lecture note on Islamic economic and business

1. LECTURE 1
Introduction : Worldviews and
Economic & Business
1

2.  World Economy Today:
 Worldview and Behaviour
 Islamic Worldview
2

3. World Economy Today
3

4. Fact 1 : Bubble Economy
Impact of the Financial Sector to
Economic-Business Dominance
 The dominance of the financial
sector of the economy makes
economic systems less vulnerable to
shocks such as the financial crisis
that occurred in 1997 (Asian
financial crisis) and the 2008 global
financial crisis.
 Moreover, income inequality
between the financial sector and the
real sector
 The worst : ineqaulity between the
have and the poor is widen
significantly

5. Sumber:

6. Fact&Concept 2 : Capitalism
 Economic and political system in which economic and
business activity is controlled by individual ownership
with the aim of profit
Characteristics:
 Private Ownership
 Profit Motive
 Market Economy
 Creates individualism, consumptive community, high
taxes policy
6

7. Facts&Concept 3 : Self interest
Bubble Economy  Capitalism  Self Interest
Giving priority to private interests (self-interest),
 individualism
 the pursuit of self-interest
 tend to greedy
Single objective  material things  own happiness
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8. FOUNDATION OF ECONOMIC
AND BUSINESS
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9.  Economics is Social Science
 It is derived from people (scholar) perception about the
world
• So, economic and business activities are
VALUE-LOADED
• Our values are derived from our
WORLDVIEW
• All aspects of human activity are
influenced by one’s worldview/vision
9

10. What is Your Worldview ?

11. Worldview ?
• Vision of reality and truth that appears before
one’s mind, revealing what existence is all about.
• Governs way people interpret the world
• A worldview is the foundation for a knowledge
rather than the knowledge itself. The worldview
becomes the environment within which the mind
operates, and without which it cannot function at
all.
11

12. Worldview Values Behaviour
12

13. Worldview dan Perilaku
Worldview Nilai Perilaku
Mencari
keuntungan/ profit
Peduli masa depan
dan keluarga
Ketaatan agama
Menabung
berdasarkan motif
bunga
Menabung hanya
untuk simpanan
Menabung untuk
ibadah haji

14. Religion
Culture
Education WORLDVIEW
History
Geography
Technology

15.  Since factors affecting world views differ,
different world views exist, leading to different
“systems” for different peoples
•Theories explaining human behaviour also differ
•Islamic world view based on ‘Islam’ and its sources
of knowledge
• This world view complete at the time of revelation of
the Qur’an implying that fundamental concepts in the
Qur’an not open for changes in meaning
• All worldviews must at least include views on God,
nature, man, religion, knowledge, aim in life

16. The ring of worldview
WORLDVIEW
Religion
God
Man
Nature
Aim in
life
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17. Islamic Worldview ?
• Centered on the principle of Tawhid or unity of
God
• Al-Attas: “Ru’yat al-Islam Lilwujud” or “The
view of Islam about existence”
• Man, his aim in life, the universe, the way he
interacts are all inter-related
• Man’s behavior governed by rules of Quran and
Sunnah
• Pursue material gain with a view that existence in this
world and hereafter is important
17

18. • Is Islamic worldview different from conventional
worldview?
• Since factors affecting worldviews differ, it is natural to
also have different worldviews, thus different theories to
explain human behaviour
• Islamic worldview is based on Islam and its sources
of knowledge
• A complete worldview at the time of revelation-
fundamental concepts in the Quran are not open for
changes in meaning
• Islamic: based on revelation; flexible but not replaceable
18

19. 1. ISLAMIC VIEWS ON RELIGION
• Not equivalent to religion as understood by the
conventional
• Religion is a private matter between individual and God
• No role to play in determining public affairs
• Science replaced religion as authority
• Religion for infantile man; science for modern/mature
man
• Watt (1979) on religion to the conventional view:
“…means a way of spending an hour or so on Sundays in
practices which give him some support and strength in dealing
with the problem of daily life…; it has little or nothing to do
with commerce or economics or politics or industrial
relationships..” 19

20. • Islamic worldview encompasses this life &
hereafter
• Not ‘anti-this world’.
• Islam has clear guidelines to undertake life in this world:
“But seek, with that (wealth ) which Allah has bestowed
on you, the home of the Hereafter, and forget not your
portion of legal enjoyment in this world, and do good as
Allah has been good to you, and seek not mischief in the
land. Verily, Allah likes not the Mufsidun (those who
commit great crimes and sins, oppressors, tyrants,
mischief-makers, corrupts)”.
(Al-Qasas: 77)
20

21. NO ROOM FOR SECULARISM
• Ideology that says only this world is relevant
• When combined with materialism
• It denotes that only this world is real
• Hence, any reference to the ‘hereafter” is
irrelevant
• Economics should be conducted purely on
“costs and benefits” of this world
• Islam would not accept this ideology
21

