Surah At-Taubah: 34

O you who believe! Verily, there are many of the (Jewish) rabbis and the
(Christian) monks who devour the wealth of mankind in falsehood, and
hinder (them) from the Way of Allah (i.e. Allah's Religion of Islamic
Monotheism). And those who hoard up gold and silver [Al-Kanz: the
money, the Zakat of which has not been paid], and spend it not in the
Way of Allah, -announce unto them a painful torment.
 Surah Al-A’raf : 31

O children of Adam, take your adornment at every masjid, and eat and
drink, but be not excessive. Indeed, He likes not those who commit
excess.
ISLAMIC ECONOMICS

DEFINITION

PHILOSOPHY
IE PRINCIPLES

OBJECTIVES
 DEFINITION OF IE
WESTERN ISLAM

Adam Smith M. Akram Khan

Economics is a science of wealth or
the study of how nations become
rich
D Economics is a study of human falah
E (salvation) achieved by organizing the
resources of the earth on the basis of

Alfred Marshall
F cooperation and participation

Economics is a study of people in I Muhammad Ariff

the ordinary business of life, which Economics is a study of human behavior
examines that of individual & social N that organizes the resources, which is a
action most concerned with the
attainment & use of the material I trust, to achieve falah

requisites of well being T 1st opinion

• Concept of
2nd opinion
• Accept the concept
Economics is a social science that
studies how individual, firms and
I bounty of of scarcity &
wealth unlimited wants
governments and nations make O bestowed by • Driven by value
choices on allocating scarce Allah judgement like
resources to satisfy their unlimited N • Concept of wasatiyah,
wants wasatiyah brotherhood, etc.
 DEFINITION OF IE

• Al-Ghazali (1058–1111) classified economics as

one of the sciences connected with religion,
along with metaphysics, ethics, and psychology.
• Persian philosopher Nasir al-Din al-Tusi (1201-
1274) presents an early definition of economics
(what he calls hekmat-e-madani, the science of
city life) in discourse three of his Ethics:
"the study of universal laws governing the public
interest (welfare?) in so far as they are directed,
through cooperation, toward the optimal
(perfection)."
 PHILOSOPHY
• Islam is a philosophy of ‘RIGHT’ which is best spelt out by 4 ethical axioms:

Al’adl
Ikhtiar
wal ihsan

Tawheed Fardh
Ethical
Axioms

• The Islamic concept of freedom is different from the concept of the

absolute autonomy of Man, which is secured by obeying the laws that
Man makes for himself. But, in Islam = everything is determined by Allah

• Islam reject the concept of absolute ownership, either of the individual or

of the state.
 PRINCIPLES
• To determine what is permitted or lawful (Halal) and what is forbidden
Allah determined or unlawful (haram) is the soul privilege of God. None but God is
Right & Wrong empowered to pronounce what is right and what is wrong.

• Within the bounds of lawful (Halal) and unlawful (Haram), the rules of moderation and
prudence, the man has been allowed to make full enjoyment of God’s gifts bestowed on him.
Principle of Use • “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.” (2:168).

• Islam unequivocally discourages its followers to cross the limits and follow
Principle of extremes. The Muslims have been called by the Qur’an a middle nation
Moderation (2:143). Therefore, the principle of moderation carries paramount
importance especially in the economic field.

• Islamic principle of economic freedom means that an individual has

Economic been allowed liberty by God to earn wealth, own it, enjoy it and spend
Freedom it as he likes.

• Islamic principle of justice operates in every sphere of human activity, may it

Principle of be legal, social, political or economic. Islamic economic system, in fact is
justice based upon the principle of justice which governs all the basic aspects of
economy like production, distribution, consumption and exchange.
OBJECTIVES of IE (MAQASID)

Achievement
of al-Falah

Achievement
Fair &
of moral &
Material
Equitable
Development Distribution

MAQASID

Promotion of Provision of
Brotherhood Basic Human
and Unity Needs

Establishment
of Social
Justice
 OBJECTIVES OF IE
1. Achievement of Al-Falah
The first and the foremost aim and objective of
Islam is falah or well-being of the mankind in this
world and in the next world. That is why al-
Qur’an, admires those who pray to God : “Our
Lord ! Give unto us in the world that which is
good and in the Hereafter that which is good, and
guard us from the doom of fire……”
(2 : 201)
MAQASID
3. Provision of Basic Human Needs
It is also an important purpose and objective of
the Islamic economic system that basic
necessities of life like food, clothing and shelter
should be provided to all the citizens of the
Islamic state.
i.e: Dharuriyat, Hajiyat & Tahsiniyat
2. Fair and Equitable Distribution
The second most important objective of the
economic system of Islam is to make distribution
of economic resources, wealth and income fair
and equitable. Islam discourages concentration of
wealth in few hands and ensures its circulation
among all the sections of society.
4. Establishment of Social Justice
One of the major objectives of the Islamic
economic system is to establish socio-economic
justice among all the members of the nation. Al-
Quran says: “He (Allah) placed therein firm hills
rising above it, and blessed it and measured
therein its sustenance in four days, alike for (all)
who ask” (41 : 10).
 OBJECTIVES OF IE
5. Promotion of Brotherhood and Unity:
“It is not righteousness that ye turn your faces to
the East and the West; but righteous is he who
believeth in Allah and the Last Day and the Angels
and the Scripture and the Prophets; and give his
wealth, for love of Him, to kinsfolk and to orphans
and the needy and the wayfarer and to those who
ask, and to set slaves free; and observeth proper
worship and payeth Zakat”
(2 : 177).
6. Achievement of Moral and Material
Development:
The economic system of Islam aims at material as
well as moral development of the Muslim
community. It achieves this objective through its
system of taxation and fiscal management
particularly through Zakat.

MAQASID

7. Circulation of Wealth:
About hoarding of wealth the Quran says: “They
who hoard up gold and silver and spend it not in the 8. Elimination of Exploitation
way of Allah, unto them give tidings of a painful
doom. On the day when it will (all) be heated in the To achieve this end Islam has taken many
fire of hell and their foreheads and their flanks and effective measures such as riba, slavery,
their backs will be branded therewith (and it will be gharar, gambling and etc.
said unto them). Here is that which ye hoarded for
yourselves. Now taste of what ye used to hoard:”
(At-Taubah-9 : 34-35).
 EXERCISE

• Explain the views of five (5) Islamic economics

scholars on concept of scarcity of resources and
unlimited wants.

*** Submit on 14th September 2014

 EXERCISE
• Explain two (2) differences of objective
between Islamic and conventional economic.

• How economy can encourage human

achieve al-falah? Explain.
*** Submit on 21st September 2014