Islamic Economics Principles

Islamic Economics

• Islamic economics is a social science that studies economic problems in the light of Islamic values and principles.
• It focuses on all aspects of economic activities, balancing individual and societal interests.

Principles of Islamic Economics

• Tawhid and Brotherhood: emphasizes the oneness of Allah and the importance of social justice in an economy.
• Individual Liberty: individuals have the right to earn a living through decent labor and are free to engage in any profession within the laws of Islam.
• Right to Property: individuals have the right to own, inherit, and sell property, and the state should not infringe on this right.
• Economic Inequality within Natural Limits: Islam acknowledges economic inequalities among people, but disapproves of vast disparities that can lead to social unrest.
• Social Security: the state is responsible for providing adequate means for the poor to meet their basic needs and reducing the gap between the rich and the poor.
• Social Justice: includes the provision of basic necessities, fair distribution of wealth, and protection of the weak against economic exploitation.

Al-Falah (Success) in Islamic Economics

• Material Well-being: achieved through the eradication of poverty, creation of conditions for full employment, and promotion of charitable activities.
• Development of Human Behavior: guided by Islamic norms and values, such as the principles of righteousness, moderation, cleanliness, beneficence, and morality.

Concepts of Islamic Economics

• Belief: Islamic economics is based on the teachings of the Quran and Hadith.
• Ownership: Allah is the sole creator and owner of everything, and humans are entrusted with the responsibility to use and distribute resources justly.
• Earning: Muslims are obliged to earn a living and are encouraged to do so through honest and lawful means.
• Equity and Justice: Islam provides individuals with certain socio-economic rights, including the right to access factors of production and the right to address grievances.### Islam and Wealth Management
• Islam recommends that surplus wealth be spent in the service of virtue, righteousness, and public welfare.
• Islam guides individuals to have a proper attitude towards wealth and prosperity, avoiding extremes of extravagance and niggardliness.

Wealth Management in Islam

• Wealth management involves the organization and management of assets, which must comply with Shari'ah.
• Wealth management can be categorized into five aspects:
  • Wealth creation: generating income through lawful means.
  • Wealth accumulation: generating more wealth and creating productive economic activities.
  • Wealth protection: guarding and protecting one's wealth from risks, e.g., through takaful or Islamic insurance.
  • Wealth purification: purifying wealth through means such as zakāh, sadaqah, and waqf.
  • Wealth distribution: distributing wealth among members of society, ensuring everyone receives their due right.

Wealth Distribution in Islam

• Objectives:
  • Establish a practical system of economy.
  • Enable everyone to get what is rightfully due to them.
  • Eradicate the concentration of wealth.
• Tools and sources:
  • Primary heads: distributing wealth among factors of production (land, labor, and capital).
  • Secondary heads: redistributing wealth to people who do not participate directly in production.
  • Zakah: a Muslim financial obligation and worship, aimed at purifying self, wealth, and property.
  • Wirathah: the Islamic system of inheritance, which circulates wealth widely.
  • Waqf: an Islamic endowment of property for charitable or religious purposes.

Significance of Wealth Distribution in Islam

• Wealth and property are seen as responsibilities and trusts from Allah to be utilized and managed according to His Will.
• The Islamic system of wealth distribution aims to support those not actively participating in the economy.
• The tools and principles of the Islamic system offer the most equitable distribution of wealth, addressing shortcomings found in other economic systems.