Islam is not only a financial framework, but rather, an exhaustive convention. A thorough principle is not recently worried with one specific part of human life; rather it is worried with all parts of human life.
According to Islam, this common life is a test for people. The way of this test requires human reliance which then requires contrast in positions, enrichments and capacities. This subsequently brings about distinction in riches and salaries that individuals have. In any case, then, both, the rich and the poor as a feature of this test will be judged on the premise of how they each exclusively follow up on the benchmarks of appreciation, tolerance, compliance and maintaining moral rules recommended by their Creator for them through an inbuilt still, small voice and through direction gave by means of sending Prophets (peace be upon them all).
People are substantially more than utility amplifying machines. They are equipped for utilizing both material discernment and good soundness to separate appropriate from off-base. They require fortification to receive excellencies impacted by an inward inclination other than simply material interests. This inward inclination can be stirred by looking past utility expansion models to re-recognize the foremost actuality that people are good being than only an instrument for most extreme material progression for self.
History of financial man is intriguing. He has utilized the nature's gifts to discover and make new and imaginative methods for boosting utility. Be that as it may, in any case, at all focuses in time, he doesn't feel satisfied. He stays poor "moderately" to the boundless yearnings and nature's confinements. The fantasy of being completely separated just remains a fantasy in everybody's life. Be that as it may, then, everybody accomplishes it one day. Everybody achieves a place where he is not joined by anybody. It's his or her grave. Faith in life in the future is the main thing that offers intending to this world and life.
In the standard financial matters, utility (fulfillment) is thought to be achieved when the individual himself/herself devours the material products/administrations which bring fulfillment. Despite the fact that, there is room in utility amplification models to fuse sympathy and benevolence, at the same time, the models stay unbiased and maybe properly so the length of their targets are limited to "portrayal" and "expectation" as opposed to 'medicine'.
Islamic financial aspects consolidates moral values and avoids from the utilization package different merchandise which bring either private misfortune or welfare misfortune to the general public. Besides, the moral values in Islamic financial aspects are more complete.
Second, Islamic financial matters conveys a long haul point of view to the quest for self-enthusiasm by illuminating people about the constructive and pessimistic outcomes of their activities/decisions in the life from this point forward.
According to Islam, the inclination to look for common joys from specific merchandise/administrations and activities/practices is characteristic. The test is to sustain one's heart and battle these propensities from developing past a specific level. This test is for every individual in his/her individual limit. We can't totally deny those inclinations. Neither Prophet Muhammad (peace be upon him) nor the devout caliphs (rta) utilized any methods other than good influence to instill a parallel honest conduct close by these regular inclinations with the goal that they stay insignificant propensities, i.e. sufficiently feeble to not impact essential decisions people make in matters including moral issues.
Instead of complimenting people in their bestial impulses to continue having one-peered toward concentrate on material prosperity just, Islam teaches devotion, benevolence, collaboration and collective duty in people. In a few cases, Islam controls expressly to maintain a strategic distance from indulgence, sumptuousness and utilizing certain items and administrations which hurt a human's moral presence and prosperity either exclusively and additionally hurt the general public all the while.
Financial matters says that there is an exchange off in each asset use as each asset has substitute employments. One may feel that taking a stab at achievement in life from now on would require an intense exchange off between material interests and taking after Allah's will. Without a doubt, if material desire is favored over Allah's will, there will be changeless misfortune in life in the future, however that does not block us from not being able to profit by Allah's endowments in this world.
