1. Topic 5 Development of Islamic Economics
ISLAMIC ECONOMCS IBF 6111
Topic 5
Development of Islamic Economics
El-Ashker, A, and Wilson, R. (2006). Islamic Economics: A Short History, Leiden: Brill.
Islahi, A.A. (2004). Contributions of Muslim Scholars to Economic Thought and Analysis, Jeddah: Islamic Economics Research Centre.
Siddiqi, M.N. (1992). “History of Islamic Economic Thought” in Lectures on Islamic Economics, Ahmad, A., and Awan, K.R. (Eds), Jeddah: IDB/IRTI, pp.69-90; also in Islamic Economics, INCEIF, 2012:72-89.
Siddiqi, M.N., (1982), Recent Works on History of Economic Thought, Jeddah: Islamic Economics Research Centre.
Individual works of scholars and related English translations.

2. CONTENTS Introduction Development of early Islamic economics
Development of mainstream economics
Contributions of early Muslim scholars to economics

3. 1. Introduction

4. INTRODUCTION
We previously discussed the worldview and sources of knowledge for Islamic and secular economics, and concluded by discussing the development of economics as a discipline.
In this topic, we extend the analysis of the development of economic thought by highlighting that Islamic and mainstream economics developed from the contributions of early Muslim scholars.

5. INTRODUCTION (Cont.)
As referenced previously, once the Ottoman Empire was established in 1517, the West adopted a different approach from one of direct militaristic confrontation with the dar al-Islam, to an indirect economic competition, with the advent of mercantilism from the early 16th century.
“Disappointed from the conquest in the battlefield, mercantilists tried to block Muslim power on the economic front” Islahi (2008:140).
With the re-emergence of modern Islamic economics, it is important to reappraise the development and heritage derived from early Islamic economic thought.
Islahi. A.A. (2008). “The Emergence of Mercantilism as a Reaction Against Muslim Power”, Review of Islamic Economics, Vol.12, No.1

6. 2. Development of early Islamic economic

7. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Formation
Our analysis covers early Muslim scholarship during the periods of Formation, Translation and Transmission, i.e. up to about 1500 (CE).
The Formation Period (11-100AH/ CE): following the revealed knowledge derived from the Quran & the Sunnah, Shariah teachings on economic and other issues led to the development of a chain of scholars and Islamic jurisprudence (usul al-fiqh) to solve social problems through juristic logic, e.g.:
Zayd b. Ali Zayn al-Abidin ( ),
Abu Hanifah al-Numan b. Thabit ( ),
Malik b. Anas ( ),
Muhammad b. Idris al-Shafi’i ( ),
Ahmad b. Hanbal ( ).
Al-Shafi’i first systemized Islamic law with Al-Risala on usul al-fiqh and Kitab al-Umm on Shafi’i fiqh.

8. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Formation
Students of these leading jurists emerged such as,
Abu Yusuf ( ),
Muhammad Al-Shaybani ( ),
Yahya b. Adam Al-Qurashi ( ),
Abu Ubayd al-Qasim b. Sallam ( ).
Economic ideas that were touched by these scholars include: the market & market regulation; supply & demand, prices; exchange, transactions & usury; public finance & fiscal policy including taxation (kharaj, jizya, ‘ushr & zakat), private finance & partnership organizations; agriculture; inheritance; private property & ownership.

9. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Formation
Scholars were expert in the Islamic economic system, Islam as a way of life, and thus has not developed academic specialization or strict compartmentalization. Some of the important scholars that contributed to Islamic economics in this regard were,
Abu Yusuf Yaqub b. Ibrahim Al-Ansari ( ), Kitab al‐Kharaj
Abu Abdullah Muhammad b. al‐Hasan Al-Shaybani ( ), Kitab al‐Kasb
Abu ‘Ubayd al-Qasim b. Sallam ( ), Kitab al‐Amwal
Yahya b. Adam Al-Qarashi ( ), Kitab al‐Kharaj

10. DEVELOPMENT OF ISLAMIC ECONOMICS
Our analysis covers early Muslim scholarship during the periods of Formation, Translation and Transmission, i.e. up to about 1500 (c.e.)
Source: Islahi, Abdul Azim, “Contributions of Muslim Scholars to Economic Thought and Analysis”, Jeddah: IERC, 2004:97

11. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Translation
The Translation Period (2th-5th cent.AH / 8th-11th cent. CE): ‘Umar al-Khattab (r.a.) introduced account books ‘diwan’ (from the Persian word meaning ‘book’)in 20AH/640, and established the bayt al-mal (state treasury).
Improvements in government required scholarship in public finance and administration.
The language of administration remained in Persian (Iraq) and Byzantine Greek (Syria) until Caliph Abdul Malik b. Marwan (r.a., 26-86AH/ ) translated everything into Arabic.
The Western Roman Empire spoke Latin, the Byzantine or ‘Hellenistic’ Eastern Roman Empire spoke Greek with Latin used in administration until the reign of Heraclius ( ) when everything was changed into Greek.
The bayt al-mal, with its various departments operated as a financial institution without legal personality since the monies paid into the treasury were the common property of the Muslims with the Caliph as trustee expending them on the common concerns of the Muslims according to the Shari’ah (Zaman, 1991:138).
Zaman, S.M.H. (1991). “Economic Functions of an Islamic State (The Early Experience)”. Leicester: The Islamic Foundation.

12. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Translation
Given the conquests of Syria ( ), Egypt ( ), Iraq & Persia ( ) and with later expansions, Indian, Persian and Greek works were saved from being lost…
…and were translated, which would ultimately facilitate the transfer of Indian & Persian sciences to Europe: e.g. Arab-Indian or Western Arabic numerals - Persian scholar, Al-Khwarizmi ( ), al-Jibr (translated from Arabic to Latin).
Greek works were translated into Arabic and via Al-Andalusia were translated into Latin into European universities…Europe must thank Muslim translators for Plato, Aristotle and many others…

13. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Translation (Cont).
The impact on Muslim scholars of the translation of foreign ideas, especially Greek works depended on how they they reacted, which can be differentiated into four groups:
Muhaddithun or ‘traditionalist’ scholars with a profound understanding of the hadith rejected Greek ideas maintaining that the Islamic heritage of knowledge was sufficient: for example, al-Farra ( , Hanbali), al-Sarakhsi (d.1090, Hanafi), al-Kasani (d.1189, Hanafi).

14. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Translation (Cont).
Mutakallimun or Islamic scholastic theologians, whom tried to distinguish what was acceptable and what was not, and where there was conflict, then tried to prove the supremacy of Islamic thought over Greek thought: for example, Al-Mawardi ( , Shafi’i), Al-Ghazali ( , Shafi’i), Fakhr al-Din al-Razi ( , Shafi’i).
Abu Yala Muhammad b. al-Husain al-Farra ( , Hanbali), al-Ahkam al-Sultaniyyah or ‘The Rules of Government’
Abu Bakr Muhammad b. Ahmad al-Sarakhsi (d.1090, Hanafi), Kitab al-Mabsut, and Kitab al-Siyar
‘Ala al-Din Abu Bakr b. Mas’ud al-Kasani (d.1189, Hanafi), Kitab Bada’i‘ al-Sana’i’
Ali b. Muhammad al-Muwardi ( , Shafi’i), al-Ahkam al-Sultaniyyah (The Ordinances of Government)
Abu Hamid Al‐Ghazali ( , Shafi’i)), Ihya' 'Ulum al‐Din
Fakhr al-Din al-Razi ( , Shafi’i), Mafatih al-Ghayb

15. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Translation (Cont).
Hukama or ‘Muslims philosophers’ were deeply influenced by Greek ideas but went too far in support and propagating them:
Ibn Sina ( ), ‘Avicenna’ in Latin texts - philosophy, medicine (Al-Qanun on medicine and al-Shifa on healing).
Ibn al-Haytham ( ), ‘Alhazen’ - philosophy, mathematics, physics (optics).
The hukama translated oikonomos as `ilm tadbir al-manzil (the knowledge of household management), being the first branch of Greek philosophy, the other two being ethics (‘ilm al-akhlaq) and politics (‘ilm al-siyasah).

16. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Translation (Cont).
Additionally, Sufis or ahl al-tasawwuf preferred ascetic behaviour (zuhd), altruism and unselfishness, over material wealth, but later sufis denounced worldly means, preferring seclusion that reflected Hellenistic influences:
Harith b. Asad al-Muhasibi (d.857)
al-Junayd al-Baghdadi (d.910).
Sufi derived from safa (purity) and suf (wool) - referring to the simple cloaks the early Muslim ascetics wore.

17. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Translation (Cont).
Imam Ghazali was a sufi and a Shafi’i jurist.
The theology (kalam) of some of the theologians (mutakallimun) could not prevent the controversial metaphysics of the Muslim philosophers (hukama) nor the type of spiritual development (tasawwuf) of certain sufis.
Whilst al-Ghazali (as a sufi and a Shafi’i jurist) reaffirmed his view that tasawwuf involved knowledge and action, it did not mean monasticism and seclusion, and the true perception of God did not provide knowledge of God’s self, but of His will.

18. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Translation (Cont).
Al-Ghazali also applied reason to successfully dismantle the claims of the hukama, for he anchored reason in iman, whilst the hukama anchored reason in the senses, which became fallible and open to critique (Faruqi, 1986, pp ).
Interestingly, Ghazali wrote a book on theology called “al-Iqtisad fi al-I’tiqad” (Moderation in Belief) - later the term “Iqtisad”, which linguistically meant economy, prudence, husbandry, thrift, frugal was substituted for “tadbir al-manzil” (household management), to mean the management of property in terms of increasing or decreasing production, extending the meaning of home until it meant the community governed by the state, as an economic science (An-Nabhani, 2002:46).
Faruqi, I.R. and Faruqi, L.L. (1986). “The Cultural Atlas of Islam”. New York: Macmillan, pp
An-Nabhani, T., “The Economic System of Islam”, New Delhi: Milli, 2002, p.46

19. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Transmission
Transmission Period (6th-9th cent.AH / 12th-15th cent. CE): Islamic sciences in general and especially Muslim commentaries on Greek philosophy from Muslim philosophers (hukama) were mainly translated from Arabic into Latin, although not so the works of the traditionalists (muhadditun) give the conflict of religious ideas.
Ibn Sina (‘Avicenna’, ), al-Farabi (‘Alpharabius’, ), Ibn Bajjah (‘Avempace’, ), Ibn Rushd (‘Averroes’, ), Ibn Arabi (‘Doctor Maximus’, ).
Ibn Rushd was actually a prominent Maliki jurist and authored the ‘Distinguished Jurists Primer’ (Bidayat al-Mujtahid), but his commentaries on philosophy were translated and transmitted to the West - scholastics such as Thomas Aquinas referred to him as ‘the Commentator’ and to Aristotle as ‘the Philosopher’.

20. DEVELOPMENT OF ISLAMIC ECONOMIC THOUGHT - Transmission
Western religious scholastics also were confronted with Greek philosophy as it entered Europe.
Given their desire to also prove religion had supremacy over philosophy, the Western religious scholastics such as Thomas Aquinas ( ) absorbed the works of the Islamic scholastic theologians (mutakallimun) such as al-Ghazali (d.1111) and his Revival of the Religious Sciences (Ihya Ulum al-Din) – not in terms of belief, but in terms of methodology.

21. 3. Development of mainstream economics

22. DEVELOPMENT OF MAINSTREAM ECONOMICS
The Scholastic scholars, such as Tomas Aquinas ( ) and Navarro ( ) from the School of Salamanca), could only obtain Greek ideas through the medium of Muslim scholars basing their ideas on Greek philosophy presented by translations and commentary from Muslim philosophers.
Navarro is accredited with developing the time value of money in exchange: “diversity in time, which causes money to rise or fall in value…may sometimes be worth more and sometimes less in a year’s time” (Navarro, 2009, pp ). Later this would be distorted in to the time value of money theory of interest, and the time preference theory of interest.

23. DEVELOPMENT OF MAINSTREAM ECONOMICS
Source: Islahi, Abdul Azim, “Contributions of Muslim Scholars to Economic Thought and Analysis”, Jeddah: IERC, 2004:98

24. DEVELOPMENT OF MAINSTREAM ECONOMICS
Mercantilism (a forerunner of Keynesian economics) concentrated on an accumulation of money (gold & silver) and a positive balance of trade, and developed as a reaction to Muslim influence.
Although Richard Cantillon ( ) was influenced by the mercantilist writings of William Petty ( ), his “Essay on the Nature of Trade “(1730) broke ranks with mercantilism
He influenced both the Physiocrats and the Classical Economists, with his methodology of cause & effect; quantity theory of money and velocity of money; specie flow mechanism rather than a positive balance of trade; interest being a function of the supply and demand of loanable funds rather the mercantilist view that the interest rate varied inversely with the quantity of money; and was the first to use the term ‘entrepreneur’, although mudarib was well understood in Islam.
Cantillon also influenced David Hume ( ) given his views on specie flow, interest rates, balance of trade… David Hume influenced Adam Smith and were both products of the Scottish Enlightenment.

25. DEVELOPMENT OF MAINSTREAM ECONOMICS
The Physiocrats, notably Quesnay ( ), Turgot ( ), developed as the first Western economic school of physiocracy, an agrarian philosophy emphasizing on productive work as the source of national wealth derived from agricultural land and labour. Cantillon is also deemed a Physiocrat whom also influenced Jean-Baptiste Say ( ) whom developed the Law of the Markets (Say’s Law).
Adam Smith ( ) whom wrote the Wealth of Nations (1776) and deemed the ‘father of modern economics’, influenced the other classical economists such as David Ricardo ( ) and John Stuart Mill ( ), who in turn influenced Austrian and Neoclassical economics, whilst Keynes repackaged mercantilism.
Hence, Mainstream economics largely comprises neoclassical microeconomics in conjunction with mainly Keynesian macroeconomics.

26. 4. Contributions of early Muslim scholars
to economics

27. DEVELOPMENT OF MAINSTREAM ECONOMICS
In the following figure, we may appreciate the interaction and influence of Islamic economics from the beginning up to the modern period.
Typically, as observed by Islahi, scholastic scholars borrowed from Muslims scholars on economics without acknowledgment: they “never cited Islamic sources in their discourse on economic issues” (Islahi, 2004, p.99).
Europe was reacting against Islam, both militarily, religiously, politically and economically. European scholars undermined the significant contributions of Muslim scholarship and exaggerated Greek and Roman influence.
Even by the 14th century, European scholars prepared their own volumes of numerous translations of Arabic books, which they ascribed entirely to Greek scholars rather than their original Muslim authors.
Islahi, A.A. (2004). Contributions of Muslim Scholars to Economic Thought and Analysis, Jeddah: IERC

28. CONTRIBUTION OF MUSLIM SCHOLARS TO ECONOMICS
Here we may appreciate the interaction and influence of Islamic economics from the beginning up to the modern period.
Typically, scholastic scholars borrowed from Muslims scholars on economics without acknowledgment: they “never cited Islamic sources in their discourse on economic issues”(Islahi, 2004:99).
Source: Islahi, Abdul Azim, “Contributions of Muslim Scholars to Economic Thought and Analysis”, Jeddah: IERC, 2004:100

29. EARLY MUSLIM CONTRIBUTIONS
A selection of key works and contributions by earlier Muslim scholars to Islamic economics from the 8th – 15th centuries are summarized in the following table.
As mentioned earlier, significant contributions to economics were provided by Muslim scholars well before Western scholarship even began with the mercantilists from 1500 onwards.
Scholar
Year
Work
Summary of Topics Discussed
Abu Yusuf
Kitab al‐Kharaj
(Book of Land Tax)
Public finance, taxation, development, public finance, supply & demand
Muhammad Al-Shaybani
Kitab al‐Kasb
(Book of Earning a Livlihood)
Micro-economic behavior, commerce
Abu ‘Ubayd
al-Qasim
Kitab al-Amwal
(Book of Wealth)
Public finance, taxation, money
Al-Jahiz
Kitab al-Tabassur bi al-Tijarah (Book of Insight into Commerce)
Commerce, money, supply & demand

30. EARLY MUSLIM CONTRIBUTIONS
Scholar
Year
Work
Summary of Topics Discussed
Al-Muhasibi
al-Makasib wa al-Wara wa al-Shubuhat
(Treatise on Earnings, Abstinence and Doubt)
Commerce, ethics
Al‐Mawardi
Al‐Ahkam al‐Sultaniyyah
(The Ordinances of Government)
Political economy, public finance, market supervision taxation, money, agriculture
Ibn Miskawayh
Tahdhib al-Akhlaq
(Ethical Instruction)
Risalah fi Mahiyat al-‘Adl
(Treatise by Miskawayh on Justice)
Commerce, ethics, market supervision, economics, money
Al‐Ghazali
Ihya' 'Ulum al‐Din
(Revival of the Religious Sciences)
Fiqh mu’amalat, problem of barter, nature & functions of money, monetary theory, counterfeiting, debasement, hoarding, interest, earnings, trade & commerce, profit, consumer behaviour, and production, market supervision

