Transcript Economic Problem

ISLAMIC ECONOMCS
IBF 6111
Topic 1
An Overview of Economics
CONTENTS
1.
2.
3.
4.
Introduction
Overview of economics and the economic problem
Islamic economics and the economic problem
View of Muslim Scholars
2
1. Introduction
3
INTRODUCTION
• Studying economics should help satisfy our curiosity about the
everything that happens around us.
• Economics is about choice and the impact of our choices on
each other.
• It relates to every aspect of our lives, from the decisions we
make as individuals or families, to those developed by
governments and firms.
• The economic way of thinking can help us make better choices.
• It should help us understand fallacies and unintended
consequences, and how to anticipate them.
4
INTRODUCTION
• “The ideas of economists and political philosophers, both when they
are right and when they are wrong, are more powerful than is
commonly understood. Indeed the world is ruled by little else.”
(Keynes, General Theory, 1936:383).
• Keynes has been referred to as a “prophet”, with the Keynesian
doctrine a new religion (Murad, 1962:16).
• With regard to its significance to society, economics is partly ideology,
partly policy and partly science. As scientists, economists describe
and explain what society does: how it organizes production and the
use of wealth.
• Attention is given to economists when they recommend policy, and
every policy rests on a theory - but an ideology is embodied in
economic policy. A theory without a policy is also of not much interest:
but the right ideology will be important if the policy is implemented and
its results may be scientifically analyzed.
5
2. Overview of economics
and the economic problem
6
OVERIEW OF ECONOMICS AND
THE ECONOMIC PROBLEM
• The word “economy” comes from the Greek word “oikonomos”
which means “one who manages a household”: in fact,
households and economies have much in common.
• “Economics is the study of man’s actions in the ordinary
business of life” (Alfred Marshal, Principles of Economics,
1890:1)
• Economics is the social science that studies the allocation of
scarce resources to satisfy unlimited wants.
• The social science concerned with the efficient use of limited
or scarce resources to achieve maximum satisfaction of
human materials wants.
• Economics is the study of choice and decision-making in a
world with limited resources.
7
THE ECONOMIZING PROBLEM
FROM THE SECULAR PERSPECTIVE
• Scarcity of Resources: Economic resources are limited relative
to wants…but food, energy and precious metals in abundance…
– In “Word Hunger, 12 Myths” (Lappé et al, 2/e, New York:Grove Press,
1998): Myth 1 (p.8), “There’s Simply Not Enough Food (but in reality)
Abundance, not scarcity, best describes the world's food supply.”
– In “Global Food; Waste Not,Want Not” (IME, Jan.2013) between 30%-50%
or 1.2-2 Bn MTs of annual global food production wasted due to inadequate
infrastructure and storage facilities, exacting standards, or thrown away.
– Since mid 20th century, most of the world’s energy stocks (oil & gas) and
half of the world’s gold and silver stocks have been mined and produced.
• Unlimited Wants: People’s desires to use goods and services
that provide satisfaction.
• Choice: Scarcity of resources requires choices to be made.
• Conv. Econ = scarce resources & unlimited wants (abundant
resources & limited needs = Islamic Econ)…
• Economic Problem in area of production or distribution?
8
THE ECONOMIZING PROBLEM
AND THE ECONOMIC SYSTEM
• Societies develop an economic system to determine how it makes
choices - a system is an ideology, which involves a mechanism to
respond to the economizing problem, e.g. a market system or a
command system.
• In a command economy (socialism, communism) there is no private
property, no inheritance, a central bank, graduated income tax, and central
planning of the use of resources, composition & distribution of output and
organization of production. The “communist party manifesto” published by
Marx & Engels (1848), was originally called the “confession of faith”.
• In a market economy (capitalism), there is private ownership of
resources, inheritance, a central bank, graduated income tax, and markets
& prices are used to coordinate and direct economic activity. Capitalism
does not rely on any spiritual or moral foundation, but self-interest in order
to satisfy materialistic needs (through consumption or a monetary reward),
and price alone regulates distribution through the price mechanism.
Private ownership permits freedom of choice.
