1

The notion of public goods, sustainable development and Islam

Paper for AWQAF Foundation of South Africa

AWQAF Seminar on Islam and Sustainable Development

Saliem Fakir, Director IUCN (World Conservation Union)-SA, 1 September 2002

Introduction

It is indeed a pleasure to be able to present some thoughts on the notion of public

goods. The importance of this to international politics and economy cannot be
underestimated. Its relevance to current debates in the World Summit for Sustainable
Development, and its consistency with Islamic philosophy and ethics concerning the
use of public goods for the achievement of broader social objectives has come at an
opportune time.

I must confess that although I have been a student of Islam, I do not wish to pretend
that I am an expert on Islam. Neither have I delved into the various interpretative
frameworks (tafsir) that already constitute the rich body of Islamic teachings that exist
in the different schools of thought in Islam. I will rather be approaching the issue
within Islam from a broad perspective, and not engage in the level of detail that
scholars would as a matter of course do, when seeking an Islamic perspective on a
specific issue. Mine will take more of a philosophical approach, and hopefully draw
some conclusions that will guide the opinions and thinking of Muslims for actions in
the future.

One of the central focuses for the World Summit, and which underpins all its major
proposals is the recognition that for sustainable development goals to be achieved
global poverty needs to be eradicated. This cannot happen without the willingness of
rich countries to be emphatic and support the creation and expansion of global public
goods or the management of these in such a manner that all of the citizens of the
world can derive mutual benefit from their use. It simultaneously, also requires that
leaders and the elite who possess power and resources in developing countries also to
show a great deal of responsibility in protecting the interests of their fellow citizenry.

If we are to achieve, the goal of an eco-economy, as promoted by one of the leading

thinkers in the field on this issue, Lester Brown, then it is clear no eco-economy 1
(where economic behaviour is consistent with ecological systems) is possible without
global social justice and the eradication of poverty. The root of all environmental
problems emanate from social inequity and conflict. These conflicts and inequity are a
result of oppressive forms of hierarchy and hegemony that continue to be exercised by
dominant powers in the world today. The greatest challenge today is the need to
deepen democratic traditions and the protection of human rights. These are the key to
ensuring the challenge of poverty I tackled with all seriousness that it deserves.

Poverty is to be understood in broader terms as the erosion of the capabilities of

individuals due to the denial of certain rights or the manner in which opportunities are
distributed in society. While there is a general tendency to focus the problem of
1
See his Eco-Economy, (2001) Earth Policy Institute, Norton Books, New York and London.
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poverty as being the result of the behaviour of poor people, it is also important to
focus on the behaviour of the rich in terms of how wealth is accumulated, distributed
or disposed of. In general, inequality is a result of the lack of proper system of
distributive justice.

What then is a public good?

The concept is a wide concept, and applies to resources that are both categorised as
human and natural capital. The importance though is that unlike private goods, a
public good has utility value that is communal or societal. The two key economic
principles regarding public goods, and that which distinguishes them from a private
good is that they should have the characteristic of non-rivalrous consumption and
non-excludability. In the first instance the consumption of a good does not deny the
ability of another person to enjoy the same privilege. In the second, a public good
produces a benefit which is impossible to exclude or prevent anyone else from
enjoying. Public goods are also becoming global in dimension and as a concept
guiding international policy, i.e., the concept of a Global Public Good, is still a
relatively new concept. In the natural resource sector, the use of oceans, and the
atmosphere are examples of global public goods where the use is not limited to one
nation but is open for all nations to use. The important thing about a public good is
that while benefits accrue to individuals, the good can only be accomplished through
the actions of a collective.

By its very nature a public good cannot be owned exclusively by an individual where
their exclusivity over a resource denies a right of access to other people. Public goods,
such as international security, the internet, environment, knowledge, and so on,
require the mustering of collective effort in order for such a good to be secured for
everybody’s benefit. In the case of a natural resource or human goods have to be
regulated so that its use has limited negative impacts that are likely to go beyond the
individual user to members of society that are either users on non-users of the
resource. It is also natural or feasible that some people or countries may derive a
greater benefit from a public good than others. For instance the eradication of malaria
in Uganda may provide a maximum benefit to Ugandans, but this still does not detract
from the fact that the utility of the treatment is of value to people outside of Uganda if
they would want to use it one day. The knowledge and expertise that is generated as a
result of developing the remedy for malaria is open for wider public use. This
knowledge can also be used by others and contribute to the development of other
forms of remedies.

A private good on the other hand is inalienable, and the benefit can only be secured
by a few who have the right of access or who are willing to pay to have the right of
access. An important point to remember, that increasingly as the world becomes more
globalised and integrated, a public good, such as knowledge has more global
dimensions to it than being merely confined to a particular sovereign State. The
establishment of a global public good system, particularly for environmental goods,
requires the maximum amount of countries to act collectively. The incentive to act as
a collective should be high enough for global collective actions to be effected. If only
a few countries participate, others derive a benefit at the cost of the investment of a
few. This leads to what economist call a ‘free rider’ scenario. It is for this reason that
implementing environmental targets, as have been set out in the Kyoto Protocol, are
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daunting. If a major player like the United States rejects the Kyoto protocol, it is a
sufficient incentive for others not to collaborate.

