Economic System During the First Formal Islamic State of Madina (622-645 AD): An Historical Insights


  • Sohail Akhtar Lecturer, Ghazi University. Dera Ghazi Khan, Pakistan
  • Noreen Safdar Assistant Professor, Department of Economics, The Women University Multan
  • Fatima Ali Assistant Professor, Department of History & Pakistan Studies, The Women University Multan



The economic system of any state is quite inevitable and an integrated part of life because all other systems revolve around this system. So, Islam paid special heed to this system and the Prophet (PBUH) gave a comprehensive guideline in this regard. There is no possibility of human error in the Islamic System because it is divine while all other prevailing and proposed economic systems are man-made. The Islamic economic system is directed towards the welfare of humanity by Almighty Allah. The Holy Quran categorically states that "Allah has made business legitimate for you (Sura Baqara, Ayat-275)". Islam as a religion primarily allows the economy to run efficiently as per the market forces subject to legal bindings and guidelines on production. distribution, marketing, trade investment, exchange and wages etc. The present study is theoretical in nature using the historical method as the basis for both the primary and secondary sources of data, especially qualitative data. This research examines the formation of the world's first formal Islamic State and the economic system established by the Prophet Mohammad (PBUH). And how the Islamic State created its economic resources of income have also been discussed in this paper. This study is a theoretical piece of research using the historical method and is based on both the primary and secondary sources Including holy Quran and Hadees. Even though there has been a lot of work done on the subject, this study will contribute to the publication of Islamic economic theory by adding knowledge from contemporary economics to a new debate. The ultimate objective of the Islamic economic system, like any other economic system was the realization of efficiency and equity in the allocation and distribution of resources and freedom of individuals in the society.