Transcript emergence of islamic economics

Introduction to
Islamic Economics
Prepared by:
Kokab Manzoor
Areas of Discussion
Emergence of Islamic Economics
Some Renowned Muslim Economist
Definition of Islamic Economics
 Its objectives, Principles and Features
Islamic versus Conventional
Economics
Sources of Islamic Economics
Moral Values & Economic System of
Islam
EMERGENCE OF ISLAMIC
ECONOMICS
Economics is not a very old science.
Islamic Economics is even younger.
Attention to Islamic economic system
was diverted from Islamic banking and
financial system.
The contributions of Muslim thinkers and
philosophers have usually been
neglected in the history of Economics.
Cont`d….
Western scholars regard Adam Smith as
Father of Economics and his famous book
Wealth of Nations (1776 A.D) as the first
book of economics BUT Five centuries
before Adam Smith we find elaborated
discussion on economics under the topic
“Tadbir-i- Manzil ( planning of house),
“Siyasat-i-madan (politics of city) and “ AL
Muash (Livelihood) in the works of Muslim
scholars especially Muhammad bin
Hassan Tusi (1274 AD) and Ibn e Khaldun
(1332-1406 AD)
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Some Renowned Muslim Economist
 Many scholars trace the history of economic thought
through the Muslim world, which was in a Golden
age from the 8th to 13th century
 Abu Yusuf (731-798) wrote the Book of Taxation
(Kitab al-Kharaj).
 This book outlined Abu Yusuf's ideas on taxation,
public finance, and agricultural production.
 Tahir ibn al Hsssain (755 – 822)
 Al-Ghazali (1058–1111)
 Al-mawardi (1075–1158),
 Nasir al-Din al-Tusi (1201–1274)
 Ibn Taimiyah (1263–1328),
Contribution of other Muslim
Economists
 The discussions included division of labor within
households, societies, factories, and among
nations.
 Ibn e Tammiya illustrates the concept of
Demand and supply.
 The concept of benefits of division of Labor was
also dicsussed by Al Farabi (873–950), Ibn e
Sina (980–1037), Nasir Al Din al Tusi (1201–
1274), Ibn Khaldun (1332–1406).
The most well known Islamic scholar
who wrote about economics was Ibn
Khaldun of Tunis, who is considered a
forerunner of modern economics.
Lets have a bird eye view on his
remarkable work.
Ibn Khaldun (1332-1406 AD)
Father of Economics
 Abdal-Rahman Ibn Mohammad Ibn Khaldun
was born in Tunis.
 He worked as Judge & Head of Al-Azhar
University Cairo, Egypt (world’s oldest university founded 971 AD)
His major areas of work….
Labor Theory of Value,
 Labor Economics ; Labor as the Source of
Growth and Capital Accumulation.
Demand, Supply, Prices & Profits
 Modern price theory states that cost is the
backbone of supply theory, it was IBNKHALDUN who first examined
analytically the role of cost of production
on supply and prices.
Cont`d…
 And it was Ibn khaldun NOT Frank
Knight, who originally advanced the
theory of profit.
 He also concluded that both excessively
low prices and excessively high prices are
disruptive to markets.
 In fact he discovered what is now known
as cost push and demand pull inflation.
Cont`d…
Macro Economics, Growth, taxes, role
of government, and Money
 “Expenditure of one citizen are income to
others” this equality was first introduced
by Ibn-e-Khaldun.
 He was the pioneer in introducing the “
theory of Growth” based on capital
accumulation
 Ibn-e-Khaldun was the first major
contributor to “theory of Taxation” in the
history.
Cont`d…
Foreign Trade
 He also contributed a lot in the field of
International Economics.
 Ibe khaldun was of the view the people`s
satisfaction, merchant`s profit and
countries wealth, all these will increase
through foreign trade.
