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An Islamic Economy

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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An Islamic Economy

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  1. An Islamic Economy Example of a traditional economic system

  2. Theory of Capitalism Private ownership, hard work, self-interest, and amassing wealth are the principles of the economy. Where does ETHICS come in?

  3. Economics in a traditional Arab perspective: • No word for economics in classical Arabic. • I qtisad: Means moderation and keeping to the golden mean.

  4. Islamic Economy is composed of three basic components. • Principle of multi-faceted ownership. • Economic freedom within a defined limit. • The principle of social justice.

  5. Ownership in an Islamic Economy • 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

  6. Ownership in an Islamic Economy • 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.

  7. Economic Freedom in Islam • 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

  8. Self-interest in Islam? • 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.”

  9. Islamic Principle • 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.

  10. Islamic Principles of Self-Interest • 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.

  11. Islam and Interest on Money • 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.

  12. Islam and Social Justice • 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.

  13. Islam and Social Justice • 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.

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