Economic Europe


Solution to economic crisis hitting Europe


In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu `alaykum wa-rahmatullāhi wa-barakātuh.

Almighty Allah is perfect. Consequently, the laws of Almighty Allah are also perfect.

Man by nature is deficient. Therefore, the laws designed by man are also deficient.

The economic system of Europe just like any other man made economic system is designed by man and is bound to fail.

Generally an economic system comprises of the following four basic principles:

  1. Determination of Priorities
  2. Allocation of Resources
  3. Distribution & Income
  4. Development

 Communism (Socialism) and Capitalism are mere inefficient economic policies. They are not a complete way of life. Islam on the other hand is a complete way of life offering solutions to every problem. Allah (Subhana Wa Ta’ala) says:

({ الْيَوْمَ أَكْمَلْتُ لَكُمْ دِينَكُمْ وَأَتْمَمْتُ عَلَيْكُمْ نِعْمَتِي وَرَضِيتُ لَكُمُ الْإِسْلَامَ دِينًا} [المائدة: 3])

(Today, I have perfected your religion for you, and have completed My favours upon you, and chosen Islam as a religion for you). Allah (Subhana Wa Ta’ala) has given the solution to question or doubt that may be experience now or in the future.

Islamic Economics is just one facet of Islam that is mentioned in the Quran Karim. On the other hand Socialism and Capitalism are complete within themselves. Inspite of the variance of the two systems, the economic system of Islam is complete, comprehensive and perfect as it is a system designed by the Perfect, Almighty Allah.

Under Socialism everything is owned by the state and everyone is an employee of the state. The Government decrees what the priorities of the day are and thus divert the money and capital towards those priorities which they deem fit. It the Government sees that the needs of the country lies in certain areas such as scientific research, they will apply the above mentioned four principles to acquire the desired goal that they had set in the scientific field. They will allocate a certain percentage of the country’s resources to that industry. They will then distribute the work force to try to acquire the desired goal of that specific venture and similarly distribute the gains and income among the workers according to the gains and income among the workers according to the rate they feel appropriate. Finally, they dictate the amount of funds needed for further development of that venture and re-invest the gains therein. In brief, the Central Government is in total control or the entire economic process leaving no opportunity for the layman to individually prosper in business.

On the other hand Capitalism affords total liberalisation to the citizens. There are no restrictions and rules from the side of the Government to inhibit the freedom of trade. The citizens can use their own capital to invest in business and to increase their wealth. Although this is better than Socialism, it also has its deficiencies. The Capitalist system has no boundaries of morality and ethics in trade. One person can virtually financially enslave the masses in shackles of debt without any recourse from the side of the Government for the oppressed and enslaved masses.

The Islamic system varies greatly from both of these systems. It offers the freedom of trade of the Capitalist system, but with a system of ethics and principles that governs every type of transaction. These principles are designed by Allah to safeguard the interest of every person and to safeguard the people from financial oppression and injustice. There is no other system that can match the Islamic system in terms of equality, fairness, humanity and morality. One will only be able to understand the beauty of the Islamic system of business and trade after studying it in depth and comparing it with the other modern systems. (Introduction to Islamic Commerce – Darul Iftaa)

The Islamic system employs different mechanisms to satisfy the particular needs and to safeguard the interest of the parties that are involved in these transactions. Included in the Islamic system are the mechanisms of Musharakah, Mudarabah, Ijarah, Salam and Istisna amongst others.

The solution to every economic problem is in the Quran and the Ahadith of Rasulullah (Sallallahu Alaihi wa Sallam).


And Allah knows best.

Mufti Saeed Ahmed Golaub

Islamic Solutions