Professional Documents
Culture Documents
CHAPTER 1
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LEARNING OBJECTIVES
1. Understand the philosophy,
principles and rules of Islamic
Economic System.
2. Explain the three sectors in
Islamic economic.
3. Differentiate between Islamic
economic system and capitalism
and socialism.
4. Understand about a welfare
state.
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INTRODUCTION
THE ECONOMIC SYSTEM
◼ An economic system is usually
defined as a set of principles that
constitutes the framework of the
organization of the economic
activity.
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INTRODUCTION
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THE ISLAMIC ECONOMIC
SYSTEM
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THE ISLAMIC ECONOMIC
SYSTEM
Philosophical Background
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THE ISLAMIC ECONOMIC
SYSTEM
◼ Individual Liberty
◼ Right to Property (Ownership)
◼ Balance or non-partisanship
◼ Justice
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THE ISLAMIC ECONOMIC
SYSTEM
Rules of Functioning
The role of the rules of the functioning is to operationalize the
principles of Islamic economics.
◼ Zakah
◼ Prohibition of Riba
◼ Qirad
◼ Social Insurance
◼ Debts and loans insurance
◼ Inheritance System
◼ Role of the government of the economy
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THREE SECTORS IN ISLAMIC
ECONOMIC SYSTEM
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DIFFERENCES BETWEEN ISLAMIC
ECONOMIC SYSTEM WITH CAPITALISM
AND SOCIALISM
◼ Objective of System
◼ Fundamental Principles
◼ Ownership
◼ Distributions
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DIFFERENCES BETWEEN ISLAMIC
ECONOMIC SYSTEM WITH CAPITALISM
AND SOCIALISM
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WELFARE STATE SYSTEM
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WELFARE STATE SYSTEM
There are four characteristic of a welfare
system as explained below:
◼ A welfare state will ensure that the
societies get the protection from
social risks for example industrial
injuries, disabilities and non-
employment.
◼ Social services such as education,
healthcare, housing and public
transports are provided in ensuring
the public is functional effectively in
the modern societies.
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WELFARE STATE SYSTEM
◼ The value of welfare state is it
recognizes the objective full
employment and fair distribution of
wealth. Thus, intervention of the
government is essential to reduce
the power of free market in
capitalism.
◼ There are six main devices in the
welfare state that are: rules and
regulations, a strong workers union,
fiscal policy, high growth rate, high
demand of employment and
government possession of certain
main industries.
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❑ Critical Thinking Questions
1. Elaborate the principles of Islamic economic
system.
2. Explain the roles of zakah and prohibition of
riba’ in the Islamic economic system.
3. Who is the main centre of economic
activities and the engine of economic
production and growth? Explain its
activities.
4. Explain the different between Islamic with
capitalism and socialism in terms of
distribution.
5. Elaborate the characteristics of a welfare
state.
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SUMMARY
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SUMMARY
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