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Abstract
Introduction
1
Kahf, Monzer (2003). “Islamic Economics: Notes on Definition and Methodology’’- Review of Islamic
Economics, 13, pp. 23-47.
2
Akram Khan. (1404 AH) ‘Islamic Economics, Nature and Need’, Journal for Research in Islamic Economics, 1
(2), pp.55-61.
3
https://islamicmarkets.com/dictionary/a/al-falah Lit: To thrive, to become happy, to have luck or success.
Tech: It implies success in the ’Akhirah (hereafter).
4
S.M. Hasanuzzaman. (1404 AH) ‘Definition of Islamic Economics’, Journal for Research in Islamic Economics,
(1404 AH) 1 (2), pp.51-53.
5
Muhammad Arif, (1405 AH). ‘Toward a Definition of Islamic Economics’, Journal for Research in Islamic
Economics, 2 (2) pp.87-103.
4
To keep the economic life of man on the lines of equity and truth Islam has
down certain rules and has prescribed certain bounds within which the entire
system of production, consumption and circulation of wealth must operate.
Islam doesn't concern itself with the modes of production and circulation of
wealth. Those modes change with the progress of civilisation from age to age
and evolve out of human circumstances and needs. Islam requires that in all
ages and under all circumstances, the economic order of society must conform
6
Al Quran- Al Rahman 55:7.
7
Al Quran- Al-Infitar 82: 7.
8
Al Quran- Sa’d 38: 26.
9
M. Quraish Shihab, Wawasan al-Qur’an: Tafsir Maudhu‘i atas Pelbagai Persoalan Umat , Bandung: Mizan,
1996, 129.
5
to the principles and bounds prescribed by it. Islam holds that land and
everything in it has been created by God for the benefit of man. Hence it is the
birth right of every individual to secure his livelihood frim the land. In this right
a men are equal. No one can be deprived of this right, nor can anyone claim any
precedence over the other in this respect. The shariah excludes no individual,
race or class from availing of any means of livelihood or adapting any
profession. Similarly no distinctions calculated to reserve certain means of
livelihood or professions for some special class, race or family may be setup.
All men have an equal right and must be afforded an equal opportunity to share
in the produce of the God-made earth. The products of nature, in whose making
or finishing no man has expended his labour or skill are the property of all and
every individual has the right to avail of them according to his needs. Let‘s
trace, very briefly, emergence of this august economic system that has ‗social
justice‘ as its ultimate motive.
summarized in the transition from the Biblical ‗love of money is the root of all
evil‘ to G.B.Shaw‘s ‗lack of money is the root of all evil‘. Since the economic
system (capitalism, communism and socialism) is a major feature of Western
identity, engagement requires a Muslim response in these terms. This is
complicated by the fact that economics is not a high priority in Islam. As put by
Mufti Shafi11
11
Shafi Mufti Mohammad, Ma’s ala-e-Sud (The problem of Interest). Karachi). Karachi: Dar al- Asha’at, 1979.
(U).
12
Sadeq, A.H.M. and Ghazali, Aidit (Eds) (1992) Readings in Islamic Economic Thought, Kuala Lumpur: Longman
Malaysia.
Schumpeter (1974) suggests that economic thoughts did not occur to mankind during the five hundred years
between the Greeks and the Renaissance – the so-called ‘great gap’. Mirakhor (1983) fills this gap with the
economic thought of Muslims; see also Ahghari (1991) and Ghazanfar (2003). Khan (1983, 1991, 1998)
provides many more references in his annotated bibliographies.
13
Islahi, Abdul Azim (2008) Thirty Years of Research on History of Islamic Economic Thought: Assessment and
Future Directions, Conference Papers, The 7th International Conference in Islamic Economics: Thirty Years of
Research in Islamic Economics, Jeddah: 1-3 April 2008, pp. 123-134
7
And hold fast, all together, by the rope which Allah (stretches out
for you), and be not divided among yourselves; and remember
with gratitude Allah's favour on you; for ye were enemies and He
joined your hearts in love, so that by His Grace, ye became
brethren;14
Other verses15 state that all the treasure in the world cannot purchase love
between hearts. This prioritization of community feeling over material wealth
differentiates Islamic systems from the competitive self-interest based
individualistic systems at the heart of modern economic theory.
