Incentives are anything that motivates or encourages someone to do something. Generally, there are four types of incentives; material, coercive, moral and spiritual. Material incentive is when people expecting material rewards for any action that they do. For example, a person might do a tiresome job just to get wages in return. So the wages is the material incentive for the person. In Islam however, material incentive will only be the tools and means in achieving the goals, not as a goal itself. Material success somehow can be deceiving because it depends on the individuals on how the going to let the material incentive to drive them in achieving the goals. Next is moral incentive, it is an incentive when people regard a particular action as a right thing to do, or it is admirable or if they do not this certain thing, people will look down at them. People will usually do an action under moral incentive just because they do not want to receive any criticism from the community. The third incentive is spiritual, this is an incentive related to one’s belief, faith or religion. For example, in Islam, riba’ is haram, for some people they may avoid themselves from involving in any transaction related to interest even though such action had been normalized in the modern era because their faith had restricted them from doing so. Last but not least, coercive incentive is an incentive where people are expecting a punishment when they fail to perform one action. For instance, driver of a car would not move forward when the traffic light turns red because other than they want to avoid themselves from getting into an accident, they also know that they will get a ticket for not obeying the traffic rules.

In capitalism, people are rewarded based on their contribution to economic activities or also known as functional distribution. From this, we can see that the main incentive used in Capitalism is the material incentive. People’s contributions in the market are due to the assurance of material return according to their contribution. Other than that, Capitalism also applied the moral and coercive incentives in their market activities. Spiritual incentive is absent in Capitalism because they are inclined towards the secular view and do not really have any spiritual belief.

Islamic market, on the other hand, combined all four types of incentives in their system. Moral and spiritual incentives are linked to each other because morality or akhlaq is part of the Shari’ah. Spiritual belief is considered as the highest level of motivation in Islam because as Muslim, we believed that every deed must begin with niyyah or intention. The best intention is when we did everything for the sake of getting the blessing of Allah. As for the material and coercive incentives, the Muslim believed in Heaven and Hell as the ultimate place of getting rewards and punishments. In this case, Heaven will become the material incentive while Hell will be the coercive incentive for them.