INCEIF

THE GLOBAL UNIVERSITY IN ISLAMIC FINANCE

PHD PROGRAM

AL-QURAN, POLITICS AND THE ROLE OF GOVERNMENT

IN MANAGING THE ECONOMY

THE AL’QURAN AND THE ECONOMY: AN INTRODUCTION

– FN 6063

SEMESTER xxxx

Name: Ariffhidayat Ali

Matric No: 0900320

 ABSTRACT

The Al-Quran is the verbatim (word by word) address of Allah to Mankind,

(Nasr 2002). In Arabic al-Qur’an, means “The Recitation.” Also described as
al-Hudā, “The Guide,” it also comprises rules, laws, and injunctions that
Allah s.w.t. has put in place to be observed and not transgressed upon. Al-
Quran touches all areas of human existence. This approach will be
compared to Western tradition of engaging in philosophy and the exercise of
Reason.

Solitary existence with its sets of challenges has convinced Man of the
inevitability of government and its subsequent engagement in economic
management. Western thought has termed this as various forms of social
contract that does entail the “giving up” of certain natural rights for the
benefit of protection offered by governments.

Islam however is of the position that rights of Man come from Allah thus
compliance to the rules of Allah means achieving justice (entailing rewards)
and sanctions against for the practice of zulm. This also holds true for
collectives such as family, neighbourhood and government. All constituents
are tasked with the responsibilities of ensuring Amar Makruf Nahi Munkar
(propagate goodness and reject evil) permeates in all affairs. In the case of
Economics and Politics, the exercise of “Ijtihad” is necessary and of
abundance. Nonetheless the author question how far reaching and whether
Amar Makruf Nahi Munkar has permeated in all affairs.

Key Terms: Al Quran, Allah, Sunnah, Shariah, Ijtihad, Rules, Justice,

Politics, Government, Economics, Reason, Philosophy, Amar Makruf
Nahi Munkar, Zulm

(i)
 TABLE OF CONTENTS

Pages
Abstract (i)

Part 1:- “Man” or “Self”

a) Endowed with certain faculties 1
b) Position in Western “humanist” philosophy 1-2
c) Position in Islam 2-9

Part 2:- Legitimacy of Government

a) Based on Western Philosophy 10-13

b) Based on the Al-Quran 14-15

Part 3:- Part 3:- Government and Economic Management

1) The efficient administration of Zakat 15-18
2) Ensuring sanctity of private ownership and freedom 18-20
to accumulate
3) Promoting a “just” and “conducive” environment 20-22
for economic growth
4) Ensuring defense and propagation of Islam 23-26

Part 4:-Ijtihad on the role of Islamic government 26-31

in Economic Management
Part 5:- Conclusion 31
Bibliography 32-33

Important Note:- All Quranic quotes are denoted by Q followed No.

(Surah) and No. (Ayah). Example Q 2 -36 means Al-Baqarah Ayah 36
Part 1:- Man or “Self”

a) Endowed with certain faculties

The living entity called Man has made Earth his domain. It is shared with
other forms from the microscopic to the largest, being the Blue Whale.
However, Man has been able to adapt to various conditions of existent. This
point to a more sophisticated cognitive ability associated with
logical/rational thought, the ability to gather information, build repository of
knowledge and make decisions. These entail the use of the outward senses,
the mental and the inner self e.g. the soul. In as much the body politic
having the executive, legislative and judiciary functions the same can be
said of Man. As Man struggles with the physical world in satisfying his
bodily needs, there arise other needs resulting from interaction with other
Man and needs arising out of experience and contemplation.

b) Position in humanist Western philosophy

The exercise of the above faculties led to a certain group of Man

(philosophers) who pondered into the meaning of life, of existence, of
direction or goals in life. This often entails the exclusion of any extra
terrestrial forces e.g. God, spirits etc who held any moral, religious sway
over men. Justice in this instance was to be found in learning from
observing nature, in interaction with others and a product of reason.
Fundamental to this is that Man is put at the centre and Man itself is
considered able to exercise and dispense justice satisfactorily.

