This document introduces an Islamic economics course and discusses major propositions of conventional economics and their Islamic alternatives. It begins by outlining what students need to understand and unlearn before starting. It then discusses how economics is often presented as a positive science but implicitly includes value judgements. Several major propositions of conventional economics are outlined, such as the tradeoff between efficiency and equity, and their Islamic alternatives are presented, emphasizing dual objectives of eternal and material success and balancing efficiency, equity and environmental protection.

1. 1
Welcome to Islamic Economic
System
Course Instructor: Dr. Zahoor Khan

2. 2
Getting Start
Before we start;
1.We need to understand some ideas
(Important)
2.We need to un-learn some perceptions,
theories and Laws based on wrong Judgement
(Very Important).
3.We shall study critically major propositions
of conventional economics

3. The purpose of studying economics is
not to acquire a set of ready-made
answers to economic questions, but to
learn how to avoid being deceived by
economists. ’ Joan Robinson
3

4. 4
Major Propositions and Islamic
Alternatives
3.1. Is economics positive or normative
science?
Economics is often promoted and propagated as
a positive science.
It’s considered as free from value judgement.

5. Major Propositions and Islamic
Alternatives
Implicit value judgements are rooted
throughout so-called ‘positive’ economics.
The very definition of economics as the
attempt to satisfy unlimited wants with
limited resources is rooted in judgements
about what makes human beings happy .
It’s an individualistic view that ignores our
social links, while shifting our attention
towards efficiency (and away from questions
of equity). 5

6. 6
Major Proposition and Islamic
Alternatives
3.2. Islamic Economics is Prescriptive in
nature.
Deriving guidelines and its Implementation in
economic activities along with other activities is the
genesis of Islamic Economics.

7. 7
Major Proposition and Islamic
Alternatives
3.3. There is trade off between efficiency and
equity.
we can achieve one at the cost of other.
•Cooperation and coordination among the
economic agents can simultaneously improve
both: Efficiency and equity

8. Major Proposition and Islamic
Alternatives
3.4. The concept of utality
It is positively related with the amount of
given commodities.
(Implicitly) it is same across the different
individuals and not influenced from external
factors
•Economic wellbeing is subjective and
influenced from external factors 8

9. 9
Major Proposition and Islamic
Alternatives
3.5 Economic agents (consumer and
producer) are assumed to be rational.
They should be able to promote their
corresponding objectives (Utility maximization
and profit maximizations).
Economic rationality is based on dual objectives
(Eternal and material success)

10. 10
Major Proposition and Islamic
Alternatives
3.6 More is preferred over less….
•Implicitly the focus is on efficiency and
physical production
• It is assumed that at individual level, well-
being and happiness depend only on a
person’s real income and consumption.
•If one person is better off with more stuff,
everyone is better off if everyone has more
stuff .

11. 11
Major Proposition and Islamic
Alternatives
3.6 More is preferred over less….
•The evidence, ignored entirely in the
textbooks, shows that in rich countries
measures of average happiness have not
increased as average incomes have risen
substantially.
•People simply seem to get used to their new
circumstances, which quickly become the
norm.

12. 12
Major Proposition and Islamic
Alternatives

13. 13
Major Proposition and Islamic
Alternatives
3.6 More is preferred over less….
•Good evidence suggests, however, that
relative position and status within groups
matter a great deal to individuals’ happiness.
•Alternatively more is preferred over less
constrained by how more is accumulated and
how more is re-distributed.

14. 14
Major Proposition and Islamic
Alternatives
3.7 Least intervention of government in
economic activities is beneficial…..
•Over emphasize on market fundamentalism
•Market failure, Market power and
externalities are either ignored or
underestimated.
•Alternatively, Government intervention is
not fair but obligatory to ensure economic
balance at micro, meso and macro levels.

15. 15
Major Proposition and Islamic
Alternatives
3.8 Human beings are selfish by nature which
guide them to achieve their goals
efficiently…
•Logical fallacy…if one individual can achieve
his/her goal by selfish behavior …all individuals can
also achieve their goals by selfish behavior…. So
everyone will be better off…
•Ignored factors…asymmetric information,
difference in power and influence, common
resources

16. 16
Major Proposition and Islamic
Alternatives
Humans are not selfish by nature….
Selfishness is an adopted/learned behavior..
Alternatively, Preference of collective interest
over individual interest….

17. 17
Major Proposition and Islamic
Alternatives
3.9: Too much focus on efficiency and
productivity ruin and exploit
resources….which is a fundamental right
of current and future generation
Alternatively, over emphasized focus on
ecological elements and safeguarding
environment.

18. 18
Major Proposition and Islamic
Alternatives
Access to natural resources and getting benefits of
them is a right of each individual human being. Allah
(SWT) the creator and Sustainer of this universe has
produced all things of human needs, but we have to
acquire these resources the way He prescribes.
Allah (SWT) has produced everything with a certain
measurement and level, including environment, any
disruption to change the mandatory proportion will
cause harmful results to society and the environment.