Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik

Fakultas Ekonomi dan Bisnis Islam

Universitas Islam Negeri Sunan Kalijaga Yogyakarta

THEORY OF THE BASIC MICRO ECONOMY IN CLASSIC

ISLAMIC LITERATURE
Lailatis Syarifah
UIN Sunan Kalijaga Yogyakarta
lailatis.syarifah@uin-suka.ac.id

Abstract
Islamic Economics as a science that was born as an alternative to conventional
economics that has demonstrated its failure in creating prosperity for all human
beings. Conventional economics is considered came up from vacuum and Islamic
Economic has no role in the development history of science as Schumpeter stated in
the his great gap theory. Though some scientists actually wrote that Greek-
Hellenistic science came into the hands of the educated modern Europe today by
effort of Muslims schoolar who modifies and adds value to it as stated by Mehdi
Nakosteen. Therefore, it`s needed a search of conventional economic theories in
classical Islamic literature. To prove that the conventional Economic Sciences is not
departing from the vacuum and that Islamic Economics is part of the history of the
arising of conventional economics. On some classical Islamic literature we will find
some basic economic theories conventional not only similar but also exactly the
same as a whole. In the classical Islamic literature we would find economic basic
theories such unlimited human needs theory, value theory, theory of production,
the theory of supply and demand, the market mechanism and others. This provides
evidence for us that Islamic economics is not "new" at all and never existed in the
history of science. Even the science of Islamic Economics has been there before
conventional economics arised.
Keyword: microeconimoc theories, classical islamic literature

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 EkBis: Jurnal Ekonomi dan Bisnis ISSN 2549-4988 (p)

PRELIMINARY

With the emergence of "new" ideas about Islamic economics,

especially books on the formation of Islamic economic disciplines, scientists
began to think again whether this science deserved to be a scientific
discipline or not. Naqvi (2010) in his book "Formulating Islamic Economics"
questions about the existence of the science of Islamic Economics in a special
chapter. This is because according to him science should be scientific and
can be tested for its truth. In fact the science of Islamic Economics is based
on the teachings of Islam that are dogmatic and of course as a belief is not
relative. Even though relativity is the main characteristic of scientific
knowledge.
In addition, many also think that the existing Islamic economic
theories are new, not part of Islamic history, let alone conventional
economic history. Western historians consider that conventional economic
history departed from vacuum as Schumpeter believed in his great gap and
his supporters, Paul Samuelson, who described the family tree of economic
thought as follows:

2
 Filosof Yunani

Aristoteles
Kitab Suci
350 M Profesional
(Bible)

Pebisnis/
St.Thomas Profesional
Mazhab Klasik
Aquinas
1270 M

Merkantilis
Fisiokrasi
Abad 17-18
(Quesnay)
Adam Smith
1776 M

Figure 1. Economic kinship tree Source: Islahi in Hoetoro (2007)

So, according to the chart above the history of conventional economic
thought comes from Aristotle and the Gospel, then influences St.
Thomas Aquinas who lived 920 years after that. Then from Aquinas and
the influence of professional businessmen there was born a modern or
conventional economics that began with the classical school pioneered
by Adam Smith. So, there is an assumption that there is a missing link
between Aristotle and Thomas.
In fact, modern economics may have transmitted or even adopted the
economic thinking of Muslim scientists such as Al-Ghazali, Ibn Khaldun,
Ibn Taymiyyah and others. They have given birth to many economic
theories that are not only normative but also empirically and
scientifically tested with a systematic methodology.
Nakosteen (1996) states that in the hands of Muslims Greek-Hellenistic
science and education reached the hands of educated people in the Latin
and modern worlds in Europe. This is because after Athens schools were
closed in 529 AD by Justinius, the dissemination of knowledge and
education did not immediately stop. But it spread through Syrian-
Nestorian knowledge

and in contact with Hindu and Persian thought under the

Sassasian Monarchy and Zoroastrian teachers. Then come into
contact with Muslims who have succeeded in enriching,

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Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik
modifying the knowledge either by reducing or adding. So that
the knowledge that had gone from the European world returned
to their hands even after the schools that spread the knowledge
were closed.
Sarton in Nakosteen (1996) also says that Arabic is the language
of international science. He bridges between East and Chinese
culture and the West with its Latin culture.
Amalia (2010) in her book "History of Islamic Economic Thought
From Classical to Contemporary Periods" writes that the dark
ages in the West coincide with the second phase of the
development of Islamic economic thought as follows:
Table 1
Periodization of the Development of Conventional Economic Thought
and
Islam
KONVENSIONAL PERIODIZATION ISLAMIC
Xenophon (440-335 BC (Classic)
SM);
Plato (427-357 SM)
Aristoteles (350 SM)
Bible: century ke 1-11 M Al Quran
future (...450 H/...1058 M) and Sunnah
Scholastic future Rasulullah (613-632) as sources of
St. Thomas Aquinas Khulafarasyidin (632-661) knowledge
and law, first
(1270 M); Daulah Umayyah (abad 7-8)
phase: laying
St. Albertus Magnus Daulah Abbasiyah I (abad 8- the rationale:
(1206 – 1280 M) 11) Abu Yusuf,
future Ash
Renaissance/keemasan Islam

