In Islam the concept of Money

Before humans discovered the money as a medium of exchange, the economy is done by using the barter system, goods are exchanged for goods or goods with services. According to Shah Wali Allah ad-Dahlawy, (great scholars from India who lived in the 18th century AD), on stage or primitive jungle life, humans have been doing secarabarter exchanges and cooperation to make ends meet.This barter system is the system first became known in the history of world trade. This occurred long before the seventh century AD (before the time of Prophet Muhammad SAW). In ancient history, animals have become the dominant medium of exchange. But in this case a problem arises (constraints), because the cattle are durable goods that are not too large and serve as a medium of exchange.According to the book spark Agustianto Islamic Economic Thought (2004) barter system faces many obstacles in trade and business activities. Constraints, among other things, first, it is difficult to find people who you want. Second, it is difficult to determine the value of the goods to be exchanged for desired goods terhadp. Third, it is difficult to find people who want to exchange goods with services that are owned or otherwise. Fourth, it is difficult to menemukakan needs to be exchanged at the time of the fast as you wish. That is, to obtain the desired goods, which sometimes requires a relatively long time.Without the currency as the standard medium of exchange rates and the process of fulfilling human needs become difficult. In a barter economy, the transaction occurs when both parties have two needs at once, the first party takes what belongs to the second and vice versa. For example, a person has a number of wheat, and requires a camel does not have. While others have a camel and require grain. Thus, there was barter. But in this case, how much wheat will be exchanged for a camel, its size is not yet clear, there should be a standard.According to Tahir Abdul Muhsin Solomon in the book 'Al-Iqtishadiyah Ilajul Musykilah bil Islam, "In measuring the price of the goods to be exchanged, there must be a standard (size). In the above case, it is difficult to determine how much wheat to sesekor camel. Similarly, as if anyone would buy a house with a shirt, or a slave with shoes, atua flour with a donkey. Barter transaction process is perceived as very difficult, because of the absence of a clear measure of the price of an item. If this happens continue, then the economy stagnates and slow.To ease the condition, then God created the dinar and dirham as a judge and the price of a good size. For example, a camel with a hundred dinars, 20 dinars sesekor goat, a bushel of wheat dirhams, and so on.Agustianto said, to overcome the obstacles in barter transactions, the next man using a more effective and efficient. The medium of exchange is money that was originally composed of gold (dinar), silver (dirhams). As such valuable commodities such as livestock, to be replaced with metal, like gold or silver. This precious metal has the advantage, first, the metal is durable goods. Second, it can be broken down into satuaan-smaller units. Third, gold coins (dinars) and silver (dirham) always correspond to the intrinsic value of its nominal value. So that the economy is more stable and inflation can be controlled. This is very different from the nominal value of paper money is not balanced by its intrinsic value (the value of the material). The system is vulnerable to shocks and crises prone to inflation (Book of Islamic Economic Thought Sparks, 2004)Imam al-Ghazali said, that in a barter economy though, it takes as a measure of the value of money or goods. For example, a camel worth 100 dinars and one bushel of wheat cost so dirhams. With the money as a measure of value, money serves also as a medium of exchange (medium of exchange). However, it should be noted, that in an Islamic economy, money is not needed for the money itself. Money was created to facilitate exchange and establish a fair value of the exchange of goods or services.In explaining the historical emergence of money (medium of exchange), Shah Wali Allah ad-Dahlawy put forward the theory of wisdom (wisdom). According to him, one of wisdom (wisdom) of human beings, is the wisdom of buying and selling of reciprocity, (buyers and sales), giving gifts, rental, lending, loans and mortgages. With man this is wise to realize that the exchange of goods with the goods (barter) can not meet immediate needs as well as barter requires the terms "match both sides at the same time" (double coincidence of wants). Therefore, it is then needed "something" that can be accepted as a medium of exchange of umun (medium of exchange) which is now called money.Something scbagai medium of exchange is evolving in various forms (Goldfeld (1990, p 10) starting from the ground hat, leather, salt, fish teeth, metal, to various forms of debt securities (including banknotes). Something called the money should be accepted by the general public that Bin Miskawayh (1030M) must meet the following conditions: (1) durable (durability), (2) easy (convenience) were taken, (3) can not be corrupted; (incorruptibility), (4) the