Khilafah vs Democracy (Islamic economic system vs Capitalist system)

Taken from the literature of “Islamic global
organization”

Capitalism: An exploitative System
Let us observe some important stats of the beacon of
Capitalist State
The United States of America

In America:
In America:
37 million people live below the official poverty line—12.6 percent of the total
population
At least 2.3 million people experience homelessness at some point each year,
including nearly 1 million children
The richest among them has more wealth than the bottom 45 percent of the
households combined

Capitalist system:
Polarization of Wealth
is the Hallmark of Capitalist system

Net worth and financial wealth distribution in the U.S. in 2007

Rich getting richer and poor getting poorer
 Microsoft CEO Bill Gates has more wealth than the bottom 45 percent of
American households combined.
 Business Week reports that in 1999 top executives earned 419 times the average
wage of a blue-collar worker, up from 326:1 in 1998. In 1980, the ratio was 42:1.

Percentage of wealth held by the Top 10% of the adult population in
various Western countries
Concentration of Wealth in the West
Country
wealth owned
by top 10%
Switzerland 71.3%
United States 69.8%
Denmark 65.0%
France 61.0%
Sweden 58.6%
UK 56.0%
Canada 53.0%
Norway 50.5%
Germany 44.4%
Finland 42.3%

Year Poor: Rich ratio
1820 3:1
1913 11:1
1950 35:1
1973 44:1
1992 72:1
Where is the world headed!!!!!
An analysis of the trend of the widening gap between the rich
and the poor countries

System not Resources
Pakistan's misery due to the rotten
Capitalist system not because of lack of
resources!

Islamic Economic System
vs
Capitalist System
Comparison

Economic Problem
Khilafah Democracy
Human needs are of two types
Basic Needs (limited)
Luxurious Needs
World resources are enough to fulfil
basic needs of all the people of world 1
Human needs are unlimited while
there are limited resources to
fulfil them
Solution:
Distribution of wealth and resources to
guarantee all basic needs to each
individual
Create opportunities so that maximum
number of people can work to fulfil there
luxurious needs
Solution:
Needs of all the people won’t be
fulfilled
Increase Production to fulfil
needs of as many people as
possible
Rules related to collection of funds and its distribution constitute “Economic
System” and cannot be taken fromotherthan Islam
Methods to increase production is “Economic Science” and can be taken from
othercivilizations including the West

 The United Nations Development Program (UNDP) reported in 1998 that the
world's 225 richest people now have a combined wealth of $1 trillion. That's
equal to the combined annual income of the world's 2.5 billion poorest people.
 As of 1995 (the latest figures available), Federal Reserve research found that the
wealth of the top one percent of Americans is greater than that of the bottom 95
percent
 According to the US Census Bureau, 35.9 million people live below the poverty
line in America including 12.9 million children. (http://www.census.gov)
 The wealth of the three most well-to-do individuals now exceeds the combined
GDP of the 48 least developed countries
 UNDP calculates that an annual 4 percent levy on the world's 225 most well-to-do
people (average 1998 wealth: $4.5 billion) would suffice to provide the following
essentials for all those in developing countries: adequate food, safe water and
sanitation, basic education, basic health care and reproductive health care.
Resources are limited- Non sense

Economic System:
Ownership & Types of Properties
Khilafah Capitalism
Three types of ownership
Individual
Public
State
Oil, Gas1
, non-delectable minerals2
etc
and anything on which society depends
and people will disperse in pursuit for it,
remains in public ownership
If these were owned individually this will
deny the public from benefiting from
these huge resources, creating misery
for the common man
Freedom of ownership
Individuals or companies
can own anything and
everything
Multinational companies are
‘free’ to own public properties
such as oil, gas, parks etc
They are ‘free’ to spend or
hoard the wealth as they
please
 Huge resources forpeople’s welfare
 Cost of utilities much lower
 The foundation of economic colonisation

