22. Islamic Economic System (Basic Concepts) Course Instructor Islamic Studies:

1. 22. Islamic Economic System (Basic Concepts) Course Instructor Islamic Studies: Mufti Omer Rafique

2. IMPORTANCE: • The main object of Islam is to develop man physically , mentally and spiritually. Economics plays great role in these things therefore Islam gives much importance to economics. • This is fact that the most social evils generate from the bad distribution of wealth and Islam desired that the wealth should be distributed equally among all the peoples. Holy Prophet(SAWW) has said: “Poverty may turn a believer to kufur” کاد الفقر ان یکون کفرا

3. ISLAMIC ECONOMICS • DEFINITION: • a. Economics is the study of those activities which involve money that how man kind organizing its consumption and production activities. • b. Economics is the study of those activities which involve money, its exchange and transaction among the people • c. In Islamic terminology, Economics is the study of those activities which involve money, its exchange and transaction among the people according to the orders of Islam.

4. Salient features of islamic economic system: • 1.LABOUR: • In Islamic economic system labor has a great role and a great importance because earning factor of production is labor. It is physical and mental labor of man which produce industry and machinery. Holy Prophet (SAW) said: “Pay the labor his wages before his sweat dries”. Islam says that pay the salary of labor according to his status that he can easily complete his basic needs and necessities. Islam also says that be kind for them and don’t give them very much hard work which is beyond their capacity. Always help them, bring out them from their difficulties and problems. Help them for their health and fulfill all their requirements.

5. 2.INTEREST: • In Islamic economic system, Interest (usury) is not allowed. Interest means the excess amount in a trade without any exchange • Quran says: “Allah permitted trade and forbidden interest (usury)”. • The difference between interest and profit is that: (a) in case of interest, there is no chance of loss but in case of profit, there is a chance of loss. (b) interest is fixed but profit is not fixed. (c) profit required initiative, efficiency and labor but interest does not required anything (d) in case of interest you know your return but in case of profit you have to work for your return.

6. 3.CONCENTRATION OF WEALTH: • Islam is opposed to the concentration of wealth in a few hands. In this regard Holy Quran says: “Wealth may not make a circle only between the riches among you” • From this verse it appears that the real owner of every thing even wealth is Allah, the believer is only the trustee. It is the duty of Islamic state to take the surplus wealth from the rich people and distribute it to the poor and needy persons.

7. 4.ZAKAT: • Zakat means Purifications. Islam prescribes compulsory social insurance through its system of zakat. The order to pay zakat has been given in Holy Quran at 27 places. • Quran says: “And pay the zakat to the poor” • Holy Prophet says: “Zakat is the treasure of Islam”

8. It has three dimensions: • Economic: (It is a circulation of wealth) • Moral: (It removes the greed of wealth) • Social: (It is help for the poor people) • Zakat should be collected from the rich people and paid to the poor people. Hazrat Abu Bakar started Jihad with those people, they were not giving the zakat.

9. 5.CONCEPT OF OWNERSHIP: • According to the injunctions of Islam individual ownership of objects is allowed but this only with some conditions. A person can possess things of necessities and he is the owner of which he earns with his own hands but his earning should be honestly, lawfully and without harming people and society. • Quran says: “ A legal earner is beloved of Allah” • Another place Quran says: “A man receives but only that for which he strives” • In socialism system of economic, there is no concept of ownership and every thing is for state but in Islamic economic system, the individual owner ship is permitted.

10. 6.HOARDING: • Islam is opposed to hoarding , hoarding means to stop the things which are required by the publics. • Hoarding means to collect a huge amount of money and not to spend in the way of Allah. Quran says: “Those who collect gold, silver, money and not spend in the way of Allah. Tell them about the serious punishment on the day of Judgment”. • The person who start hoarding is also a criminal for stopping the circulation of wealth in the society. • Quran says: “He think his wealth will save him from the fire of Hell”