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The Islamic Economic System
The Islamic Economic System
The Islamic Economic System
1. ECONOMIC SYSTEM
2. CHARACTERISTICS OF ISLAMIC
ECONOMIC SYSTEM (IES)
• PROPERTY OWNERSHIP
• MOTIVATIONS/INCENTIVES
• DECISION MAKING
• COORDINATION MECHANISMS
• Components of a system
•Entities/components/groups that are working together
•Mode of interaction - relationship among components
•Goal/Common objective – basis for interaction that has been planned,
resolve by working together
•Society organizes itself according to its values, culture,
worldview and its sources of authority
•Institutions, plans and meaning/priorities of goals differ
between societies 4
•Approaches to categorize ES
•Theoretical approach: consumption, production, distribution,
market structure
•Sectoral approach: agriculture, manufacturing, services
•Comparative/Traditional approach: capitalist, socialist, mixed
economy
SUB-ST
P E S
•Definition
• Involving a system of rules of access to and control of resources
•Ownership of property; rights
•Rights that affect object’s disposition/utilization
•Components
• Object: anything that can be owned; something of value
permissible and capable of being possessed. Can be corporeal
(having a physical dimension) or incorporeal (such as intellectual
property)
• Content:
•Rights-to own, possess, use, priority, exclusion, income, security,
dispose; bundle of rights differ, either complete ownership or
incomplete
•Obligations/duties: not to abuse or misuse, not to hoard, must
meet all obligations, etc. Usually moderating factor between
individual/society’s right
1/03/2009 FOUNDATIONS OF ISLAMIC ECONOMICS
PROPERTY OWNERSHIP
•Mal/amwal: mentioned 86 times in the Qur’an
•Refers to wealth, property, possessions, whatever one possesses
•Most versus deal with content aspect rather than the object
•Milkiyyah: To possess, control, have power/authority over
•Islamic perspective on property ownership:
•Absolute owner of property is Allah: the creator of everything
•Man as khalifah and abd has relative and conditional ownership:
Utilization for betterment of mankind; there are shares of others
3. Man is responsible to society and accountable to God for his property:
property are trials and man will be rewarded
4. Labor and need are both legitimate bases for ownership
5. Both private and public property are legitimate kinds of property in
Islam
•Three types:
1. Private property
2. Personal property: for consumption; personal belongings
3. Public property
•2 categories
•State-owned:
•Has complete rights and can decide use for public interest, even if it means
giving to private sector to manage
•Example of corporatisation, privatization of previously public property
•Common:
•Must be equally accessible to all members of society
•Public parks, beaches, etc
Private Public
Natural Common
Resources State