Islamic Economic System: Principles, Ethics, and Welfare Dimensions an Article by Dr Hussain Qadri

A must-read article by Prof. Dr. Hussain Mohi-ud-Din Qadri, Deputy Chairman (Board of Governors), Minhaj University Lahore, in today’s edition of The Business (April 30, 2025), titled:

“Islamic Economic System: Principles, Ethics, and Welfare Dimensions”

Islam is a comprehensive code of life that governs every aspect of human existence, including economic affairs. Rooted in the divine guidance of Allah Almighty and His beloved Messenger ﷺ, the Islamic economic system is distinct in its ability to meet material needs while simultaneously nurturing spiritual and moral growth. It stands apart from non-Islamic systems like socialism, communism, and capitalism, which have been predicating them for centuries. Its continued relevance and resilience are evident through its sustained success over the ages.

The life of Prophet Muhammad ﷺ offers a timeless example for all of humanity and particularly for the Muslim Ummah. Even before Prophethood, he was celebrated for his unwavering truthfulness, honesty, and outstanding business acumen, which laid the foundation for ethical commerce in the Islamic society. Islam emphasizes socially responsible profit and trade. The Islamic economic model is anchored in ethics, justice, and God-consciousness. Economic activity is evaluated not merely by its outcomes but by the righteousness of its intentions and the integrity of its methods, demonstrating that the means are critical as the ends.

In Islam, the pursuit of halal (lawful) income is elevated to the level of worship.

The Prophet ﷺ declared that Allah loves honest and moral, trustworthy merchants. Consequently, Islamic teachings strictly forbid unethical economic practices such as usury (riba), gambling, fraud, hoarding, and price manipulation. Business dealings must be characterized by honesty and fairness, and the vivid emphasis is placed on transparency and accountability.

The Islamic economic system is equally committed to preventing the concentration of wealth among a privileged few.

The Qur'an commands that wealth must not remain circulating exclusively among the wealthy. Islam has instituted mechanisms like zakat, charity (sadaqah), endowments (waqf), and well-structured inheritance laws to ensure fair and equitable distribution. These institutions promote social solidarity and human dignity.

Freedom in choosing one’s occupation is another essential feature of the Islamic economic system. Each profession is encouraged with the condition of honesty and adherence to the principles of halal conduct. Rather than restricting economic aspirations, Islam channels them toward ethical and socially beneficial endeavors.

Central to the Islamic approach is focusing on collective welfare rather than individual enrichment alone. Unlike capitalist systems that often prioritize capital accumulation, the Islamic model places human welfare at its core.

A properly implemented system of zakat across the Muslim world has the potential to significantly reduce poverty and bridge economic divides, reinforcing the message that economic justice is a moral imperative.

To maintain economic transparency and trust, Islam forbids deceptive practices such as hoarding, interest-based transactions, broken promises, and fraudulent conduct. Such activities corrode the moral fabric of society and destabilize economic systems, leading to widespread mistrust and injustice.

Islam also emphasizes the dignity of labor and the virtue of striving for one's livelihood. The Qur’an asserts that man shall have nothing but what he strives for, promoting a culture of hard work, self-reliance, and determination. By discouraging idleness, begging, and dependency, Islam empowers individuals to contribute actively and positively to society.

In today's world, as nations struggle to resolve economic challenges and rising inequality, the Islamic economic system offers a balanced solution. It offers a just, ethical, and welfare-based model that upholds human rights, respects social and moral spirit, and restores socioeconomic balance. Only through a sincere commitment to the principles of Divine guidance can mankind attain peace, stability, and shared prosperity.