The topic "Islamic Economic System" can give certain literalists the impression that in its basic and fundamental teachings Islam presents an unchangeable, concrete, and well defined method of managing money matters. This in any case is the dictionary meaning of the above words and this is what may be regarded by some people as a statement of fact. As a result of such impressions attempts are sometimes made to recover from the archives of Muslim history, the imagined concrete structure of the Islamic economic system. This search is stimulated by the presumption that the earlier Muslims had a fixed and comprehensive economic structure based on Islam spelt out to them, and had made use of it through various stages of their history. In pursuing such enquiries we have to be careful to ensure that what we are searching for is not merely a reflection of our wishful thinking but has some real existence in fact. Much reliance is placed, in making the assertion that Islam does offer a fixed economic system, on three specific revealed directives which concern the economic life of the believers.
First we have very specific laws of inheritance, second there is the total prohibition of Riba and third there is the command about Zakat. Without in any way diminishing the economic significance of any of these directives, we have to consider dispassionately if these three directives constitute an economic system in the very concrete and comprehensive sense in which we use these words with reference to other economic systems of today, such as capitalism and communism. If the answer is in the negative, then there would be no way except to admit that there is no unchangeable and all-embracing Islamic economic system which can be used as a blueprint today. Basically and primarily Islam is an invitation to mankind to submit themselves to the Will of their Creator, and accept the responsibility of acting as His Vicegerents on earth. The first purpose of the message of Islam is to change the inner man, and to instil such moral and spiritual values in the hearts of men, that they change the world and bring into existence a new order in which animal passions and desires will be brought under control and all mankind will obtain justice the and tranquillity.
It is the eternal principles of human conduct which are the real starting point of an Islamic economic system and which make the three specific directives mentioned above implementable. In fact it has been due to a lack of whole hearted commitment to these eternal principles, that even the three directives mentioned above have in the past been often ignored.
In the case of the laws of inheritance many attempts have been made in the past to circumvent them, and there is also no uniformity in the application of these laws among the five schools of Fiqha. As regards the prohibition of Riba there is no historical evidence to show that in the course of Muslim history, a totally riba-free economy was functioning in a systematic manner over a long period. On the other hand there is evidence to show that in the classical period of Islam, prices of commodities were fixed on two different bases - cash and credit - the credit prices being higher, and thus taking care of the interest factor on the delayed payment. Evidence is also there to show that in the famous early Abbasid period, borrowing and lending of money on the basis of interest was a flourishing business, with perhaps only this reservation that officially the lenders were Christens and Jews, and the borrowers mostly Muslims. As far as Zakat is concerned, here again there is no unimpeachable evidence of the existence of any comprehensive system of collection and disbursal of Zakat during the Omayyed and Abbasid periods such as we are contemplating to enforce in Pakistan now, although there is ample evidence of not only Zakat but large scale charity on a voluntary basis throughout the most fruitful years of early and middle Muslim history. In fact it was this generously-given voluntary charity by pious individuals and not state initiative which made possible most of the social welfare projects, like schools, libraries, dispensaries, etc. At the same time, let us not forget that side by side with these charitable God fearing Muslims, there were many other Muslims who evaded or ignored the payment of Zakat on one excuse or the other.
Islam’s distinctive contribution to the evolution of a just fair and equitable system of economic management is the criteria which it prescribes for judging the value of human actions in this world and the exhortation that at all places and in all circumstances and situations including situations with economic implications, these criteria should be used unhesitatingly to determine what is good and what is evil. Any system which fulfils these criteria can be tried out if the majority of the community so desires but if it goes contrary to the criteria, it should not be adopted even if the whole community is enamoured of it.
