Fundamentals of Islamic Economic System

1. Fundamentals of Islamic Economic System Prepared By Abid Kilyani

2. Spiritual Power جانى جهاد Prayer صلاة Economic Power ما لى جهاد Charity زكاة و انفاق Piety نفس كا جهاد Fasting روزه Unity اجتمائى جهاد Hajj حج Human Welfare انسانيت كى فلاح Social System معاشرتى نظام Economic System معاشى نظام Political System سياسى نظام Spiritual System روحانى نظام Mission of Islam (اسلام كا نصب العين) Work (كام) Output/Resource (قوت) Outcome (مقصد)

3. Devine Economic Plan Malik 2 Wealth is a test Anam 165/Nahal 71 Not related to efforts Zumr 49 وَاللّهُ فَضَّلَ بَعْضَكُمْ عَلَى بَعْضٍ فِي الْرِّزْقِ And Allah has made some of you excel others in wealth. (Nahal 71) وَهُوَ الَّذِي جَعَلَكُمْ خَلاَئِفَ الأَرْضِ وَرَفَعَ بَعْضَكُمْ فَوْقَ بَعْضٍ دَرَجَاتٍ لِّيَبْلُوَكُمْ فِي مَا آتَاكُمْ And Allah has made you successors in the land and raised some of you above others in different levels, to test you for what is given to you. (Araf 165) فَإِذَا مَسَّ الْإِنسَانَ ضُرٌّ دَعَانَا ثُمَّ إِذَا خَوَّلْنَاهُ نِعْمَةً مِّنَّا قَالَ إِنَّمَا أُوتِيتُهُ عَلَى عِلْمٍ بَلْ هِيَ فِتْنَةٌ وَلَكِنَّ أَكْثَرَهُمْ لَا يَعْلَمُونَ When a man gets in trouble he cries for help of Allah, and when he is granted favors, he says “I have got it due to my knowledge”. In fact wealth is a trial but most of people do not know. (Zumr 49)

4. Definition of Islamic Economics • Islamic economics is “a social science which studies the economic problems of a people imbued (inspired) with the values of Islam” (Mannan) • Islamic economics is a science that studies the allocations of resources to create and distribute wealth for mankind and universe for the purpose of returning (worshipping) to Allah (j.j).

5. Sources of Islamic Economics • The book of Allah (Holy Quran) • The Sunnah of Prophet Muhammad (sws) • Ijtehad • Ijma • Qiyas

6. 1 The Holy Quran • The first and the most authentic source of knowledge about Allah`s commands is Allah`s Book i.e. THE HOLY QURAN. • It covers the general guidelines of all aspects of human life. • The basic guiding principles for ordering economic life of man are preserved in this book in the light of which detailed policies and program may be designed to resolve economics issues arising in the every age.

7. 2 The Hadith and Sunnah • Next to the Holy Quran, the Sunnah i.e. the example set by the Allah`s Messenger (sws) is an authentic source of knowledge. • It is in fact the interpretation and explanation of Allah`s revealed message. • “ Take whatever the Messenger gives you and refrain from whatever he forbids you” [Al-Hasher]

8. Cont`d… • The record of Sunnah contains theoretical and practical guideline of almost all aspects of economics life. • It’s a very important source to which Islamic economist must turn for research and analysis.

9. 3 IJTEHAD • Literal meaning of Ijtehad is “ to strive to the utmost”. • In the Shariah it denotes the greatest effort which is made to discover the law from the implications of Allah`s Book or Sunnah of Prophet Muhammad (sws). • The need for Ijtehad arises in those matters in which direct guidance is not available in the Quran and Sunnah.

10. Cont`d… • Is everyone competent to exercise Ijtehad ???? NO…!!!! • Only the one who has advance expertise in the knowledge of Quran and Sunnah with high degree of honesty and piety and flawless morality and character.

11. 3a IJMA • The third source of Islamic law is consensus of experts of religion. • Ijma emerged as a result of exercising reasons and logic in a rapidly expanding society, such as in the times of early Islam.

12. 3b Qiyas • When there are cases regarding which no order exist in shariah, but the shariah has given an order in some analogous cases then after establishing the similarity of ilat (cause) in both sets of cases the mujtihad extends the existing order of shariat to those cases in which there is no order.

13. SALIENT FEATURES • Allah is the Sustainer • God is Real Owner of Everything and Man is Merely a Trustee • Everything Created for Service and Use of Man • Concept of Halal and Haram • System of Sadaqat and Zakat

14. SALIENT FEATURES • Prohibition of Interest • Ban on Hoarding of Wealth • Policy of Moderation • Condemnation of Monasticism and Materialism • Equity and Equality

15. Allah is the Sustainer • Almighty Allah of universe, is the sustainer and provider. • It is Allah who has created all means and resources through which man earns his livelihood. • Allah, in fact, has committed to feed, sustain and nourish all creatures including human beings. It is Allah who expands or curtails rizq (sustenance).