Islamic economics originated during the Golden Age of Islam, 622-661 CE,
when the Prophet Muhammad and the Rashidun16 practiced ‗brotherly
cooperation17‘ in economics. The ummah operated under the same codes of
conduct, and resources were allocated efficiently to ensure a high standard of
living18. It is believed that as ties to Islam weakened, so did global economic
growth in Islamic institutions19. Islamic social thinkers Sayyid Abdul-Ala
Maududi, as well as Sayyed Qutb and Muhammad Baqir al-Sadr, popularized
14
Al-Quran: Chapter 3 verse 103.
15
Al Quran: Chapter 8 verse 62, 63
16
Meaning “Rightly guided”.
17
Timur Kuran. 2004. Islam & Mammon: The Economic Predicaments of Islamism. Third printing, and first
paperback printing ed. Princeton: Princeton University Press, 89.
18
Ibid, 3.
19
Ibid.
8
the concepts behind Islamic economics in modern times based on their own
experiences and explained the civilization clash between Islamists and
perceived Westernization. It is seen as a practical counteroffensive against
Western aggression20. A few decades passed before the current form of Islamic
economics was brought to Muslim society, starting with Egypt.
The birth of Islamic economics as we know it today can be dated to the early
twentieth century. The needs of liberation movements gave a distinct shape to
Islamic thought all over the Islamic world. It was necessary to argue that Islam
required Muslims to struggle for freedom, and that it offered a better way of life
than the dominant Western systems of capitalism and communism. This forced
Muslim thinkers to delineate and distinguish Islamic socio-political and
economic systems21. Although these issues have been discussed by many
Muslim thinkers, two major figures devoted substantial energy and time to
developing the basis and defending the need for a distinct Islamic economic
system: Mohammad Baqir Al-Sadr22 in his book ‗Our Economy‟, and Sayyid
Abul A'la Maududi in numerous books and articles23, Chapra 24 summarises this
historical background and the views of Maududi, and gives citations to the
latter‘s numerous works. Chapra also remarks on the courage it took to
formulate an Islamic system and defend it against the dominant and apparently
tremendously successful Western systems in the early twentieth century. The
founders of Islamic economics (Al-Sadr25 , Maududi26) agree that the focus of
20
Supra 17.
21
There is no doubt that historical circumstances have strongly impacted on modern formulations of Islamic
economics, as well as political theories. This has led some observers to the mistaken belief that these theories
are additions to the corpus of Islamic beliefs – for example, Kuran (1997, p. 306) writes that “Bringing
economics within the purview of religion was, then, central to Mawdudi’s broader goal”. In fact, economics
has always been within the purview of Islam, but has never been separated out as a distinct subdomain or
isolated from spiritual and social concerns.
22
Al-Sadr, Muhammad Baqir (1961) Iqtisaduna translated as Our Economy, London: Bookextra, 2000.
23
Maududi, Sayyid Abul A'la (1970) Ma’ashiyat-e Islam [Economic System of Islam], Lahore: Islamic
Publications.
24
Chapra, M. Umer (2000) The Future Of Economics: An Islamic Perspective, Leicester : The Islamic Foundation.
25
Al-Sadr, Muhammad Baqir (1961) Iqtisaduna translated as Our Economy, London: Bookextra, 2000.
9
It is now widely agreed that good institutions and public participation in and
ownership of socio-political processes are crucial to progress and development
(broadly defined). Indigenous institutions, created and adapted to perceived
public needs, had been replaced during the colonial era by alien and exploitative
governance structures designed solely for the efficient extraction of revenues.
Replacing these relics of the colonial era and adapting them for use in states
26
Maududi, Sayyid Abul A'la (1947 [1041]) Insan ka Ma’ashi Mas’alah aur us ka Islami Hal, [Economic Problem
of Man and its Islamic Solution], Lahore: Islamic Publications.
Maududi, Sayyid Abul A'la (1970) Ma’ashiyat-e Islam [Economic System of Islam], Lahore: Islamic Publications.
