Chapter Two: Evolution of Islamic Economic Thought and Baqir al-Sadr
2.1. Early Development in Islamic Economics
Evolution of Islamic economic thought can be traced back to the earliest period of Islam. Right from the prophet’s period, economic issues have been addressed from different perspectives by various authors, in the context of different disciplines and in response to the need of respective times in the Islamic history. In the early Islamic economics five different dimensions of analysis are broadly identified. First, economic issues have been discussed by Mufassirin in the light of the holy Quran, For instance, discussions on the prohibition of usury and the encouragement of economic activities for human welfare. Second; economic issues have been discussed in the light of Fiqh. For example the legal aspects of Mudharibah and Musharikah have been dealt within this discipline in some great detail. Third; economic matters have been discussed by Muslims in the light of ethical system of Islam for moral development. The works of “Ulama, Sufis, Muslim philosophers and reformers come under this category. Fourthly, some good pieces of works, related to economics have been written by some great scholars of Islam in response to the needs of their times while holding important government offices. The works related to public finance, public revenues, land tax, public expenditure fall under this category. The book Kitab al Kharaj by Imam Abu Yusuf is one such example. Finally some Islamic Scholars and philosophers have provided objective analysis in the field of economics. The analysis made by Imam Ghazzali, Ibn Taimiyah and Ibn Khaldun fall under this category.
The economic activities practiced in the early Islamic period had a clear basis in the overall ethical and social philosophy of Islam. It was based on the guidance of Islamic Shariah with the aim of promoting public interests. The general principles were derived from the verses of the holy Quran and the necessary details and guiding principles were provided by the holy prophet. The economic system at the times of the prophet was not very complex. The prophet lived in a tiny state of Madinah and his economic policies were simple. After his demise (d.632 C.E.) the Islamic state crossed the boundaries of Arabian Peninsula, especially during the reign of caliph “Umar (d. 644 C.E.), this made imperative the need for an organized system which could effectively tackle the new economic challenges. Thus, in the light of the verses of the holy Quran and Sunnah of the prophet, various rules were adopted after mutual consultation (Shura) and consensus (Ijma) of the companions of the prophet. The main thrust of the consensus was that policies adopted must be based on the basic principles of Shariah and guided for the public interest.
Thus two more sources on Islamic economics got developed besides the holy Quran and the Sunnah of the prophet. These were consensus of the opinion and analogical reasoning of experts of Islamic law for the public interest. Afterwards, society expanded and gradually became more complex, newer and newer problems of personal, social, political economic and international nature raised their heads. The need then arose to carry an earnest research to find out the solutions of these problems in the light of the Quran and the Hadith and so was evolved al-Fiqh. The Fiqh did not remain confined to ablution, fasting, Hajj and Zakat but also encompassed other aspects of society including economics. This state of affairs continued during the period of Khulfai-Rashdin and Umayyads till the advent of Abbasids, when economic matters were given due importance and were attended with great care. It was in this period that many books on economic matters particularly on financial policy of Islam were written.
It is beyond the scope of this work to present Muslim economic thought over fourteen centuries, therefore, for the sake of convenience in the present study the economic history of Islam has been divided into various stages and a few representatives from each stage have been concisely discussed.
The Quran and Hadith being the divine sources cannot be included in economic thinking, because thinking is a human process, however it is necessary to throw some light upon their basic teachings in order to understand the basic principles that have been taken into consideration by Muslim thinkers while discussing the economic matters throughout the Islamic history.
2.2. Economic Teachings of the Holy Quran
The Quran provides a series of values, guidelines and rules which serve as the basis for developing an appropriate economic system. The many positive values discussed in the Quran include; justice, honesty, moderation and kindness to the disadvantaged while as injustice, greed, extravagance, miserliness and hoarding are termed as negative values. The Quran permits trade and identifies some prohibited economic practices such as Usury, Misappropriation and gambling. There are more than two hundred verses in the Quran which in one way or another concern economics; including zakat, permissible and prohibited goods, wealth, ownership of property, trade, credit and debt, fraud, associations and contracts etc. There are five areas of economic behavior which are prominently mentioned in the Quran, these include; Justice and social responsibility, acquisition of wealth, distribution of wealth, the protection of the disadvantaged and regulation of transactions through contracts.
2.2 (a) Justice and Social Responsibility
The Quran lays much emphasis upon maintaining justice in the society. Justice (“Adl) is to be upheld in all aspects of life including the economic one
. Those who pursue economic affairs are exhorted to act fairly, truthfully, honestly and in a spirit of co-operation. They are being emphasized to provide a fair description of the goods involved in transaction and ensure that proper standard of measure are used
. Those who commit acts of injustice are required to repent
. They are being warned that their punishment in the life hereafter will be severe
and even in this world they will have to suffer.
Many of the prohibited acts in commerce and finance are described as unjust such as dishonesty, cheating, fraud, misrepresentation of things and theft
.
The Muslim society is held responsible for maintaining economic justice both at individual and collective levels. This responsibility functions through the institution of “Enjoining what is right and forbidding what is wrong.” (Al-amr bi-al maruf wa nahi an-al munkar) and is regarded by the Quran as essential to social cohesion.
2.2 (b) Acquisition of Wealth
Quran highly encourages economic activities and direct Muslims to enjoy fully the bounties of Allah
. The Quran emphasizes repeatedly that all things in the universe belong to Allah. It is He who created them and allowed man to exploit them and placed them at his disposal
. However, men should distinguish between things lawful and unlawful. Qur’an ordains that wealth should be acquired by lawful means only and that unlawful ways and means should be discarded altogether: “O you who believe, take not your wealth among yourselves in wrongful ways, but let there be trade among you by mutual agreement
…” These “wrongful ways” have been dealt at length by the holy Prophet and the great Jurists of Islam have elucidated them in the books of law. Some of them, however, have been described in the Qur’an as under:
a. “And do not eat one another’s property among yourselves in wrongful ways, nor seek by it to gain the nearness of the judges that may sinfully consume a portion of other men’s goods and that knowingly
.”
b. “If one of you deposits a thing on trust with another let him who is trusted (faithfully) delivers his trust, and let him fear God, his Lord.
”
c. He who misappropriates (the public money) will come on the Day of Judgment with what he has misappropriated; then shall everyone be given in full, what he earned.
