Economic Principles of the Rightly Guided Caliphs and the Contemporary Financial System: A Comparative Study

Abstract

The era of the Rightly Guided Caliphs represents a foundational period in Islamic history where divine guidance and administrative wisdom converged to establish a balanced and ethical economic system. The economic principles of the Rashidun Caliphs were not confined merely to fiscal management but embodied a comprehensive moral and social philosophy aimed at ensuring justice, equality, and the collective welfare of society. Their governance emphasized transparency, accountability, and equitable distribution of wealth, preventing economic concentration and social disparity.During the caliphates of Abu Bakr and ʿUmar, financial administration was characterized by austerity, integrity, and a strong sense of public accountability. Under ʿUthmān, economic expansion was accompanied by the development of trade, industry, and agriculture, while ʿAlī’s rule reflected firm measures against economic injustice and corruption. Collectively, these policies established a moral-economic framework rooted in fairness, responsibility, and public service.In contrast, the modern global financial system operates primarily on capitalist principles, emphasizing profit maximization, interest-based transactions, and speculative market mechanisms. This structure has led to widespread economic inequality, social exploitation, and recurring financial crises. The dominance of global financial institutions and debt-based economies has marginalized ethical and human considerations in economic policymaking.This comparative study highlights that the economic model of the Rashidun Caliphate provides not only a morally superior framework but also a viable and sustainable alternative to contemporary financial structures. Integrating its core principles justice, equity, transparency, accountability, and moral responsibility into modern economic policies could lead to a global financial order grounded in human welfare, social balance, and sustainable development.

Keywords: Rashidun Caliphs, Islamic Economic Principles, Economic Justice, Capitalist System, Financial Ethics, Comparative Study, Sustainable Economy, Wealth Distribution, Accountability, Moral Governance