Economic Thoughts in the Dark Ages You Probably Never Heard of

Have you heard of the dark ages? A dark period in the world, which is considered to be the cessation of scientific development? However, in what is considered a dark period by the western world, the eastern world, especially the Muslim world, is growing rapidly, various sciences ranging from astronomy, medicine to social sciences such as economics have experienced significant developments. Economic science that developed at that time was based on Islamic principles and values so that we know it as Islamic economics

Islamic economic thoughts and practices have been going on since the prophetic period of the Prophet Muhammad, to be precise since the migration of the prophet Muhammad and his people to the city of Medina. It was there that the Islamic Government began to slowly run, various policies were carried out by the Prophet in Medina, both religious, political, and economic policies. From here the various basic ideas of Islamic economics began to be built based on The Quran, the holy scripture of Islam and hadith, word, deeds, and acceptance from the Prophet

THOUGHTS ON THE MARKET

The first thought is on the principle of the market, the market here plays an important role in an economy, because the market is the main vessel for transactions that fuel the economy. Thinking about the market in this prophetic era already has very deep thoughts.

From the hadith narrated by Anas bin Malik, at that time the price of merchandise had skyrocketed in Medina, then people said: “O Messenger of Allah, the price of goods soared, so set the standard price for us.” So the Messenger of Allah -peace and prayer of Allah be upon him- said: “Verily Allah is al-Musa’ir (The One Who Sets the price), al-Qabidh, al-Basith, and ar-Raziq. And really, I really hope to meet Allah in a situation where none of you sue me with tyranny in matters (life) and property.

Through the stories in the hadith, there are Islamic economic thoughts that can be drawn. The first one who determines the price is Allah, through the conditions of supply and demand in the market, this thought is very similar to Adam Smith’s thought 1000 years later about the invisible hand.

Then the second is that the government should not set prices on the market, because the harm will outweigh the benefits, if you refer to conventional economic theory, this thinking is identical to the deadweight loss theory or the loss of welfare due to imbalances in the market.

The Prophet also emphasized transparency and honesty in transactions in the market, by criticizing people who cheat and making market supervisors carry out the task of monitoring fraud in the market, this is to increase trust and reduce imperfect information that often occurs.

MONOPOLY ELIMINATION

Further thinking about the prohibition of exercising monopoly, Before the Prophet came to Medina, the Medina Jews had an advantage in trading and finally gave usury-based loans that took advantage of using monopolistic practices.

When Rasulullah SAW arrived in Medina and was made a leader there, Rasulullah SAW abolished the system by changing the system which had been monopolized by the Jews.

From the hadith narrated by the Muslim, the Prophet Muhammad said “whoever he monopolizes, then he is a sinner.”

Here it is clear that there is a very large disadvantage both in the usury system used and the monopoly used by the Jews.

PROHIBITION OF HOARDING AND ECONOMIC INSTITUTION

Next is the prohibition of hoarding practices in times of scarcity, this prohibition is also the key to the economic policy of the Prophet Muhammad to maintain price stability in the market from (HR. Ahmad, Hakim, Ibnu Abu Syaibah and Bazzar) Rasulullah SAW said

“Whoever hoard food for forty nights, then really Allah no longer needs him.”

This prohibition is enforced by an economic institution called Al-Hisbah. This enforcement through economic institutions has become an important thought and policy regarding preventing the increase in the price of goods which is getting worse due to the practice of hoarding. Al-Hisbah is not only enforcing the prohibition of hoarding practice, but also many other moral hazards that happen in the market, such as market fraud that often occur

REVENUE REDISTRIBUTION

The next economic thought which is very synonymous with Islamic values is the way Islam redistributes income from those who can afford to those who cannot, through instruments such as Zakat (a Muslim obligation to give 2.5% of its wealth to those in needs and many more aspect), Jizyah (tax to nonmuslim), Kharaj (agricultural tax), and many other receipts such as khums, kaffarat, waqf, and so on.

Aside from being a form of worship for Muslims, an instrument that is economically aimed at helping underprivileged people is a powerful way to continue advancing the economy without leaving certain groups.

One of the uniqueness of this is the Islamic policy not to provide disincentives to people who work, such as zakat on farms which is regressive so that the proportion of zakat issued is smaller and only applies zakat to non-productive assets.

CLOSING

There are still many economic thoughts that existed in the era of the Prophet Muhammad, which later on these thoughts would become the basis for the development of Islamic economics after the Prophet Muhammad died. This economic thinking continues to be studied and developed by Muslim economists from the era of Khulafaur Rashidin to modern times like today.