”
d. “The thief, male or female, cut off his or her hands.
”
e. “Those who devour the property of orphans unjustly, devour fire in their bellies, and will soon endure a blazing fire.
”
f. “Woe to the defrauders who, when take the measure from men, exact full measure, but when they measure or weigh for them, give less than is due.”
g. “Those who love that indecent thing should spread among the believers, for them is a painful chastisement, in the life of this world and the hereafter
.”
h. “Force not your slave-girls to prostitution that you may enjoy (some) gain of the present life, if they desire to live in chastity.”
And approach not fornication, surely it is shameful deed and an evil way.”
“The adulterer and the adulteress, flog each of them with a hundred stripes
.”
i. “O ye believers, wine and gambling and idols and divining arrows are an abomination-of Satan’s handiwork; so avoid them that you may prosper
.
j. “God has permitted trade and forbidden usury.”
“O ye believers fear God and give up what remains (due to you) of usury if you are believers (indeed). If you do not so, take notice of war from God and His Messenger. But if you repent you shall have your principal. Neither you wrong, nor shall you be wronged. If the debtor is in straitened circumstance, give him time till it is easy (for him to pay), and that you remit (the debt) by way of charity, that is the best thing for you, if you only knew.”
Thus Qur’an prohibits the following ways of acquiring wealth: taking ones property without his consent, bribes, forcible acquisitions, fraud, taking or giving wrong measure, business which spread indecency, prostitution, manufacturing buying selling and carriage of wines, gambling, manufacture buying selling of idols, and business like astrology, foretelling of faith, divination and usury.
2.2 (c) Distribution of Wealth
The Quran lays down a broader expenditure policy for fair distribution of wealth among the various sections of the society. The main objective of the Quranic principle of distribution is to avoid the concentration of wealth in a few hands
. The Quran repeatedly commands the faithful to give to the poor and needy
, to one’s parents and relatives
. Further it states that the reward for such a deed is great
. It links this giving to belief and warns of severe punishment for those who do not act generously
. Distribution of wealth and its prohibition of concentration are further reinforced by the laws of inheritance that the Quran explains
. Therefore, the Quran wishes that the wealth should remain always in circulation. On account of it the Quran criticizes stinginess and miserliness,
while as moderation is encouraged
, hoarding of wealth is strongly prohibited and those who disobey are warned of hell fire
. Similarly squandering property is also prohibited; in fact the society must prevent individuals from wasting their wealth
. Likewise extravagance is linked to corruption
with severe punishment to follow
. In the same vein individuals should not spend on prohibited goods or acts such as illicit sex, alcohol or anything that leads to the corruption of society or injury to others.
2.2 (d) Non Exploitation of the Disadvantaged
According to the Holy Quran, wealth should be acquired by engaging in socially beneficial activities which take into account the needs of the weaker sections of the society. On account of it Quran prohibits usury because, it leads to the exploitation of the economically weaker people; the prohibition of usury is mentioned in four different contexts in the Quran. First, it emphasizes that usury strips wealth of Allah’s blessing
. Second, it condemns usury equating it with wrongful appropriation of property
. Third, it commands Muslims to avoid usury
& fourth, it establishes a clear distinction between usury and trade, urging the believers to take only the principle sum and to forgo even this, if the believer is unable to repay
. Increase of wealth by means of usury is forbidden on the ground that it is unjust and exploitative.
While giving a deep rooted nature of usury in Jahiliya and early Muslim society, the Quran declares that, those who transgress should be ready for the wrath from Allah and His prophet
. Since usury occurs largely due to debts, the creditor is commanded to give additional time to the debtor in case the later is facing financial difficulties, without charging any interest
.
2.2 (e) Regulation of Transactions Through Contracts:
In order to regulate the economic activities in the society, the Quran insists that transactions must be governed by rules so that there will remain no disputes among the people. For instance, to avoid misunderstanding or injustice, contracts should be written along with witnesses
. The Quran commands believers to fulfill promises
and contracts
and emphasizes that this is a duty for which they shall be rendered accountable on the Day of Judgment.
Honoring of obligation is a hall mark of the believers
. On the other hand violation of one’s commitment is prohibited
. Believers are also commanded to pay their debts
, give full measure
, return what is entrusted to them
and avoid fraud and cheating.
In this way a full-fledged economic system based upon equity and justice can be formulated by properly seeking the guidance from the Holy Quran.
2.3. Economic Teachings of Prophet Muhammad
There are numerous Ahadith, of Prophet Muhammad (Pbuh) which deals with various aspects of economics. Some of the chief economic issues discussed in Hadith include; ownership of property, earning one’s livelihood, development of land, wages, profit, capital, consumer behavior, Market mechanisms, partnerships and business transactions. Most of these Ahadith are the explanation of the Quranic verses related to economics. Both the Quran and the Ahadith provide necessary guidelines and rules which can help in developing an economic system based upon equity and Justice. The holy prophet actively participated in supervising economic activities in the society. He would often visit market places in order to find out the real nature of transactions occurring there. He would advice his companions to be fair while making any business deal.
It is narrated on the authority of Abu Huraira that the Messenger of Allah happened to pass by a heap of eatables (corn) He thrust his hand (in that heap) and his fingers were moistened. He said to the owner of that heap of eatables (corn). “What is this”, He replied, “Messenger of Allah, these have been drenched by rainfall.” He (the prophet) remarked, “why did you not place this (the drenched part of the heap) over the eatables so that the people could see it? He who deceives is not of me (is not my follower)
. In another Hadith, prophet has remarked that the defects of goods should be clearly revealed.
Uqba bin Amir reports, I heard the Messenger of Allah saying, “Muslims are brothers to each other. It is not lawful for a Muslim to sell something (to his brother) which contains some defects except what he reveals to him”
. In fact prophet has remarked that one who does not wish for his brother as he wishes for his own self is not a true believer.
It is narrated on the authority of Anas bin Malik that prophet observed, “No one amongst you believes (truly) till one likes for his brother or for his neighbor what he loves for himself”.
Islam guarantees the right to ownership private property and prophet has ordained the Muslims to safe guard their property. He has also made a distinction between private and public property.
