BEDER INTERNATIONAL

UNIVERSITY
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JAAMACADDA BEDER EE CAALAMIGA AH

LECTURE 1

Introduction to Islamic Economics

Course: Foundations of Islamic Economics

Introduction to Islamic economics
 Overview of Economics

 Worldviews and Economics

 Definition of Economics

Economics is the social science that

studies the allocation of scarce
resources to satisfy unlimited
wants.

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 The Economizing Problem
 Scarcity of Resources (Economic resources are limited
relative to wants)

 Unlimited Wants (People’s desires to use goods and services

that provide satisfaction is unlimited)

 Choice (Scarcity of resources requires choices to be made)

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 Scarcity
 Scarcity means that people want more than is
available.
 Scarcity limits people both as individuals and as a
society.
 As individuals, limited income, time and ability,
restrict people from doing or having ALL what they
like.
 As a society, limited resources such as manpower,
machinery, and natural resources limit the amount of
goods and services that can be produced.

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 Scarcity Requires Choice
 People must choose which of their desires they will
satisfy and which they will leave unsatisfied.
 When people, either as individuals or as a society,
choose more of something, scarcity forces them to take
less of something else.
 Economics is sometimes called the study of scarcity
because economic activity would not exist if scarcity did
not force people to make choices.
 When we talk of scarcity within economic context, it
refers to limited resources, not a lack of riches. These
resources are the inputs of production: Land, labour and
capital.
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• Economics is the study of production, distribution
and consumption of goods and services.
• The decisions and trade-offs society makes due to
scarcity is what economists study.
• Why certain decisions made and what is the next
best alternative that was forgone?
• Why are some scarce resources more expensive
than others?
Because of limited resources
Higher want/demand for that good
 Choice
 People make choices about what goods and
services they wanted.

 People work harder and do business to earn

income or make profits in order to satisfy their
unlimited wants. 

 Commodities, money and profits constitute their

happiness.

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 Definition of Islamic Economics
 Islamic Economics is a social science which studies the
economic problems of people imbued with the values of
Islam.
 It is the study of social science which enables people to
perform their obligation to Allah and to their society.
 Is that branch of knowledge which helps to realize
human well-being through an allocation and distribution
of scarce resources that is in conformity with Islamic
teachings without unduly curbing individual freedom or
creating continued macroeconomic and ecological
imbalances.
 How Islam views the
Economic Problems?

 Scarcity of Resources
 Unlimited Wants &
 Choice
 Resources in Islam

 Allah (swt) Has created resources in abundant.

 However resources in the eyes of mans is
scarce/limited why?
due to lack of means to reach this resources
(which is the results of man’s choice such as lack
of knowledge, skills, etc.)
And because humans are always demanding.
 Unlimited Wants

Islam recognizes that human desires are

unlimited. This is explained in the Quran and
in the Hadith.

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 ‫‪Man is greedy‬‬
‫‪:‬قال رسول هللا (ص)‬
‫لو أن ابن آدم أعطي واديا ً مألى من ذهب أحب إليه ثانياً‪ ،‬ولو أعطي‬
‫ثانيا ً أحب إليه ثالثاً‪ ،‬وال يسد جوف ابن آدم إال التراب‪ ،‬ويتوب هللا‬
‫على من تاب‬
‫صحيح البخاري‬

‫‪“If man is given a valley of gold, certainly, he wants‬‬

‫‪the second and third one and he will …..” Hadith‬‬

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 Choice in Islam
 Hence scarcity of means necessitates choice
which can provide higher values but at same
time performing one’s mission in this life.

 Choice in Islam should be ranked according to

need fulfillment and not to greediness.

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 WORLDVIEW
Worldview explain how man perceives this world. It
denotes “a set of implicit or explicit assumptions
about the origin of the universe and the nature of
human life.

Every community or system is controlled or

influenced by its own worldview. The different
worldviews among communities or among systems
lead to dissimilar end means of human life.
 SECULAR WORLDVIEW
(Man’s Way of Life)
- separation between religion and other
aspects of life,
- materialistic,
- individualistic,
- less socio economic justice
- less public relations,
- less concern with the hereafter life
 ISLAMIC WORLDVIEW
(Man’s Way of Life)

- belief in a dual worldviews: this world & the

hereafter
- religion is part of his/her daily life
- maslahah of the ummah (public benefit),
- accountability,
- trustworthiness,
- transparency etc.
 Cont. The Islamic Worldview

Muslims believe that this world is a

temporary place for them to be tested
in order to determine whether they will
get the reward or punishment in the
Hereafter.