Transcript Islamic Economic System by Muhammad Naeem khan

An ecosystem of (i) economic sciences*, (ii)
natural sciences, (iii) social sciences and (iv)
spiritual sciences for advancement of justice
and human welfare
Founded on “principles” not “interests”
Mohammad Naeem Khan, FCA
Petroleum Economist
Eni Pakistan Ltd
*Science refers to irreversible laws
1
Principles
of Islamic
economic
system
Devine Economic Plan
Malik 2
Wealth is a test
Not related to efforts
Anam 165/Nahal 71
Zumr 49
َ
ْ
َ
ْ
َ
َّ
ُ
‫ق‬
ْ
‫ر‬
‫ل‬
‫ا‬
‫ي‬
‫ف‬
‫ض‬
‫ع‬
‫ب‬
‫ى‬
‫ل‬
‫ع‬
َ
‫م‬
‫ك‬
‫ض‬
‫ع‬
‫ب‬
‫ل‬
‫ض‬
‫َواّللُ ف‬
َ
ْ
ْ
ِ
َ
َ
ٍ
ْ
ِ
ِ
And Allah has made some of you excel others in wealth. (Nahal 71)
َ ‫ض َو َرفَ َع بَ ْع‬
‫ت ِليَ ْبلُ َو ُك ْم ِفي َما آت َا ُك ْم‬
ٍ ‫ض د ََر َجا‬
َ ‫ض ُك ْم فَ ْو‬
ٍ ‫ق بَ ْع‬
ِ ‫ف األ َ ْر‬
َ ‫َو ُه َو الَّ ِذي َجعَلَ ُك ْم َخالَ ِئ‬
And Allah has made you successors in the land and raised some of you above
others in different levels, to test you for what is given to you. (Araf 165)
َ ‫س‬
ُ ‫ان‬
‫ض ٌّر دَعَانَا ث ُ َّم ِإذَا َخ َّو ْلنَا ُه ِن ْع َمةً ِمنَّا قَا َل ِإنَّ َما‬
َ ‫اْلن‬
َّ ‫فَ ِإذَا َم‬
ِْ ‫س‬
ُ
ْ
َ
ُ
ُ
َ ‫ي فِتْنَة َولَ ِك َّن أ َ ْكث َ َر ُه ْم َ ا يَ ْعلَ ُم‬
‫ون‬
‫ه‬
‫ل‬
‫ب‬
‫م‬
‫ل‬
‫ع‬
‫ى‬
‫ل‬
‫ع‬
َ
‫ه‬
‫ت‬
‫ي‬
‫ت‬
‫و‬
‫أ‬
ْ
ِ
َ
ِ
ِ
ٍ
َ
When a man gets in trouble he cries for help of Allah, and when he is
granted favors, he says “I have got it due to my knowledge”. In fact
wealth is a trial but most of people do not know. (Zumr 49)
Mission of Islam (‫)اسالم كا نصب العين‬
Prayer
‫صالة‬
Charity
‫ْكاة و انفاق‬
Fasting
‫روْه‬
Hajj
‫حج‬
Spiritual Power
Economic Power
Piety
Unity
Work (‫)كام‬
‫ما لى جهاد‬
‫)قوت(نفس كا جهاد‬
Output/Resource
‫اجتمائى جهاد‬
‫جانى جهاد‬
Human Welfare
‫انسانيت كى فالح‬
Social System
‫معاشرتى نظام‬
Economic System
Political System
Outcome
(‫)مقصد‬
‫معاشى نظام‬
‫نظام‬
‫سياسى‬
Spiritual System
‫روحانى نظام‬
‫)اسالم كا نصب العين( ‪Target of Islam‬‬
‫‪Belief‬‬
‫مقصد حيات‬
‫‪Good deeds‬‬
‫عمل صالح‬
‫‪Morality System‬‬
‫اقامت صالة )شريعة(‬
