Author: Abdul Hameed Nowrozi
Economy and its Role in Islam (Part Two)
Definition of Economy:
The term “economy” means “moderation” and “by.” In other words, economy refers to maintaining balance and moderation. As the Almighty Allah says in the Qur’an: «وَاقْصِد فِي مَشْیِک». Translation: “Observe moderation in your walk.
In term It is a set of measures that establish harmony between endless human needs and limited resources.
The Importance and Role of the Islamic Economy:
Livelihood and economic issues are crucial for all people because they are tangible and understandable; everyone sees themselves involved in them. The economy is also very important for societies and countries because the stability, independence, strength, and resilience of a society against natural and social disasters depend on addressing these economic challenges and deficiencies.
Basic Concepts of the Islamic Economy:
In every economic system, there are basic and fundamental concepts that must be understood and examined to effectively manage that economic system. It is generally recognized that there are four fundamental economic concepts:
1. Superior Option:
To better understand the concept of the “superior option,” consider the following example: Suppose you have 2000 Afghanis in your pocket. With this amount of money, you can buy a bag of flour, clothing, or order food at a restaurant. When deciding how to spend those 2000 Afghanis, the term “superior option” becomes relevant. This concept applies not only to individuals but also to countries and governments, as both have limited resources and possibilities while facing unlimited needs and demands. Therefore, it is crucial to choose the best option to meet these demands and produce the desired products.
2. Allocation of Facilities:
“Allocation of facilities” refers to the distribution of the factors needed to produce goods and provide services, such as capital, labor, and land. The challenge lies in determining how these factors should be allocated among various activities. For example, if “land” is one of the production factors, the question arises: How much land should be allocated for cotton cultivation, legumes, or fruits? The answer to these questions in economic terms is called “allocation of facilities.”
3. Income Distribution:
The third concept of the economic system is “income distribution” or “product distribution.” After utilizing the aforementioned facilities, how should the resulting products be distributed within society? In economic terminology, this is referred to as “income distribution.”
4. Development:
The meaning of “development” pertains to how we can enhance our economic efficiency so that the products we obtain not only meet better quality standards than in the past but also increase in quantity. Additionally, it involves how to implement new products. To achieve a society that is economically advanced and provides healthy means of livelihood for its people, an increase in opportunities for earning money must be established. This concept is termed “development” in economic terms.
These four basic concepts—superior choice, allocation of facilities, income distribution, and development—are essential for solving the challenges faced by any economic system.
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