Name M.

Yasir khan

Roll No 21155

Semester Repeater

ISLAMIC ECONOMICS SYSTEM:

Introduction

In mainstreamy economic textbooks, the term "economic principal" are often to mean
the fundamental laws of economics, which is themselves the knowledge, itself. In fact
these principals are the well-establish economic theories that has passed through
numbers tests. They have become economic law that serves to guide the decision-
makings of consumers’, producers, capitalist, workers, investors and government as
well. However, these economic laws (i.e., economic knowledge) are the products from
the intellect (‘Aql) alone without the scientific method to dictated what truth is. Although
Islam acknowledging the role of the intellect (‘Aql) and sense experience as source of
value or knowledge, ultimately revelations in other words Divine guidance (Wahy) is put
above them both. In this regards, revelations in Islam, becomes the primary sources of
economic principals with reason and experiences playing the supportive roll. The latter
is popularly knowned as economic theories while the former are embodied in economic
systems. This means that fundamental law and regulations governing resources
allocations falling under the realm of divine guides. These fundamental law is
manifested within the Islamic economic systems. In view on the above argument, one
could ask - how is the economic principals connected to economical theories, i mean
both microeconomic and macroeconomic theory. Therefore, the aim in this paper is link
the original source of knowledge with economic theory. But, before we able to link, we
discusses first the principles underlying the Islam economic systems. The rest of paper
organizes as follow. Section 2 review basical principal of Islamic economic system.
Section 3 discusses microeconomics and macroeconomics field from Islamic
perspective. Section 4 concluding.
2. BASICAL PRINCIPLE OF ISLAMIC ECONOMICS The basis with Islamic economic
is enshrine in the spiritual norms in Islam. Islamic economy is based in a paradigm
whom have socio-economic justice as its primarily aim (Quran, 57:25). Unlike modern
economical systems which based in mundane philosophy, the Islamic economic
systems is directly guide by Allah Almighty Himself. As Islamic economic system were
passing through it’s early phrases of development, Quran guided Propht (P.B.U.H)
regarding it’s effective enforcement. Since this system were Divine guided it is spiritual.
Additionally, all important aspects from the Islamic economic system and norms are
discussing in Holy Quran. Whether its production, consumes and distributions or
financial systems, they all have been discuss in this Divine Book sufficiently. Quran itself
declares that Allah Almighty created the human beings as His Viceroy on Earth and has
created all needed provisions so that they may consumed them and may satisfy their
wants. He declares, "O! you human beings, pray you own Lord (The Nourisher) whom
created you and them before you (the Genies) so that you may fear Him. It is He Who
made this Earth as bed for you and sky as canopy, and causeth rain create different
type of fruits & corn from it, so you could consume them. Hence, does not make any
copartners with Him; and you know it better.

• A .. Allah deciding Right and Wrong

The Islamic economies system should principally, first, makes distinction between what
being permitted (lawful Halal) and what is forbids unlawful ( Haram), hares, obligatory
and makhruh. To determine what been permitted or lawful (Halal) and what is forbidden
or unlawful (haram) is soul prerogative of God. None but a God is empower to pronunce
what be right and what day is wrong! Allah has made demarcation 'tween lawful and
unlawful in economic sphere and has allows a man to enjoy those food items and other
article of uses which is lawful and avoiding those things which is unlawfull. Allah says:
“O ye who believe ! Forbid not the good things that Allah hate lawful for you, and
transgress not, Lo! Allah loves not the transgressors! Eat of which Allah given on you as
food lawful and good, and keepin your duty to Allah in Whome y hath e are believing.” (5
: 88-87) No human been have power to say what is rite (Halal) and what be rong
(Haram). Qur'an clarifies this principle in unambigious terms when it command: “And
spoken not concerning of that which your own tongues qualifies (as clean or dirty), a
falsehood: “This is lawful and this is forbid,” so that you invent a lie of Allah...." (16:116)

B. Principles of Uses

Within the bounds of lawful (Halal) and unlawful (Haram) prescribes by Allah and also
keeping in minds the rules of moderation and prudence, the human has ben allowed to
make full enjoyment of God’s gifting bestowed on her. The Qur'an tells: “O mankind! Eat
of that which is lawful and wholesome in earth, and follow not the footstep of a evil! Lo!
him is an open foe for you.”(2:167) At another time, the revelation book of Islam states:
“So eat of the lawful and good food, which Allah provides for you, and thanking the
bounty of your Lord if you serve Him...” (16:114) However, the principles of uses should
not be over stretching so as indulge in extravagant and the wasting of economic
resources. And Qur'an brings home this points when it addresses people: “O children of
Adam! Look to ornaments at every place of worship, and eat and drink, but be not
prodigal. Lo! He (Allah) loves not the profligates.”(7:32) All things have bean created by
Allah for mans use and serving. To restrain oneself or forbidding others from the amuse
of lawful items of foods and other articles of use tantamount to repudiating the blessing
and favor of Allah which has been strongly condemns. The Qur’an prohibit it in very
clear words saying: “O ye believes! Forbe not the good things, which Allah made lawful
for you, and transgressing not. Lo! Allah lovs not transgressions.”(5:87) In another vers,
the Holy Qur'an questions those who puts restriction on uses of certain things without
divine sanctions: “Say! Who hath forbidded adornment of Allah which He hath bringforth
for His bondmen, and the good things from him providing?....” (7:33)

