Islamonweb

From the early primitive age, when the concept of surplus first emerged among hunter-gatherer communities, markets have been central to human civilization as mechanisms for exchange, resource distribution, and social interaction^[1]. Historically, markets developed to address the economic needs of society, though their structures and functions have undergone profound transformations over time. The pre-modern era, for instance, was characterized by simpler, community-centered, and welfarist market systems^[2]. However, contemporary capitalist structures have institutionalized markets into global, profit-driven, and individual-centric entities, shifting the focus from communal welfare to private accumulation.

The pre-modern mechanisms of market exchange maintained a balance between profit-making and welfarist principles, ensuring that market monopolies were not solely concentrated in the hands of producers or consumers. Transactions operated within an ethical framework that prioritized communal welfare alongside economic gain.

However, the sweeping wave of Liberalization, Privatization, and Globalization (LPG)—driven by the expansion of capitalist economies and accelerated in the late 20th century—undermined these state-controlled, welfarist models of exchange, further consolidating economic power in the hands of monopolistic entities^[3]. The rise of capitalist markets led to the emergence of monopolistic entities that dominated economic activity, severely impacting small startups, poor consumers, and agrarian communities. This economic monopoly contributed to the formation of an economic minority—a class of people disproportionately affected by financial disparities, restricted access to credit and capital, property ownership challenges, occupational segregation, and systemic barriers in employment and policymaking.

In response to this exploitative capitalist framework, these global economic minorities are now seeking an alternative mechanism of exchange—one that is interest-free, state-controlled, and welfarist in nature^[4]. The only system that fully aligns with these criteria is the pre-modern Islamic economic model. Thus, Islamic economic institutions stand as a viable solution for the financially marginalized populations worldwide, offering a model of equitable and ethical economic participation^[5].

Pre-Modern Market Systems

The pre-modern market functioned as a localized, communal space facilitating the exchange of goods and services. These markets were deeply embedded in the socio-cultural fabric of communities, often intertwined with religious, social, and political institutions. Barter systems and periodic markets were key components of this exchange mechanism.

Before the widespread adoption of currency, barter-based transactions dominated, where goods were exchanged based on mutual needs, emphasizing equivalence and fairness^[6]. For instance, an agrarian community might trade surplus grain for tools or textiles.

Additionally, seasonal and periodic markets were common, aligning with agricultural cycles or religious festivities. In medieval Europe, fairs and festivals served as key trading hubs, fostering both economic and social interaction. Similar systems were present in the Islamic world and other pre-modern societies.

Unlike contemporary profit-driven capitalist markets, pre-modern markets primarily served as mechanisms for the exchange of essential goods and services rather than instruments of private accumulation. These markets were shaped by cultural, social, and ethical norms, minimizing economic marginalization and wealth disparity. Socioeconomic status was often determined by communal roles rather than material wealth alone.

Pre-modern markets, particularly in Islamic societies, were guided by Sharia principles, which emphasized fair trade and ethical business conduct. Monopolistic practices and price manipulation were discouraged, and local authorities actively regulated markets to ensure equitable distribution. The Hisba system^[7], led by market inspectors (Muhtasib), played a crucial role in enforcing ethical trade, protecting both consumers and smaller traders.

Markets were local in nature, relying on proximity and personal relationships. Trust and reciprocity were fundamental, as trade was often conducted among acquaintances or within tightly-knit networks^[8]. Unlike today's globalized economy, these markets thrived on direct interactions, ensuring economic inclusivity and stability.

Pre-modern markets prioritized sufficiency over surplus. While wealth accumulation existed, it was not the primary driving force of economic activity. Trade was regulated to ensure equitable wealth distribution, preventing extreme economic disparities. Religious and moral norms further reinforced welfarist economic principles, ensuring that markets served both individual and communal well-being^[9].