Monday, April 17, 2017
Thursday, April 13, 2017
Notions of Free Market and Social Welfare in Islamic Economics
Jamia Millia Islamia, New Delhi, India
Islam as a guide to human development. It is always suppression economic enterprise and transactions emanating out of hard work to earn more and more through halal (permissible) channels. Prophet Muhammad (PBUH) himself has engaged in different wage-earning professions like rearing of sheep, agent of trade and business, Etc. The Prophet was once one of Hejaz's richest businessmen, one of the most trusted trade agents including his wife Khadeja bint Khuwailid. After Shimira (immigration) and the Prophet's reconciliation of his followers in Madeena, they established the prophets of the market (according to the prophets of the guidelines)
Social welfare in Islamic economics
slam emphasizes cooperation and harmony, as well as spending money and material for achieving this goal (Zaman, 2008). In the capital market, morality is to constrain people's behavior, thus restraining the economy. But in the Islamic economy, philosophy, morality and the pursuit of virtue is the ultimate goal, the enterprise is engaged in this goal. Support charity, engage in welfare activities, enhance the company's reputation, the Islamic market is the pursuit of the interests of society as a whole rather than the interests of some individuals. The basic idea of Islam is to promote all positive values and maximize the existence of each individual and social life. Therefore, in the context of the Islamic market, "profit optimization" will be more than the capitalist profits to maximize the market demand, but also better protect the interests of citizens. The concept of profit optimization can best be explained by doing business with Islamic rules, strictly observing and gaining more and more profits to adhere to social and economic equality. Even in the free market, Islam also instructs to overcome the love of wealth by pursuing demand and abandoning demand to pursue modest consumption and giving others, especially the poor (Zaman, 2013). To sum up, there is a market mechanism in the Islamic economy, which simultaneously increases and maintains social wealth. It delineates the line between good and evil (or legal and illegal), improves the operation of the market in the right way, rather than system intervention to curb market freedom. The provisions of Islam are some form of prohibition in the form of certain market norms. Islam provides the main norms for maintaining market areas: Islam (Islamic Judges), production specifications, pricing, promotion and advertising, and customer satisfaction. On the other hand, Islam strictly prohibits certain immoral market activities like riba, Gharar, Maisir and Qimar, Najash, Ghabalah, and Ihtikar. In different verses of Quran (23:51, 2:68, 2:72, 7:60), it has been demanded from the people to consume "reliable quality" and "halal" goods. In another verse (6: 115) God orders his slave to be straightforward and do justice in all transactions。It can be analyzed market share from these verses. Islam revolves around three basic characteristics: "reliable quality", "honest", "frank". Because these three are the basis of justice in the Islamic market
As mentioned above, the quality of the production process is critical in the Islamic ethics of the Qur'an consumption of quality goods and services. The production process of the Islamic market is guided by the principles of legality, purity, existence, disposability and precise determination. First, the product should be legal and will not lead to any form of boring mind, leading to pollution or immorality; second, the product must be owned by the owner; third, the product must be deliverable, because if the product sales can not Such as the sale of birds flying in the sky or out of control animals; fourthly, the sale of goods must determine the quantity quality; fifth, the object should not be najas or unclean (Saeed et al., 2001). About these specification.
Prohibitions of Islamic Market
The Islamic market forbids the development of some commercial evils. So that all people in this market can enjoy a fair competitive environment.
Riba: In Islamic perspective, this law has been introduced to prevent the accumulation of the wealth in few hands Stands against the concentration of wealth in few hands and needs "to to allowed it (the money) to circulate Among Q "(Quran 59: 7). Of, different from the regular market, the transactions of Islamic market, Especially the capital-free mechanism of sharing profit and risk between the Provider of the finance and the beneficiary of the service.
Gharar: This is due to the lack of clarity of the subject or price caused by the uncertainty or harm in the contract or exchange. Islam prohibits any commercial contract market involving elements of Gharar. In the definition of "Fiqh", Gharar is selling goods that are not in the hands or sell goods Aqibah (consequences) do not know or sell unsold goods.
Maisir and Qimar: Maisir is the occasional acquisition of wealth, and not engaged in any business whether or not at the expense of other people's rights. On the basis of this definition, the modern Islamic market space does not allow lottery gambling. Qimar is also another type of opportunity game at the expense of someone else at the expense of others. As Islamic law strictly prohibits the Islamic market space from all the chance of the game. The game of opportunity makes mankind more free and greedy. It creates a habit of making money without taking any risk or doing any work. The same human mind is also able to lead to the creation of an idle society and a luxury lifestyle in all the hula means. Money is valuable to be achieved by working hard or taking risks.
Najash .: This is a kind of interference in the market that artificially creates price increases. The price of the tender goods is not intended to deliver the goods, is not allowed, The prophet said: "If somebody interferes in the market to create artificial rise in the prices, Allah Has right to cast his face down in the hell ".