Abu Huriara reports, a person came to the Messenger of Allah and said.” Messenger of Allah, what do you think of a man who comes to me in order to grab my possession”? He said: “Don’t surrender your possession to him.”He (the inquirer) said: if he fights with me?”He (the prophet) remarked; then, fight (with him)”. He (the inquirer) again said: “what do you think if I am killed? “ He (the Prophet) observed: “you will be a martyr.” He (the inquirer) said.” Messenger of Allah, what do you think of him, (if) I kill him”. He (the Holy Prophet) said, “He would be in the fire.”
In another Hadith Abdullah bin Amir Says that prophet has said, “He who dies in protecting his property is a martyr.”
To prevent cheating, injustice, dishonesty and exploitation, prophet has forbidden certain unethical trade practices, these practices were prevailing in Jahiliya Arabia.
Abu Hurraira reports that Allah’s Messenger has forbidden (two types of Transactions) Mulamasa nad Munabatha.
Abu Hurraira also reports that Allah’s Messenger has forbidden a transaction determined by throwing stones
and the type which involves some uncertainty (Bay al Gharar).
Abdullah ibn “Umar narrates that, Allah’s messenger forbade the sale called Habal-il-Habala which was a kind of sale practiced in the Jahiliyah period, in which one would pay the price of a she camel which was not born yet, but was likely to take birth.
Ibn “Umar narrates that, Allah’s Messenger forbade Muzabana and Muzabana is the selling of fresh dates for dried old dates by measure, and the selling of dried grapes for fresh grapes by measure.
Abu Bakr narrates that Allah’s Messenger said, “Do not sell gold for gold unless equal in weight, nor silver for silver unless equal in weight (and from hand to hand), but you could sell gold for silver or silver for gold as you like.”
It is also, forbidden to enter into transaction when somebody is already bargaining.
Ibn “Umar reports that Allah’s messenger has said, “One among you should not enter into transaction when somebody is already bargaining”
. Prophet has prohibited interception of goods before they reach the market. The seller of a commodity should be allowed to go to the market so that he can observe the actual situation there. Accordingly, he can sell his goods.
Ibn “Umar reports that Allah’s Messenger said: Do not go out to meet merchandise in the way, (wait) until it is brought unto the market”.
While making any business deal, both parties should get fully satisfied. The seller and the buyer can break the deal (if any of them wishes) before they depart from one another. But that too should be done in a beautiful way, besides both the parties are advised to be truthful in their sayings. If both are truthful and honest they will be blessed in their sale. But if they are secretive and tell lie then the blessing of their sale will be destroyed. Hakim bin Hazam narrates that, Allah’s Messenger said, “The seller and the buyer have the right to keep or retain goods as long as they have not parted or till they part; and if both the parties speak the truth and describe the defects and qualities (of the goods) then they would be blessed in their transaction and if they tell lie or hide something, then the blessings of their transaction would be lost.”
In another Hadith Abu Hurraira reports that Allah’s Messenger said, “He who bought a goat having its udder tied up should go back with it, milk it, and if he is satisfied with its milk, he should retain it, otherwise he should return it along with a measure of dates”.
While economic activities have been highly encouraged by the holy prophet at the same time much emphasis have been laid on earning livelihood with one’s own hands consider the following Ahadith.
“Urwa “ibn Abu-al Jad al-Baraqi reports that the prophet of Allah gave him a dinar to purchase for him a scarified animal or a goat. He purchased two goats. He sold one of the two for a dinar and came to him with a goat and a dinar. He (the prophet) prayed for him for blessing in his business. The effect was that if he would deal in mud i.e. something valueless he would earn a profit on it”.
Another Hadith is reported by Zubair (bin Awwam) The prophet said, “It is better for any one of you to take a rope (and cut) and bring a bundle of wood (from the forest) over his back and sell it and Allah will save his face (from the Hell fire) because of that, rather than to ask the people who may give him or not.
In another Hadith which is narrated by Al-Miqdam, prophet has said, “nobody has ever eaten a better meal than that which one has earned by working with one’s own hands. The prophet of Allah Dawud (David) used to eat from the earning of his manual labor.”
On one hand earning livelihood with one’s own hands has been encouraged on the other, earning livelihood through begging has be disliked. Prophet has remarked, “when a man is always begging from people, he would meet Allah (in a state) that there would be no flesh on his face.”
Poverty is discouraged in Islam. Prophet has disliked it. Abu saeed Khudri reports, Allah’s Messenger (Pbuh) as praying, “Allah, I seek thy refuge from infidelity and destitution.” There upon a person asked: Are both (the things) equal, the prophet said, “Yes”.
Similarly earning through stealing and prostitution has also been prohibited Abu Hurraira reported that prophet has said: no plunderer who plunders a valuable thing that attracts the attention of people is a believer, so long as he commits this act.
Rafi b. khadij reported, Allah’s messenger as saying; the price of a dog is evil and the earning of a prostitute is evil.
Similarly much emphasis is laid in Hadith on spending in the way of Allah. Those who do not act generously are warned against a severe punishment. It is narrated on the authority of Abu Hurriara, Allah’s Messenger has said, “ whosever is made wealthy by Allah and does not pay Zakat of his wealth, then on the day of Resurrection his wealth will be made like a bald headed poisonous male snake with two black spots over the eyes. The snake will encircle his neck and bite his cheeks and will say, “I am your wealth, I am your treasures.”
Spending in the way of Allah is a means to acquire Allah’s blessings it is narrated by Asma bint Abu Bakr that the prophet Said, “Do not shut your money bags, otherwise Allah too will hold his blessings from you. Spend (in Allah’s cause) as much as you can afford.”
On one hand spending in the way Allah has been highly encouraged. On the other keeping something at disposal has been also considered good.
Abdullah bin “Umar reports that the Messenger of Allah Said, “The upper hand in better than the lower one, the upper being the one which bestows and the lower one which begs.”
In another Hadith Hakim bin Hazam reports, Allah’s Messenger saying this, “The most excellent Sadaqa is that after giving which the giver remains rich and the upper hand is better than the lower hand”.
Muslims have been emphasized to live a simple and moderate life. They should prefer the life hereafter over the worldly life and should not merely run after the worldly possessions.
Umm Salma, the wife of Allah’s messenger has said, “He who drinks in the vessel of silver, in fact drinks down in his belly the fire of Hell.”
Anas reports that Allah’s Messenger has said, “If the son of Adam were to possess two valleys of riches, he would long for the third one. And the stomach of the son of Adam is not filled but with dust. And Allah forgives those who repent”.