27
This runs counter to the belief that European colonization brought civilization to primitive cultures. The
facile assumption that conquest proves superiority runs counter to historical evidence that savage tribes have
often over-run more advanced civilizations. Evidence for this point of view is provided in Marglin (2007) and
Mitchell (2002). Syed Hussain Ahmed Madani (1953) documents the destruction of numerous welfare and
educational institutions in India and the spreading of corrupt practices among the populace due to British rule.
10
Capitalism
break even line further away from the entrepreneur and crowds out
entrepreneurs who cannot afford to keep feeding capitalists. In this regard,
interest has a huge influence on allocation of resources. It influences the basic
economic decisions like what and for whom to produce.
Interest serves capitalists and allows them to accumulate wealth. This is evident
from the empirical statistics on inequality in income and wealth in second half
of the 20th century when monetary capitalism with institutional support
expanded in an increasingly integrated and global economy.
―Interest to-day rewards no genuine sacrifice, any more than does the
rent of land. The owner of capital can obtain interest because capital is
scarce, just as the owner of land can obtain rent because land is scarce.
But whilst there may be intrinsic reasons for the scarcity of land, there
38
See Exodus 22:25, Leviticus 25:35-36, Deuteronomy 23:20, Psalms 15:5, Proverbs 28:8, Nehemiah 5:7 and
Ezekiel 18:8,13,17 & 22:12).
39
(1936, p. 377).
13
40
(1932, p.358)
14
longer still. For only they can lead us out of the tunnel of economic
necessity into daylight‖
Among most recent economists, Krugman in his New York Times article titled
―How Did Economists Get It So Wrong?‖41 analysed the current financial crisis
in following words:
41
[September 02, 2009]
15
… So here‘s what I think economists have to do. First, they have to face
up to the inconvenient reality that financial markets fall far short of
perfection that they are subject to extraordinary delusions and the
madness of crowds.‖
Chapra44 viewed secular societies continuing to belittle the need for moral
development; though all of them now profess commitment to development with
justice. He emphasized that even material development with justice is not
possible without moral development. The rationale for this contention is that
development with justice requires an ‗efficient‘ and equitable use of all
resources and both ‗efficiency‘ and ‗equity‘ can neither be defined nor
actualized without the injection of a moral dimension into economic pursuits.
42
Samuelson, Paul (1948). “Economics”. New York: Harcourt and Brace.
43
Siddiqui, Muhammad N. (2002). “The Wisdom of Prohibition of Interest”. La Riba Annual Conference. Los
Angeles, C.A. March 30, 2002.
44
Chapra, Umer (1993). “Islam and Economic Development.” Islamabad. Islamic Research Institute.
16
5. Perfect Market i.e. price mechanism can have a minimum impact on socially
desirable allocation of resources; it works when there is perfect competition.
But, market imperfections even dilute this little influence that price mechanism
could have on socially desirable resource allocation when prices are completely
out of line of real out-of-pocket costs.
6. Social Darwinism i.e. richest are the fittest to survive by the sheer weight of
their purchasing power to influence the resource allocation.
Socialism
Some of the pioneer and well known social thinkers include Robert Owen,
Charles Fourier, Pierre-Joseph Proudhon, Louis Blanc, Charles Hall and Saint
Simon. Socialism was to act as a pre-cursor to Communism. Karl Marx
described socialism as a specific historical phase that will displace capitalism as
a precursor to communism. Socialism does not promise to make everyone equal
and pay everyone the same wages and replace market economy in a complete
sense. However, communism does promise income and social equality. Some of
the well known social leaders include Vladimir Lenin and Joseph Stalin. Some
of the important countries that tried Socialism include Russia, Hungary, Poland,
Romania, Vietnam, Yugoslavia etc. Just before Great Depression, the socialist
movement was at its peak. Most socialist countries fared very well in Great
Depression and only Capitalist countries suffered in Great Depression. This also
caused appreciation for Socialism at the point in history.