16. Allah is the Sustainer Verses of the Qur’an: • اللہ انسانوں کے لئے جو رحمت جاری کر دے اُسے کوئی روکنے والا نہیں۔ اور جو چیز وہ روک دے اُسے اس کے (روکنے) کے بعد کوئی جاری کرنے والا نہیں اور وہ کامل 35:3 غلبہ والا (اور) حکمت والا ہے۔ • 1-    And there is not a beast in the earth but the sustenance there of dependeth on Allah. He knoweth its habitation and its repository. All is in a clear record. (11 : 6)

17. Allah is the Sustainer • O’ mankind! Remember Allah’s grace towards you! Is there any creator other than Allah Who provideth for you from the sky and the earth?..... (35 : 4)

18. Allah is the Sustainer Verses of the Qur’an: • [29:62] And if thou ask them, ‘Who has created the heavens and the earth and pressed into service the sun and the moon?’, they will surely say, ‘Allah.’ How then are they being turned away from the truth? • اور اگر تُو ان سے پوچھے کہ کس نے آسمانوں اور زمین کو پیدا کیا اور سورج اور چاند کو مسخر کردیا؟ تو وہ ضرور کہیں گے: اللہ نے۔ تو پھر (وہ) کس طرف اُلٹے پھرائے جاتے ہیں؟

19. Allah is the Sustainer Ahadith of Muhammad (PBUH) : • 1-        Omar-b-al-Khattab reported : I heard the Messenger of Allah say : If you all had relied on Allah with due reliance, He would have certainly given you provision as He supplies provisions to birds who get up hungry in the morning and return with full belly at dusk. (Tirmizi, Ibn Majah)

20. Allah is the Sustainer Ahadith of Muhammad (PBUH) : • 3.       Jabir b. Abdullah reported : The Messenger of Allah (may peace be upon him) said: “O people, Fear God and cut your ambitions of livelihood, for a man will not court death unless he is provided full sustenance (decreed) for him even if he restrains himself from it. So, fear Allah and cut your ambitions in search of livelihood. Take whatever is lawful and leave whatever is unlawful.” • -----(Ibn Majah)

21. Allah is the Sustainer Ahadith of Muhammad (PBUH) : • 4.       ‘Ali (Allah be pleased with him) said: “I heard the Messenger of Allah (may peace be upon him) saying: ‘(on the Day of Resurrection) when there will be no shade except that of the Throne of Allah, the person who undertakes a journey to earn his livelihood and then returns with it towards his dependents, will be under the shade of Allah’s Throne’.” • -----(Masnud Zaid bin Ali)

22. What Does it Mean? • No need to do hard work

23. The revealed book of Islam encourages its followers even on Friday to disperse in the land after finishing their prayer and seek of the bounty of God (62:10). Ahadith of Prophet Muhammad (PBUH) also emphasis the importance of struggle and hardwork put in for earning livelihood for oneself and one’s family.

24. God is Real Owner of Everything and Man is merely a Trustee • The heavens and the earth and everything in the universe belongs to Allah. God is the real owner of everything. • Al-though He has given some rights to man for use of things required by the latter for his existence on the earth. • However, the rights given to man are very limited, the real position of man being that of a trustee and a beneficiary.

25. God is Real Owner of Everything and Man is merely a Trustee • Quranic reference, • Unto Allah belongeth whatsoever is in the heavens and whatsoever is in the earth; and unto Allah all things are returned. (3 : 110) اور اللہ ہی کے لئے ہے جو آسمانوں میں ہے اور جو زمین میں ہے۔ اور اللہ ہی کی طرف تمام امور لوٹائے جائیں گے۔

26. Unto Allah belongeth whatsoever is in the heavens and whatsoever is in the earth. Allah ever surroundeth all things. (4 : 126) اور اللہ ہی کا ہے جو آسمانوں میں ہے اور جو زمین میں ہے۔ اور اللہ ہرچیز کو گھیرے ہوئے ہے۔

27. Everything Created for Service and Use of Man • See ye not how Allah hath made serviceable unto you whatsoever is in heavens and whatsoever is in the earth and hath loaded you with His favours both without and within? Yet of mankind is he who disputeth concerning Allah without knowledge or guidance or a Scripture giving light. 31:21 • کیا تم نے غور نہیں کیا کہ اللہ نے تمہارے لئے مسخر کردیا ہے جو بھی آسمانوں اور زمین میں ہے اور اس نے اپنی نعمتیں تم پر ظاہری طور پربھی پوری کیں اور باطنی طور پر بھی۔ اور انسانوں میں سے ایسے بھی ہیں جو اللہ کے بارہ میں بغیر کسی علم یا ہدایت یا روشن کتاب کے جھگڑتے ہیں۔

28. Concept of Halal and Haram • Foundations of the Islamic economy have been laid on this concept. • This concept reigns supreme in the realm of production as well as consumption.

