Chapter-02

Islamic Economics:
Islamic economics is a social science that studies the economic problems of people imbued with
the values of islams. (Mannan-1992).

Characteristics of Islamic economics:

1. Rabbaniyyah (divine origin)
The initiation of economic activity in islam has its metaphysical roots in the holy quran.
Shariah rules that are derived from quran and Sunnah, shall be applied in all aspects of
economic and business activity. These shariah rules must be followed without
compromise as they are divine commands.

2. Insaniyyah(Humanness)
Islamics economics should be based on the role of insan(human being) who is entrusted
to use the resources according to needs that are in line with the shariah .

3. Akhlaqiyyah (ethicality)
Individuals needs are driven by akhlaq (ethics and morals)

4. Wasatiyyah (moderation)
One seeks to secure wasatiyyah in conducting economic activities that must also observe
laws of nature to efficiently use of scarce resources available to him.

5. Waqiiyyah (practicality)
Some activities may need no explicit divine guidance but must follow the law of nature.
This includes considering the realities of life and the importance of being efficient in
using the resources .

6. Alamiyyah (universility)
Islamic economics carries Alamiyyah characteristics which aims to positively contribute
to world economic stability and prosperity.
Three-Pronged Approach of Islamic Economics:
Islamic economics may follow a three-pronged approach involving negation, integration and
value addition.
Negation: the rejection of any conventional concept, theory, value or model if it contradicts the
world view of islam and its fundamental elements. For example Negation are applicable to goods
and services that are Haram by Shariah .
Integration:
Integration The incorporation of any economic concept Theory or practice that is in line with
The Islamic worldview.
For example the use of market equilibration methods are not antiethical to principles of Islamic
economics. Besides, concept such as inflation and business cycle are still valid to Islamic
economics.
Value addition: this approach involves exclusive additions made to economics because of the
unique values within the Islamic worldview.
An example of value addition to economics would be the inclusion of the concept and practice
of giving zakah(alms) to specified categories of recipients.