4
 Ubaid, Al
Daudi,
Abu
hanifah
dll.
There is a great gap Daulah Abbasiyah II (abad Fase
during
500 years, the dark
ages in the West.
However
indeed this
is time
golden in the world
Muslim. Many
economic thinking
Muslims quoted
without mention
the source is between
others: pareto theory
optimum of the book
Nahjul Balâghah works
Imam Ali and Bar
Hebralus from Ihâ
`Ulûmuddīn works
Imam Ghazali
11-15) kedua
(450-850 H/1058-1466 M) Al Ghazali
The period of Baghdad's (1055-
decline.
Baghdad fell into the hands
Mongols, Dynasty continued
hereditary in Egypt
with the Capital of Cairo.
1111)
Al
Mawardi
(1058)
Ibnu
Hazm
(1064)
Ibn
Taimiyah
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 Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik
(1263-
1328)
Abu Ishak
Al-Syatibi
(1388)
Ibnu
Khaldun
(1332-
1404)
Al Maqrizi
(1364-
1441)
Source: History of Islamic Economics Thought From Classical to
Contemporary Period by Amalia (2010)

So, actually the missing link in Schumpeter's great gap was filled by Islamic economic
thinkers who had succeeded in elaborating between Aristotle's thinking along with the
teachings in the Qur'an and the sunnah of the Prophet so that it became an independent
science. Therefore, strong evidence is needed as a rebuttal to the assumption

6
deny the role of Muslim scientists in the overall economic arena.
We can find these evidences by analyzing conventional economic theory in some economic
literature, both classical and modern. Followed by analyzing whether theories exist in
Islamic literature, especially classical Islamic literature. Because of the breadth and
abundance of studies on basic theories in microeconomics, the authors only analyze
microeconomic theory in this paper.
Based on the explanation above, the author formulates two problems that the author will
find the answer in this paper, namely: 1. What is the basic theory of microeconomics in
conventional economic literature, and 2. Is there a basic theory in classical Islamic
literature.
The method used in this study is a qualitative research method with literature research,
namely by analyzing the basic theories of microeconomics in conventional economic
literature. Then analyze the existence of a theory that resembles or is similar to that theory
in classical Islamic literature. What is meant by classical Islamic literature is not just
literature that specifically covers economic problems such as the book "al-Amwal" and
"Muqaddimah Ibn Khaldun", but all classical Islamic literature with various branches of
science such as interpretations, hadith, fiqh, and others.

DISCUSSION
Microeconomic Theory
Based on the formulation of the problem above, what the author will describe first is the
basic theory of microeconomics found in conventional economic literature.
Microeconomics includes economic behavior in households. Micro economy includes
economic activities which are divided into 3 important things, namely consumption,
production and distribution.
1. Birth of Economics (Unlimited Wants, Scarcity and Efficiency)
The most fundamental theory in microeconomic studies is the theory of unlimited human
needs and limited resources. Samuelson & Nordhaus (2001) in his book Economics
explains that economics is the study of how people use scarce resources to
produce.commodities

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 Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik

valuable commodity and distribute it to the wider community. In other words, economics
arises because human desires are relatively unlimited while the available resources are
relatively limited, so there is scarcity that requires humans to make efficiency. Smith in
Samuelson & Nordhaus (2001) states that unlimited human needs and scarcity give birth
to self-interested. But with this individual attitude, humans succeed in producing very
useful commodities and forming
awesome market efficiency.

The problem of scarcity or scarcity makes people experience tradeoff problems where to
get something we want we have to sacrifice other things. Humans are forced to think of
the benefits and opportunity costs that they must sacrifice to achieve something they want
(Mankiw, Quah, & Wilson, 2014).
1. Basic consumption theory (Utitility and Marginal Satisfaction Theory)
Next is the basic theory of utility as a result of the rational attitude of humans who must
deal with scarcity and tradeoff. Humans who think rationally will certainly consider the
costs and benefits of the goods and services he consumes. Every decision to consume goods
or services he will consider whether it will provide satisfaction for him or not. He will also
consider how much profit or satisfaction he gets from consuming an item or service.

According to Samuelson & Nordhaus (2001), the history of utility theory was started by
Daniel Bernoulli in 1738, he observed that people acted as if the dollars they wanted to
earn were no more valuable than the dollars they wanted to escape. This shows that the
new dollars they earn only give a little extra satisfaction or utility. Utility theory was first
introduced by Jeremy Bentham who proposed that society should be organized according
to the principle of utility. Continued by Williams Stanley Jevons who expanded the
concept of utility to explain consumer behavior.
Daniel's observations can be said as the forerunner to the birth of the marginal utility
found.by

8
Hermann Heinric Gossen is the law of diminishing marginal utility. This law
states that the more products of goods or services consumed by a person in a
period, the less additional satisfaction he gives. That's why Daniel found that the
dollars people want to achieve are no more valuable than the dollars they want
to escape.

