Islamic Economic System Comparison with Russian Economic System - Essay Example

Islamic economic system comparison with Russian economic system Introduction The Islamic economic system is a type of economic system which is based in the principles of Islam and has its foundations from the Islamic traditions and scriptures. The main features of Islamic economic system are moral foundations, behavioral norms which are derived from the Quran, prohibition of usury or capital interests and zakat as a form of tax according to the Islamic fiscal policy. The Islamic economic system is practiced in the gulf countries and Middle Eastern countries like Dubai, Oman, Qatar, Saudi Arabia, and Kuwait etc. The economic system prevailing in Russia is a socialist economic system. A socialist economic system is based on collective or public ownership as the main mediums of production. The Russian economic system focuses on equality and collectivist more than individual achievement. Also, the people in the country are made to be dependent on the government for their basic needs like food, health care etc. Discussion The Islamic economic system is starkly different from the socialist economic system prevailing in Russia. Russia is primarily a democratic socialist system. A democratic socialist system is a type of economic system in which the government has the administration control and ownership over the major wealth and industries of the economy. Also in a democratic socialist economic system, the government generally allows for the possession and ownership of people but also controls and limits these possessions according to the suitability of the economic system. In a communist socialist economic system, the individuals of the country are allowed to have more than they need but the government aims at managing and controlling the level of ownership and possessions in the country so that the wealth is not concentrated among one segment of the society. The role of the government in a democratic socialist economic system is critical. In a sociality economic system, the government develops, manages, controls and secures almost all the aspects of the society. This practice may be c considered to be unhealthy for the economy in the long run because such an economic system constraints the initiatives, self-interest, imaginative power and responsibility taking capabilities among the individuals residing in the country. The Russian Federation introduced several reforms and structural changes after the disintegration of the Soviet in 1991. The government of Russia focused on introducing suitable economic reforms to introduce the concepts and practices of privatization and trade liberalization in the country. The main goals of the economic reforms in Russia were to stimulate economic restructuring and macroeconomic stabilization in the country. The introduction of reforms in the socialist country helped in transforming the Russia to a certain extent from being a centrally controlled economy to being a market based economy. The Russian economic system is a socialist economic system which is based on the principle of a central authority controlling the level of possession and ownership of the individuals.in the country. On the other hand, the Islamic economic system is based on the foundation of triple nature of ownership and possession, prevention of usury and capital interests and to foster social justice and equality. In the Islamic economic system, there are three major types of possession which are private possession, collective possession and state’s possession. In contrast, the Russian economic system denies economic possession to individuals in the country. The complete ownership rights and control remains in the hands for the government or the state authority. In a socialist economic system like Russia, the collective ownership of citizens is perceived to be the basic concept of the economic system. According to socialism, the nationalization of private capitals is a source of generating wealth and ensuring growth of the economy. This often leads to several economic problems in the country due to the constraining factors associated with the nationalization of private property and the restriction on private possessions in the country. In Islamic economic system, social balance in the state is achieved through restraining the material possessions and through the reduction of material differences within different segments of the society. While capitalism contributes to increasing the social and financial gaps between the extreme classes belonging to a society, a socialist economic society is assumes a denying stance towards the natural difference prevailing among the different classes of people in a society and strives to force the concept of social equality on the people of the country. In a socialist economic system, the concept of social equality and justice is forced upon the people wherein it is necessary for all citizens to abide by the set principles and controls of the government (Bernstein 212). However in the Islamic economic system, social equality is achieved by encouraging all the members of a society to contribute to the society through their work and their ideas. Capitalism poses a view that the main root of economic problems in the world is the depletion and scarcity in the supply of natural resources. According to the capitalist view, the scarcity of natural resources limits the capability of the nature to fulfill the continuously increasing demands of mankind which leads to economic problems in certain periods of time. The socialist economic systems, on the other hand, blame the capitalistic societies for the economic problems and recessions taking place in the world. Socialism supports the view point that the wealth being created by the work of the people in the country should be made to be controlled and owned by the people. According to the socialist economic theories, the economic problems in the global economies are created by the fact that capitalistic economic systems tend to take away the profits of the people (De Soto 120-124). However, the Islamic economic system differs from both the capitalistic and socialistic views of the causes of economic issues. According to the Islamic economic system, the root cause of economic problems is man himself. Since, the foundation of the Islamic economic system is the Quran, therefore according to the principles of the Quran, the greed and unjust practices of human beings lead to economic problems in the world. According to the principles of the Islamic economic system, human beings always tend to choose the easy paths and they do not work in order to use the natural resources properly (Heilbroner and Milberg 440). Therefore, the root cause for economic problems is likely to be removed if the human beings on the earth start behaving in a more responsible manner. In the Russian economic system, the workers are entitled to possess the value of goods and the profits generated by their work because the profits are reaped from the work of the people. But in the Islamic economist society, the applied rule is that work alone is not the creator of value and profits. This rule limits the ownership and possession of profits and value by the individual people in the country. The basic concept followed in the Islamic economic system is that work is mandatory for creating value and that possession cannot be attained without work. However, work is not the only driver of valley and profits because goods have intrinsic values. This concept drives the phenomenon of persistence in possession which implies that the workers should be the only possessors of their work. But, according to the persistence of possession principle, the providers of the raw materials are also the owners of the work after the production process is complete. This means of possession in the Islamic economic system is a major differentiating factor between the Islamic economic system and the socialist economic system prevailing in Russia. The Russian economic system denies economic freedom for individuals. The economic freedom of the citizens is controlled and restructured by the state or the government. The major part of the economy of Russia is planned, managed and administered by the government or the state authority without any consideration for the incentives of individuals in the country. The Islamic economic system recognizes the right of possession and economic freedom of individuals in the country while defining the limits and boundaries of freedom and possession. The boundaries in the economic freedom and right of possession are influenced by the influence of education level which is considered critical for carrying on the image of Islam religion (Maddison 12). The government in an Islamic economic system steps in to control the economic freedom in aces any discrepancy arises in the protection of the basic legislation principles of Islam. Conclusion Thus it can be identified that in a socialistic economic system, the role of the government is much more authoritative and controlling as compared to an Islamic economic system or the capitalist economic system. This may have several negative implications on the economy in the long term because of the dictatorship assumed by the government in Russia. The Islamic economic system is often considered to be a more constructive economic system as compared to the economic system in counties like Russia because this system was the least affected by the global financial crisis of 2008. It can be established that there are major differences between the two economic systems but each economic system is fictional in its own way for working in a democratic country. Works Cited Bernstein, William. The Birth of Plenty:  How the Prosperity of the Modern World was created. New York: McGraw-Hill.2004. Print. De Soto, Hernando. The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New York: Basic Books. 2003. Print. Heilbroner, Robert & William Milberg. The Making of Economic Society, 12th edition. New Jersey: Prentice Hall. 2007. Print. Maddison, Angus. A millennial perspective. The World Economy. Vol. 1(2). 2006. Print. Read More