‫‪Economic System‬‬
‫اقامت ْكاة )رْق(‬
‫روح كى غْا‬
‫جسم كى غْا‬
‫َّ‬
‫‪Accumulation‬ن ُك ْمَ َ َوع َِملُ‬
‫ُ‬
‫َ‬
‫َ‬
‫ت‬
‫ل‬
‫ا‬
‫ص‬
‫ال‬
‫وا‬
‫م‬
‫وا‬
‫ن‬
‫م‬
‫آ‬
‫ين‬
‫ذ‬
‫ل‬
‫ا‬
‫اّلل‬
‫د‬
‫ع‬
‫َ‬
‫و‬
‫حا ِ‬
‫ِ‬
‫َ‬
‫َّ‬
‫ِ‬
‫ِ‬
‫َّ‬
‫َ‬
‫َ‬
‫‪of‬‬
‫‪Wealth‬‬
‫ُ‬
‫َ‬
‫ْ‬
‫َّ‬
‫َّ‬
‫ُ‬
‫َ‬
‫َّ‬
‫وا‬
‫م‬
‫ا‬
‫ق‬
‫أ‬
‫ض‬
‫ر‬
‫األ‬
‫ي‬
‫ف‬
‫م‬
‫ه‬
‫ا‬
‫ن‬
‫ك‬
‫م‬
‫ن‬
‫إ‬
‫ين‬
‫ذ‬
‫ل‬
‫ا‬
‫ِ‬
‫َ‬
‫ِ‬
‫َ‬
‫ِ‬
‫ْ‬
‫َّ‬
‫ُ‬
‫ْ‬
‫صالَةَ‬
‫ِ‬
‫َّ‬
‫ْ‬
‫ْ‬
‫ُ‬
‫ْ‬
‫ُ‬
‫َ‬
‫َّ‬
‫ال‬
‫ا‬
‫و‬
‫م‬
‫ا‬
‫ق‬
‫أ‬
‫و‬
‫ت‬
‫ا‬
‫ح‬
‫ل‬
‫ا‬
‫ص‬
‫ال‬
‫ا‬
‫و‬
‫ل‬
‫َم‬
‫ع‬
‫و‬
‫ا‬
‫و‬
‫ن‬
‫م‬
‫آ‬
‫ين‬
‫ذ‬
‫ل‬
‫ا‬
‫ن‬
‫إ‬
‫ِ‬
‫ِ‬
‫)منكر(‬
‫ارتكاْ‬
‫كا‬
‫دولت‬
‫َ‬
‫ين ُ ِمن ق ْب ِلهمَّ‬
‫َّ‬
‫‪X‬‬
‫ِ‬
‫ِ‬
‫َ‬
‫َ‬
‫َ‬
‫ِ‬
‫‪‬‬
‫َ‬
‫َ‬
‫ْ‬
‫ْ‬
‫ْ‬
‫َ‬
‫َ‬
‫َّ‬
‫َّ‬
‫َ‬
‫َ‬
‫َ‬
‫َ‬
‫ذ‬
‫ل‬
‫ا‬
‫ف‬
‫ل‬
‫خ‬
‫ت‬
‫س‬
‫ا‬
‫ا‬
‫م‬
‫ك‬
‫ض‬
‫ر‬
‫األ‬
‫ي‬
‫ف‬
‫م‬
‫ه‬
‫ن‬
‫ف‬
‫ل‬
‫خ‬
‫ت‬
‫س‬
‫ي‬
‫ل‬
‫ِ‬
‫ّلل ْ‬
‫ِبا َ ْل َم ْ ْع ُر ِ‬
‫وف ُ َونَ َه ِ ْوا ع َِن ْ َا ْل ُم ِن َك ِر َ‬
‫عاقِبَةُ َ ْاأل ُ‬
‫ِْ‬
‫ور‬
‫م‬
‫َ‬
‫و‬
‫ِ‬
‫ِ‬
‫ِ‬
‫َّ‬
‫َ‬
‫ُ‬
‫ِ‬
‫‪The focus‬‬
‫خ‪of‬‬
‫‪Islamic‬‬
‫‪economic‬‬
‫‪system‬‬
‫هم‪is‬‬
‫‪to‬‬
‫‪stop‬‬
‫‪the‬‬
‫‪lust‬‬
‫‪of‬‬
‫َ‬
‫َ‬
‫ْ‬
‫َ‬
‫َ‬
‫َّ‬
‫َ‬
‫ُ‬
‫َ‬
‫َ‬
‫ف‬
‫و‬
‫ ا‬
‫و‬
‫م‬
‫ه‬
‫ب‬
‫ر‬
‫د‬
‫ن‬
‫ع‬
‫م‬
‫ه‬
‫ر‬
‫ج‬
‫أ‬
‫ل‬
‫ة‬
‫ا‬
‫ك‬
‫الْ‬
‫ا‬
‫و‬
‫ت‬
‫آ‬
‫و‬
‫ْ‬
‫ِ‬
‫ُ‬
‫ْ‬
‫َ‬
‫َ‬
‫ُ‬
‫َ‬
‫ُ‬
‫ْ‬
‫ْ‬
‫ْ‬
‫ِ‬
‫ِ‬
‫َ‬
‫َ‬
‫َ‬
‫َ‬
‫َ‬
‫َ‬
‫َ‬
‫َّ‬
‫َّ‬
‫‪Those‬‬
‫‪who,‬‬
‫‪if‬‬
‫‪We‬‬
‫‪give‬‬
‫‪them‬‬
‫‪power‬‬
‫‪in‬‬
‫‪the‬‬
‫‪land,‬‬
‫‪establish‬‬
‫‪regular‬‬
‫‪prayer‬‬
‫َ‬
‫َ‬
‫َّ‬
‫د‬
‫ع‬
‫ب‬
‫ن‬
‫م‬
‫م‬
‫ه‬
‫ن‬
‫ل‬
‫د‬
‫ب‬
‫ي‬
‫ل‬
‫و‬
‫م‬
‫ه‬
‫ل‬
‫ى‬
‫ض‬
‫ت‬
‫ار‬
‫ي‬
‫ذ‬
‫ل‬
‫ا‬
‫م‬
‫ه‬
‫ن‬
‫ي‬
‫د‬
‫م‬
‫ه‬
‫ل‬
‫ن‬
‫ن‬
‫ك‬
‫م‬
‫ي‬
‫ل‬
‫و‬
‫ِ‬
‫ِ‬
‫ِ‬
‫ِ‬
‫ْ‬
‫َ‬
‫ِ‬
‫َ‬
‫ِ‬
‫ُ‬
‫ُ‬
‫ُ‬
‫ُ‬
‫ُ‬
‫ُ‬
‫َ‬
‫َ‬
‫ْ‬
‫َ‬
‫‪ْ of pleasure – twin‬‬
‫ْ‬
‫‪ُ plagues‬‬
‫‪possession and the lust‬‬
‫‪and give regular charity, enjoin the right and forbid wrong: with Allah‬‬
‫)‪َ 55‬‬
‫‪responsible‬‬
‫)‪fordecision‬‬
‫‪killing‬‬
‫‪the‬‬
‫‪humanity‬‬
‫)‪ْ41‬نُ‪َ (Hajj‬‬
‫‪(Baqra‬‬
‫)‪277‬‬
