The essence of the economic system of Islam lies in an appropriate combination of individual freedom with state intervention. It allows state intervention to a certain extent, but it also provides for individual freedom. A proper balance between these two defines the Islamic economic system. Individual freedom is granted to enable persons to build up assets and spend them voluntarily in order to gain the spiritual benefits in the life to come. State intervention, on the other hand, is provided in order to protect the poor from economic exploitation by the wealthy.
The state intervention is deemed essential for putting in place certain safeguards against harming the weaker sections of society, while individual freedom is deemed essential for a healthy competition among individuals and for enabling them to make provisions for the life Hereafter. Individuals are given full opportunity to voluntarily serve humanity and earn merit in the life Hereafter. Individual freedom thus opens up endless possibilities of progress through the force of healthy competition. At the same time, judicious state intervention is provided so that the economic system is not based on brutality and injustice and hindrances to economic progress of any section of society are avoided.
It should now be easier to understand that religions that believe in the hereafter in general, and Islam in particular, do not view the issue in simple economic terms, but from a religious, moral and economic perspective. Religion does not seek a purely economic solution because such a solution might interfere with the moral and religious aspects of life, which would be unacceptable. A nonbeliever is of course free to view economic problems in isolation. But a religious person would not judge an economic system from purely an economic perspective. He would demand an economic system that also respects his moral and religious requirements.
After this introduction, let me state that keeping in view the two principles stated above, Islam leaves the individual free to follow any trade or profession. However, Islam also specifies certain limits on individual freedom, which while not interfering with his legitimate aspirations to excel, deter him from taking undue advantage of his freedom or pushing it to dangerous lengths.
It should be remembered that some of the defects that are associated with economic competition are rooted in certain selfish streaks in human nature. For example, a person may set his heart upon accumulation of wealth, and this passion may shut his eyes to the suffering caused by hunger, want and penury. His sole wish may be to accumulate maximum amount of wealth. Selfishness and indifference to tyranny and oppression are the result of certain incentives, which are mentioned in the Holy Quran and are discussed below.