A highway is built by the government, yet what you buy in a shop is your own choice. How can one country run on both? This note covers two systems, the mixed and the Islamic, and ends by setting all four systems in one grid.
1. The mixed economic system
Where private ownership and private enterprise exist side by side with government enterprise and social control, we call it a mixed economic system. Most countries of the world run this way. The English Version names the United States, the United Kingdom, Germany, Bangladesh and India; the Bangla Version lists Japan in place of India.
Feature 1, private, cooperative and government ownership. Individuals own, buy and sell movable and immovable property freely. The institutions that produce public goods (a highway, say) and services (health care) are run mainly by the government.
Feature 2, private enterprise. Most economic activity, including production, trade, distribution and consumption, runs through private enterprise. Feature 3, government enterprise. Basic and heavy industries, national security and institutions of public importance are run by the government. Feature 4, profit. The private sector can earn profit, but not excessive monopoly profit.
Feature 5, consumer freedom. Consumers are free to buy, sell and use ordinary goods. But the government may influence prices when needed, and may restrict the production or use of goods such as tobacco and drugs. In this way it can keep prices stable.
Now sort the jobs: which belong to the government, which to private hands?
sort themwhose job is it?
Government or private?
Pick up a job, then drop it in a box.
Right. Next one.
Not yet. Remember: public goods, services, heavy industry and security are the government's; trade, distribution and buying and selling ordinary goods run on private enterprise.
All in place. Highways and health care are run mainly by the government; trade and distribution run on private enterprise.
Picture a scale: at one end everything is private, at the other everything belongs to the state. Drag the handle and see which job goes to whom.
the scaledrag the state's share
From pure to mixed
Where along the scale each job passes to the state is made up to show the idea.
No country follows a purely capitalist or a purely socialist model; the private and government sectors sit side by side. That is why many people consider the mixed economy an advanced system.
2. The Islamic economic system
An economic system built on belief in the basic rules of Islam is called the Islamic economic system. In it, all the resources of the earth are to be used for the welfare of humankind.
Feature 1, faith in Islam. The guiding principles are framed and run according to religious philosophy, scripture and religious rules. Production and consumption follow the rules laid down by the Quran and Sunnah.
Feature 2, interest-free deposits. Taking interest is not recognised. The banking system offers interest-free deposits.
Feature 3, zakat and fitra. Wealth is collected from the rich through zakat and fitra and distributed among the poor.
3. Four systems in one grid
The commonest exam question asks which system a trait belongs to. Tap any cell and that system's line opens.
gridtap a cell
The four systems
system
ownership
price
distinct mark
capitalist
private
automatic
inequality
socialist
state
central
central planning
mixed
private and government
both
side by side
Islamic
by Islamic rules
not stated in the book
interest-free deposits, zakat and fitra
Capitalist. Ownership is private, price is automatic, and the distinct mark is inequality.
Socialist. Ownership is the state's, price is central, and the distinct mark is central planning.
Mixed. Ownership is private and government, price is a mix of both, and the distinct mark is the two sectors side by side.
Islamic. It runs by Islamic rules, and interest-free deposits, zakat and fitra are its marks. How price is set is not stated in the book.
Three questions are enough to tell the four systems apart. Pick a country and answer your way down.
identification keypick a country
Question by question to the system
Countries A to D are made-up examples.
Keep the mixed and the Islamic apart. Before you tap each of the six traits, guess which system it is.
spot themmixed or Islamic?
Which system?
Mixed. Government enterprise beside private enterprise is its very definition.
Mixed. Basic and heavy industry, national security and institutions of public importance are government enterprise.
Mixed. The government may restrict the production or use of tobacco and drugs, and so keeps prices stable.
Islamic. Interest is not recognised; banks offer interest-free deposits.
Islamic. Wealth taken from the rich and distributed among the poor.
Islamic. Production and consumption follow the rules laid down by the Quran and Sunnah.
All six seen. The first three are mixed, the last three Islamic.
4. Check yourself
Three questions in the exam's style. Start with the first.
check yourselfpick one answer
Question 1
Which economic system do many consider an advanced economic system?
In the capitalist system the means of production are privately owned and the automatic price mechanism runs the economy. The right answer is Mixed.
In the socialist system resources are state owned and production follows central planning. The right answer is Mixed.
Right. Since no country is purely capitalist or socialist, many consider the mixed system advanced.
The Islamic system is based on Islamic rules; interest-free deposits and zakat and fitra are its features. The right answer is Mixed.
In the second, match the trait to its system.
check yourselfpick one answer
Question 2
In which system are production and price control carried out by both government and private enterprise?
In the socialist system resources are state owned and production follows central planning. The right answer is Mixed.
Right. In the mixed system government and private enterprise play a joint role and the government can influence prices.
In the capitalist system the means of production are privately owned and the automatic price mechanism runs the economy. The right answer is Mixed.
The Islamic system is based on Islamic rules; interest-free deposits and zakat and fitra are its features. The right answer is Mixed.
The last one goes back to the definition.
check yourselfpick one answer
Question 3
Mr. Nabil went to a super shop to buy sugar and noticed that the price of sugar had increased significantly compared with the previous week. As he was about to leave without buying sugar, another customer nearby told him that sugar was being sold at a lower price at a nearby government sales centre. He bought sugar from there. This reminded him of the business trip he took last year to country 'Ka', where all products were produced by the government and sold at the price set by the government. In Mr. Nabil's country's economic system-
Income inequality is a capitalist feature, where there are no government sales centres.
Interest-free loans belong to the Islamic system; the stimulus hints at no such thing.
Right. In Mr. Nabil's country a government sales centre works alongside private shops; in a mixed system the government influences prices to keep them stable.
In a mixed system the government influences prices when needed; private enterprise is not completely free.
The whole note on seven cards.
cut from the notetap to turn over
Seven cards
QuestionWhat is a mixed economic system?
AnswerOne where private ownership and enterprise exist alongside government enterprise and social control
QuestionWhich industries and institutions does the government run in a mixed economy?
AnswerBasic and heavy industry, national security and institutions of public importance
QuestionWhich goods may the government restrict in a mixed economy?
AnswerGoods such as tobacco and drugs
QuestionWhy do many consider the mixed economy an advanced system?
AnswerNo country is purely capitalist or socialist, and both sectors sit side by side
QuestionWhat is the Islamic economic system?
AnswerAn economic system built on belief in the basic rules of Islam
QuestionIn which system is interest not recognised and interest-free deposits are offered?
AnswerThe Islamic system
QuestionHow is wealth taken from the rich and distributed to the poor in the Islamic system?