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This exercise of reason entails that the “Self” is able to resolve the
predicaments faced by them. Philosophy itself developed into various
branches of studies and eventually developed into natural sciences with the
use of scientific approach of developing theories, employing assumptions,
hypotheses to be tested and re-tested as opposed to the social sciences.
Whilst philosophy initially engaged in descriptive analysis of the human
condition, it was also prescriptive analysis of how Man is to behave (morality
and ethics) often in social setting which is intertwined with politics and
economics (arrangements with regards to how to recognize, arrange,
distribute power and resources).

c) Position in Islam

From Dictionary.com, religion is defined as a set of beliefs concerning the

Cause, nature, and purpose of the universe, esp. when considered as the
creation of a superhuman agency or agencies, usually involving devotional
And ritual observances, and often containing a moral code governing the
conduct of human affairs.

In Arabic, religion corresponds most closely to “al-dīn”. Religion with respect

to the Latin root religare , meaning “to bind” and therefore religion binds us
to God, al-dīn meanwhile to some Arabic commentators is derive from al-
dayn , which means “debt”. Al-dīn, therefore, means the repaying of our debt
to Allah.

The word Islam meanwhile conjures multiple meanings such as peace,

submission; total surrender of oneself to God (Allah) and put together gives
meaning “peace acquired by submission to the will of God (Allah)”.

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Al-dayn and the concept of Mal (property)

Mainstream understanding has come to associate debt with the notion of

property. Property results out acts of creation, work, and trust and rights
(since we are discussing religion these arises from Allah).

a) The debt arising out of Creation and position of Vicegerent

Q 96-1-3:-Proclaim! (Or Read!) In the name of thy Lord and

Cherisher, Who created m a n , o u t o f a ( m e r e ) c l o t o f c o n g e a l e d
blood. Proclaim! And thy Lord is Most Bountiful, He Who taught
(the use of) the Pen, Taught man that which he knew not.

Q 2-30:- Behold, thy Lord said to the angels: "I will create a
vicegerent on earth." They said: "Wilt Thou place therein one
who will make mischief therein and shed blood? whilst we do
celebrate Thy praises and glorify Thy holy (name )?" He said: "I
know what ye know not."

Science has reconfirmed that a human foetus developed out the

insemination of the ovum by the sperm. And in this particular race
to inseminate the ovum millions of sperm are expended but only
one is successful. Some would contemplate that it is by mere
chance but in Islam it is by design. This gift of existence is indeed
remarkable since it’s given the foetus every opportunity to grow into
a Man and experienced the other gifts from Allah.

From Answers.com the term vicegerent entails a person appointed by

a ruler or head of state to act as an administrative deputy. To be
appointed vicegerent of Allah entails an exalted position for Man

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Since it provides Man with a position of Trust, a position to exercise
Allah’s justice on Earth, a position of enjoying Allah’s bounties on
Earth for his own comfort and for the comfort of others. This
position also entails choice, to choose good or evil (a choice that is
not available to other creations of Allah). A choice that if rightfully
exercised ensures immeasurable rewards and if wrongly chosen
entails sanctions.

b) The debt arising out of being provisioned and given the faculty of Aql’

Q 2-22:- Who has made the earth your couch, and the heavens your
canopy; and sent down rain from the heavens; a n d b r o u g h t
F o r t h t h e r e w i t h F r u i t s f o r y o u r sustenance ;

Q 3-7:- And those who are firmly grounded in knowledge say: "We believe in
the Book; the whole of it is from our Lord:" and none will grasp the Message
except men of understanding.

Earth was provided to Man with its resources, water provided to sustain life
via agriculture. Other verses points to other resources for human use. The
endowed faculties in a) is provided by Allah to Man. Aql’ renders Man the
ability in seeking understanding, to acquire knowledge and in it the means
to acquire the full comprehension of justice.

c) The debt arising out of being given the Al-Quran and the earlier scriptures

Q 2-185:- Ramadhan is the (month) in which was sent down the Qur'an, as
a guide to mankind, also clear (Signs) for guidance and judgment (Between
right and wrong).

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Q 2- 192-196:-Verily this is a Revelation from the Lord of the Worlds, with it
came down the spirit of Faith and Truth, to thy heart and mind, that thou
mayest admonish. In the perspicuous Arabic tongue. Without doubt it is
(announced) in the mystic Books of former peoples.

Q 3-90:-Behold! In the creation of the heavens and the earth, and the
alternation of night and day, there are indeed Signs for men of
understanding

Q 1- 6-7:- Show us the straightway, the way of those on whom Thou

hast bestowed Thy Grace, those whose (portion) is not wrath, and
who go not astray.

