Islam and Economics.pptx

UNDERSTANDING ISLAM II RKF0423 ISLAM AND ECONOMICS  Introduction As people are acquainted with the different economic systems of the world, it has been observable that no econo...

UNDERSTANDING ISLAM II RKF0423 ISLAM AND ECONOMICS  Introduction As people are acquainted with the different economic systems of the world, it has been observable that no economic system is correctly working to fulfil the economic requirements and needs of human beings. Human needs are not only confined to fulfilling basic needs such as food, shelter, and clothing. They are very much vast in nature. Human beings also engage in many economic activities for their satisfaction, such as purchasing property, selling goods and services, investing, borrowing loans, and others. Islam and Economics 2  MEANING Signifies the study of human behaviour in using resources to satisfy wants. It deals with the Economics human management of the earthly resources regarding consumption, production, and distribution. Islam and Economics 3  Conventional Economics Economics is the science of wealth. (Adam Smith) Economics is a study of mankind in the ordinary business of life. (Alfred Marshall). Economics deals with human behaviour that concerns money getting and money spending. (Modern Economist). Islam and Economics 4  Islamic Economics Economics is a social science that studies the economic problems of people imbued with Islamic values (M.A. Mannan). Economics is an administration of scarce resources in human society in the light of an ethical conception of welfare in Islam. (Ibn Khaldūn, Al-Tūsī). Concisely, Islamic economics is defined as the knowledge and application of injunctions and rules of the Sharīʿah that prevent injustice in acquiring and disposing material resources. Islam and Economics 5  Belief Equity and Conce Owners Justic e pt hip Earnin g Islam and Economics 6  Belief Islamic economics is a belief-based system. Its concept is governed by the teachings derived from Qur’ān and Ḥadīth of the Prophet Muḥammad S.A.W. These teachings are the foundations for its system to realise the falāḥ Islam and Economics 7  Ownership Allah S.W.T. is the Sole Creator of everything and every life in the universe. He is the absolute owner of everything, including all properties on this planet. َ‫سبْع‬ َ َ ُ ‫خلَق لَكُم ما فِي اَأْل‬ َّ ‫هُوَ ال‬ َ ‫ن‬ ُ ‫ه‬ َّ َّ ‫ا‬‫و‬ ‫س‬ َ ‫ف‬ ‫ء‬ ِ ‫ا‬ ‫م‬ َ ‫س‬ َّ ‫ال‬ ‫ى‬ ‫ل‬ ‫ى‬ ‫َ ٰ ِإ‬ ‫و‬ َ ‫ت‬‫س‬ْ ‫ا‬ ‫م‬ َّ ‫ث‬ ‫ا‬ً ‫ع‬ ‫ي‬‫م‬ِ ‫ج‬ َ ‫ض‬ ِ ‫ر‬ ْ َّ َ َ ‫ي‬ِ ‫ذ‬ ﴾٢٩﴿ ‫م‬ ٌ ‫يءٍ عَلِي‬ ْ ‫ش‬ َ ‫ل‬ ِّ ُ ‫ات ۚوَهُوَ بِك‬ ٍ َ‫ماو‬َ ‫س‬ َ He it is Who created for you all that there is on the Earth; He then turned to the sky and ordered it into seven heavens. And He has full knowledge of everything. Islam and Economics 8  Earning It is incumbent on every Muslim to earn his living.  He is obliged to earn an honest livelihood. He should not become a burden on others for his livelihood and preferably earn it through his labour. Islam and Economics 9  Equity and Justice Islam provides every individual with some fundamental socio-economic rights. For example, the right to access factors of production; land, labour, and capital to ensure economic justice. Islam and Economics 10  PURPOSE OF ISLAMIC ECONOMICS: AL-FALĀḤ  The ultimate goal of man’s life is the attainment of falāḥ in both worlds  Falah is an Arabic word which literally means success and well-being, and technically, it means material and spiritual success to gain the pleasure of Allah S.W.T  One of the essential conditions to gain falāḥ is the fulfilment of the objectives of Sharī ʿah.  five foundations defined the objective of the Sharīʿah by Al-Ghazali:  religion  life intellect Posterity  property. Islam and Economics 11  Social utilities (Masalih): three-level hierarchy of needs  Necessities: All activities essential to the preservation of five foundations of a good life.  