desired ( desirability), (4) want (desirability) of all persons, and (5) people love to see it.Based on the formulation of Ibn Miskawayh, then of the various forms of "money" mentioned above only gold and silver that meet the fifth requirement of money that he put it.Prophet has set the gold and silver as money. He made only of gold and silver as standard money. Standard value of goods and services are returned to the standard of the dinar and dirham this. With gold and silver is all forms of transactions take place. He has made money in the form of standard uqiyah, dirham, dinar mitsqal and. All of these are well known and very famous at the time of the Prophet, in which Arab societies have used it as a medium of exchange and measure of value in the transaction.From the above it is known that, in the early days of Islam, the currency used is the dinar and dirham. A fact history has proved this. In one of the museums in Paris, found a collection of four Islamic Caliphate legacy currencies. One of them until recently, considered one of the world as peniggalan history of currency. Currency was printed in the reign of Ali Ra. While the other three silver currency is printed in Damascus and Merv around 60-70 Hijri ..In the Caliph Umar and Uthman, the currency was also printed by following the style of Persian dirhams, with changes to the text contained in these currencies with the Arabic script. Indeed, in the reign of Umar had the thought to make money from the skin, but it was canceled, because it is not approved by another friend, the reason is not very durable and could not match their intrinsic gold and silver.Currency Islamic caliphate that has special characteristics, newly minted during the reign of Imam Ali ra But unfortunately, very limited circulation, because the political situation when it is very unstable. Concentration was more terpokus caliphate in the chaotic political issues like war and the Battle of Siffin camel.Persian style dirham currency printed with pictures of Iraq at the time of Muawiyah sword, and his son Ziyad. Outstanding eye was not round like coins today. New at the time of Ibn Zubair, a currency is printed with a round shape, but its circulation is limited in the Hijaz. While Mus'ab, governor of Kufa scored with two different styles, there are Persian style, and there are Roman style.At 72-74 H Bishri bin Marwan print currency called atawiyya. Up to this time of the caliphate currency in circulation along with the Roman dinar, dirham and a little Persian Himyarite Yemen. New at the time of Abdul Malik (76 H), the government established a mint, among others, in Dara'bjarb, Suq Ahwaz, Sus, Jay and Manadar, Maysan, Ray and Abarqubadh, and currency printed khlifah organized by government controls.Value for money is determined by weight. Dinar contain 22 carat gold and consists of fragments and a third and a half dinar dinar. Small fragments obtained by cutting the currency. Imam Ali for example, never buy meat by cutting two carats of dinars (Hadith History Abu Daud). United composed of several fractions nash (20 dirhams), nawat (5 drams), and sha'ira 1/60 dirhams.Dinar-dirham exchange rate relatively stable in the long period of time with 1:10 dirham exchange rate. means that 1 dinar equal to 10 dirhams. One dinar consists of 22 carats, while the one dirham consisting of 14 rust. Umar during the dirham rose, if at the time of Prophet 1 dirhams to 10 dirhams worth, then in the Umar bin Khattab, 10 dinars worth 7 dirhams.Monetary reform ever undertaken by Abdul Malik, the dirham is converted into 15 carat (no longer a 14 karat) and at the same time, the weight of the gold dinar be reduced from 4.55 grams to 4.25 grams. At the time of Ibn Faqih (289 H), the dinar rose to 1: 17, but then stabilized at the rate 1:15.After the monetary reform of Abdul Malik, the measures of value are as follows: single dinar 4.25 gram, one dirham, 3.98 grams, the equivalent of 90 mitsqal uqiyya, one qist 8 ritl (liter), equivalent to half-sha ', one qafiz 6 sha 'equivalent ¼ artaba, one wasqs 60 sha', one jarib 4 qafiz.It was surprising that a thousand years later the 1:15 exchange rate is also applicable in the United States 1792-1834 m. Unlike the monetary reform measures taken by Abdul Malik, the U.S. still maintains this rate even in countries erofa value of the currency exchange rate in the range of gold rose to 1:16,6 1:15,5. wal result, gold flowed out of the currency and the currency used to flow into the United States. Incidence of bad money drives out bad quality or money to replace money good quality.Five hundred years earlier (1263-1328 AD), Ibn Taymiyya Islamic cleric who lived in the reign of the Mamluks was experiencing a situation where the currency has been circulating in large numbers to the value of the precious metal content different from one another.At that time the outstanding three types of money: dinar (gold), dirham, (silver) and money (copper). Circulation is sometimes refine dinars, while the wide circulation is money. This phenomenon is formulated Ibn Taymiyya that money with low quality (money) will kick in money out of good quality (dinars and dirhams).
