Research & Written

YOUSUF IBNUL HASAN

Program Consultant Islamic Banking & Applied Finance

IQRA University Pakistan

Design by

SAIRA ALI Student MBA Program 2010-2014

IQRA UNIVERSITY

Islamic Economics is a system that defines the available

resources blessed by Almighty Allah to the mankind.

How these resources are utilized and distributed by man

keeping in it, the social justice and seeking best of these

in participation and cooperation by applying,

knowledge, experience, ability and efforts through the

power of pen and book, granted by Almighty Allah,

recognizing and in confirmation the status of men as

“Unique among all creations” and appointing as

“Custodian” to all the resources, that Almighty Allah

owns it alone and absolute.

WHAT IS ISLAMIC ECONOMICS?

WHAT ARE THE PRINCIPLES ON WHICH ISLAMIC ECONOMY,

ITS MONETARY AND FINANCIAL SYSTEMS FUNCTION?

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ECONOMICS IS AS OLD AS ISLAM ITSELF”.

Islam is not a religion. It is a complete political, social,

financial & economic system for Islamic & non Islamic

communities without discrimination with freedom of

choice and speak within define limits.

Islam is “Deen”. It totally differs to the religions because

of the definition, depth and details.

Deen is interpreted as a “Lifestyle”.

The principles of Deen are comprehensively guided in

Holy Quran, explained in Hadiath and practice by Holy

Prophet Muhammad May Peace Be upon Him as

Sharia’h” 3

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ALMIGHTY ALLAH IDENTIFIED

Aims, Objectives, Purpose, Way & Means

of

Islamic Economics

“READ (IQRA) in the name of your Lord, who

has created you with the clot of frozen blood and

taught you with the power of pen …………….

The word READ opens the chapter of an Islamic

Economics; in4

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RATIONAL

EFFORTS

APPLICATION

DESCRIPTIVENESS

READ

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20TH CENTURY ECONOMISTS DEFINE

ISLAMIC ECONOMICS

Hasan-uz-Zaman

Islamic economics is the knowledge and application of

injunctions and rules of the Shari'ah 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.

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.

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Dr. Nejatullah Siddiqi

Role of Shariah define belief in justice and freedom, cooperation and sharing which are

the fundamentals to Islamic economic philosophy within the total Islamic system.

Key to Islamic economics philosophy lies in man's relationship with Allah, his universe and his people. The other human beings are

the nature and purpose of man's life on earth.

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CONCEPT OF ECONOMICS

Established on the day Adam

Adam was senseless to his needs & desires upon his

creation. He disobeyed Allah Almighty on the

temptation of IBLEES (devil).

Adam’s act of disobedience created principles of economics

that revolve around

Theory of Need, Want and Desire that lead to

Act, Acquire and Accept

Prophet Adam (May Peace Be Upon Him) was sent to

earth to develop mankind with a system of life that give

birth to Natural Economics.

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DEFINITION OF ISLAMIC

ECONOMICS

“Any activity that has a commercial,

economical and financial purpose with the

priority of social benefit to mankind is

classified as

Islamic Economics The system that has the foundation on this

classification leads to socio- economic

development and not just the economic

development.”9

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BASE OF ISLAMIC ECONOMICS

Resources are unlimited and efforts are limited.

Needs and wants does not effect on the supply or resources.

Availability of resources depend on efforts that increase

affordability which is the force for satisfying needs.

Nations using their efforts in achieving knowledge and

apply it in seeking rights are leaders of economic growth.

Nation merges economics growth with socio development

are the genuine Communities and such states are

For the People, By the People, & Of the PeopleThis Socio Economics Development converts

Peoples into Nations.10

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ISLAMIC ECONOMIC REGARDS

THREE FACTORS OF PRODUCTIONS.

Man, Money &Commodity

MAN

MONEYCOMMODITY

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RELATIONSHIP OF ALLAH & MAN

TawheedOneness of Almighty Allah

Total commitment to the will of Allah by submission & the mission to mould human life in accordance with

Allah’s will”.

4 Great ways to except Tawheed1st….. Look back and thank Allah.

2nd……. Look forward and trust Allah

3rd……… Look Around and believe in Allah

4th………. Look within yourself and find Allah

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Life on earth

Is a test and its purpose is to prove successfully by doing

Allah’s willed. For man entire universe with all natural

resources and powers are opens to exploitation, which

Allah owns it alone. Provisions are available to man being

the nature of trust.

Islam & Faith

Almighty Allah is absolute & Prophet Mohammad Peace be upon Him,

was an executive judge. Holy Quran is the code of conduct.

Islam organizes

Man’s life in its aspect of political, social, commercial, legal,

ethical, financial, monetary and in economy.

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ISLAMIC ECONOMICS

Application of Deen

(Principles of Lifestyle).

Through the Theory “The Holy Quran”

By the explanation of theory “Hadiath”

&

Practice & Implementation

“The glorious Shariah”14

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ISLAMIC ECONOMICS IS AN

INDEPENDENT SYSTEM

It enjoys a separate identity.

It is a self-contained system with its own

economic policy,

It covers interests at Private and Public as well

as Material or Spiritual.

It has given a complete system of lifestyle,

Earning, Expenditure, Businesses, and

Relationship with Legal Framework.

It emphasizes for all bases on Social Justice,

Equality, Unity, love, Cooperation, Sharing,

Transparencies in all affairs and respect.15

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Islamic Economics System guards

Rights of minorities and non-Muslims in the Islamic

state.