2.4. Economic Thinking of Eminent Jurists, Sufis and Philosophers up to 450 A.H
In this period the economic issues were discussed by fuqaha followed by Sufis and philosophers. Since the focus of fiqh is what is required by Shari’ah, therefore, the fuqaha have discussed economic issues in the light of that context only. They have focused upon the principles of permissions (Halal) and prohibitions (Haram) rather than providing descriptions and explanations of economic events of life. Some of the chief economic issues discussed in this period include;Mudaraba, Musharika, Muzariah, Mulamatha, Munabatha, Bay al-Gharar etc. Some of the important jurists of this period are Zaid b. Ali(d.120/738), Abu Hanifa (d.150/767) Awzai(d.157/774), Imam Malik (d.179/798), Abu Yusuf (d.198/798), Muhammad bin Hassan al Shaybani (d.189/804), Yahya bin Adam (d.203/818), Shafi (d.204/820), Abu Ubayd(d.224/838), Ahmad bin Hanbal (d.241/855), Yahya bin Umar(d.289/902), Qudama bin Ja’far (d.337/948), Abu Ja’far al Dawudi (d.402/1012), Mawardi (d.450/1058), Ibn Hazm (d.456/1064), Abu Yala (d.458/1066) and al-Imam al-Haramain al Juwayni (d.478/1085). The Sufis have talked about economic life in terms of Zuhd (asceticism) they have given less importance to the material world and have focused upon unselfish service to Allah’s creatures. Some of the important Sufis of this time include Hassan al-Basri (d.110/728), Ibrahim bin Adham (d.161/874), Fudzyl bin Ayad (d.187/802), Maruf Karkhi (d.200/815) and Dhunmun Mirsi (d.245/859).
Among the philosophers the mention may be made of Ibn Miskawiyh(d.421/1030), al-kindi(d.260/873), al-Farabi (d.339/950) and Ibn Sina (d.428/1037)
2.4 (a) Imam Abu Yusuf (113-182 A.H./731-798 C.E.)
An emphasis on the economic responsibility of the rulers has been a recurrent theme of Islamic economic thought since the early times of Islam. This happens to be the focal point of Imam Abu Yusuf who served as the chief Justice under the Abbasid caliph Harun al Rashid.
His book entitled Kitab al Kharaj
is written in response to the caliph’s queries on the state of religious percepts dealing with taxation problems, revenue administration and public expenditure. He writes, “The commander of the faithful (Amir al Muminin) asked me to prepare for him a comprehensive book to be used for the purpose of the collection of legal taxes, a book for him to study and act upon designed to overt oppression on his subjects and serve their interests”.
While writing on the subject of revenue collection Abu Yusuf prefers the state to take a proportional share on agricultural produce from the cultivators rather than levy a fixed rent on agricultural land. This was more just and likely to yield larger revenue by facilitating the expansion of the area under cultivation. Advocating the need of adopting the proportional method, he writes, “In my view the best system of taxation for generating more revenue for the treasury and the most adequate one to prevent injustice to the tax payers by tax collectors is the proportional agricultural tax. This system will alleviate injustice to the tax payers and benefit the treasury”
He also emphasis upon the ruler to adopt such policies that could secure the well being of the people and increase the general prosperity and welfare of his subjects. He observes that the work for general utility should be provided publically and free of any direct charge. He holds that all expenses occurring on the provision of public works such as construction of walls, bunds on the river banks to prevent floods and other developmental projects should be borne by the state. For the provision of better irrigation facilities to agriculture, his suggestion to ruler runs thus. “If these projects are likely to result in improvement and increase in Kharaj, you should order digging of these canals, all expenses are to be met out of the public treasury. Do not charge the expanses from the people of the area because it is better that they should be developed rather than ruined. Every request from the kharaj paying people for repairs etc involving improvements and betterment in their lands and canals should be granted as it does not harm others”.
However, if the project is for the benefit of a particular group, in such a case the cost will be properly charged. In regard to the cleaning works on privately owned canals he recommends,” the whole canal is to be cleared first and expenses should be charged from those who own it, in proportion to their shares in the canal.”
Abu Yusuf has a detailed discussion on the growth and development of the economy. He suggested various policy measures to be adopted by the state in order to increase the productivity of the land. According to him it is an obligation upon the ruler to arrange for the cleaning of ancient canals and excavation of new ones. He should also construct dams in order to increase the productivity of the land and income of the state. He clearly states, “The expenses of the upkeep of the walls on the river banks to prevent floods and expenses of the dams and of the water locks must be borne by the state treasury and that they should be kept in order, as any malfunction will cause damage to agriculture and decrease the income from taxation.”
Abu Yusuf provides a detailed discussion on the reclamation of dead and unclaimed land. About the ownership rights of these lands he holds that he who revives a dead land acquires the right of ownership to it and may continue to cultivate it or let it for cultivation, dig canals in it or otherwise, develop it for his benefit. He will have to pay Ushr Levy if the land is from Ushr category and Kharaj levy for Kharaj land.
He highly emphasizes upon the cultivation of these lands and categorically recommends that these unused lands must not be kept idle. He holds, “These resources (un owned/waste lands) are like wealth which does not belong to anyone. A just ruler should grant them to someone who promotes the interests of Islam and spends the wealth for a good purpose.”
2.4 (b) Muhammad bin Hassan al-Shaybani (132-189 AH/750-804 C.E.)
Muhammad bin Hassan al Shaybani wrote a small tract on Kasb (earnings) entitled as al-Iktisab fi’al rizq al Mustahab,
(book on earning a clean livelihood); In this short tract he discusses different ways of earning one’s livelihood. These ways include Ijarah (hiring out), Tijarah (trade), Zira’ah (agriculture), and Sina’ah (industry).
The various sharia’h rules for conducting these activities are noted. The author also describes the good Muslim’s consumption behaviour and emphasizes the desirability of charitable giving on the one hand and the undesirability of begging on the other. He criticizes some Sufis who shun economic enterprise but do not hesitate in accepting food from others who earned it. He also emphasizes that one must earn enough to meet his own needs in moderation, as well as spend on others especially those, whose financial support is obligatory. Beyond this, one is free to earn and save or not to earn more.
