanged for over 1367 years so it is the exact same
thing that was revealed to the Prophet Muhammed(s.w.a).
Most of what people hear in the media about Islam is
completely alerted and warped into a message that was
never meant to be delivered. Most people like Lou Dobbs
and the 700 Club have no idea what they are saying. If
you don't know were to take your shoes off in our house of
worship how can you criticize our Holy Book? Muslims are
people just like the rest
Having a captive market: The captive market for products based
on Islamic principles is composed of people who want to adhere
to the tenets of their religion and, therefore, abstain from putting
money into conventional financial products, which are not
sharia-compliant.
Benefiting all classes: Rich and poor alike stand to benefit from
participating in products based on Islamic principles. In contrast,
anyone with access to Islamic financial products has the
potential opportunity to enter a partnership with one or more
investors in an economic venture.
Keeping credit scores in perspective: A lousy credit history
doesn’t automatically slam the door to participation in Islamic
financial products as it does in the conventional system. An
institution offering Islamic financial products considers additional
criteria when determining a person’s qualification to participate
in an investment or other contract.
LINKING SAVINGS AND INVESTMENT
If you put money into an Islamic savings account, you’re putting
it into an investment vehicle. An Islamic bank doesn’t guarantee
a set rate of return on your savings.
Islamic savings vehicles illustrate the concept of connecting the
financial markets more closely to real economic activity. If you
save money through a product in the Islamic finance system,
you don’t isolate that money from economic activity the way a
conventional savings account seems to do.

Reference
1. www.dummies.com
2. https://channels.theinnovationenterprise.com
 3. https://www.guidanceresidential.com
4. https://www.wikipedia.org/
5. www.youtube.com
6. https://www.livescience.com

Book
Islamic economicsan introductory analysis
By M.A Hamid