• Choice involves a trade-off (opportunity cost), in order to determine which
combination of goods and services an economy can produce at a
particular point in time according to available factors of production.
9
ECONOMIC RESOURCE AND RESOURCE
PAYMENTS
CONVENTIONAL
ECONOMIC RESOURCE
SECULAR
RESOURCE
PAYMENT
LAND: natural resources
RENT
LABOUR: skilled &
unskilled labour
WAGES
CAPITAL: man-made
resources (machines,
buildings, equipment)
INTEREST
ENTREPRENEURIAL
ABILITY: human resources
that combine land, labour &
capital - organizes and
produces output
PROFIT
ISLAMIC ECONOMIC
RESOURCE
ISLAMIC
RESOURCE
PAYMENT
HIRED FACTORS OF
PRODUCTION: land,
animals, human resources
(skilled & unskilled labour),
buildings, other goods for
usufruct
UJRAH
(WAGES OR
RENT)
ENTREPRENEURIAL
FACTORS OF
PRODUCTION: combining
human resources and nonhuman resources (physical
capital or money) in a
productive economic venture
RIBH
(PROFIT)
10
PRODUCTION POSSIBILITIES CURVE
• Secular economics tells us that wants are unlimited but there
are a limited amount of resources of factors of production which
are used to produce economic goods and services.
• The economic concepts of scarcity, choice and trade-offs can
be illustrated by the use of a production possibilities curve
(or frontier), which represents the potential total output
combinations of any two goods for an economy.
• That is, it illustrates an economy's potential for allocating its
limited resources for producing various combinations of goods,
in a given time period.
• The PPC illustrates four important economic ideas concerning,
[1] Scarcity (trade-offs), [2] the Law of increasing opportunity
costs, [3] Efficiency, and [4] Economic growth - since the whole
point of economics is to make us all materially better off
(but is this happening?)
11
PRODUCTION POSSIBILITIES (cont.)
• Assuming: full employment, fixed resources, fixed technology
and two goods, economists have developed a simple model to
show the effect of scarcity faced by societies, as per the
following table:
Production Alternatives
Type of Product
A
B
C
D
E
Guns
0
1
2
3
4
Butter
10
9
7
4
0
Plot Points to Create Graph…
12
PRODUCTION POSSIBILITIES CURVE
A
10
B
Unattainable
9
Butter
• Each point on the PPC represents
the maximum combination of two
products (guns & butter) that can be
produced if resources are fully
utilized.
• Given fixed resources & technology,
points outside the PPC are
unattainable: points inside the curve
are attainable but full employment is
not being realized.
• Thus the PPC reveals the Law of
Increasing Opportunity Costs - as
production increases, the
opportunity cost of producing an
additional unit rises, and is reflected
in the slope of the production
possibilities curve, which is steeper
as we move from A to E.
C
8
D
7
6
Attainable
E
5
0
4
Law of Increasing
Opportunity Cost
(shape of the curve)
1
2
3
4
5
Guns
3
13
EFFICIENCY
• Efficiency requires society to use its resources to the
fullest extent - getting the most out of scarce resources; so
that there is no waste. If resources are being used
efficiently, at a point along a PPC, more of one good
requires the sacrifice of another good as its cost.
• Efficiency or pareto efficiency or pareto optimality, occurs
when at equilibrium no further improvements in economic
allocations can be made without someone being better off
at the expense of another. Economists argue that social
welfare increases if at least one person’s welfare has
increased but no-one else’s has fallen.
14
EFFICIENCY
• Efficiency is an important criterion in evaluating economic
systems. However, efficiency says nothing about justice or
fairness involving a desirable distribution of resources: there
are consumers that can afford a price on the demand curve,
but if the example is food, then there are those that cannot
afford it and therefore go hungry; also high cost small farmers
cannot compete with low cost large-scale agro-businesses on
the supply curve.
• The PPC is extended into International Economics and
international trade, with the principle of comparative advantage
and comparative opportunity cost involving specialization.
• However, when we observe nations specializing in one area of
production whilst foregoing another. Is this a function of
production theory or the underlying monetary and financial
system that requires a lower standard of living to accommodate
higher monetary and debt creation that distorts the allocation of
productive resources?