Economic System:
Pakistan’s Privatization Drive
Privatized To Be privatized
ABL, HBL, UBL, MCB
Bankers Equity Ltd
Hub Power Co, Kot Addu Power Co
PTCL (Ufone, Paknet, TIP, CTI)
Steel Mill (Decision Reversed)
Ghee Corporation of Pakistan
KESC
UCH Power Ltd, Saba Power Ltd
Dharki Power Ltd
Oil and Gas exploration Licenses are
innumerable
OGDCL, PSO, PPL, SNGPL, SSGPL
NIT, ICP
Sindh Engineering, Bolan Textile
Lyallpur Chemical and Fertilizer Co.
Javedan Cement, Karachi Shipyard
Republic Motors, Lasbella Textiles
Heavy Mechanical Complex
HPFL (Hazara Phosphate Fertilizer
Limited)
Jamshoro Power Co, Pak Arab
Fertilizer, Mustahekam Cement
In first ten month of 2004-2005 assets worth $3.6 billion has been sold:
Survey 2005:2006
Current yearprivatization target is 75 billion rupees.

Taxation in a Capitalist System
 Tax the poor and average man
 Give tax-breaks to the
 Rich
 Multinational companies
 Landlords

Taxes in America
Who Benefits from Bush's Tax Cuts?
 George Bush's 2001 $1.3 Trillion tax cut was the largest in US history
 The Top 1% supper-rich got 37 % of Bush's tax cut as saving ($481
billion)
 Whilst the bottom 80% of Americans only got 29 % of the total tax cut
($377 bn)
 The tax cut savings clearly shows that Bush works for the Super-Rich,
and that he is willing to promote their interests above those of all other
Americans

Taxes in Pakistan
 Agriculture sector in Pakistan contributes 40% to the GDP whilst astonishingly its
contribution to the tax revenue is a meager 1%
 GST, which is an indirect tax extracted from common man, constitutes 37% of the
total tax-revenue of Pakistan
 No Zakat taken from the land mafia which owns billions of rupees of land for the
last decade or so. Islam requires a Muslim to give two and half percent of the
value of the tradable goods in alms as Zakat
 Currently No Ushr and Kharaj being levied on Agriculture produce
 No wonder in democracy the elite legislate laws to tax the poor and give tax
breaks to themselves

Taxes Comparison
2009-10 2008-9

Economic System:
Taxes
Khilafah Capitalism
No Taxes on common man1
 GST, Income Tax, Withholding tax, toll
taxes etc are all haram and will be
abolished
There will be following permanent
sources of revenues
 Al-Kharaj 2
 Al-Jizya 3
 Al-Ushr 4
 The fifth of Al-Rikaz 5
(hidden treasures
minerals)
 Import and export duty on foreign
traders 6
 Zakat on import and export of the
Muslim Trader 7
 Hima (Protecting from public properties)
63.93% (Rs 840 billion) of revenue of
Pakistan comes from taxes on the people
as per the budget 2006-07 figures.
Out of these taxes 67.66% (Rs 569 billion)
are indirect taxation that are to be paid by
even a beggar, unemployed, handicapped,
widow, elderly people and children without
any differentiation.

Laws related to
Agricultural land

Economic System:
Agriculture and Land laws
Khilafah Capitalism
Lease of agricultural lands
(Muzariyat) is haram1
Leasing of agricultural lands is
permitted
Agricultural land if not used for 3
years will be confiscated2
and
allotted to someone who would
cultivate it
No such restriction applies to an
owner. He is “free” to do whatever
he pleases
Anybody who occupies a dead
land (outside the planned city area)
and revives it by building a house
or a factory etc becomes the owner
of the land as well
No such incentive in the current
Pakistani system
Prohibition of Muzarat coupled with obligation to cultivate land will give
rise to land distribution of optimumproductivity
Eradicates injustice to Muzarays. Delivers a fatal blow to the colonialist
Feudal system(“jageerdarana nizam”)