‫ون‬
‫هم أ َو ْمنً اَا ُه ْم يَ ْح‬
‫عخلَ ْو ْي ِف ِه ْم‬
‫ََ‬
‫‪rests‬‬
‫‪the end (and‬‬
‫‪of‬‬
‫)‪(all‬‬
‫‪affairs.‬‬
‫‪(Noor‬‬
‫‪Distribution‬‬
‫‪wealth‬وا‪of‬‬
‫َ‬
‫َ‬
‫َ‬
‫ال َّ َ‬
‫َّ‬
‫َ‬
‫َ‬
‫وا‬
‫ر‬
‫م‬
‫أ‬
‫و‬
‫ة‬
‫ا‬
‫ك‬
‫الْ‬
‫ت‬
‫آ‬
‫و‬
‫َ‬
‫َ‬
‫ُ‬
‫َ‬
‫ُ‬
‫صالة دولت كى تقسيم َ )معروف(‬
Economic Principles of Islam
Earning Side
‫آمدنى‬
Business
‫بيع‬
Usury
‫ربا‬
Usage Side
‫مصارف‬
Individual (‫ )فرد‬State (‫)حكومت‬
Frugality & Sharing
Distribution
‫عفو‬
‫سدباب تكاثر‬
َ
َ
َ
ُ
ْ
َ
ْ
ُ
َ
َ
َّ‫ت لَعَل‬
ُ
َّ
َ
ُ
َ
َ
ْ
ُ
ُ
‫(ُك ْم‬Hashar
‫م‬
‫ك‬
‫ل‬
‫اّلل‬
‫ن‬
‫بي‬
‫ي‬
‫ك‬
‫ل‬
‫ذ‬
‫ك‬
‫و‬
‫ف‬
‫ع‬
‫ل‬
‫ا‬
‫ل‬
‫ق‬
‫ون‬
‫ق‬
‫ف‬
‫ن‬
‫ي‬
‫ا‬
‫ذ‬
‫ا‬
‫م‬
‫ك‬
‫ن‬
‫و‬
‫ل‬
َ
ِ ‫اّلل‬
َ
ْ ‫َوَوا َيلََّ ِذ‬
ِ
ِ
َ
ُ
ُ
ُ
َ
َ
ْ
َ
َّ
َ
َ
‫ي‬
‫ب‬
‫س‬
‫ي‬
‫ف‬
‫ا‬
‫ه‬
‫ن‬
‫و‬
‫ق‬
‫ف‬
‫ن‬
‫ي‬
‫ ا‬
‫و‬
‫ة‬
‫ض‬
‫ف‬
‫ل‬
‫ا‬
‫و‬
‫ب‬
‫ه‬
‫ذ‬
‫ال‬
‫ون‬
ْ
‫ن‬
‫ك‬
‫ي‬
‫ين‬
ِ
ِ ‫لاآليَا‬7)
َ
َُ ُ ِ
ِ ُْ َ ْ َ َ
ِ ِ ً َ َ َْ ُ َ ْ َ ْ ُ ْ ِ َ َ َّ ‫سأ‬
ِ
ِ
َ
َ
َ
‫ه‬
‫ل‬
‫و‬
‫س‬
‫ر‬
‫و‬
‫اّلل‬
‫ن‬
‫م‬
‫ب‬
‫ر‬
‫ح‬
‫ب‬
‫ا‬
‫و‬
‫ن‬
‫ذ‬
‫أ‬
‫ف‬
‫ا‬
‫و‬
‫ل‬
‫ع‬
‫ف‬
‫ت‬
‫م‬
‫ل‬
‫ن‬
‫إ‬
‫ف‬
َ
ِ
ُ
َ
‫ك‬
‫ن‬
‫م‬
‫ا‬
‫ي‬
‫ن‬
‫غ‬
‫األ‬
‫ن‬
‫ي‬
‫ب‬
‫ة‬
‫ل‬
‫ُو‬
‫د‬
‫ُون‬
‫ك‬
‫ي‬
‫ ا‬
‫ي‬
‫ك‬
ِ
ِ
ِ
َ
(Baqra 279)‫م‬
ُ
ْ
َ
ْ
ْ
َ
ٍ
َ
َ
َ
ِ
ْ
ِ
ِ
ْ
‫ا‬
‫ب‬
‫الر‬
‫م‬
‫ر‬
‫ح‬
‫و‬
‫ع‬
‫ي‬
‫ب‬
‫ل‬
‫ا‬
‫اّلل‬
‫ل‬
‫ح‬
‫أ‬
َ
(Baqra
219)
ْ
َّ
َ
َ
َ
َ
َ
َ
َ
َ
َ
َّ
‫ون‬
‫ر‬
‫ك‬
‫ف‬
‫فَت َبَت‬
ُ
‫علَ ْي َه ِا فِي نَ ِار َج َهنَّ َم فَت ُ ْك َوى ِب َها‬
َ َ ‫ب ُ أ َ ِل ٍيم َيَ ْو َم َ يُ ْح َم َّى‬
‫ا‬
‫ذ‬
‫ع‬
‫ب‬
‫م‬
‫ه‬
‫ر‬
‫ش‬
ُ
ِ
َ
ْ
ٍ
ِ
But
if ask
you
doallowed
not
stop
taking
usury,
then
be ready
for
waris
They
you
how
much
they
should
spend;
Say:
"What
“…
in
order
that
wealth
may
not
become
confined
to
the
Allah
has
business
and
forbidden
usury
َ
َ
َ
ُ
ُ
ُ
ُ
َ
ْ
ْ
َ
ُ
ُ
ُ
َ
ُ
‫ا‬
‫م‬
‫ا‬
‫و‬
‫ق‬
‫و‬
‫ذ‬
‫ف‬
‫م‬
‫ك‬
‫س‬
‫ف‬
‫ن‬
‫أل‬
‫م‬
‫ت‬
ْ
‫ن‬
‫ك‬
‫ا‬
‫م‬
‫ا‬
‫ذ‬
‫ه‬
‫م‬
‫ه‬
‫ور‬
‫ه‬
‫ظ‬
‫و‬
‫م‬
‫ه‬
‫ب‬
‫نو‬
‫ج‬
‫و‬
‫م‬
‫ه‬
‫ه‬
‫ا‬
‫ب‬
‫ج‬
ِ
ُ
ُ
ُ
ُ
َ
ُ
َ
َ
َ
َ
ْ
ْ
ْ
ُ
ْ
ْ
ِ
with
Allah
and
His
Messenger
beyond
your
needs."
