Evolution of Economic Thought

 

Muslim Economic Thought

The contribution of Muslims in the field of economics dates back to the early days of Islam, spanning from the 7th century to the 18th century. The Islamic era laid the foundation for economic ideas through the Quran's teachings and the Prophet Muhammad's traditions. 

Central to Muslim economic thought emphasizes justice, ethical conduct, Contributions to economics and finance, and support for free markets. The concept of Zakat, obligatory almsgiving, exemplifies a commitment to addressing economic inequality. Islamic finance, with its prohibiting usury and emphasis on fair trade, showcases a sophisticated approach to economic practices. The early Muslims' engagement in trade and their advancements in science and technology further contributed to the development of economic thought, leaving a lasting legacy that continues to influence economic discourse today.

 There was main 3 personalities.

                 

1. Prophet Muhammad 

Born: 29 August 570 AD, Mecca

 Died: June 8, 632 AD, Medina

Oh, Prophet Muhammad, the seal of the prophets,

Your economic thought was truly profound.

You taught us to share our wealth with the poor,

And to live within our means, never bound.

You encouraged trade and commerce,

And showed us the importance of hard work.

You taught us to be honest and fair in our dealings,

And to never exploit the weak or the poor.

Muhammad was an Arab religious, social, and political leader and the founder of Islam.

He brought ideas about,

 ●      Control over lending -

Muhammad advocated ethical lending practices, discouraging usury and exploitation in financial transactions. His teachings emphasized fairness, compassion, and the well-being of individuals, fostering a community that prioritized economic justice and responsible lending. 

●      Reform corrupt market practices

Prophet Muhammad spearheaded reforms against corrupt market practices, promoting transparency, honesty, and fair dealings in commerce. His teachings sought to eradicate fraudulent practices, ensuring a just and ethical marketplace where transactions were conducted with integrity. 

●      Systematic transfer of funds in favor of the poor

Prophet Muhammad implemented a systematic transfer of funds to support the impoverished, exemplified through the institution of Zakat, a mandatory almsgiving. This compassionate economic system is aimed at addressing social inequality by redistributing wealth and ensuring the well-being of the less fortunate in the community.

2. Abu Yusuf

Born: 661 AD· Kufa, Umayyad Caliphate

Died: 750 AD· Baghdad, Abbasid Caliphate

 

Abu Yusuf, the great jurist and economist,

Your contributions to economic thought are vast.

You wrote about taxation, public finance, and trade,

And your insights are still relevant today.

You argued that the government should play a role in regulating the economy,

And that it should provide social welfare for the poor and needy.

You also emphasized the importance of private property rights,

And the role of the market in promoting economic growth.

Abu Yusuf was a prominent 8th-century Islamic jurist and chief judge.

Abu Yusuf made a significant contribution to economic thought with his work on land taxation, outlined in "Kitab al-Kharaj." This influential treatise reflects his commitment to fostering fairness and justice within the Islamic legal system, providing practical guidelines for revenue collection and contributing to the broader understanding of economic governance in Islamic societies.

3.Ibn Khaldun 

Ibn Khaldun, the great historian and economist,

Your work on economic thought is truly groundbreaking.

You were the first to identify the cyclical nature of economic growth,

And you explained the role of institutions in economic development.

You also emphasized the importance of education and human capital,

And you argued that social cohesion is essential for economic prosperity.

Ibn Khaldun was a 14th-century Arab historian, philosopher, and scholar.

According to economic theorist Ibn Khaldun, the division of labor brings manifold benefits by stimulating supply and demand. As specialization increases efficiency, it positively influences economic growth and development. Ibn Khaldun recognized the pivotal role of supply and demand in determining the prices of goods, acknowledging their impact on the overall economic. 

landscape. He delved into the determinants of economic development, highlighting the interconnected factors of population growth, human capital development, and technological advancements. Ibn Khaldun posited that population growth was intricately linked to a society's wealth. Additionally, he explored the concept of taxation, observing that while short-term revenue increases with higher tax rates, there exists a critical tipping point where excessively high tax rates can lead to a decrease in tax revenues in the long term, as they impose a burdensome cost on producers within the economy.

 

Written by: Dinithi Jayasuriya, Pasan Rathnayaka, Tharushi Ponnamperuma

 

References

9ways Academia. (n.d.). From Abu Yusuf Ya'qub idan Ishaq Al Kindi.

britannica. (n.d.). Muhammad biography history & facts.