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ECS10403
* Explain the definition of Islamic economics,
philosophy and methodology of Islamic
economics.
* Explain the source of Islamic economics
* Differentiate between Islamic economics
system and conventional economics system
*
The Economic System
* An economic system is usually defined as a set of
principles that constitutes the framework of the
organization of the economic activity.
* Economic System: It is the set of goals rules and
institutions that society prefers to follow in its
economic life.
* Economic systems are the major repository of the
values and ideals that society wants to live up to in
its Economic life.
*
* There are three parts of an economic system:
i. Economic philosophy
ii. Set of principles
iii. The analytical functioning that determines
the economic
variables
* In
Islamic economic system, it has all these parts but with
different theories and explanations.
*
* Islam established from the very beginning, true
equality and guaranteed the limit of wealth to
every citizen
* It determined an economic balance among
members of society and confirmed principle of
dual ownership.
*
* Islamic economics is “a social science which
studies the economic problems of a people
imbued with the values of Islam” (Mannan
1986, 18)
* Islamic economics is a science that studies the
allocations of resources to create and
distribute wealth for mankind and universe for
the purpose of returning (worshipping) to God
Philosophy Background
* Ownership (the concept of Tawhid)
* Allah is one and every other thing
and subservient to Him
* Belief in the Day of judgment
*
is created
Principles of Islamic Economic
* Allah determines Right and Wrong
* Principles of Uses
* Principles of Moderation
* Principle of Justice
* Economic Freedom
*
Rules of Functioning
* The
role of the rules of the functioning is to operationalize
the principles of Islamic Economics.
* Zakah
* Prohibition of Riba
* Qirad
* Social insurance
* Debt and loans insurance
* Role of the government of the economy
*
* Most economic applications have to be derived from
the main sources of knowledge in Islam i.e the Quran
and the Sunnah
i. hypothesis must be in harmony with the logical
structure of the Islamic paradigm – even in
conventional economics, hard core or protective
belt is accepted without question
ii. explaining rationally – Ilm al-Kalam – God does not
operate in an arbitrary manner
iii. testing – al-Kindi : a scholar should not make
unproven statements
iv. assumptions – must be realistic
*
* The guiding principles of Islamic economics are
derived from the follow sources:
* a) The Qur'an;
* b) The Sunnah of the Prophet (peace be upon him);
* c) Ijma’ and;
* d) Qias
*
* The Qur'an is thus a primary source of Islamic
economics.
* The Qur'an contains general and broad guidelines for
the conduct of human beings.
* On economic matters, too, it provides a set of
fundamental principles to guide human conduct.
* The injunctions of the Qur'an are immutable and
applicable to all societies and are valid for all times
to come.
*
* The sunnah is the speech, action or tacit
approval of the Prophet (SAW) as recorded in
the books of traditions.
* The compilers of these traditions have
analyzed, classified and interpreted the whole
material.
* The literature on traditions of the Prophet
(SAW) covers the entire orbit of life, including
the economic aspect.
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Secondary Sources
*Ijma’
*Collaboration among “mujtahid” to make
a decision.
*Qias
*Make a similarity with similar
characteristic.
* Right to ownership
* Economic freedom
* Monopoly
* Institution of Interest
*
*Microeconomics & Macroeconomics ???
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Thank You