29. Haram • Certain means of earning livelihood and wealth have been declared unlawful such as • interest, • bribery, • gambling and • games of chance, speculation, short weighing and short measuring, business malpractices, etc.

30. Haram • Similarly in the field of consumption certain items of food are unlawful such as • dead animals, • blood, • swine flesh • animals slaughtered in the name other than that of Allah.

31. Haram • Even expenses on certain items such as • drinks, • narcotics, • debauchery, • prostitution, • pornography, • things that promote obscenity and vulgarity, lotteries and gambling are strictly inadmissible.

32. Verses of the Quran: • 1-       O mankind! Eat of that which is lawful and wholesome in the earth, and follow not the footsteps of the devil. Lo! he is an open enemy for you.(2:169) اے لوگو! اُس میں سے حَلال اور طیّب کھاؤ جو زمین میں ہے اور شیطان کے قدموں کے پیچھے نہ چلو۔ یقیناً وہ تمہارا کھلا کھلا دشمن ہے • 2.       O ye who believe! Eat of the good things wherewith We have provided you, and render thanks to Allah if it is (indeed) He Whom ye worship. He hath forbidden you only carrion, and blood, and swine flesh, and that which hath been immolated to (the name of) any other than Allah. But he who is driven by necessity, neither craving nor transgressing, it is no sin for him. Lo! Allah is Forgiving, Merciful. • (2:172-173) • 3.       And eat not up your property among yourselves in vanity, nor seek by it to gain the hearing of the judges that ye may knowingly devour a portion of the property of others wrongfully. • (2:188)

33. O ye who believe! Eat of the good things wherewith We have provided you, and render thanks to Allah if it is (indeed) He Whom ye worship. He hath forbidden you only carrion, and blood, and swine flesh, and that which hath been immolated to (the name of) any other than Allah. But he who is driven by necessity, neither craving nor transgressing, it is no sin for him. Lo! Allah is Forgiving, Merciful. (2:173-174)

34. اے وہ لوگو جو ایمان لائے ہو! جو رزق ہم نے تمہیں دیا ہے اس میں سے پاکیزہ چیزیں کھاؤ اور اللہ کا شکر ادا کرو اگر تم اسی کی عبادت کرتے ہو اس نے تم پر صرف مُردار اور خون اور خنزیر کا گوشت اور وہ حرام کیا ہے جس پر اللہ کے سوا کسی اور کا نام لیا گیا ہو۔ البتہ اس پر کوئی گناہ نہیں جو (بھوک سے) سخت مجبور کردیا گیا ہو، نہ حرص رکھنے والا ہو اور نہ حد سے تجاوز کرنے والا۔ یقیناً اللہ بہت بخشنے والا (اور) باربار رحم کرنے والا ہے

35. Equity and not Equality • Islam establishes equity, fairness and justice in the production and distribution of wealth, and in ownership of means of livelihood. • Recognises no equality among human beings as regards the economic means and possession of worldly wealth. • This inequality has been presented by the Qur’an as a part of Divine Economic order.

36. Equity and not Equality • The Qur’an does not consider these inequalities in the distribution of Divine sustenance as punishment or • Taking the existence of inequalities as a part of divine scheme, the Qur’an advises its followers not to covet those things in which Allah has made some of them excess others. God in fact tries and tests the human beings.

37. Equity and not Equality He it is Who hath placed you as viceroys of the earth and hath exalted some of you in rank above others. That He may try you by (the test of) that which He hath given you………6:166 اور وہی ہے جس نے تمہیں زمین کا وارث بنادیا اور تم میں سے بعض کو بعض پر درجات میں رفعت بخشی تاکہ وہ تمہیں ان چیزوں سے جو اس نے تمہیں عطا کی ہیں آزمائے۔ یقیناً تیرا ربّ عقوبت میں بہت تیز ہے اور یقیناً وہ بہت بخشنے والا (اور) بار بار رحم کرنے والا ہے۔

38. Difference between Islamic Economic and Western Economics 1 Difference in Basic Assumptions • View of the Universe • Concept of Man • The supposition of the Economic Man • Difference in operation of Moral values • Difference in Aims • Difference in Scope • Difference in the Mode of research

39. Status of Sources of Income Labor + Capital (Entrepreneurship) Ideal Permitted Partnership (Labor + Capital) Restricted Machine Middlemen Land Prohibited Money Medium of Exchange

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