NAME: Adeel Ahmad

CLASS: BBA

SECTION: 5-A

SUBMITTED TO: MAM UZMA KASHIF

The Significance of Islamic economics
Having explained the meaning of Islam having its own economic system, I shall
explain the most important objectives in this system before discussing the
principles that Islam provides in the realm of economics.
Personal freedom
The first objective in Islam is safeguarding personal freedom. Restrictions only
exist to safeguard the collective wellbeing of a society. Islam attaches great
importance to human freedom (moral, political and economic) because individuals
are accountable for their deeds in their personal capacity. It is therefore essential to
let each person have more avenues for the growth and development of his
personality. Islam provides the mandatory principles for AN national economy that
guarantees AN individual’s freedom to earn their daily bread, for instance, it
guarantees basic human rights.
Harmony in moral and material progress
The second objective is to ensure the harmonious growth of human temperament
each virtuously and materially. thanks to the special stress on ethical development
placed by Islam, it's obligatory a society to produce ample opportunities to assist
people opt to benefit deeds, by making a contributory atmosphere wherever noble
human virtues and traits will blossom. Islam doesn’t rely on the law to determine
social justice. It assigns greater importance to faith, prayers, education and moral
upbringing to reform individuals from within. Social pressure can force individuals
to abide by its values in case measures fall short of producing desired results. If
that fails to produce a change, then the law is there as a last resort to establish
justice.
Promotion of cooperation, harmony and justice
The third necessary objective of the financial system of Islam is that the promotion
and property of a society’s unity and cohesion.It doesn’t encourage a society’s
division based on class, clan, and ethnic or linguistic considerations. Classes that
naturally emerge are led to live in an environment of mutual cooperation,
compassion and trust.
Basic principles of Islam’s economic system
These three objectives allow for a better understanding of the fundamentals and
nature of the Islamic economic system. I now briefly explain the major principles
of the system.
Parameters of private ownership
Since personal freedom is of prime importance to Islam, it allows the right of
personal ownership of property. It makes no distinction between the types of
ownership, whether it is ownership of the means of production or consumer goods
or whether it is of earned or unearned income. Rather, Islam focuses on whether or
not financial gain and wealth is obtained and distributed through truthful or foul
suggests that.
Equitable distribution of wealth
Another principle that Islam aims for is Associate in Nursing just, not equal,
distribution of wealth. Since there is no equality in matters such as wealth, health,
skills, strength, and intellectual intelligence, it is not logical to claim equality in the
means of production and distribution of wealth. Hence, Islam stresses on equitable
distribution with certain rules to achieve equity and justice. The first rule is that
Islam has classified the means of wealth into the lawful and forbidden. It offers
people the liberty to earn their living subject to the provisos of halal and haram.
aside from the prohibited suggests that of wealth production, something that's
attained lawfully, is that the rightful financial gain of man. He is entitled to use his
wealth for himself, give it to others, earn more wealth on it or leave it behind for
heirs. The wealth that's lawfully attained is but subjected to sure restrictions on its
use.
Social obligations
Islam superimposes the correct of the society on personal possession and
safeguards this right in numerous ways in which. It lays special stress on the rights
of the kindred, creating it dutybound upon those with excess wealth to assist their
relatives. It similarly recognizes a neighbor’s right to one’s income. Islam also
makes every affluent person responsible for helping those who approach him or are
in need. In addition, Islam enjoins Muslims to spend ‘in the way of Allah’,
establishing the rights of society and state on their wealth. In this manner, there is
bound to be overall economic improvement in society, such that hardly any
household would need external support.
Zakat
Zakat is the most outstanding feature of the economic system of Islam. The
mandatory Zakat and the voluntary Sadaqat are like the regular and supererogatory
prayers. Therefore, Sadaqat cannot absolve one from the obligation to pay zakat.
Zakat should not be mistaken for a ‘holy’ tax. Rather it is an ‘ibadah (an act of
worship) and a pillar of Islam. Unlike tax, zakat is not meant to satisfy the general
needs of society. It is exclusively for those who have lagged behind economically.
Muslims are to feel honored to fulfil this benevolent duty and are never to try to
avoid its payment. Regarding taxation, Islam truly places no restrictions on taxes
levied by Associate in Nursing Islamic government that's run on the principles of
shura, to secure social group welfare.
Law of inheritance
The Islamic law of inheritance has been framed with the sole objective of allowing
the wealth left behind by the deceased to be distributed to a larger group of heirs
and next of kin in a well-defined manner. An individual’s parents, spouse, and
children are the prime beneficiaries, followed by siblings and close relatives. In the
absence of an heir, the community as a whole inherits the wealth which goes to the
public treasury. These basic principles are set by Islam for the wellbeing of society.
We are free to devise an economic system of our own within these parameters. We
have to adopt a free economy with certain restrictions, and not follow the path of
the capitalists, nor that of communists.
Position of labour, capital and organization
The Islamic law of Muzara’ah and Mudarabah in Islamic jurisprudence highlights
the exact position that labour, capital, and organization occupy in the economic
system of Islam. Muzara’ah is a method of farming where the land belongs to one
person but is cultivated by another and both share the resultant profits. Mudarabah
is a form of investment wherein the capital belonging to one person is used by
another for business and trade, and both share the profits. Islam safeguards the
rights of the landowners, investors and laborer’s by establishing land, human labor,
enterprise and capital as factors that are jointly eligible to a share in the profit.
While Islam leaves the onus for determining the share-ratio of the different
production factors to the respective parties, in the case of any injustice and
violation of rights, the law intervenes to settle the matter justly