1-Introduction to Islamic Economics

In search of  Islamic Financial  System

Islamic Economic System Chapter 1

Economics System in Islam What is Islamic Economics? What are the principles upon which Islamic  Economy, its monetary and financial systems  function?

 A very short and straight answer

Islamic economics is as old as Islam itself” and Islam is not a religious. 

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It is a complete political, social, financial & economic system for the Islamic & Non Islamic Community. Islam is “Deen” that totally differ to the religion because of the definition, depth and details

Islamic Economics For Economists

20th Century Economists define Islamic Economics  Hasan-uz-Zaman Islamic economics is the knowledge and application of injunctions and rules of the Islamic Jurisprudence that prevent injustice in the gaining and disposal of material resources in order to provide satisfaction to human beings and enable them to perform their obligations to Allah and society.

 M. Akram Khan Islamic economics aims at the study of human recovery  achieved by organizing the resources of earth on the  basis of cooperation and participation.

Dr. Najatullah Siddiqui Role of  Shariah  Shariah define the belief of   justice and freedom, cooperation and sharing that are fundamentals to Islamic economic philosophy with the total Islamic system. Key to economic philosophy of Islam lies in man's relationship with Allah, His universe and His people. i.e. other human beings are the nature and purpose of man's life on earth

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Introduction of Islamic economics considered in the dates back to emergence of Islam, Fourteen centuries ago. The concept of economics was establish on the day Adam disobeyed to Allah Almighty 

Theory of Need, Want & Desire establish with Prophet Adam  May Peace Be Upon  Him who who was sent to earth from Haven on the orders of Almighty Allah.

He was senseless to his needs and desires at the time he was created.

Relationship of Allah and Man is being defined as

Tawhid (Oneness of Allah) It is total commitment to the will of   Allah by submission & mission to mould human life in accordance a ccordance  with Allah’s will.

4 Great ways of excepting

Tawhid  

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1st Look back and thank Allah. 2nd Look forward and trust Allah 3rd Look Around and believe Allah

4th Look within you and find Allah

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Life on earth is a test and its purpose is to prove successful by  doing Allah’s willed. For man entire universe with all the natural resources and powers open to exploitation, that Allah owns it alone. Life on earth is a test and provisions available to man being in the nature of trust.

Islam & Faith

 Almighty Allah is Absolute Prophet Mohammad  May Allah’s Prayer and Peace be upon  Him, was an executive judge

Holy Quran Is the code of conduct. Islam organize man’s life in its aspects of  political, social or economic.

Islamic Economic is the applications of 

 Deen  Principles of Lifestyle comprises of 

Theory “ The Holy Quran”. Explanation of theory “Hadiath” (saying of Prophet Mohammad  May Peace Be upon Him)

Implementations & practicing

“Sharia” (life of Prophet May Peace Be Upon Him ).

Islamic economics is an independent system, 

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It enjoys a separate identity. It is a self-contained system with its own economic policy, It covers interests at

Private or Public Material or Spiritual.

Islam has given a complete system of lifestyle ,

Earning, Expenditure, Business, Relationship &  Legal Framework . For all bases Islamic Economic emphasis on

Social Justice, Equality, Unity, love, Cooperation, Sharing, Transparencies in all affairs and respect

System that Guard Minorities and Non Muslim Rights in the Islamic State.  Women and Orphan Rights Right of employees Right of Lender and Borrowers Right of everyone without RaceReligion-Language-Color or Sect

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Islamic Economic system is  based on four principles  All wealth belongs to Almighty Allah Man is the trustee of the wealth Hoarding of wealth is prohibited  Wealth must be in circulation at all time

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For any activity and for all purpose, Islamic Economic demands three main principles to be followed by  an individual in his day-to-day  affairs and problems. IJMA (Gathering), QYAS (Discussion)  AMAL (Act).

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Islam specifically considers distribution distribution as economic problem. It differ to application of capitalists & communists system for production. Islam differentiates between basic needs and luxuries It not accept the concept of  effective scarcity of resources.

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Holy Quran identify resources in sufficient, unlimited and number of  qualities to fulfill basic needs like food, clothing and shelter for over fifty billion human beings at all time. Conventional economics misguide this reality with starvation, poverty, & economic backwardness. It resulted from misdistribution, originated by  man-made laws and systems.

The financial matters in the human life play a vital role 

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It identify principles of finance including earnings, income, distribution distribution of wealth & utilization of these same. Matters pertaining to money must  be fare and transparent and useful for developing socio-economic life of the community.

Islamic Economic eliminate monopoly of a group or individual  who 

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Keep a control on world monetary  polices.  Who gets most out of these resources. Blocks wealth to cross their jurisdictions Remain in between privileged society . This is classified as Capitalist form of  Economy that protects the class of  influence and privileged.