The predictions of Marx about Capitalism also did not materialize and his
Theory of Surplus Value was also criticized later on. The problem in
distribution of income in Capitalism from an Islamic perspective was only with
interest. Land has an intrinsic value and its owners receive rent on land. Labor
also earns wages even when the entrepreneur suffers loss. Value of production
i.e., prices of goods is not always sufficient to create surplus after paying wages,
rent and interest. While labourer earns wages for work it renders and the land
owner earns rent for the use of land, money cannot have a separate
compensation of its own until it transforms itself as capital and take the risk of
entrepreneurship along with an entrepreneur.
Though Mixed economy has solved some of the problems in laissez-faire and
Anarcho-Capitalism, but it still lacks an ethical foundation to foster social
46
Usmani, Muhammad Taqi (2003). “Islam Aur Jadid Maeeshat-o-Tijaraht” [Islam and Contemporary Economy
and Trade] . Karachi: Maktaba ma’ariful Quran.
47
Fukuyama, Francis (1992). The End of History and the Last Man. London: Penguin.
20
48
https://en.wikipedia.org/wiki/Great_Recession_in_the_United_States
49
The principle foundations of an Islamic economy by Hossein Askari and Roshanak Taghavi.
50
The Prophet is reported to have said that "poverty may sometimes lead to Kufr [a denial of God's
teachings]". Sottrce: Ul·Haq (1995, p. 86).
21
51
UL HAQ, I. (1995), Economic Doctrines of Islam, The International Institute of Islamic Thought, Islamabad.
52
The word knowledge, including its derivatives, is the second most repeated word in the Quran alter Allah
(God), and the Prophet is reported to have said that "striving alter knowledge is a sacred obligation/religious
duty for every Muslim" (see VI Haq 1995, pp. 207-08 and 222-23).
53
SACHEDINA, A.A. (1988), The Just Ruler in Shi’ite Islam, Oxford University Press, New York.
54
Ul Haq (1995, pp. 96-97). Note: Education and literacy-training for children and adults were (primarily)
provided by the state for free alter the Prophet immigrated to Medina. Source: Ul Haq (1995, pp. 100-01.
55
All men, according to the Quran, are obligated to financially support and care for their families. Source: Ul
Haq (1995, p. 93). The Quran does not require women to generate an income and financially support their
families. However, no Quranic verses speak against women working, earning a living, becoming financially
independent, and/or financially supporting their families. All citizens are consistently urged to work and
contribute to the economic and social development of society.
22
exploitation of the earth's natural resources, and has made the utilization of
these resources through hard work a religious obligation second only to
prayer56. Work is considered by Islam to be the most crucial aspect of economic
success, and hard work on the part of any individual - regardless of his or her
religious convictions - is the best guarantee for economic and social progress
Islamic law permits all forms of labor, production and economic commerce,
except for routine beggary and freeloading, and any vocations that may promote
social instability or political, economic or social oppression57.Recognizing that
an individual's capacity to produce may vary according to his or her talent and
ability, Islam does not call for perfect income equality and does not stipulate a
limit on the amount of income an individual may earn. It strives to reduce and
prevent exceptionally large inequalities in wealth and income, and thus requires
that employees receive no less than a living wage that can sufficiently cover
basic expenses58. Islam has left it up to the ummah to determine what minimum
or living wage value can adequately cover a worker's basic living expenses at a
specific point in time59.
According to Islam, work and investment are the only legitimate means of
acquiring property right so Islamic law maintains that all individuals have the
right to keep what they earn, and acquire a right of priority in the use of any
goods they produce. Property may also be transferred by means of an exchange,
56
See Quran 9:105: "And say [unto them, O Prophet]: Act! And God will behold your deeds". Source: Ul Haq
(1995, p. 93). The Prophet is reported to have said that "to strive to earn a livelihood through the right means
is an obligation after the duty of prayer" and "bread earned by one's own labor [or effort] is the best of all
earnings". Source: Ibid. (p. 154). Quran 4:95: "Such of the believers as remain passive [Literally, 'who sit at
home'] - other than the disabled - cannot be deemed equal to those who strive hard in God's cause with their
possessions and their lives: God has exalted those who strive hard with their possessions and their lives far
above those who remain passive". Source: Ibid
57
See Quran 2:11: "they are told, 'Do not spread corruption on earth" Quran 2: 205: "*…] and God does not
love corruption” Quran 7:56: "do not spread corruption on earth after it has been so well ordered" Quran 7:
85: "*…] do not deprive people of what is rightfully theirs" Quran 11:111: "And, verily, unto each and all will thy
Sustainer give their full due”. UL HAQ, I. (1995), Economic Doctrines of Islam, The International Institute of
Islamic Thought, Islamabad.p.109.
