Islamic Capitalism was active during the

Islamic Golden Age The Islamic Golden Age was a period of cultural, economic, and scientific flourishing in the history of Islam, traditionally dated from the 8th century to the 14th century. This period is traditionally understood to have begun during the reign ...

and

Muslim Agricultural Revolution The Arab Agricultural Revolution was the transformation in agriculture from the 8th to the 13th century in the Islamic region of the Old World. The agronomic literature of the time, with major books by Ibn Bassal and Abū l-Khayr al-Ishbīlī, d ...

, where an early market economy and form of

merchant capitalism Some economic historians use the term merchant capitalism to refer to the earliest phase in the development of capitalism as an economic and social system. However, others argue that mercantilism, which has flourished widely in the world without ...

took root between the 8th–12th centuries. A vigorous

monetary economy Monetary economics is the branch of economics that studies the different competing theories of money: it provides a framework for analyzing money and considers its functions (such as medium of exchange, store of value and unit of account), and it ...

was based on a widely-circulated

currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general ...

(the dinar) and the integration of

monetary Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are ...

areas that were previously independent. Business techniques and forms of business organisation employed during this time included

contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tr ...

bills of exchange A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a ...

, long-distance

international trade International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy) In most countries, such trade represents a significant ...

, forms of

partnership A partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments ...

(''mufawadha'') such as limited partnerships (''mudharaba''), and forms of

credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...

debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...

, profit,

loss Loss may refer to: Arts, entertainment, and media Music * ''Loss'' (Bass Communion album) (2006) * ''Loss'' (Mull Historical Society album) (2001) *"Loss", a song by God Is an Astronaut from their self-titled album (2008) * Losses "(Lil Tjay son ...

, capital (''al-mal''), capital accumulation (''nama al-mal''), circulating capital,

capital expenditure Capital expenditure or capital expense (capex or CAPEX) is the money an organization or corporate entity spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land. It is considered a capital expenditure ...

revenue In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive reven ...

cheque A cheque, or check (American English; see spelling differences) is a document that orders a bank (or credit union) to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The pers ...

s, promissory notes,

trusts A trust is a legal relationship in which the holder of a right gives it to another person or entity who must keep and use it solely for another's benefit. In the Anglo-American common law, the party who entrusts the right is known as the "settl ...

(see ''

Waqf A waqf ( ar, وَقْف; ), also known as hubous () or '' mortmain'' property is an inalienable charitable endowment under Islamic law. It typically involves donating a building, plot of land or other assets for Muslim religious or charitab ...

''),

savings account A savings account is a bank account at a retail bank. Common features include a limited number of withdrawals, a lack of cheque and linked debit card facilities, limited transfer options and the inability to be overdrawn. Traditionally, transa ...

transactional account A transaction account, also called a checking account, chequing account, current account, demand deposit account, or share draft account at credit unions, is a deposit account held at a bank or other financial institution. It is available to the ...

pawn Pawn most often refers to: * Pawn (chess), the weakest and most numerous piece in the game * Pawnbroker or pawnshop, a business that provides loans by taking personal property as collateral Pawn may also refer to: Places * Pawn, Oregon, an his ...

ing,

loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that ...

ing, exchange rates,

bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...

ers,

money changer A money changer is a person or organization whose business is the exchange of coins or currency of one country for that of another. This trade was a predecessor of modern banking. The advent of paper money in the mid-17th century and the develop ...

ledger A ledger is a book or collection of accounts in which account transactions are recorded. Each account has an opening or carry-forward balance, and would record each transaction as either a debit or credit in separate columns, and the ending or ...

deposits A deposit account is a bank account maintained by a financial institution in which a customer can deposit and withdraw money. Deposit accounts can be savings accounts, current accounts or any of several other types of accounts explained below. ...

, assignments, the

double-entry bookkeeping system Double-entry bookkeeping, also known as double-entry accounting, is a method of bookkeeping that relies on a two-sided accounting entry to maintain financial information. Every entry to an account requires a corresponding and opposite entry to ...

, and lawsuits.

Organization An organization or organisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences), is an legal entity, entity—such as ...

al enterprises independent from the

state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly magazine published by the U.S. Department of State * ''The State'' (newspaper), a daily newspaper in Columbia, South Carolina, United States * ''Our S ...

also existed in the medieval Islamic world, while the agency institution was also introduced. Many of these early capitalist concepts were adopted and further advanced in

medieval Europe In the history of Europe, the Middle Ages or medieval period lasted approximately from the late 5th to the late 15th centuries, similar to the post-classical period of global history. It began with the fall of the Western Roman Empire a ...

from the 13th century onwards.Jairus Banaji (2007), "Islam, the Mediterranean and the rise of capitalism", ''

Historical Materialism Historical materialism is the term used to describe Karl Marx's theory of history. Marx locates historical change in the rise of class societies and the way humans labor together to make their livelihoods. For Marx and his lifetime collaborat ...