Contemporary Capitalist Social Structure

The emergence of capitalism, particularly after the Industrial Revolution, radically altered the role and function of markets. Contemporary markets are operated within a framework defined by the concept of supply and demand. Consequently, the ominous advent of capitalism inspired by the industrial revolution, markets evolved into profit-maximizing less-state control systems. This shift introduced systemic inequalities, where wealth concentrated in the hands of a few, exacerbating economic marginalization. For example, the Gini coefficient, a measure of ‘income inequality’, developed by Italian statistician and demographer, Corrado Gini in 1912, outlines the disparity between the rich and the poor in contemporary capitalist societies, with some countries, for example, South Africa, with a Gini coefficient above 60%, experiencing extreme economic divides.^[10]

Modern capitalism's emphasis on individual profit and competition has led to the exclusion of those unable to participate fully in market systems, such as marginalized farmers, small-scale artisans, and indigenous communities. In India, rural farmers – nearly 58% of the workforce^[11] – struggle with debt cycles due to limited access to fair credit systems, exacerbating their economic marginalization. Globally, 1.4 billion^[12] people remain unbanked, unable to access basic financial services, disproportionately affecting women and minorities. Thus, while pre-modern markets fostered inclusivity and community, the transformation into capitalist systems has intensified the creation of economic minorities, often sidelining vulnerable populations.

Every entity used to dress up some unique characteristics by which its identity gets an optimum shape. Monetary economics, global financial markets, corporate dominance, globalization, consumerism, systemic inequalities, and exploitation are the defining features of the contemporary capitalist framework. This system prioritizes profit maximization over the welfare and socio-economic stability of vulnerable populations, especially in developing nations.

The excessive focus on shareholder returns often disregards the plight of marginalized groups, disproportionately burdening the global South with unmanageable debt. For instance, developing countries collectively face over $9 trillion in external debt, with annual repayments exceeding $400 billion,^[13] straining their resources and perpetuating dependency. Income and wealth disparities are stark: the wealthiest 1% control nearly 50% of global wealth, while 1.3 billion people live in extreme poverty, subsisting on less than $1.25 a day.^[14]

Modern financial systems, centered around fiat currency, have supplanted barter systems, with global financial markets valued at approximately $100 trillion in 2024. International trade, worth $32 trillion annually, integrates economies, but often reinforces unequal dependencies through complex global supply chains. Multinational corporations dominate the economic landscape, with the world’s top 500 companies generating over $40 trillion in revenue in 2024^[15], equating to the GDPs of many nations. These corporations, alongside global advertising spending of $860 billion in 2023, drive consumerism, creating artificial needs instead of addressing existing ones.

Furthermore, digital platforms like Amazon and Alibaba have pushed e-commerce to $5.7 trillion in 2024^[16], centralizing market power and further entrenching inequalities. Ultimately, this system exacerbates disparities while burdening third-world nations – referred to as ‘economic minorities – with cycles of debt and systemic exploitation, ensuring that wealth and power remain concentrated within the capitalist framework.^[17]

Approaches For Social-Centric Markets in Modern Times^[18]

Due to the absence of the human-centric welfarist ethical principles, we can’t totally deny the advancements and prevalence of the contemporary mechanisms of exchange in the markets. If not completely, unlike the pre-modern market, the capitalist mechanism of exchange also offers several social and environmental advantages. Therefore, Community-centric, Sustainable Practices, Ethical Regulation, Resilience and Stability, Focus on Basic Needs, and Reduction in Inequalities are some of most notable logical approaches that potentially make the modern markets the social-centric entity.

Pre-modern markets were grounded in social relationships and community well-being. Unlike the impersonal, profit-driven nature of capitalist markets, they fostered trust, reciprocity, and mutual aid. Likewise, pre-modern markets prioritized local production and consumption, minimizing the environmental impact of trade. In contrast, modern markets contribute to ecological degradation, with global supply chains responsible for 60% of carbon emissions.^[19]

Religious and moral principles guided market transactions in the pre-modern era, ensuring fairness. Contemporary capitalist markets often prioritize profits over ethics, as seen in labour exploitation, environmental harm, and aggressive marketing of harmful products. Localized, diversified economies in the pre-modern era were less vulnerable to global shocks.

Modern markets, while efficient, are prone to crises, such as the 2008 financial meltdown,^[20] which caused a 10% contraction in global GDP.^[21] pre-modern markets primarily addressed essential needs, whereas capitalist markets often prioritize luxury goods and services, perpetuating consumerism and resource depletion. The absence of excessive wealth accumulation in pre-modern systems contributed to more egalitarian societies. Contemporary capitalism has created stark disparities, with billionaires’ wealth increasing by over $5 trillion during the COVID-19 pandemic alone.^[22] 

Conclusion

The evolution of markets from the pre-modern era to the contemporary capitalist structure reflects broader shifts in societal values, priorities, and economic systems. While modern markets have enabled unprecedented growth, innovation, and connectivity, they also perpetuate inequality, environmental degradation, and social alienation. In contrast, pre-modern market mechanisms, rooted in community, ethics, and sustainability, offer valuable lessons for creating a more equitable and resilient economic system.