58
See Quran 4:33: "And unto everyone have We appointed heirs to what he may leave behind [000] give them,
therefore, their share".
59
UL HAQ, I. (1995).
23
contract, grant or inheritance. Ownership rights are held inviolable and private
property cannot be forcefully appropriated or confiscated. The violation of
legitimate property rights is considered by Islam to be oppressive and
exploitative60. Thus Islam recognizes the importance of institutions, the
guarantee of property rights and the enforcement of contracts to economic
growth and development. However, in Islam because natural resources (such as
raw land, water and mineral deposits) are considered to be a gift bestowed to
humanity by God, absolute ownership can only be claimed by God61. Because
humans did not actually create any of the world's natural resources, they cannot
exert unequivocal ownership over them. They may only privately own anything
they produce with their work or gain through legitimate investment and
inheritance.
An individual who earns more than what he or she consumes must pay a charity
tax, called zakah, which is calculated according to his or her leve1 of net worth.
Business capital and housing are exempt from zakah taxation in order to
promote investment in capital and construction and encourage home
ownership62. It is important to note that zakah is not a substitute for taxation by
the state, which may institute other forms of taxation to finance additional
social, economic, infrastructural and re1ated programs63. While Islam
encourages people to save their earnings after consumption, it denounces the
hoarding of wealth and views taxation as a mode of social investment64. It
reasons that because God bestowed natural resources to the entire human
population, all people are entitled to a share of world production. Thus those
60
MlRAKHOR, A. (2003), "General characteristics of an Islamic economic system", Global Scholarly Publication,
New York.
61
CUMMINGS, J.T. and H. ASKARI and A. MUSTAFA (1980), "Islam and modern economic change", in J.L.
Esposito ed., Islam and Development, Syracuse University Press, Syracuse, pp. 25-47.
62
Source: Ul Haq (1995).
63
ASKARI, H., J. CUMMINGS and M. GLOVER (1982), Taxation and Tax Policies in the Middle East, Butterworth
Publishers, London.
64
The terms 'taxes' and 'social spending' are used interchangeably throughout the Quran. See also Quran 59:7,
which says that "it [wealth] may not be [a benefit] going round and round among such as you may [already] be
rich". Source: DI Haq (1995, p. 140).
24
65
See Quran 9:60: "The offerings given for the sake of God (zakah) are [meant] only for the poor and the
needy, and those who are in charge thereof (who collect the tax), and those whose hearts are to be won over,
and for the freeing of human beings from bondage, and [for] those who are overburdened with debts, and [for
every struggle] in God's cause, and [for] the wayfarer: [this is] an ordinance from God - and God is All-Knowing,
Wise". Quran 70:24·25: "*…] in whose (the faithfuls’) possessions there is a due share, acknowledged [by
them], for such as ask [for help] and such as are deprived [of what is good in life]". Quran 51:19: "[But,]
behold, the God-conscious *… would assign+ in all that they possessed a due share unto such as might ask [for
help] and such as might suffer privation". The Prophet is also reported to have said that "charity is halal
(permitted) neither for the rich nor the able-bodied".
66
Ul Haq (1995, p. 200).
67
ZAMAN, S.M.H. (1999), Economic Guidelines in the Quran, The Islamic Institute of Islamic Thought,
Islamabad.
68
MlRAKHOR, A. (2003), "General characteristics of an Islamic economic system", Global Scholarly Publication,
New York.
69
Id., (1989, p. 25)
25
Prophetic saying that: "Nothing makes a poor man starve except that
with which a rich person avails in luxury‖.
Islam does not require social institutions built through infaq and sadaqah to
register with or be approved by a central political authority73. Thus by
advocating extensive popular participation in the development of society, Islam
70
Ul Haq (1995).