Thus
Allah
makes
clear
to
you
His
rich
amongst
you”.
(Baqra 275)
34-35)(Baqra‫ون‬
َ 219)
ُْ ِ‫كُنت ُ ْم ت َ ْكن‬
revelations: In order that you (Tauba
may ponder.
)34(
Islam abhors DEBT and strongly discourages it
1. Prophet (PBUH) said: "Whoever asks for money while he has what
suffices him has asked for a lot of Hellfire's embers." People asked
him, "What is the sufficient amount of money above which one should
not ask?" He said, "The amount he needs for his lunch and dinner."
(Abu Dawud)
2. He also said: "Whoever asks people for their money to increase his
wealth, has asked for embers, so let him ask a little or a lot”.
3. A man came to the Prophet (PBUH) and said, "O Messenger of Allah! If
I was killed in Allah's cause, observing patience, awaiting Allah's
reward, attacking, not retreating, would Allah forgive my sins?" The
Prophet (PBUH) said, "Yes, except for the debt." The Prophet (PBUH)
said, "A believer's soul is attached to his debt till it is paid.“
4. A dead person was brought to the Prophet so that he might lead the
funeral prayer for him. He (PBUH) asked, "Is he in debt?" When the
people replied in the negative, he led the funeral prayer. Another dead
person was brought and he asked, "Is he in debt?" They said, "Yes."
He (refused to lead the prayer and) said, "Lead the prayer of your
friend." Abu Qatada said, "O Allah's Apostle! I undertake to pay his
debt." Allah's Apostle then led his funeral prayer. No. 2154 (Sahih
Bokhari)
Islam prohibits and strongly CONDEMNS
usury or RIBA.
1.
Allah will deprive usury of all blessing, but will increase
benefits of charity" (Baqra 276);
2.
If you do not stop taking usury, then be ready for a war with
Allâh and His Messenger (Baqra 279)
3.
Abdullah ibn Hanjalah related that the Prophet said: A dirham
of Riba (interest) knowingly taken by a man is a sin worse
than committing Zina (fornication) 36 times (Ahmad,
Daraqutni).
4.
Narrated Jabir ibn Abdullah: Allah's Messenger cursed the
accepter of interest and its payer, and one who records it, and
the two witnesses; and he said: They are all equal (Muslim).
5.
Hazrat Abu Hurairah r.a. reported that the Prophet said : A
time will certainly come when none will remain who will not
devour usury. If he does not devour it, its vapors will fall on
him [Ahmed,Abu Dawood,Nisai,Ibn Majah]
Legal System
Spiritual System
Limited Capitalism
Spiritual Socialism
(surplus wealth for personal use)
(human rights on surplus wealth)
Inter-dependent &
Inter-connected (Synthesis)
Restricts luxury &
wealth accumulation
Channels excess
wealth to needy
Immune System
(Regulatory)
Treatment system
(Repair/Maintenance)
Elevating ethical/
spiritual values
Restricting
evils/crimes
Dimensions of
Islamic Economic System
Primary focus of Islam is on the spiritual System (test of Taqwa/free will)
Legal system provides only safety valve for safeguarding basic human rights
Keeping excess wealth and generating income from it is allowed legally but
spiritually is it detested.
Economics: A life blood system of Society
Individual
Distribution
(Arteries)
State
Collection &
Re-distribution
(Veins)
Status of Sources of Income
Labor
+
Ideal
Capital
(Entrepreneurship)
Permitted
Partnership
(Labor + Capital)
Restricted
Land
Prohibited
Distribution Channels (‫)عبادت‬
Compulsory
‫واجبات‬
% of contribution
Marriage payment and
penalties on certain faults
Taxes (‫)تيكس‬
Taxes imposed by state to
provide basic needs of its citizens
Zakat (‫)ْكاة‬
Payable on wealth of individual
Inheritance (‫)وراثت‬
Strictly in accordance with injunction of Quran
Voluntary Charity (‫)انفاق‬
Entire wealth in access of basic needs
Stock Exchange Transactions
Interest based
Trade*
Load taken/given at interest
with security against fully
insured property (margin
financing)