22. ISLAM IS DIN
• The term “din” used to denote “religion” in the Qur’an
• Comes from root word “dana”
• Mentioned 92 times in the Qur’an
• Meaning debt, obedience, judgement / way / custom; inter-
connected to explain “religion”
• Is not limited to rituals/faith
• A way of life
• Detailed code of conduct
• Willing and conscious submission to Allah in all aspects of life
• Economics and its related activities are potentially ibadah or acts of
worship
• Based on revealed knowledge, man uses his intellect to
organize life on earth: Intention, action according to shari’ah
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23. 2. ISLAMIC VIEWS ON GOD
• Belief in unity of God, Tawhid
• Oneness of God; Expressed in Kalimah shahadah
• Core concept /foundation of Islamic worldview
• Other aspects of Islamic worldview are logical extensions
•3 aspects of tawhid
• Oneness of the lordship of Allah: to believe that there is
only one lord for entire universe
• Oneness in the worship of Allah: to believe that none has
right to be worship but Allah
• Oneness of the names and qualities of Allah: none can be
qualified with the Names/qualities of Allah
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24. 24

25. 3. ISLAMIC VIEWS ON MAN
• The best of creation, created good, comprising of
body and spirit: “verily, we created man of the best stature (mould)”
(At-teen: 4)
• Given ‘aql (mind) and knowledge: And He taught Adam of
all things (al-Baqarah: 31)
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26. • Created as vicegerent (khalifah) on earth:
(al-Baqarah: 30): and remember when your Lord said to the
angels: ‘I am going to create a vicegerent on earth…”
• Created as ‘abd (worshipper) of God:
(ad-Dhariyat: 56): “I created not the Jinns and human except to
worship Me”
• Implications of roles:
• As khalifah: nature, universe and other creations are
entrusted to man for his utilization, responsibility
• As ‘abd: man does not have the ultimate authority other
than to follow the will of God
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27. • Cannot be khalifah unless you are first and
foremost an ‘abd
• Nasr (1990): there is no more dangerous creature on earth
than a khalifah of Allah who no longer considers himself to be
an ‘abd Allah.
• Man’s life = a test on execution of this twin role.
“Blessed be He in Whose Hand is the dominion, and He is
Able to do all things. Who has created death and life, that He
may test you which of you is best in deed. And He is the All-
Mighty, the Oft-Forgiving.”
(Al-Mulk: 1-2) 27

28. 4. ISLAMIC VIEW ON NATURE
• Nature/universe in Islam:
• Comprise of “heavens and earth and all in between”
• Mention about vegetation and fruits, night and day, heavens and
earth, human being, rain
• Another sign to direct man to worship Allah, the Creator
• Nature is a bounty from God
• Must be utilized in the best way possible, in accordance with God’s
will, remembering that it is part of God’s creation
• Man as trustee to manage nature
• 2 types of nature
• Material world (visible)
• Unseen world (ghayb or invisible): believe in the existence of God,
angels, hell and paradise
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29. 5. ISLAMIC VIEWS ON AIM IN LIFE
• Primary aim of life for human as described by Islam
• To achieve happiness (falah)
• Ultimate success and pleasure of Allah
• The means through which man can prepare for
happiness in this world and hereafter
1.Al-nafsiyyah – soul
2.Al-jismiyyah – body
3.Al-kharijiyyah – external good
4.Al-tawfiqiyyah – divine grace
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30. ATTAINING FALAH
1. Al-nafsiyyah – the goods of the soul
• Comprising faith (iman) and good
character
• Achievable through action (‘amal)
• Iman = Amal : soul can only be improved if
man has knowledge and apply that
knowledge
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31. 2. Al-jismiyyah – the goods of the body
• Second importance
• Health + strength = allows perfect performance
of ibadah that requires physical movements
• Long life = amplifies no. of performance
• Pleasant appearance –
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32. 3. Al-kharijiyyah – external good (surrounding)
• Useful for happiness
• Wealth, influence, family and noble birth (family in which
knowledge and piety are instilled to all members)
4. Al-tawfiqiyyah – divine grace
• Essential for happiness
• Comprise of divine guidance (hidayah), divine direction, divine
leadership and divine strengthening
• Primary means of achieving falah are goods of the soul, that
can be acquired with help of bodily and external goods, if he is
given divine grace.
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THEREFORE
• Economic and Business from Islamic
perspective should start with the values and
goals of life that has been determined by
God and can not be understood without it.
• Economic and Business in Islam, as other
sciences in Islam, should be useful to be
able to solve the problem and promote the
welfare of mankind in the world and
especially in the hereafter.

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Thank You