Consumer satisfaction after several additions at one time is not only reduced, but
will continue with an increase of zero, which means there is no additional
satisfaction at all for the additional consumption carried out by consumers. After
no additions at all satisfaction can change dissatisfaction or disgust and boredom.
This is called inefficiency in consumers. So at a time like this consumers should
stop from consuming these goods or services.

1. Basic Production Theory (Efficiency, Decreasing Addition Law and Division of

Labor)
On the other hand not only consumers who behave rationally, producers also act
rationally which means also consider the benefits and costs of producing an item
or service. The rational attitude of the producer gave birth to several theories such
as the theory of division of labor, production efficiency and the law of addition
which was decreasing.

If in the past mankind produced goods by taking away from the gift of nature. So
that the output of a production has a modest added value. In modern times
production activities are very diverse and the output produced also varies. At
present producers do not only need natural gifts in producing production, but
many inputs are needed to produce output that has more value. The relationship
between input and output produces a production theory. If consumers determine
consumption choices based on the costs and benefits obtained. So producers in
producing goods also consider the amount of input and output that can be
produced.

If consumers are faced with efficiency, the producers are the same. This forces
producers to determine what maximum output they can produce from a certain
number of inputs. In other words the producer must produce output that has
more value on

the highest maximum level by using a limited number of resources. This is what
is called production efficiency.
In production there are several inputs needed, namely natural resources such as
land, water, raw materials and others. Human resources are also needed, namely
labor. If the consumer satisfaction applies the law of diminishing marginal utility,
then the production also applies the law of increasing diminishing returns. This
means that when we add one input unit with another unit in a constant state, then

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 Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik
the additional products from each unit will decrease, even though in general the
resulting product increases (Samuelson & Nordhaus, 2001)

For example, we add some labor in a production, while the engine and land for buildings
are fixed, then the addition of each one of the labor we add will decrease even though
production generally increases. This is because human energy is definitely decreasing. We
can find events like this every day. Imagine if we study economics in 7 meetings, at the
first meeting we will be very excited and all theories we can understand correctly.
Continued at the second meeting, our enthusiasm is still the same, but because we have
been studying for one week, assignments from other courses are given. So that in the
second week we can still concentrate on economic courses, but we will begin to feel a slight
disturbance in our concentration. In the following weeks our spirit and concentration can
simultaneously begin to decline and so on. From this we can understand why there is an
additional decrease in the product on the additional unit of input if the other is constant.

This declining addition does not only apply if we add labor and other inputs such as
machinery and constant land. Conversely, if we add machinery or land and constant labor,
then the law of addition decreases. For example, we add machines to the factory and do
not add labor and land and buildings. So over time the engine will fill the building and
make the workforce have to share the place with the engine that continues to grow.
Workers will feel tight and difficult to move until eventually it will also cause a decrease
in work efficiency

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Just as with consumers, inefficiencies also occur in production. Where production reaches
the point of inefficiency which means there is no additional value for each additional per
unit of input given. So at this time the producers also have to stop adding inputs to
production. Because of this we often find companies laying off some of their workers or
releasing one of the production machines or selling their land.

In addition to the law of addition that is reduced there are other laws relating to
production, namely the theory of division of labor or division of labor or can also be called
specialization. Adam Smith in Hoetoro (2007) explained that in one job, for example
making a needle, certainly not everyone can do some things alone. This will actually hinder
the production process. If all the needle making process is done by each individual
workforce by forging the metal, straightening it, cutting it then sharpening the base, then
one person can only succeed in completing one needle per day, so if there are 10 people,
then only 10 or at least 15 needle produced. But if the process is shared with several people
according to their respective expertise, the production will be more efficient. Of the 10
people the workforce can produce dozens of needles or maybe hundreds.

1. Basic Distribution Theory (Market, Demand and Supply and Income Distribution)
Consumers who want goods and services will make requests for goods and services, while
producers will bid for goods and services that they produce. In a conventional economy
demand and supply have their own laws. Requests and offers meet on the market and
interact, giving birth to requests and offers.

