Friday, 19 October 2012
Factors of Production : Islamic Perspective
Four (4) factors of production from the Islamic perspective are as follow:
1. Land. It refers to all natural resources gifted by Allah, which are usable in the process of production. Man should utilize the resources according to al-Quran and al-Sunnah as land is a valuable gift by Allah SWT. Land not only include the resources found on sea and land, but also include the climate (such as rain, solar and wind), minerals and animals.
2. Labor. In Islam, it refers to the mean to extract most of the goods from the earth by labor (human effort) who are sane and healthy. The reward given to the labor id not only monetary term (wages), but also the compensation in terms of good deeds in the hereafter. The relationship of employer and employee are also stretched out in Islam, as both should treat each other according to al-Quran and al-Sunnah. For example, the employer should pay wages to the employees before their sweat dried out. (according to Hadith Riwayat Ibn Majah)
3.Capital. It refers to the combination of work to obtain wealth, and the use of the capital (equipment, machinery, wealth) must be in accordance to al-Quran and al-Sunnah). As refer to the writing of Dr. Muhammad Imran Ashraf Usmani, Ph. D. Islamic Finance. His writing posted on Meezan Bank's Guide to Islamic Banking. Capital refers to those means of production which cannot be used in the process of production until and unless during this process they are either wholly consumed or completely altered in form, and which, therefore, cannot be let or leased (for example, liquid money or food stuff etc.)
4. Entrepreneur. It refers to the man who makes the decision and has the ability and capability to produce within Islamic value. His decision will determine the demand of factors of production, influence maximum production of output and quality of goods and services. Decision made by him must be in accordance with the teaching of al-Quran and al-Sunnah.