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Assignment 2

The Islamic economic system is based on Shariah principles, emphasizing fairness, justice, and social welfare. Key features include the prohibition of interest (riba), mandatory charity (zakat), and a focus on ethical investments and fair trade. The system promotes wealth circulation, economic equity, and views lawful economic activities as a form of worship.

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33 views3 pages

Assignment 2

The Islamic economic system is based on Shariah principles, emphasizing fairness, justice, and social welfare. Key features include the prohibition of interest (riba), mandatory charity (zakat), and a focus on ethical investments and fair trade. The system promotes wealth circulation, economic equity, and views lawful economic activities as a form of worship.

Uploaded by

Arifah
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CF-303: APPLIED ECONOMICS FOR ENGINEERS

SE – CIVIL

SPRING 2025

ASSIGNMENT# 02

SUBMITTED BY:

ARIFAH SHAKOOR KHAN (CE-23070)

SUBMITTED TO:

MR. KAMRAN SHEIKH


MAIN FEATURES OF ISLAMIC ECONOMIC SYSTEM

The Islamic economic system is rooted in the principles of Shariah (Islamic law) and is designed to ensure
fairness, justice, and social welfare. Here are its main features:

1. Belief in Allah’s Sovereignty

 Wealth belongs to Allah, and humans are trustees (khalifah) of it.


 Economic activities must align with Islamic principles, including avoiding unethical practices.

2. Prohibition of Riba (Usury or Interest)

 Charging or earning interest is strictly prohibited.


 Profit-and-loss sharing (e.g., Mudarabah or Musharakah) replaces interest-based transactions.

3. Emphasis on Zakat (Compulsory Charity)

 A specific portion of wealth (typically 2.5%) must be given annually to the needy.
 Ensures wealth circulation and reduces income inequality.

4. Prohibition of Haram Activities

 Activities involving gambling (maysir), excessive uncertainty (gharar), alcohol, pork, and unethical
practices are forbidden.
 Investments must only be in halal (permissible) ventures.

5. Fair Trade and Justice in Transactions

 Honest trade is emphasized, with transparency in contracts.


 Fraud, cheating, and exploitation are strictly prohibited.

6. Encouragement of Wealth Circulation

 Hoarding of wealth is discouraged.


 Economic policies are designed to promote equitable distribution of wealth.

7. Property Rights with Social Responsibility

 Private ownership is allowed, but it comes with a responsibility to use wealth for social good.
 Wealth must not harm society or lead to monopolies.

8. Economic Equity

 Strives to reduce the gap between the rich and the poor through redistribution tools like zakat, waqf
(endowments), and inheritance laws.
 Focuses on balancing individual freedom with collective welfare.
9. Profit-and-Loss Sharing

 Encourages risk-sharing in business ventures rather than fixed returns.


 Promotes partnerships (e.g., Musharakah) over debt-based financing.

10. Work as Worship

 Engaging in lawful economic activities is seen as a form of worship, provided they adhere to Islamic
principles.

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