Maslahah and Circular Causation

29 May 2015

TSR for Better Civilization

Objectives

I. What is Maslahah?

II. How the implementation of Maslahah ?

III. Linked between Maslahah and Economic Development

I. Maslahah Definition

• Literally, maslahah means 'benefit' or `interest‘ more technically,

maslahah is defined as a consideration which is proper and

harmonious with the objectives of the Lawgiver (Allah); it secures a benefit or prevents a harm. Futhermore, the Qur’an and Hadith related to the Maslahah as follows:

So direct your face toward the religion, inclining to truth. [Adhere to] the fitrah of Allah upon which He has created [all] people. No change should there be in the creation of Allah . That is the correct religion, but most of the people do not know Maka hadapkanlah wajahmu dengan lurus kepada agama (Alloh); yang telah menciptakan manusia menurut fitrah itu. Tidak ada perubahan pada fitrah Alloh. (itulah agama) yang lurus; tetapi kebanyakan manusia tidak mengetahkui ”. (Q.S. Al-Ruum : 30)

I. Maslahah Definition

"The best man is the most useful for others.“ Musnad Shihab, Hadith no. 1234

And, [moreover], this is My path, which is straight, so follow it; and do not follow [other] ways, for you will be separated from His way. This has He instructed you that you may become righteous.(Q.S. Al-An’am :153)

Protecting

of Religion

(Din)

Protecting

of Life

Protecting

of

Intellectual

Maslahah

1 2 3

Qur’an, Hadith and Ijtihad

Based on Maqhasid Shariah Principles

Maslahah and Maqhasid Sharia

Protecting

of lineage

(families)

Protecting

of property

Protectin

g of

Environm

ent

4 6 5

II. How The Implementation of Maslahah

Complementary and Opposite Economic Movements in the

Light of the tawhidi Episteme

The difference between tawhidi and mainstream economic and financial thinking is this: The knowledge dynamics underlying social productivity and ethical values in the tawhidi episteme of unity of knowledge is unknown to mainstream economics. In fact, mainstream economics is not a study of a process oriented world-system (Georgescu-Roegen 1971) that studies embedded systems and ethical behaviour. The role of r/i (r denotes the rate of return; i denotes the rate of interest) as an endogenous variable in relation to the evolving effect between M (money) and Q (output) under the impact of knowledge-flows by discourse, integration and creative evolution, as in the case of the tawhidi epistemological and ontological construction, is unknown in mainstream economic, finance, social and institutional studies.

Circular Causation on Well Being

The term ‘wellbeing’ is different from the often used term of welfare function in economics. The wellbeing function evaluates and explains the degree to which there exists or is a lack of endogenous effects of technology, innovation, and knowledge in the rest of the variables.

The simulation of the wellbeing function by way of maintaining balance and complementarities between the variables and entities implies the meaning of socioeconomic sustainability

An Islamic theory of preference formation in an ethico-

economic

Knowledge-induced preference aggregation and circular relations among selected

variables of the Islamic political economy

An Islamic theory of preference formation in an ethico-economic general equilibrium system. To focus on a political economic issue we will focus on the inter-relationships among money, price, output, spending as resource mobilization, factor utilization, technological change and the concomitant monetary and fiscal policy that all revolve around a cogent set of Islamic development financing instruments. Such instruments are profit-loss sharing (Mudarabah), equity financing (Musharakah), cost-plus mark-up (Murabaha), rental (Bay Muajjal) as the primary ones and the secondary instruments revolving around these primary ones that bring about participation and co-operation in the framework of Islamic political economy

Economic Growth Potency Based on Islamic Perspective

Ther are four factors that influence the growth in Islamic Perspective 1. invistible resources 2. human resources

3. entrepreneurship

4. technology ad.1 Moslem countries should decreasing the interdependency from the external resources. The purposes to minimalist of the debt which based on interest (riba) Ad.2 The determine of the success is also related to human capital. Furthermore, Islamic perspective of the human capital coverage of professionalism and morals. Ad.3 The key success of economic growth also related to participatory of the community especially in entrepreneurship activity. Its also in line with the hadith. “The best of jobs is trading”. Ad.4 The technology is very important to support of economic growth to making simulation at this part related to the research and development.

Some Quantitative Implications of the (r/i, i/r)

Marginal Substitution Result

Expressions (1) and (2) show the tradeoff between i and r in respect to resource allocation in the financial and real sector duality according to the postulate of marginal rate of substitution. This is yet another way of stating that in the neoclassical roots of macroeconomics, the financial sector and real sector remain competing rather than complementary. Thereby, such sectors have their own versions of prices and returns. Through the trade-off between i and r financial resources get withdrawn from the real sector into the financial sector and viceversa

II. Linked Maslahah and Economic Development

Islamic perspective on economic

development must be based on

the holistic view of Islamic

teaching itself. Human

development and welfare of

human being has a pivotal place

in the whole Islamic teaching. The

Holy Qur’an and the Sunnah

reveal an overriding interest in the

overall welfare of mankind and so

unanimous Islamic scholars come

to the conclusion that the

objective of the Shariah (Maqasid

al-Shariah) is to promote well-

being of all mankind and relief

from hardships.

II. Is the growth as the objective of economic

development?

Is the growth is important in

economic development? The

implementation of growth

should follow by equity spread

out to community. The growth

and equity should be

simultaneously. In Islamic

perspective the growth is not

only for maximalization of profit

but the emphasize in the wellbeing

II. Is the growth as the objective of economic

development?

From the figure above, the ultimate goals is Tawhid ant the foundation of variables in the prisma are work and productifity (W)its mean you should take participation in economic

activity, cooperation (C) its involve interaction and integration in economic, Ownership (0) its also should generate return commercial and return on morals can be zakah , infaq, etc.

Furthermore, distribution in equity its reflection of justice.

Conventional Economics VS Islamic Economic

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