Islam's Response to Contemporary Issues — Page 168
168 islam’s response to contemporary issues Islamic Concept While communism provides no incentive for direct dedicated involvement in the production of wealth, despite banishing interest, Islam provides the incentive. Islam does away with the system of usury and interest without sharing the specific problems of the communist world. In the absence of interest dragging capital along non- productive channels, Islam checks idle capital. This check is a form of ‘tax’ known as Zakat, which is levied not on income or profit but on the capital itself. The contrast is very clear. In capitalist societies, capital is amassed in the hands of a few out of greed to increase capital through the accumulation of interest and is recycled into the economy with the set task of yielding a profit greater than the prevailing rate of interest. Failing this, the economy is bound to go into recession. In Islam, out of fear that any idle capital would be gradually eroded away through the imposition of Zakat, anyone with surplus savings would have to employ it in earning profit to offset the effect of Zakat. According to Islam, the answer to the economic problems of the world lies neither in scientific socialism nor capitalism. It is impossible to elaborate on this subject here but we must have a topical view of the economic imbalance created by capitalism to draw some lessons for the future.