CH4 : Islamic Microeconomics (Level of needs ( Maslow Hierarchy of Needs),…
CH4 : Islamic Microeconomics
Theory of consumption
Consumption (western) is expanding wealth for satisfaction for human wants.
There is no constraints to pursue any good that is perceived by individual for self esteem.
Consumption in Islamic perspective: the goal to direct the consumption in achieving the individual & social well-being & higher purpose which is achieving God's pleasure.
Importance of Consumption
Beginning & end of all economic activities- When human feels desire & want to fulfill his desire, the he will make efforts to satisfy it & it is the end of all economic activities
Consumption derive production
Consumption is the source of production.
Production of goods & services dependent when there is demand (consumption) &, there will be supply (production)
Economic theory - Economist can formulate in several theories that help to understand how individual behavior affects the inputs & output in the economy.
Income & employment theory
Theory states that if consuming good & services does not increase demands, it will lead to fall in production so it will layoff workers which resulting in increment of unemployment rate.
Principle of consumption
Principle of piety/ righteouness
Haram & halal applies to items of expenditure.
Islam are required to spend their earning on halal or permitted expenses and refrain from spending on haram
Principle of cleanliness (thoiyyibah)
The goods must be clean, usuful,& suitable for consumption
In a hadith, the Prophet Muhammad mentioned the prohibition of silk and gold to be used by Man & also warned to use the plate made from gold/silver
Principle of moderation
Islam promte minimal consumption so as to control & contain one's desire
Excessive consumption is condemned & is considered as wasteful. Excess income should be channelled to spending for the sake of Allah
Principle of welfare
Consumption is done to enhance the well being of the people
Islam concern about self interest & self public .
Principle of moral
Consumption must fulfill ethical values and meet acceptable behavior.
A muslim is taught to start taking food with the mention of the name of Allah & to give thanks to Him after finished it.
Consumption should strengthen spiritual part & improve one's behavior.
Type of human wants
Refer to basic primary wants for food, clothing, shelter, medical care, education
Refers to goods and services which make life easier and comfortable Provide freedom from suffering Fans , furnished house
Refers to goods and services which give us pleasure and prestige
Level of needs ( Maslow Hierarchy of Needs)
These are the things that we simply cannot live without: air, food, drink, warmth, sleep and shelter.
This is about physical safety, such as protection from violence, but also about financial security, freedom from accidents, and the security of easily accessible healthcare.
Friendships, family connections and emotional intimacy with others
The levels where they want respect and want their esteem to be fulfilled
Where a person tries to find about who he or she is and how they can achieve their full potential
Level of need in Islam
Dharuriyyah is a basic need for man.Without them ,men will not be able to continue their life
Hajiyyah ( complementary)
These needs provide comfort and without them, men will feel less comfortable in life
These type complete the needs of men but without them, men can still survive and live in comfort.
Tarafiyyah needs are not permissible (haram). These goods bring negative impact on the society.
To study of how people decide to spend their money based on their preference & budget.
Wealth & income
Taste and desire
Economic Rationalism - To interprets human behavior by Max Weber
Concept of success
Selfishness & altruism (self sacrifice)
Concept of wealth
Concept of Goods
Is defined as to when a consumer attempts to maximize the total value possible from the expenditure of the money they have spent
Utility vs Satisfaction
Utility is the satisfaction that one experts from having a commodity while satisfaction is how one feels after spending his money on a thing
Utility is not internal to commodities.
The seat of utility is the human mind; a psychological feeling of satisfaction expected from the consumption of a good. For example, a glass of water has no utility for a person who is no thirsty.
Muslim's Utility Fuction