15
PRODUCTION & RESOURCES
• Economic growth reflects the capacity of an economy to satisfy
the needs & wants of the economy over time.
• An economy tries to maximize the production of goods &
services, which are consumed by society, hence economics
studies price, demand & supply, in the context of a desire to
manage the size of national production or output (GDP) in
macroeconomics.
• Macroeconomics places a lot of emphasis on real (inflationadjusted) GDP as a measure of economic growth, and whilst it
measures income it does not measure equality.
• To solve poverty, all an economy needs to do is increase GDP,
thus increasing production, to solve the economic problem of
scarce resources.
• Economics mixes the management of the needs of man
(distribution) and the means of satisfying those needs
(production).
16
ISLAMIC EFFICIENCY
• In Islam, great importance is placed on the redistribution of wealth to
the poor & destitute.
• Voluntary sadaqah (infaq) and compulsory sadaqah (zakat)
contradicts pareto optimality, which does not recognize the sacrifice of
a few rich to raise the well-being of many poor.
• In Islam, price is not the only means of distribution to achieve
economic growth: zakat has an extremely importance role to play in
this regard. The concept of secular efficiency is to maximize
satisfaction with available resources. Islamic efficiency is to
maximize the fulfillment of needs with available resources.
• The empirical evidence suggests the economic problem is not in the
area of production, but the area of distribution.
• Laws relating to distribution and re-distribution are precisely reflected
in the Islamic economic system (al-nidham al-Iqtisad fi-Islam), which
is concerned with the distribution of income and wealth according to
the Shari’ah.
• Whilst the maqasid al-Shari’ah includes the preservation of wealth
(hafiz al-mal), conventional economics is unable to address the maldistribution and misallocation of resources due to the riba system. 17
3. Islamic economics and the economic problem
18
DEFINING ISLAMIC ECONOMICS - A
SCIENCE OR SYSTEM?
• Many scholars today argue that Islamic economics is a social science
which studies the economic problems of people imbued with the values
of Islam, which enables people to perform their obligation to Allah
(s.w.t) and to their society.
• “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” (Zaman, 1984:49-50)
• Islamic Economics (al-iqtisad al-Islam) or the knowledge (or subject)
of economics (alm al-iqtisad) originally meant economy, husbandry
(iqtisad) and derived from the Greek word for household management
(oikonomos), or tadbir al-manzil (management of a household). The
term iqtisad was extended from the “home until it meant the
community being governed by the state.” (an-Nabhani, 2002:46)
19
DEFINING ISLAMIC ECONOMICS - A
SCIENCE OR SYSTEM? (Cont.)
• An-Nabhani continues by arguing that the Islamic economic system (alniztham al-iqtisad fi-Islam) has a different ideology to capitalism or
socialism, since it involves a theory and practice, “which determines how
to distribute wealth, how to possess it, and how to spend or dispose of it”
according to the Shari’ah.
• Thus combining the means of producing economic material and the
manner in which it is distributed is an error for there is a difference
between an economic science and an economic system. An economic
science discusses production and improvements in the quantity of
production and productivity, which is technical & scientific in nature and
has no relationship to an ideology: it would be the same whether under a
capitalist, socialist or Islamic system.
• An economic science involves the management and creation of wealth,
but this is different from managing distribution. The fluctuations of wealth
do not affect the form of the economic system and thus the way in which
wealth is distributed will not change. Islam does not interfere in the
production of wealth or define the manner of managing the quantity of
production (An-Nabhani, 2002:22-23,47,49,51).
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THE ECONOMIC PROBLEM IN ISLAM
• An-Nabhani (2002:46-48) argues that the economic problem
revolves around man’s needs. Man is driven to produce the
means to satisfy his needs.The economic problem arises not
from production, but restricting man from utilizing and
possessing benefits from production.
• The economic problem lies in the possession of wealth and not
in the creation of wealth, and is thus a function of ownership
(milkiyyah) from the mal-disposition of ownership and maldistribution of wealth.
