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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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.
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Principle of multi-faceted
ownership.
Economic freedom
within a defined limit.
The principle of social
justice.
Ownership in an Islamic Economy
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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
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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
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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?
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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
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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
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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
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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
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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
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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.