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Sunday, March 25, 2007

Islamic Business Terms & Concepts

Islam forbids monopolies by outlawing the hoarding of wealth (Al-Ihtikar)Eliminates copyright or potency laws that would open the avenue for potential monopolies to develop.

Islam Protects the ownership of businesses and companies by restricting ownership of companies only to those who contribute both capital and effort to the company or business, thus effectively putting the seal on such concepts as "corporate takeover" from ever becoming a reality.

contracts

The Exchange Contract is the most basic of all contracts and the most important building block for a financial and economic system. Most of the financial products, services and instruments are based on this contract.

monetary & fiscal
The role and realm of reign of each will be specified to the set of assumptions that is derived from the Islamic economic system, which include
Zakah, prohibition of interest,
moderation in consumption,
the Islamic inheritance system, Hisbah, Qirad,
Co-existence of private and social ownership of the means of production.
Zakah (Zakat) provides a major means of fiscal policy because it affects
  • the allocation of resources,
  • the level of aggregate demand and the
  • distribution of income as well since the variations in the volume and the timing of collection and disbursement of Zakah creates variations in disposable income and fixed and circulating capital.
  • The economic policy has to do with the role of the government Such a government role is made available through its ownership of the major natural resources and al-Hisbah.

Al Hisbah

  • Price control,
  • Market management mechanisms,
  • Supervision of economic activities
  • trade & business
    During the height of the great Islamic civilization, trade was among the most important activity in wealth creation. Today in a world that is being rapidly globalized, trade has become even more important, facilitated by the advancements in information and communication technology and the greater capacity and speed of transportation. Whereas in the past trade could be carried out through the barter of goods, the Muslim world would still have to trade with the rest of the world as individual countries or as a regional group or as an Islamic Financial Community.

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