Islamic Economic System 1 Islamic Economic System The

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Islamic Economic System 1

Islamic Economic System 1

Islamic Economic System • The Islamic Economic System – It is a system which

Islamic Economic System • The Islamic Economic System – It is a system which is in conformity with the rules of Shariah • Shariah – It can be explained as • A Pathway to be followed • A set of divine injunctions & laws that regulates every aspects of human beings in their individual and collective lives 2

Islamic Economic System • 5 categories for every aspects of human beings in their

Islamic Economic System • 5 categories for every aspects of human beings in their individual and collective lives i. Beliefs (Aqaid) ( )ﻋﻘﺎﺋﺪ ii. Acts of Worship (Ibadat) ( )ﻋﺒﺎﺩﺍﺕ iii. Dealing with others (Muamlaat) ( )ﻣﻌﺎﻣﻼﺕ iv. Manners (Ikhlaqiat) ( )ﺍﺧﻼﻗیﺎﺕ v. Economics (Maishat) ( )ﻣﻌیﺸﺖ – It is a system which is in conformity with the rules of Shariah • Shariah provides a pathway to be followed in all these categories 3

Islamic Economic System • Nature of Shariah Rulings i. iii. iv. v. vi. Halaal

Islamic Economic System • Nature of Shariah Rulings i. iii. iv. v. vi. Halaal ( )ﺣﻼﻝ Haram ( )ﺣﺮﺍﻡ Faraiz ( )ﻓﺮﺽ Wajibaat ( )ﻭﺍﺟﺐ Sunnah ( )ﺳﻨﺖ Nawafil ( )ﻧﻔﻞ 4

Islamic Economic System • Sources of Shariah i. iii. iv. v. Quran ( )ﻗﺮآﻦ

Islamic Economic System • Sources of Shariah i. iii. iv. v. Quran ( )ﻗﺮآﻦ Sunnah ( )ﺳﻨﺖ Ijma Qiyas Ijtihad Tafako 5

Islamic Economic System • Introduction to Islamic Economics – Non Islamic Societies of the

Islamic Economic System • Introduction to Islamic Economics – Non Islamic Societies of the World • Investments are interest based – A form of Capitalism – Normally have two participants i. Investor ii. Manager – Investor provides capital as loan against interest – Manager runs the business 6

Islamic Economic System • Introduction to Islamic Economics – Non Islamic Societies of the

Islamic Economic System • Introduction to Islamic Economics – Non Islamic Societies of the World i. Investor » Has no concern whether the business runs into profit or loss • He automatically gets an interest (Riba) • In both outcomes at a fixed rate on his capital • Islam prohibits this kind of business and the Holy Prophet (SAW) enforced the ruling – Not as in the form of some moral teaching – But as the law of the land in Islam 7

Islamic Economic System • Introduction to Islamic Economics – Understanding of Riba & desired

Islamic Economic System • Introduction to Islamic Economics – Understanding of Riba & desired liberation from it • Know the definition and forbiddance of Riba and the injunctions relating to its lawfulness in all aspects • On one hand there are severe warnings of Qur’an & Sunnah • On the other hand it has become integral part of the world economy today • The desired liberation from Riba seems to be infested with difficulties – As the problem is » Very complex » Detailed oriented, & » Has to be taken up in all possible aspects 8

Islamic Economic System • Introduction to Islamic Economics – Understanding of Riba & desired

Islamic Economic System • Introduction to Islamic Economics – Understanding of Riba & desired liberation from it • First – Deliberate into the correct interpretation of the Quranic verses on Riba – Saying about Riba in authentic Ahadith • Then – Determine what Riba is in the terminology of the Quran and Sunnah » Which transactions it covers » What is the underlying wisdom behind its prohibition, and » What sort of harm it brings to the society 9

Islamic Economic System • The economic philosophy of Islam vis-à-vis interest • The economic

Islamic Economic System • The economic philosophy of Islam vis-à-vis interest • The economic philosophy of Islam – Islam has no concept of Riba – According to Islam • Riba is that curse in society – Which causes wealth to accumulate among handful of people and it results inevitably in » Creating monopolies » Opening doors of • Selfishness • Greed • Injustice, & • Oppression 10

Islamic Economic System • The economic philosophy of Islam vis-à-vis interest • The economic

Islamic Economic System • The economic philosophy of Islam vis-à-vis interest • The economic philosophy of Interest – In interest based economy • Which is one of the forms of capitalism • Deceit & fraud prosper in the trade & business – Islam primarily encourages • Highest moral ethics, such as – Universal brotherhood – Collective welfare and prosperity – Social fairness and justice 11

Islamic Economic System • The economic philosophy of Islam vis-à-vis interest • Islam –

