Friday, May 14, 2010

The Islamic Economics

Islam takes a positive view of life considering the right of living. The values of right of living, that Islam spreads in all sectors of human activity. There is no strictly common sectors of life according to Islam. Action in every field of human activity, including economics, is spiritual, provided it is in harmony with the goals and values of Islam. It is really these goals and values that determine the nature of the economic system of Islam. A proper understanding of these is therefore essential for a better perspective of the economic system of Islam. These goals and values are:

1. Economic well-being within the framework of the moral norms of Islam;
2. Universal brotherhood and justice;
3. Equitable distribution of income;
4. Freedom of the individual within the context of social welfare.

This list of goals is by no means complete but should provide a sufficient framework for discussing and elaborating the Islamic economic system and highlighting those characteristics which distinguish the Islamic system from the two prevalent systems, capitalism and socialism.

Eat and drink of which God has provided and act not corruptly, making mischief in the world (al-Quran 2:60).

O mankind! Eat of what is lawful and good on earth and follow not the footsteps of the devil (al-Quran 2:168)

O you who believe! Forbid not the good thing which God has made lawful for you and exceed not the limits God loves not those who exceed the limits. And eat the lawful and good that God has given you, and keep your duty to God in whom you believe (al-Quran 5:87-88)

These verses of the Qur’an, and there are many others, strike the keynote of the Qur’an message in the economic field. Islam urges Muslims to enjoy the bounties provided by God and sets no quantitative limits to the extent of the material growth of Muslim society. It even equates the struggle for material well-being with an act of virtue.

When the prayer is ended, then disperse in the land and seek of God’s bounty… (al-Qur’an, 62:10)

Islam goes even further than those verses. It urges Muslims to gain mastery over nature because, according to the Qur’an, all resources in the heavens an the earth have been created for the service of mankind, and because, as the Prophet said, ‘there is no malady for which God has not created a cure’. From this, one cannot but infer that the goal of attaining a suitably high rate of economic growth should be among the economic goals of a Muslim society because this would be the manifestation of a continuous effort to use, through research and improvements in technology, the resources provided by God for the service and betterment of mankind, thus helping in the fulfillment of the very object of their creation.
Islam has prohibited begging and urged Muslims to earn their livelihood. From this premise one may infer that one of the economic goals of a Muslim society should be able to create such an economic environment that those who are willing to and looking for work are not accomplished then Muslim society cannot succeed even in its spiritual aims, because those unemployed would be subjected to a life of hardship unless they depend on the dole, or resort to begging or immoral practices, all of which, particularly the last two, would be repugnant to the spirit of Islam.
This stress of Islam on economic well-being springs from the very nature of its message. Islam is designed to serve as a ‘blessing’ for mankind, and aims at making life richer and worth the living and not poorer, full of hardship.
These are some of the characteristic of Islamic economics; it covers the universal brotherhood and justice. Not only for Muslims, but also for all humankind of non-Muslims. It covers many sides from the social justice, economic justice, and many others. And it is also equitable distribution of income, freedom of the individual within the context of social welfare.

One of the examples: Bank Islam Malaysia Berhad

Bank Islam Malaysia Berhad was established in 1983, and the government of Malaysia has done to facilitate the establishment and operations of BIMB. The Muslims in Malaysia, like their counterparts elsewhere, had for a long time the desire to practice the rules of Shari’ah in the fields of banking and finance. This desire was especially rekindled when, in the early 1970’s, there was a successful move to establish Islamic banks in West Asia.
Their desire finally was made true in the appointment by the Honorable Prime Minister of Malaysia, of a National Steering Committee on Islamic Bank on 30th July 1980. On 5th July 1981, the committee submitted its report, which was accepted by the government. Among others, the committee recommended that:
1. An Islamic bank, which operates according to the rules of the Shari’ah should be established.
2. The bank should be incorporated as a limited company under the Companies Act 1965.
3. In order to provide for licensing and supervision of the bank, an Act, styled on the Islamic Bank Act 1983, should be legislated and some consequential amendments should be made to the existing related Acts.
4. Bank Negara Malaysia (the Central Bank) should administer the Islamic Bank Act 1983.
5. The Bank should set up a religious supervisory council to supervise the compliance of its operations with shari’ah principles.