Institutional Structure of the Islamic Economic System

Abstract

Every economic system has its own institutional structure that is built in a way to serve its objectives. Objectives of the economy are common across all economic systems. However, the varying emphasis on the two objectives of efficiency in creating wealth, and justice in the distribution of wealth and income across different systems is what makes these systems distinct from one another. The Islamic economic system further adds to the aforementioned two objectives the aspect of dignity of human beings, men and women. Hence, Islamic economic system does not accept the production or creation of wealth at the expense of justice or at the expense of dignity of the human being. Rather, the Islamic economic system considers promoting the dignity of human beings as a positive objective for which economic resources are used and well expended. This issue is not taken seriously in both capitalism and socialism. In both systems human dignity is left to social development only. Although the dynamism of both systems is gradually driving them towards recognising the issue of human dignity as an economic problem that deserves resource allocation, theoretically, the Islamic economic system has preceded them in allocating resources to maintain and promote human dignity and life. This is, clearly, evident in the institutional structure itself. The institutional structure is created by the Islamic system to achieve these three objectives. In order to comprehend the way of the Islamic economic system in working towards these objectives we need to go through detailed dimensions of this system that are explained below.