 He also introduced the concept of
“opportunity cost”
Conclusion
His analysis on theory of capital accumulation,
value and its relationship to labor, dynamics of
demand, supply, prices & profits; his treatment
of the subjects of money and role of
government; his remarkable theory of taxation,
and other economics subjects; his all this
unprecedented contribution to the overall field
of economics make
IBN KHALDUN , THE FATHER OF
ECONOMICS
Definition of Islamic Economics
Islamic economics is “a social science
which studies the economic problems of
a people imbued (inspired) with the
values of Islam”
(Mannan)
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 Allah (j.j).
The Objectives of Islamic
Economics
Economics stability for individual, society
and country
Optimum Resource Usage
Fair distribution of wealth
Uphold individual freedom
Equal rights and opportunities
Justice and cooperation
Basic principles of Islamic
Economics
Individual liberty
Right to property
Economic inequality with natural limits
Social equality
Social security
Prohibition of accumulation of wealth to
certain group
Prohibition of anti-social institutions
Social and individual welfare
Two Concepts of life
1 Materialistic concept of life
2 Moral concept of life
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1
Materialistic concept of life
The materialistic concept of life views Man
as an animal whose sole subject is to
satisfy physical needs.
This concept of life naturally and logically
leads to an individuals approach to life.
The feudal system of the middle ages in
Europe, Modern Capitalism and
Communism are all products of
materialistic approach.
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2
Moral concept of life
According to this view the universe has
been created by Almighty Allah.
Man is not an animal rather he is a
vicegerent (‫ ) خليفه‬of the Lord of the
universe.
Man should subordinate all his actions in
every phase of life to Almighty Allah
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Cont`d…
He should fully utilize all resources of
universe.
Goal of life is to obtain welfare in this life
and eternal (‫ ) ابدي‬life in the hereafter.
He is answerable for all his deeds to his
Lord.
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Difference between Islamic
Economic and Western
Economics
1 Difference in Basic Assumptions
a) View of the Universe
b) Concept of Man
c) The supposition of the Economic Man
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Difference in operation of Moral values
Difference in aims
Difference in Scope
Difference in the Mode of research
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Sources of Islamic Economics
1 The book of Allah (Holy Quran)
2 The Sunnah of Prophet Muhammad (sws)
3 Ijma
4 Ijtehad
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1
The Holy Quran
The first and the most authentic source of
knowledge about Allah`s commands is
Allah`s Book i.e. THE HOLY QURAN.
It covers the general guidelines of all aspects
of human life.
The basic guiding principles for ordering
economic life of man are preserved in this
book in the light of which detailed policies
and program may be designed to resolve
economics issues arising in the every age.
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2
The Sunnah
Next to the Holy Quran, the Sunnah i.e. the
example set by the Allah`s Messenger (sws)
is an authentic source of knowledge.
It is in fact the interpretation and explanation
of Allah`s revealed message.
 “ Take whatever the Messenger gives you and
refrain from whatever he forbids you” [AlHasher]
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Cont`d…
The record of Sunnah contains
theoretical and practical guideline of
almost all aspects of economics life.
It’s a very important source to which
Islamic economist must turn for
research and analysis.
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IJMA
The third source of Islamic law is
consensus of experts of religion.
Ijma emerged as a result of exercising
reasons and logic in a rapidly
expanding society, such as in the times
of early Islam.
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IJTEHAD
Literal meaning of Ijtehad is “ to strive to the
utmost”.
In the Shariah it denotes the greatest effort
which is made to discover the law from the
implications of Allah`s Book or Sunnah of
Prophet Muhammad (sws).
The need for Ijtehad arises in those matters in
which direct guidance is not available in the
Quran and Sunnah.
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Cont`d…
Is everyone competent to exercise
Ijtehad ????
NO…!!!!
Only the one who has advance
expertise in the knowledge of Quran
and Sunnah with high degree of
honesty and piety and flawless morality
and character.
Moral Values & Economic System
of Islam
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Piety ( ‫) پرهيز گاري‬
Equality
Brotherhood ( ‫) اخوت‬
Justice
Benevolence ( ‫) خير خواهي‬
Cooperation
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