Obviously, Islamic economy is not presented effectively. Existing models of Islamic banks and Shari`ah-compliant financial products have actually played some role, which is not bad, but there is much more they can contribute.
Global economy is plagued with multiple ailments, some of which are technical and some in the underlying philosophy itself. And Islamic economy is well positioned to remove all such ailments.
In the global economic mentality, laissez faire et laissez passer (“let do and let pass”) constitutes the key maxim in business. It implies removal of all restrictions on trade and freedom from state intervention, placing the individual in the center of the whole economic structure.
By contrast, Islamic Shari`ah derives its reference from Allah, the Legislator, based on the concept of trusteeship. Allah says, {And spend of that whereof He (i.e., Allah) has made you trustees}. As a trustee or agent, man does not have absolute freedom, but should rather act within the framework of seeking good and warding off evil.
In the aftermath of 1929′s Great Depression, restrictions were imposed to regulate economy. With the advent of Thatcherism and Reaganism, economic deregulation and promotion of “individual initiative” started, inspired by the pioneering economic philosopher Adam Smith’s theory of the “invisible hand of the market”, which states that the marketplace has a self-regulating nature, by virtue of an invisible and benevolent hand.
All that entire system has now turned out to be a total failure. On the other hand, Islamic economy does encourage self-initiative and self-freedom, but within limits and guidelines that adjust the course of economy.
In terms of practical application, we find that only 5 percent of the global economy is based on real investment, while the remaining is mere venturing, prediction, and unreal wealth.
On the contrary, Islamic economy adopts the principle of exchanging wealth within society at large and not monopolizing it by the wealthy. Allah says, {That you exchange among yourselves}. Exchange is to be only of real wealth. In an authentic hadith, the Prophet (Peace and Blessings of Allah be upon him) said, “Sell the less quality dates for (a sum of) dirhams, and then buy with the dirhams good dates”. Money is just a medium. We have principles of exchange, or circulation as Ibn `Ashur puts it, and transparency.
Huge profits have been made there from usury, while it is utterly prohibited in Islam to exchange money for money. Even in the West itself, there are voices that argue against usury. Islam warns against the devastating consequences of usury: {But if you do not do (i.e., give up usury), then let it be a war (against you) from Allah and His Messenger}.
By the same token, Westerners practice factoring, while Islam bans selling a debt for another, according to a hadith narrated by Al-Bazzar.