31. EARLY MUSLIM CONTRIBUTIONS
Scholar
Year
Work
Summary of Topics Discussed
Al-Dimashqi
12th century
Al‐Isharah ila Mahasin al‐Tijarah
(Guide to the Virtues of Commerce)
Commerce, wealth (definition, acquisition, preservation, management), division of labour for economic development, money, price equilibrium, supply & demand, price controls, price index
Ibn Taymiyya
Al‐Hisbah fi al‐Islam
(Public Duties in Islam)
Market oversight, price equivalent, supply & demand, market imperfects, agricultural arrangements, hoarding, fair wage, fair price, fair profit, money (anticipated Gresham’s Law).
Ibn Khaldun
Al‐Muqaddimah
(The Introduction)
Farther of economics and social science, economic theory and trade, determinants of supply & demand, monetary theory, supply side economics: taxation and the Laffer curve, economic growth, division of labour & cooperation: labour theory of value
Al‐Maqrizi
Ighathat al‐Ummah bi Kashf al‐Ghummah (Helping the Community by Examining the Causes of Distress)
Monetary economics, monetary theory and monetary analysis of hyper-inflationary depression

32. THE FIRST SPECIALIZED BOOKS ON ISLAMIC ECONOMICS
The first books dealt with taxation, the land tax (kharaj) in terms of collection of revenues from conquered land and their distribution. Hence, kharaj is state revenue employed in public finance.
Given the size and depth of Abu Yusuf’s work on al-Kharaj, it would be sufficient to assess his work rather than include the others:
Abu Yusuf Yaqub b. Ibrahim Al-Ansari ( ), Kitab al‐Kharaj
Yahya b. Adam Al-Qarashi ( ), Kitab al‐Kharaj
Ibn Rajab al‐Hanbali ( ), Al‐Istikhraj al-Ahkam al‐Kharaj
Qudamah ibn Ja’far ( ), Kitab al-Karaj
“Abu Huraira reported Allah's Messenger (may peace be upon him) as saying: Iraq would withhold its dirhams and qafiz; Syria would withhold its mudd and dinar and Egypt would withhold its irdabb and dinar, and you would recoil to that position from where you started [repeated further the last part twice], the bones and the flesh of Abu Huraira would bear testimony to it.” (Muslim, 41:6923)
The hadith from Muslim refers to the kharaj or land tax.

33. ABU YUSUF ( AH / )
Abu Yusuf Yaqub ibn Ibrahim al-Ansari was a student of Abu Hanifah (d.767) who extended the influence of the Hanafi school of Islamic law through his writings and the government positions he held.
He was appointed Qadi (judge) in Baghdad, Iraq, and later chief justice (qadi al-qudat) under Abbasid Caliph Harun al-Rashid ( ), and it was the Caliph whom commissioned Abu Yusuf to write the Kitab al-Kharaj, being an issue of state concern requiring examination.
The work was essentially the first treatise on economic policy, and provides a comprehensive discussion, as Abu Yusuf states, on “…the collection of the kharaj, ‘ushr (tithes), alms (zakat), jizyah and other matters of what [the Caliph] ought to do look into and act upon,” and the objective being to “avert oppression from his subjects, and benefit their interests” (Abu Yusuf, 1969:35)
Abu Yusuf, Kitab al-Kharaj, translated by Ben Shemesh (1969), Taxation in Islam, Vol.3, Lieden: Brill

34. ABU YUSUF (Cont.)
Abu Yusuf did not just discuss kharaj, but also expenditures & distribution of revenue, taxation (kharaj - tax on land, zakat (including ‘ushr - tax on crops) and other taxes such as jizyah, customs dues (‘ushur); public administration, law & order; other issues relating to leasing of land, public goods, prices, supply & value.
Kharaj is a tax on conquered land, a system of rent, and was originally levied by Umar (r.a.) on the unit of land area (misahah) as a fixed tax (kharaj al-wazifah), e.g. for wheat it was fixed in cash and in kind at 1 qafiz + 1 mithqal dirham per jarib per year.
The jarib is a surveyed unit of land measurement = 1,366 sqm.
A qafiz is unit of measure for produce (one sa’) = abt 2kg of wheat.
A mithqal dirham weighed 4.25g of pure silver (Abu Yusuf, 1969:107)
When ‘Umar conquered Iraq he surveyed 36,000,000 jaribs for agriculture, and assessed the kharaj on them accordingly (Abu Ubayd, 2003:66).

35. ABU YUSUF (Cont.)
Later under the Umayyads and early Abbasids, the fixed kharaj was taken in cash or in kind: when prices are low authorities preferred the kharaj in cash, and when prices high, the kharaj was preferred in kind, neither preferable to the farmer (Abu Yusuf, 1969:100)
Hence, on taxation, Abu Yusuf recommended a proportional tax (kharaj muqasamah) on agricultural produce, instead of a fixed levy (kharaj al-wazifah), as an incentive to bring more land into cultivation, reflecting what the land could bear.
Abu Yusuf proposed a proportional rates that reflected the level of labour and capital contributed, and paid in kind, unless by cash when the valuation agreed is just and not harmful to the farmer or the authorities (Abu Yusuf, 1969:101):
40% of the produce if irrigated naturally by rain,
30% of the produce if artificially irrigated,
1/3rd of the produce of trees (palm trees, vineyards, orchards etc.),
1/4th of the produce from summer crops.

36. ABU YUSUF (Cont.)
He also advocated tax policies which favour the producer: where the kharaj would not apply below the nisab (5 wasqs) and if the yield fell below the threshold due to the farmer’s consumption, the tax would apply on the balance having deducted the amount consumed.
And also a centralized tax administration to reduce corruption.
He opposed tax farming land (qabalah) where land is accepted for kharaj and a tax farmer (mutaqabil) pays the ruler an agreed fixed amount of tax in grains, then collects taxes from the people and retains the difference. This was the privatization of tax collection, a tyrannical system…
He also emphasized the economic responsibilities of the ruler towards need fulfillment of his people and development, the need for justice and equity in taxation, and rulers’ duty to regard public money as a trust and be accountable for its expenditure.
Abu Yusuf favoured the use of tax revenues for socio-economic infrastructure and included discussion of various types of taxes, including customs duties.

37. ABU YUSUF (Cont.)
He made detailed suggestions on how to meet developmental expenditures on building bridges, dams and irrigation works. Though his chief contributions lie in the field of public finance.
In terms of public finance, there was no deficit financing or borrowing since the central bank did not exist, and in any case not necessary given the prosperity and surplus funds in the bayt al-mal (Islahi, 2004:64). Hence no income tax to repay any national debt.
He also rejected other policy measures such as price control, reaffirming that prices should be determined by market forces.
On prices he observed: “Low prices are not caused by a surplus of crops nor high prices by the scarcity of them, but are from Allah. Sometimes there may be a surplus of crops and the price high, and sometimes there may be a scarcity and the price low” (Abu Yusuf, 1969:101). This does not necessarily contradict the price mechanism, if one considers value in exchange, where prices are a function of two ratios (the demand & supply of goods and the demand & supply of money).

38. IMAM MUHAMMAD AL-SHAYBANI (132-189AH / 750-804)
Imam Abu Abdullah Muhammad b. al Hasan al-Shaybani was a student of Abu Hanifah (d.767) and after his death became one of Abu Yusuf’s followers - he was a Hanafi jurist and a judge.
His “Book of Earning a Livelihood” (Kitab al-Kasb) dealt with an individual Muslim's micro-economic behaviour, was written on his own initiative, indicating that Islamic economics was developing an independent body of literature. He also wrote Kitab al-Asl which deals with fiqh mu’amalat: together with the works of Abu Yusuf they form the basis of Hanafi school of Islamic law.
The style was traditional (athari) and juristic (fiqhi), and contrasts with Al-Dimashqi’s more pragmatic (‘amali) approach in Al-Isharah ila Mahasin al-Tijarah (The Guide to the Virtues of Commerce), but it certainly reflects the style of Al-Ghazali in his Ihya Ulum id-Din, in line with the Islamic world-view (ru’yat al-Islam li al-wujud) of combining the goal of worldly prosperity with that of the Hereafter.
Al-Imam Muhammad ibn al-Hasan al-Shaybani. (2011). “The Book of Earning A Livelihood (Kitab al-Kasb)”, translated by Adi Setia, Kuala Lumpur: IBFIM

39. AL-SHAYBANI (Cont.)
He describes the appropriate behaviour in consumption and emphasizes the desirability of giving in charity on one hand and the undesirability of begging on the other. (Sect.41,42).
He criticizes some sufis who reject economic enterprise (and beg instead), citing the Prophet (s.a.w.s) and the sahabah being engaged in trade as part of ibadah. (Sect.5,42).
According to him one must earn enough to meet one’s own needs in moderation as well as spend on others, especially those whose financial support is obligatory, in particular one’s family (Sect.35,36,44).