Because the economic minorities across the third world nations who get deprived of myriads of socio-economic advantages and opportunities for them and their forthcoming generation await ‘an alternative’ economic system which will work for the "general good" not an individual profit-generating principle like modern capitalist markets do. Nowadays, the entire ‘economic minority’ is compelled and burdened by the current anti-poor capitalist economic monopoly only because of the absence of this alternative economic system at their disposal.

Therefore, Islamic economic systems^[23] qualify all the potentials to take charge as a leading pathway of ‘that alternative’ as it schemes - interest-free, state-controlled, anti-poor initiatives based on public welfare and common good - which are the quintessential demands of the global economic minority. While the pre-modern markets lacked the scale and efficiency of modern capitalism, their emphasis on fairness, sustainability, and community well-being provides a model for rethinking contemporary market practices. Balancing the innovations of capitalism with the ethical and communal principles of pre-modern markets could pave the way for a more inclusive and sustainable economic future.

About the author: 

Nairul SK is a PG research scholar at Darul Huda Islamic University, (Dept. of Islamic Economics and Finance), Kerala, India, and Graduate in B.A Political Science Hons IGNO University, New Delhi. His research areas include Islamic Economics and Finance, Political Science, Islamic Studies, the Study of Organizational Behavior, and Anthropology.

Reference:

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Dambisa Mayo. 2009. Dead Aid. New York: Farrar, Straus and Giroux

William Easterly. 2001. The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics. MIT Press.

Yunus, Muhammad. Banker to the Poor: Micro-Lending and the Battle Against World Poverty. New York: PublicAffairs, 2007.

Pereda M, Zurro D, Santos JI, Briz I Godino I, Álvarez M, Caro J, Galán JM. Emergence and Evolution of Cooperation Under Resource Pressure. Sci Rep. 2017 Mar 31; 7:45574. doi: 10.1038/srep45574. PMID: 28362000; PMCID: PMC5374527.

García, Juan Carlos Moreno, ed. Markets and Exchanges in Pre-Modern and Traditional Societies. Vol. 1. Oxbow Books, 2021. https://doi.org/10.2307/j.ctv24q4zf5.

Vaghela Dharini Ishvarsinh (2014), “New Economic Policies:  Liberalization, Privatization, Globalization” Journal of Social Sciences Year-2, Issue-5

De la Fuente Stevens, Diego, and Panu Pelkonen. "Economics of Minority Groups: Labour-Market Returns and Transmission of Indigenous Languages in Mexico." World Development 162 (February 2023): 106096. ScienceDirect. https://doi.org/10.1016/j.worlddev.2023.106096.

Al-Daghestani, Sami. The Making of Islamic Economic Thought: Islamization, Law, and Moral Discourses. Cambridge: Cambridge University Press, 2022. Online publication date: November 2021. Online ISBN: 9781108990813. https://doi.org/10.1017/9781108990813.

Amartya Sen. 01 April 2019. The Political Economy of Hunger Amartya Sen. 01 April 2019. The Political Economy of Hunger: On Reasoning and Participation. Common Knowledge.

Catalano, Michael, Tanya Leise, and Thomas Pfaff. "Measuring Resource Inequality: The Gini Coefficient." Numeracy 2, no. 2 (July 1, 2009): Article 4. https://doi.org/10.5038/1936-4660.2.2.4.

Mubashir, Muhammad, and Arshad Bhatt. "Indian Agriculture, Farmer and Labour: Issues and Reforms." In Indian Agriculture, Farmer and Labour: Issues and Reforms, 1–15. 1st ed. Bharti Publications. Research Gate

Report: A Data-driven Exploration of Access to Financial Services. Published by World Remit. <https://www.worldremit.com/en/resources/global-financial-inclusion-and-exclusion >

World Economic Forum, in collaboration with Reuters. "$400 billion Debt Burden: Emerging Economies Face Climate Action Crisis." World Economic Forum, April 19, 2024. https://www.weforum.org/stories/2024/04/debt-burden-emerging-economies-face-climate-action-crisis/.