Evidences
1. It was narrated by al-Bukhari that the Messenger of Allah said: “Whoever has land let him plant upon it or grant it to his
brother. If he declined let him hold his land.”
2. Muslim also narrated, “The Messenger of Allah forbade a rent or a share be taken for the land.”
3. The Sunan of An-Nisai states: “The Messenger of Allah forbade leasing the land.We said, ‘O Prophet of Allah, can we
then lease it for some of the grain.” He said, ‘No.’ We said, ‘We used to lease it for the straw.’ He said, ‘No.’We
said, ‘We used to lease it in return of that on the irrigating Rabee’a.’ He said, ‘No, plant it or grant it to your
brother.’”
4. Abu Dawud has narrated from Rafi’a ibn Khadeej that the Prophet also said, “Whoever has land, he has to plant upon it
or let his brother plant upon it, and he cannot lease it for its third or fourth or a specified food.”

Evidences
1. Bukhari related from ‘Aisha (ra) that the Messenger of Allah said: “Whosoever cultivated a land that is not owned by
anybody, then he deserved it more.”
2. Abu Dawud narrated that the Messenger of Allah said: “Whosoever fenced a (dead) land it becomes his”
3. Bukhari narrated from Umar (ra) that he said: “Anyone who cultivated a dead land it becomes his.” Muslims and the
Dhimmi are equal in this matter, because the Hadith is general in its words.

Evidences
1. By completing the revival, ownership is completed and the land is officially transferred to the peasant. All this must happen
before the end of three years after the allocation. This came in the narration narrated by Tawus from ‘Umar ibn Al-Khattab
who said: “The muhtajir (who shield a land) has no right after three.” ‘Umar implemented this ruling while Sahabah were
present and they all approved of this. Hence it becomes Ijma as-Sahabah for us and a Shari daleel.

Residential Land
Khilafah Capitalism
The State guarantees housing for
the one who is in capable to build a
house for himself and his relatives
are also poor cannot support him
The Prophet (SAW) said: “The Son
of Adam has rights to food, clothing
and shelter.”
The system doesn’t allow the
people to use the resources which
Allah has bestowed to man
Common man’s biggest problem in building a house is the inflated prices
of residential land that can easily be solved through the Khilafah state.

Currency
Khilafah Capitalism
Metallic Currency
 Gold
 Silver
 Any other precious metal
 Currency notes can be used in lieu
of gold and silver
Fiat currency backed by confidence
Dollar
Euro
Protects the currency fromforeign control
Puts a checkon devaluation and fake inflation
Return of the Gold standard will strike a fatal blow to the colonialist
economy

Riba
Khilafah Capitalism
Interest transactions not allowed1
No interest based debt servicing
Encourages the wealthy to under
take local investment rather than
depositing their money in high
interest deposit accounts
Freedom of ownership allows people
to hoard money
Riba is the bate for the people to
take money out of circulation/
investment and to put into deposit
account
In 2006:07 Pakistan will pay 295
billion rupees in interest payment.
This is 55 billion more than all foreign
loan and grants for the year.
Relief to common man/investor
No interest servicing to IMF and WB.

Evidences
1. “That is because they say: Selling is just like usury. Whereas Allah permitted selling and prohibited usury.” [Al-
Baqarah: 275]

Investment before the advent of
Banks
Investor Skilled labour
Inventor
Investor
Investor
Investor
Investor
Investor
Businessman
Entrepreneur
Trader
In a society devoid of Banks
investors are in need of
entrepreneurs and businessmen
to help increase their wealth
On the other hand the skilled
labour, inventors and
businessmen are in need of
investment in order to generate
more wealth
Hence it is a marriage of
convenience for both parties
They join together in a
partnership to benefit from
each other such that the
investor bears the risk and the
other partner does the work

