Is Islamic Economics Truly an Alternative to Capitalism? A Critical Review of Contemporary Islamic Economic Literature

Abstract

The debate over whether Islamic economics can serve as an alternative to capitalism is increasingly relevant amid problems such as unequal wealth distribution, asset concentration, financial dominance, resource exploitation, and social inequality. Islamic economics is often presented as an alternative because it is grounded in tawhid, falah, maslahah, maqashid al-shariah, justice, amanah, and restrictions on riba, gharar, and maysir. However, many Islamic economic institutions operate within global market and financial structures shaped by capitalism, raising questions about the extent of their transformative capacity. This study critically examines the potential of Islamic economics as an alternative to capitalism by analyzing the gap between its normative principles and institutional implementation. It employs a critical literature review using a qualitative descriptive-analytical approach, focusing on Islamic economic philosophy, capitalism, ownership, markets, wealth distribution, Islamic finance, maqashid al-shariah, maslahah, and social justice. The findings indicate significant philosophical and normative differences between Islamic economics and capitalism, particularly regarding economic objectives, wealth, social responsibility, and moral limits. Nevertheless, Islamic economics has not yet developed into a fully independent alternative system. It is therefore more appropriately understood as a transformative alternative paradigm whose systemic realization depends on institutional innovation, public policy, equitable wealth distribution, and justice-oriented development.