Fortune Report: Global 500.  https://fortune.com/ranking/global500/

Chevalier, Stephanie. May 22, 2024. Global Retail E-Commerce Sales 2014-2027. Statista. https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/ 

Stacey, Erica. "How Much Money Is There in the World." Under30CEO, October 31, 2024. https://www.under30ceo.com.

Sigala, Marianna. "A Market Approach to Social Value Co-Creation: Findings and Implications from 'Mageires' the Social Restaurant." SAGE Journal 19, no. 1 (2019): 27–45. https://doi.org/10.1177/1470593118772208. Alliance University.

Timmermans, Kris. "How Supply Chain Sustainability Helps Unlock Resilience and Growth." Accenture, March 30, 2023. https://www.accenture.com/us-en/insights/supply-chain-operations/supply-chains-key-unlocking-net-zero-emissions#:~:text=Supply%20chains%20are%20the,on%20multiple%20fronts%2C%20including%20sustainability.

Turner, John. "Why Did the Global Financial Crisis of 2007-09 Happen?" Economic Observatory, September 4, 2023. https://chatgpt.com/c/6745bc41-53cc-8011-9ed8-e0b25e117206.

Ten Richest Men Double Their Fortunes in pandemic while incomes of 99 percent of humanity fall. 17 January 2022. OXFAM International. https://www.oxfam.org/en/press-releases/ten-richest-men-double-their-fortunes-pandemic-while-incomes-99-percent humanity#:~:text=Billionaires'%20wealth%20has%20risen%20more,billionaire%20wealth%20since%20records%20began.

Maudoodi, Syed Abul ʻAla. First Principles of Islamic Economics. Edited by Khurshid Ahmad. Leicester: Islamic Foundation, 2011. pp. 45–69. ISBN 9780860374824, 0860374823.

Alkhotob, Imam Taufik. "The Concept of Al Hisbah and Its Implementation in Indonesia in the Perspective of Da'wah." Jurnal Dakwah Risalah Merintis, Da'wah Melanjutkan 6, no. 1 (2023): 33. STID Mohammad Natsir. P-ISSN 2085-4536, E-ISSN 2721-7183.

Note: I reviewed Zaytuna College's website under the qualifications and requirements section, which specified submitting a "writing sample." After consulting with seniors, I learned that any relevant writing sample would suffice. Upon starting my application on November 27, I noted that the application forms instructed applicants for the Islamic Finance concentration to write on the given topics. However, as these topics were not explicitly mentioned in the requirements section earlier, I did not have sufficient time to prepare adequately. Due to limited time, this essay might not fully meet the juries’ expectations. To complement it, I have provided links to some of my previously published works below for further reference.

• Islam and Liberalism: The Goods and the Evils – A Comparative Analysis
• ‘Anti-Zionism Is Anti-Semitism’: A Propagandist Argument to Defend Israel’s Criminal Offences
• Prophet Muhammad’s Political Philosophy. Part 1 and Part 2

Citations

[1] Pereda M, Zurro D, Santos JI, Briz I Godino I, Álvarez M, Caro J, Galán JM. Emergence and Evolution of Cooperation Under Resource Pressure. Sci Rep. 2017 Mar 31; 7:45574. doi: 10.1038/srep45574. PMID: 28362000; PMCID: PMC5374527.

[2] García, Juan Carlos Moreno, ed. Markets and Exchanges in Pre-Modern and Traditional Societies. Vol. 1. Oxbow Books, 2021. https://doi.org/10.2307/j.ctv24q4zf5.

[3] Vaghela Dharini Ishvarsinh (2014), “New Economic Policies:  Liberalization, Privatization, Globalization” Journal of Social Sciences Year-2, Issue-5

[4] De la Fuente Stevens, Diego, and Panu Pelkonen. "Economics of Minority Groups: Labour-Market Returns and Transmission of Indigenous Languages in Mexico." World Development 162 (February 2023): 106096. ScienceDirect. https://doi.org/10.1016/j.worlddev.2023.106096.

[5] Al-Daghestani, Sami. The Making of Islamic Economic Thought: Islamization, Law, and Moral Discourses. Cambridge: Cambridge University Press, 2022. Online publication date: November 2021. Online ISBN: 9781108990813. https://doi.org/10.1017/9781108990813.

[6] Dr. Abhijit Banerjee & Esher Duflo. 2011. Poor Economics: Rethinking Poverty and the Ways to End It. Penguin Books, Penguin Random House India. p.2-3.

