Link between Maslahah and Economic Development

1. Maslahah and Circular Causation
29 May 2015
TSR for Better Civilization

2. Objectives
I. What is Maslahah?
II. How the implementation of Maslahah ?
III. Linked between Maslahah and Economic Development

3. 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)

4. 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)

5. 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 65

6. 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.

7. 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

8. 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

9. 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.

10. 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

11. 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.

12. 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

13. 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.

14. Conventional Economics VS Islamic Economic
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