AD 600 to 700

Economic principles of Islam

The founding texts of Islam, and notably the Koran which dates from the first half of the 7th century AD, cover various aspects of day-​​to-​​day life and incor­porate a number of ele­ments from Jewish and Christian teachings. The oblig­ation to give alms or zakat (which sig­nifies puri­fic­ation in Arabic) to the poor, either on an indi­vidual or col­lective basis, is one of the five pillars of Muslim life. Private property is encouraged, although Muslims must recognise that all property is ulti­mately owned by God.

Regarding money, Islam forbids loans at interest, and pro­motes methods of fin­ancing where all stake­holders share in the profits and losses gen­erated by the under­taking. The remu­ner­ation of the lender thus depends on the prof­it­ab­ility of the trans­action he is helping to finance. These prin­ciples form the basis of all Islamic banks and fin­ancial institutions.