Saturday, May 18, 2019

The Economizing Problem

These get around Essays ar partial fulfillment of Paper IE1001 of Part 1 of Certified Moslem finance passe-partout (CIFP) DRAFT V0. 4 INCEIFStudent Name Mustafa AydemirStudent ID 1200279 IE1001Assignment in Muslim Economics unforesightful Essay No 1 by Mustafa Aydemir fluctuation 0. 4. doc -1- Bismillahirrahmanirrahim The economizing problem And its direct effect on the economy at large. A short establish from Moslem perspective by Mustafa Aydemir Human beings are greedy by nature and their needs are univers all in ally acknow leadge as infinite.A simple prove for this statement is the wish of every person to drop dead forever. The limitless 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 among unlimited needs versus limited resources. Economics is the social science that studies the a llocation of scarce resources to satisfy unlimited wants (INCEIF Lecture Notes1), It is divided into Macro- and Micro frugals.The former is the field of economicals that studies the behavior of the economy as a whole, and not just on a singular company, but entire industry sector and merchandises. Whereas, the latter focuses on supply and demand as well as other forces that determine the price levels seen in the economy. The introductory 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 thinking(prenominal) in their choices and would for example prefer a business line paying 3000 USD salary over a job with a 1500 USD pay. The case-by-case is looking after his own offbeat, which is likely to increase by taking the high up income employ ment. 1 Title Overview On Economics Class Islamic Economics IE1001 Prof Dr. Magda Ismail Abdel Mohsin Institution INCEIF interpret 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 -2- However, the well-being of all people needs to be guaranteed, which is well noted by theological, merciful 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 homophile race may remain just a dream if the scarce resources are not utilise efficiently and rightfully. In order to achieve this vision, societies develop effective strategies that foundation be considered as worldviews.For the stake of simplicity the (1) secular and the (2) religious worldviews are the only two that are subje ct to this essay. The secular worldview wildness the importance of material aspects of well-being and disregards the religious aspect completely. The secularist argue that maximum material well-being raft be best realized if economic agents are given freedom to actualize their self-interest approximately(prenominal) 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 people for social well-being is alert to the happiness of a human being. However, the secular worldview refers to market forces that would ensure social interests because competition will apply self-interest (that may lead to exaggerated greed) under con trol. 3 4 Chapra, M. Umer. (1995). Islam and the economic challenge.Leicester, U. K. Islamic entry Abbas Mirakhor (2012).Lecture macroeconomic Policies & Islamic Finance. Kuala Lumpur, Malaysia INCEIF IE1001 Assignment in Islamic Economics Short Essay No 1 by Mustafa Aydemir Version 0. 4. doc -3- In contrary to the secular or capitalist worldview stands the religious or spiritual worldview. It gives tribute and attention to both the spiritual as well as the material aspects of human wellbeing. In fact, the spiritual worldview does not necessarily reject logical reasoning in human improvement, individual freedom or self-interest (Chapra, 1995).This worldview, however, highlights that moral values and good governance are required as restraining factors for freedom and self-interest in the journey of a r severallying a civilization where well-being in ensured to all people and to achieve social harmony and family integrity. The direct effects of the economizing problem to a nations wealth are manifold. Well after capitalism had been established in medieval Europe and the west, its consequences in call of unemployment and mal-distribution of income and wealth became painfully evident (Haferkamp and Smelser, 1992).Market cycles are considered part of an economy and crisis are accepted as unavoidable. The market itself is the overarching governance frame that determines prices through supply and demand and overrules the social interest of human beings. It is like an absolute dictator without mercy that supports the rich and the powerful and penalizes the poor and the needy people. Consequently, societies began overtime to assign an