71
In Quran 20:118-119, Adam is told: "Behold, it is provided for thee that thou shah not hunger here nor feel
naked, and that thou shah not thirst here or suffer from the heat of the sun. The Prophet is reported to have
said: "He is not a faithful who eats his fill while his neighbour [or fellowman] remains hungry by his side".
72
See Quran 30:39: "And [remember]: whatever you may give out in usury so that it might increase through
[other] people's possessions will bring [you] no increase in the sight of God - whereas all that you give out in
charity, seeking God's countenance, [will be blessed by Him:] for it is they, they [who thus seek His
countenance] that shall have their recompense multiplied! Quran 3:92: "[But as for you, O believers,] never
shall you attain true piety unless you spend on others out of what you cherish yourselves; and whatever you
spend - verily, God has full knowledge thereof". Quran 2:276: "Allah [...] will give increase for goods of charity".
Quran 2:177: "True piety does not consist in turning your faces towards the east or the west - but truly pious is
he who believes in God, and the Last Day, and the angels, and revelation, and the prophets, and spends his
substance - however much he himself may cherish it - upon his near of kin, and the orphans, and the needy,
and the wayfarer, and the beggars, and for the freeing of human beings from bondage; and is constant in
prayer, and renders their purifying dues (zakah) *…] it is they that have proved themselves true, and it is they,
they who are conscious of God”.
73
IQBAL, M. ed. (1986), Distributive Justice and Need Fulfillment in an Islamic Economy, International lnstitute
of Islamic Economics, International Islamic University, Islamabad.
26
Islam holds that state authority is needed for the preservation, cohesion and
general welfare of society. It must be an elected body (although exact
procedures for elections are not stipulated) that maintains fiscal stability and
transparency, social cohesion and an adequate national standard of living. The
state's most fundamental duties are the alleviation of poverty and the prevention
of extreme income inequality (social and economic justice). Although Islam
ultimately holds the ummah responsible for the creation and administration of
public development institutions, it authorizes the state to intervene on the
community's behalf if an adequate living standard, referred to as fard kifaya, has
not been established and if members of the ummah stop making their zakah
payments75. The state authority, with the approval of the shura, may institute
any new policies it cansiders necessary for the restoration or attainrnent of an
equitable income distribution76. The state may therefore formulate its own
additional tax policies, borrow money and increase spending, if doing so will
result in economic growth77. Islam encourages state authorities to avoid
accumulating significant debt, however, and strongly discourages deficit
spending78.
74
Supra at 63.
75
The Prophet (Peace be upon him) is reported to have said: "The leader [or government] who has authority
over people is a guardian and responsible for them".
76
When asked about azm - taking a particular course of action - the Prophet is reported to have defined it in
this way: "It means taking counsel with the knowledgeahle people (ahl al ra'y) and thereupon following them
[therein]".
77
MlRAKHOR, A. (2003), "General characteristics of an Islamic economic system", Global Scholarly Publication,
New York.
78
UL HAQ, I. (1995), Economic Doctrines of Islam, The International Institute of Islamic Thought, Islamabad.
27
While the Islamic social order is not supposed to function as a welfare state, the
primary national authority must make sure that all citizens have a reasonable
standard of living. Thus if any members of the community cannot afford food,
shelter or healthcare and do not have easy access to education, the state is
obligated to provide it for them. The state must ensure the proper collection and
distribution of zakah funds, and may collect and administer zakah
disbursements if the ummah lacks the capacity to do so. It is also allowed to
provide non-profit and non-governmental organizations with zakah funds if they
need it. The state must stabilize and maintain the value of the national currency.
Because Islam prohibits the excessive accumulation and hoarding of wealth, the
state should not permit the presence of monopolies, and should formulate
economic policies encouraging investment and competition79. In cases where
the ummah is suffering from extreme income inequality and mass poverty -
putting its survival at stake -, the state is authorized to impose substantial taxes
on the wealthy to collect money for basic living expenses, and may restrict and
redistribute property rights80. Feudalism and absentee landlordism, for example,
are considered to be socially detrimental and un-Islamic, and would thus
warrant land confiscation and redistribution81.
