Islamic

Economics
Farda Hasun
Telkom University
Bandung, Indonesia
2
Outline

 Islamic Production
 Islamic Consumption
 Islamic Market and Pricing Theory
 Islamic Finance: Commercial Financing and Social Financing
Sustainable Development
Brundtland Report: Development that meets the need of the present without
compromising the ability of future generations to meet their own needs

Basically it is a political concept which is open to re-interpretation. The most

popular concept, is describing the sustainable development as achieving a balance
between economy, environment and society (Meadowcroft, 2007)

Operational Concept: the 2030 Agenda for Sustainable Development  17 SDGs

The Future

 Imagine a world in 2050 with 9.6 billion people (now is 7.6 billion), the
equivalent of almost 3 planets could be required to provide the natural resources
needed to sustain current lifestyle
 Indonesia  305 million in 2035 (BPS, 2013)
 Food? Energy? Water? Other resources?
Current Lifestyle

Who are the consumers?

The story about people being persuaded to spend
money we don’t have on things we don’t need to
create impressions that won’t last on people we
don’t care about
(Tim Jackson, An Economic Reality Check,
TEDGlobal 2010)
 Halal  A halal product is a product that has been
declared halal in accordance with Shariah rules /
principles (Indonesian Halal Product Law) How to Consume?
 What Sharia says about consumption?
Consumption: Islamic Guidance
 Sharia principle:
 Aqidah principle: consumption activities as a part of worshipping Allah  not giving attention to consumption more
than it should be. Qanaah is important to prevent people grabbing something haram
 Scientific principle: everybody should understand sharia rules related with consumption
 Amaliah principle: only consume halal and thoyyib product and avoid haram and syubhat product. Halalness also
consider about the source of fund.
 Quantity:
 Moderate, not excessively or sparingly (QS 25:67), Hadis: Eat and drink in other than pride, and not excessively
 Suitability of consumption and income (QS65:7)
 Consumption priority:
 Primary, secondary, tertiary
 Fulfillment of basic needs for all first (using social financing including zakat, infaq, shadaqah, waqf instruments)
 Social Principle
 Narrated by Ahmad: Let no one be full, while his neighbor is starving
 Not harm the others
 Protection of the environment
 Local product consumption (based on Hadits: Take the close one): reduce energy and logistic cost
 Not harm the environment
 Three levels of needs (Al Ghazali; Asy-Syatibi)

 Primary needs are the needs that must be fulfilled to uphold religious and world maslahah and
without them the condition will not be stable and somebody will not be safe from destruction
 Notes: Baznas develop standard called had kafaf and had kifayah
 Had kafaf (minimum limit of need): food, cloth, housing
 Had kifayah: had kafaf + worship need, education, health and transportation
 In 2018, had kifayah is IDR 772,088/capita/month
 Below had kifayah  has the right of zakat
 Secondary needs are the needs which without them narrowness in life will happen, but not as
narrow as the consequence of the absence of primary needs
 Tertiary needs are needs which are not primary or secondary, but only complementary to those
needs and are ornamental in life.
 Production: Islamic Guidance
 Production is a form of jihad (Umar bin Khatab RA)
 “…Know it, if he works for his parents or one of his parents, it means he does jihad. If he works to fulfil his family
needs, it means he does jihad. And if he works for himself, it means he does jihad” (hadith shahih narrated by Ath
Thabrani)
 Utilize resources in an efficient way to fulfill moderate needs. If the need is met, with low production cost,
as long as the market mechanism is protected, the price will be controlled, inflation rate will be
controlled
 Quality orientation: halal and thoyyib, other technical quality
 Production process:
 Minimize waste
 No harm to environment
 Producers’ behavior:
 Tawakkal (Allah determine the result)
 Understand sharia rules
 Quality oriented (QS 67:2)
 Not cause mudharat to others
Market

 The market is an avenue for people to acquire what they need in exchange for what they
possess according to mutual terms
 One of the first thing that accomplished by Rasulullah PBUH in Madinah is designating a
place for setting up a market  market has a very important role
 Islam places moral and regulation on the freedom of the market, which is an integral duty
of the state  justice in the market
 Market

Source: Prof. Dr. Ugi Suharto

Rely Price on Market Mechanism (under
normal condition)
 The people said: Messenger of Allah, prices have shot up, so fix prices for us. There upon
the Messenger of Allah said: Allah is the one Who fixes prices, Who withholds, gives
lavishly and provides, and I hope that when I meet Allah, none of you will have any claim
on me for an injustice regarding blood or property (Sunan Abi Dawood, Vol. IV, Hadith
No. 3451
 Whatever price that emerges from the market, under normal conditions (i.e. conformity
with the ethic of market behavior), must be harmonious with the ideals of justice
Prohibition in the Market

 Najasy. Najasy occurs when a producer or a buyer creates fake demand to increase the
price
 Hoarding. Hoarding occurs when a supplier restricts supply to the market, by hiding what
should be delivered for sale, in order to make extra gains
 Forestalling, that is the interception of goods before they reach the markets
 It means people involved in transaction should have the information about the market and the
price
 No price war
 No gharar
 No dharar
Financial System

 Commercial financing: no interest

 Alternatives financing methods:
 Profit sharing mechanism (mudharabah, musyarakah)
 Trading base (murabaha)
 Social financing: can be used for production or consumption
 Zakat: for consumption first
 Infaq
 Sadaqah
 Waqf
 Real
Market Sector
Upholding justice in
the market

Consumption
Production
Halal & thoyyib
Halal & thoyyib Not excessive
Efficient Help the poor (ziswaf)
Safe for the envir tion
onment Local product consump

Financial Sector

Commercial Financing : No riba

Social Financing: Zakat, Infaq, Shadaqah, Waqf
Islamic vs Occident

 Halal and thoyyib

 No riba
 Ziswaf instruments
Consumption Reduction and the Economy

Less consumption
 less demand

Lower economic
Less supply  less growth
Less consumer debt
pressure on
 i?  What is your
environment
opinion?
The most basic need
of human is belief
and consciousness –
Fakhruddin ar Razi