Bank monopolizes the wealth of the society
Inventor
Investor
Investor
Investor
Investor
Investor
Businessman
Entrepreneur
Trader
Bank
Bank’s Profit = (20-12)%
12%
20%
Profit
Interest
The Bank drains the society off of
its wealth by guarantying the
investor of sure profit (interest)
As a result an entrepreneur and
skilled labourer is forced to
borrow money from the bank on
exploitative terms.
According to the contract not only
the borrower has to pay hefty
interest but he also has to return
the principle amount in full even
though if his business was in loss.
This produces a win-win situation
for the investor and the bank.
Hence the rich becomes richer
and the poor poorer

In Muslim societies Banks were not very
successful
Inventor
Investor
Investor
Investor
Investor
Investor
Businessman
Entrepreneur
Trader
Bank
12% 20%
Profit Interest
In Muslim societies since
people considered Interest as
haram therefore Banks was
not in total control of the
money flow in the society.
Billions of dollars of money
remained outside Banks
control. And skilled labour
didn’t need to go to the bank
to borrow money as investors
were there to help them.
As a result banks who thrive
on monopolising the money
and then forcing people into
exploitative contracts
couldn’t function properly.

Islamic Banking is helping Capitalist Banks
Inventor
Investor
Investor
Investor
Investor
Investor
Businessman
Entrepreneur
Trader
Bank
12% 20%
Profit Interest
Islamic
Banking
$
$
$
The Banks opened up a Window
for Islamic Banking through
which Muslims were encouraged
to give their money to the banks
instead of investing it themselves
following Islamic laws
This achieved the objective of
draining the society off of wealth
and hence the skilled labour has
become more dependent on the
Banks
Hence Islamic Banking has
actually helped Capitalist system
by having stronger grip on the
money flow and hence exploit
the masses

Islamic Banking in the Capitalist system
Islamic banking is also tool via which the Imperialist forces engage
sincere Muslim in the current Kufr system and deceive them in believing
that they can have an Islamic system within the frame workof the existing
Kufr Capitalist system. As a result enormous time and effort is wasted in
trying to “reform” this kufr system instead of uprooting it and
implementing Islamic systemin a comprehensive and radical manner

Banking System
Khilafah Capitalism
Bank do not serve as financial
intermediaries. Hence in capitalist
sense there are no banks.
They will provide services of the
like debit card, LC for import
export, Online fund transfer,
internet payments, etc.
They will facilitate/establish
communication between the
investor (Muwakkil) and worker
(Mudharib)
Banks acts as financial intermediaries
They provide services like debit card,
LC for import export, Online fund
transfer, internet payments, credit
cards. Financing for various heads on
interest etc
A source of hoarding of wealth
Khilafah takes advantage of financial institutions providing financial
services and networking whilst protecting the masses from the current
banks system which spread their evil through hoarding of wealth, marginal
reserve systemand interest etc.

Banks in the Khilafah
Inventor
Investor
Investor
Investor
Investor
Businessman
Trader
Bank
• Bank is not a part of the
financial contract
• Bank is only a financial
adviser and facilitator similar
to that of a property dealer
• Only introduces the two
parties and takes
service charges for its
effort
The banks can continue to
undertake all non-interests based
services and take service charges
on them such as:
 Current accounts for its
customers
 Money Transfer
 Cash Station Cards
 Lockers for valuable items
 LC (Bank as a Guarantor)
The banks can also act as
financial advisors and facilitate
the marriage of investors and
entrepreneurs /businessmen etc.
Government bank will also
provide grants and interest free
loans to its citizens to enhance
economic activity

Company Structure
Khilafah Capitalism
All contracts should conform to
contracts laid down by shari’ah.
Hence exploitation of the needy is
not possible
Man made laws aimed at benefiting
corporates are to be complied.
Rules have been written to benefit
those who wrote them. Golden rule!
“he who has the gold rules”
Public limited companies Illegal.
i.e. no stock exchanges, futures
trading etc. in Khilafah
Stock-exchange an integral part of
western corporate business.
Speculative contracts lead to fiat (Alternative) economy and indexes
which is used by the corporations to loot common man’s money while
keeping them in dark as happened in the latest saga of energy giant Enron
and second largest telecomcompany WorldCom.
Khilafah’s economy will be protected from economic crisis as were
witnessed in South East Asia during the late ’90s when “Asian Tigers”
were wiped by the powerful foreign investors