• The economic benefit is the desire and suitability of a particular
thing to satisfy human needs and quantifiable in terms of money
& income. Benefits arise from a combination of either labour
(‘amal) and/or capital (sing. mal, pl. amwaal) which includes
property, assets, money.
21
THE ECONOMIC PROBLEM IN ISLAM
• An-Nabhani (2002:48) categorizes the acquisition of property is for
either: [1] consumption (such as food), [2] utilization (owning a
residential property), or [3] usufruct being the possession of a benefit
derived from goods (renting property), or [4] possession of a benefit
derived from work (such as an architect’s blueprints).
• Ownership (milkiyyah) involves “anything owned by a human being, be
it a specified property, or usufruct of a property (Majallah, art.125).
• Man is driven to Production, man strives to Produce to accumulate
Property (or Wealth) which involves Benefits that satisfies man’s Needs
(food, clothing, shelter): the Property implies Ownership being a
function of labour & capital (hence mudharabah & musharakah).
• The Economic Problem in Islam revolves around man’s needs.
• An-Nabhani (2002:23) argues that economics mistakenly views man as
entirely materialistic, as opposed to his needs, which should include
spiritual, ethical and moral objectives.
22
ECONOMIC PROBLEM IN ISLAM
REVOLVES AROUND MAN’S NEEDS
23
LABOUR, CAPITAL AND NEEDS
• Since property satisfies human needs, and labour is the means to
obtain property or its benefit, then property is the basis of the benefit.
Indeed, man strives to obtain property for possession: “and property
(amwaal) you possessed with hard work (At-Tauba, 9:24).
• Hence, the combination of both labour and capital (mal), are both
reflected in wealth (mal) for a man to become affluent (ghana’) or
rich (ghina’). Labour & capital are required to satisfy needs and
combined in the form of Islamic partnerships - e.g. musharakah &
mudharabah....
• An-Nabhani (2002:63-64) argues that state ownership, disposal &
distribution of wealth should conform to rules pertaining to the Bayt
al-Mal (State Treasury), whilst private ownership, disposal &
distribution of wealth is governed by the rules of ownership,
contracts and transactions (fiqh mu’amalat) with regard to
commerce and trade (tijarah).
24
THE ECONOMIC PROBLEM IN ISLAM
• Man is driven to Production, man strives to Produce to
accumulate Property which involves Benefits that satisfies
man’s Needs (food, clothing, shelter): this implies Ownership
being a function of labour & capital.
• The Economic Problem in Islam is not in the area of
Production, but in the area of Distribution.
• Historically, the focal point of the Islamic Economic System
was the bayt al-mal and not the central bank…and the
provision of finance in the form of private partnerships was
absent of any financial intermediation.
25
MAL-DISTRIBUTION
• “Experts in the fields of development, food and population
unanimously agree that the available natural resources in
the world are so abundant that they can meet all the needs
of the nations. The root cause is the unjust distribution
of the resources…and the failure of many nations to win
their real independence, decide the fate of their wealth and
distribute it justly and fairly. Russian scientist Ivan Shatilov
has also said that cultivated areas now could satisfy the
hunger of tens of billions of people if their crops were
distributed equally and fairly among the nations of the
world…”
Source: Italian publication trans & published by “Al-Qabas” Kuwaiti
newspaper, no.1525 on 15 Aug 1976, cited by INCEIF, Islamic
Economics, 2012:217)
26
ECONOMICS FROM THE ISLAMIC
PERSPECTIVE
• Man is the cause and object of creation.
– “And (remember) when your Lord said to the angels: ‘Verily!
I will create a
vicegerent (khalifah) on earth…And (remember) when We said to the
angels: ‘Prostrate yourselves before Adam.’ And they prostrated except
Iblîs (Satan), he refused and was proud and was one of the disbelievers
(disobedient to Allâh).” (Al-Baqarah, 2:30-34)
• To facilitate our life on earth, Allah (s.w.t.) has subjected creation for
benefit.
