BY

FAROOQ MUSTAFA JOYIA(169-FET/BSME/F11-B)

(IIU,ISLAMABAD)

WHAT IS CAPATLISM HISTORY OF CAPATLISM WHAT IS SOCIALISM HISTORY OF SOCIALISM ISLAMIC ECONOMIC SYSTEM CAPATLISM VS SOCIALISM

Capitalism is an economic system in which the means of production are privately owned and operated for profit, usually in competitive markets. Income in a capitalist system takes at least two forms, profit on the one hand and wages on the other.

According to some historians, the modern capitalism has its roots in “CRISIS OF FOUTEENTH CENTURY”. A conflict between land-owning aristocracy and agriculture producers, the SERFS. MANORIALS arrangements inhibited the development of capitalism in no of ways. Because serfs were forced to produced for their land lords, they had no interest in technological innovation and land lords relied on force to guaranteed that they were provided with sufficient food. Finally, because lords expended their power and wealth through military means, they spend their wealth on military equipments that helped foster alliances with other lords; they had no incentive to invest in developing new productive technologies.

This arrangement was shaken by crisis of 14th century

Great famine (1315-1317) Black death (1348-1350) (Led to a population crash) Decline in agricultural production

According to Karl Marx, the rise of the contractual relationship is inextricably bound to the end of the obligatory relationship between serfs and lords. Marx characterizes this transformation as “the historical process of divorcing the producer from the means of production.” It was this “divorcing” that turned the serf’s land into the lord’s capital. According to Marx, this rearrangement led to a new division of classes: two very different kinds of commodity owners; on the one hand, the owners of money; on the other hand, free workers.

Socialism is an economic system in which the means of production are either state owned or commonly owned and controlled cooperatively; or a political philosophy advocating such a system.

Socialism is based on co-operative social relations and self-management; relatively equal power-relations and the reduction or elimination of hierarchy in the management of economic and political affairs. Modern socialism originated from an 18th-century intellectual and working class political movement that criticized the effects of industrialization and private property on society. Saint-Simon, Friedrich Engels and Karl Marx advocated the creation of a society that allows for the widespread application of modern technology to rationalize economic activity by eliminating the anarchy of capitalist production that results in instability and cyclical crises of overproduction.

Islamic economic system believes in justice and fairness in the economic field. According to it, the man is God’s viceroy or deputy in overall divine scheme and he has been given limited rights of ownership of means of production. It recognizes intervention of state in the economic activity for the purpose of ensuring welfare of its citizens. Abolition of interest, institution of sadaqat and Zakat, concept of lawful and unlawful, equitable distribution of wealth, prohibition of hoarding and stress on circulation of wealth, concern for well being of the poor are the distinctive features of the Islamic economic system.

Following are the salient features of this economic system

Allah is the Sustainer God is Real Owner of Everything and Man is

Merely a Trustee Everything Created for Service and Use of Man Concept of Halal and Haram System of Sadaqat and Zakat Prohibition of Interest Ban on Hoarding of Wealth Policy of Moderation Condemnation of Monasticism and Materialism Equity and not Equality

Capitalism is the world’s dominant economic system. Within it, the means of production and distribution are owned by individuals: private ownership and free enterprise are believed to lead to more efficiency, lower prices, better products and rising prosperity. Socialism advocates the ownership and control of the means of production and industry by the community as a whole: the community is believed to be both more just and more efficient through central planning. In Marxist theory Socialism represents the stage following capitalism in a state transforming to communism; for many, however, it is a goal in itself.This binary view of potential political and economic systems may be thought simplistic, but it is a debate that is extremely common, especially after the 2008 financial crisis led many to question the western capitalist economic system. Necessarily, many other systems are not touched upon.