Complementary: All activities and things that are not vital to preserving the five foundations. Rather, they are to remove difficulties in life.  Luxuries or Refinement: All activities and things that go beyond the limit conveniences. It includes matters that do not remove or relieve difficulties but preferably those that complement and adorn life. Islam and Economics 12  Al-Falāh in Islamic Economics 1. The attainment of material well-being in the society through  The eradication of poverty and creation of conditions for full employment and job opportunities The development of training and education to advance the individual's abilities and enable him to cater for his well-being independently The construction of affordable and comfortable housing The promotion of Infāq in all economic activities The system free from ribā 13 Islam and Economics  Al-Falāh in Islamic Economics 2. Development of human behaviour in the light of Islamic norms and values. a) Consumption – As a consumer, man should be governed by five principles: Principle of Righteousness Principle of Moderation Principle of Cleanliness Principle of Beneficence Principle of Morality Islam and Economics 14  Al-Falāh in Islamic Economics b. Production: Attainment of falāh in production means the achievement of the: Increase in the volume of production according to the priorities the hierarchy of needs Quality of goods and services produced subject to Islamic injunctions Maximum participation of people in the production process. Increase in income resulting from the increase of only beneficial goods and services through the maximum utilisation of resources Islam and Economics 15  PRINCIPLES OF THE ISLAMIC ECONOMIC SYSTEM 1. Tawhīd and Brotherhood  Tawḥīd literally means unity.  The principle of Tawḥīd and brotherhood are the predominant note of Islamic economics, that to Allah alone belongs whatever is in the heavens and the earth  Man has been appointed as the Khalifah of Allah on earth and entrusted with the responsibility to use and distribute the resources created by Him justly.  Tawhid teaches man how to relate and deal with other men in the light of his relationship with Allah  the principle of tawhid and brotherhood link up the duties to men with the duties to Allah 16 Islam and Economics  PRINCIPLES OF THE ISLAMIC ECONOMIC SYSTEM 2. Individual Liberty  Everybody has a right to earn a living through decent labour. ‫ن‬ ْ ‫ "أل‬: ‫ قال رسول الله‬:‫عن أبي عبد الله الزبير بن العوام رضي الله عنه قال‬ ‫ه بها‬ َّ ُ ‫الحطب فيبيعُها فيك‬ ُ ‫ف الل‬ ِ ‫من‬ َ ُ َ ‫يأخذ َ أحدُكم حبل‬ ٍ‫ه على ظهْرِهِ فيأتي بحزمة‬.))‫س أعطوْهُ أوْ منعوهُ" ((رواه البخاري‬ َ ‫ن يسأ‬ َ ‫ل النا‬ ْ ‫نأ‬ ْ ‫م‬ ِ ‫خير‬ ٌ ‫ه‬ ُ َ‫وجه‬ “It is far better for one even to take his rope, cut wood, pile it up and sell it in order to eat and give charity rather than to beg of other whether they give him or not”. 17 Islam and Economics  PRINCIPLES OF THE ISLAMIC ECONOMIC SYSTEM 3. Right to Property  In Islam, an individual has the right to property through lawful means. It is considered his private possession ‫سبُوا‬ َ َ ‫ما اكْت‬َّ ‫م‬ ِّ ‫يب‬ ٌ ‫ص‬ ِ َ ‫ال ن‬ ِ ‫ج‬ ِّ ِّ ‫ض ل‬ َ ‫لر‬ ٍ ْ ‫ع‬َ ‫ب‬ ‫ى‬ َ ‫م عَل‬ ٰ ‫َأ‬ ْ ُ ‫ك‬ ‫ض‬ َ ْ ‫ع‬َ ‫ب‬ ِ ‫ه‬ِ ‫ب‬ ‫ه‬ ُ َّ ‫ل الل‬ َ ‫ض‬ َّ َ ‫ف‬ ‫ا‬ ‫م‬َ ‫ا‬ْ ‫و‬َّ ‫ن‬‫م‬َ َ ‫ت‬َ ‫ت‬ ‫وَاَل‬ ‫ل‬ِّ ُ ‫ن بِك‬َ ‫ه كَا‬ َ َّ ‫ن الل‬ ْ َ ‫من ف‬ َّ ‫ضلِهِ ِۗإ‬ ِ ‫ه‬ َ َّ ‫س لُوا الل‬ ْ ‫ن ۚوَا‬ َ ْ ‫سب‬ َ َ ‫ما اكْت‬ َّ ‫م‬ ِّ ‫يب‬ٌ ‫ص‬ ِ َ ‫ساءِ ن‬ َ ِّ ‫ۖ وَلِلن‬ ﴾٣٢﴿ ‫ما‬ ً ‫يءٍ عَلِي‬ ْ ‫ش‬ َ  The āyah explicitly recognises the individual's right to own, inherit, and sell the property as and when he likes.  