– “He it is Who created for you all that is on earth…” (Al-Baqarah, 2:29)
– “And He has subjected to you all that is in the heavens and all that is in the
earth…” (Al-Jâthiya, 45:13)
• Adam (a.s.) was offered ‘iman (faith), ‘aql (reason, intellect) or haya
(shyness, modesty) - he chose ‘aql in order to discover ‘iman and thus
obtain haya. Man was given choice to determine the straight path to
success
– “Those who listen to the Word and follow the best thereof those are (the
ones) whom Allâh has guided and those are men of understanding”
(Az-Zumar, 39:18)
27
ECONOMICS FROM THE ISLAMIC
PERSPECTIVE
• Fulfilling the role of khilafah (vicegerent) through piety is man’s
special purpose in order to obtain al-falah (prosperity/happiness)
in this word and the next.
– “Oh mankind! Worship your Lord (Allâh), Who created you and
those who were before you so that you may become Al-Muttaqûn
(the pious)” (Al-Baqarah, 2:21)
• Islam therefore determines our akhlaq (virtues, ethics) which
affects our fitrah (natural disposition, character), man has free
will, but his character will determine his outcome.
– “There shall be no compulsion in religion. The right course has
become clear from the wrong.” (Al-Baqarah, 2:256)
28
DEFINITION OF ISLAMIC
ECONOMICS (Cont.)
Islamic economics studies man not only as an isolated
individual but of a social individual having;
• Faith: believing in Allah (s.w.t).
• Ethics: believing in the six articles of faith (arkan al-iman),
his deeds are accountable to Allah (s.w.t.) as guided by
the Shari’ah.
• Responsibility: he is responsible in propagating good
doing and prohibiting bad doing in the society (al-Amr bil
Maruf wa al-Nahy anil Munkar).
29
HOW DOES ISLAM DEALS WITH THE
ECONOMIC PROBLEMS?
 Scarcity of Resources
 Unlimited Wants &
 Choice.
30
SCARCITY OF RESOURCES
FROM THE ISLAMIC PERSPECTIVE
• To deal with the first economics problem of scarcity of
resources, Muslim scholars believe that Allah (s.w.t.) has
created resources in abundance as shown in the
following Quranic verses.
• Indeed, one of the names of Allah (s.w.t.) is Al-Razzaq The Provider of all things beneficial to His creatures.
• “To Allah belongs the treasures of the heavens and the
earth” (Al-Munafiqun, 63:7)
• “His bounty is not restricted (to anyone)” (Al-’Isra’,17:20)
31
ABUNDANT RESOURCES
AS SHOWN IN THE QURAN
• “And surely, We gave you authority on the earth and
appointed for you therein provisions (for your life)” (AlA’raf, 7:10)
• “Allâh is He Who has created the heavens and the earth
and sends down water (rain) from the sky, and thereby
brought forth fruits as provision for you; and He has
made the ships to be of service to you, that they may
sail through the sea by His Command; and He has
made rivers (also) to be of service to you.”
(Ibrahim,14:32)
• “And He gave you of all that you asked for, and if you
count the Blessings of Allâh, never will you be able to
count them.” (Ibrahim 14:34)
32
ABUNDANT RESOURCES
AS SHOWN IN THE QURAN (Cont.)
• “And the earth We have spread out (like a carpet); set
thereon mountains firm and immovable; and produced
therein all kinds of things in due balance” (Al-Hijr, 15:19)
• “And there is not a thing but its (sources and) treasures
(inexhaustible) are with Us; but We only send down
thereof except in a known measure” (Al-Hijr, 15:21)
• “Verily, We have created all things with Qadar” (Divine
Preordainments of all things before their creation, as
written in the Book of Decrees Al-Lauh Al-Mahfûz). (AlQamar, 54:49)
• He enlarges the provision for whom He wills, and restricts
it (the provision for whom He wills)” (Al-’Isra’, 17:30 and
Al-Baqarah, 2:245)
33
RESOURCES IN ISLAM
• Allah (s.w.t.) has created resources in abundance,
and yet, resources in the eyes of man are scarce
and limited… why?
34
RESOURCES IN ISLAM (Cont.)