[7] Alkhotob, Imam Taufik. "The Concept of Al Hisbah and Its Implementation in Indonesia in the Perspective of Da'wah." Jurnal Dakwah Risalah Merintis, Da'wah Melanjutkan 6, no. 1 (2023): 33. STID Mohammad Natsir. P-ISSN 2085-4536, E-ISSN 2721-7183.

[8] Amartya Sen. 01 April 2019. The Political Economy of Hunger Amartya Sen. 01 April 2019. The Political Economy of Hunger: On Reasoning and Participation. Common Knowledge.

[9] Alkhotob, Imam Taufik. "The Concept of Al Hisbah and Its Implementation in Indonesia in the Perspective of Da'wah." Jurnal Dakwah Risalah Merintis, Da'wah Melanjutkan 6, no. 1 (2023): 33. STID Mohammad Natsir. P-ISSN 2085-4536, E-ISSN 2721-7183.

[10] Catalano, Michael, Tanya Leise, and Thomas Pfaff. "Measuring Resource Inequality: The Gini Coefficient." Numeracy 2, no. 2 (July 1, 2009): Article 4. https://doi.org/10.5038/1936-4660.2.2.4.

[11] Mubashir, Muhammad, and Arshad Bhatt. "Indian Agriculture, Farmer and Labour: Issues and Reforms." In Indian Agriculture, Farmer and Labour: Issues and Reforms, 1–15. 1st ed. Bharti Publications. Research Gate

[12] Report: A Data-driven Exploration of Access to Financial Services. Published by World Remit. <https://www.worldremit.com/en/resources/global-financial-inclusion-and-exclusion >

[13] World Economic Forum, in collaboration with Reuters. "$400 Billion Debt Burden: Emerging Economies Face Climate Action Crisis." World Economic Forum, April 19, 2024. https://www.weforum.org/stories/2024/04/debt-burden-emerging-economies-face-climate-action-crisis/.

[14] Mubashir, Muhammad, and Arshad Bhatt. "Indian Agriculture, Farmer and Labour: Issues and Reforms." In Indian Agriculture, Farmer and Labour: Issues and Reforms, 1–15. 1st ed. Bharti Publications. Research Gate

[15] Fortune Report: Global 500.  https://fortune.com/ranking/global500/

[16] Chevalier, Stephanie. May 22, 2024. Global Retail E-Commerce Sales 2014-2027. Statista. https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/ 

[17] Stacey, Erica. "How Much Money Is There in the World." Under30CEO, October 31, 2024. https://www.under30ceo.com.

[18] Sigala, Marianna. "A Market Approach to Social Value Co-Creation: Findings and Implications from 'Mageires' the Social Restaurant." SAGE Journal 19, no. 1 (2019): 27–45. https://doi.org/10.1177/1470593118772208. Alliance University.

[19] Timmermans, Kris. "How Supply Chain Sustainability Helps Unlock Resilience and Growth." Accenture, March 30, 2023. https://www.accenture.com/us-en/insights/supply-chain-operations/supply-chains-key-unlocking-net-zero-emissions#:~:text=Supply%20chains%20are%20the,on%20multiple%20fronts%2C%20including%20sustainability.

[20] Turner, John. "Why Did the Global Financial Crisis of 2007-09 Happen?" Economic Observatory, September 4, 2023. https://chatgpt.com/c/6745bc41-53cc-8011-9ed8-e0b25e117206.

[21] Turner, John. "Why Did the Global Financial Crisis of 2007-09 Happen?" Economic Observatory, September 4, 2023. https://chatgpt.com/c/6745bc41-53cc-8011-9ed8-e0b25e117206.

[22] Ten Richest Men Double Their Fortunes in pandemic while incomes of 99 percent of humanity fall. 17 January 2022. OXFAM International. https://www.oxfam.org/en/press-releases/ten-richest-men-double-their-fortunes-pandemic-while-incomes-99-percent humanity#:~:text=Billionaires'%20wealth%20has%20risen%20more,billionaire%20wealth%20since%20records%20began.

[23] Maudoodi, Syed Abul ʻAla. First Principles of Islamic Economics. Edited by Khurshid Ahmad. Leicester: Islamic Foundation, 2011. pp. 45–69. ISBN 9780860374824, 0860374823.