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Topic 2: Introduction to Islamic Economics

Topic 2: Introduction to Islamic Economics. The worldview of Islam. Learning outcomes. At the end of the lessons, students should be able: To explain the worldview of Islam. Capitalism and Socialism.

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Topic 2: Introduction to Islamic Economics

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  1. Topic 2:Introduction to Islamic Economics MFK ISB544 Topic 2

  2. MFK ISB544 Topic 2

  3. The worldview of Islam MFK ISB544 Topic 2

  4. Learning outcomes At the end of the lessons, students should be able: • To explain the worldview of Islam. MFK ISB544 Topic 2

  5. Capitalism and Socialism • Do not incorporate an inherent belief in human brotherhood, socio-economic justice and the trust nature of resources. • Overly exaggerated emphasis on “survival of the fittest” or “material conditions of life”. • Do not motivating system to induce human being to work in the interest of society. MFK ISB544 Topic 2

  6. Capitalism and Socialism (ctd) • Unable to realise simultaneously the goals of both efficiency and equity by means of strategies based on the secularist Enlightenment worldview. • Muslim countries need a different economic system – a system able to provide all the elements necessary for human well-being in accordance with the demands of brotherhoods and socio-economic justice. MFK ISB544 Topic 2

  7. DOES ISLAMIC WORLDVIEWDIFFER FROM THE CONVENTIONAL WESTERN WORLDVIEW MFK ISB544 Topic 2

  8. Worldview of Islam • Since factors affecting world views differ, different world views exist, leading to different “systems” for different peoples. • Theories explaining human behaviour also differ. • Islamic world view based on ‘Islam’ and its sources of knowledge. MFK ISB544 Topic 2

  9. The worldview of Islam MFK ISB544 Topic 2

  10. Islam · Literally means peace and submission · Muslim - one who submits MFK ISB544 Topic 2

  11. Islamic view of “religion • Not equivalent to religion as understood in the west. • Watt (1979) … means a way of spending an hour or so on on Sundays in practices which give him some support and strength in dealing with the problems of daily life, and which encourages him to be friendly towards other persons and to maintain the standards of sexual propriety; it has little or nothing to do with commerce or economics or politics or industrial relationships … or may even look on religion as an opiate developed by exploiters of the common people in order to keep them in subjection. MFK ISB544 Topic 2

  12. In the west • Religion reduced to a private matter between and individual and his/her God(s). ·  no role to play in determining public affairs ·  science replaced religion as authority · religion for infantile man; science for modern/nature man ·  Nietzsche proclaims “God is Dead” · This understanding of religion is not necessarily applicable to all societies and civilizations. MFK ISB544 Topic 2

  13. In the west (ctd) • Religion reduced to a private matter between and individual and his/her God(s). • No role to play in determining public affairs. • Science replaced religion as authority. • Religion for infantile man; science for modern/nature man. • Nietzsche proclaims “God is Dead”. • This understanding of religion is not necessarily applicable to all societies and civilizations. MFK ISB544 Topic 2

  14. Islam is DIN • Watt (1979) … whole way of life … covers both the private and public/societal lives of man, it permeates the whole fabric of society, and includes theological dogma, forms of worship, political theory and a detailed code of conduct, including even matters which the European would classify as hygiene or etiquette … MFK ISB544 Topic 2

  15. Islam is DIN (ctd) • Watt (1979). • No shunning this world. • Din is for this world. • Use this dunya to achieve akhirah. Al-Qasas : 77 “But seek with the (wealth) which Allah has bestowed on thee, the home of the Hereafter, And do not forget thy portion in this world. But do good as Allah has been good to thee and seek not mischief in the land, for Allah loves not those who do mischief MFK ISB544 Topic 2

  16. GOD • Tawhid or Unity or God. • Kalimah Shahadah. • Beautiful Names of God. • Implications for economics. • Al- Razzaq (the Provider). • Malikal Mulk (the eternal owner of Sovereignty). • Al-Muqsit (the equitable). MFK ISB544 Topic 2

  17. MAN • Insan. • Created good. • Body and spirit. • Al-Hijr : 28-29 “Behold! Thy Lord said to the Angels : I am about to create man, from sounding clay from mud moulded into shape. When I have fashioned and breathed into him of my spirit, fall ye down in obeisance to him” MFK ISB544 Topic 2

  18. MAN (ctd) • Given aql and knowledge. (Al-Baqarah:31) “…And He taught Adam the manes of all things… • Best of creations. (Al-Tin:4) “We have indeed created man in the best of moulds” MFK ISB544 Topic 2

  19. MAN (ctd) • Role of abd and khalifah. (Al-Dhariyat:56) “I have only created Jinn and Man that they may serve me…” (Al-Baqarah:30) “Behold! Thy Lord said to the angels: I will create a vicegerent on earth…” • Cannot be khalifah unless you are first and foremost an abd. MFK ISB544 Topic 2

  20. MAN (ctd) • Nasr (1990) “There is no more dangerous creature on earth than a khalifah Allah who no longer considers himself to be an abd Allah”. MFK ISB544 Topic 2

  21. Nature • Creation of God for man. (Al-An’am: 95-103) • Talks of vegetation and fruits, night and day, heaven and earth, human being, rain. • Material world and world of ghayb. • Man as trustee to manage nature. • Natures as a sign of God. MFK ISB544 Topic 2

  22. Aim in Life • Ibadah to achieve falah (ultimate success). • Develop earth to achieve God’s pleasure. • To attain falah we must have knowledge and action MFK ISB544 Topic 2