Stock exchanges
Khilafah Capitalism
No stock exchanges are there in
Khilafah.
No speculative transactions are
allowed as per Islam. Investment
is done only in real trade
strengthening economy.
No chance of drowning of money
in stocks as recently happen
when 4 billion dollars of small
investors were lost in a matter of
a week when KSE index dropped
from 10,000 to 7000 points.
A major portion of investment is done
in stocks whose more than 90 %
portion has nothing to do with real
trade.
Real trade has gradually been
reduced to less than 10 % of
international trade and 90% is only
financial transaction.
Last year stock market crashed
several times drowning trillions of
rupees of investors.
Stock exchanges are a source of diversion of investment from real trade to
speculative business.
If all the money that is invested in stocks is directed to real trade it will give
rise to a robust economy

Valid Companies in Islam
Khilafah Capitalism
The Company of Equal (Al-’Inan)
The Company of Bodies (Al-Abdan)
The Company of Body and Capital
(Mudharaba)
The Company of Reputation Faces
(Wujooh)
Company of Negotiation (Mufawadha)
Public Limited Company
Private Limited Companies
Guarantee Limited
Unlimited Company
A Man is not separate from his
company
He is responsible for the debt of the
company. He the stake holder money
is safeguarded
A man can not hide behind the
corporate rules at the time of
bankruptcy
The Company and the owner
are two separate distinct bodies
Owner is not responsible for the
debt of company beyond his
investment
Owners always hide behind the
corporate rules at the time of
bankruptcy.

Zakat
Zakat is only taken from Muslim citizen after the passage of one year if his
wealth exeeds Nisab which is different for different catagories
Liquid Currency
Stocks (Raw material or Finish Goods)
Receivable – Debts
Live Stock
Land (Ushr)
Any tradable commodity including property
Hence as a whole more than 2.5% of the total wealth of the economy is
collected from the society and injected back into the poorest echelons
of the society.
This is a tremendous mechanism of producing a balance in the
distribution of wealth within the economy apart from other Ahkam of
Islam which allow the down trodden people to improve their economic
situation

Foreign Loans- no way
Khilafah Capitalism
Taking Foreign loans would not be
allowed 1
Membership in colonial
organisation is also not allowed like
Paris club, ADP, Islamic
Development Bank, World bank
and of course IMF.
Foreign loans are the integral part
of Pakistan’s capitalist economy
This year 239 billion rupees will be
received as different type of foreign
loans.
In 1980 Nigeria took a loan of $3.5
billion from the Paris club. By 1985
this debt had risen $5.8 billion. By
1998 it had risen to 20.9 billion, and
is today estimated at 27 billion.
Sovereignty of Pakistan was mainly eroded due to foreign loans
IMF and WB dictate all our internal policies under the guise of ‘reforms’
and ‘good governance’
Khilafah would liberate us from IMF & WB Structural Adjustment
programmes (SAP’s), Poverty reduction strategy Papers (PRSP)
conditionalities and improve oureconomy

Economic System:
Foreign Traders − not MNC’s
Khilafah
Foreign trade is assessed on the basis of the citizenship of the
trader and not the origin of the goods except goods from countries
we are in actual war with like Israel.
Merchants from countries that have treaties with the State are
treated according to the terms of the treaties
Merchants from countries in a state of war with the State are
prevented from trading in the State, unless given a special
permission
Any country with whom we have actual war with, its citizens (such
as Israel) is excluded from these rules. The rules applicable to the
actual land of war (Dar al-Harb Fa’lan) apply to such country in all
the relations