40. AL-SHAYBANI (Cont.)
He details four different types of earnings (anwa’ al-Makasib), stating that lowly earnings is permissible and agriculture is not at all reprehensible (Sect.17,18,19);
Hired employment (al-ijarah)
Commerce / trade (al-tijarah)
Agriculture (al-zira’ah)
Craftmanship / industry (sina’ah).
However, he did warn about a narration from Abdullah ibn ‘Umar: “I heard the Apostle of Allah, (s.a.w.s) say: When you buy and sell on ‘inah (tabaya’tum bi al-’inah), hold the tails of oxen, are pleased with agriculture, and give up conducting jihad (struggle in the way of Allah). Allah will cause disgrace to prevail over you, and will not withdraw it until you return to your original religion” (Abu Dawud, 17:3455).

41. ABU 'UBAYD AL-QASIM (157- 224AH / 774-837)
Abu ‘Ubayd al-Qasim ibn Sallam, was a judge and highly knowledgeable on jurisprudence, the Sunnah, and history. He wrote his Kitab al-Amwal (The Book of Wealth) at a time when the Hanafi school was established in Iraq, the Maliki school in Medinah and the Shafi’i school was just beginning to emerge in Syria and Egypt.
His book was three times the size of Abu Yusuf’s Kitab al-Kharaj, and was written about 30-40yrs afterwards, an d deals with similar issues, but incorporates a greater variety of opinions on each subject.
It is a manual on public finance, dealing with the revenues and expenditure of the state, and is one of the most comprehensive of its kind in Islam. He gives a detailed analysis of Islamic weights & measures, and money in order to quantify important Shari’ah injunctions including taxation, such as kharaj and zakat.
Abu ‘Ubayd al-Qassim. (2003). “The Book of Revenue (Kitab al-Amwal)”, translated by Imran Ahsan Khan Nyazee. Reading: Garnet Publishing

42. ABU 'UBAYD (Cont.)
Kitab al-Amwal includes a higher level of documentation in terms of isnads, citations and also includes letters recording peace agreements with non-Muslims made by the Prophet (s.a.w.s.) and the sahabah.
Abu ‘Ubayd describes what type of wealth the ruler is to manage, and then proceeds to give a very detailed analysis of the collection and disbursement of anfal or ghanima (spoils of war acquired by force), the fifth (khums); fai’ (booty or property acquired without force) including land taxation on conquered land (kharaj, fixed & proportional rates) and on unconquered land (‘ushr - 10% non-irrigated / 5% irrigated); jizyah (poll tax on dhimmis); zakat (on wealth & agriculture) and its expenditure; ushur (customs duty based on the value of property or ad valorem tax - 2.5% Muslims, 5% dhimmis & 10% harbis).

43. ABU ‘UTHMAN AL-JAHIZ (160-255AH / 776-869)
Abu ‘Uthman ‘Amr ibn Bahr al-Jahiz al-Basri was born in Basrah where he flourished and also died.
Baghdad, as the centre of world trade, was the seat of the ‘Abbasid caliphate at the time, and “Iraq was the eye of the world and Basra was the eye of Iraq”. Basra was at the confluence of the Euphrates and the Tigris, and was the door to Baghdad through which goods were traded; “Umar ibn al-Khattab (r.a.) called it the Dome of Islam” (al-Tunisi, cited by Seta, 2012:vi).
Al-Jahiz wrote Kitab al-Tabassur bi al-Tijarah (The Book of Insight into Commerce) from the perspective of a merchant.
Al-Jahiz’s pragmatic (‘amali) approach is similar to Al-Dimashqi’s more comprehensive manual for merchants, Al-Isharah ila Mahasin al-Tijarah (The Guide to the Virtues of Commerce).
Abu ‘Uthman ‘Amr ibn Bahr al-Jahiz al-Basri. (2012). “The Book of Insight into Commerce (Kitab al-Tabassur bi al-Tijarah), translated by Adi Setia, Kuala Lumpur: IBFIM

44. AL-JAHIZ (Cont.)
It mostly deals with different types of goods, their differing qualities, where they can be traded and contains an analysis on assaying gold and silver as money and the importance of intrinsic value (Ch.1).
Al-Jahiz’s analysis of supply and demand extends that of Abu Yusuf: “Anything available in the market is cheap because of its availability (supply) and expensive by its lack of availability, if there is need (demand) for it” (Al-Jahiz, 2012:3), and that, “anything the supply of which increases, becomes cheap except intelligence, which becomes dearer when it increases” (Al-Jahiz, 2012:4). S2 P S1
Intelligence & knowledge in this context would provide more opportunities in trade in order to prosper.
A shift in the Supply curve reflects a change in supply is a result of a change in the determinants of supply: e.g. an increase in the number of grain suppliers (producers) increases the supply of grain, which increases Q and reduces P.
Movement along a fixed Supply curve reflects a change in quantity supplied, which is determined by price: e.g. a fall in the price of grain will reduce the quantity of grain supplied.
(c.f. Law of Supply & Demand, McConnell, Economics, 18/e, McGraw-Hill)
A shift of the supply curve (S1-S2) due to a change in supply reduces Q and increases P
A shift to the right from S1-S3 due to a change in supply increases Q and reduces P to a new equilibrium S3 P2 P1 P3 D1 Q2 Q1 Q3 Q

45. HARITH BIN ASAD AL-MUHASIBI (165-243AH / 781-857)
Abu Abd Allah al-Harith bin Asad al-Anazi al-Muhasibi was born in Basra to a wealthy farmer and affluent early lifestyle, but died as a sufi in poverty in Baghdad.
Al-Muhasibi was a jurist of the Shafi'i school. He had studied under Imam al-Shafi'i himself. As a theologian, he advocated the use of the 'aql (faculty of reasoning), and initially became inclined towards the mu'tazilites (‘Isolationists’) and their rationalism, but later turned away.
He finally adopted a life of ascetic renunciation by becoming a sufi by choice rather than necessity. He rejected his inheritance of about 300,000 dinars, donating it to the bayt al-mal: this could have been because his father was said to have been a qadari (‘libertarian’).
The qadaris and mu’tazilities sects were influenced by Greek philosophy.
The qadaris (qadariyah) or ‘libertarians’ are rationalists whom believe that knowledge is derived from reason in distinguishing between right and wrong, and basing their theology on man’s absolute free will, they claimed that God did not decree things in pre-eternity, and that His knowledge does not precede events, hence they denied divine will & decree Qadaa & Qadar (pre-destination). Imam al-Haramayn al-Juwayni ( AH/ ), the teacher of al-Ghazali, in his “Kitab al-Irshad” refutes the claims of the qadaris since they attribute al-qadar, or the power over their own actions, to themselves (c.f. commentary by Al-Nawawi in “Kitab al-arba’in” or “Forty Hadith”, no.2).
The qadaris were founded by Ma'bad ibn Kalid al-Juhani (d.80 AH/ 699) whom was killed upon the orders of the Caliph Abd al-Malik ibn Marwan (646/705) in Damascus. The "qadariyyah" came to be called ”mu'tazilah”.
The mu’tazilites (mu’tazilah) or ‘Isolationists’ founded by Wasil ibn Ata (700–748), held similar views to the qadaris, and were opposed by the Ash’arites.
Ash'arites were founded by Abu al-Hasan al-Ash'ari (d. 324 AH / 936) in response to the mu’tazilites: the most influential work of Asharite thought became Al-Ghazali’s treatise “The Incoherence of the Philosophers” (Tahāfut al-Falāsifah), which dismantled Muslim philosophy, by anchoring reason in faith (iman) and applying cause-and-effect through logical deductive reasoning.

46. AL-MUHASIBI (Cont.)
Al-Muhasibi wrote Risalah al-Makasib wa'l Wara' wa'l-Shubuhah (Treatise on Earnings and Abstinence and Doubt).
He explains that asceticism, piousness or wara’ addresses the inner self not merely the external behaviour. Giving up the doubtful, shubuhah, for the sake of what is certain is a main feature of wara’. In ch.1 he stresses on the importance of tawwakul (trust in Allah s.w.t.) combined with harakah (activity).
He affirms that "one whose activities in seeking a livelihood are for establishing the right, and desists from violating the limits (set by Allah), observing piety in trade and industry and all other activities - such a one is obeying Allah and deserves appreciation by men of knowledge”.