Public goods are instrumental in dealing with some of challenges of poverty globally.
In most instances where public good systems are created, they also help to determine
the investment patterns and objectives of civic and private holders of capital, services
and goods.

What is the importance of public goods in the current political and economic
context?

There is generally a perception, and in fact, in many cases it is true that the ethos that
informed the idea of public goods is being eroded by the dominance of the idea of
privatisation or the idea of private goods. It is assumed that the management, and the
maximal benefits can be derived if the good is in control of private hands. The tilt is
far too much on the end of private goods that the very philosophical underpinning that
informs the utility value of public goods is being lost in modern economic and
political life. Given that much of the debate on sustainable development issues is
focused on poverty at the Summit, the role of public goods in supporting this
objective becomes ever more critical. It is also assumed that if markets are allowed to
reign, then the markets will lead to efficient allocations of scarce resources where it is
needed most. This is all proving to be false. One of the key reasons why State
intervention in creating a public good is precisely because the markets have failed,
and if it does not act, resources will not be allocated where it is needed most. Markets
if anything have often proven to defeat the ends of social welfare and justice. They
work best, where State supervision and regulation are able to monitor and ensure that
the market acts responsibly.

This erosion of a key principle enshrined in the notion of a public good, that
underpinned much of our civilization, has happened over the last 30 years or so. In the
1980s with the rise of Reagonomics and Thatcherite free market orientated
economics, a substantive role in managing and promoting the idea of public goods has
been whittled down. The mass scale privatisation of State functions in many
developed countries and now beginning to be felt in developing countries has led to
what was once seen as a public asset to fall under the control of private hands. In
order for a public good notion to regain legitimacy there has to be a revisiting of neo-
liberal economics and the role of the State. The spread of unbridled free marketeering,
and notions of free trade, premised on opening up markets for capital have not had the
desired intent on protecting the interest of developing countries. In fact, in free market
economies like New Zealand, the wholesaling of State assets-which is seen as a
virtue- is being revisited.

If anything, globalization, which has enabled markets and the global economy to be
dominated by the whims of financial markets -controlled by a few countries and
individuals-, and has often led to sovereign States being left powerless against their
impacts and in some cases the infringement of the rights of their own citizens.
Structural adjustment programmes instituted by the Bretton Woods institutions such
as the IMF and World Bank, have not helped poor countries but made them more
vulnerable too the risks global financial markets have generated. The net effect has
been the withering of the State. And, as we have seen in countries such as Asia and
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Russia with the crash of their currencies and economies, those most affected have
been their own citizens.

States which have been left powerless cannot determine national policy anymore
without being accused of scaring foreign capital or investment. For these States to
attract foreign capital, they have to give up significant autonomy and control of their
resources to either individual or foreign private or public corporations. Their ability
therefore to pursue economic planning and funding of national programmes that
support the interests of their citizens foremost is constantly being hampered and
slowed down because of their need to bend over to foreign interest. Recently, when
villagers from the Island of Aceh in Indonesia, took the big multinational company
Exxon-Mobil to court for human rights abuses, the US State Department intervened in
the affair. The State Department argued that the case undermines US interests and its
war on terrorism and is trying to get the case squashed. (Financial Times, August 6,
2002)

Perhaps the current crises in the USA, around corporate responsibility and the
corruption that is engulfing corporations may provide an opportunity for these issues
to be revisited. Indeed, people like Adair Turner, who is from the famous
management consulting firm, Mckinsey, in his latest book, ‘Just Capitalism’, is
beginning to ask whether neoliberal principles should not be revisited and reformed. It
is also clear that the role of the State, and transnational institutions such as the United
Nations, are critical in creating an enabling environment for the creation of public
goods and the spreading of the welfare which result from the creation of public goods.
However, Turner’s prognosis on the issue of rapacious liberalism is very insightful.
He writes:

“Global free trade cannot be pursued outside the context of other global issues, and
Britain’s (or preferably all of Europe’s) export policies should not be pursued without
moral concern for human rights and for the uses to which our exports will be put. To
some free marketers and to some business interests these assertions will be anathema,
an attack on market economics. But they are not. For market economics should never
be dogma, but a set of propositions about how we best achieve desirable ends. And
free markets should never be thought sufficient in themselves to meet the full range
of human aspirations: they have to be managed and moderated, domestically and
internationally, to offset imperfections, to achieve inherently collective rather than
individual objectives, and to deal with distributional issues.” (Turner, 2001)