Muhammad’s another book kitab al Asl
discusses various types of transactions including Salam (prepaid order) Muharikah (partnership) Mudarabah (profit sharing).
2.4 (c) yahya bin Adam(d. 818 C.E.)
Abu Zakariya Yahya bin Adam was the contemporary scholar of Imam Abu Yusuf. He also wrote a treatise on revenue administration entitled Kitab al Kharaj.
The book contains Traditions relating to fiscal issues like the status of land, the problems of revenue collection, revival of dead unclaimed lands, matters related to the collection of sadaqat and Fay. The book contains six hundred forty Traditions on the subject of revenue administration. Yahya discusses some important fiscal issues in this book. About the revival of dead/unclaimed lands yahya holds that revival of land means that, one should open springs or ancient wells or conduct water to a land which was not cultivated or occupied by anyone before him and who cultivated or reclaimed it until it was fit for cultivation.
While emphasizing the importance of the revival of dead and unclaimed lands, Yahya holds that he who revives a dead land has its right of ownership.” He cites a hadith of prophet, “The original rights of ownership in land are God’s and the prophets and then yours afterwards. But he who revives any dead land acquires the right of ownership to it.”
Yahya also quotes Umar II, who wrote to one of his governors, “look into the state lands in your province and distribute them on the condition of crop sharing at half of the yield or even less, reducing the state’s share to one tenth. However, if the land is so infertile that nobody likes to cultivate it even to one tenth, give it for nothing, if even then there is no body to accept, spend on its cultivation from the public treasury so that no land under your control is neglected.”
However, if someone fails to cultivate a dead land, his claim on it becomes null and void. In such a precedent, Yahya reports that caliph Umar took away a land from Bilal (a companion of the prophet) when he failed to cultivate it and divided it among Muslims
. Yahya in his discussion on the status of conquered lands holds that the land taken forcibly from the enemy is at the disposal of the ruler, who using his discretionary power may make it a permanent source of income by leaving it in the hands of its subjects.
2.4 (d) Abu Ubayd (d.838 C.E.)
Abu Ubaid’s, Kitab al Amwal is a comprehensive work on public finance in Islam.
This book is not only a treatise on fiscal system of Islam but, it is also a treasure of information concerning laws, history, geography, administration and Jurisprudence. The book contains ninety three chapters in total. It is a good source of authentic Traditions from the prophet and the reports from his companions and those who followed them, on economic matters. While dealing with any issue, Abu Ubayd usually refers to the verses of the holy Quran, narrates Traditions of the prophet and practices of the pious caliphs and examines their various interpretations, putting out their strength or weakness, then gives his own opinion. While expressing an opinion, he gives reasons for preferring one opinion over the other. Overall the entire book can broadly be divided into two major parts, Part first starting from item number 1 to 895 deals with those sorts of revenue which are imposed upon and received from the non Muslim citizens of the Islamic state that is 1/5th of the spoils of were, Jizya, Kharaj and different forms of Fay. It also discusses the problems related to them. Part second; (paragraph number 895 to 1988) undertakes Zakat, (the compulsory religious obligation upon the rich Muslims for their poor and needy brethren) and its different forms.
2.4 (e) Qudamah bin Ja’far (d.932 C.E.)
Qudamah bin jafar is the author of another book entitled Kitab al-Kharaj.
Qudamah served as a finance secretary under two Abbasid caliphs’ al-Muqtafi and al-Muqtadir. Being personally involved in fiscal affairs, he wrote the book in the style of a government official and presented a summary of religious precepts of taxation as practiced in the first quarter of the tenth century. The book originally contains eight parts. Part seven of the book deals with and explains the matter of revenue and taxes. Qudamah has made Yahya’s kitab al Kharaj and Abu Ubaids Kitab al Amwal his source books. Besides these sources he also refers frequently to Abu Yusuf’s Kitab al kharaj.
2.4 (f) Abu Ja’far Nasr al-Dawudi (d.1012 C.E.)
Abu Ja’far Nasr al Dawudi was a scholar of the Maliki School of law. He also wrote a book entitled Kitab al Amwal.
This book is the specific work which treats the problems of taxation and land management from the stand point of Maliki fiqh. A distinctive feature of Abu Ja’far’s book is its treatment of the status of land in the provinces of al-Ifriquyyah, Sicily & Spain focusing attention on the nature of the area in order to impose land taxes accordingly. A whole chapter of the book is devoted to the responsibility of the ruler to exercise control on the financial corruption among officials. As a whole the book reflects the religious and practical character of its time.
2.4 (g) Mawardi (d.1058 C.E.)
Mawardi
wrote a treatise on government and administration entitled Ahkam al Sultaniah.
The chief issues discussed by Mawardi in this book include the duties of the ruler, public revenue and expenditure, public lands, common lands and the state’s prerogative to make land grants and supervision of the market. Mawardi regards fulfillment of the needs of every member of the society as an economic moral and religious obligation of the ruler. He holds that supply of drinking water to the city and construction of city walls for the purpose of protection are among the socially obligatory duties of the ruler.
The financial assistance for marriage is also considered as a basic need to be fulfilled by the state. Al Mawardi also holds that financial assistance for the wedding expenses of orphan girls is also one of the duties of the ruler.
Another book of Mawardi entitled kitab al Din wal Dunya
is richer in its economic content because, it focuses on the behaviour of the Muslim individuals. In this book he discusses agriculture, animal husbandry, trade and industry
as the four ways of earning one’s livelihood. He writes that it is alright to earn more than one needs for the fulfillment of one’s basic requirements with the intention of spending on good cause. But earning money for the sake of it and in order to amass wealth and claim superiority to others on that basis is bad. There is simply no end to greed which is destructive of all virtue.
Besides these treatises Mawardi has left a voluminous works on Fiqh, al-Hawi, a part of which has been published under the title Mudarabah.
It is a comparative study of the various schools of Islamic law on the subject of profit sharing.
2.4 (h) Ibn Hazm (d.456/1064 C.E.)
