These Short Essays are partial fulfillment of Paper IE1001 of Part 1 of Certified Islamic Finance Professional (CIFP) [DRAFT V0.4]
Student Name: Mustafa Aydemir Student ID: 1200279
IE1001 Assignment in Islamic Economics - Short Essay No 1 by Mustafa Aydemir - Version 0.4.doc
Bismillahirrahmanirrahim The economizing problem - And its direct effect on the economy at large. A short essay from Islamic perspective by Mustafa Aydemir Human beings are greedy by nature and their needs are universally recognized as infinite. A simple prove for this statement is the wish of every person to live forever. The unlimited wants are the main reason that resources are considered insufficient or scarce. This is probably the strongest argument and a good justification to define an entire field of study to explain and solve the resulting economizing problem between unlimited needs versus limited resources. “Economics is the social science that studies the allocation of scarce resources to satisfy unlimited wants” (INCEIF Lecture Notes1), It is divided into Macro- and Microeconomics. The former is the field of economics that studies the behavior of the economy as a whole, and not just on a singular company, but entire industry sector and markets. Whereas, the latter focuses on supply and demand as well as other forces that determine the price levels seen in the economy.
The previous section described the economizing problem, that is the relation between the scarcities or resources relative to ‘needs and wants’. People are self-interested economic agents that maximize their own utility by using goods and services (Williamson, 1985)2. In the capitalistic worldview, people are rational in their choices and would for example prefer a job paying 3000 USD salary over a job with a 1500 USD pay. The individual is looking after his own well-being, which is likely to increase by taking the higher income employment.
Title: Overview On Economics; Class: Islamic Economics [IE1001]; Prof: Dr. Magda Ismail Abdel Mohsin; Institution: INCEIF; Date: 8/16/2006 # Of Pages: 28 2
The Economic Institutions Of Capitalism; Firms, Markets, Relational Contracting; Oliver E. Williamson; Yale University IE1001 Assignment in Islamic Economics - Short Essay No 1 by Mustafa Aydemir - Version 0.4.doc
However, the well-being of all people needs to be guaranteed, which is well noted by theological, human and western researchers and recognized by all civilizations in the present and the past (Chapra, 1995)3. With the assumption that resources are limited, the well-being of the entire human race may remain just a dream if the scarce resources are not utilized efficiently and rightfully. In order to achieve this vision, societies develop effective strategies that can be considered as worldviews. For the sake of simplicity the (1) secular and the (2) religious worldviews are the only two that are subject to this essay.
The secular worldview emphasis the importance of material aspects of well-being and disregards the religious aspect completely. The secularist argue that ‘maximum material’ well-being can be best realized if economic agents are given freedom to actualize their self-interest whatever it may be with regards to taste and preference and the guidance of God in any form is replaced by the help of human reasoning. Moreover, in this liberal view of secularism neither values nor government intervention can play a major role in the fair distribution of resources to achieve the well-being of all people. The liberal view has not succeeded and was overthrown nearly everywhere (Mirakhor, 2012)4. The need of...