Risk capital investment at
profit/loss + Work + Public
benefit
Gambling
Profit/loss without efforts at the
expense of someone else
*Limited liability is an exclusion
Public Benefits
Does the activity lead to
employment/resource
generation or brings harm to
the public interest
1. Limited liability concept in anti-Islam
2. Primary purpose of the transaction is to make quick money rather than long term
investment
3. Mostly investment is made from loan taken from banks or brokers
4. It is a gambling business (gain at the loss of someone else
5. Short term focus leads to extreme damage of public interest.
Property business (Plots)
Interest based
Trade*
Loan taken/given at interest
with security against fully
insured property (margin
financing)
Risk capital investment at
profit/loss + Work + Public
benefit
Gambling
Profit/loss without efforts at the
expense of someone else
*Limited liability is an exclusion
Public Benefits
Does the activity lead to
employment/resource
generation or brings harm to
the public interest
As per Islamic law house is right of every Muslim. Anyone trying to grab the property for
the purpose of trade/profit making is haram because it is a gamble (profit/loss at the
expense of others) and it is also not a business/trade as it does not lead to any fruitful
business activity which entails hardwork. As a consequence of profit making price of the
property rise and takes it out of the reach of legitimate buyer for building his house
State Financial Crime: Inflation
4,690
Value “Rs”
5,000
4,000
An item costing Rs
100 now costs Rs
4,690 in year 50
@8% inflation rate
3,000
3,192
2,172
2,000
1,479
1,006
1,000
100
147
0
5
216
317
10
15
466
685
0
20
25
Year
30
35
40
45
50
Faceless dragon eating humanity
Islam does not
permit
limitation
of liability. Every
individual is fully
responsible for
his deeds
Resources Credit
‫ْرائ آمدنى‬
‫قرض‬
Judges
Production
‫جج‬
‫بيداوار‬
Corporate
Capitalist Citizen Commerce
Law
(limited liability)
‫قانون‬
‫تجارت‬
(1886)
Trade
Politicians
‫كاروبار‬
‫سياست دان‬
Jobs Media
‫ابالغ مالْمت‬
ُ
ْ
َ
ْ
َ
َ
َ
َ
ْ
َ
َ
ْ
‫ل‬
‫م‬
‫ح‬
‫ي‬
‫ ا‬
‫ا‬
‫ه‬
‫ل‬
‫م‬
‫ح‬
‫ى‬
‫ل‬
‫إ‬
‫ة‬
‫ل‬
‫ق‬
‫ث‬
‫م‬
‫ع‬
‫د‬
‫ت‬
‫ن‬
‫إ‬
‫و‬
‫ى‬
‫ر‬
‫خ‬
‫أ‬
‫ر‬
ْ
‫و‬
‫ة‬
‫ر‬
ْ‫ا‬
‫و‬
‫ر‬
ْ
‫ت‬
‫ ا‬
‫و‬
ْ
ُ
ْ
َ
ِ
ِ
ُ
ْ
َ
َ
َ
َ
ُ
َ
َ
َ
ُ
ِ
ِ
ِ
ِ
ِ
Corporation:
An
ingenious
device
for
obtaining
individual
profit
ْ
َ
َ
َ
َ
َّ
َ
ْ
ْ
َ
َ
‫سبَ ْت‬
‫ت‬
‫ك‬
‫ا‬
‫ا‬
‫م‬
‫ا‬
‫ه‬
‫ي‬
‫ل‬
‫ع‬
َ
‫و‬
‫ت‬
‫ب‬
‫س‬
‫ك‬
‫ا‬
‫م‬
‫ا‬
‫ه‬
‫ل‬
‫ا‬
‫ه‬
‫ع‬
‫س‬
‫و‬
‫ ا‬
‫إ‬
‫ا‬
‫س‬
‫ف‬
‫ن‬
‫اّلل‬
‫ف‬
‫ل‬
‫ك‬
‫ي‬
‫ ا‬
ْ
َ
َ
َ
ْ
ََ
ِ
ُ
َ
َ
ً
َ
ُ
ُ
َ
َ
ِ
ُ
without individual responsibility.
َ‫ َول‬the‫ش ْي‬
(Fatir 18)
َ but
‫ربَى‬aْ ُ‫ق‬duty
‫ان ذَا‬
‫ ْو َك‬to
َ ُ‫ِم ْنه‬
Allah does not impose upon
anyone
Nor can a bearer of burdens bear another's burdens if one heavily laden should
Moto: Profit,
Competition
and for
amorality,
extent
of hisgrowth
ability;&He
gets reward
every good deed,
call another to (bear) his load. Not the least portion of it can be carried (by the
dehumanization,
opposition
to nature.
and
suffers
forhe
every
ill that
he earns. (Barea 286)
other).
Even though
be nearly
related.
Does Islam allow any Banking System?
1. Banks were created for taking public deposit and
lending at interest and investment in treasury
bonds, derivatives, securities etc.
2. Interest is against natural laws. Proper functioning
of natural laws and economy implies a zero rate of
interest
3. Islam detests borrowing even at zero interest rate.
4. Banking was conceived in iniquity (against natural
law) and was born in sin (for the benefit of rich).
5. An interest rate of zero means the end of the
money & banking system.
Three economic modes of Muslims
Moral  Hallal means of living
(Height of
spiritual
living)
 Distribution of entire excess wealth
 Hardy any situation of Zakat
 Simple lifestyle
Legal
 Hallal means of living
Illegal
 No distinction of hallal/harram
(Minimum  Pays Zakat and other compulsory dues
threshold  Charity (infaq) up to the level of Taqwa
of living)  Modest lifestyle
(State of
practical
kufr)
 Does not care to pays Zakat/other dues
 Charity for image building
 Extravagant and luxurious lifestyle
 Stinginess/wealth piling up
Mirror view before/After Implementation
Deprivation
After (Natural Society)
Tyranny
Piety
Savagery
Courage
Cut-throat competition
Happiness
Self-centeredness
Justice
Criminality
Content
Non-contributory
Robbery
Satisfaction
/Contributory
Theft
Chastity
Social Security
Intellect
Racism
Humility
Compassion
Cowardice
Plan
Care of kin
Ignorance
(Surplus Pool)
Affection
Tensions
Sincerity
Fear
Freedom
Hunger
Fortitude
Servitude
Munificence
Debt
Zeal & Endeavor
Threats
Harmony
Exploitation
Before (Savage Society)
Summary of natural economic System of Islam
1. Islamic view is that “real economy” controls, and the money is only a
“supportive function”. Protects labour/work.