Islamic Economic System • The economic philosophy of Islam vis-à-vis interest • Islam – Renders Riba as absolutely haram and strictly prohibits all types of interest based transactions • The prohibition of Riba in the light of economic philosophy of Islam can be explained vis-à-vis distribution of wealth in a society 12

Islamic Economic System • Distribution of Wealth • One of the most important and

Islamic Economic System • Distribution of Wealth • One of the most important and controversial subjects concerning economic life of man • Has given birth to global revolutions in today’s world • Has affected every sphere of human activity from international politics down to the private life of the individuals 13

Islamic Economic System • Distribution of Wealth • The center of fervent debates for

Islamic Economic System • Distribution of Wealth • The center of fervent debates for many a centuries • Reasons for armed conflicts • The fact remains that whatever has been said on the subject without seeking Divine Revelation and relying merely on human reason has had the sole and inevitable result of making the confusion worse confounded 14

Islamic Economic System • Islamic perspective of distribution of wealth • Extracted from –

Islamic Economic System • Islamic perspective of distribution of wealth • Extracted from – The Holy Qur’an, – The Sunnah – The writings of the Shariah research scholars 15

Islamic Economic System • Islamic perspective of distribution of wealth – The importance of

Islamic Economic System • Islamic perspective of distribution of wealth – The importance of the economic goals • Islam – Opposed to monasticism – Views the economic activities of man • Quite lawful • Meritorious, and • Sometimes even necessary and obligatory – Acknowledges the economic progress of man and – Considers a lawful and righteous livelihood an obligation on every individual – It does not consider “economic activity” to be the basic purpose of man • Nor does it view economic progress as the be-all and end-all of human life 16

Islamic Economic System • Islamic perspective of distribution of wealth – The importance of

Islamic Economic System • Islamic perspective of distribution of wealth – The importance of the economic goals • View point of materialistic economics – Livelihood is the fundamental problem of man and economic developments are the ultimate end of human life • View point of Islamic economics – Livelihood may be necessary and indispensable, but cannot be the true purpose of human life 17

Islamic Economic System • Islamic perspective of distribution of wealth – The importance of

Islamic Economic System • Islamic perspective of distribution of wealth – The importance of the economic goals – The Holy Quran – The • Disapproves monasticism • And order to: ﺍ ٱﻠ ﻭ ٱﻨﻭﺍ ﻯ ٱ ٱﻭﺍ ﻥ ٱﻠ ٱﻭﺍ ٱﻠ ﻳﺍ ﻭ Then, when the prayer is concluded, disperse through the land, and seek God's bounty, and remember God much, so that you may prosper. (62: 10) Holy Quran • We also find the restraining from the temptations of worldly life • Ad-Dunya (“the mean”) – Designates ‘all these worldly things in their totality’. – In literal sense, it does not have a pleasant connotation 18

Islamic Economic System • Islamic perspective of distribution of wealth – The importance of

Islamic Economic System • Islamic perspective of distribution of wealth – The importance of the economic goals • The success in Ultimate Life – The real problem of man • The fundamental purpose of his life ﺍ ٱ ٱﻧ ﺍ ﻭ I did not create the jinn and the humans except to worship Me. (51: 56) • But one cannot attain them without traversing the path of this world • So, all those things too which are necessary for his worldly life, become essential for man 19

Islamic Economic System • Islamic perspective of distribution of wealth – The importance of

Islamic Economic System • Islamic perspective of distribution of wealth – The importance of the economic goals • As long as the means of livelihood are being used only as a path leading towards the final destination – They are the benevolence of Allah • But as soon as man gets lost in the mazes of this pathway and allows him to forget his real destination – The very same means of livelihood turn into a “temptation” or “trail” ٱﺍ And know that your possessions and your children are a test (8: 28) 20

Islamic Economic System • Islamic perspective of distribution of wealth – The importance of

Islamic Economic System • Islamic perspective of distribution of wealth – The importance of the economic goals • The Holy Quran has enunciated this basic truth very precisely ٱ ﻳ ﺍﻯ ٱﻠ ٱﻠ ﺍ ٱﺍ But seek, with what God has given you, the Home of the Hereafter (28: 77) • This principle has been stated in several other verses too • This attitude of Holy Quran towards “the economic activity” of man & its two aspects would be very helpful in solving problems of man in Islamic Economics 21

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature of wealth & property • The other fundamental principle, which can help solve problem of distribution of ‘wealth’ in Islam • “Wealth” in all its possible forms is a thing created by Allah, and is, in principle His “property” (Quran) • Allah delegates the right of His property over a thing, which accrues to man, to Him. • The Holy Quran explicitly says: ﺍﻭﻡ ﻥ ﺍ ٱﻠ ٱ ﺍﻯ Give to them from the property of Allah which He has bestowed upon you (24: 33) 22