The very basic law of demand and supply in a conventional economy is that demand and
supply are influenced by prices. Demand will decrease if prices rise and demand will
increase if prices decline, otherwise supply will increase when prices rise and will decline
when prices decline. So, the demand and prices form a negative slove while the offer forms
a positive slove as follows:

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 Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik

demand offer

p p

Q Q
Figure 2. Demand and Supply Curves

The symbol P on the curve above means price which means price,
while Q on the curve above means quantity which means the number of
items requested or offered. If we look at the curve above, we will find that
the demand line moves from the top left to the bottom right, while the
supply line is the opposite moving from the lower left to the top right. If our
demand and supply lines are combined, then it will produce a cut-off point
called the equilibrium price. Equilibrium price is a balance price which is
the result of the interaction between demand and supply. we can draw
equilibrium prices in the following curve:

P S

Figure 3. Cutoff Demand and Supply Curves

The symbol P in the curve above is equal to price or price and

symbol Q means quantity or number of items requested or offered. S means supply
(supply) and D means demand (demand). E means equilibrium (equilibrium price).
As we know that the process of demand and supply occurs in the market. So in addition
to the theory of demand and supply, there are other basic theories about the market. In
conventional economic

what is meant by the market is not just the market as we know it like the Sunday
market, the Monday market and so on. Markets in conventional economics have
several forms, namely perfect competition, monopolistic markets, oligopoly

12
markets, and monopoly markets.
Mankiw et al. (2014) say that sometimes we find highly competitive markets or
we can call perfect competition markets. Where sellers and buyers have no power
to influence market prices. Such markets have two characteristics, namely sellers
and buyers are very many and goods are sold the same. The market in which
there is only one seller who sells one item is a monopoly market, while the market
in which there are only a few sellers who sell one item and the competition is not
too aggressive is the oligopoly market, the last monopolistic competitive market
is a market with several sellers and goods the ones sold are a bit different so they
can determine their own prices.

Because prices in the market are determined by demand and supply, problems
arise in the conventional economy about pricing, especially if there is a very high
price increase. In conventional economics we recognize two perspectives in
pricing, namely, theory, "invisible hand" proposed by Adam Smith with his
perspective that prioritizes markets to compete perfectly and form equilibrium
prices (equilibrium prices) with the interaction between market supply and
demand without intervention from the government. And if disequilibrium
occurs, Adam Smith believes there will be a veiled hand / "X" factor that can
change the price to change to an equilibrium position.

Contrary to Adam Smith's theory, Keynes has another view. He argues that the
market sometimes does not experience temporary disequilibrium, but can be very
long and very severe, so the role of the government in pricing is very necessary so
that prices can return to normal towards equilibrium.
After discussing economic activities which include consumption and production,
the next is an equally important activity, namely distribution. Income distribution
is the main topic of all economic systems in the world. Regarding the income gap
there are several views on income distribution. Mankiw et al. (2014) mention that
Utilitarians such as John Stuart Mill chose

income distribution that maximizes the total utility of all members of the
community. Libertarians like Robert Nozick view that the government must
strengthen individual rights to ensure a fair process, and not to worry about the
income gap that is generated.

Microeconomic Theory in Classical Islamic Literature

The author has presented the basic micro theories in conventional economics in
economic literature. In this section the author will present the theories that exist
in classical Islamic literature and have similar ideas with the microeconomic
theories above.

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 Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik

Unlimited Wants, Scarcity and Efficiency

If we go back to the discussion above, the basic theory underlying the birth of
economics is scarcity as a result of unlimited human desires and limited natural
resources. In classical Islamic literature we will find that human desires are indeed
unlimited and humans are never satisfied as in the following historical hadith:

Atha `narrated," I heard Ibn Abbas RA said, "I heard the Prophet Muhammad said," If
the son of Adam had two valleys of wealth, surely he would want a third valley, and
no one filled the belly of Adam except the land and Allah forgives those who ask for
forgiveness. (Bukhari)
The above hadith explains that humans are very greedy which means their desires
are unlimited. So if he has two valleys of wealth, he still wants to have the next
treasure valley to infinity. Even though all the assets we consume will all return to
the land, they mean to perish.

In addition to the above hadith, Al-Gazali (1975) in Ihya Ulumuddin also stated that
human desires are unlimited and have even become human nature to love the world
and its contents both in the form of
human resources and natural resources. Even human love for the world can be so
high that his heart seems to be a slave to the world
In addition to the two statements above, the idea of human love for the world or
hubb ad-dunyâ, which in conventional economic theory is called unlimited
wants, has become a common understanding in classical Islamic literature.
Unlimited human desires are the problems studied. In the realm of aqeedah this
becomes a problem because it can bring people to immorality to their Lord,
because love for the world makes a person a slave to the world and reduces and
even negates his servitude to his God. In the realm of jurisprudence this is a
problem because of the influence of worship of a servant which is a form of
devotion to the Creator, in the moral realm this is also a study. And of course as
the main literature of Muslims, the Koran also states this:

Made to feel beautiful in the human view of love for what is desired, in the form
of women, children and possessions piled up in the form of gold and silver,
chosen horses, livestock and rice fields. That is the pleasure of living in the world,
and Allah's side is a good place to return (Ali Imran: 14)
Although the meaning of the verse above in the interpretation literature is more
emphasized on the existence of the world as slander, especially about the slander
of women for men. But the verse as a whole conveys the human nature that loves
the world, in other words humans are never satisfied with whatever they have.
This idea is similar to the unlimited wants theory in conventional economics. The
difference is that in conventional economics this causes the concept of scarcity
due to limited natural resources and justifies individualistic and self-interested
attitudes, so in classical Islamic literature this is not the case. In classical Islamic
literature these unlimited desires are considered as slander and temptation which
must be avoided. And the idea that resources are limited so that they cannot meet
everyone's needs and make people have to behave individually with the principle

