Price, investment, production, and employment are among the most important elements of economic structure, and intervention in one of these will affect all other elements. A well-functioning economic structure represents the harmonical and balanced collaboration of all financial factors. Price has decisive power over other elements of the economy. Investment, production, and employment plans are generally closely associated with prices because they are made with a profit index. Although the financial principles of Islam emphasize earnings in a legitimate (ḥalāl) manner, its price policy does not directly intervene in the price-determining process. Various price policies and different economic systems have been followed and applied throughout the history of economics. In the field of economics, some systems favor unlimited freedom through sanctifying the individual and capital, while others, such as capitalism, do not recognize any rules. Also, some systems ignore private property without a sense of justice for the community, while mixed systems combine some of these factors. However, none of these economic structures gain accomplishment because of injustice and imposed methods contrary to human nature. Furthermore, they were unable to solve problems of economic origin. Islamic economics and price policy are fundamentally different from other systems. First, Islamic economics carries the inherent religious characteristics of Islam. It centers on justice and legitimacy and has made the moral principles of religion dominant in economics. The Prophet Muḥammad was the first person to transfer the economic principles of Islam from theory to practice. In this sense, the Medina bazaar had deep meanings beyond being an ordinary or local market. In Islamic economics, instead of directly intervening in prices, the Prophet abolished methods such as profiteering, black markets, prevention (talaqqī l-rukbān/jalb), brokerage, deception, cheating, and speculation (najash), which led to unlawful profits. Instead, he advocated principles based on legitimacy, established a system relying on supply-demand balance, and organized the market with Islamic moral values. The new economic principles prioritized fair competition, equal opportunity, fair income distribution, and sharing. Islamic finance model, therefore, embraces the principles of a free-market economy. However, there are clear differences between the free-market principles as understood by Islam and the free-market principles that dominate present-day capitalism. First, Islam does not accept destructive competition, any form of monopolization, or unlimited freedom of production and consumption. It also does not attribute economic value to some profits, such as interest and gambling, and instead labels them illegitimate and prohibited (ḥarām). Although Islam adopts the principles of a free market economy, it does not allow arbitrary decisions. For this reason, it establishes a realistic price policy without artificial interventions and aims to dominate the economy with preventive measures. The system does not allow the establishment of privileged classes that effortlessly earn money regarding the endeavor of other people. The measures taken in the scope of price policy affect prices and other elements. Investment, directly associated with prices, has significantly contributed to preserving and improving the balance between production and employment. Sustainable investment, production, and employment are ensured by restraining stocking and high prices that reduce consumption, preserving the supply of goods, price stability, and purchasing power. The balance between production, consumption, investment, and employment has been preserved as an indicator of economic stability and development in this respect. Another privileged aspect of the Islamic price policy is the inspection of economic elements in integrity with an effective control mechanism called ḥisbah. The requirements of appointed muḥtasibs, who must be competent in understanding the calculations and calibrations, show the seriousness and importance given to economic stability in Islam.
|Journal Section||Research Article|
|Publication Date||November 22, 2022|
|Submission Date||March 5, 2022|
|Acceptance Date||June 10, 2022|
|Published in Issue||Year 2022, Volume 13, Issue 1|