Week2 Definition of Islamic Economics

Definition of Islamic Economics

Aris Hassama

What if?

• The resource is not scarce

• And human desire is never end

• So what should be the definition of economics?

Definition of Islamic Economics

• Ibn Khaldun (Al-Muqaddimah): “The study of human efforts in obtaining resources and using them, through exchange, for the fulfillment of necessities, need, and refinements as well as for the propose of acquisition”

• Hasanuz Zaman: “The knowledge and application of injunctions and rules of the Shariah that prevent injustice in the acquisition and disposal of material resources in order to provide satisfaction to human beings and enable them to perform their obligations to Allah and the society”

Definition of Islamic Economics

• Zaidan Abu al Makarim: “The science that deals with wealth and its relation to man from the point of view of the realization of justice in all forms of economic activities”

• Muhammad Akram Khan: “Islamic economics aims at the study of human falah achieved by organizing the resources of the earth on the basis of cooperation and participation”

Khan’s Definition of Islamic Economics

• Islamic economics aims at the study of human falah achieved by organizing the resources of the earth on the basis of cooperation and participation

Poll

What is the meaning of falah?

• successful

• survival

• freedom from want

• glory

• power

Open Ended

Find me the ayah that mentioned about falah.

Falah in Economics

• Infaq: Spending on others to seek God's pleasure

• Riba: Prohibition of Interest 

• Amanah: Fulfillment of Covenants and Trusts

• Adl: Justice

• Enterprise by seeking His bounty

Organizing resources

• In Islam, God has created these resources for all human beings and has made man their trustee. God would like man to use these resources to achieve falah.

• Man is not the real owner of these resources. So he is not free to use as he like. He needs directions.

• God has created sufficient resources for His creatures (41:10)

• Therefore the apparent scarcity of resources may be due to improper use or imbalanced distribution.

• The word adequacy is prefer to scarcity. 

Open Ended

Tell me "what are the lessons that you get from this ayah?"

Indeed, your Lord is Allah, who created the heavens and earth in six days and then established Himself above the Throne. He covers the night with the day, [another night] chasing it rapidly; and [He created] the sun, the moon, and the stars, subjected by His command. Unquestionably, His is the creation and the command; blessed is Allah, Lord of the worlds. (7:54)

Open Ended

Tell me "what are the lessons that you get from this ayah?"

Do they distribute the mercy of your Lord? It is We who have apportioned among them their livelihood in the life of this world and have raised some of them above others in degrees [of rank] that they may make use of one another for service. .... (43:32)

The basis of cooperation and participation

• Allah created us to be different in order to work together on the basis of cooperation and participation.

Ethics in Islamic Economics

• Principle of Truth

• Principle of Cleanliness

• Principle of Moderation

• Principle of Benefit

• Principle of Moral

Principle of Truth

• He has only forbidden to you dead animals, blood, the flesh of swine, and that which has been dedicated to other than Allah. But whoever is forced [by necessity], neither desiring [it] nor transgressing [its limit], there is no sin upon him. Indeed, Allah is Forgiving and Merciful.

Principle of Cleanliness

• “Cleanliness is half the faith (Emaan).” [Sahih Muslim]

Principle of Moderation

• And [they are] those who, when they spend, do so not excessively or sparingly but are ever, between that, [justly] moderate

Principle of Benefit

• Maslaha as a derivative concept literarily means benefit or interest which is quite a generic expression. However, when qualified to Maslaha Al Mursala, it means the benefit or interest of the public. In this case the public refers to the majority and this can include the Muslim Ummah and in fact non-Muslims (Lahsasna, 2011).

Principle of Moral

• Islam forbids intoxicants (Al-Qur’an, Al-Baqarah: 219), the meat of dead animals, blood and flesh of swine (Al-Qur’an, Al-Baqarah: 173). In financial services, Islam forbids interest (Al-Qur’an, Al-Baqarah: 276) and gambling (Al-Qur’an, Al-Maida: 90), for instance. On some occasions, even lawful goods become impermissible, such as during the time of fasting (Al-Qur’an, Al-Baqarah: 183). 

• Fasting in Islam is prescribed for Muslims to make them become God-fearing by restraining their desires and achieving moral consciousness.