islamic business law, report

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  • 7/28/2019 Islamic Business Law, Report



    Graduate School of Business, Islamabad


    Islamic Perspective ofBusiness

    Ijaz Hussain Bajwa Muhammad Waseem

    Muhammad Ali Abbas Muhammad Farooq

    Course Instructor: Naveed Khan Advocate.

  • 7/28/2019 Islamic Business Law, Report




    Capitalism is an economic system in which wealth, and the means of producing

    wealth, are privately owned.

    Through capitalism, the land, labor, and capital areowned, operated, and traded for the purpose of generating profits, without forceor fraud, by private individuals either singly or jointly, and investments,distribution, income, production, pricing and supply ofgoods, commodities andservices are determined by voluntary private decision in a market economy. Adistinguishing feature of capitalism is that each person owns his or her ownlabor and therefore is allowed to sell the use of it to employers. In a "capitaliststate", private rights and property relations are protected by the rule of law of a

    limited regulatory framework. In the modern capitalist state, legislative action isconfined to defining and enforcing the basic rules of the market, though thestate may provide some public goods and infrastructure.

    Some considerlaissez-faire to be "pure capitalism."Laissez-faire (French,"leave to do (by itself)"), signifies minimizing oreliminating state interferencein economic affairs and the competitive process, allowing the free play of"supply and demand." Laissez-faire capitalism has never existed in practice.Because all large economies today have a mixture of private and publicownership and control, some feel that the term "mixed economies" more

    precisely describes most contemporary economies. In the "capitalist mixedeconomy", the state intervenes in market activity and provides many services.During the last century, capitalism has often been contrasted with centrally

    planned economies. The central axiom of capitalism is that the best allocation ofresources is achieved through consumers having free choice, and producersresponding accordingly to meet aggregate and individual consumer demand.This contrasts with planned economies in which the state directs what shall be

    produced. A consequence is the belief that privatization of previously state-provided services will tend to achieve a more efficient delivery thereof. Furtherimplications are usually in favor offree trade, and abolition ofsubsidies.Although individuals and groups must act rationally in any society for their owngood, the consequences of both rational and irrational actions are said to bemore readily apparent in a capitalist society.

    Capitalistic economic practices incrementally became institutionalized in

    Englandbetween the 16th and 19th centuries, although some features of,_costs,_and_pricing,_costs,_and_pricing
  • 7/28/2019 Islamic Business Law, Report



    capitalist organization existed in the ancient world, and early aspects ofmerchant capitalismflourished during the Late Middle Ages. Capitalism has

    been dominant in the Western world since the end of feudalism. From Britain, itgradually spread throughout Europe, across political and cultural frontiers. In

    the 19th and 20th centuries, capitalism provided the main, but not exclusive,means ofindustrialization throughout much of the world.

    Political advocacy

    World's GDPper capita shows exponential acceleration since the beginning ofthe Industrial Revolution.

    Many theorists and policymakers in predominantly capitalist nations haveemphasized capitalism's ability to promote economic growth, as measured byGross Domestic Product (GDP), capacity utilization orstandard of living. Thisargument was central; for example, to Adam Smith's advocacy of letting a freemarket control production and price, and allocate resources. Many theoristshave noted that this increase in global GDP over time coincides with theemergence of the modern world capitalist system. While the measurements arenot identical, proponents argue that increasing GDP (per capita) is empirically

    shown to bring about improved standards of living, such as better availability offood, housing, clothing, and health care. The decrease in the number of hoursworked per week and the decreased participation of children and the elderly inthe workforce have been attributed to capitalism. Proponents also believe that acapitalist economy offers far more opportunities for individuals to raise theirincome through new professions or business ventures than do other economicforms. To their thinking, this potential is much greater than in either traditionalfeudal ortribal societies or in socialist societies.

    Milton Friedman has argued that the economic freedom of competitivecapitalism is a requisite ofpolitical freedom. Friedman argued that centralizedcontrol of economic activity is always accompanied by political repression. Inhis view, transactions in a market economy are voluntary, and the wide diversitythat voluntary activity permits is a fundamental threat to repressive politicalleaders and greatly diminishes power to coerce. Friedman's view was alsoshared by Friedrich Hayekand John Maynard Keynes, both of whom believedthat capitalism is vital for freedom to survive and thrive.