It is clear that the more stable the State, and the larger its capacity to deal with both
internal and external forces the more capable it will be in pursuing a public good
agenda and paradigm. Therefore this issue of the State is central, and also an intrinsic
component of the debate around the creation of public goods. Public good services is
not solely dependent on the State making provision for this. Important public good
services are also being carried out by NGOs, religious organizations, labour unions,
and even businesses. The role of civic organizations is enhanced and complementary
if the State is able to paint the landscape, and creating the platform which allows
others to act in a complementary manner. The role of the State is to facilitate, make
interventions where needed, and to regulate where pernicious forces stand to
undermine a public good objective.
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This is more so now, as the net effect of globalization has been that the vast majority
of the people who live on this planet, are marginal to the mainstream economy. If,
anything globalization has resulted in the greater ‘informalization’ of the economies
of developing countries as State assets have been sold, and industries being gobbled
up by foreign capital. An important work by sociologist such as Theodor Shanin2-who
studied extensively Russian peasantry-are of the view that in fact the global economy
will always have two kinds of economies. One that is formal, and one that is informal
dominated by the unemployed or part-time workers whose sole purpose is merely to
subsist. The idea is not to see subsistence as an objectionable activity, but to
understand its nature and reduce the burdens under which it takes place. As Shanin in
an interview notes:

“They found that their way of life was completely the opposite of how a human being
in an industrial society survives. They didn’t have a job, pension, steady place to
work or regular flow of income. Families held a range of occupations from farming
and selling in the market to doing odd jobs or handcrafts. Their aim was survival
rather than the maximisation of profit. Rather than earn wages, labour was used
within family enterprises, or shared put among the village. Researchers discovered
the same way of life in Latin America, in South Asia-even Italy.” 3

His work is also corroborated by the work of the Latin American economist Hernando
de Soto, who found that much of Latin America’s poor survive in the informal
economy, and manage to make a living from limited resources and having for long
periods no formal employment, which has baffled conventional economic thinking,
because their activities are ‘hidden’ and not captured in national accounts. The vast
mass of poor survive using social networks, family and friends as a way of ensuring
social and economic security. They do live through hardship, but nonetheless have
developed remarkable and innovative ways of surviving against great odds. To a large
extent these people live through these hardships because the institutions of State in
their own countries have become dysfunctional, suffer from corruption, or have an
economic planning system that is geared to only cater for a ‘market orientated’
economy. With the collapse of the financial and banking system in Argentina,
economists would have expected people to starve, but instead Argentinians have
reverted to a system of bartering as a means of economic exchange rather than rely on
the cash economy.

The basic needs of the poor have to be juxtaposed against the conspicuous
consumption of the rich. Much of the formal economy is driven by the overproduction
of goods. In order for these goods to be consumed-most of which we do not need for
basic survival-they have to be branded and marketed so that a consumption pattern is
created rather than organically evolved premised on need rather then social and peer
pressure to consume in order to adhere to a certain lifestyle. This does not only have
social cost, but also environmental cost. We have a glut of consumer goods driven a
mass pop culture, juxtaposed, unashamedly, against a mass of poverty. Of over half
the world’s population living on less than $1 dollar day. This is a misappropriation of
resources on a grand scale.

2
He is also regarded as the father of peasantology.
3
Interview, New Scientist, August 2002.
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In fact, environmental experts, who have developed an accounting method called the
ecological footprint4, are able to show how an individual in a developed country
because of his/her consumption pattern, impacts on the environment. The footprint of
an average world citizen is estimated to be about 2.3 global hectares. That of a
German is 4.7 hectares and an American is close to three times the average at about
9.6 hectares. There is only 1.9 hectares of biologically productive space available per
person on Earth. If, the global average per citizen is already 2.3, then the consumption
patterns of rich countries far exceeds what is biologically possible to sustain into the
future.5

There is no doubt that the privatisation of a good has some value in some context, like
the management of a service that is clearly not used by all, or upon which all citizens
of a country are not dependent upon for their own survival or livelihood. You could
also have both a public and private good system living side by side with each other.
For instance general health care that is accessible and affordable to all citizens, and
then private clinics where citizens who can afford more sophisticated health care are
able to pay for such services. However, the choice of how much of our human and
natural capital is to be regarded as a public or private good is determined by the social
values of a particular society or cultural context. It has to be determined by the socio-
political context of the country and the pressing development objectives of each
country. Global markets are oblivious of this. They are not in most cases development
friendly. Given the integrated nature of our global economy, there is a need to view
issues of distributive justice not only as a national priority, but international as well.
The establishment of global public goods needs to be an essential component of
international mechanisms for distributive justice.6

Attaining global collective action on these issues is much more complicated though
when we have to determine these definitions and policies within a global community
of nations which adhere to different value systems, cultures and beliefs. The issue of
privatization is a major source of consternation. In some cases, like the management
of water utilities, which is seen by many developing countries as an issue of access
and a basic right, has lead to riots in countries like Bolivia. Water may in the future
become a private commodity in some countries, although it has a public good value.
A good example of the dangers and complexities associated with the privatisation of
what was generally regarded as a public good across civilizations for generations is
the question of knowledge. Wealth creation in the 21st century is becoming
increasingly knowledge dependent. Countries which are able to generate and access
this at the lowest possible cost will be the forerunners in terms of making economic
progress.(Anderson, 1999) It is for this reason that this issue is so politically
contentious.

