ISLAMIC ECONOMIC

PED2133

HANISSAH BINTI HAMZAH

LECTURE 3
CHAPTER 2
BASIC CONCEPTS IN ISLAMIC ECONOMICS
CONSUMPTIO PRODUCTION DISTRIBUTION
N IN ISLAM IN ISLAM IN ISLAM
 Definition of Consumption:
OBJECTIVES OF CONSUMPTION
The demand for goods and services by a
consumer either for current or future
consumption 1. Fulfill the
2. Satisfy the
3. Provide al
Falah
material needs
spiritual and (happiness) in
In Islam, consumption will establishes of human being
emotional world and
the balance in the socio economic system and give the
worldly
needs of human hereafter
of the society. satisfaction
being on earth (consumption
(consumption of goods and
(consumption
Consumption in Islam also ensure the of spiritual services
of goods and
goods) according to
balance and justice between material and services)
Shariah)
spiritual needs of human while satisfying
their unlimited wants.
PHILOSOPHY OF CONSUMPTION IN ISLAM

Public
Ownership
Interest

Public Interest: The demand for goods and services is based on

needs towards the preservation of life, mind, religion, wealth and
Submissio
Trust
lineage
n
Ownership: consumption on good only can happen once has the
right of ownership. In production, the producer must get the right of
ownership of the resources before process it.
Submission: Submission to Allah is the aim to be true Muslim and it will be
asked during the Day of Judgement.

Trust: Create the ethical consumer behavior and control the unlimited
desire based on the Shariah guidance.
CONCEPTS OF CONSUMPTION

Belief: Believe of Tauhid and the Day of Judgement because it

will guide to consume goods and services for worlds and
Belief hereafter.

Al Falah: Ultimate success. All resources such as wealth, energy

and time should be utilized to gain the blessing and pleasure
from Allah and not for the sake of satisfying the material needs.
Wealth Al Falah
Wealth: It is a trust and test to the owner and not the sign of
power and authority. Islam encourage us to obtain the wealth
as much as possible to moderately spent according to the will
of Allah, and to be redistributed to those needy people.
CONCEPTS OF CONSUMPTION GOODS

Ar Rizq
• Any gift from God for human being
• It should be consumed in accordance to the
will and determination of God

At Taiyyibat
• Any Halal goods which will give benefit to the
consumers
IMPORTANCE OF CONSUMPTION

1. Boost up the economic growth: It means help to increase the

economic growth through free market system where there is a
demand from the consumer.

2. Starting point of all economic activities: It means that the desire

of human being to consume goods and services will involve in the
production process in order to satisfy their wants.

3. Determine the production activities’ pattern. This is the result

from the quality and quantity of goods and services being
demanded by consumer.
PRINCIPLES OF CONSUMPTION

The principle
of moral in
The principle terms of
of truthful and The principle spiritual and
rights of moderation Akhlak (ethics)

The principle The principle

of cleanliness of welfare on
and purity usufruct and
public interest
 The principle of truthful and rights
• The desire, rights, and freedom in
consumption should be based on Taqwa.
• The sources of wealth, the goods itself, the
intention and the way to consume it must
be accordingly to the Shariah guidelines so
that it can be considered as Halal.
 The principle of moderation
• Should not be wastage (Israf).
• Should not be niggardliness, stingy, bakhil
(Imsak).
• Uphold the concept of Justice in consumption
without showing off.
• Concern on the individual savings and needs
of future generations
 The principle of cleanliness and purity
• The sources of goods and services must be clean because it
influence the physical, mental and spiritual health of
consumers.
 The principle of welfare on usufruct and public interest
• Help individuals towards the complete submission and
obedience of themselves to the will of Allah
• The halal and haram of certain goods should have
goodness reasons and effects in order to take care
welfare of individuals and society
 The principle of moral in terms of spiritual and Akhlak
• Highlight the concept of adab and akhlak, linked the
good values and excellent identity while satisfying and
strengthen the physical, mental and spiritual.
• Aim for success in world and hereafter
• A set of tarbiyyah (spiritual training) like fasting.
THE PRIORITY HIERARCHY IN CONSUMPTION AND UTILITY

Dh Objectives of Shariah to preserve religion, life, mind, property,

aru lineage and dignity. It is basic necessities. Example: foods, shelters,
riyy cloths, educational and health care
at

Hajiyyat Efficiency like television, washing machine

Tahsiniyyat Comfortless such as Astro, cloth dryer

Kamaliyyat Completeness such as TV plasma, laptop

Tarafiyyat Luxurious life style such as gold toilet, gold car, Iphone X
TYPES OF CONSUMPTION GOODS

HALAL
• Any goods permissible by Shariah, obtained through permissible means and being utilized according to
Shariah rulings
• Its consumption will be rewarded

SUNAT • Any goods which will bring goodness and benefits to its consumer
• Its consumption will be rewarded but its negligence will not be punished

HARUS (MUBAH) • Any goods which will bring extra goodness to its consumer
• Its consumption will gives neither reward nor punishment

MAKRUH • Any goods which will bring difficulties and harm its consumer
• It avoidance will be rewarded but its consumption will not be punished

HARAM
• Any goods which will totally harm and endanger its consumer
• It avoidance will be rewarded and its consumption will be punished
• The consumption gives zero utility
DETERMINANTS OF CONSUMER BEHAVIOR IN ISLAMIC ECONOMICS
 1. The belief in the hereafter
 The life before and after death is closely
related
 The immediate utility obtained by consuming
goods and services is the worldly satisfaction
from consumption activities
 The satisfaction in hereafter is gained through
zakat, sadaqah which considered as
alternative consumption
 2. The concept of success in Islam
 The economic activities are considered as will
and responsibility that must be efficiently
done
 The motivational factor for the consumer
would be to attain the al Falah and the
pleasure from Allah
 3. The concept of wealth in Islam
 Wealth is gift and trust of Allah therefore it
must be consumed for good and not to be
freeze
 The consumption in Islam is not merely to
fulfill the worldly satisfaction but it should
also cater the ultimate satisfaction in the
hereafter
 4. The concept of goods and services
 The chosen goods and services must be Halal
in terms of its nature, the income used to pay
for it, the way to obtain it and the utilization
of it.
 5. Ethical values in consumption
 Important to mould the pleasant consumer
behavior because Islam is unique combination
of material and spiritual values of life
MUSLIM CONSUMER BEHAVIOR

 1. The consumption of goods and services is

only tool to attain ultimate success in the
hereafter
 2. Muslim consumer must try to attain a balance
between material and spiritual satisfaction
 3. A rational Muslim consumer should be able to
conduct his attitude towards the maximum
attainment of satisfaction according to Islamic
norms such as generous
THE EFFECT OF MUSLIM CONSUMER BEHAVIOR

 1. The demand for unlawful goods according to  4. The demand for customary needs and desire
Shariah is zero and it is excluded from the increases such as education, leisure activities,
consumer demand schedule. For example, spiritual development and towards the way of
demand for pork, liquor, gold and silver by man Allah

 2. The demand for luxury goods decreases due

to the avoidance of extravagance (Israf)

 3. Budget the income into two divisions:

 a) To fulfill the material needs of himself and his
family members
 b) To fulfill other’s need because of Allah
THE END