Rights of Women and Orphan’s.

Rights of employees.

Rights of Lenders and Borrowers.

Rights of everyone without Race-Religion-Language-Color

or Sect.

Islamic Economics 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 time16

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Three parameters for day-to-day affairs and

problems

IJMA(GATHERING)

QIYAS(DICUSSIO

N)

AMAL(ACT)

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WHAT ISLAMIC ECONOMIC BELIEVE

Islamic Economics is specifically believe distribution as an

economic problem.

It differ application to capitalist & communist systems for

production.

It differentiates between Basic Needs & Luxuries.

It does not accept concept of effective scarcity of resources.

It does not accept concept of inflation

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The Holy Quran identifies resources

Sufficient, Unlimited & in Qualities

Fulfilling the basic needs like

Food, Clothing & Shelter

For over Fifty Billion Human Beings at all time.

Conventional economicsmisguides this reality with starvation, poverty,

& economic backwardness because of misdistribution originated from man-made

laws and systems.

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MAN & MONEY IN ISLAMIC ECONOMICS

Money matters in human life play a vital role

Money matters identify principles of it affairs including

earnings, income, distribution of wealth & its utilization.

Matters pertaining to money must be fair, transparent &

useful for developing socio-economic life of community.

Islamic Economics eliminate monopoly of an individual,

group or an organization who keeps a control on world

monetary policies and gets most out of these resources

by blocking wealth, crossing their jurisdictions

It does not impose limits on amount of wealth that an

individual can acquire.20

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ISLAMIC ECONOMICS SYSTEM GUIDANCE

Guides in maintaining of wealth in a proper form of

distribution and define incentives for work and efforts.

Shows opposition & defends against misuse of exploitation

in getting hold of wealth through unfair means.

Denies clearly "free" Market of Capitalism, which has led

to the situation of survival of a part of the society.

Emphasizes public revenue from natural resources

should be use to secure needs of community and not to fill

pockets of casino owners.

Encourages state to provide public, essentials, utilities

and resources to cover needs of citizens in justified way.

Outlaw hoarding of wealth and eliminate copyright or

patent laws that open an avenues for developing potential

monopoly. 21

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ISLAMIC ECONOMIC SYSTEM

Protects ownership of businesses & companies by restricting it only to those who contributes both capital or effort

Effectively puts a stop on concepts "corporate takeover" from becoming a reality.

Classifies wealth in a systematic way to protect rights of individuals to access wealth.

Protects the society and secures the needs of the people.

Mandates vital and natural resources as public property while allowing for unlimited access to luxury items.

Protects society by defining certain needs as a “prohibited needs”.

Disregards corrupt man-made systems and protects honor, rights of woman, minor and orphans.

Bans all forms of prostitution, pornography or any activities that exploit charms and physical attractiveness of women.

Prohibits alcohol, gambling, spiral of corruption, social turmoil and moral devastation

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BASIC PRINCIPLES OF ISLAMIC ECONOMICS

Principle of adaptable ownership

Principle of economic freedom within a “defined limit”

Principle of social justice.

FIRST PRINCIPLE

Three types of ownerships are permitted ;

The individual ownership.

The state ownership.

The public ownership.

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SECOND PRINCIPLE

Economic Freedom within a Defined Limit

Islamic law prohibits all such social and economic

activities that differ to the teachings of Islam and its

principles and values. Such social, economical and

commercial activities fall under the category of Riba

It defines the principles on which ruler sworn for

supervision of general activities intervenes in any anti

Islamic economic activities.

It guides State to protect and safeguard 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.

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ECONOMICS FREEDOM IN DEFINE LIMITS

Men have no right to possess unlimited wealth and

desire to obtain wealth by any means and way he may

choose.

Right is given to every member of the society by

appointing each one as a guardian of the public trust

and the ownership is limited for the public welfare and

for the betterment of mankind.

THIRD PRINCIPLE:

Social Justice in Islamic Economics

To give-and-take responsibility

To keep social balance

Prohibits growth in differences 25

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IT GIVE SOCIAL BALANCE

i.e. few live in extra luxury and rest were 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.

DIFFERENCE

Tawhid (monotheism)

Definite acceptance of Almighty Allah’s relationship with

man and man’s believes in supremacy of Almighty Allah

with clear vision on Day of Judgment.

The accomplishment of man depends on the belief and

obeying the teachings of Islam and bringing healthy and

peaceful community by synchronizing between morality

and the material characteristic of life.

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IJTEHAD

Emphasize on independent legal judgment, effort and

ability to figure out rules from sources that carry out social

justice in accordance with Islamic Economics.

Economical and social problems can be solved only through

Ijtehad, particularly issues in regard to which, no definite

injunction is available in the Quran, or Sunnah.

ETHICS

It is third element for the enforcement of social justice.

Islamic economics considers ethics in relation to human

lifestyle or religion.

Islamic Sharia’h defines social justice in Islamic Economic

as the pillar of the concept that functions with a valid

reason.

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ETHICS

The concept of Zakat and prohibition of practicing of

Riba in the daily life of an Islamic society.

The contribution of Zakat and elimination of Riba

develop stability, peace, harmony and social

economics development.

It gives the real value of Money as money to be

respected instead to be loved.

It defines the state responsibilities for income

distribution and take this responsibility as the basic

principles towards the social justice

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