4
Ecological Footprints (representing human demand) can be compared to the biological capacity
(representing ecological supply) in a specific region or the entire planet). When human demand exceed
ecological production, the natural capital (assets on which current and future generations depend)
declines. This situation is called “overshoot”, or the global ecological deficit. The Footprint assess use
of resources from all over the world.
5
This must also be gauged by the unprecedented growth of the global economy. The growth in world
output of goods and services from $6 trillion in 1950 to $43 trillion in 2000. Over the next half-century
the total global output for goods and services is expected to rich $172 trillion.
6
One such mechanism that has been mooted by anti-globalization activist is the establishment of a
global tax for financial transactions called the Torbin Tax. Proceeds from this fund would go into a
global fund that would support the creation of global public goods.
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The increasing privatisation of knowledge, through the use of the intellectual property
rights system is likely to impose constraints on economic progress and development
in the future. Although IPRs are managed through the World Intellectual Property
Organization (WIPO), they are enforced through trade agreements such as the Trade
Agreement on Intellectual Property Rights (TRIPS) which falls under the World
Trade Organization (WTO).7 For instance the South African government had to fend
off the attempts of big multinationals who wanted to institute IPR rules by trying to
force the South African government not to introduce a system of parallel importation
and compulsory licensing. In this way the South African government would be able to
make these drugs more cheaply available. Drugs companies, because they are
concerned about eroding shareholder profitability, use patents as a way of exercising
monopoly and justifying high prices for drugs.

Patents are a new frontier of exploitation and control, given that as the world becomes
more service orientated and globalised it becomes more knowledge dependent.
Knowledge will hold a premium value in the future, and the manner in which it is
shared and disposed off will be limited by the homogenisation of international IPR
rules. OECD countries hold 90% of the world’s patents, and therefore exercise a
monopoly over a good that limits the development potential of other countries. Patent
holders can exercise a monopoly over the use of the knowledge for 20 years. Once the
20 years is over, when the knowledge is made public, other innovations and
technologies may have superseded the patented technology. In recent years the most
disturbing trend has been in the biological sciences, where genetic sequences have
increasingly been subjected to patents.

This is all the more worrisome, if you consider that the Human Genome Project,
which was funded by public funds, had its whole ethos sacrificed, by venture
capitalist such as Craig Venter. Venter established a rival sequencing ‘factory’
through his company, Celera Genomics, to beat the public sector gene sequencing
programme. He did. But, not also without patenting a considerable amount of the
sequences, that limits scientific access and use. Countries involved in the Human
Genome project –dominated by the US and UK-agreed in 1996, on the island of
Bermuda that as soon as the genes have been sequenced they would deposit the data
on public database8 for the benefit of the global community. The Bermuda agreement
espoused the principles of free availability, scientific co-operation, and the
recognition that given that humans are special the material should not be the property
of any individual, group or country. The Bermuda agreement depicted a global public
good ethos in the purest and truest sense. (Ashburner, 2001) What the Bermuda
agreement tried to achieve is rapid advancement in human knowledge. Venter’s group
on the other hand infringed the basic principles of the Bermuda agreement by

7
The WTO, which was created out of the Uruguay round of trade talks has four main functions:
enforcing rules for international trade, to provide a forum to negotiate and monitor trade liberalization,
to improve policy transparency and to resolve trade disputes. The two important principles of the
General Agreement on Trade and Tariffs (the rules which the WTO enforces) are Article I which
argues that all members be given access to a particular country’s market as the most favoured member,
and Article II (national treatment), that all foreign suppliers be treated equally as domestic suppliers.
8
From the 1980s onwards scientist from all over the world have deposited information about gene
sequences on public DNA databases. Over 20 years some 50 000 scientist have contributed sequences
to the databank. These can be downloaded onto any computer when needed.
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commercialising the availability of the sequences to companies and researchers and in

so doing restricting access to this knowledge.

Patents must be seen as an economic inefficiency, by the mere fact that they allow a
monopoly over an idea to be exercised for such a long period. Such economic
inefficiencies are already evident in the biotechnology industry, where there are
numerous patent holders of genetic sequences, protein models, and other biological
material. The ability for innovators to introduce new innovations is being impeded by
the fact that there are so many patent holders that they have to negotiate with before
they have the right to use the patent. Instead of being an incentive for innovation it in
fact is having the opposite effect of raising the cost of innovation. Some experts have
called this phenomena the ‘tragedy of the anti-commons’, because a swathe of private
holders of patents are creating barriers to invention, and in so doing potentially,
inhibiting the possibility of scientific and technological progress.

The effect of patents, where its earlier intention was to protect the right of the
inventor, and to ensure the inventor was not exploited has been subverted by
monopolistic tendencies. Patents have been tainted by the ethos of greed. Where
protection is merely seen as an end to achieving monetary rewarded. It has lost all its
social good value which traditionally informed a patent system. They have in effect
become monopoly goods. Once again this monopolistic tendency is reinforced if there
is a weak State. For instance if health care was still dominated by the State, it is more
than likely that the State which is the largest buyer of drugs, would be able to break
the price logjam that big multinationals exercise by hiking prices even though there is
a surplus of consumers.9 The Canadian government was able to do this. Also with the
lack of an international policy on competition, and the regulation of price for essential
goods, pharmaceutical companies can exercise price differentiation. This could lead to
least developed countries paying a higher price for a drug, and effect subsiding the
research and development cost of rich countries and their consumers. In general,
developing countries lack effective anti-trust mechanisms to protect them against
monopolistic pricing. Once again, this raises too the importance of better regulation of
competition at the international level.

