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Islamic Economics: An Introduction

In light of the recurring financial crises that shake national economies from time to time, coupled with the recent downturns in capitalist economies, and the failure of socialism alongside the collapse of communism in the late 1980s, conflicting voices have emerged:

1. The first calls for the implementation of an Islamic economic system—one that encompasses both macro and micro aspects, does not discriminate between social classes, and balances between the unchangeable nature of the core principles and the flexibility of their practical application. This system is comprehensive for all of humanity, drawing its inclusivity from the universality of Islamic law, which is applicable in all times and places.

2. The second argues that the most suitable economic system should be adopted based on consensus among nations, whether it be capitalism, socialism, or a mixed system. It denies the existence of a distinct "Islamic economic system," claiming that what is presented as such is merely interpretative viewpoints that attempt to impose meanings onto religious texts beyond their intended scope. It also sees Islamic banking experiments as limited in scope, failing to provide comprehensive developmental solutions.

Thus, we need to know what is the concept of Islamic economics in reality? And to what extent does an Islamic economic system truly exist? These are the questions we aim to explore in the following lines.

Definition of Economics

Linguistically, the term Iqtisad (loosely translated as "economy") derives from the Arabic root qasd (القصد), meaning moderation—an approach that avoids excess or deficiency. A "moderate" person (qasd) is one who is neither extravagant nor miserly. Hence, in linguistic terms, economy refers to moderation in spending.

Terminologically, economics is Islamically defined as:
"The science that studies all matters related to wealth, money, earning, ownership, expenditure, production, investment, utilization of resources and services, savings, and issues of wealth and poverty."
— (Islamic Economic Dictionary by Dr. Ahmad Al-Shirbasi, p. 36).

Moving beyond academic definitions and complex terminology, a review of contemporary scholars' definitions of Islamic economics leads to the following conclusions:

Key Principles of Islamic Economics

1. Islamic Law and Economic Guidelines
   The eternal and universal nature of Islamic law makes it impossible for it to lack foundational principles and regulatory frameworks concerning key economic topics such as wealth, money, investment, and production. These are vital aspects of human civilization, essential for the continuity and advancement of life. Without proper economic principles, societies would descend into chaos, resembling a lawless jungle. In fact, economic discussions are a natural extension of the comprehensive nature of Islamic law, as emphasized in the Qur'an:

   "Today I have perfected for you your religion, and completed My favor upon you, and have chosen for you Islam as your religion." (Surah Al-Ma'idah, 5:3)

2. The Role of Economics in Islamic Da'wah
   Highlighting the comprehensiveness and greatness of Islamic law—especially in areas such as economic interactions—serves as a powerful means of calling people to Islam. Establishing a solid base of scholars specialized in Islamic economics is essential. Such scholars must possess a deep understanding of both classical jurisprudence and modern economic principles, enabling them to make well-founded legal rulings (fatwas) and conduct informed economic analysis. This is a communal obligation (fard kifayah); neglecting it would be a collective sin upon the Muslim community.

3. Foundational Economic Principles in Islam
   The general principles and overarching rules of Islamic law serve as the constitutional framework for economic matters, guiding both foundational and subsidiary rulings. As Dr. Muhammad Shawqi Al-Fanjari states in his book The Identity of Islamic Economic Policy and the Importance of Islamic Economics (p. 18):

   "Islamic economic policy is divine in its principles and human in its application."

   The Qur'an provides several foundational economic guidelines, such as:

   • "And do not consume one another’s wealth unjustly." (Surah Al-Baqarah, 2:188)
   • "So that wealth may not merely circulate among the rich among you." (Surah Al-Hashr, 59:7)
   • The Prophet Muhammad (peace be upon him) said: "People are partners in three things: water, pasture, and fire."
   • He also stated: "Whoever revives a barren land, it belongs to him."

   These principles form the foundation for economic theories that can structure a just and comprehensive economic system suitable for humanity.

Conclusion: The Definition of Islamic Economics

From the above discussion, we can conclude that Islamic economics is:

"A science that studies all matters related to wealth, money, earning, ownership, expenditure, production, investment, utilization of resources and services, savings, and issues of wealth and poverty—within the framework of Islamic legal principles, general rules, and ethical values."