2. Stop earning money through money and compels people to work and invest
money in business ventures
3. Eliminates sources of unearned income (interest/speculation)
4. No protection to capital and uses wealth in real economic activities integrated
with physical laws of nature.
5. Collect zakat (wealth tax) no tax on income or consumption.
6. It is responsibility of individuals for meeting needs of poor and social welfare
of society
7. State is responsible for meeting basic needs of citizens and taking
administration/legal measure for checking concentration of wealth in few
hands.
8. Business in Islam is not an grabbing the opportunity but a “Ibadah” covered
under the ethos of Islamic principles of life.
2
Principles
of current
economic
system
Modern Economic Drivers
Government
1.
2.
3.
4.
GDP growth
Free market
Credit
Tax on income/
Consumption
5. Deficit financing
Companies
1.
2.
3.
4.
5.
Sales growth
Money
Credit
Consumerism
Profit
maximization
Individuals
1.
2.
3.
4.
5.
Income growth
Money
Credit
Consumption
Wealth
maximization
“Ownership/Competition”
Short-term approach
Islamic Economic Drivers
1. Economics is a Science of wealth (to teach selfishness). K.K Dewett
2. Economic is made to study “wealth” rather than “welfare”.
1. Earned income (‫)محنت‬
1. Wealth Tax (‫)عبادت‬
Restrictswith:
2.3. Guarantee
basic
Whatever the
economics is concerned with it is not2.
concerned
consumption
human
needs
 Study
of relation of real goods (physical science) and wealth
(monetary (‫)اعتدال‬
3. Distribute surplus
science)wealth
3. Restricting
wealthwelfare
(‫( )عبادت‬of
 Study of relation of material welfare (of individual) and general
accumulation
“Trusteeship/Cooperation”
Long-term approach
humanity).
 Study of relation of “short term needs: and “long-term needs”
Major problem of Humanity:
Operating under incompatible Systems
Matter (‫)ماده‬
Money (‫)دولت‬
Natural (Real) Economy
Financial (Shadow) Economy
Operates under
physical/biological constraints
Organic Resources
‫حياتى اشيا‬
(Manpower, animals, plants)
Inorganic Resources
‫نامياتى اشيا‬
(Natural Resources)
Operates under unconstrained
compound interest rate growth
Taxes (‫)محصول‬
Gov. Deficit (‫ْر‬
‫)افراط‬
Money (‫)كرنسى‬
Credit (‫)قرض‬
Profound change in the underlying dynamics:
•Money and credit rather than goods/services had become the real economy
•Energy and automation has become real contributor rather than manpower and animals
Framework of integrated human ecosystem
External Political &
Economic Conditions
Social
Process
Demography
Technology
Economy
Institutions
Culture
Information
Ecological
Process
Interactions
Human
Systems
‫انسانى قوانين‬
Land use
Land cover
Production
Consumption
Disposal
Natural
Systems
‫فطرى قوانين‬
‫فطرى اور انسانى‬
‫قوانين كا ربط‬
Primary
production
Populations
Organic matter
Nutrients
Disturbances
External Biological, Geological
& Physical Conditions
Biggest tragedy of our time is that modern priests (economists) do
not know that something must be physically possible before it can be
economically possible.
Basic types of growth patterns
Growth
c
natural curve
(natural resources)
linear curve
(machines)
b
exponential curve
(money)
a
Time
U.S. National Debt Clock
US Population
Current Interest Rate
298,342,731
10.0%
Year Outstanding US Debt
1
8,199,252,799,551
25
88,836,493,038,639
50
962,517,279,115,525
75
10,428,591,684,647,000
100
112,990,724,306,816,000
125
1,224,221,272,194,810,000
150
13,264,077,493,871,600,000
175
143,712,379,256,415,000,000
200
1,557,081,369,667,970,000,000
225
16,870,518,770,280,900,000,000
250 182,787,109,988,408,000,000,000
As of 25th January 2006
Debt/Citizen
27,483
297,767
3,226,213
34,955,072
378,727,928
4,103,405,731
44,459,194,462
481,702,298,476
5,219,102,756,246
56,547,443,652,250
612,674,923,822,453
77 times
of national
total now
http://www.brillig.com/debt_clock/
Impracticable (Financing Decisions)
Year
10
200
400
600
800
1000
1200
1400
1600
1800
2000
Kg (Gold, Sliver or any other commodity)
Interest
Rate (8%)
8%
cc
1
1 Kg
4,838,950
in year 1
23,415,433,085,206
Weight
113,306,100,207,918,000,000
of Earth
No of
548,282,506,567,769,000,000,000,000
Kgs in
earths
2,653,111,407,564,170,000,000,000,000,000,000
year 2000
12,838,272,344,326,700,000,000,000,000,000,000,000,000
62,123,752,631,416,000,000,000,000,000,000,000,000,000,000,000
300,613,707,008,236,000,000,000,000,000,000,000,000,000,000,000,000,000
1,454,654,572,742,820,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000
7,039,000,140,947,130,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000
5,972,000,000,000,000,000,000,000
1,178,667,136,796,240,000,000,000,000,000,000,000,000,000
The economist sees economic activity as a function of infinite "money creation",
rather than a function of finite “natural resources".