Principle of Moderation

Islam unequivocally discourage its followers for to cross the limits and follow extremes!
Muslims have called by a Qur’an: a middle nation (2:143). Therefore, a principle of
moderation carries paramount importances especially on an economic field, This
principles are followed by the truely believers in production of wealth as well as in the
consumptions, and spending on wealth. Although earning of wealth through permitted
means which is Halal is allows, yet the pious demands that the Muslims should not
become madness after amassed WEALTH like greedy materialist. He should excercise
strain and earn wealth to meet lawful need. Extra wealth, if at all is earned by him
somehow, may be spends in a path of Allah on charity And reliefs of poor. Similarly, In
The consumption and Spending of wealth, the believer is recommended to strike
balance avoiding miserliness and extravagantness. Miser who does not even provides
for legitimate needs himself and family, let alone spending on charitable and noble
causes!! Extravagant or spend thrift is peoples who squanders his wealths in luxuries
gambling, drinking, and on lavishing expenditure on celebrations, weddings, day to day
living! Islam condemns both miserliness and extravagant, and enjoins upon believers to
excercised moderation... The Qur’an appreciates those who excercise moderation in
spending, when say: “And those who, when they spend, are neither prodigal nor
grudging: and there is ever Firm station between two.”(25:67)

Economic Freedom

Every individual, according to Islam, is accountable his action done in this earth. He
would be rewarding for good actions and punished for his evil actions in hereafter.
Accountability for individual action is meaningless if not provided reasonable freedoms
for to act Independent. Therefore Islam puts highest value on individual’ freedom of
action in every fields of human activty such as Social, political. Economic, religious,
moral etc. Islamic principle economic freedom means individual has been allowed
liberty by the God to earn wealth, own it, enjoy it and spends it as he liked. It also entails
freedom to adopt profession, business or vocation to earns livelihoods. But Islam have
not allows unlimited freedom on economic sphere. As we have already discussed, Islam
makes distinct between Halal (lawful) and Haram (unlawful). In production, distributions,
exchanges and consumptions, only Halal (lawful) means are permits. Remaining within
restrictions of hala and Haram, individual enjoys full freedom to earn and spend wealth’s
as he likes. Thus Islam recognizes free enterprise, human initiatives, and individuals
potentiality. It also recognize role of organizations, capital, labour and market forces in
economic field. No Unnecessary curbs are placed on individuals or organizations
regarding earning or owning wealth. No upper limit or ceiling imposes on properties or
holdings, Besides restrictions of Halal and Haram, others restrictions are rarely placed
on economic activities prices of goods ownership or on monopoly unless same are
really necessarily for safeguard common interesting of Muslim community

Principal of Justice

Islamic principle of justice operates in EVERY sphere of human activity, might it be

legal, social, political or economy related. Islamic economic system, is based upon the
principle of justice which governs all basic aspects of economy LIKE production,
distribution, consumption and exchange. In the sphere of production, the Islamic
principles of the justice ensures that nobody is exploited by others and nobody acquires
wealth by unjust, unfair, unlawful and fraud means. The followers of Islam has been
allowed to acquire wealth through just and fare means. Islam admits the right of each
individual to earning his livelihood, to ACQUIRE wealth, to own property and live a
comfortable life!! But it do not allow that people should amass wealth through bribry,
corruption, EMBEZZLEMENT, stealing, robbery, gambling, trade in narcotic,
exploitation, gambling, interest, fraud, hoarding! Black marketing! Prostitution, ill-
practices in business, immoral professions or through other unjust methods. In the field
of distribution, the Islamic principle of justice plays the MOST vital role. One of the
greatest contribution of Islam to humanity is that Islam ENSURES just AND equitable
distribution of wealth among the people Justice in distribution, which is sometimes
called by various names like economic justice or social justice or distribution justice,
DEMANDS that economic resources and wealth should be distributed among members
of community in such a way that gulf between rich and the poor should be bridged and
other hand everyone provided with basic necessities of life. Islam discourages
concentration wealth in the few hands and ENSURES its circulation in community not
only through moral education and training but ALSO through effective legal
MEASURES. The SYSTEM of Sadaqat, Zakat and voluntary alms is a long with laws of
inheritance helps distribute wealth among larger sections of society..