Once a community of Muslims accepts the above proposition, the way is clear for them to fashion their economic system, adopting where necessary parts of other systems in order to fulfil their economic needs for the circumstances of a particular time in history. This is what the early Muslims did as they stepped out of the boundaries of the city-state of Madina and then Arabia to fashion a new world order based on Islam. They borrowed unhesitatingly many features of the administration of the Persian, Roman and Byzantine empires particularly in the fields of land tenure and taxation. They had the utmost understanding and confidence based on their own total commitment to Islam, to know that the adoption of some existing administrative traditions and procedures which did not run counter to the criteria given by Islam would not in any way lead to a deviation from Islam. However, as time passed this commitment diminished and the self confidence disappeared, with the result that instead of the true criteria given by Quran and Sunnah the practice of the ancestors (taqlid) became the guiding principle of many aspects of community life. With this came an inferiority complex and a fear of the unknown and the unfamiliar which led the Muslim community to retreat mentally and otherwise more and more within itself, instead of boldly venturing into the world as the first few generations of Muslim had done. This syndrome of fear, inhibition and excessive caution has continued to afflict the Muslim world till today, and we are in its grip upto this moment.
The only way to break out of this impasse is to renew and refresh our direct true understanding of Islamic criteria for determining the value and validity of human actions in this world. This is not an abstract philosophical or rigid theological approach but a very practical method of securing guidance for human actions in this world. Confining ourselves to the principles which have a direct relationship with economic life, the first and foremost is the principle of unhesitating and generous charity. Islam clearly recognises the basic variation and resulting inequalities among men in respect of talent and opportunity. This inequality and diversity is a part of the laws of nature which God has laid down in His wisdom, but it has been made the duty of man with his intelligence and will power, and acting as the vicegerent of God, to compensate and counter balance this disparity as far possible. A particular talent and a suitable opportunity are both gifts of God and no individual can claim them as his birth right. It is therefore incumbent on those who have been blessed with these two gifts to give away the surplus wealth which they produce with the help of God’s gifts, to the less fortunate and the less talented. There is no limit to the amount that should thus be given away. The exhortation is to give away all that is surplus to the producer’s genuine needs. What should be regarded as the surplus is left only to the conscience and judgement of the producer, and would perhaps vary directly in proportion to the producer’s commitment to the way shown by his Creator and the extent to which he wants to earn the Creator’s pleasure.
Closely connected with the principle of charity is the principle of austerity - the austerity which is not an end in itself but a means to an end - the end being the widest possible diffusion and distribution of the wealth produced by human effort in this world. It is difficult to do greater justice to the Islamic concept of austerity than to Builder draw attention to the terminology of Faqr-i-ghayur used by Iqbal for this aspect of Islam’s message. This term is meant to connote not the austerity of the poor and the handicapped but the voluntary and the consciously practised austerity of the well-to-do and the self-disciplined.
Just as the practise of austerity must increase the pool of surplus wealth from which the handicapped, the ill and the ineffective can receive their share of the bare necessities of life, so has maximisation of production and gainful employment of all able bodied persons been emphasised by Islam in order to serve the same purpose. Even though productivity in its modern technical connotation may not have been mentioned in past Islamic writings, the emphasis on Rizq-i-Halal and the supreme importance of honesty and equity in all business relationships which includes that of the employer and the employee leave no doubt that the utmost effort by all concerned for the maximum production of wealth by honest means is a significant part of the requirements prescribed by Islam.
The fourth element in the Islamic criteria is striving for justice, which in its economic context, means striving for equality of opportunity. It is a major prerequisite of a true Islamic economic system that every body must have an equal chance to rise to the highest level in any field of national endeavour he may choose to pursue, through his personal effort and dedication. Merit and merit alone and not connections, family background or family wealth should be the basis for rewarding individual effort, and conditions should be created in which persons with talent but no financial resources are given a helping hand by the community to enable them to realise the full potential of their capabilities in this world.
While all ingredients of Islamic business ethics are equally important the one which deserves particular attention is the fixation of profit margins at various stages of the marketing of any particular good or produce. Is it not curious that while we have devoted so much time in the recent past discussing a Riba-less society, no research or systematic examination has been made of what Islamic economic principles have to say on the subject of profit margins and what could be done to regulate them, not on an adhoc hit-miss basis, but in a proper and systematic manner. After all if Islam orders the prohibition of Riba, does it not have something equally definite in its value system about profiteering, and if so why is the Islamic admonition on this point not given as much publicity as the prohibition of Riba? Perhaps, I am being uncharitable but is it not a case of picking and choosing various ingredients out of the all comprehensive single message of Islam, an arbitrary picking which is most strongly condemned in the Holy Book itself?
