4. • The Nature and
Method of Economics
• Definition of
Economics
• The Economizing
Problem
• Islamic Perspective
and the Economizing
Problem
Contents
4
5. WHAT IS ECONOMICS? (SECULAR
PERSPECTIVE)
Economics is the social science that studies the
allocation of scarce resources to satisfy
unlimited wants.
The social science concerned with the efficient
use of limited or scarce resources to achieve
maximum satisfaction of human materials
wants.
Economics is the study of choice and decision-
making in a world with limited resources. 5
6. THE ECONOMIZING PROBLEM
1. Unlimited wants
– Economic wants are desires of people to use goods and
services that provide utility, which means satisfaction.
– Products are sometimes classified as luxuries or
necessities, but division is subjective.
– Services satisfy wants as well as goods.
– Businesses and governments also have wants.
– Over time, wants change and multiply.
6
7. 2. Scarce Resources
• Economic resources are limited relative to wants.
• Economic resources are sometimes called factors of
production and include four categories:
• Land or natural resources,
• Labour or human resources, which include physical
and mental abilities used in production,
• Capital or investment goods which are all
manufactured aids to production like tools,
equipment, factories, transportation, etc.,
• Entrepreneurial ability, a special kind of human
resource that provides four important functions:
7
8. 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.
8
3. CHOICE
9. HAPPINESS IN THIS WORLD
Human life is to enjoy the pleasure and delight of
this world.
Means gratification of desires for food and sex,
possession of enormous wealth, widespread fame
and influence.
To maximize profit/interest
To satisfy wants with the limited resources at any
cost. 9
10. Discussion
What are the advantages and the
disadvantages of this system?
(Capitalist/Secular)
10
11. DISCUSSION ON
LIMITED WANTS
LOCKED IN A SMALL PLACE
• Group of people Locked for a month in
a small place with only few bottles of
water and some food which can sustain
them for only 3 days.
• What do you think will happen? Secular
Perspective. 11
12. EXAMPLE: THE ECONOMIZING PROBLEM AND
ITS EFFECT ON THE ECONOMY AT LARGE
Scarcity of Resources: Row materials to manufacture cell
phones/mobile phone, etc.
Unlimited Wants:
Supply side: people need to maximize their profit.
Demand side: people’s needs new designs/new brands for
cell phones
Choice: Scarcity of resources requires choices to be made, at
any cost, in order to satisfy human desires for maximum
profit and maximum satisfaction of wants.
12
14. 'Nokia CEO" ended his speech in
tears, saying this..| Nokia CEO Cries
Out
https://www.youtube.com/watch?v=3A6Lmyj1QK8
Sell it to Microsoft in 2015 with $7.2 billion
14
15. 1. What is/are the core issue(s) ?
2. What do you think the main causes for this/these issue(s)?
3. Why do you think the ECO said that we didn’t do anything
wrong.?
4. What is/are the best alternative measure(s) that should be
adopted by individuals, economists, policy makers and
societies to overcome such issue(s)?
5. What is/are the challenge(s) that they might face in
overcoming such issue(s)?
15
16. CASE STUDY 2
What will happen when the rivers goes
dry?
• Egypt, whose population of 68
million may reach 97 million by
2025, gets essentially not rainfall.
All agriculture is irrigated by
seasonal floods from the Nile River,
and from water stored behind the
• Egypt is seeking to develop ties with
South Sudan as its relations with
Ethiopia and Sudan deteriorate over
the distribution of Nile water.
• Source:
http://whyfiles.org/131fresh_water/2.htmlhttp://whyfiles.org/131fresh_water/2.html
16
18. WAR IN IRAQ
Antonia Juhasz, Special to CNN
April 15, 2013
"Of course it's about oil; we can't
really deny that," said Gen. John
Abizaid, former head of U.S.
Central Command and Military
Operations in Iraq, in 2007.
Former Federal Reserve Chairman
Alan Greenspan agreed, writing in
his memoir, "I am saddened that it
is politically inconvenient to
acknowledge what everyone
knows: the Iraq war is largely
about oil." Then-Sen. and now
Defense Secretary Chuck Hagel
said the same in 2007: "People
say we're not fighting for oil. Of
course we are."
18
20. 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.
DEFINITION OF ISLAMIC
ECONOMICS
20
21. CONT. DEFINITION OF ISLAMIC
ECONOMICS
It studies man not only as an isolated individual but of a
social individual having;
Faith,
Ethics (believing in the six articles, his deeds is
accountable to Allah as it is guided by Shari’ah.
Propagate good doing and prohibit bad doing al-Amr bil
Maruf wa al-Nahy anil Munkar in the society (watch his
business ethics) 21
22. FUNDAMENTALS OF ISLAMIC
ECONOMIC PHILOSOPHY
Tawhid: a comprehensive concept, implying complete submission
of oneself to the one and unique being, who is the creator,
sustainer, owner of everything, all-knowing, all-wise, and the most
powerful.
Risalah: an institution of prophethood, which brings the revealed
guidance in all dimensions of human life from Allah in the form of
the Kitab, and demonstrates its application through practice which
is recorded in the form of Sunnah.