A further reason why IPR is such an emotional issue is that innovation is only
possible because of the accumulation of a global commons of knowledge which is and
has been freely accessible for centuries. Developing countries have contributed
considerably to this pool of global knowledge, and feel that they have not been fairly
rewarded as result of innovations being exploited during the colonial era and present
exploitation of indigenous knowledge. Indeed, one of the persistent issues that keeps
on raising its head, in for a specifically dealing with the environment and
development, is the issue of technology transfer and the sharing of scientific expertise.
Developing countries have pointed out that sustainable development goals in their
own country cannot be achieved without developed countries offering significant
concessions in terms of their willingness to share more freely and in affordable
manner their technological and scientific expertise.

9
In classical economic terms if there was true competition and surplus of consumers prices of goods
should come down, not go higher. In the case of drugs, because of monopoly, prices in fact go up rather
than come down.
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Increasingly, global benefits from a global knowledge commons has favoured

developed countries because of the manner in which the IPR system has worked to
their advantage. This inequity in the distribution of benefits arising from a global
knowledge commons is an impediment to development in developing countries. As
the Economist Joseph Stiglitz notes: “I have argued that knowledge is one of the
critical keys to development and that knowledge is complementary to private and
public capital. Knowledge is a global public good requiring public support at the
global level.” (Stiglitz, 1999) The preservation of the ideal of knowledge as a global
public good still faces persistent threats. The latest is the attempt by the World
Intellectual Property Organization’s (WIPO) to establish a central global patent
system that will do away with national patent systems and laws. (Grain, July 2002) As
GRAIN-a advocacy group-notes that the implications are that by removing sovereign
responsibility over patents, patent policy cannot be used to pursue national
development strategies. In fact, patent policy, and the rights associated with it, will be
determined by powerful countries and corporations outside of the realm of national
democracies and legislative powers. National authority will be superseded by an
international regime, without possible proper avenues for appeal if a decision is
unfavourable.

The notion of a public good within an Islamic Framework

In the rather scant literature review I have done, I have not been able to find works
that speak specifically about a public good in the sense of the evolution of the concept
in western economic literature. Nonetheless, it is clear based on Quranic verses and
hadith that certain resources were regarded as public goods, viz: water, land and fire.
Fire for contemporary purposes may well be equated with the idea of energy.
Although, in Islam private property is accepted as a legitimate form of ownership, the
general ethos though is geared towards using property ownership as a way of
achieving largely social ends by using an individual’s entrepreneurial capacity and
ingenuity.10 Property rights come with the responsibility of custodianship. It has to be
used to achieve the ends of social justice. As the Shia Scholar, Seyyed Mahmood
Taleqani writes in his tract Islam and Ownership:

“…from the Quranic text, man is neither the absolute owner not the total possessor of
the earth and its resources. He does not have the right to possess as much as he
desires or to obtain material wealth in any way he may choose. Indeed, the earth’s
wealth belongs to God and man his vicegerent and servant. Indeed, because
vicegerency belongs to all people, each individual is a guardian of the public trust.
And, this ownership should be limited for the public welfare.” (1983)

In general, there are many indications that the notion of a public good, and public
good practices are central to an Islamic ethos. This principle is also extended to
owners of private goods in circumstances where a good, like food, which is essential
for the survival of humans cannot be sold at monopolistic or exploitative prices, but a
fair price so that it is made accessible, and the private owner fairly compensated. (Ibn
Taymiya, 1983) In the case of need the State has a right to intervene for the sake of
public interest and welfare. Another example, is when the State-and this was the
practice at the time of the Prophet Muhammed and his Caliphs-land (called hima
10
For instance in the three categories of land, mawat land, land which is dead belongs to anybody who
is able to bring the land to productivity once again. This is in recognition of their investment and risk
they have taken to bring it back to life again.
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land) can be set aside for the purposes of public utility where the need arises. (Dutton,
1992) The use of the hima system is still prevalent in some Muslim countries today,
especially in rural areas where himas are created to support animal grazing on a more
communal basis. The potential exist to apply this concept to other areas of use such as
the rehabilitation of degraded land, protection of biodiversity, wetlands etc.

In Islam poverty is recognised as breeding both indignity amongst the rich, and
amongst the poor the cause of the feeling of the lost dignity. Both breed contempt,
and conflict in society and erode the ability to create meaningful social contracts. It is
for this reason that Islamic precepts and institutions have a strong social and
distributive justice to them. A good example of this is prohibition on riba (interest) in
the Quran in an uncompromising way. Riba is seen as the most pernicious form of
exploitation and if encouraged leads to the erosion of social welfare by creating a set
of dependencies in the economy. For the practices of distributive justice and its
institutions to function there is a need for a State that is strong and willing to make
interventions where there are clear distortions in the economy that undermines social
welfare.