14
of survival of the fittest (he is the strong one who wins), then in classical Islamic
literature we will find different ideas as follows:

Meaning:
And there is not a single moving creature on earth, but all are guaranteed by God
to fortune him. He knew his residence and place of storage. All (written) in the
real Book (Hud: 6)

Meaning:
Indeed, We created all things according to size (al-Qamar: 49)
Ibn Kathir stated that the above verse explains that Allah created everything in
this world, both humans, animals and plants and had ascertained the sustenance
they ate and fulfilled all of their needs. Even Allah has confirmed his place of
residence, until how and when the end of his life (Ibn Kathir, 4444)

So limited natural resources are not in the view of Islam, because all Allah has
made sure that their needs are met. What makes these natural resources scarce
for humans is their greed, not their needs.
Furthermore, regarding efficiency, both efficiency in consumption and efficiency
in production. Efficiency in consumption according to conventional economics
means giving a certain sacrifice to achieve maximum satisfaction or utility. While
efficiency in production means using a number of certain inputs both natural
resources, capital and human resources to produce output and gain maximum
profit.

Related to the above, we will find that in Islamic literature there is an urge to
make the maximum effort and sacrifice in production (work) in a lawful way and
not be disappointed if the results obtained are not as large as the expected results.
Whereas in the matter of consumption, Islam provides an impetus to achieve
satisfaction that is appropriate (not excessive) so that it does not carry out tabdzîr
actions which are prohibited in Islamic teachings. Also do not forget that in every
consumption that we succeed in achieving, there is the right of others who need
that God leaves us. And also always remember that the goods and services
consumed must be halal and thayyib.

Regarding consumption that is not excessive and not tabdzir according to the
following word of God

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 Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik

Meaning:
O son of Adam! Take your ornaments every time you enter the mosque and eat
and drink and don't overdo it. Indeed He does not like excessive people (Al-A`raf:
31)

The verse above even though it is as if only talking about jewelry, food and drink.
However, this includes all types of consumption by humans both goods and
services. Eating and drinking are used as symbols of consumption because eating
and drinking are consumption which is always done by humans. Likewise with
jewelry, because people are always interested in jewelry, although the shapes are
different, they can be physical jewelry in the form of clothing, accessories and
others, as well as psychological jewelry in the form of pleasant entertainment both
by distributing hobbies, getting married and having children and so on.
So, Islam does not forbid humans to enjoy their lives by achieving physical and
psychological satisfaction, even the prophet Muhammad forbade people who want
to escape physical satisfaction by fasting and not marrying as in the following
hadith:

3 (three) people came to the house of the wives of the Prophet. They asked about
the Prophet's worship. When they were told (about it) they looked down (their
worship) then they said, "where are we when compared to the Prophet who has
been forgiven of his sins both earlier and later?". One of them said, "I will pray the
night forever". Others say, "I will fast all the time and not break the fast." The third
said, "I will not go to women and I will not marry forever". The Messenger of Allah
came and said, "You who say this and that, actually I am the most fearful of Allah
and the most fearful of Him among you, but I fast and I break the fast, I pray and I
rest, I also marry women. So whoever does not like my sunnah means that he is
not my class "(Bukhari and Muslim)

The above hadith asserts that humans are created with orders to fulfill their
physical and mental needs. Those who only fulfill a part of their needs (only
worship) and leave their physical needs are prohibited and even considered not
followers of the Prophet Muhammad. However, it also must not forget that the
consumption we choose must be halal and thayyib as in the following verse:

Meaning:
Then eat of what Allah has given you halal and good sustenance and be thankful
for Allah's favor if you only worship Him (An-Nahl: 114)
So, Allah commands us to consume goods and services that provide benefits and
utilities for us because they are gifts and sustenance that Allah bestows on His
servants, but these consumption must be obtained and carried out in a lawful and
good manner. Halal means that what we consume is not what Allah forbids in
16
books or hadith. Thayyib (good) means that even though our consumption is
halal but if it is not nutritious it means it is not good for us, for example
consuming food without being washed / cleaned first, even though there is no
prohibition but it is not good for health, it means we should avoid it .
Some of the above are explanations of consumption theory in Islam and the
difference with the concept of consumption efficiency in conventional economics.
Furthermore, regarding the efficiency of production the author will write together
other theories about production in the discussion of production.

1. Utilities and Theory of Marginal Satisfaction and the Law of Addition

Decreases
The next theory is about the attitude of consumer rationality which is the basis for
him to choose to consume based on the level of satisfaction or utility that can be
given by an item or service. The higher the utility that can be produced by an
item or service, the more likely it is for consumers to consume the goods or
services

Tracing this related theory in Islamic literature both interpretations, hadith, fiqh
and morality we will find a study of choosing everything based on benefits and
benefits, including determining consumption choices. The concept of maslahat is
broader in scope than the concept of utility, because utility only covers physical
interests and mere pleasures. Whereas the concept of maslahat contains a
person's physical and mental interests and the interests of others and the
preservation of the lives of all beings.