Akhirah: the hereafter for accountability, and for getting the
outcome of all deeds including economic activities, in an eternal
life.
Economic well-being for leading a good life and discharging
socio-Islamic obligations in this world for achieving the home of
the hereafter.
22
23. HOW ISLAM VIEWS THE
ECONOMIZING PROBLEMS?
Scarcity of Resources
Unlimited Wants &
Choice
23
24. RESOURCES IN AL-QURAN
(many resources between the sky and the land)
ِم َل َزأنَأ َو َ
ض أرَ أ
اْل َو ِتا َاوَمهسال َقَلَخ يِذهال ُ ه
َّللا
َنِم ِهِب َج َرأخَأَف ًءاَم ِاءَمهسال َن
َتِل َكألُفأال ُمُكَل َرهخَس َو أمُكَل اًق أز ِ
ر ِتاَرَمهثال
هخَس َو ِه ِ
رأمَأِب ِ
رأحَبأال يِف َي ِ
رأج
ُمُكَل َر
َارَهأنَ أ
اْل
It is Allah Who hath created the heavens and the earth
and sendeth down rain from the skies, and with it
bringeth out fruits wherewith to feed you; it is He Who
hath made the ships subject to you, that they may sail
through the sea by His command; and the rivers (also)
hath He made subject to you. (Ibrahim 14:32)
24
25. دُعَت أنِإ َو ُهوُمُتألَأَس اَم ِلُك أنِم أمُكاَتَآ َو
هنِإ اَهوُصأحُت َ
َل ِ ه
َّللا َةَمأعِن وا
ٌارهفَك ٌموُلَظَل َانَسأنِ أ
اْل
• And He giveth you of all that ye ask for. But if ye
count the favors of Allah, never will ye be able to
count them. Verily, man is given up to injustice and
ingratitude. (Ibrahim 14:34)
RESOURCES IN AL-QURAN
(Never will you be able to count the favors of Allah)
25
26. َر اَهيِف َانأيَقألَأ َو اَهَانأدَدَم َض أرَْلا َو
َهيِف َانأتَبأنَأ َو َيِسا َو
أنِم ا
ٍونُز أوَم ٍءأَيش ِلُك
Allah (swt) mentioned in the Quran:
And the earth We have spread out (like a carpet); set
thereon mountains firm and immovable; and
produced therein all kinds of things in due balance
(Hijir 15:19)
RESOURCES IN AL-QURAN
(abundant but in due balance)
26
27. َو ُهُنِئاََزخ َانَدأنِع هَلِإ ٍءأَيش أنِم أنِإ َو
َم ٍ
رَدَقِب هَلِإ ُهُل ِ
َزنُن اَم
ٍومُلأع
And there is not a thing but its (sources and)
treasures (inexhaustible) are with Us; but
We only send down thereof in due and
ascertainable measures. (al Hijir 15:21)
RESOURCES IN AL-QURAN
(everything … but in due and ascertainable
measures)
27
28. ISLAMIC PERSPECTIVE ON SCARCITY
When it comes to Islam, it analyzes the concept of
scarcity from a different perspective where there is no
concept of ‘relative scarcity’ in the economy as
believed by the secularism.
To Islam, ALLAH SWT has created ‘abundant and
sufficient’ resources for the usage of all people and
His other creations inclusive of animals and plants.
Thus, there is no ‘a big deal’ to recognize the factors
of production being relatively scarce.
28
29. As a result, the scarcity issues only arise due to the
‘availability’ which caused by limited knowledge and
capability of men to search the location of created
resources, to derive the method to extract and to
formulate its usage for benefits of the people.
The limited knowledge of men occurred because
ALLAH SWT releases knowledge to them bit by bit
and up to certain limitations. The men would not know
everything about themselves and other creations. Only
He knows at utmost. Due to this, ALLAH SWT said in
Surahal-Baqarah
“…He said: “I know what you know not” (Surah al-
Baqarah :30)
Cont.,
29
30. From the above assertion, there is no scarcity in term
of quantity in Islamic economy. Summarily, it can be
written as:
Sufficient Resources Created by God + (Human’s
constraints to acquire, to locate and to use of the
resources + Unlimited Wants)=Scarcity in Availability
All the three economic agents that are households,
firms and state face the availability scarcity in land,
capital , labor and entrepreneur towards the limited
knowledge and physical constraints and their unlimited
wants and needs. Not because of the factors of
production are limited in nature.
Cont.,
30
31. UNLIMITED WANTS
Islam recognizes that human
desires are unlimited.
This is explained in Quran and
in Hadith.