It is for this reason that the system of sharing and giving in Islam –which is the main
rationale for its system of taxation and moral admonitions-is aimed not only at
institutionalising the distribution of wealth, but also restoring dignity amongst the
poor, and inculcating generosity and empathy amongst the rich. The essence of the
Islamic social welfare system is pivoted around the need to protect human dignity.
Human dignity itself creates the sense of belonging, community and well-being the
effects of which are translated into positive actions in other realms of human activity.
Through the mechanism of taxation and moral admonitions Islamic traditions are
aimed at holding the integrity of community (ummah) intact. It sees the protection of
the whole as a sacred obligation that is not to be compromised under any
circumstances.

An Islamic economic system can only be understood in terms of the social objectives
it sets out for every Muslim individual that chooses to live in this society. Ironically,
this is not only limited to Islamic philosophy. In fact, the father of modern economics,
Adam Smith, espouses this as his central theme in his ethical thesis: “The theory of
moral sentiments” (1759). Smith saw the importance of social justice and the effect
private property can have in breeding a rapacious form of economic enterprise. While
he encourage the idea of free trade, he also saw the importance of moral empathy, and
the need for social justice. As Adam Smith writes:

“This disposition to admire, and almost worship, the rich and the powerful, and to
despise, or, at least, to neglect persons of poor and mean condition, though necessary
both to establish and to maintain the distinction of ranks and the order of society, is,
at the same time, the great and most universal cause of the corruption of our moral
sentiments. That wealth and greatness are often regarded with the respect and
admiration which are due only to wisdom and virtue; and that the contempt, of which
vice and folly are the only proper objects, is often most unjustly bestowed upon
poverty and weakness, has been the complaint of moralists in all ages”.

The ethical system that governs socio-economic policies in Islam is hinged around
four main tenets. They are:
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1. Unity (Tawhid) in which individual actions must conform to an integrated whole.

2. Equilibrium (Al’adl wal ihsan) in which individuals have the freedom to act, but must
do so with bearing the general well-being of the present and future generations.
3. Free will (Ikhtiyar) individual freedom is guided by a broader framework of duty to
community or society.
4. Responsibility (Fardh) individuals and society have the responsibility to use and
dispose of possessions and wealth in a responsible way. It is not to be wasted but
conserved. (Sirageldin, 2000)

Wealth creation for instance is not abhorred in Islam, and encouraged, but regulated
in terms of its future distribution and system of taxation through various precepts we
find through the institution of practises such as zakat, sadaqa, and the inheritance
system. While sadaqa (the giving of alms) is seen as voluntary, its universal practice
has acquired the status of ‘urf’ (custom) in Muslim societies all over the world. The
system of taxation was also extended to agricultural goods, certain kinds of commerce
such as mining, and taxation of goods of foreigners. The Baitul-mal (treasury), as a
State institution would then redistribute the collection of zakat to two categories of
poor, the fuqara (poor from Muslim communities) and masakin (poor from non-
Muslim societies). Funds from treasury were used to build roads, maintain security,
and support allies of the Islamic State.

In other cases mosques, universities, schools, libraries and scholarship was promoted
to ensure general societal benefits because it was identified as an essential public
good. It is also interesting to note that in the works of the classical Hanbali scholar,
Ibn Taymiya, he also sees the necessity of the state to establish collective industries
where certain essential goods have to be imported at great expense or where there is a
shortage of such goods in the market. (Ibn Taymiya, 1983) These goods could be
clothing or food. From Ibn Taymiya’s tract we also learn that with the creation of the
Hisba, while the right of ownership was honoured, the Hisba ensured that it was not
allowed to be abused. For instance the establishment of a flour mill or tanning factory
in a residential area that led to pollution was disallowed. Places of public amenity
could not become the exclusive privilege of an individual or a group. The benefits of
these amenities were for both rich and poor alike.

As the Islamic empire expanded during the period of the Umayyads and Abbasids, the
sponsorhip of centers of knowledge and accumulation of knowledge around the world
was not only of benefit to Muslim states and as historical research shows, such
investments have been critical to the revival of lost traditions of science, mathematics
and philosophy from amongst the Greeks, Indians, Persians and other ancient
civilizations. In fact, this investment in knowledge as a public good by Muslim rulers
has been of great benefit to modern civilization and the advancement of key sciences
in the West. This investment in knowledge which was not confined to any discipline
and crossed the bounds of culture and religion was an indispensable investment that is
often underplayed by western scholars.

The central role of the State was also extended onto issues of insurance. Unlike, our
societies where insurance cover has been left to the private sector, in Islam this was
seen as a State responsibility. There is also evidence that during the period of the
Caliphs, regional security, and forming of friendly relations, was seen as an important
way of ensuring security for Muslim societies. State taxes were also expended to
support good neighbourliness and cross-border security, even if the benefit did not
 12

exclusively accrue to the Muslim state. The Islamic system of economy has also been
characterised by the French anthropologist Marcel Mauss11, as having the
characteristic of being a kind of ‘gift economy’. As Mauss demonstrates, in his
anthropological study: ‘The Gift”, that the characteristic of a gift economy, seem to
have been an essential feature of most if not all pre-capitalistic societies.