According to al-Ghazali in Chapra (2001), maslahat includes the protection of

religion, soul, mind, descent and wealth which all aim to prosper the individual
in the ummah

According to Syatibi (t. Th) in his book "al-Muwâfaqât fî Ushûl as-Syarî`ah"

maslahat is divided into three namely: dharûriyyât, hajjiyyât and tahsîniyyât. The
Dharûriyyât is a problem whose existence is inseparable from humans under any
circumstances and that includes the maintenance of religion, soul, mind, lineage
and wealth. Whereas hajjiyyât is a problem whose existence is very important for
humans because it improves the maintenance of the five things above, where its
absence creates imbalances in life. The tahsîniyyât is a complementary problem
for humans whose existence enhances the maintenance of the 5 things above so
that it adds beauty to life.

Syatibi also mentions that damage to the dharûriyyat will affect the masses of the
hajjiyyat and tahsniyyat, while the damage to both does not affect the dharûriyyât
maslahat. But all three are actually very closely related, so that sometimes
damage to the hajjiyyat and absolute tahsîniyyât brings damage to the
dharûriyyat. But when it comes to dealing with putting one of the three masks
first, maslahat dharûriyyat must take precedence.
This benefit does not only apply to consumers, but also producers. And if the
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 Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik
utility experiences a declining increase, then maslahat if it is related to the
dharûriyyât, the decline tends to be slower than the utility. This is because
massively dharuriyyât existence cannot be released by humans. For example,
carrying out worship as a material manifestation of religious guarding. Someone
who continues to worship constantly will

cause saturation both physically and spiritually. However, because he believed

that the worship was the main means to achieve satisfaction in the aftermath of
death (doomsday), he would try to eliminate the feeling of saturation to return to
normal. This is in accordance with the description in Atsar which states that faith
sometimes rises sometimes down as follows:
Meaning:

Ibn Abbas and Abu Hurairah said, "faith is increasing and decreasing" (Ibn
Majah)
Whereas in the matter of the hajjiyyât and tahsîniyyât, the addition also
decreases. However, for consumers who are aware of the importance of maslahat,
because the problem of hajjiyyat is more important and the absence of imbalance,
consumers will prefer the hajjiyyât above tahsîniyyât, so that the decrease in
consumer consumption of hajjiyyat is slower than the decline in consumption
tahsiniyyat.

But based on the close link between the three as mentioned by Syatibi above,
sometimes all three are inseparable. This causes the decrease of the three of them
to be equally slower than the decrease in utility. And sometimes when one must
put one of them first, both consumers and producers must put the dharûriyyat
above the hajjiyyat and tahsîniyyat. So that the decline in dharûriyyât is slower
than the hajjiyyât and tahsîniyyât.

1. Production Theory and Division of Labor

If in conventional economics we find theories of efficiency and division of labor in
production. As explained earlier efficiency in production in conventional
economics has the idea of using certain inputs to produce maximum output and
profits. Whereas in classical Islamic literature production is interpreted by working
and trying as much as possible to produce products both goods and services that
benefit humans in a lawful way, but the goal is not just to

maximizing maximum profits. But the ultimate goal of work is to make it a good
deed because of Allah (worship), so that it is always grateful and thankful to God
for the results obtained, and not disappointed if the final results are not in
accordance with the expected results.
As stated by Imam Ash-Syaibani in Amalia (2010) that production activities are
18
called al kasb, the definition of which is to seek the acquisition of assets through
various halal means. And producing must consider a problem which aims to
preserve the five basic elements of life, namely religion, soul, mind, lineage and
wealth.
Here's one of the verses that instructs to work with the purpose of righteous deeds:

If the prayer is fulfilled, you will scatter on the earth and seek the grace of God and
remember Allah as much as possible so that you will be lucky (Al-Jumuah: 10)
Prayers which are symbols of worship are placed before the command to seek
sustenance, indicating that everything we do is all due to worship. Coupled with
the command to remember Allah at work, meaning that all our economic activities
must include God with him. This is the difference between the concepts of
production in conventional economics and in Islam. God also motivates us to work
as much as possible not only to seek maximum profits, but because it will be
witnessed on Judgment Day:

And say (Muhammad) work for you! Then Allah and His Apostle and those who
believe will see your work. And you will be returned on the Day of Judgment to
the Knower of the Unseen and the real world, then He will tell you what you have
done (At-Tawbah: 105)

Because the main motivation for production is worship to God, then humans will
always be grateful for whatever results they get even if they are not as expected
as in the following verse,

Meaning:
And remember when your Lord announced ¸ "If you are grateful then I will really
add to you and if you deny (My blessings) then indeed My doom is very painful
(Ibrahim: 2)

The verse above commands humans to remain grateful for whatever God has
given them. In the context of production, it is grateful that it means not feeling
disappointed with the results that are different from the expectations plus greater
enthusiasm to keep doing the production in a lawful way. Then look for causes
and find solutions to yesterday's failures to be more successful in future
production. Because in Islamic teachings the lucky man is that the principle of
tomorrow must be better than today and today must be better than yesterday.