increasingly bigmouthed role to the government to correct the shortcomings of capitalism (market capitalism) with billion or even trillion dollar bailout packages for so called to-big-to-fail institutions.All paid with tax money. Simultaneously however a contrary view developed objecting to the governments involvement in the econom y on efficiency ground. Anyhow, even after the massive global financial crisis in 2007/2008 the high net-worth individuals are better off (see 5 Haferkamp, H. , & Smelser, N. J. (Eds. ). (1992). Social change and modernity. Berkeley University of California Press. IE1001 Assignment in Islamic Economics Short Essay No 1 by Mustafa Aydemir Version 0. 4. doc -4-Forbes Magazine6) and seduce much wealth than the middle class and low-income classes, likely due to cost cutting and austerity measures for companies and governments alike. The Islamic economic system is unique and provides a divine solution to the economizing problem this essay has elaborated thus far. It starts with the scarceness of resources that illustrates the issue quite clear. If we assume that resources are available in abundance (INCEIF Lecture Notes7) rather than limited, the figure shifts dramatically from strategies to accumulate wealth to strategies of wealth distribution.Wealth in Islam can be distributed b y Zakah and Sadaqah but likewise by introducing a risk-sharing model into the financial system to replace it with interest (Askari, Iqbal, Krichene and Mirakhor, 2011)8. Islam recognizes differences in human potentials because each person is gifted with different skillsets and depth of abilities. Human beings are not identical is proof that no two individuals have identical capabilities. This differences will bring income and wealth inequalities in societies (Chapra, 1992)9. Furthermore, the self-interest and rational human aspects are fully endorsed but to a different end.Choices however are enhanced by honourable values and rules. Consider for example Islamic teachings where there is a sense of duty and obligation to attach to rules of behavior and be in full compliance with them, often there are also some ends in view like Jannah (Paradise), the total well-being of society or approval and satisfaction of Allah. all the same Allahs love and mercy or fear of hell are motivators of a self-interested spiritual person. To the bound that ends is gaining strength over 6 7 The Worlds Billionaires List http//www. forbes. com/billionaires/ Retrieved on November 12, 2012Title Overview On Economics Class Islamic Economics IE1001 Prof Dr. Magda Ismail Abdel Mohsin Institution INCEIF Date 8/16/2006 Of Pages 28 8 Hossein Askari, Zamir Iqbal, Noureddine Krichene and Mirakhor (2011) Risk-sharing in Finance The Islamic Finance Alternative Singapore John Wiley & Sons 9 Chapra M (1992). Islam and the Economic Challenge, The Islamic Foundation and International Institute of Islamic Thought, London and Herndon. IE1001 Assignment in Islamic Economics Short Essay No 1 by Mustafa Aydemir Version 0. 4. doc -5- the obligation and duty.Muslims may think of consequences in the hereafter more than over what was to be material well-being in this world. The position of Quran is in the first instance decoupling of actions from consequences, actions are done as a sense of duty to do what Allah teala and his darling Messenger have ordered. At the same time, however, the Quran itself repeatedly emphasizes the desirable and undesirable consequences of actions (Lecture Notes Prof Mirakhor, 2012)10. In conclusion, Ibadah is the justification for rules. If one adores almighty Allah swt, one does what the creator orders.Hence, peoples unlimited wants are recognized and mentioned in the Quranic poetise And ye love wealth with inordinate love (al-Fajr 8920) and following hadith Narrated Ibn Abbas and Anas bin Malik Allahs Messenger said, If a son of man had a valley full of gold, he would desire to have two. Nothing can fill his mouth except the earth (of the grave). Allah turns with mercy to him who turns to Him in repentance. (Al-Bukhari and Muslim) That is why it may seem that Islamic economic system is probably the strongest alternative to greed and unfair markets that have led the world from crisis to crises. At least it is worth a try in the advanced economies . 10 Abbas Mirakhor (2012).Lecture Macroeconomic Policies & Islamic Finance. Kuala Lumpur, Malaysia INCEIF IE1001 Assignment in Islamic Economics Short Essay No 1 by Mustafa Aydemir Version 0. 4. doc -6

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