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Islam
Comparative Economic
Systems
Economic System-Theme
An economic system is the method used by a
society to produce and distribute goods and
services
What determines which type of
economy a country has?
Explosion of
Debt
Explosion of
Over-supply )26(
Competition
Explosion of
*****
And give to the relatives due and to the
needy and the wayfarer, and do not squander
Explosion of Explosion of
wastefully. Surely the squanderersExplosion
are the of
Over-production Over-utilization
fellows of the devils and the satan Over-wastage
is ever
ungrateful to his Lord.
(Isra 26-27)
Islamic Economic System
Three economic modes of Muslims
Moral Hallal means of living
(Height of Distribution of entire excess wealth
spiritual Hardy any situation of Zakat
living) Simple lifestyle
And Allah has made some of you excel others in wealth. (Nahal 71)
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)
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)
Welfare of Humanity
Human Welfare
( Hashar
7)
(Baqra 279)
(Baqra
219)
)34(
But
They
Allah
with
if ask
in
you
has
order
Allah
you
and
doallowed
thatnot
how
His stop
wealth
much
Messenger
taking
business
may
they
not
usury,
should
become and
then
spend;
be ready
forbidden
confined
Say:
for
"What
to
usury
the
waris
beyond
rich
(Baqra 275) amongst your needs."
you. Thus Allah makes clear to you His
revelations: In order that you (Tauba may ponder. 34-35)(Baqra 219)
Dimensions of
Islamic Economic System
Elevating ethical/
spiritual values
evils/crimes
Restricting
Inter-dependent &
Inter-connected (Synthesis)
Permitted
Partnership
(Labor + Capital)
Restricted
Land
Prohibited
Distribution Channels ()
Compulsory
Marriage payment and
penalties on certain faults
Taxes ()
Taxes imposed by state to
provide basic needs of its citizens
% of contribution
Zakat ()
Payable on wealth of individual
Inheritance ()
Strictly in accordance with injunction of Quran
Voluntary Charity ()
Entire wealth in access of basic needs
Stock Exchange Transactions
Interest based Trade*
Load taken/given at interest Risk capital investment at
with security against fully profit/loss + Work + Public
insured property (margin benefit
*Limited liability is an exclusion
financing)
Public Benefits
Gambling Does the activity lead to
Profit/loss without efforts at the employment/resource
expense of someone else generation or brings harm to
the public interest
Public Benefits
Gambling Does the activity lead to
Profit/loss without efforts at the employment/resource
expense of someone else generation or brings harm to
the public interest
As per Islamic law house is right of every Muslim. Anyone trying to grab the property for
the purpose of trade/profit making is haram because it is a gamble (profit/loss at the
expense of others) and it is also not a business/trade as it does not lead to any fruitful
business activity which entails hardwork. As a consequence of profit making price of the
property rise and takes it out of the reach of legitimate buyer for building his house
State Financial Crime: Inflation
4,690
5,000
4,000
Value Rs
2,000 1,479
1,006
685
1,000 466
216 317
100 147
0
0 5 10 15 20 25 30 35 40 45 50
Year
Limited Liability
Resources Credit
Islam does not Judges Production
permit
Corporate
limitation Capitalist CitizenCommerce
Law
of liability. Every (limited liability)
individual is fully (1886)
responsible for Politicians Trade
his deeds
Jobs Media
Corporation:
An
ingenious
device
for
obtaining
individual
profit
without individual responsibility.
Allah does not impose upon (Fatir 18) anyone a duty but to the
Nor can a bearer of burdens bear another's burdens if one heavily laden should
Moto: Profit,
extent of hisgrowth
ability;&He gets reward
Competition and for every good deed,
amorality,
call another to (bear) his load. Not the least portion of it can be carried (by the
dehumanization,
and
other).suffers forhe
Even though opposition
every to nature.
ill that
be nearly he earns. (Barea 286)
related.
Does Islam allow any Banking System?
Harmony
Savagery Courage
Exploitation
Tensions Affection
Fear Sincerity
Hunger Freedom
Servitude Fortitude
Debt Munificence
Threats Zeal & Endeavor
Summary of natural economic System of Islam
1. Islamic view is that real economy controlled
2. money is only a supportive function, prhibit earning money through
money and compels people to work and invest money in business
ventures
3. Protects labour/work
4. Eliminates sources of unearned income (interest/speculation)
5. No protection to capital and uses wealth in real economic activities
integrated with physical laws of nature.
6. Collect Zakat (wealth tax) no tax on income or consumption.
7. It is responsibility of individuals for meeting needs of poor and social
welfare of society
8. State is responsible for meeting basic needs of citizens and taking
administration/legal measure for checking concentration of wealth in
few hands
Conclusion
Story of Past Rebels
Tower of Babel
X
How many populations have We destroyed, which were given to wrong-
doing? They tumbled down on their roofs. And how many wells are lying
idle and neglected, and castles lofty and well-built? (Hajj 45) X
War with
Economic Interest Allah & Rasul
Steps for healing the money system
1. Limit growth and focus on wellbeing
2. Limit Debt & encourage entrepreneurs
3. Introduce zero rated debts
The money
4. Impose Charge on money holding
system is like a
5. Make speculation a criminal offence
cancer that
6. Incentivise productive work and investment;
consumes its
7. Tax Unearned Gains
host and
8. Replace labor for energy use
ultimately
9. Strengthen the social fabric of family and
community destroys itself
10. Lease land for living/business purposes
Healing the Money System David C. Korten: http://www.converge.org.nz/pirm/money.htm
Action at personal level
1. Adopt simple lifestyle (Resource conservation & sharing)
2. Get out of interest/speculation based investments
3. Fully utilize goods before replacement
4. Eliminate moody craving for extravagant gadgetry
5. Get rid of fashion (a bio-economic disease of the human
mind )
6. Demand durable goods to be made still more durable by
being designed so as to be repairable.
7. Get closer to the nature as possible
8. Join hands to fight for reform at state level