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It does not impose any limits l imits on amount of wealth that an individual can acquire. It guides maintaining of wealth in i n proper form of distribution & incentive on work  and efforts. It show opposition & defend against misuse of exploitation in getting hold of   wealth through unfair means. It clearly denies "free" market of  Capitalism, which has led to the situation of survival of the large part of the society.

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In Islamic Economics public revenue from natural resources used to secure needs of  community and not to fill pockets of casino owners.

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State to provide public, essential resources to cover needs of every  individual and family.

It forbids monopolies by  outlawing hoarding of   wealth and eliminating copyright or patent laws that would open avenue for potential monopoly to develop.

It protects the ownership of   businesses and companies by  restricting it only to those who contribute both capital and effort to the company or  business and effectively putting the seal on such concepts as "corporate takeover" from ever  becoming a reality.

It classify wealth in a systematic way that protects rights of  individuals to access  wealth. It protects the society and secures the needs of the people.

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It mandates vital and natural resources as public property while allowing for unlimited access to luxury items. It protect society by  defining certain needs as “prohibited needs” .

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It disregard corrupt man-made systems and protect honor, rights of woman, minor and orphans. It ban all forms of prostitution, pornography or any activities that exploit charms and physical attractiveness of women. It prohibit alcohol, gambling, spiral of corruption, social turmoil and moral devastation

Basic Principles of Islamic Economic The Islamic economy is composed of three basic components The principle of adaptable ownership The principle of economic freedom within a defined limit The principle of social justice.

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Islamic law permits three types of ownership, 

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The individual ownership. The state ownership. The public ownership.

Principle of Economic Freedom  within a Defined Limit 

Islamic law is the source that that prohibits all such social and economic activities that differ to the teaching of Islam and the principles and values that are approved by  Islam. Such social and economical activities fall under the categories of  Riba, like holdings, monopoly, gambling and speculation

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It clearly define principal on which ruler of an estate sworn in for fo r the supervision of general activities and intervene in anti Islamic economic activities. The state must protect and safeguard the public interest through the control on individual freedom in the illegal and non-permitted actions they involve due to which the economic activity of the community and society suffer.

Men have no right to possess unlimited wealth and desire to obtain  wealth by any means and way he may  choose of his like. Right is given to every member of the society by appointing each one is a guardian of the public trust and the ownership is limited for the public  welfare and in the betterment of  mankind.

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The Principle of Social Justice Social justice has two prime principles 

Principle of give-and-take responsibility

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Principle of social balance

Prohibits growth in differences to an extent that few live in extra luxury and rest are deprived of basic necessities of life and forced to live a life of misery, hunger, without shelter, illness and as neglected class of the society.

Tawhid (monotheism) 

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Definite acceptance of Almighty Allah’s relationship with man and man’s believes in supremacy of Almighty Allah with clear vision of  Day  Day of Judgment . The accomplishment of man depends on the  belief and obeying the teaching of Islam and  bringing healthy and peaceful community by synchronizing between morality and the material characteristic of life.

 Ijithad  

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Emphasized the independent legal judgment, effort or ability to figure out rules from sources for carrying out social justice in according to Islamic Economics. Economical and social problems, which can be solved only through Ijithad , particularly issues in regard to which, no clear injunction is available in the Quran, or Sunnah.

Ethics (Moral principles) 

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It is third element for the enforcement of social justice. Islamic economics consider ethics in relation to human lifestyle or religion. Islamic Sharia defines social justice in the Islamic Economic as the pillar of the concept that function with a  valid reason.

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The concept of  Zakat   Zakat and prohibition of  Riba Riba practices in daily life of  Islamic society bring the stability, peace, harmony and social development. It also gives the real value of Money  and defines the state responsibilities for income distribution that are treated as the basic principles of  social justice in society 

Muslim contribute for Economics

Ibn Khaldun Muslim Philosopher, Scholar & Economist. Respected as father of Economic System of all times  Authenticated name in Islam for defining different fields of knowledge, specially science of civilization, Contributed theories and concept in economics that placed him above-board in the history of economic thought as a major predecessor.  Adam Smith accepted him as the "father," of  economics.

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Planted seeds of classical economics in production, supply  and cost

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Pioneered in consumption, demand, and utility, the bases of modern economic theory

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Believer in free market economy.

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Introduced labor theory of value.

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Free economy & for freedom of  choice.  Analyzed relationship of economic study, which are demand, supply, prices and profits First to put seed of modern demand theory which was further developed  by Thomas Robert Malthusian,  Alfred Marshall 

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Logically role of cost of production on supply  and prices Theory of profit as a reward for undertaking risk in a future of uncertainties Concept for traders maximize profits, "Buy cheap and sell valued ," ," Concept of macroeconomics “Theory of Growth”  based based on capital accumulation through man's efforts

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Economic Development through Migration Tax Theory in history  Theory for the best Rate of Taxation Explain advantages of trade among nations through foreign trade with people's satisfaction, merchants' profits, and country’s wealth and how all increased.