47. AL-MUHASIBI (Cont.)
In Ch.4 he criticized those Sufis whom deserted or withdrew from economic activity for the sake of worship as having nothing to do with Islamic teaching, and accepting the offerings of others the source of which might by haram is a means that does not justify the end.
He emphasizes the need for avoiding all profits or wages which involved doing something undesirable.
One should be sincere and should engage in business with the intention of helping other Muslims.
He also comes down heavily on the traders of his times who behaved “as if they did not believe in the Day of Judgment and engaged in all sorts of unlawful activities…”

48. ABU AL-HASAN AL-MAWARDI (364-450AH / 974-1058)
Abu al-Hasan Ali ibn Muhammah al-Mawardi was born in Basra, the son of a rose-water merchant, where he studied the Quran and the Sunnah and then proceeded to learn fiqh and Islamic jurisprudence. He was a Shafi’ite jurist, and appointed judge (qadi), earning the title aqda al-quda (“judge par excellence”) and then chief justice, as well as a diplomat, under the ‘Abbasid Caliphs al-Qadir ( ) & al-Qa’im ( ) during the time of Buwayhids before they were over-thrown in 1055 by the Seljuks.
He wrote a book on public finance called Al-Ahkam Al-Sultaniyyah (“The Ordinances of Government”). Another important book on public finance was written at the same time and with the same title by Abu Ya’la Muhammad ibn al-Husain Al-Farra’ ( AH/ ). The contents were similar with slight differences in opinion since Al-Farra’ was Hanbali.
Al-Mawardi, The Ordinances of Government (Al-Ahkam Al-Sultaniyyah), translated by Wafaa Wahba. Reading: Garnet Publishing

49. AL-MAWARDI (Cont.)
Al-Ahkam al-Sultaniyyah is one of the first treatises on political science concerning the rules of government and state administration. It is similar in nature to Abu-Yusuf’s al-Kharaj and Abu Ubayd’s al-Amwal, but broader in scope, dealing with a wide range of subjects including market supervision (al-hisba), agricultural relations and taxation, and also it discusses the appointment of the ruler and his duties.
Al-Mawardi felt that there was a need to explain state orders from the context of the Shari’ah to those involved in implementing them, by addressing the centre of power (the Imamate); to assist the ruler (the Caliph) in issuing state orders, governors as government officials who exercised them, and judges and jurists in arriving at legal decisions concerning them.
As with Abu Ubayd, he clarifies Islamic weights, measures, areas and money.

50. AL-MAWARDI (Cont.)
In al-Ahkam al-Sultlaniyya he writes not as a philosopher but as a (Shafi’i) jurist, and deals with the office of the Caliphate which represents the entire politico-religious system; public revenue and expenditure; public and common lands and the state's prerogative to make land grants; the supervision of the market, and other economic roles of the government including the bayt-al mal and rules associated with the government departments.
Al-Mawardi discussed the important market supervisors office (al-hisba), which would later be the subject of specialized works, such as by Ibn Taymiyyah. The functions of the muhtasib include supervision of the market, ensure the correctness of weights and measures, prevent fraud and see to ensure that the Shari'ah rules relating to transactions are followed by the merchants.
Al-Mawardi cites “Imams come from the Quraysh” (Al-Mawardi 2000:4 / Bukhari 9:254 / Muslim 33:1820), and all the Caliphs up to the Abbasids (Rashidun, Umayyad, Abbasid) were from the Quraysh, but their leadership depended on obedience (Bukhari, 9:253), and obedience is due to a leader even if he is an Abyssinian slave (Bukhari, 9:256).
The first person the Prophet (s.a.w.s.) appointed in Medina as the market inspector (amil ‘ala l-suq), was not an amil but an amila, a muslimah called Samra’ bint Nuhhayk al-Asadiyya (Essid,Yassin. “A Critique of the Origins of Islamic Economic Thought”. Leiden: Brill, 1995:116)

51. IBN MISKAWAYH (320-421AH / 932-1030AD)
Abu ‘Ali Ahmad ibn Muhammad ibn Ya'qub Ibn Miskawayh. He was Persian philosopher, scientist and historian from Ray (Iran) during the Buwayhid era.
As a Muslim philosopher he was mainly concerned with ethical issues. He was the author of the first major Islamic work on philosophical ethics, entitled Tadhib al-Akhlaq (“Ethical Instruction”), focusing on practical ethics, conduct, and refinement of character.
Ibn Miskwayh observed that, “The creditor desires the well-being of the debtor in order to get his money back rather than because of his love for him. The debtor, on the other hand, does not take great interest in the creditor.” (Hosseini, 2003:36)
Hosseini, Hamid S. (2003). "Contributions of Medieval Muslim Scholars to the History of Economics and their Impact: A Refutation of the Schumpeterian Great Gap". In Biddle, Jeff E.; Davis, Jon B.; Samuels, Warren J.. A Companion to the History of Economic Thought. Malden, MA: Blackwell. pp. 28–45

52. IBN MISKAWAYH (Cont.)
In Tahdhib al-Akhlaq in a section entitled tadbir al-rajul li-manzilihi (man’s management of his household), he states:
“Men are by nature social. They cannot live without cooperation. Hence they must serve one another. They take from one another and give to one another, so they demand suitable compensation, (al mukafat al munasibah). If the shoe-maker utilizes the services of the carpenter and gives him his own services, it becomes the reward if the two works were equal. But nothing prevents from one's work being better than the work of the other. In that case, the dinar will be the one to evaluate and equalize between the two (al muqawwim al musawwi baynahuma).”

53. IBN MISKAWAYH (Cont.)
Ibn Miskawayh also deals with money in Risalah fi Mahiyat al-`Adl (“Treatise by Miskawayh on Justice”) and notes that money measures value of various goods and services and establishes equality between them which is not possible in direct exchange without the medium of money. He considers gold, in its capacity of money, as "the standard for all kinds of labour and vocations and the substitute (mu’awwid) for all and everything”.
Not only as ‘the standard for all and everything’ but it is also the best kind of store of value because “he who sells many things and picks up gold in exchange for the articles and as a substitute for all of them, has done the right thing, since he can get thereby whatever he wishes and whenever he wishes.” (Miskawayh, p.29)

54. AL-GHAZALI ( AH / 1058–1111)
Abu Hamid Muhammad ibn Muhammad al-Ghazali was born and died in Tus, in Khorasan province of Persia. At 23 he studied in Nishapur, the capital of the Seljuks, and his tutor was Imam Al-Haramayn Al-Juwayni ( ).
At 33 he was appointed professor in charge of al-Nizamiyya university of Baghdad (est.1065), which became the model for all madrasahs and universities.
He was a Sufi, a scholar belonging to the Shafi’i school of jurisprudence, and the associated with the Asharite school of theology, whose title was “Hujjatul Islam” (‘Proof of Islam’).
He wrote many works on theology, sufism, philosophy, and jurisprudence, but much of his discussion on economic matters is found in his greatest work, his Ihya Ulum al-Din.
The Asharites, which included Imam Al-Haramain Abul-Ma’ali Al-Juwaini, Al-Razi and Al-Ghazali were named after Abū al-Hasan Alī ibn Ismā'īl al-Ash'arī ( ) and were opposed to the Mu’tazalites / Qadaris.
Theology:
al-Munqidh min al-dalal (Rescuer from Error)
Hujjat al-Haq (Proof of the Truth)
al-Iqtisad fil-i`tiqad (Moderation in Belief) - iqtisad meaning moderation or prudence
al-maqsad al-asna fi sharah asma' Allahu al-husna (The best means in explaining Allah's Beautiful Names)
Jawahir al-Qur'an wa duraruh (Jewels of the Qur'an and its Pearls)
Fayasl al-tafriqa bayn al-Islam wa-l-zandaqa (The Criterion of Distinction between Islam and Clandestine Unbelief)
Mishkat al-Anwar (The Niche of Lights)
Tafsir al-yaqut al-ta'wil
Sufism:
Mizan al-'amal (Criterion of Action)
Ihya' ulum al-din, "Revival of Religious Sciences", Ghazali's most important work
Bidayat al-hidayah (Beginning of Guidance)
Kimiya-ye sa'ādat (The Alchemy of Happiness)
Nasihat al-muluk (Counseling Kings) [in Persian]
Minhaj al-'Abidin (Methodology for the Worshipers)
Philosophy:
Maqasid al falasifa (Aims of Philosophers) [written in the beginning of his life, in favour of philosophy and presenting the basic theories in Philosophy, mostly influenced by Avicenna's works]
Tahafut al-Falasifa (The Incoherence of the Philosophers), [in this book he refutes the Greek Philosophy aiming at Avicenna and Al-Farabi; and of which Ibn Rushd wrote his famous refutation Tahafut al-tahafut (The Incoherence of the Incoherence)]
Miyar al-Ilm fi fan al-Mantiq (Criterion of Knowledge in the Art of Logic)
Mihak al-Nazar fi al-mantiq (Touchstone of Reasoning in Logic)
al-Qistas al-mustaqim (The Correct Balance)
Jurisprudence:
Fatawy al-Ghazali (Verdicts of al-Ghazali)
Al-wasit fi al-mathab (The medium [digest] in the Jurisprudential school)
Kitab tahzib al-Isul (Prunning on Legal Theory)
al-Mustasfa fi 'ilm al-isul (The Clarified in Legal Theory)
Asas al-Qiyas (Foundation of Analogical reasoning)