Ghabalah. The quality of the goods is too high and the hidden misleading promotion is misleading. Since it includes the nature of deceiving customers,it is prohibited in Islam. It is seen In the traditions of Prophet PBUH that: "Refrain from swearing much while selling or doing business, for it May increase business (in the beginning) but beverage destruction (ultimate) "
Ihtikar. Is another way to raise the market price by creating artificial scarcity. If traders, whether wholesale or retail, are protected by the stock secretly create the scarcity of necessities, Islamic law prohibits the practice of the market. Yahya narrates that: Sa’id bn Al Musayyab said that Ma’mar reported Allha’s messenger as saying: “One who hoards is a sinner. It was said to Sa’id: ‘You also hoard’. Sa’id said: ‘Ma’mar who narrated this badith also hoarded’”. It can be analyzed from this Hadees that hoarding which is sin has a specific definition. According to the scholars of jurisprudence, hoarder is condemned as a sinner who withholds goods in the market from a genuine consumer for the purpose of creating artificial scarcity and then takes undue advantage of the helpless situation of the people (Khan, 2009).
Zaman, A. (2008). Islamic economics: A survey of the literature. Birmingham: University of Birmingham.
Saeed, M., Ahmed, Z. U., & Mukhtar, S. M. (2001). International marketing ethics from an Islamic perspective: A value-maximization approach. Journal of Business Ethics, 32(2), 127-142.
Zaman, A. (2013). Islam versus economics. In K. Hassan, & M. Lewis, (Eds.), Oxford university handbook on Islam and the economy. London: Oxford University Press.
Khan, M. A. (2009). Economic teachings of Prophet Muhammad (may peace be upon him): A select anthology of Hadith literature on economics. New Delhi: Adam Publishers.
Wednesday, April 12, 2017
Islamic economists have argued for the adoption of a profit rate, rather than an interest rate.
Riba (interest or usury) is fundamentally prohibited both by the Qur’an and the Sunnah. On the concept of interest, there is no doubt or dispute among Muslims that it is absolutely prohibited. In a modern economy in which interest is a fundamental part, this can lead to a necessary change of objectives and perspectives when working within the framework of Islamic economics.
One of the main issues of prohibiting interest is that interest rates are used to regulate demand in modern finance. A particular interest rate is equivalent to a price for a particular investment. With no interest, credit becomes impossible to handle under traditional capitalist models. Islamic economists propose replacing interest rates with profit sharing, selling goods for their cost, or even leasing. All of these alternatives would necessarily make certain speculative practices and artificial interest rate manipulation practices obsolete. However, Islamic economists agree that this would actually be a good thing. One possible alternative consists in the creditor acting as a partner in a contract between an investor and an entrepreneur. Basically, in Islamic economics banks must be able to generate returns through investments in productive projects rather than relying solely on interest rates.
International economics also rely heavily on interest rates. One of the main problems that plague economies, especially those of third-world countries, is the presence of a crippling foreign debt. Corrupt leaders, or incompetent managers can often borrow money without restrictions, and international financial institutions lend it without reservations because interest guarantees a return on capital. In these cases, Muslims find it objectionable that the lenders take absolutely no responsibility in making sure that the projects in which the money will be used are viable and competently managed. This results in a debt that is exploitative and oppressive, and the does not benefit society in any tangible way. It also results in a stunted growth and development due to having to service the crippling debt incurred. Interest-free debt could be easily managed among countries using international financial institutions like the International Monetary Fund.
Islamic economists have argued for the adoption of a profit rate, rather than an interest rate. This can be used to evaluate the quality and return of specific investments and entrepreneurial activities. This concept also lends itself to interacting with countries that do not use an interest-free system. While many economists will argue that a bank interest rate is necessary for currency and monetary policies, Islamic economists have proposed other rates that can be used instead of interest. Countries like Pakistan or Sudan have adopted alternative rates for setting monetary policy, usually set by the government in a way that will benefit the public.
The prohibition of Riba in Islam is very obvious from the Quranic verse “O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful” 230 Al Imran, All Muslims agree that riba is prohibited, however in the modern economy interest rate is a main part, that is why Islamic Economics differ from the modern economics.
Interest rate plays a role of stabilizer to the economy and it regulates the demand, interest rate is a price for investment, when there is no interest rate people will not lend their money; however Islam proposes a shared profit rather than an interest, Islamic economists agree that it is a good thing and a very possible alternative, and Islamic banks should invest with the investors and share the risk and profit with them.
Another problem is that international economics rely on interest rates, and especially in 3rd world countries they have crippling foreign debt this is because they have corrupted governments and incompetent managers, they take no responsibility because their money will come back with an interest, however in the case when they cannot pay their debt because of the undeveloped business environment and their economics situation, so the debtors might not return their debt and they have debt however interest-debt could be a solution and it is a benefit for the society.
Islamic economists agreed on a profit-rate, it means that the lenders will share risk with the investors and they will get benefit; which is an Islamic perspective.