A considerable body of literature has appeared, mostly in Islamic countries, on an alternative economic system to that of the West. In the developing world there is increasing realization that the interest-based capitalist system has failed to solve the problem of poverty and economic disparity. Various solutions have been tried to meet the economic needs of man, but it has not yet been possible to achieve a welfare society, free from periodic recessions and ‘depressions, based on equal opportunity, balance between classes, and spirit of cooperation rather that unbridled competition and greed. Whether in the capitalist system or socialist system, man is the center of the universe, directed by the basic instincts. Following the renaissance, a Euro-centric paradigm of civilization motivated by reason became the cornerstone of all knowledge; the concept of Divine inspiration that had formed the basis of the spiritual heritage was subjected to close scrutiny. In science, Darwin’s theory of evolution and survival of the fittest permeated intellectual courses; in economics, technological advancement, as measured by GNP, became the hallmark of man’s progress; in politics, democracy became the creed of representative government rather than dictatorship. The substitution of divine spiritualism, the common heritage of mankind since Islam, by secularist materialism has limited man’s life to satisfying the fundamental human urges, bereft of any sense of accountability before a creator in the Hereafter.

The prevailing civilization in the industrialized West and the deprived developing countries, which have been caught in the maze of scientific and technological developmental Western model, are suffering from political instability, economic imbalance between rich and poor, and social ills such as violence, drugs and teenage pregnancy in the Hereafter. The prevailing civilization in the industrialized West and the deprived developing countries, which have been caught in the maze of scientific and technological developmental Western model, are suffering from political instability, economic imbalance between rich and poor, and social ills such as violence, drugs and teenage pregnancy. Politically, the European post-renaissance system has drifted from monarchy and oligarchy to government, based on popular representation. Whether they are Greek City states, consuls of Constantines Roman Empire, Charley Magnes, nations state of medieval Europe or Post- revolution democracies, Their common denominator has been the quest for a decent living and security against attack by invaders. Feudal lords provided protection to tenants levied taxes, supplied conscripts for army of the Monarch. The church itself owned land and worked in tandem with feudal aristocracy and the monarchy. In the Middle Ages, on the bidding of Church, armies were raised to fight the Infidel, the Muslims, leading to the crusades in return for pay, bounty and reward in the Hereafter. Although the Christian army hated the Muslims, contact between them during the crusades had a great impact on the European economy, political and socio-cultural life. In the post-renaissance period Europe was swept by the wave of supremacy of Men, as reason rather than Divine Revelation became the main tool of knowledge.