The vast scholarly work of Ibn Hazm
entitled Kitab al Muhalla
throws light on many important economic issues. Besides analyzing many fiscal issues, the book discusses in detail the financial administration of the state. Ibn Hazm also speaks about the responsibilities of the Islamic state towards the elimination of poverty and securing social justice. He has a clear view of the collective responsibilities of an Islamic society. He therefore, strongly advocates the rights of the poor in the wealth of the rich and prosperous. After quoting many verses of the holy Quran and the sayings of the holy prophet Ibn Hazan observes that, it is the duty of the rich that they should meet the needs of the poor and the destitute of their village or town, and if the treasury is not sufficient to meet their needs, then the state has the right to take their surplus wealth, if necessary, by force to meet the needs of the poor people in the community
. He further says that all the companions of the prophet have a consensus of opinion that if there is anyone hungry or naked or without shelter, it is incumbent upon the state to supply his needs from the surplus wealth of the rich (incase its own treasury is insufficient).
2.5. The Second Phase (450-850 A.H. /1058-1446C.E.)
In the second phase of the development of economic thought in Islam, Muslims started with the rich intellectual heritage left by their predecessors besides being directly influenced by the Quran and the Sunnah. At the same time they faced a political reality characterized by the disintegration of the central Abbasid rule and the division of the Islamic realm into regional powers largely based on force rather than people’s consent. There was high level of corruption which was followed by moral disintegration. With the decaying moral fabric of the society the gap between the rich and the poor was also on an increase. The Muslim rulers were less serious in terms of their economic responsibilities towards their subjects. Therefore, they were often reminded of their duties towards their subjects by the Muslim scholars. This age is also characterized by the prosperity of the people with brisk trade practices between the people. People in this age were paying huge taxes and levies to the government with little curb on economic enterprise.
This age, also witnessed a good number of Jurists, Sufis and philosophers. Some of the noteworthy Jurists of this period include; Shamsuddun al Sarakshi (d.483/1090), Nizamul Mulk Tsui (d.485/1093), Imam Ghazzali (d.505/1111), Ibn Mas’ud al Kasani(d.578/1182), Shirazi,(d.589/1193), FakhruddinalRazi(d.606/1210), Najmuddin,(d.654/1256), Ibn Taimiyah (728/1328), Ibn Ukhuwa(d.729/1329), Ibn al Qayyam (d.751/1350), Muhammad bin Abdur Rahman al Habashi (d.782/1300), Abu Ishaq al-Shatibi (d.790/1388), Ibn Khaldun (d.808/1404) al Maqrizi (d.845/1441).
Similarly some of the great Sufis of this time who also made a deep impact on successive generations of Muslims are al-Qushayri (d.465/857), al-Hujwari (d.490/1096), Abul Qadir Jilani (d.564/1169), Farid al-din Attar (d.622/1252), Ibn Arabi (d.638/1240), Jalaludin Rumi (d.672/1274).
This period is also known for its towering philosophers like Ibn Baja (d.533/1138), Ibn Tufayl (d.581/1185), Ibn Rushd (d.595/1198).
All these jurists, Sufis and philosophers have touched the economic issues in one way or the other in accordance with their times and situations. However, the present work will only focus upon the few economic insights of Abu Hamid al-Ghazaali, Taqiuddin Abul Abbas Ahmad Ibn Taimyah and Ibn Khaldun.
2.5 (a) Al-Ghazzali, (451-505 A.H. /1055-1111C.E.)
Economic thinking of the author of Ihya-al-ulum al din,
Abu Hamid al- Ghazzali
is an integral part of his vision of a rejuvenating Islamic life. In his book Ihya al Ulum al din, he devotes a separate chapter for economic teachings of Islam under the title, “Earnings and trade and commerce.”
Some of the important economic issues that he discusses in this book include buy and sale, advance payment money, lawful an unlawful ways of earnings, economic justice, economic behaviour and relation between economics and religion. According to Ghazzali there are four things necessary in earnings; earning through lawful means, justice, kindness and fear of religion
. While discussing the principles of buy and sale, Ghazzali observes that, no transaction is valid with a minor, insane, slave or a blind man
. However, Transaction with the slave becomes lawful with the permission of his master. Similarly, transaction with the blind man is lawful with the consent of his representative. It is also lawful to have transaction with unbelievers but it is unlawful to sell arms to them.
While analyzing the characteristic features of commodities for sale, Ghazzali observes that, the things for sale must be fit for transfer and must be known, fixed and certain. The contract for buy and sale must be expressed in clear and unambiguous terms. Intention plays an important part in it and no condition can lawfully be imposed by one party after the agreement is final.
Ghazzali also discusses advance payment of money and things. He observes that the conditions necessary in it are as the follows.
1. The quantity and the kind of the thing for which advance payment is made should be fixed.
2. The time and place of its delivery should be ascertained.
3. It should not be a precious or a rare thing like a precious jewel.
4. It should be an exchangeable commodity.
5. Its weight and time of delivery must be fixed.
While discussing the prohibition of interest, Ghazzali states that, interests arise only in two cases, in transactions of cash money, gold and silver and of food stuffs. Interest occurs in these two cases under two conditions; first sale is held on credit and not in cash; that is not to hand in hand transaction and second, more quantity is takes in lieu of the same kind of things. On account of this, it is unlawful to sell fixed quantity of gold or silver for a fixed quantity of more gold or silver. There is however, no fault in selling silver in more quantity in lieu of gold of less quantity, because they are different kinds of things and not of the same kind. It is also unlawful to receive in cash the value of a certain thing which is to be delivered in future. Similarly it is unlawful to exchange food stuffs of the same kind in cash or on credit. For instance a goat cannot be exchanged with mutton nor can wheat be exchanged with bread. It is also unlawful to exchange milk with milk products.
Ghazzali highly emphasizes upon maintenance of justice in business transactions, he strongly opposes ill economic practices like hoarding and monopolization of wealth, these practices leads market imperfections and hurts the interests of common people. He cites many Ahadith of prophet and stories of the pious persons in respect of the prohibition of hoarding. However, he allows, hoarding of such kind of things which are not principle food stuffs for livelihood like saffron and medicines. He also allows hoarding of food stuffs provided their hoarding does not affect the general public. In this way Ghazzali has provided due regard to the interests of the common people.
Ghazzali regards trade and commerce as a trail for believers. He emphasizes that one should do good to others while persuing any economic activity. He remarks that one should not make much profit in business and considers it an Ihsan
. However he is not against making much profit. It is better to buy at a higher price from a poor person and while purchasing from a rich person one may search for additional profit. He also regards payment of debt in a good manner as Ihsan
. It is better to go personally and pay the debt than to wait till it is demanded. He also remarks that one should not forget ones religion and hereafter, while one is in a state of business with others. If he forgets, he will be ruined and will be one of those who sell their next world in lieu of this world. His real capital is his religion and matters relating to the next world
.