At the time of Ibn Taymiyya lived, Mamluk rule was marked by instability of life. Mamluk rule was marked by instability of the monetary system, because of the money in circulation or increasing the amount of copper in dirham currency to replace. It is also common in these modern times. Damage to the modern monetary system has caused a crisis in many countries and infalsi the craze. Damage to the monetary system that lies in the use of paper money that exceeds the limit. Printed paper money as much as possible without having a limit or standard gold reserves held. Therefore, since the gold standard was abolished in 1971 by Richard Nixon, many countries experienced repeated crises, including Indonesia.The new paper money system lasted about 300 years, has been shown to cause a lot of disasters in various countries. While the dinar and dirham currency that has lasted over 3000 years of history is evident in the catastrophic financial crisis, because its face value and this condition does not invite speculation with margin trading, it is today.To return to the use of gold and silver, is something very difficult. This is due to the limited number of gold and silver reserves. As a result, transactions in the economy needs rapid acceleration, not worth the gold reserves that are available. Petumbuhan more economic activity and very diverse. Obviously not possible to offset the amount of gold production that can be produced by mines all over the world. These conditions make the printing of paper money no longer need to be secured by a reserve of gold or precious metals.This reality, then invite currency speculation business of the so-called virtual transactions. Money has been used as a tradable commodity, rather than to the needs of the real sector. In fact, the concept of Islamic economics, money should not be used as a commodity, because it expressly prohibits the Islamic economy currency speculation.B. Functions of Money According to Islamic ShariaFrom the above description shows that according to Islamic economics, in view of money as a medium of exchange, not a commodity. Aside from being a medium of exchange, money also serves as a measure of price (standard value), it is appropriate definition of money formulated denbgan Taqi al Din An-Nabhani, the book An-Nizam al-Iqtishadi Al-Islami. He says money is the standard value of the goods and services. Therefore, Islamic economics, define money as something that is used to measure the price of any goods and services.Acceptance of the role of money is, broadly, in order to facilitate the transaction process, as measure and eliminate inequality and injustice in economic exchange. Because of injustice in the barter economy, classified as usury fadhal. Bartering is an exchange methods are not practical and generally menunjukkaan much pettiness in the market mechanism. So, it takes a system of appropriate practical exchange, ie money.Later, as civilization advances, the money was developed as a measure of value and medium of exchange. Prophet Muhammad approved the use of money as a medium of exchange. He did not suggest an exchange, because there are some practices that lead to injustice and oppression. Barter is only acceptable in limited cases. The Prophet advised to sell a product with money, and buy another product with the priceThus, Islam is very supportive tungsi money as a medium of exchange of (a medium of exchange) as many of the traditions that the Prophet did not advocate barter, but strongly recommends the purchase and sale transactions between the currencies are faced with the goods and services. Examples of traditions that are clearly found in the Hadith Muslim Shaih, as follows:حديث أبي سعيد رضي الله عنه قال: جاء بلال بتمر برني فقال له رسول الله صلى الله عليه وسلم من أين هذا فقال بلال تمر كان عندنا رديء فبعت منه صاعين بصاع لمطعم النبي صلى الله عليه وسلم فقال رسول الله عند ذلك أوه عين الربا لا تفعل ولكن إذا أردت أن تشتري التمر فبعه ببيع آخر ثم اشتر به *Ra of Abu Said, said: "On one occasion, Bilal came to the Messenger of Allah brought Barni dates. Then the Prophet asked him, "which dates from this?" Answer Bilal, "Dates are low quality. Therefore kutukar two bushels to one bushel of food dates to the Prophet. "Then the Prophet said, This is called usury. You do not ever do it again. If you want to buy dates (good), kurmamu first sale (less good), then with that sale money to buy a better date. "Another hadith narrated by Ibn Yasar Ata, Abu Said and Abu Hurairah, Abu Said Al Kudri affirmed the recommendation of the barter trading: "It was the Prophet Muhammad, did not approve transactions with a barter system, it is recommended to best use the money. It seems that he forbade the form of exchanges like that because there are elements of usury in it ".The role of money as a medium of exchange and measure also appears from the hadith of the Prophet, when he requires that zakat on monetary assets (gold and silver). indirectly Prophet says, that money as a factor of production has the potential to evolve through the efforts of the real productive.If the money received as a pillar of production, then the provisions of decision manfa'at profits (results), should not be determined in advance without seeing the realization of such production. Determination of the initial portion of profits is usury and is not fair. Islam therefore menkonsepsikan sharing in the business world.Islam also has linked the gold and silver with sharia laws, as in jinayat (criminal). When Islam requires diyat, Islam has determined the diyat certain size in gold.Prophet had stated in his letter sent to residents of Yemen; Whereas in the murder of the soul is there diyat 100 camels, and the owner of the gold (no obligation) to 