The giving of alms in these societies-which amounts to the sacrifice by the rich of a
proportion of their wealth-was a way of creating a system of distributive justice
through religious moral persuasion and in some cases like in Islam were also enforced
by the State and certain religious rites. Given that the act of giving is seen as a
supreme virtue, the idea of a gift becomes an essential ethos of both the Muslim social
fabric and economic system. It is intrinsic to a Muslim’s way of being. One of the
virtues of giving is that the giver also prospers as a result of his/her giving. So what
occupies the Muslim mindset is that wealth that is created, is also given away soon
after its creation. Wealth creation, while meeting individual needs, therefore also has
a pure social objective, and not a private atavistic goal. This virtue is exulted by Allah
in Surah Tagabun, verses 14-18. The verses state:

Verse 15: Your riches and your children may be a trial. Whereas God, with Him is
the highest reward.
Verse 16: So fear God as much as ye can. Listen and obey; and spend in charity for
the benefit of your own souls. And those saved from the covetousness of their own
souls-they are the ones that achieve prosperity.
Verse 17: If ye loan God a beautiful loan, He will double it to your credit, and He will
grant your forgiveness.

The act of giving-that which is incumbent as a result of duty and voluntary volition-
and where one gives more than what is obligatory-will result in a barakah. A reward
in the hereafter, for all believers who commit in the way of God. Perhaps Mauss, in
his study of pre-capitalistic societies captures the essence of this act of giving
traversing many cultures, when he concludes on the moral lessons to be drawn. He
writes:

“Therefore let us adopt as the principle of our life what has always been a principle of
action and will always be so: to emerge from self, to give, freely and obligatorily. We
run no risk of disappointment. A fine Maori proverb runs: ‘Give as much as you take,
all shall be very well’”.

Given what I have described above, the maintenance of public goods that are not open
to private exploitation is consistent and an intrinsic component of an Islamic ethos.
Critical to this is the role of the State in ensuring that how these public goods are
created and maintained always promote the ends of social justice. Their main aim
therefore would be to create a distributive system that leads to greater opportunity by
individuals in that society wanting to maximise their own welfare. It is also clear from
an Islamic ethos that any human activity, that erodes a public good which is both
natural or human will be viewed as inconsistent with the ends of social justice. It is
for this reason that the institution of the Hisba12 has been an important institution in
11
A group of French economist have in fact established a Maussian society to promote Marcel Mauss’s
notion of the ‘gift economy’.
12
The term hisba over time came to connote the state institution that has the specific responsibility of
instituting public morals based on the injunction of ‘al-amr bil ma’ruf wa-n-nahi anil munkar’-
 13

Islamic societies to monitor and regulate public life as far as it concerns economic
activity. One of the crucial roles of the institution of Hisba was to regulate supply of
goods, so that no hoarding or monopolistic prices manifested, especially as it concerns
essential goods. Therefore the institution of Hisba represents a concerted attempt on
the part of Islam to maintain a balance between private interests and the public good.

Looking into the future

The only way in which national public good objectives can be secured and
implemented is if the issue of the role of global public goods is addressed
internationally. More fundamental, the global system of trade and finance needs to
have rules that accommodate public good objectives. The system of trade and finance
needs to be more poor friendly, and should work towards promoting greater human
welfare across the globe. Presently, this system is chipping away of what is left of
both national and global public goods. The consequence of this is that without
collective action on critical areas of concern for the global community there will be
greater human insecurity and conflict. The spread of benefits arising from global
public goods will also go a long way in spreading a global culture of empathy. While
globalization which is often promoted as a solution to global poverty by proponents of
the free market as maximising welfare, lacks a human face, and so far; has shown no
empathy towards the weak. Unregulated globalization has increased global poverty
levels rather than diminish it. The reform of trade, and the financial architecture are
seen as being critical to ensuring that globalization adorns more humane attributes.
However, the commitment to moving in this direction does not seem to be there.

For sustainable development to succeed it has to also have a strong public goods
dimension. Institutions such as the United Nations, which is a multilateral institution
can play a positive role in creating the climate to establish very clear public goods
objectives through their special programmes, such as the examples of the World Food
Programme, the Global Fund for AIDS etc. Ever since the UN negotiated the first
global environmental treaty on whales in 1946, it has overseen 240 other similar
treaties to protect the global commons, and strategic resources and forms of biological
life for present and future benefit.

The strengthening of the State is critical to ensure that strong States can secure
national interest first, but also act collectively to ensure that at the transnational level
collective actions are also supported to the mutual benefit of all participating
countries. This tilt towards supporting more public good objectives internationally
needs to be secured first if there is to be any seriousness to the claim that nations who
form part of the multilateral institutions are serious in tackling global poverty.
Securing, a strong State national is a pre-requisite to negotiating international
outcomes not only the interests of the State at stake, but also other like minded states
who are our allies.