55. AL-GHAZALI (Cont.)
Al-Ghazali classified knowledge (Bk.1) into fardu ‘ayn and fardu kifayah, categorizing the law of Islamic transactions (fiqh mu’amalat), as part of the religious sciences that is fardu ‘ayn, (compulsory on the individual):
“To know the rules of Sharicah in these concerns is compulsory, as to search for knowledge is compulsory for every Muslim. It was reported that Omar used to visit the markets and instruct some inexperienced tradesmen by whipping them and say; ‘Nobody shall carry on business in our markets who has got no knowledge of business’.”
Ihya, 2004, 2:52, Bk.13 Kitab Adab al-Kasb wa al-Ma’ash (Book of the Ethics of Earning and Livelihood)

56. AL-GHAZALI (Cont.) Problem of barter and the need for money:
“The creation of dirhams and dinars is one of the blessings of Allah. They are stones having no intrinsic usufruct or utility, but all human beings need them....Allah (s.w.t.) has therefore, created dirhams and dinars as judges and mediators between all commodities so that all objects of wealth are measured through them; and their being the measure of value of all commodities is based on the fact that they are not an objective in themselves…Allah has created them, so that they may be circulated between hands and act as a fair judge between different commodities and work as a medium to acquire other things. So, the one who owns them is as if he owns everything…A mirror, which has no colour, but it reflects all colours. The same is the case of money. It is not an objective in itself. But it is an instrument to lead to all objectives…He who does an act with dirhams and dinars, which is opposed to the above plan of Allah, commits a sin and is ungrateful to the gifts of Allah”.
And stressing also the need for indirect exchange “Barter system is not lawful as the good and bad of it are the same”.
Ihya, 2004, 4:90-91,94, Bk.32 Kitab al-Sabr wa’l-Shukr (Book of Patience and Gratefulness).
Al-Ghazali stresses the importance of money and indirect exchange including the functions of money: medium of exchange (and an instrument of transfer only, measure of value and store of value.

57. AL-GHAZALI (Cont.) Counterfeiting and debasement:
“It is a great injustice to place counterfeited money in circulation. All those handling it are harmed…circulation of one counterfeit dirham is worse than stealing a thousand dirhams, for the act of stealing is one sin, ending once committed: but counterfeit money is something that affects many who use it in transactions for a long time.”
“By zaif (alloy) we mean a coin that contains no silver at all, it is only polished; or dinars with no gold in them. If coins contain some silver but is mixed with copper and that is the authorized coin in the country, this is acceptable whether the silver content is known or not, but if it is not authorized, then it will be acceptable only if the silver content is known.”
Ihya, 2004, 2:57-58, Bk.13 Kitab Adab al-Kasb wa al-Ma’ash (Book of the Ethics of Earning and Livelihood)
In other words, a counterfeit coin is one which has no gold or silver, if it does, it will only be accepted if the precious metal content is known or that an official (and thus trusted) coin is known for its intrinsic value.
Obviously fraudulent debasement is unacceptable

58. AL-GHAZALI (Cont.) Hoarding, utensils and interest:
“If instead of using dirhams and dinars someone buries them or hoards them for long, he does oppression to them and makes inoperative the object of Allah. Dirhams and dinars have not been created…but as a medium exchange of things…”
Anyone who converts them into utensils of gold and silver acts contrary to the purpose for which they were created and is unlawful to Allah and commits sin. His condition is worse than that of the hoarder of money, for…the Prophet said: He who drinks in cups of gold or silver, enkindles as it were the fire of Hell in his belly [Bukhari 7:538]”
“When someone is trading in dirhams and dinars themselves, he is making them as his goal, which is contrary to their functions. Money is not created to earn money, and doing so is a transgression. The two kinds of money are means to acquire other things; they are not meant for themselves.”
Ihya, 2004, 4:91,94, Bk.32 Kitab al-Sabr wa’l-Shukr (Book of Patience and Gratefulness).

59. AL-GHAZALI (Cont.) Earnings, trade and commerce, and profit
“Earnings is not the aim of human life but it is a means to an end. There are three kinds of men: (1) one kind of man forgets the return and makes the earning of livelihood as the sole object of life. He is one who will be destroyed; (2) another kind of man makes his return to the next world as his sole object of life and remains busy in earning his livelihood therefore; (3) the third kind of man is near the middle path who keeps his goal of return to the next world as fixed and takes to trade and commerce for livelihood. He who does not adopt the straight path in earning a livelihood will not get the pleasure of the straight path. He who takes the world as the means of earning the next world adopts the rules and regulations of the Shari’ah in search of it and gets the pleasure of the straight path.”
The prophet (s.a.w.s.) said “take to trade and commerce, because nine-tenths of the source of earnings is from trade and commerce”
“Sale is for profit in a business and there is no profit unless a thing is charged more than the price by which it was bought. To take less profit is “ihsan” doing good, but to take greater profit is not unlawful”
Ihya, 2004, 2:49-50,60, Bk.13 Kitab Adab al-Kasb wa al-Ma’ash (Book of the Ethics of Earning and Livelihood)
Al-Ghazali also stresses not to conceal in weights and measures (Ihya, 2004:59-60)

60. AL-GHAZALI (Cont.) Consumption and consumer behaviour
“The object of the wise is the vision of the Lord in the next world and the only way to gain it is learning and action and there is no other way, but it is not possible to stand constantly on them without a health body which is also not possible without food and drink, such food and drink which are absolutely necessary and which are taken according to prescribed rules”
Ihya, 2004, 2:1, Bk.11 Kitab Adab al-Akl (Book of the Manners Relating to Eating)
“The sustenance of a number of the sahabah was no more than a sa’ of wheat every week. When they ate dates they sufficed themselves with one sa’ and a half. One sa’ of wheat is four mudds, so that each day they ate about half a mudd, a third of the stomach. A greater quantity was required in the case of dates because these contain pits which must be discarded. Abd Dharr (r.a.) used to day, ‘every week my food amounts to one sa’ of barley, in accordance with the usage of the Apostle of Allah (s.a.w.s.), and, by God, I shall not eat more until I meet him again!”
Ihya, 2004, 3:87-87, Bk.23 Kitab Kasr al-Shahwatayn (Book of Breaking the Two Desires)
In assessing the sa’ from Abu Ubayd (2003: ) it is ratls, and 1 mudd is ratls, and 1 ratl = 128 dirhams (each 2.975g), so 1 sa’ of wheat is equivalent to x 128 x = 2,031g or 2.031kg.

61. AL-DIMASHQI (6th Century AH / 12th Century)
Little is known about the life of Abu al‐Fadhl Ja’far b. ‘Ali Al-Dimashqi, except that he was from Damascus and wrote Al‐Isharah ila Mahasin al‐Tijarah (The Guide to the Virtues of Commerce) in about His work reveals a genuine and pragmatic understanding of commerce as a merchant.
He begins with a discussion on wealth; the division of labour for economic development; analyzes the importance and relevance of money and assaying; preservation and quality of merchandise; theory of price, supply and demand; of acquiring different types of real estate; acquiring wealth through livestock, trade or industry; criticizes the involvement of the ruler in business; he discusses the economic means of wealth preservation; discusses domestic and public expenditures; he differentiates between the differing types of merchants including the wholesaler and the exporter; he discusses price controls; monitoring prices in different locations through a price index; and highlights proper wealth management.
Shaykh Abu al‐Fadhl Ja’far ibn ‘Ali Al-Dimashqi. (2011). “The Guide to the Virtues of Commerce (Al‐Isharah ila Mahasin al‐Tijarah)”, translated by Adi Setia. Kuala Lumpur: IBFIM

62. AL-DIMASHQI (Cont.) Division of Labour for economic development
“No single person, due to his limited lifespan, can take on the task of cultivating all the crafts (al-sina’at). Even if he has the capacity to learn many of them, he definitely will not be able to master them all completely in every respect. This is because the crafts are embedded into one another. For example, the builder (al-banna) is in need of the carpenter (al-najjar), and the carpenter is in nedd of the ironsmith (al-haddad), and the workers of iron are in need of the crafts of the workers of mines (ashab al-ma’adin), and all these crafts, in turn are in need of the builder. This is the reason why people need to found cities (al-mudun) and congregate (al-ijtima’) in them, so that they can assist one another with regard to mutually fulfilling their need for one another” (al-Dimashqi, 2011:10)
Al-Dimashqi, Abu al‐Fadhl Ja’far b. ‘Ali. (2011). Al‐Isharah ila Mahasin al‐Tijarah (The Guide to the Virtues of Commerce), translated by Adi Setia, Kuala Lumpur, IBFIM.