31
32. َو ِاءَسِالن َنِم ِتا َوَههشال بُح ِ
اسهنلِل َنِيُز
َطأنَقُمأال ِ
يرَِاطنَقأال َو َينِنَبأال
َنِم ِة َر
َ أ
اْل َو ِةَم هوَسُمأال ِلأيَخأال َو ِةهضِفأال َو ِبَههذال
َحأال ُعاَتَم َكِلَذ ِث أرَحأال َو ِامَعأن
ِةاَي
ِبَآَمأال ُنأسُح ُهَدأنِع ُ ه
َّللا َو اَيأنالد
Fair in the eyes of men is the love of things they
covet: Women and sons; Heaped-up hoards of gold and
silver; horses branded (for blood and excellence); and
(wealth of) cattle and well-tilled land. Such are the
possessions of this world's life; but in nearness to Allah
is the best of the goals (To return to). (Al-i- Imran
3:14)
MAN’S UNLIMITED WANTS IN AL-
QURAN
32
35. MAN IS GREEDY
هللا رسول قال
(
ص
:)
«
أعطي ولو ، ثانيا إليه أحب ذهب من واديا أعطي آدم ابن أن لو
، التراب إَل آدم ابن جوف يمأل وَل ، ثالثا إليه أحب ثانيا
تاب من على هللا ويتوب
»
“If man is given a valley of gold,
certainly, he wants the second
and third one and he will …..”
Hadith
35
36. CHOICE IN ISLAM
Choice in Islam should be ranking
according to:
•Need fulfillment and not to
greediness.
•Concept of brotherhood
•Concept of sharing
36
38. When a man dies he will be asked on four:
1- His youth how he spend it?
2- His age how he spend it?
3. His wealth how he acquires it? &
4. How he spends it?
يزول لن وسلم عليه هللا صلى هللا رسول قال قال الدرداء ابي عن
اباله فيما شبابه عن أربع عن يسأل حتى القيامة يوم عبد قدما
أنفقه وفيما اكتسبه اين من ماله وعن افناه فيما عمره وعن
CONT. ACQUIRING WEALTH IN ISLAM
PILLARS OF ACCOUNTABILITY IN THE
HEREAFTER
38
39. RELATION BETWEEN ETHICS AND ISLAMIC
ECONOMICS
Muslims are bound by Islamic ethics/Aklaq and
morals in their society. They should jealously
guard their behaviour, deeds, words, thoughts,
feelings and intentions.
Quran had laid down may Quranic verses which
highlighted how the Muslim should behave as an
individual and as a member in the society
towards others.
The Quran and the hadith gave the framework
within which people should think how to apply it
in their daily life as individuals and as collective.
39
39
41. َذ أنِم أمُكَانأقَلَخ اهنِإ ُاسهنال اَهيَأ اَي
ُش أمُكَانألَعَج َو ىَثأنُأ َو ٍ
رَك
اًبوُع
ِع أمُكَمَرأكَأ هنِإ واُفَارَعَتِل َلِئاَبَق َو
َ ه
َّللا هنِإ أمُكاَقأتَأ ِ ه
َّللا َدأن
ٌيرِبَخ ٌميِلَع
O mankind! We created you from a single
(pair) of a male and a female, and made you
into nations and tribes, that ye may know
each other (not that ye may despise (each
other). Verily the most honoured of you in
the sight of Allah is (he who is) the most
righteous of you. And Allah has full
knowledge and is well acquainted (with all
things). (al-Hujurat 49:13)
1. KNOWING AND DEALING
WITH EACH OTHER
41
42. 2. CONCEPT OF BROTHERHOOD
َأنيَب واُحِلأصَأَف ٌة َوأخِإ َونُنِمؤأُمأال اَمهنِإ
َعَل َ ه
َّللا واُقهتا َو أمُكأي ََوخَأ
أمُكهل
َونُمَح أرُت
The Believers are but a single Brotherhood: So
make peace and reconciliation between your
two (contending) brothers; and fear Allah, that
ye may receive Mercy. (al-Hujurat 49:10)
42
43. … CONCEPT OF
BROTHERHOOD
ْلخيه يحب حتى أحدكم يؤمن َل
–
قال او
:
لجارة
-
لنفسه يحب ما
It is reported on the authority of Anas ibn Malik
(r.a.‘) that the Propeht (pbuh) said; None of
you (truly) believes till he loves for his brother-
or he said: for his neighbor- that which he loves
for himself”
(Narrated by Bukahari
and Muslim)
43
44. … CONCEPT OF
BROTHERHOOD
وسلم عليه هللا صلى قوله
:
(
الجسد كمثل وتعاطفهم وتراحمهم توادهم في المؤمنين مثل
الواحد
إذا
والحمى بالسهر الجسد سائر له تداعى عضو منه اشتكى
)
Meaning: the example of a believers
with his friend, in terms of
mercifulness and sympathy, like a
body if any part complained from any
weakness, the rest of the body will
weaken too and caught fever. 44
45. 3. CONCEPT OF MUTUAL
COOPERATION
قال موسى أبو رواه اْلشعريين وحديث
:
وسلم عليه هللا صلى النبي قال
" كان ما جمعوا بالمدينة عيالهم طعام قل أو الغزو في أرملوا إذا اْلشعريين إن
وأنا مني فهم ،بالسوية واحد إناء في بينهم اقتسموه ثم ،واحد ثوب في عندهم
منهم
(
البخاري اْلمام رواه
)
The Ash’ari when they were afflicted with a period of
deprivation they would collect all of their provisions
and divide them amongst themselves equally - as
mentioned in the Hadith.
45