• Man’s inability to reach the abundant resources and
convert God’s bounties into goods and services might in
part be due to man’s choices due to a lack of knowledge,
skills, etc., but Man’s ability to produce in abundance is
constrained due to Man’s negligence involving a maldistribution of resources associated with the structural
injustice of distribution derived from the economic
system, which is biased in favour of inefficient resource
utilization (idle capacity and unemployment), and
socially undesirable resource allocation reflected in
inadequate production of necessities…a misallocation
of resources attributed to usury and banking.
(Al-Sadr, Iqtisaduna, 1982, Vol.1-2, pp.110-16, Vol.2-2, p.145)
35
UNLIMITED WANTS &
LIMTED NEEDS
• Concerning the second economic problem, Islam has
recognized that human desires are unlimited. This
had been highlighted in many ayat in the Qur’an and
addressed in many Hadith.
• Man has unlimited wants, but Man also has limited
needs…
36
UNLIMITED WANTS
IN AL-QURAN
• “Fair in the eyes of men is the love of things they covet:
Women and sons; Heaped-up hoards of gold and silver;
horses branded (for blood and excellence); and (wealth
of) cattle and well-tilled land. Such are the possessions of
this world's life; but in nearness to Allah is the best of the
goals (to return to)” (Al-’Imran, 3:14)
• “And ye love wealth (mal) with inordinate love!” (Al-Fajr,
89:20)
• “He thinks that his wealth would make him last for ever!”
(Al-Humazah, 104:3)
37
UNLIMITED WANTS
IN AL-HADITH
• Narrated Ibn ‘Abbas: “I heard Allah’s Apostle saying, ‘If
the son of Adam is given a valley of gold, then he will
wish for another similar to it, for nothing can satisfy the
eye of the son of Adam except dust. And Allah forgives
him who repents to Him’ ”
(Bukhari, Vol.8, 76:445)
38
CHOICE IN ISLAM
• For the third economic problem regarding choice, in
Islam, choices must be ranked according to the need
fulfillment and not to greed, and must be accompanied by
the concept of brotherhood.
• Muslims must also accept we are subject to qadr (predestination) and this also applies to rizk (sustenance).
• Choice is according to the fulfillment of the basic needs
(daruriyyah) for food, clothing, shelter, medical care and
education: man is driven by his choice of needs (al-hajat).
39
IS ACQUIRING WEALTH IN ISLAM
PROHIBITED ?
• Nothing wrong in generating, accumulating
and spending wealth according to the
Shari’ah.
• But acquiring & distributing wealth unlawfully
and hoarding it, is clearly not acceptable.
40
ACQUIRING WEALTH IN ISLAM
• Lawful means (halal).
• Accompanied with ethics or virtues (akhlaq) and good
manners (adab).
• To attain happiness, prosperity, success (falah) in this
world and in the hereafter. Taqwa leads to falah
[2:189, 3:130, 3:200, 5:35, 5:100].
• Al-falah in terms of success implies self-improvement
and well-being, from the verb aflaha meaning to
thrive, proper, become happy.
41
CONSCIOUSNESS WHEN ACQUIRING
WEALTH
• On the authority of Ibn Mas'ud (r.a.) who said that the
Messenger of Allah (s.a.w.s.) said, “The two feet of the
son of Adam will not move from near his Lord on the
day of Judgment until he is asked about five (matters):
[1] about his life - how he spent it; [2] about his youth how he took care of it; [3] about his wealth - how he
earned it; [4] and where he spent it and [5[ about that
which he acted upon from the knowledge he
acquired.”
(Tirmidhi, no.:1969)
42
ISLAMIC ECONOMICS & ETHICS
• What is the relation between Ethics and Islamic
Economics?
• Islam demands a certain type of behaviour from the
economic agents – the consumers and the producers.
• An Islamic market is characterized by certain norms that
take care of the interests of both the buyer and the
seller.
• In Islam ethical behaviour is a part of Iman (faith)
• Yahya related to me from Malik that the Prophet
(s.a.w.s) said: “I was sent to perfect good character.”
(Malik, al-Muwatta, Husn al-Khuluq [Good Character], 8)
• khuluq (sing.) / akhlaq (pl.)