63. AL-DIMASHQI (Cont.) Price equilibrium, supply and demand
Al-Dimashqi discusses the movement in prices and market supply and demand that involves an average or equilibrium value or price (al-qimat al-mutawassitah), and discusses variances in prices in terms of high and low prices (al-Dimashqi, 2011:11-12).
Price index
Such that it is important for a merchant to develop an index of prices (jadwal al-as’ar) and adjust for transportation and customs taxes in order to assess his net proceeds in different markets. (al-Dimashqi, 2011:99).
Marginal Utility Theory of Value
“Over-spending on one need to the extent of under-spending on another” (al-Dimashqi, 2011:112), may imply marginal utility or perhaps involves good management (husn al-tadbir)
The marginal utility of a good is the gain or loss from an increase or decrease in the consumption of that good.
The law of diminishing marginal utility, means that the first unit of consumption of a good or service yields more utility than the second and subsequent units.
Marginal utility theory of value applies to the consumer and the producer in terms of supply and demand.
Consumer behaviour: the law of diminishing marginal utility, where the first unit of consumption of a good yields greater utility (satisfaction) than the second and subsequent units.
The equilibrium of a consumers satisfaction and deriving the demand curve c.f. McConnell, Economics, 18/e, pp (marginal rate of substitution and the indifference curve).
Marginal costs of production: diminishing marginal returns to a variable input (e.g. labour), states that as you add more and more of a variable input to a fixed resource (e.g. capital, land), at some point the extra output, or marginal product (MP), attributed to each additional unit of the variable resource (to the production process) will start to decline, or diminish.
Assuming labour is the only variable input and that its price (wage rate) is constant then when the marginal product (MP) is increases, then the marginal cost (MC) decreases (and vice versa), hence MP is a mirror of MC.
Marginal product (MP) is the change in output that occurs when one more unit of input (such as a unit of labour) is added.
Marginal revenue (MR) is the change in extra revenue from selling one more unit of output, in perfect competition MR = Price (P), and coincides with the demand curve (MR=D).
Assuming perfect competition, a firm will adjust output by only through changes in variable resources (materials, labour), since land, plant and equipment/machinery (capital and land) are fixed. in the short run, the firm will maximize profit or minimize loss by producing the output at which the marginal revenue equals marginal cost (MR=MC rule),
Costs of Production and Prefect (or Pure) Competition, c.f. McConnell, Economics, 18/e, pp.158, ,182.

64. IBN TAYMIYYAH (661-728H/1263-1328 AD)
Shaykh al-Islam Taqi ud-Din Abu'l-Abbas Ahmad Ibn al-Halim ibn Abd al-Salam Ibn Taymiyyah al-Harrani  was born in Harran, and died in Damascus. He was a Hanbali jurist and by thirty years old he was offered the office of Chief Justice, but refused, as he could not persuade himself to follow the limitations imposed by the authorities.
One of his major contributions was al-Hisba fi al-Islam (Public Duties in Islam) explaining its socio-economic functions, with a central theme of “commanding what is ma’ruf (good) and prohibiting what is munkar (evil)”.
Ibn Taymiyyah. (1992). “Public Duties in Islam, The Institution of the Hisba”, translated by Muhtar Holland. Leicester: The Islamic Foundation.
Islahi, A.A. (1996). “Economic Concepts of Ibn Taymiyyah”. Leicester: The Islamic Foundation.

65. IBN TAYMIYYAH (Cont.) Price Equivalent, Supply and Demand
“If people are selling their goods in a fitting manner, causing no injury, and the current price happens to rise either because of the scarcity of an article or an account of increased demand, then is is a matter for Allah” (Ibn Taymiyyah,1992:35).
Ibn Taymiyyah is referring to a thaman al-mithl (price of the equivalent) is a just price (thaman al-adl) free of injustice and determined by market forces. (Islahi, 1996:81,83).
Price Control
In the above circumstance, if the authorities fix the price (qimah al-mithl) or impose a price control, it would be unfair and distort the market; but if the supplier refrains from selling in anticipation of a higher price when those goods (such as food) are urgently needed, then “price control in such case is an undisputed duty. Its true nature is compulsion to sell or buy only for a fair price” (Ibn Taymiyyah, 1992:36)

66. IBN TAYMIYYAH (Cont.) Market imperfections
In the case of monopolies or oligopolies, “such that foodstuffs or other goods are sold only to them and then retailed by them, any would-be competitor would be restrained rather harshly…In this situation prices must be controlled so that monopolists sell only for fair value…[if they] set their own prices the public would be injured (zulm) on two sides: the sellers wishing to sell those goods to them on one hand, and those purchasing from them on the other” (Ibn Taymiyyah, 1992:36).
Agricultural arrangements and Muzara’ah (share-cropping)
Ibn Taymiyyah regards the correct approach to share-cropping (muzara’ah) is a partnership rather than a form of leasing (ijarah), since one party is providing labour and the other property in the form of agricultural land, and thus both parties have a equitable arrangement in terms of profit, rather than a fixed rental (Ibn Taymiyyah, 1992:41).
“The crop is a result of land that consists of soil, water, air, of the physical use of labour and of bullocks and means” (MFS, 29:103), i.e. the factors of production: land, labour and capital suggesting a cost of production theory of value, or is value reflected in its market price?
[MFS], Ibn Taymiyyah. ( AH). “Majmu’ Fatwa Shayk al-Islam”. Vols vols.index. Riyad: Matabi’ al-Riyad.
The cost-of-production theory of value is the theory that the price of an object is determined by the sum of the cost of the resources that went into making it. The cost can compose any of the factors of production (labor, capital, or land) and taxation: proponents include Adam Smith (classical).

67. IBN TAYMIYYAH (Cont.) Hoarding
Ibn Taymiyyah stipulates that in order to prevent hoarding, the authorities are entitled to compel people to sell their stocks for fair value (bi-qimat al-mithl) when they are urgently needed. So, for instance, if someone has food he does not need while people are starving he may be force to sell it to them for fair value. This is why the jurists hold that he who is in urgent need of another’s food may take it from him, regardless of his wishes, for fair value. Were he reluctant to sell except for more than the regular price, he would still be entitled only to this regular price” (Ibn Taymiyyah, 1992:32-33).
Hence the consumer as well as the producer are protected against injustice.
Provision of Essential Supplies
In terms of production, essential items (food, clothing, housing) are required and that these industries are a collective obligation (fardu kifayah) on capable individuals in the community since public welfare is incomplete unless they are provided (Ibn Taymiyyah, 1992:37-38)

68. IBN TAYMIYYAH (Cont.) Fair Wage, Fair Price, Fair Profit
As with a fair price, so Ibn Taymiyyah provides scenarios requiring a fair wage (ijrah al-mithl) in the labour market (tas’ir fi’l-a’mal) without inuring either party (Ibn Taymiyyah, 1992:43-45).
And a seller should earn a just profit in an acceptable manner (al-ribh al-ma’ruf) without deceiving the people: the Prophet (s.a.w.s.) prohibited the townsman who knows the market price to act as middleman or agent for the nomad who does not (Ibn Taymiyyah, 1992:32-33, 56-57).

69. IBN TAYMIYYAH (Cont.)
Ibn Taymiyyah's discusses public duties and the management of money, regulation of weights and measures, and anticipates Gresham’s Law (‘bad money drives out good’ in the presence of a bimetallic standard):
“If the ruler cancels the use of a certain type of coin and mints another kind of money for the people, he will spoil the riches (amwal) which they possess, by decreasing their value as the old coins will now become merely a commodity. He will do injustice to them by depriving them of the higher values originally owned by them. Moreover, if the intrinsic value of coins are different it will become a source of profit for the wicked to collect the small (bad) coins and exchange them (for good money) and then they will take them to another country and shift the small (bad) money of that country (to this country). So (the value of) people’s goods will be damaged” (MFS 29:469, Islahi 1996:143).

70. IBN KHALDUN ( AH / )
Abu Zayd ‘Abd al-Rahman ibn Muhammad ibn Khaldun Al-Hadrami was born in Tunis and deemed the father of economics.
In 1377 he wrote on economic and political theory in the Muqaddimah (Introduction) of his History of the World (Kitab al-Ibar), and deals with history, culture, sociology, demography, economics, Islamic theology and political theory, indeed, he addresses the rise and fall of civilizations: for example, by discussing asabiyyah (social cohesion / tribal group), and explained how these social groups or dynasties would evolve and be replaced by others.
Ibn Khaldun’s economic theory is contained in chapters 3, 4, and mostly ch.5 (sect.1-21). “Trade involves effort to earn and develop one’s capital by buying merchandise and cheaper, and selling them at higher, prices (Ibn Khaldun, 1958, 2:317)
Ibn Khaldun. (1958) The Muqaddimah”, translated by Franz Rosenthal. New York: Pantheon Books.