Islam forbids anyone, including the state, from jeopardising this right as long as the individual does not involve in unlawful transactions  However, he must also fulfil certain obligations to the state, for instance, by paying certain taxes. It is to highlight that every individual is responsible for the state's prosperity 18 Islam and Economics  PRINCIPLES OF THE ISLAMIC ECONOMIC SYSTEM 4. Economic Inequality within Natural Limits Islam admits the economic inequalities among people within reasonable and natural limits, as they differ in their ability, intelligence, and other qualities ‫ف اَأْل‬ ‫ما‬ َ ‫في‬ ِ ‫م‬ َ ُ ‫ات لِّيَبْل‬ ْ ُ ‫وك‬ ٍ ‫ج‬َ ‫ض دَ َر‬ ٍ ‫ع‬ ْ َ ‫ب‬ َ ‫ق‬ ‫و‬ ْ َ ‫ف‬ ‫م‬ ْ ُ ‫ك‬ ‫ض‬ َ ‫ع‬ ْ َ ‫ب‬ ‫ع‬ َ َ ‫ف‬ ‫ر‬ َ ‫و‬ َ ‫ض‬ ِ ‫ر‬ ْ َ ‫م خَاَل ِئ‬ ْ ُ ‫علَك‬َ ‫ج‬ َ ‫ذي‬ ِ َّ ‫و ال‬ َ ‫ه‬ُ ‫و‬َ ﴾١٦٥﴿ ‫يم‬ ٌ ‫ح‬ ِ ‫ور َّر‬ٌ ‫َف‬ ُ ‫ه لَغ‬ ُ َّ ‫وِإن‬ َ ‫اب‬ِ ‫ق‬ َ ‫ع‬ِ ْ ‫ع ال‬ ُ ‫ري‬ ِ ‫س‬َ ‫ك‬ َ َّ ‫ن َرب‬ َّ ‫م ِۗإ‬ ْ ُ ‫آتَاك‬ ‫ة الدُّنْيَا‬ ِ ‫حيَا‬َ ْ ‫في ال‬ ِ ‫م‬ ْ ‫ه‬ َ ‫ع‬ ُ َ ‫يشت‬ ِ ‫م‬ َّ ‫هم‬ ُ َ ‫منَا بَيْن‬ ْ ‫س‬َ ‫ق‬ َ ‫ن‬ُ ‫ح‬ ْ َ‫ك ۚ ن‬ َ ِّ ‫ت َرب‬ َ ‫م‬َ ‫ح‬ْ ‫ون َر‬َ ‫م‬ ُ ‫س‬ ِ ‫ق‬ ْ َ‫م ي‬ ْ ‫ه‬ ُ ‫َأ‬ ‫خي ْ ٌر‬ َ ‫ك‬َ ِّ ‫ت َرب‬ ُ ‫م‬َ ‫ح‬ْ ‫و َر‬َ ‫ْريًّا‬ ِ ‫سخ‬ ُ ‫ضا‬ ً ‫ع‬ ْ َ ‫هم ب‬ ُ ‫ض‬ ُ ‫ع‬ ْ َ ‫خذ َ ب‬ِ َّ ‫ات لِّيَت‬ ٍ ‫ج‬ َ ‫ض دَ َر‬ ٍ ‫ع‬ ْ َ ‫وقَ ب‬ْ ‫ف‬َ ‫م‬ ْ ‫ه‬ ُ ‫ض‬ َ ‫ع‬ ْ َ ‫عنَا ب‬ْ ‫ف‬ َ ‫و َر‬ َ ﴾٣٢﴿ ‫ون‬ َ ‫ع‬ ُ ‫م‬َ ‫ج‬ْ َ ‫ما ي‬ َّ ‫م‬ ِّ These two Qur’anic Āyāt state: I.Everything on the earth and the universe belongs to Allah. Man, as the “Khalifah” on the earth II.Allah has assigned different ranks to human beings. Islam and Economics 19 III.Life is a trial whereby one will be tested on the bounties given.  The economic inequality among people provides chances for human beings to develop noble qualities and struggle for betterment in their lives Islam disapproves of vast economic inequality among people as it will cause clutter and enmity in society. Sharīʿah imposes al-Zakāh and recommends al- ʿAfw (surplus // charitable funds from the surplus wealth of people) to maintain equitable differences in people’s basic needs Presentation title 20  PRINCIPLES OF THE ISLAMIC ECONOMIC SYSTEM 5. Social Security The state is responsible, among others, to provide adequate means for the poor to meet their basic needs. the state is also responsible to sanction measures to reduce the gap between the rich and the poor. the state is incumbent to impose taxes on the wealthy to meet the requirements of those in need. Presentation title 21  PRINCIPLES OF THE ISLAMIC ECONOMIC SYSTEM 6. Social Justice In Islamic economics, justice should prevail in all circumstances by giving each what he or she is due. I. Production  It is related to individual liberty and the right to property  It involves the right to acquire wealth lawfully and the right to own the wealth without abusing other people’s rights II. Distribution  It is related to economic inequality within natural limits and social security.  Wealth should be circulated among all sections in society instead of being concentrated in a few hands only 22  III. Consumption  related to balance in spending, neither excessiveness nor miserliness  Islam recommends that the surplus wealth of people to be spent in the service of virtue, righteousness, and public welfare. Presentation title 23  Tawhīd and Brotherh ood Social Individua Justice l Liberty PRINCIPLES OF THE ISLAMIC ECONOMIC SYSTEM Social Right to Security Property Economic Inequalit y Within natural Islam and Economic limits 24 Thank you