2.5 (b) Ibn Taimiyah (661-728 A.H/1263-1328 C.E.)
Taqiuddin Abu al Abbas Ibn Taimiyah was primarily an author on Hadith, but his contribution to Tafsir and Fiqh are no less significant. He also wrote extensively on logic, philosophy mysticism and comparative religions. His economic ideas are reflected from his works Al Hisbah fi al Islam
(public duties in islam) Al Siyasah al Shariah fi Islah al Ra,i wa,l Ra,iyah
(Shariah policies on Reforming the Affairs of the Ruler and the Ruled). In his Al Hisbah fi al Islam(public duties in Islam) Ibn Taimiyah envisioned a well provisioned society organized on the basis of freedom of enterprise and private property with limits set by moral considerations and supervisioned by a just ruler enforcing Shariah and working for the welfare of the people. He describes the characteristic features of the Muhtasib in the following words, “The Muhtasib not only ordains the Friday congregation and other communal prayers. He also exacts truthful reports and the discharge of truths. He proscribes such abominations as lying and deceit, including the giving of small measure and weight and fraudulent practices in history commerce and religious matters etc.
” In the third chapter of the book he discusses the issue of price control in detail. He observes that it is wrong to control prices if it involves injury to people and forces them without any justification to sell goods at a price not agreeable to them. He quotes Anas bin Malik (The companion of the prophet), who narrates, “The market price rose in the time of the messenger of God, on him be peace, and they said to him: Messenger of God; if only you would fix the prices! But he replied: God is The Taker, The Disposer, The Scourer and The Controller of prices. I very much hope that when I meet God, no one will claim against me for an injury, I have caused him in blood and property
.”Ibn Taimiyah however, remarks that if the controlled prices involves just dealings between people and prevents them from doing unlawful activities, then it is not merely permissible but indeed obligatory. For instance when the owners of merchandise refuse to sell except for more than the reasonable value at a time people are in urgent need or when certain people have monopoly of particular commodities and goods are sold only to them and retailed by them. In these situations Ibn Taimiyah emphasizes that prices must be controlled, so that people will not suffer
. Another unique contribution of Ibn Taimiyah to Islamic economics is his emphasis upon partnerships based upon proportional shares, for example one third or one half. To take a fixed amount according to him would not constitute equity but rather injustice
. Ibn Taimiyah also vehemently condemns improper economic practices that involve cheating, fraud or speculation. He quotes many sayings of prophet against the trade practices like Mulamasa, Munabatha and bay al Gharar. Similarly, he also condemns hoarding and other ill economic practices that leads market imperfections.
2.5 (c) Ibn Khaldun(732-808/1332-1404 C.E.)
Ibn khaldun
was a historian and a social analyst. His Muqaddimah
is one of the greatest works in social, political and economic analysis in the Islamic tradition. Some of the main economic issues that he discusses in this book are division of labour, money and prices, production and distribution, international trade, capital formation and growth, trade cycles, poverty and prosperity, population, agriculture, industry and trade and macro economics of taxation and public expenditure. He defines commerce as a means to attempt to make a profit by increasing capital, through buying goods at a low price and selling them at a high price
. He regards profit as the value realized from human labor. He writes, “The part of the income that is obtained by a person through his own effort and strength is called profit.
”
According to Ibn khaldun prices are determined in the market by the interplay of both supply and demand. He writes, “When goods are few and rare, their prices go up, on the other hand, when the country is near and the road safe for travelling, there will be many people to transport goods, thus they(goods) will be found in large quantities and the prices will go down.
” He regards continued low prices as the main cause of business decline. He writes, “When the prices of any type of goods; food, clothing material or anything else that may bring in capital remain low and the merchant cannot profit from any fluctuation of the market affecting these things, his profit stops, if the situation continues for a long period. Business in this particular line slumps, no trading is done and the merchants lose their capital
.”
Ibn khaldun observes that the division of labour plays a very important role for growth and development. He observes that civilization and its wellbeing as well as its business propensity depend upon productivity and propelling efforts of people in all directions according to their own interest and profit. The way in which the productive powers of people can be utilized is through cooperation. He notes that production of staple diet like wheat requires six to ten different kinds of services. By coming together to supply all these services men are able to produce a quantity many times more than the quantity needed for their consumption
. In this way the surplus can be exchanged by the goods produced by others, thus leading to prosperity. He notes that the countries which have a surplus to trade with other countries are more prosperous than the countries that have little to offer for international trade. He observes that more profit can be secured by withholding goods till the market prices are again high and by foreign trade
. He strongly discourages hoarding. He observes that it can cause loss of profit. He writes, “Intelligent and experienced people in the cities know that it is inauspicious to hoard grain and wait for high prices….the reason may perhaps lie in the fact that people need food and they are forced to spend money on it. For things that are traded other than foodstuffs, people have no compelling need…. On things not really needed they spend their money willingly and eagerly and feel no attachment to the money they have spent.
Ibn khaldun has a wide range of discussion on economic growth. He talks about different types of crafts and their development. According to him crafts can improve and increase only when people demand them. If the demand for a particular craft decrease, the people engaged with that craft becomes dishearten and their interest decreases and if the situation continues, this results into the disappearance of that craft. In fact development of civilization and the refinement of crafts are complementary to each other.
2.6. The Third Phase (850-1350 A.H/1445-1932 C.E.)
As we enter into this period, the decline in independent thinking had already yielded to stagnation. But there is a fresh stirring during the last two centuries in which a number of thinkers and reformers called for a return to the Quran and Sunnah for inspiration and guidance. Notable among these are Shah Waliullah (1114-1176 A.H. /1703-1762C.E.), Muhammad bin Abdul Wahab (d.1206 A.H./1787C.E.), Jamaluddin Afghani (d.1294 A.H. /1897C.E.), Muhammad Abduh (d.1320 A.H./1905 C.E.), Iqbal (d.1356 A.H. /1938C.E.). The Jurists in this period were generally speaking content with writing footnotes on the works of their eminent predecessors and issuing fatwa in the light of standard rules of their respective schools. Although the gates of Ijtihad had long being closed, there are numerous insights to be found in the works of jurists like Ibn Najaym (d. 970/1562) and Ibn “Abedin (d.1252/1836). Similarly this period also witnessed the works of eminent Sufis like Sheikh Ahmad Sirhindi (d. 1034/1624) and a host of other writers. Among all the above mentioned scholars Shah Wali-ullah Dehlvi has significantly contributed in the field of Islamic Economics.
