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Allocation of resources in islamic eco system ((application of islamic…
Allocation of resources in islamic eco system
normative & technical aspects of resources allocation
Normative
set boundaries or parameter that limit the decisions
derived from quran and sunnah by using concept of halal and haram
make a choice that utilize the resources
choice must be made in islamic by islamic rules, result in economic and shouldn't include haram
what ought will be made through what, how, for
Technical
deals with the constrained decision making within the normative framework
constrained optimizzation include the tools and methods
Goals and principles of allocation in islam
Principles
agents of decision making- the gov may interefere so that no faults of limits set by islam
Rules of the game- individual responsible of failure of community collective's effort and the prices are determined by market forces
Mechanism- could be market signal
Market structure- freedom in making decsion and express more in cooperation rather than competition
role of state-
play positive and complementary role to ensure the game prevail
act as regulator to ensure adil and ihsan
ensure minimum standard of living by fulfill the basic needs
reduce the concentration of wealth through zakat and fara'id
Al Hisbah
charge of responsibilty of making arrangements to oversee the implementation of this institution
muhtasib is responsibility in facilitate the performance of ibadah and implement of adil in society
checking the weight and measures to avoid the fraud and availability of products
correcting market imperfection and ensuring the price with checking the legaliity
ensuring fair wages and checking corruption
apply the amar makruf nahi munkar and discharge obligation relating divine rights
Importance of resource allocation
scarcity and choice
needs- what people require
wants- normally more than what is being required
scarcity- unlimited wants with liited resources
absolute scarcity-there are shortage in non renewable resources
Relative scarcity- resources available to satisfy the unlimited wants, it is also can be used for different alternatives and needs to make choice
resource allocation
production
distribution
consumption
scarcity demands us to choose the best alternatives
application of islamic concept of resource allocation
consumption
normative aspects
achieve falah and basic principles in consumption
derived from quran and sunnah
TA : a partial approach to utility maximization
production
Goals
entrepreneur must comply with adil and ihsan
Making rational production decision confined by limits
not only profit but rewards in the hereafter
general maxim- higher level output is better
Maximization of utility