An islamic economy
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An Islamic Economy. Example of a traditional economic system. Theory of Capitalism. Private ownership, hard work, self-interest, and amassing wealth are the principles of the economy. Where does ETHICS come in? . Economics in a traditional Arab perspective:.

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An Islamic Economy

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An Islamic Economy

Example of a traditional economic system

Theory of Capitalism

Private ownership, hard work, self-interest, and amassing wealth are the principles of the economy.

Where does ETHICS come in?

Economics in a traditional Arab perspective:

  • No word for economics in classical Arabic.

  • I qtisad: Means moderation and keeping to the golden mean.

Islamic Economy is composed of three basic components.

  • Principle of multi-faceted ownership.

  • Economic freedom within a defined limit.

  • The principle of social justice.

Ownership in an Islamic Economy

  • No private ownership in Capitalist terms.

  • No socialist ownership in terms that society owns property.

  • “Real ownership belongs to Allah, man holds property in trust, which he is accountable to Him.” – Shari’ah

Ownership in an Islamic Economy

  • The acquisition of property as well as its use and disposal are subject to limits set and guided by Allah.

  • The three kind of ownership is determined by principles, needs and circumstances.

Economic Freedom in Islam

  • Economic freedom is within the bounds of the spiritual and moral values of Islam.

  • Forbids economic activities that hinder Islam:

    • Usury (interest on money)

    • monopolies

Self-interest in Islam?

  • Sacred law emphasizes that the success of both the individual and society depends on the balance between spiritual and material needs of man.

    • “Man may not possess all that he desires or obtain wealth in any way he may choose.”

Islamic Principle

  • When the spiritual life is detached from the economic struggle of man, the dominant balance will be upset.

  • Prices are based on tradition – not just supply and demand.

Islamic Principles of Self-Interest

  • Hoarding and profiteering is forbidden when there is particular need for particular commodities.

  • It brings the price mechanism into harmony. The state only intervenes if corruption is happening.

Islam and Interest on Money

  • Interest is forbidden in Islam.

  • People cannot make money by lending money.

  • BUT investment is encouraged. Invest money in a productive manner, and increase profits.

Islam and Social Justice

  • Wealth is to be distributed.

  • Differences in wealth are okay within “reasonable limits.”

  • Zakat: A special tax that is paid as a religious duty and act of worship. Based on values of property.

Islam and Social Justice

  • Ijuthad: A court of clerics that using holy texts try to apply the past to today in solving economic problems.

  • Keep man mindful of Allah’s will.

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