The principle of efficiency in a conventional economy is closely related to the

division of labor. Because as explained above according to

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Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik
Adam Smith several parts in one production or work if divided into
several people the results will be more than done by one person.
In classical Islamic literature we will find Imam Syaibani also asserting that
humans need to specialize, because he cannot do everything alone, even
though he tries to master all science, his age limits it. Likewise al-Ghazali
groups production activities into several categories, and all of them require
division of tasks. Ibnu Khaldun also said that the division of labor has
implications for increasing production (Amalia, 2010).

So, the theory of division of labor in conventional economics pioneered by

Adam Smith in 1776, actually the same idea was sparked by Imam Syaibani
& Al-Ghazali who, if we look back at the diagram above, they lived
hundreds of years before Adam Smith's birth. Al-Ghazali lived in 1055 to
1111 and Imam Syaibani was born in 750 AD

20
1. Market, Demand and Supply and Pricing
Market concepts are widely discussed in classical Islamic literature, even the majority of
literary writers used as references to Islamic economics write about markets and market
regulation. But what is discussed in detail about the market structure is Yahya bin Umar.
He specifically wrote about kitâb as-sûq. Indeed the market structure expressed by Yahya
bin Umar is not exactly like in a conventional economy. But we can conclude from his
writing that a good market is a market in which information can be accessed by everyone
involved in it and no one does a monopoly. Indirectly Yahya bin Umar has mentioned two
models of markets namely perfect competition markets which he considers ideal and
monopolistic markets that are not ideal. Ibn Taymiyyah also mentioned the perfect
competition market, although not explicitly in his al-Hisbah al-Islam.

The market is a place where there is an interaction between demand (demand) and supply
(supply). In a conventional economy demand is always inversely proportional to price and
supply is always equal to price.

In classical Islamic literature we will find people at the time of Abu Yusuf understood that
if there was a scarcity of goods prices would rise and demand would decrease. This means
that an understanding of the concept of demand and supply has existed at that time. And
Yusuf (1979) in his book "al-Kharaj" protested the understanding that prices always
influence demand. He said that sometimes food is very much but the price is still expensive
and sometimes the food is very little but the price is cheap. But Abu Yusuf agrees that if
the price rises, surely the offer will rise, on the contrary if the price decreases then the
supply will decrease as well. He also said that there were other things that caused the rise
and fall of the offer.
Ibn Khaldun who lived after Abu Yusuf also wrote about the theory of demand and
supply. His theory built by Ibn Khaldun was exactly the same as in conventional
economics where prices gave influence to demand and supply differently. If the demand
is inversely proportional, then the supply is positively proportional. He also said that high
and low prices could also be

influenced by other things such as taxes and ihtikr behavior or

hoarding goods (Khaldun, 1967)
In addition to the demand and supply, the issue of pricing is also a study in
classical Islamic literature. Even the prophet Muhammad himself in several
narrations also conveyed one of the theories of pricing in Abu Dawud's following
account,

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 Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik

Anas related that people said, "O Messenger of Allah! Prices have risen, set prices
for us, "then the Prophet Muhammad replied," Verily Allah is the Determinant of
prices, the Grasper, the Spreader and the Giver of sustenance. And I hope to meet
God in a situation that none of you demands me for wrongdoing in both blood
and wealth (Abu Daud).

If we pay attention to the hadith above and an explanation of Adam Smith's

invisible hand theory before. We will find the same thing, namely that prices
should not be set, but let the market that will move on its own find the price of
balance. And if Adam Smith states that there will be an invisible hand that will
change when on the market disequilibrium occurs, this is exactly the same as in
the above hadith, the Messenger of Allah states that God is the price regulator
and God, who will make everything stable again.

After the time of the Prophet, the idea of pricing also developed in the future. In
contrast to the attitude of the Apostle who tends to refuse to set prices, Yahya bin
Umar and Ibn Taymiyyah expressed the importance of the role of the government
in regulating prices.

Yahya bin Umar said in Janwari (2016) that one of the functions of the state is to
uphold justice in society. Therefore, to uphold justice in the market, the
government needs to take actions so that the market functions well. For him a fair
government must play a role in the supervision and formation of the organ in
charge of auditing the market. The government also appoints officials who are in
charge of controlling the market. While to maintain price stability, the
government needs to standardize both in size and scale and avoid the market
from goods.