1,000 dinars. (Narrated by Nasa'i and Amri bin Hazam).When Islam requires that the punishment of hand amputation for theft perpetrators, Islam also specify a certain size in gold, which is a quarter of a dinar. ). Word of the Prophet "The hand must be cut if ¼ dinar or more steals" (Bukhari from Aisha).Provisions of law above shows that the dinar, dirham and mitsqal is the monetary unit used to measure (calculate) the value of goods and services. Thus, the unit of dinars and dirhams that is the money which serves as a measure of prices of goods and also as a medium of exchange.Seven hundred years before Adam Smith wrote The Wealth of Nations, a Muslim named al-Ghazali (w.1111 M), have discussed the functions of money in the economy.At length, he discussed the functions of money in the chapter "gratitude" to the book Ihya Ulumuddin. In that chapter he says, "Among Allah is the enactment ni'mat dinar and dirham. With the dinar and the dirham, the life of the world can be arranged, but both are nothing more than metal, the stuff that was originally nothing useless. But everybody is interested in both currencies, because everyone needs a variety of goods for food, clothing and other necessities ".Al-descriptions next Gahzali, on concepts of Islamic economics, it's amazing. But unfortunately, many Muslims who cites and examines aspects of the mystical, without reviewing the full contents of the book, so the discourse of Islamic economics is neglected.Al-Ghazali's thoughts are also quite amazing about the function of money is a theory which states that the money is like a mirror that has no color, but can reflect all the colors. (Ihya, 4: 91-93). That is, money has no value (intrinsic) but may be able to reflect on all prices. Or in terms of classical economics is said, money does not give utility (direct utility function). Only when the money was used to buy goods, then the item has a purpose.In classical economic theory says, the money arising from the use of its purchasing power. So the money provides utility (indirect utility function). Western economists debate any of this convention, the conclusion remains the same as al-Ghazali, the money is not needed for the money itself.
Referring to the Al-Qur'an, al-Ghazali criticized those who hoard money. Such people, he said as the villain. What's worse is that the dinar and dirham melted into gold and silver jewelry. They say the people who give thanks to Almighty God the creator, and a lower position than the person who hoards money. Hoarding cash means temporarily withdraw money from circulation. While the melting means pulling it out of circulation for good.In a modern monetary theory, slowing the accumulation of money means that the velocity of money. It means to lessen the occurrence of a transaction so that the sluggish economy. The fusion of money, the same meaning by reducing the amount of money supply that can be used to make transactions.In Islamic economics, as described al-Ghazali, the functions of money are as a medium of exchange and standard prices. Who is using the money not according to function, he has Kufr bererti favors the use of money. Hoarding money is a disgraceful act in the Islamic economic perspective, because he had been imprisoned for money and prevent the actual function. Said al-Ghazali, the accumulation of money just like the people that imprisons the Muslim judge, thus hampered the smooth perasidangan law. If the money is deposited only, then wisdom, his wisdom will be lost and the destination of the money did not materialize.
Dinars and dirhams of Islamic economics, is not specific to particular individuals, but the dinar and the dirham was created in order to circulate among humans, then judge between them, became the standard price and medium of exchange.Options to the gold sebagal medium of exchange that has a value attached to the substance (intrinsic value) is equal to the value rielnya, in fact, prevail throughout the world for centuries.Function of money as the unit value (unit of account), in which money serves as a standard measure of goods and services raises konsequensi to have the purchasing power of money. Currency gold dinar and silver dirham will still have the purchasing power if the money is still in its quality standards. Dinar and Dirham qualifications classical Islamic law according to which standardized by the Caliph Umar bin Khattab is 22 karat gold weighing 4.25 grams with a diameter of 23 mm and weighing 3 grams of pure silver with a diameter of 25 mm. Was nisabnya each dinar is 1 for versus 10 for United. For the present time the standardization of Dinar and Dirham Islamic conducted by the World Trade Organization (Wito)In the Islamic economy, the circulation of counterfeit money was heavily criticized. In the classical age of Islam, especially the al-Ghazali, counterfeit money is seen as the content of gold / silver do not match those set by the government. al-Ghazali said, print or distribute this kind of money are more dangerous than stealing a thousand dirhams. Because stealing is a sin, while the printing and circulating counterfeit money will continue to sin again and again the money was used, and would be detrimental to anyone who received it in the long term. That's smart al-Ghazali, long before Western economists appear, he already had a brilliant idea about the function of money, hoarding money, and the implications of counterfeit money.Furthermore, al-Ghazali discusses the concept of Islamic economics on the type of currency. He allowed the circulation of currency that did not contain gold and silver, as long as the government officially declared as a means to pay (Ihya, 4:192).

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