In this context it may not be out of place to mention one of the central economic issues of our time, namely control over the means of production. While the capitalist and communist systems take an uncompromising and often pedantic stand on this issue, Islam as far as can be seen has a totally pragmatic approach towards this matter. end Since the economic welfare and economic well being of the whole community is the ultimate aim of the Islamic economic system, it is prepared to experiment with different types of control of the means of production, provided, and this is the important consideration, it results in the widest possible diffusion of economic benefits. The socialist system also claims to aim at an equitable distribution of the fruits of production and uses this to justify excluding the possibility of leaving the means of production in individual hands. Deriving its inspiration from human reason alone it is not prepared to visualise the possibility that any human being who produces wealth through uninhabited control over the means of production, will ever be able to conquer his selfish and materialistic instincts enough to give away a substantial part of his earnings to the needy. Islam, however, since it does not base its appeal solely on the material plane but on the higher moral and spiritual planes, has no such inhibition in accepting private control of the means of production. At the same time there is nothing in the Islamic principles which militates against state ownership of some of the means of production if it is in the larger interests of the community at any particular time and place.
I may add that on this question of control of the means of production, the views expressed by me are necessarily tentative and further research and detailed investigation are obviously needed. It is, however, a good example of the economic issues of our time which have to be subjected to the litmus test of our understanding of Islamic moral values in order to find out what course of action in such matters should be adopted by a community committed to the implementation of the Islamic economic system. Many such issues and options in the economic sphere Course await investigation and analysis by Muslim scholars, so that the proper decision can be taken.
The list presented above is by no means a comprehensive enumeration of the ingredients of an Islamic system but if an economic order shows the presence of the above listed features it would be pretty close to what Islam envisages for the economic side of human life on earth. The essential ingredient remains man’s recognition Ravenfields of his duty to look after his fellow men as he looks after himself and his family, and this recognition itself comes from a total commitment to the Will of God and a determination under all circumstances to earn His pleasure and avoid His displeasure. The cultivation of such discipline through each individual’s personal efforts is no easy task, but it is without doubt feasible and practicable as has been demonstrated from time to time. The commitment to act as God’s true vicegerent at times is a commitment which must take priority and precedence over every other commitment that one makes in this world - the commitment to your family, your group and your nation, but above all the commitment to your own ego and your material desires. This may seem to be a tall order but it is not so difficult once it is realised that it is not only a prerequisite for being a good Muslim, but it is also perhaps the only way of getting out of the maze of economic difficulties in which we find ourselves today. We have the option of taking this course or alternatively allowing ourselves and our children and our children’s children to suffer from the endless nightmare of poverty, inflation, ill-health, ignorance and moral degradation, which can only end in self-destruction. The first option obviously requires courage, hard work and determination but it is by no means impossible of implementation once we realise that God has given us the assurance of His help, if we act in accordance with his directives.
Once the above commitment has been made by a Muslim community anywhere, the way is clear, as pointed out earlier, for evolving the structure and procedures of a truly Islamic economic system relevant for our situation today. In an endeavour of this type there is no need for us to be overawed by the dimensions and surface material prosperity of the Western nations, just as we must not surrender our capacity for independent appraisal before the torrent of catchy slogans and much publicised concern for the poor of the socialists and communists of various hues. The real danger to be guarded against, however, is an uncalled for blind idolisation of the actions of our forefathers in the economic field and a fatal reluctance and resistance to chart new paths and make full use of the continuing developments in the economic sphere. In order to make progress we have no option but to pick and choose from every known system of economic management without fear or inhibition only making sure that the features chosen do not run counter to the moral value system of Islam.
What I have proposed is obviously a broad and generalised approach, and a great deal of very precise details will have to be worked out before we can make tangible progress. However, I have restricted myself deliberately, because to try to be more specific is to invite controversy on subsidiary issues and this in my opinion would Software not be desirable without first having settled the principles on which we have to work and the grand strategy we have to follow. In fact there may well be considerable opposition to the acceptance and implementation of these Islamic principles, from the various vested interests, for which we should be prepared.
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