2.7. Shah Waliullah (1114-1176 AH-1703-1762 C.E.)
Economic ideas of Shah Waliullah
are found in his different works such as Hujjat Allah al-Balighah, al-Budar al-Bazigah, al-Tafhimat al-Illahiyah and his numerous letters that he addressed to different rulers, notables and friends. Starting from simple primitive village life to an international community, Shah Waliullah divides human society into four stages. These stages he calls as the stages of Irtifaqat. All his economic ideas are related to some way or the other to his concept of Irtifaqat or stages of socio-economic development.
2.7 (a) Al-Irtifaq al Awwal (The First Stage of Socio-Economic Development)
In the Irtifaq al Awwal, man becomes acquainted with food stuffs suited for his physical constitution and learns how they are to be eaten and digested, besides the ways of preparing and cooking them. He also becomes aware about different methods of cultivation, irrigation, harvest and preservation. He learns how to benefit from animals, their domestication and their use for different works such as ploughing the land, riding over them and benefiting from their milk, meat and wool. He also learns how to manufacture garments out of animal skin. In short this is an age of fulfilling the basic needs of food, shelter and clothing. In this stage the social organization is led by the person who possesses a higher quality of sound Judgment and powers to sub-ordinate others. There is a set pattern of rules to resolve the disputes among people. On intellectual level there are people who discover ways of socio-economic development according to their condition and other people become their followers.
2.7 (b) Al-Irtifaq al Thani (The second stage of Socio-Economic Development)
In this stage the various occupations of people are agricultural, grazing animals, acquiring the natural products of sea and land such as metals, trees, animals and different industries emerge such as; carpentry, Iron work, weaving etc. There is division of labour and specialization of work among people. The division of labour arises due to diverse needs of people which they cannot satisfy individually
. The division of labour and specialization may be on the basis of one’s ability for doing a particular job or it may be incidental. For Instance; the son of a blacksmith takes the work of Iron work. Similarly, the person living close of the sea may take the profession of fishing
. Shah Waliullah emphasizes that one should be very selective in choosing one’s job. He should not follow the blind tradition of his family.
He advises municipal authorities that they should be vigilant to people’s selection of jobs and should exercise some type of control if necessary to ensure that they do not concentrate on few jobs, leaving the others unattended, and to check engagement of more people in production of luxuries and their involvement in socially undesirable production.
Division of labour and specialization lead to the need of exchange which can be done easily through on object that can be used as medium. This leads invention of money. Thus, it is the second stage of socio-economic development in which the use of money appears. According to Shah Waliullah, money should be a durable object and commonly accepted by people in their transactions.
He mentions that Gold and Silver are most suitable to be used as money. They are easily divisible into small pieces, their different units have similarity and are of great benefit to human physique and may serve as adoration
.
While explaining the rationale of Shariah rules for prohibiting wrong ways of earning wealth, Shah Waliullah particularly takes up Grambling and Interest.
He notes that gambling amounts to acquiring wealth on the basis of people’s ignorance, greed, false hopes and exposure to risks and uncertainties produced by these conditions. Similarly, interest is prohibited because; it creates disputes among people and is a source of hatred and envy among them. It also causes decline in agriculture and industry which are fundamental means of earning a living.
Shah Waliullah considers interest in lending as the actual one (al-Haqiqi). He also takes note of barter exchange with inequality in terms of quantity or time of delivery termed as Riba al-fadl and Riba al nasiah in the Shariah. He regards these interests in similitude (Mahmulalaih).
prohibition of this kind of interest is known by a hadith of prophet stating that gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates salt for salt, be exchanged , the same for some, in equal quantity and hand in hand. Incase these groups are different, and then sell them as you like (with unequal quantity).
2.7 (c) Al Irtifaq al-Thalith (The Third Stage of Socio-Economic Development)
With the completion of second stage, the human society develops into a city stage. Shah Waliullah emphasizes that city does not mean walls, buildings and market. The city is a kind of relations between different groups of people based on mutual dealings and cooperation
. The integrity, interest and independence of the city are maintained through the Institution of Imam, who acts as a physician to maintain a healthy body of the city.
In this stage it will be the duty of the government to see that proper allocation of employment is done in different industries and services. Traders and farmers are encouraged in their professions and arrangement for their proper education is also made. He emphasizes that city develops with easy taxation and employment of necessary number of officials.
2.7 (d) Al-Irtifaq al Rabi (The fourth stage of socio-Economic Development)
In this stage the human society and the Institution of the government adopts an international character and need arises to have a government of all the governments (Khalifat al Khulafa).
This is the final stage of socio-economic development. Shah Waliullah does not assign any economic role to the government in this stage, except that it will need a lot of men and material to perform the duty of keeping peace, providing Justice and check exploitation.
2.8. Later Development in Islamic Economic Thought
Although Muslim scholars have discussed the economic principles of Islam earlier, much attention has been paid to the subject in the twentieth century. It started in the third decade and specialized works appeared in the fourth. Its commencement was due to the world wide economic crises during the thirties and forties and the increasing exposure of Muslim mind to the socialist doctrines and the impact of Russian Revolution. There was acceleration in these writings during the fifties and the sixties due to the emergence of a number of independent Muslim countries and the rise of powerful Islamic movements which raised hopes of serious attention to the application of the Islamic teachings on the practical affairs of the new state. On one hand Islamic Economic principles were thoroughly discussed on the other, it was presented as an alternative to neoclassical economics and other economic doctrines rooted in western social thought. Among the Muslim Scholars of the modern times Muhammad Baqir al Sadr has emerged as a distinguished economist. He wrote a comprehensive book on economics “Iqtisaduna’ besides having academic scholarship in other disciplines of knowledge like Jurisprudence, exegeses, Philosophy, history, theology and Islamic culture. In Iqtisaduna he has made a detailed study on capitalism, socialism and communism and the book primarily deals with various aspects of Islamic economy.
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Author: Mohd Lateef Khan