However, the role of multi-lateral institutions is being undermined in the wake and
rise of unilateralism led by the USA. It is also being undermined by the fact that over
the last ten years the US has financially weakened the UN system. It is the largest
debtor to the UN, owing about $1.35 billion in back dues, which precipitated a
financial crises in the UN in the 1990s. The US’s share of the UN core budget is 22%
enjoining the good and repelling that which is evil.
 14

less than the 37% the EU contributes. Some commentators are of the view that the
US’s unilateralist stance, and its weakening of the UN, threaten to undermine
international law, and further exacerbates the divide between rich and poor nations.
(Simmons, 2002) Ironically, the US has been a party to numerous international
agreements that have a public good dimension to them, only to have abandoned them
later. Examples of these include it spending 6 years at the negotiating table,
negotiating the Biological Weapons Convention Protocol, only to force other nations
to abandon the idea, when it blocked a monitoring and verification system. It spent 40
years carving a Comprehensive Nuclear Test Ban Treaty, which it signed in 1996, but
was rejected by the US senate in 1999. The list goes on.

A second important indicator that we are up for a steep challenge is the relative
decline in overall development assistance to developing countries through global
programmes that have a public good objective behind them. At Rio, in 1992,
developed countries have set the target of 0.7% ODA as the target to be achieved if
sustainable development initiatives are to be financed. Only few countries have met
this or surpassed this target. The World Bank President, Jim Wolfensohn, called for
development assistance to be doubled, but this was met with deaf ears. ODA is
certainly not a panacea, but will go a long way in ensuring existing programmes
continue, but also new and innovative programmes are also created. One of the main
issues for the WSSD is the need to replenish existing funds with additional or new
funds to implement the various programmes of Agenda 21. There is a strong body of
opinion amongst experts that if for instance the fund for water and sanitation were to
be double, a considerable number of people lacking access to decent water and
sanitation facilities can be halved by 2015. One of the key areas for which actions are
being suggested as outcomes for the WSSD are the areas of water, health, agriculture,
education and biodiversity.

What are Muslims to do?

• As they say, charity first starts at home. Muslims as individuals should

understand and be conscious of poverty issues in their own countries. The
majority of Muslims in the world still live under conditions of abject poverty13,
which has not been adequately addressed, given that some of our Muslim
countries have vast natural resources which can be put to good use.

• Muslim countries through various regional blocs, and organizations such as

the Organization for Islamic Unity, will have to play a more strident
diplomatic role that promotes a form of internationalism that is based on
consensus and the general well-being of all nations. Because their own well-
being is dependent on the well-being of other countries it is also in their
interest to promote the creation of global public goods. Some Muslim
countries even have the resources to contribute funds towards their creation.

• Finally, for Muslims, that are to be regarded as the diaspora, there is a special
responsibility to promote good courses in their own country. Muslim
charitable organizations have an obligation to find innovative ways to deal
with the poverty challenges in their own country. Many Muslims occupy
13
In the case of the Arab world, the UN’s recent Arab Development Report, was highly critical of the
lack of progress by Arab countries in addressing the issues of poverty of their 280 million citizens.
 15

influential positions and can influence the direction of their government’s

policies.

References:

1. Anderson, K Globalization, WTO and Development strategies for poorer

countries, (1999) Center for International Economic Studies, Australia, Policy
Discussion paper No.99/01.

2. Ashburner, M Privatising our genes? Open democracy, May 2001.

3. Chapra, UM Islam and the Economic Challenge, (1992), The Islamic

Foundation, United Kingdom.

4. Dutton Y, Natural Resources in Islam, in Islam and Ecology, edited by Khalid

F and O’Brien, J (1992) World Wide Fund for Nature, England.

5. Gardiner, R and Le Goulven, K Sustaining our Global Public Goods, A

Briefing Paper, Heinrich Bohl Foundation, 2002.

6. Grain WIPO moves toward “world” patent system, July 2002.

7. Khan, M and Mirakhor, A Islam and the Economic System, (1992) Review of
Islamic Economics, Vol. 2, No. 1, pp1-29.

8. Ibn Taymiya, Public Duties in Islam: The Institution of the Hisba, translated
by Muhtar Holland, (1983) The Islamic Foundation, United Kingdom.

9. Mauss, M The Gift: The form and reason for exchange in Archaic Societies,
translated by W.D. Halls, (1990) Routledge, Great Britain.

10. Simmons, P.J Global Challenges: Beating the Odds, Policy Brief, Carnegie
Endowment Fund, August 2002.

11. Sirageldin, I Elimination of poverty: challenges and Islamic strategies,

Keynote address presented at the 4th International Conference on Islamic
Economics and Banking, August 13-15, 2000.

12. Stiglitz, J. E. (1999) Knowledge as a Global Public Good. Previous World

Bank Senior Vice President and Chief Economist.

13. Taleqani, SM Islam and Ownership, translated from the Persian by Ahmad
Jabbari and Farhang Rajee, (1983), Mazda Publishers, USA.

14. Turner, A Just Capital: The Liberal Economy, (2001), MacMillan, Oxford.