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature of wealth & property • According to Quran – The reason for this philosophy is that • All a man can do is invest his labor into the process of production. • But Allah alone, and no one else, can cause this endeavor to be fruitful and actually productive. • Man can do no more than sow the seed in the soil, but to bring out a seedling from the seed and make the seedling grow into a tree is the work of some one other than man. 23

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature of wealth & property • The Holy Quran says: o ﻡ ﺍ ﻭﻥ ﻧ ﻭ ٱﻠ ﻭ “Well, tell Me about that (seed) which you sow: [63]Is it you who grow it, or are We the One who grows? [64]” (56: 63 -64) o ﺍ ﺍ ﺍ ﻡ ﺍ ﻳ ﺍ ﺍ ﻭ “Did they not see that We have created for them cattle, among things made (directly) by Our hands, and then they become their owners? ” (36: 71) 24

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature of wealth & property Essence • Wealth, no matter what its form, is in principle “the property of Allah”, • And it is He who has bestowed upon man the right to exploit it • So Allah has the right to demand that man should subordinate his exploitation of this wealth to His commandments – Thus, man has the “right of property” over the things he exploits, – But this right is not absolute or arbitrary or boundless, it carries along with it certain limitations and restrictions imposed by the real Owner of the ‘wealth’ 25

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature of wealth & property Essence • We should spend wealth where Allah has commanded it to be spent, and refrain from spending it where Allah has forbidden ٱﻠ ﺍ ٱﻳ ٱ ﻳ ﺍﻯ ٱﻠ ٱﻠ ﺍ ٱﺍ ﺍ ﻧ ﻳ ٱﻠ ﺍ ﻥ ٱﻠ ﺍ ٱﺍ ﻯ ٱ “And seek the (betterment of the) Ultimate Abode with what Allah has given to you, and do not neglect your share form this world, and do good as Allah did good to you, and do not seek to make mischief in the land” (28: 77) 26

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature of wealth & property Essence - the Islamic guidelines regarding property 1. Whatever wealth man possesses has been given by Allah 2. Man has to use it in such a way that his ultimate purpose should be to seek the bounties and blessings of Allah in this world and hereafter 3. Since wealth has been given by Allah, its use by man must necessarily be subject to the commandment of Allah 27

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature of wealth & property Essence - the Islamic guidelines regarding property • The Divine Commandment has taken two forms: a) Allah may command man to convey a specified production of “Wealth” to another man • This commandment must be obeyed – Because Allah has done good to you » So He may command you to do good to others – “do good as Allah has done good to you” b) He may forbid you to use this “wealth” in a specified way • He has every right to do so because He cannot allow you to use “wealth” in a way which is likely to produce collective ills or spread disorder on the earth 28

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature of wealth & property Property: The Islamic View Point vs Capitalist & Socialist View Points Property: Capitalist View Points • The mental background of Capitalism is materialistic – It gives man the unconditional and absolute right of property over his wealth and allows him to employ it, as he likes Property: The Islamic View Point vs • But the Holy Quran has adopted an attitude of disapprobation towards this theory of property, in quoting the words of nation of Hazrat Shu’aib (AS) – They used to say ﻧ ٱﻳ ٱﻠ ﻳ ﺍﺍ ﺍ ﻭ ﻥ ﺍ ﺍ ﻥ “Does your Salah (prayer) command you that we should forsake what our fathers used to worship or that we not deal with our wealth as we pleases” (11: 87) – Theses people use to consider their property as really theirs or “Our property” • And hence the claim of “doing what we like” was the necessary conclusion of their position 29

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature of wealth & property Property: The Islamic View Point vs Capitalist & Socialist View Points • But the Holy Quran has, in the chapter “Light” substituted the expression “Our possessions” with the term “the property of Allah” – And thus struck a blow at the very root of the Capitalistic way of thinking 30

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature of wealth & property Property: The Islamic View Point vs Capitalist & Socialist View Points • And at the same time, by adding the qualification “what Allah has bestowed upon you” – It has cut the roots of Socialism as well, which starts by denying man’s right to private property • Similarly – “thus they acquired the right property over them” – A verse in the Chapter “Seen” • Explicitly affirms the right to private property as a gift from Allah 31

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature

Islamic Economic System • Islamic perspective of distribution of wealth – The real nature of wealth & property Property: The Islamic View Point vs Capitalist & Socialist View Points Capitalism Right to private property Truth An absolute & unconditional Islam Socialism Islam admits the right to private property but does not consider it to Totally denies be an absolute the right to and unconditional private property right that is bound to cause “disorder on the earth” Lies between the two extremes 32