43
ETHICS, ECONOMICS & THE SHARIAH
• Muslims are bound by Islamic ethics and morals in their
society. They should jealously guard their behaviour,
deeds, words, thoughts, feelings and intentions.
• Quran had laid down may Quranic verses which
highlighted how the Muslim should behave as an
individual and as a member in the society towards others.
• The Quran and the hadith gave the framework within
which people should think how to apply it in their daily life
as individuals and as collective.
44
ETHICS
IN THE QURAN
• “The Believers are but a single Brotherhood: So make
peace and reconciliation between your brothers; and fear
Allah, that ye may receive Mercy.” (Al-Hujurat, 49:10)
• “Oh mankind! We created you from a single (pair) of a
male and a female, and made you into nations and tribes,
that ye may know each other (not that ye may despise
(each other). Verily the most honoured of you in the sight
of Allah is (he who is) the most righteous of you. And Allah
has full knowledge and is well acquainted (with all things).”
(Al-Hujurat, 49:13)
45
ETHICS
IN THE HADITH
• It is reported on the authority of Anas ibn Malik (r.a.)
that the Prophet (s.a.w.s.) said: “None of you (truly)
believes until he loves for his brother - or he said: for
his neighbour - that which he loves from himself.”
(Bukhari, Muslim)
• “The Believers, in their mutual love, mercy and
compassion, are like one body: if one organ
complained, the rest of the body develops a fever.”
(Bukhari, Muslim)
46
MUTUAL COOPERATION
AND NOT DIVISION
• "And hold fast, all of you together, to the Rope of
Allah and be not divided among yourselves, and
remember Allah's Favour on you, for you were
enemies one to another but He joined your hearts
together, so that, by His Grace, you became
brethren, and you were on the brink of a pit of Fire,
and He saved you from it. Thus Allah makes His
Ayat clear to you, that you may be guided."
(Al-’Imran, 3:103)
47
3. View of the Scholars
48
THE VIEWS OF THE SCHOLARS
• Earlier Muslim scholars approached the subjects of trade and the
economic functions of the state as part of the Islamic ideology;
• Imam Ghazali (1058-1111) related a hadith from the Prophet
(s.a.w.s.) whom said “take to trade and commerce, because ninetenths of the source of earnings is from trade and commerce” in
Kitab Adab al-Kasb wa al-Ma’ash (Book of the Ethics of Earning and
Livelihood) in Book 13 of Ihya ulum id-Din (Revival of the Religious
Sciences), but we should be mindful of lawful earnings in Book 14
Kitab al-Halal wa al-Haram (Book of the Lawful and Unlawful), and
be thankful of the gifts from Allah (s.w.t.) such as gold and silver as a
medium of exchange in Book 32 Kitab al-Sabr wa’l-Shukr (Book of
Patience and Gratefulness).
• The Ihya takes into account the Worldview of Islam (ru’yat al-Islam
li al-wujud) encompassing both al-dunya and al-akhirah.
49
THE VIEWS OF THE SCHOLARS (Cont.)
• Al-Shaybani (729-804) - Kitab al-Kasb (The Book of Earning a
Livelihood)
• Al-Jahiz (776-869) - Kitab al-Tabassur bi al-Tijarah (The Book of
Insight into Commerce)
• Al-Dimashqi (12th century) - Al-Isharah Ila Mahasin al-Tirajah (The
Indicator to the Virtues of Commerce, or The Guide to the Merits of
Commerce, 1175)
• Ibn Khaldun (1332-1406) - al-Muqaddimah (The Introduction,
1377) to Kitab al-’Ibar “Book of Lessons” [on World History],
Ch.3:34 the Mint [money], Ch.3:36 Taxation [public finance],
Ch.5:1-32 Making a Living, Profit and Crafts [commerce]
• Al-Mawardi (972-1058) - Al-Ahkam al-Sultaniyya (The Ordinances
of Government)
• Abu ‘Ubayd (774-837) - Kitab al-Amwal (The Book of Revenue)
• Ibn Taymiyya (1263-1328) - Al-Hisba fi al-Islam (The Market
Supervisor’s Office in Islam)
50
THANK YOU