Islamic Economics – Part 2: What is Islamic Economics?

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Now that we have a general understanding of what the study of economics is (see part 1 here), we can move on to the big question: what is Islamic economic? To truly answer this question, we have to take a slight theoretical detour into the realm of moral philosophy.

All economic theories — from the classical thinkers to the institutionalists, the Keynesians to the Austrians, the Marxists to the neo-classicalists — have a philosophical under printing. The main/dominant ideology within microeconomics today is what is commonly known as the Neoclassical School, or “Welfare Economics”. From a secular approach, the neoclassical school utilizes a consequentialist moral base: the value of an action (i.e., is it “good” or “bad”) is based purely on the propriety of that action. The concepts then of whether an action is labeled “good” or “bad” are subject to cost-benefit analysis and valued by the consequences of the action. Every action has a certain level of benefit, known to economists as utility, and a certain amount of costs. If the gains in benefit outweigh the increase in costs, the action is “good”; if the gains in benefit are outweighed by the increase in costs, the action is “bad”. Continue reading

Are Bulls and Bears Halal?

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It seems that one of the favorite questions Muslims like to ask about anything seems to be “Is it Halal?” When investing, there are two types of animals that you need to be aware of. Not to eat, but to understand what these two animals represent. Inevitably we expect a comment below asking if they are permissible to eat, but that’s for another site.

Bull Markets

Yearly in Pamplona, Spain there is a festival in which bulls are released into the streets to transport them from the off-site corrals where they are kept. The bulls used in this festival are also those that are used later in the day in the afternoon bullfight. While in the streets, young men jump in front of the bulls to prove their bravado. The Bulls lunge at the participants, thrusting its horns upward trying to toss the target into the air. A “Bull Market” is one that spikes upward, the bull being a metaphor for where the market is headed. So when the market trends upward, it’s a Bull Market.

Bull markets can be very profitable, with more investors entering the market to trade because of the upward trend. Continue reading

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