Everything from scripture to secular knowledge — Astronomy, Geography, Mathematics, Medicine, Philosophy and Physics became empirical in reasoning and experimentation. Nothing existed unless it was tested by the five senses. In the history of Western thoughts, the scholars relied for inspiration on the Greek civilization, which had been unknown to them till Arab Muslims translated (and commented upon) Greek works. Under Alfonso the Third, the academy named after him carried on this conversion and transmission of knowledge from Toledo in Spain from where books were taken all over Europe during the 11th – 13th century. James Barkers the day the universe changed was televised, and suggested that Andalus acted as a bridge between Greek civilization and Europe. In fact, ironical thought it may seem, original Greek works were taken by scholars from Istanbul, when it was Conquered by Mohammed the conqueror in 1458, to Bologna in Italy; till then only Arabic translations were available to Europe. In turn, the Greeks owed much to earlier civilizations: Assyrians, Babylonians, Chaldions, Chinese, Egyptians, Indians; this prognosis by Martin Bernal in Black Athena angered many western scholars who see Greeks as the precursors of western civilization, ignoring the debt Greeks owed to earlier civilizations. Similarly, the West rarely acknowledges the contribution of Arabs in heralding renaissance in Europe. Knowledge is a continuum, but not to a vast majority in the West. On the contrary, the West has tended to look with disdain on Arab Muslims, considering them as retrogrades. There has been a prevalent ignorance of the fact that Al-Beruni in 10th century, much earlier than Galileo proved that the Earth revolved around the Sun. Avicenna’s (Ibn-I-sina) canon was taught in Europe for 200 years; Averros (Ibn i-Rushd) is considered very popular in Europe for his philosophical commentaries on Aristotle; Ibne Khaldun is considered the father of sociology; Al-Khwarzami (for algorithms) and Al-Jabr-wal-Muqabla heralded modern mathematics with Arabic numerals replacing Latin numbers; in astronomy, many names of stars are Arabic in origin. Likewise, Al-Kindi as geographer and Al—beruni as mathematician measured the circumference of the Earth with greater precision than Ptolemy; Al-Zahravi as gynecologist and Ibne-Haitham as the father of optics, have made lasting contributions to the sciences. Chemistry is derived from the Arabic branch of learning known as ‘Al-Kimia”; Al gibra from “Al-Jabr- Wal Muqabla”, and as final example, Al- Idrisi was a great geographer who prepared the Atlas of the world. Nine Hundreds years before Columbus, a west African Muslim king of Mali sent expeditions to explore what lies beyond the Atlantic ocean which reached the Caribbean. An Arabic translation, confirming the discovery of America by West African Muslims long before Columbus has been found. Al Omari, the historian documented this historical fact. Likewise, Spain was first explored during the time of Othman, the third Caliph. He sent Oqba Bin Naji to Spain with instructions to reach Constantinople over land. But the Berber tribes stopped his passage and further expeditions were discontinued. Andalus served as a bridge for the transfer of learning from Arabia into Europe, leading to renaissance in this region. At an International Conference on Islamic Spain at Lahore in 1991, tributes were paid to the contribution made to the West by Arab Muslims. The scientific, technological and economic advances in the West, since the renaissance, accompanied by political and intellectual development, have not made man a happy being or the present society more egalitarian and just. Plagued by socio-economic ills the West is bewildered as attempts are made to solve these problems as was evident from the advocacy of family virtues by Republicans who upon that plat form, won the 1994 congressional elections. In national economies, sustained economic progress has lead to economies heating, giving rise to an increase in interest rates in an attempt to curb inflation; the risk always remains that the pendulum may swing in the other direction - recession. To overcome the economic ills of the West, another economic model is needed, especially in the wake of the failure of the socialist model. In that sense, Fukuyama’s End of History is at best a flawed proclamation about the victory of Capitalism as the panacea for all ills afflicting moderns society, i.e., the ecological disasters, green house effect pollution, and prospects of nuclear winter. These are attributed to unbridled industrialization and urbanization with their concomitant effects in social fields. The alternative is the Islamic (interest free) financing system postulated by Islam and practiced for a long time before the western interest - based system played havoc with the worlds economy.

Interest is banned in the old testament of the bible and the Quran considers interest as war on Allah. In the Islamic economic system, money is a medium of exchange; not - to – be transacted on, be it for home mortgage, credit card, car purchase, and the link. In the western economic model, the consumer society, based on instant gratification, has placed a heavy burden of dept on the individual and community, being passed on to future generation. To obviate these ills, the Islamic system uses financial instruments such as Mudaraba, Musharaka, and Ijara etc: The Mudaraba is a partnership between the provider of capital and worker; both agree to share profits on an agreed basis while the loss is borne by the former as the worker loses his labor. The messenger of Allah (MPBUH) used this form of trade with the capital of Khadijah (his wife). In the case of Musharaka, the shareholders in a joint stock company share profits and losses, but the Management Company which is responsible for the day to day operations shares in profit while the loss is borne by the shareholders, with the management losing their labor. In the capitalist system the Management Company receives their fees irrespective of profit or loss, enabling them to acquire riches at the expense of shareholders, which is iniquitous. For instance, in stocks and Mutual Funds, the holding company is paid finance charges, losses notwithstanding. The Musharaka concept is considered permissible in Islam, as it entails a sharing in both profits and losses. Ijara, is a from of leasing with the user of machinery paying the rent on the market value of the machinery o a declining scale. Apart from equipment and machinery, leasing or Ijara is used in the purchase of homes or cars, with exploiting immoral desires of the consumers to secure huge profits were allowed, which tend to create monopolies and in turn paralyze the forces of demand and supply or at least obstruct their operation. It is thus ironical that the capitalist theory on the one hand asserts the principles of lassiez faire but, on the other, by allowing the aforesaid instruments, interferes with their natural function and stops market forces from playing their due role by creating monopolies that impose their arbitrary decisions on the hulk of the common people.