The state is additionally required to preserve the ummah‟s internal and external
security, and must maintain amicable relations with other Muslim and non-
Muslim countries. Islam requires the state to maintain social stability by
promoting tolerance and opposing all forms of extremism, particularly religious
79
Verses reproving hoarding and the non-investment: Quran 102:1-6: "You are obsessed by greed for more
and more [comforts, material goods, greater power over fellow men and nature] until you go down to your
graves [...]. Nay, if you could but understand [it] with an understanding [born of certainty, you would indeed,
most surely, behold the blazing fire [of hell]!". Quran 104:1-9: "[Woe unto him] who amasses wealth and
counts it a safeguard, thinking that his wealth will make him live forever! Nay, but [in the life to come such as]
he shall indeed be abandoned to [...]. A fire kindled by God, which will [...] dose in upon them in endless
columns [overwhelming with despair as they belatedly realize their guilt]". Quran 107:1-7: "Hast thou ever
considered [the kind of man] who gives the lie to all moral law? Behold, it is this [kind of man] that thrusts the
orphan away, and feels no urge to feed the needy [ ... ] those who want only to be seen and praised, and,
withal, deny all assistance [to their fellowmen]!".
80
The Prophet is reported to have carried out such policies out for housing and cultivation.
81
Supra at 78.
28
Conclusion
82
The Prophet strongly condemned religious extremism, and actively struggled against pseudo-pietism and
zealotry. Whenever he encountered religious fanatics during his lifetime, he would warn them three times that
"the zealots will perish".
83
Ul Haq (1995, p. 107).
84
Ibid
85
UL HAQ, I. (1995), Economic Doctrines of Islam, The International Institute of Islamic Thought, Islamabad.
29
economic policies that are rooted in Islamic values, in order to meet a society's
shifting socio-economic needs. The few basic principles outlined in this paper
are the foundation upon which all policies must be based. All forms of
discrimination and zealotry are strongly condemned by Islam, which also
prohibits underdevelopment and significant income inequality. But Islam does
not require income equality, nor does it limit the level of income that an
individual may earn. Freely elected leaders are expected to work with society at
large to formulate policies supporting economic prosperity, public education,
healthcare and economic equity. All physically and mentally competent
Muslims are required to work for their livelihoods, and those with a sufficient
level of assets are obliged to pay taxes that help the state fund welfare and other
social programs. The ruling authority in an Islamic state must maintain social
and economic stability and ensure a fair distribution of income. Islam, however,
prescribes that it is up to the Muslim community itself to determine its specific
socio-economic needs and work to fulfill them. Fiscal efficiency, social
investment, achieving rapid economic growth and the dispersion of executive
power are thus intrinsic aspects of Islamic economic teachings. Freedom of
expression and belief, along with equal access for all citizens to education and
healthcare, are crucial elements of Islamic law. Fluidity is a fundamental aspect
of the Muslim economic and political systems, which may be modified as fiscal
priorities shift and social settings change. A Muslim is therefore obliged to
voice concern when he or she observes an unelected executive authority
institute rigid and harmful national policies. He or she is religiously obligated to
contest the rulings of that authority if they generate low or negative economic
growth, stifle social liberties, and do nothing to combat unemployment and
sexual or racial discrimination.
Islamic finance is now a material segment of the global finance scene. Whether
its emergence as a significant and competing force in the provisions of financial
30
services lives up to the Islamic economics paradigm and its world view remains
to be seen. There are some promising theoretical and empirical findings
pointing to positive contributions of Islamic finance to financial inclusion,
financial stability or even better economic development. Still, doubts remain
over whether Islamic finance can distinguish itself from its conventional
counterpart. Or, eventually, there will be convergence between the two, with
Islamic finance to be similar to conventional finance. At the same time, Islamic
finance is still besieged with its own issues, which include lack of
standardisation and harmonisation, insufficient human capital and talent, and
inadequate framework to address risks unique to Islamic finance. These issues
add to the need to have concrete demonstrable real effects of Islamic finance
which are in line with its Sharia objectives.