ABU YUSUF’S THEORY OF PRICE FORMATION AND ITS RELEVANCE TO MODERN MARKET MECHANISMS

Abstrak

The contemporary development of Islamic economics is deeply rooted in the intellectual legacy of classical Muslim scholars who addressed socio-economic issues in their time. One of the most influential figures in this tradition is Abu Yusuf, whose ideas on market mechanisms, particularly price formation, remain significant. This study aims to examine Abu Yusuf’s perspective on price determination and to analyze its relevance to modern market systems. The research employs a qualitative library research design, using classical and contemporary literature as primary sources. Data were collected through documentation and analyzed using content analysis. The findings indicate that Abu Yusuf opposed direct government intervention in price fixing, grounding his argument in Prophetic traditions that emphasize natural market dynamics. He asserted that price levels are not solely determined by production volume but are also influenced by the interaction between supply and demand. Market prices, therefore, should emerge naturally through fair competition rather than administrative imposition. Nevertheless, Abu Yusuf acknowledged the role of the state as a regulator responsible for ensuring justice, preventing monopolistic practices, and safeguarding public welfare. This study concludes that Abu Yusuf’s economic thought remains relevant to contemporary market mechanisms, particularly in promoting ethical pricing, preventing market distortion, and strengthening the principle of fairness in trade. His ideas provide an important normative foundation for modern economic policy by positioning the state as a guardian of justice rather than a price-setting authority