Production and social welfare are relative and interdependent functions in macroeconomics. While the productive capacity of a nation is measured by GDP and its derivatives, social welfare requires the consideration of other determinants such as purchasing power, GDP per capita, minimum wages, unemployment rate, and social security payments. The more GDP per person, the higher the government revenues and social security is an important ceteris paribus assumption in open democracies. For wealthy nations, social welfare expenditure has become one of the biggest challenges of governments and a bottleneck in financial management. The financial mechanism of interest vis-à-vis the banking system provides a platform of exploitation of labor by capital owners. The social culture of wealthy people that do not care about the wellbeing of the poor has a tremendous negative effect over social welfare. 

As a requirement and/or indication of social welfare, the upper and lower classes in human society, that is, the rich and the poor, live at peace when in equilibrium. The basis of that equilibrium is compassion and kindness of the upper classes, and respect and obedience in the lower classes. If the upper classes do not oppress and the lower classes obey laws and rules, social welfare will be sustainable. Now, the individualistic attitude of mind that “So long as I’m full, what is it to me if others die of hunger” lacks compassion for the poor. Furthermore, another deleterious attitude of mind, “You work so that I can eat,” provides a basis of exploitation by upper classes. The first ominous phrase has incited the upper classes to practice oppression, immorality, and mercilessness; while the second has driven the lower classes to hatred and envy and has negated man’s tranquility for several centuries. So too this century, the struggle between capital and labor has been the cause of momentous events in Europe well-known by all. Thus,together with all its societies for good works, all its establishments for the teaching of ethics, all its severe discipline and regulations, it could not reconcile these two classes of mankind, nor could it heal the two fearsome wounds in human life. The Qur’an, however, delegitimizes the first phrase with its injunction to pay zakat. While it uproots the second phrase with its prohibition on usury and interest. Indeed, the Qur’anic verse stands at the door of the world and declares usury and interest to be forbidden. 

In capitalist societies people are exposed to negligence in their social and family relationships and excessiveness in both personal consumption and concerns for superficialities. Economic and social relations in capitalist societies are based on a materialistic point of view, resulting in an unequal wealth distribution and inefficient, wasteful use of economic and social capital. Islam stands in the abovemiddle course between capitalist and socialist systems. Islam advocates a wealth distribution mechanism with a view to realizing a society in which there will be accumulation of wealth but not in monopolistic and oligopolistic terms. Usury, hoarding, and profiteering can only be the act of marginal wrongdoers. A society in which the impoverished and wealthy help the poor with their zakat with the proletariat willing to add value to production processes is not far away according to the Islamic point of view. The socio-economic role of Zakat in Islamic social welfare is proven for its effectiveness in combating chronic poverty, hunger, and social hindrances in society. It is understood that Zakat provides a sustainable mechanism in the economy and social balance of societies, to provide transfer of income from the rich to the poor serving as a bridge between the bottom and the top. Once aptly assessed, efficiently collected, and fairly distributed, it plays the role of solving dangerous socio-economic problems such as poverty, class tensions, unemployment, insurgency, indebtedness, and unfair income distributions. 

Our argument is that since the Islamic religion is valid and pervasive, its economic assumptions, requisites, and results should be more congruent, logical, and beneficial in providing human happiness and easing the burden of worldly life. Whereas the Western style subjugates everything that can serve material progress and capital accumulation as the means of production or productive relations. Islamic philosophy takes the worldly life only as a temporary place but worthwhile to the extent that it preserves life; therein, production is a process that excludes whatever is harmful to humanity and nature, economic growth takes environmental issues and revenue distribution into account and social welfare is not simply synonymous with the capital accumulation of wealthy people, but rather embraces distribution to all people in society.