Economic System:
Local Traders
Khilafah Capitalism
Merchants who are subjects of
the State are prevented from
exporting any goods that the
enemies could benefit of
militarily, industrially or
economically
No such provision, hence Pakistan is
helping India fulfil her energy needs
by building two gas pipelines. Which
would further strengthen Indian
industry and Military to be used
against Muslims of Pakistan
 This Trade Policy protects the state frompotential enemies in the future
They are not prevented from
importing any property they own
under the pretext of protecting
the local industry
The government hurts the local trader
under the pretext of “Smuggling” while
reduces import duty to give monitory
benefit to the foreign trader under the
guise of “foreign investment”
There is nothing known as “Smuggling” in Islam as long as the citizen of the
state imports Halal items

Import export duties
Khilafah Capitalism
A Muslim trader only has to pay Zakat
(2.5%) of the property during import and
export once a year1
No import or export duty other than zakat
Import and export duties
may be as high as 15 to
20%.
Import duties on luxury cars
reduced to suit the rich
A Zimmi (non-Muslim citizen) will pay
according to the contract he had with state
at the time of conquest 1
No such distinction
A Harbi (foreigner non-Muslim) will pay the
same percentage of duty as his country
applies on the traders of the Khilafah 2
No such distinction
Low import and export duties will enhance trade and improve not only the
conditions of the traderratherit will also help ourexports
In a Capitalist state people in the legislative assemblies reduce and
increase duties to suit theirinterests and make money.

Evidences
1. The hoarding of gold and silver was prohibited explicitly in the Qur’an. Allah (SWT) says: “And let those who hoard
gold and silver and do not spend them in the way of Allah know that a severe and painful punishment is awaiting
them.” [At-Tauba: 34] This warning of severe punishment for those who hoard gold and silver serves as a clear
evidence that the Law Giver has decisively ordered us to refrain from doing so; it is therefore forbidden to hoard gold and
silver.
2. Islam prohibited pricing absolutely, due to what Imam Ahmad narrated from Anas who said: “Prices increased at the
time of the Messenger of Allah , so they said, O Messenger of Allah, we wish would you price (fix the prices). He
said: “Indeed Allah is the Creator, the holder (Qabidh), the Open-handed (Basit), the Provider (Raziq), the Pricer
(who fixes prices); and I wish I will meet Allah and nobody demands (complains) of me for unjust act I did
against him, neither in blood or property.” Also Abu Dawud narrated from Abu Huraira, he said, “A man came and
said, O Messenger of Allah, fix prices. He said: “Rather Allah reduces and increases.”
3. S’aid ibn Al-Musayyab narrated from Mu’ammar ibn Abdullah Al-‘Adawi in Bukhari that the Prophet (saw) said: “No one
monopolises except the wrongdoer.” Al-Athram narrated from Abu Umamah, he said: “The Messenger of Allah
(saw) forbade that a foodstuff be monopolised”. And Muslim narrated through his chain of narrators from S’aid ibn Al-
Musayyab that Mu’ammar said: “The Messenger of Allah (saw) said: “Whoever monopolised is a wrongdoer.”’
Monopoly is prohibited (Haram) in all things without a difference between the human foodstuff or animals foodstuff, a
foodstuff or not, and of the people’s necessities or luxuries. This is because the linguistic meaning of the word
monopolised (Ihtakara) is to compile a thing in its absolute sense (without specification). The word monopolised did not
come in the meaning of compiling the foodstuff or the people’s necessities, rather compiling the thing, so it should not be
confined to other than its linguistic meaning.