 The system of interest favors the rich industrialists who benefit from the wealth of the common people who deposit their savings in the hank, and after making huge profits do not allow the common people to share these profits except to the extent of a fixed rate of interest that is again taken back by them as it is charged to the cost of production. At macro level, it means that these rich people always use the money of depositors for their own benefit and in reality pay nothing to them because the interest payments are always added to the cost of production. Similarly, gambling is a major instrument for concentrating the wealth of thousands of men in a few hands and for promoting the disastrous motive of greed for the unearned income. Speculative transactions are also a major source of disturbing the natural market operations and contribute to the inequities in the distribution of wealth. Islam not only allows market forces but also provides mechanisms to keep them operative with their natural force without their being hindered by monopolies. It applies two types of controls on the economic activities. First, it subjects the process of earning to certain divine injunctions which clearly define the limits of Halal and Haram. This injunctions tend to prevent monopolies and curb the unjust and immoral earnings and commercial activity detrimental to the collective interest of the society. In the context modern economic needs where the saving of the common people are activated to boost development, the use of the Islamic Instruments such as Musharaka and Mudaraba, instead of interest, may make the common people directly share the fruits of development which may bring prosperity in a balanced manner reducing the gap between the rich and the poor. Second, the institution of Zakat, Sadaqat, and certain other financial obligations provide that even the Halal income is again distributed to the persons who could not earn enough due to insufficient market opportunities. Through the twin controls, the wealth is kept under constant circulation and the chances for its concentration are almost eliminated. But our main tragedy is that the principles of

Islamic economy are still in theoretical form for which no living example is available. The Muslim countries have not tried to structure their economy on Islamic basis. Most of them are still following the capitalist system and that too in a half-baked manner, Which has made the economic atmosphere much worse than that of the developed capitalist countries. Sadly, despite having the clear-cut Islamic injunctions, the inequities existing in Muslim countries are far more severe than in the Western world. This tragic situation cannot last forever. If we are not prepared to mend our ways, some natural process of revolution is bound to find its way. If we want to avoid disastrous consequences of such revolution, we’ll have to restructure our economic system on the basis of clear guidance provided by the Quran and Sunnah. Our success in setting an example for implementing the Islamic principles will be our best gift to the human fraternity at the advent of the new century. I hope that if the principles of Islamic economic are implemented sincerely, well the world more respective to them today than we experienced in the past. Islamic financing institution entering into separate agreements with depositors and users. For example, if a loan of dollars 100,000 is provided, the tenant, not the owner, agrees to pay installments of the loan over and agreed period. In addition, the tenant or user pays rent, depending on the market value, assessed annually, with the total of investment and rent not exceeding the installment of loan under a mortgage system. In the event of default, the house or car is not seized, as is the capital system, and the tenant is given a period of grace beyond which a penalty may be imposed to deter defaults. Thus, the Islamic system works on the tradition of the Prophet (pbuh): that the lender should provide a period of grace affording the borrower every opportunity to pay etc. It is more just and equitable than the capitalist system wherein the lender must receive his pound of flesh. At the same time, the debtor is encouraged to pay back the loan; in case of death, it is paid before inheritance is divided. In the case of Islamic banks they enter into agreements with depositors which stipulate that depositors will be paid a return proportionate to the profit or loss in the investment of their capital; the bank invests capital on agreed terms, with a director of the bank sitting in the board of directors of the joint venture, be it an industry or a trading company, and sharing profit as well as loss. This is in sharp contrast to the prevalent banking practices, charging fixed interest against collateral, irrespective of the profit or loss with depositors receiving fixed interest in turn. Additionally, credit card companies, whether it is a company or a bank, charges exorbitant interest, passing on a small percent age to depositors. Besides interest free financing, the Islamic system is also based on voluntary spending (Sadaqa) or charity, gifts and donations to the poor, needy, old, handicapped, wayfarers, war veterans, widows, orphans, school, hospitals, in addition to the compulsory payment of Zakat (2.5°/o).

 The Quran exhorts Muslims to spend whatever is surplus to their needs, ensuring circulation of wealth. Earning of reward in Hereafter provides the incentive for spending on the poor, rather than hoarding. The Islamic system is gaining popularity, given the concept of accountability in Hereafter, the Islamic system, especially in the field of Economics, may prove to be a harbinger of a new era of welfare- a utopia – which has been the unrealized dream of mankind if man realizes his true stations in life as vise- Roy of god on earth, he may make it a haven of piece, progress and harmony.