'' 15 (1), pp. 47–74, Brill Publishers. Some have argued that these economic activities laid the foundations for the development of modern capitalism.

Market economy

A market economy was established in the Islamic world on the basis of an economic system resembling

Capital formation Capital formation is a concept used in macroeconomics, national accounts and financial economics. Occasionally it is also used in corporate accounts. It can be defined in three ways: *It is a specific statistical concept, also known as net inve ...

was promoted by labour in medieval Islamic society, and

financial capital Financial capital (also simply known as capital or equity in finance, accounting and economics) is any economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or to provi ...

was developed by a considerable number of owners of

funds Funding is the act of providing resources to finance a need, program, or project. While this is usually in the form of money, it can also take the form of effort or time from an organization or company. Generally, this word is used when a firm uses ...

and precious metals.

Riba The Royal Institute of British Architects (RIBA) is a professional body for architects primarily in the United Kingdom, but also internationally, founded for the advancement of architecture under its royal charter granted in 1837, three supp ...

(

usury Usury () is the practice of making unethical or immoral monetary loans that unfairly enrich the lender. The term may be used in a moral sense—condemning taking advantage of others' misfortunes—or in a legal sense, where an interest rate is c ...

) was prohibited by the

Qur'an The Quran (, ; Standard Arabic: , Quranic Arabic: , , 'the recitation'), also romanized Qur'an or Koran, is the central religious text of Islam, believed by Muslims to be a revelation from God. It is organized in 114 chapters (pl.: , s ...

, but this did not hamper the development of capital in any way. The capitalists (''sahib al-mal'') were at the height of their power between the 9th–12th centuries, but their influence declined after the arrival of the ''ikta'' ( landowners) and after

production Production may refer to: Economics and business * Production (economics) * Production, the act of manufacturing goods * Production, in the outline of industrial organization, the act of making products (goods and services) * Production as a stati ...

was monopolized by the state, both of which hampered the development of

industrial capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, private ...

in the Islamic world. Some state enterprises still had a capitalist mode of production, such as

pearl diving Pearl hunting, also known as pearling, is the activity of recovering pearls from wild molluscs, usually oysters or mussels, in the sea or freshwater. Pearl hunting was prevalent in the Persian Gulf region and Japan for thousands of years. On t ...

Iraq Iraq,; ku, عێراق, translit=Êraq officially the Republic of Iraq, '; ku, کۆماری عێراق, translit=Komarî Êraq is a country in Western Asia. It is bordered by Turkey to the north, Iran to the east, the Persian Gulf and K ...

and the

textile industry The textile industry is primarily concerned with the design, production and distribution of yarn, cloth and clothing. The raw material may be natural, or synthetic using products of the chemical industry. Industry process Cotton manufacturi ...

Egypt Egypt ( ar, مصر , ), officially the Arab Republic of Egypt, is a transcontinental country spanning the northeast corner of Africa and southwest corner of Asia via a land bridge formed by the Sinai Peninsula. It is bordered by the Medit ...

. During the 11th–13th centuries, the " Karimis", an early enterprise and

business group A corporate group or group of companies is a collection of parent and subsidiary corporations that function as a single economic entity through a common source of control. These types of groups are often managed by an account manager. The concept ...

controlled by

entrepreneur Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values t ...

s, came to dominate much of the Islamic world's economy. The group was controlled by about fifty Muslim merchants labelled as "Karimis" who were of

Yemen Yemen (; ar, ٱلْيَمَن, al-Yaman), officially the Republic of Yemen,, ) is a country in Western Asia. It is situated on the southern end of the Arabian Peninsula, and borders Saudi Arabia to the Saudi Arabia–Yemen border, north and ...

ian and sometimes

Indian Indian or Indians may refer to: Peoples South Asia * Indian people, people of Indian nationality, or people who have an Indian ancestor ** Non-resident Indian, a citizen of India who has temporarily emigrated to another country * South Asia ...

origins. Each Karimi merchant had considerable wealth, ranging from at least 100,000 dinars to as much as 10 million dinars. The group had considerable influence in most important eastern

market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an ...

s and sometimes in

politics Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations among individuals, such as the distribution of resources or status. The branch of social science that stud ...

through its financing activities and through a variety of customers, including

Emir Emir (; ar, أمير ' ), sometimes transliterated amir, amier, or ameer, is a word of Arabic origin that can refer to a male monarch, aristocrat, holder of high-ranking military or political office, or other person possessing actual or cer ...