Economic System:
Hoarding of Wealth & Price Fixing
Khilafah Capitalism
Hoarding of wealth (money) is
haram and state will take practical
steps to prevent it 1
People are “free” to hoard wealth for no
reason
Islamic systemensures circulation of wealth
In Capitalist system banks offer “interest” to encourage people to inject
money into economy
Islam prohibits price fixing 2
Islam prohibits monopoly 3
Capitalist are still in dilemma as to how
to get rid of monopolies; e.g. Microsoft
break up litigation

Evidences
1. The Islamic economic system came to secure basic needs, irrespective of market conditions for such products.
Muhammad (SAW) said, “The son of Adam has no better right than that he would have a house wherein he may
live and a piece of cloth whereby he may cover his nakedness and a piece of bread and some water.” According
to this principle the Islamic State must ensure for all its citizens (Muslims or Non-Muslim) of the Islamic State a security
which western people will never achieve in the heartless obduracy of the application of its free market.

Economic System:
Basic needs of the masses
Khilafah Capitalism
Basic needs of all citizens are
guaranteed such as food, clothing,
shelter, education, health etc.
The land laws discussed earlier
allow people to attain self-sufficient
in food and housing as explained
above
In the purest form of capitalism
there is no concept of public
welfare.
Khilafah alleviates the suffering of the masses
Decreases crime and insecurity in the society
Produces a secure economic atmosphere which increases economic
activity and investment as the investor doesn’t run the risk of being
homeless and struckby hungerin case of a loss

Economic System:
State Revenues
Khilafah Capitalism
Sources of Bait -ul-Mal
 The booties and the spoil of war1
, Al-Fai2
and the fifth3
 Al-Kharaj
 Al-Jizya
 Protecting some Public property (Hima) 4
 State property of land, building utilities and their
revenues)
 Al-Ushur
 Money attained illegally by the rulers, the employees of
the State, illicit money and money from penalties
 The fifth of Al-Rikaz (hidden treasures) minerals 5
 The inheritance property of the one who has no
inheritors 6
 The property of apostates 7
 Charity Funds – Zakat
 Taxes (only from the rich Muslims and in specific situations)
Predominant source
of income is Taxes
from the common
people. People in the
west are taxed upto
35% of their income

State Expenditure Priorities
Khilafah
The expenditures of the State are based around seven areas:
The Zakat funds – on fix 8 categories mentioned in the Qur’an.
Spending money on the destitute and the poor to ensure their basic needs is a must
on the State.
Spending on defence, heavy industry and security of the State as well as carrying the
Islamic Message to other lands.
Allowances of State employees such as salaries of soldiers, civil servants, judges,
teachers and the like.
Provide utilities to the people such as roads, water services, power services,
mosques, schools and hospitals and any other utility considered as necessity for the
people.
Emergency expenditures such as during famine, flood, earthquake or attack by
enemy.
Spending on development projects – Only if funds available

Implementation of Economic
System
Khilafah
oTo implement Islam’s economic system we require its corresponding ruling system
i.e. the Khilafah. In the Khilafah no one has the authority to change Allah’s laws or
abrogated them
oDictatorship and Democracy cannot implement Islam’s economic system as man is
the legislator in both these systems and the powerful can easily change the just laws
of Islam in their personal interests to subjugate the rights of the weak and the poor

Decision making in Autocracy
(dictatorship of an individual)
Decision making
Legislative Mubah
(General issues)
Mubah
(needing expertise)
Economic Ruling Social Judicial
Education
Policy
Foreign
Policy
The ruler
The ruler
The ruler

Decision making in Democracy
(dictatorship of an elite group)
Decision making
Legislative Mubah
(General issues)
Mubah
(needing expertise)
Education
Policy
Foreign
Policy
Elite Group
Elite Group
Elite Group

Decision making in Khilafah
Decision making
Legislative Mubah
(General issues)
Mubah
(needing expertise)
Education
Policy
Foreign
Policy
Khaleefah
is final
authority
after
discussing
with
experts
People
Through their
representatives
decide based on
Majority (if
Khaleefah asks
them)
Allah’s Ahkam
Are implemented
derived from the
sources, Qur’an,
Sunnah, Ijma us
Sahaba
Qiyas

Khilafah vs Democracy (Islamic economic system vs Capitalist system)

Khilafah vs Democracy (Islamic economic system vs Capitalist system)

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