71. IBN KHALDUN (Cont.) Determinants of supply and demand
Ibn Khaldun introduced many new determinants of supply and demand and their influence on prices, including purchasing power of the community, tastes, composition of goods demanded and willingness to buy changes in the countryside and cities, in the beginning of a dynasty and at its advanced stage (Ibn Khaldun, 1958, 2:276-78).
Supply is affected by hoarding, production and procurement costs, such as cost of rent, wages, duties, taxes on profits, risks attached to storage (2:339-40,341), profit expectations (2:301-02,351-52,367): “moderate profits boost trade whereas very low profits discourage traders and artisans and very high profits decrease demand” (2:340-01) the implication being the role of prices in the market and their influence on economic activities. (Islahi, 2004:30).

72. IBN KHALDUN (Cont.)
Gold and silver served as a standard of value, a medium of exchange, and a store of value:
“God created the two mineral stones gold and silver as the measure of value for all capital accumulations. Gold and silver are what the inhabitants of this world, by preference, consider treasure and property to consist of. Even if, under certain circumstances, other things are acquired, it is only for the purpose of ultimately obtaining gold and silver. All other things are subject to market fluctuations, from which gold and silver are exempt. They are the basis of profit, property and treasure” (Ibn Khaldun, 1958, 2:313).
“A gold mithqal weighs seventy-two average-sized grains of barley (habbahs). Consequently, the dirham, which is seven-tenths of a mithqal, has a weight of fifty and two-fifths grains” (Ibn Khaldun, 1958, 2:58)

73. IBN KHALDUN (Cont.)
Supply side economics (achieving economic growth through e.g. lowering taxation):
“In the early stages of the state, taxes are light, but fetch in a large revenue; in the later stages taxation increases while the aggregate revenues falls off. This because the state, if it rests on a religious basis it will exact only dues provided for by the Shari’ah such as zakat, kharaj, jizya whose rates are low…and fixed…Now where taxes and imposts are light, private individuals are encouraged to engage freely in business….and as business prospers… the total yield of taxation grows. As time pass and kings succeed each other…they impose fresh taxes on their subjects…until taxation burdens the subjects and deprives them of their gains…businessmen are soon discouraged by the comparison of their profits with the burden of their taxes, and… production falls off, and with it the yield in taxation… From this you must understand that the most important factor for business prosperity is to lighten as much as possible the burden of taxation”
(Ibn Khaldun, 1958, 2:89-91) .

74. IBN KHALDUN (Cont.)
Hence the concept known as the Khaldun-Laffer Curve
This is the relationship between tax rates and tax revenue, which increases as tax rates increase for a while, but then the increases in tax rates begin to cause a decrease in tax revenues as the taxes impose too great a cost to producers in the economy. .

75. IBN KHALDUN (Cont.) Economic growth
“When civilization [population] increases, the available labour again increases. In turn, luxury again increases in correspondence with the increasing profit, and the customs and needs of luxury increase. Crafts are created to obtain luxury products. The value realized from them increases, and, as a result, profits are again multiplied in the town. Production there is thriving even more than before. And so it goes with the second and third increase. All the additional labor serves luxury and wealth, in contrast to the original labour that served the necessity of life.”
(Ibn Khaldun, 1958, 2: )
He notes that population growth, human capital development, and technological developments effect economic development, increasing economic surplus and trade.

76. IBN KHALDUN (Cont.) Division of labour and cooperation
“When the prices of any type of goods…remains low, the merchant cannot profit… his profit and earnings stop if the situation continues for a long period” (Ibn Khaldun, 1958, 2: ), and the mutual interdependency and co-operation of individuals within society would be adversely affected. The implication being that co-operation and the economics of the division of labour are limited to the extent of the market.
Labour Theory of Value?
Ibn Khaldun insists that “profit is the value realized from labour” (1958, 2:272). At another occasion he says, “It should be further known that the capital a person earns and acquires, if resulting from a craft, is the value realized from his labour” (1958, 2:313); “it has, thus, become clear that gains and profits in their entirety or for most part, are value realized from human labour” (2:314). He did not state ‘exchange value’ but may have implied a labour theory of value, or is wealth a function of both capital and labour?
The labour theory of value is the value of a commodity is related to the quantity labor needed to produce or obtain that commodity: proponents include Adam Smith, David Ricardo,
And also Karl Marx with his definition of ‘use value’, or value in use is the utility (satisfaction) of consuming a good, and ‘exchange value’, where the value of a commodity was deemed the objective form of social work spent in production and the quantity of value it contained was equivalent to the quantity of work contained in it (Vadillo, U., “The End of Economics”, Granada:Medina Press, 1991:20-21). For Marx the only source of value is the work spent in production, and that the capitalist exploits labour with a wage just enough to survive, but denying labour or the worker his right to the ‘surplus value’ or the net profit from production (An-Nabhani, 2002:102)
In reality, man assesses the benefit in a commodity, taking into account its shortage in the market, and thereby determines its value, which is discovered in the form a market price.
Wealth is a function of property and the effort man has made in securing it. Needs are a function of property and man’s effort to possess it, in order to satisfy those needs. Hence property is a function of needs and wealth, and benefits are derived from property: the means to produce a benefit (production) is distinct from possessing the benefit (ownership), so property and effort (labour) are components of wealth, and they are the means to produce benefits (An-Nabhani, 2002:47,48,102).
Hence the economizing problem lies in the possession of wealth and not the creation of wealth, from the ill-disposition of ownership and mal-distribution of wealth (An-Nabhani, 2002:48): the problem is in the ownership of those benefits, a problem of distribution, rather than production, which is the conventional approach to the economizing problem, involving the efficient allocation of scarce resources to satisfy unlimited wants.

77. IBN KHALDUN (Cont.) Ibn Khaldun and economics
Ibn Khaldun’s Muqaddimah may correctly be regarded as one of the best works in social, political and economic analysis in the Islamic tradition, offering insights into such subjects as division of labour, money and prices, production and distribution, international trade, capital formation and growth, trade cycles, poverty and prosperity, population, agriculture, industry and trade and issues relating to taxation and public expenditure.

78. AL-MAQRIZI ( AH / )
Taqi al-Din Ahmad ibn Ali Al‐Maqrizi was trained as a Shafi’i, was a student of Ibn Khaldun ( ), a prolific author, an historian. He served as the muhtasib (market supervisor) of Cairo under the Circassian Mamluks on three occasions in 1399, 1400 and 1405, the last appointment on the insistence of the sultan, Faraj ( ).
A hyper-inflationary depression brought on by debasement, corruption, famine and plague killed half the population of Egypt in 1404, and all of the livestock in 1405: Al-Maqrizi lost his only daughter during the crisis.
Given his direct experience and knowledge in weights, measures and coinage, and monetary issues he wrote the Ighathat al‐Ummah bi-Kashf al‐Ghummah (Helping the Community by Examining the Causes of its Distress) completing it in Muharram 808AH / July 1405, as a warning to Muslims not to discard the Islamic currency of the dinar and dirham for fiat money (in the form of fulus), and reaffirmed their necessity in a subsequent work called an-Nuqud al-Islamiyyah (the Islamic currency).
Al-Maqrizi, Taqi al-Din Ahmad ibn Ali. (1994). “Mamluk Economics, A Study and Translation of Al-Maqrizi’s Ighathah”, translated by Adel Allouche. Salt Lake City: University of Utah Press.

79. AL-MAQRIZI (Cont.) Gold, silver and copper
“The first to mint the dinar and dirham was Adam who said that life is not enjoyable without these two currencies” (al-Maqrizi, 1994:57)
“[The people] should deal exclusively with gold and silver for pricing goods (Al-Maqrizi, 2004:80)
“During the reign of al-Zahir Barquq ( / ), the Ustadar Muhammad b. Ali was entrusted with the supervision of the royal treasury. He was greedy for profits and for accumulating wealth. Among his evil deeds was a large increase in the quantities of fulus (copper coins); he dispatched his men to Europe to import copper and secured the mint for himself in exchange for a sum of money. Under his administration fulus were minted at the Cairo mint. He also opened a mint in Alexandria for the purpose of striking fulus. Extremely large quantity of fulus came into the hands of people and they circulated so widely that they became the dominant currency in the country…This caused a catastrophe that rendered money useless and foodstuffs scarce…[the fulus] is an innovation and a calamity of recent origin …[which] led the population to privation and extinction” (Al-Maqrizi, 1994:71-72,77-79).

80. THANK YOU