Global Capitalism and the Islamic Economic Alternative: A Comparative and Critical Study

عالمی سرمایہ دارانہ نظام اور اسلامی اقتصادی متبادل: ایک تقابلی و تنقیدی مطالعہ

Abstract

The dominance of the capitalist system on the global economic landscape is not merely an economic reality but an intellectual and institutional structure that has distributed the world's wealth and resources with striking inequality. This paper offers a detailed critical analysis of the foundational theoretical principles of capitalism like private property, the profit motive, and laissez-faire, alongside its operative pillars: interest (riba), paper currency, the fractional reserve system, banking, taxation, international trade, corporations, insurance companies, the stock market, the foreign exchange market, privatization, national debt, and the national budget. It also briefly reviews the basic tenets and limitations of socialism. The paper highlights, in particular, how the prevailing global economic order operating through international financial institutions such as the IMF, the World Bank, and the WTO, perpetuates the exploitation of the resources, labour, and industrial potential of Third World countries, keeping them locked in a cycle of dependency and under-development. Against this critical backdrop, the paper presents the Islamic economic system as a theoretical and practical alternative grounded in limited private ownership, the prohibition of riba coupled with profit-and-loss sharing, the mandatory circulation of wealth through Zakat and Bait-ul-Mal, and justice-based trade. Following a comparative examination of capitalism, socialism, and Islam, the paper concludes with a practical outline for Islamic economic planning and a set of policy recommendations.