“Organisations in the West with money to invest, especially those which like to
consider themselves as being ethical, might have rather more to learn from Islam
than is generally acknowledged. By applying the Islamic approach, a lot of human
misery could have been avoided.
Wayne A.M. Visser and Alastair McIntosh
http://www.che.ac.uk/publications/usury.htm
Un-natural (Investing Decisions)
Quantities @10%
120
100 100 100 100 100 100 100 100 100 100 100
100
80
Capitalist Way
62
60
39
40
20
Islamic Way
24
Year 1
Quantities
Year 50
Quantities
15
9
6
4
2
1
0
25
30
35
40
45
50
0
Year 1
5
10
15
20
1. Under discounting system, we need less and less quantities in
future to survive.
2. Under natural system, we need a constant quantity of food to
meet our biological needs
3. Hence, discounting concept is in conflict with nature
3
Outcome of
current
economic
practices
Outcome of modern economic system
َ ‫س ِك‬
‫س ِبي ِل‬
‫ين َوا ْب َن ال‬
‫ت ذَا ا ْلقُ ْربَى َحقَّهُ َوا ْل ِم‬
ِ ‫َوآ‬
ْ
َّ
Explosion of
Explosion of
Explosion
of
َ
َ
ُ
َ Debt
َ Over-supply
‫ان‬
‫ين َكانُواْ ِإ ْخ َو‬
‫يرا ِإ َّن ا ْل ُمبَ ِذ ِر‬
‫ذ‬
‫ب‬
‫ت‬
‫ر‬
‫ذ‬
‫ب‬
‫ت‬
‫ ا‬
‫و‬
ِ
ِ
ْ َ َ
ً ْ Competition
‫كاروبار كا جال‬
‫سودى‬
ُ
َ ‫ين َو َك‬
ُ ‫ترسيل‬
‫ورا‬
‫ف‬
‫ش ْي َط‬
‫اط‬
‫ش‬
َّ ‫انكثرتال‬
َّ ‫اندهى ال‬
ِ َ‫مقابلهي‬
ً ‫ان ِل َر ِب ِه َك‬
ِ ‫باْى‬
*****
)26(
And give to the relatives due and to the
needy and the wayfarer, and do not squander
Explosion
of
Explosion
Explosion
of
wastefully. Surely the squanderers
are theof
Over-utilization
Over-wastage
Over-production
fellows of the devils and the satan
is ever
‫استمال‬to‫كثرت‬
‫ كثرت بيداوار‬ungrateful
his Lord. ‫كثرت ضياع‬
(Isra 26-27)
World Economy at Crossroad
1.
2.
3.
4.
Products
economy
Industrial
Economy
Industrial
Economy
Employment
Real
Economy
Paper
Economy
Economic
Principles
Social
Principles
Primary products economy uncoupled from Industrial Economy
Industrial Economy uncoupled from Employment
Symbol economy disconnected from real economy
Economic principles (self-interest/short term focus) disconnection
from social principles
Modern tragedy of Contradictory Laws
Economic
Laws
Integral
System
"It is well that the people of the nation do not
understand our banking and monetary
system, for if they did, I believe there would
be a revolution before tomorrow morning."
Henry Ford
1. Sixty percent of the
families in America can
maintain their standards
of living for only one
month
2. The next 20% can
maintain it for only three
months.
3. That means that 80% of
the population is living at
an incredibly high level of
economic insecurity
“work-and-spend lifestyle.”
Consumption & Waste Culture
The Earth can no longer support the lifestyle of the cool hunting American-style
consumer. We have sought, bought, spewed and devoured too much, too fast, too
brazenly, and now we're about to pay. Economic "progress" is killing the planet.
(Kellay Lason)
March towards Destruction?
Each U.S citizen
requires energy
of 300 persons
working round the
clock
Lifecycle is no more sustainable
100%
Stacked presentation of
work done over time in
Wood
United States by labor, Domesticated animals, Fuels
as a percentage of Total Horsepower in the Economy
80%
Labor
60%
Oil is capitalism's crack cocaine
6000 products
(Fertilizers &
pesticides!!!!)
40%
20%
0%
Fuel
Domesticated
Animals
Domesticated
Animals
1850
1870
1890
1910
Energy is
now
life blood of
economy
1930
p.79 BEYOND OIL. J. Gever et al. 1991
1950
1970
Importance of Energy
How Much Human Energy Is Contained in One
Barrel of Oil?
***
1 Barrel of Oil = 5,800,000 BTUs
**
1 Barrel of Oil = 23,200 Hours of Human Work Output
Human work cost of 1 barrel of oil
Rate per hour= US$ 8/hour
Total cost= $185,600 per barrel equivalent human
work
Switchover is possible only when the oil cost
increases $185,600/barrel
Or Rupees 70,000/Litre
http://lifeaftertheoilcrash.net/Research.html
Greatest Threat to Life: Food Scarcity
from planting, irrigation, feeding and harvesting,
through to processing, distribution and packaging.