  23. Knowledge • Ilmand derivatives appear 750 times in the Qur’an. • Fundamental requirement for all Muslims life-long. • Obligation (fard). MFK ISB544 Topic 2

  24. Knowledge (ctd) MFK ISB544 Topic 2

  25. Action • Good action is ibadah. • Good economic action is ibadah. • Good action requires correct intention, correct knowledge and observance of all shari’ah requirements. MFK ISB544 Topic 2

  26. Definition, philosophy, principles and goals of Islamic Economics MFK ISB544 Topic 2

  27. Recap - The worldview of Islam MFK ISB544 Topic 2

  28. Worldview Sub Systems For Various Aspects of Human Life Political System Economic System Social System Philosophy Principles Goals Tawhid Khilafah Amanah Tazkiyyah Ownership Freedom Social-Econ. Justice Economic well – being Universal brotherhood Equitable distribution of income Employment generation MFK ISB544 Topic 2

  29. Definition • According to M. Akram Khan:- “Islamic economics aims at the study of human falah achieved by organizing the resources of the earth on the basis of cooperation and participation” • Key concepts in the above definition are the following:- • Falah • Resources • Cooperation and participation MFK ISB544 Topic 2

  30. Definition • Falah • Literal meaning; - to become happy, to have god luck or success, to be successful. • According to Raghib al-Isfahani:- Falah is a both-worldly concept. MFK ISB544 Topic 2

  31. Definition • Falah • In this world it represents three things:- • survival, • freedom from want, • power and honour • In the hereafter it stands for:- • eternal survival • eternal prosperity • everlasting glory • knowledge free of all ignorance MFK ISB544 Topic 2

  32. Definition • Falah • According to Qu’ran , the ultimate goal of human life should be the achievement of falah in the hereafter, but it would be reward for one’s deeds during his stay in this world • Conformity to the Islamic way of life is a means to achieve falah both in this world and hereafter MFK ISB544 Topic 2

  33. Falah MFK ISB544 Topic 2

  34. Definition • Falah • In Qur’an the uses of the term falah its derivatives occur at forty places • A perusal of these verses leads us to determine the conditions of falah i.e. • Spiritual • Economic • Cultural • Political MFK ISB544 Topic 2

  35. Definition • Economic Conditions of Falah • Infaq • Prohibition of interest • Fulfillment of covenants and trusts • Justice • Enterprise MFK ISB544 Topic 2

  36. Definition • Resources of earth • Studies human behavior towards resources of earth and investigates those modes of utilisation which may lead to falah • Resources of earth are meant to provide livelihood to the creatures of God MFK ISB544 Topic 2

  37. Definition • Resources of earth • The Qu’ran informs us that God has created sufficient resources for his creatures (41:10) • Hence, scarcity may be either due to lack of proper utilisation of natural endowments or an imbalanced distribution MFK ISB544 Topic 2

  38. Definition • Resources of earth • IE studies resources from the point of view of ‘adequacy’ rather than scarcity • It starts from the premise that the resources of earth are adequate to achieve falah • If some scarcity is being encountered man must be doing something wrong, and ways and means should be found t restore the natural state of adequacy MFK ISB544 Topic 2

  39. Definition • Resources of earth • This may be broadening the productive base, improving technical know-how, and re-distribution of resources • There is moral dimension to this question as the man is accountable for his deeds in the akhirah. MFK ISB544 Topic 2

  40. Definition • Cooperation & participation • Inter-personal relationship in Islam are based on the universal brotherhood (ukhuwah) of all human being (4:1). • The Qu’ran has explicitly ordained Muslims to help one another in furthering God-consciousness (taqwa) and virtue (birr) (5:2). • Thus mutual help rather than conflict should be the basis of all economic relationship. MFK ISB544 Topic 2

  41. Philosophy of IE MFK ISB544 Topic 2

  42. Philosophy • Tawhid • Foundation of Islamic faith • Oneness and Unity of God • It means that universe has been consciously designed and created by the Supreme being • Quranic verse (3:191; 38:27; 23:15) • Everything created by Him has a purpose which gives meaning and significance to the existence of Universe • After creating this world, the Supreme being did not retire MFK ISB544 Topic 2

  43. Philosophy • Khalifah (Vicegerancy) • Quranic verse:- (2:30; 6:165; 35:39; 38:28; 57:7) • Man endowed with:- • Spiritual • Mental characteristics • Material resources MFK ISB544 Topic 2

  44. Philosophy • As a khalifah man is free which enable them to think and reason to choose between right ad wrong • By nature man is good and noble (15:29; 30:30; 95:4) MFK ISB544 Topic 2

  45. Philosophy • Amanah MFK ISB544 Topic 2

  46. Philosophy • Tazkiyah MFK ISB544 Topic 2

  47. Principles • IE is further supported with the following principles:- • Ownership • Freedom • Social-economic justice MFK ISB544 Topic 2

  48. Principles of IE MFK ISB544 Topic 2

  49. Principles • Ownership • A social (including legal) relationship of an individual or group with an object involving a system of rule of access to, and control of resources. • 86 times in the Qu’ran. • Absolute owner is God. • Man as khalifah and ‘abd has relative and conditional ownership. • Man is responsible to society and accountable to God for his property. • Labour and need are both legitimate bases of property ownership. MFK ISB544 Topic 2

  50. Principles • Freedom • In Islam, man is free but still subject to the guidelines in the form of shari’ah MFK ISB544 Topic 2

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