22
unclean goods. Yahya bin Umar even stated that if the government failed in controlling
the market, the private sector should be given the opportunity to do so.
Besides Yahya bin Umar, Taimiyah (1996) also explained the regulation of prices in his al-
Hisbah. He stated that the government has the authority to regulate prices in the event of
price imbalances in the market, either by forcing traders to sell their goods at equal prices,
or to set prices when a monopoly occurs on the market. But according to him the
government must conduct deliberations together with the parties concerned to set the
appropriate price.

In addition to the discourse on pricing, in some literature there are several solutions given
to overcome the situation of disequilibrium in the market such as by banning ihtikr
(stockpiling of goods) or by increasing subsidies for goods experiencing price increases.

1. Income Distribution
Income distribution is also a discourse in conventional economics. Even if it is seen from
the history of its birth, it is closely related to individualistic attitudes and unlimited
fulfillment of desires and the desire to gain maximum profit is far from thinking about
harmony and social welfare. But in reality there are some conventional economic thinkers
who think about the distribution of income as the author explained earlier. But all of that
is still in the stage of theory and discourse.

Unlike the income distribution in Islam which is the core of economic teachings. Where
the distribution of income in Islam is almost integrated into every economic activity. For
example when doing consumption, we are warned not to overdo it and remember that
there are rights of people who need it in every provision we get. The orders for production
also relate to orders to share. The more production we can produce, the more labor we
need. Of course this gives them the opportunity to earn income

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 Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik

In addition, in Islam the distribution of income is carried out in various ways, all
of which are highly recommended in Islam such as alms, infaq and waqf. There is
even an order of zakat which is an obligation for Muslims and must be channeled
every year (haul) if it reaches a certain size (nishab). The discussion is very much
in classical Islamic literature.

CONCLUSION
After reading classical Islamic literature and comparing it with the basic theory of
microeconomics in conventional economic literature, we will find ideas that are
close together or even the same.
Some of the theories are as follows:

1. The theory of unlimited wants and scarcity is considered to be the cause of the
birth of a conventional economy. This theory states that humans have unlimited
desires even though the natural resources that can fulfill these desires are limited
in number causing economic action. In classical Islamic literature we find
recognition of human greed's (greedy) desires, but this is considered a test and
slander for humans so it must be avoided. And the natural resources that God
provides for all of his creatures are actually sufficient. Only greed makes this
natural resource very limited.

2. Efficiency theory: that is about sacrificing a certain amount to get maximum

profit both in production and consumption. In classical Islamic literature, we will
find the concept of working optimally in production and remain grateful for the
results, although not as expected. Whereas in Islamic consumption it is ordered not
to cover ourselves from utilizing the nature that God has provided for us, but must
be halal and thayyib and may not be excessive.

3. Utility theory and law of diminishing marginal utility. It is a theory of consumer

satisfaction and satisfaction of consumption whose additions are decreasing. In
production this also applies, namely the addition of decreasing output. In classical
Islamic literature we will find a theory that is broader than utility, namely the
concept of maslahat which aims to maintain

24
all the most important aspects of human life are religion, reason, wealth, lineage
and wealth. The idea of declining additions in classical Islamic literature also exists,
but because it is associated with problems, the decline is slower.

1. Production theory: produces output in the form of goods and services.

Production activities in classical Islamic literature are defined by producing halal
goods or services in a lawful manner as well. So the difference is in halal problems.

2. Division of Labor: namely the theory of specialization and division of labor to

produce more efficient output. In classical Islamic literature also found the same
theory.

3. Demand and supply: namely the theory of the effect of prices on demand and
supply. where if prices increase then demand will decrease while supply will
increase. Conversely, if prices decline, then demand will increase and supply will
decline. In classical Islamic literature there is also the same theory, but some are
criticizing it.

4. Market structure: namely the theory of market forms. In a conventional economy

the market is divided into 4 forms: perfect competition, monopolistic competition,
oligopoly and monopoly with their respective characteristics. In classical Islamic
literature we will find theories about market structure but still explicit and only
divided into two, namely perfect markets and monopoly markets.

5. Price regulation: namely the theory of pricing when disequilibrium occurs in the
market, there is something that demands the government to set prices and some
do not. We find the same thing in classical Islamic literature. But there are several
solutions in classical Islamic literature for markets that experience disequilibrium
such as by prohibiting stockpiling of goods or by providing subsidies to the public
for goods whose prices are rising.

6. Distribution of income: that is an idea of equal distribution of income so that the

gap between the rich and the poor decreases slightly. There are several equalization
theories offered by conventional economics but not the main topic. In Islamic
literature income distribution becomes an important topic. Even the technicalities
have been set up, some are highly recommended

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 Lailatis Syarifah: Teori Dasar Ekonomi Mikro dalam Literatur Islam Klasik

such as infaq, alms and endowments and there are those who are obliged and
regulated in size (nishab) and scale (haul), namely zakat.

Some of the above give us the existence of a basic theory of microeconomics in

classical Islamic literature written long before Adam Smith appeared with his
book which is considered the foundation of the establishment of conventional
economics.

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