s, Sultans,

Vizier A vizier (; ar, وزير, wazīr; fa, وزیر, vazīr), or wazir, is a high-ranking political advisor or minister in the near east. The Abbasid caliphs gave the title ''wazir'' to a minister formerly called '' katib'' (secretary), who was ...

s, foreign merchants, and common

consumer A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. ...

s. The Karimis dominated many of the

trade routes A trade route is a logistical network identified as a series of pathways and stoppages used for the commercial transport of cargo. The term can also be used to refer to trade over bodies of water. Allowing goods to reach distant markets, a sing ...

across the

Mediterranean Sea The Mediterranean Sea is a sea connected to the Atlantic Ocean, surrounded by the Mediterranean Basin and almost completely enclosed by land: on the north by Western and Southern Europe and Anatolia, on the south by North Africa, and on the ...

Red Sea The Red Sea ( ar, البحر الأحمر - بحر القلزم, translit=Modern: al-Baḥr al-ʾAḥmar, Medieval: Baḥr al-Qulzum; or ; Coptic: ⲫⲓⲟⲙ ⲛ̀ϩⲁϩ ''Phiom Enhah'' or ⲫⲓⲟⲙ ⲛ̀ϣⲁⲣⲓ ''Phiom ǹšari''; ...

, and

Indian Ocean The Indian Ocean is the third-largest of the world's five oceanic divisions, covering or ~19.8% of the water on Earth's surface. It is bounded by Asia to the north, Africa to the west and Australia to the east. To the south it is bounded by t ...

, and as far as

Francia Francia, also called the Kingdom of the Franks ( la, Regnum Francorum), Frankish Kingdom, Frankland or Frankish Empire ( la, Imperium Francorum), was the largest post-Roman barbarian kingdom in Western Europe. It was ruled by the Franks dur ...

in the north, China in the east, and sub-Saharan Africa in the south, where they obtained

gold Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile me ...

from

gold mine Gold Mine may refer to: * Gold Mine (board game) *Gold Mine (Long Beach), an arena *"Gold Mine", a song by Joyner Lucas from the 2020 album ''ADHD Attention deficit hyperactivity disorder (ADHD) is a neurodevelopmental disorder characteri ...

s. Strategies employed by the Karimis include the use of agents, the financing of projects as a method of acquiring capital, and a

banking institution Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial insti ...

for

s and

. Another important difference between the Karimis and other entrepreneurs before and during their time was that they were not

tax collector A tax collector (also called a taxman) is a person who collects unpaid taxes from other people or corporations. The term could also be applied to those who audit tax returns. Tax collectors are often portrayed as being evil, and in the modern wo ...

s or

landlord A landlord is the owner of a house, apartment, condominium, land, or real estate which is rented or leased to an individual or business, who is called a tenant (also a ''lessee'' or ''renter''). When a juristic person is in this position, t ...

s, but their capitalism was due entirely to trade and financial transactions. Though medieval Islamic economics appears to have somewhat resembled a form of capitalism, some

Orientalists In art history, literature and cultural studies, Orientalism is the imitation or depiction of aspects in the Eastern world. These depictions are usually done by writers, designers, and artists from the Western world. In particular, Orientalist p ...

also believe that there exist a number of parallels between Islamic economics and

communism Communism (from Latin la, communis, lit=common, universal, label=none) is a far-left sociopolitical, philosophical, and economic ideology and current within the socialist movement whose goal is the establishment of a communist society, a ...

, including the Islamic ideas of

zakat Zakat ( ar, زكاة; , "that which purifies", also Zakat al-mal , "zakat on wealth", or Zakah) is a form of almsgiving, often collected by the Muslim Ummah. It is considered in Islam as a religious obligation, and by Quranic ranking, is ...

and

riba The Royal Institute of British Architects (RIBA) is a professional body for architects primarily in the United Kingdom, but also internationally, founded for the advancement of architecture under its royal charter granted in 1837, three supp ...

. Others see Islamic economics as neither completely capitalistic nor completely socialistic, but rather a balance between the two, emphasizing both "individual economic freedom and the need to serve the common good." (se
online
) Others point out that Islam has an inherently capitalist nature and argue this most through respect for private property as the foundation of capitalism in Islam, as well as the historical fact that the

Prophet Muhammad Muhammad ( ar, مُحَمَّد; 570 – 8 June 632 CE) was an Arab religious, social, and political leader and the founder of Islam. According to Islamic doctrine, he was a prophet divinely inspired to preach and confirm the monoth ...

was an entrepreneur, a merchant.

Market economy

See also

References

Further reading