In addition, fossil fuels are essential in the
construction and the repair of equipment and
infrastructure needed to facilitate this industry,
including farm machinery, processing facilities,
storage, ships, trucks and roads
Pesticides (Gas)
FROM THE CAVES, TO THE MOON, TO THE CAVES
Richard C. Duncan, Ph.D. Institute on Energy
and Man, June 27, 1996
Even if the entire mass of the earth were petroleum, it would be exhausted
in 500 years at 5% increase in rate of consumption. For addition 100 year
157 earths would be required (current production is 10 Trillion Ton/year)
Story of Past Rebels
“Tower of Babel”
َ
َ
َ
َ
َ
َ
َ
ْ
َ
ْ
‫علَى‬
َ ‫ي َخا ِويَة‬
‫ه‬
‫ف‬
‫ة‬
‫م‬
‫ل‬
‫ا‬
‫ظ‬
‫ي‬
‫ه‬
‫و‬
‫ا‬
‫ه‬
‫ا‬
‫ن‬
‫ك‬
‫ل‬
‫ه‬
‫أ‬
‫ة‬
‫ي‬
‫ر‬
‫ق‬
‫ن‬
‫م‬
‫ن‬
‫ي‬
ٍ
ِ
ِ
َ
ِ
َ
ْ
َ
ِ ‫فَ َكأ‬
َ ِ
َ
‫شي ٍد‬
ْ َ‫ش َها َو ِبئْ ٍر ُّمعَ َّطلَ ٍة َوق‬
ِ ‫ص ٍر َّم‬
ِ ‫ع ُُرو‬
X
How many populations have We destroyed, which were given to wrongdoing? They tumbled down on their roofs. And how many wells are lying
idle and neglected, and castles lofty and well-built? (Hajj 45)
X
Period of Namrood (let us revolt) 2500 BC
4
What
should we
do?
Penalties on various crimes
Level
Crime
Action

Moral
various
Disliking/Curse of
Allah

Social
Sex
100 Lashes
Killing
Revenge (Qasas)
Political
 Economic
Interest
War with
Allah & Rasul
Steps for healing the money system
1.
2.
3.
4.
5.
6.
7.
8.
9.
Limit growth and focus on wellbeing
Limit Debt & encourage entrepreneurs
Introduce zero rated
debts
The
money
Impose Charge on money holding
system is like a
Make speculation a criminal offence
cancer that
Incentivise productive work and investment;
consumes its
Tax Unearned Gains
host and
Replace labor for energy use
ultimately
Strengthen the social fabric of family and
destroys itself
community
10. Lease land for living/business purposes
Healing the Money System “David C. Korten”: http://www.converge.org.nz/pirm/money.htm
Action at personal level
1. Adopt simple lifestyle (Resource conservation &
sharing)
2. Get out of interest/speculation based investments
3. Fully utilize goods before replacement
4. Eliminate morbid craving for extravagant gadgetry
5. Get rid of fashion (a bio-economic disease of the
human mind )
6. Demand durable goods to be made still more
durable by being designed so as to be repairable.
7. Get closer to the nature as possible
8. Join hands to fight for reform at state level
Final outcome
‫علَ ْي ِه ِر ْْقُهُ فَ ْليُن ِفقْ ِم َّما آتَا ُه‬
َ ‫سعَتِ ِه َو َمن قُ ِد َر‬
َ ‫سعَ ٍة ِمن‬
َ ‫ِليُن ِفقْ ذُو‬
( ‫س ًرا‬
ُ َ‫اّللُ بَ ْعد‬
ْ ُ‫س ٍر ي‬
ْ ‫ع‬
َ ‫سا ِإ َّ ا َما آتَا َها‬
َّ ‫سيَ ْجعَ ُل‬
َّ ‫ف‬
َّ
ً ‫اّللُ نَ ْف‬
ُ ‫اّللُ َ ا يُ َك ِل‬
‫سابًا‬
َ ‫َو َكأ َ ِين ِمن قَ ْريَ ٍة‬
َ ‫س ْبنَا َها ِح‬
َ ‫س ِل ِه فَ َحا‬
ُ ‫عت َ ْت ع َْن أ َ ْم ِر َر ِب َها َو ُر‬
ُ‫عذَابًا نُّ ْك ًرا فَذَاقَ ْت َوبَا َل أ َ ْم ِر َها َو َكا َن عَا ِقبَة‬
َ ‫عذَّ ْبنَا َها‬
َ ‫ش ِديدًا َو‬
َ
‫اّلل يَا أ ُ ْو ِلي‬
َ ‫عذَابًا‬
َ ‫اّللُ لَ ُه ْم‬
َ َ ‫س ًرا أ‬
ْ ‫أ َ ْم ِر َها ُخ‬
َّ َّ‫عد‬
َ َّ ‫ش ِديدًا فَاتَّقُوا‬
َ َ ‫ين آ َمنُوا قَ ْد أ‬
َ ‫ب الَّ ِذ‬
‫اّللُ ِإلَ ْي ُك ْم ِذ ْك ًرا‬
َّ ‫نْ َل‬
ِ ‫ْاأل َ ْلبَا‬
)7
)8(
)9(
*****
Let the man of means spend according to his means: and the man whose
resources are restricted, let him spend according to what Allah has given
him. Allah puts no burden on any person beyond what He has given him.
After a difficulty, Allah will soon grant relief. And how many a community
revolted against the ordinance of its Lord and His messengers and We took
detailed accountability of their deeds and punished them severely. Then did
they taste the evil result of their conduct, and the End of their conduct was
great loss.
(Talaq 7-10)
PEOPLE
POWER SHIFT:
GLOBAL FINANCE
MARKET
ECONOMY
CAPITALIST
ECONOMY
Globalization
Deregulation
Concentration
Small & Local
Large & Global
Global Financial System
People
Ownership
Culture &
Choice
Rules
Ownership
Global Corporation
Culture &
Choice
Local
Enterprises
Source: Life after the Dominance of Capital, by David C. Korten
http://www.bke.hu/~kg_korny/altern/korten/kortpres.html
Rules
People
Most frequent
question is: Where
is modern Islamic
Economic System?
Surprisingly, the Quran troughs the question back to
us?
Create it based on the guiding principles keeping in
view needs and deeds of the society. Then keep on
modifying it based on the emerging needs of the
Humanity