The early scriptures and Al-Quran speaks of faith, truth, guidance and
signs. Man may discover the signs via observation and understanding. The
Al-Quran also reveals the “Shari’ah” literally meaning “the path to water”).
Compliance ensures grace (barakah) whilst wrath entails the negative of
grace, peace and harmony.

d) The debt arising out of being provided with the messengers of Allah

Q 10-48:- “Verily to every people there is a messenger”

Q 6-130:- "O ye assembly of Jinns and men! Came there not unto you
apostles from amongst you, setting forth unto you My signs, and warning
you of the meeting of this Day of yours?" They will say: "We bear witness
against ourselves." It was the life of this world that deceived them. So
against themselves will they bear witness that they rejected Faith.

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Q 14 – 4-6:- We sent not an apostle except (to teach) in the language of his
(own) people, in order to make (things) clear to them. Now Allah leaves
straying those whom He pleases and guides whom He pleases: and He is
Exalted in power, full of Wisdom. We sent Moses with Our signs (and the
command). "Bring out thy people from the depths of darkness into light, and
teach them to remember the Days of Allah." Verily in this there are Signs for
such as are firmly patient and constant,- grateful and appreciative.
Remember! Moses said to his people: "Call to mind the favour of Allah to you
when He delivered you from the people of Pharaoh: they set you hard tasks
and punishments, slaughtered your sons, and let your women-folk live:
therein was a tremendous trial from your Lord."

As explained by the concept of prophecy (nubuwwah), prophets or

messengers convey to Man the message of Allah. They are human since Man
due to various factors is more receptive to their own kind. Modern theories
of leadership and management encourage face to face communication. Man
fear of the unknown necessitates these emissaries to be of human origin.
Example Prophet Muhammad s.a.w himself was overcome by emotions that
he requested Khadijah to cover him soon after his first meeting with the
angel Gabriel.

Theory and practice is also perfected by prophetic examples. Thus the

primacy of the Sunnah (deeds, words, sayings, approval, disapproval,
silence, tacit) as being the 2nd most revered source of Islamic law after the
Al-Quran.

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e) The debt arising out of being provided with the angels watching over Man

Q 82- 10-12:- But verily over you (are appointed angels) to protect you, Kind
and honourable, Writing down (your deeds). They know (and understand)
all that ye do.

Q 86-4:- There is no soul but has a protector over it.

Orwell’s 1984 introduced the concept of “Big Brother” as an apparatus of

the State watching over Man. This critique of Totalitarianism assumes Man’s
freedom in the context of Western understanding. In Islam, for the believers
at least we are the property of Allah and to accept the presence of Angels is
warranted, welcomed since it serves as a constant reminder of Allah.

f) The debt arising out of the guaranteed rewards from Allah for rule
compliant behaviour

Q 47-38:- God is the rich (ghaniy) and ye are the poor (fuqarā’)

Q 6-133:- Thy Lord is self-sufficient, full of Mercy: if it were His will, He

could destroy you, and in your place appoint whom He will as your
successors, even as He raised you up from the posterity of other people.

Q 3-198:- On the other hand, for those who fear their Lord, are Gardens,
with rivers flowing beneath; therein are they to dwell (for ever),- a gift from
the presence of Allah. And that which is in the presence of Allah is the best
(bliss) for the righteous.

The above points to Allah being self sufficient only requires rule compliant
behaviour from Man. Out of love and mercy for Man, Allah equipped Man

7
with all that is required for rule compliant behaviour including much if not
all of the rules themselves (discoverable through the exercise of reason and
our other faculties).

All of the above shows the power, authority, sovereignty and legitimacy
(terms synonymous with exercise of political power) of Allah in
commanding obedience and rule compliant behaviour from Man. It serves
to reconfirm the doctrine of the divine unity of Allah (al’ tawhid). The act
of challenging the sovereign entails the act of political disobedience or
transgression. The Arabic word Zulm implies transgression and also
covers harm, wrong and injustice. These acts have reference to
oneself (example suicide is transgression) and when the wrong is
done to others it implies tyranny and oppression.

Q 38-71-74:-Behold, thy Lord said to the angels: "I am about to

create man from clay, When I have fashioned him (in due
proportion) and breathed into him of My spirit, fall ye down in
obeisance unto him." So the angels prostrated themselves, all of
them together. Not so Iblis: he refused and was haughty: He was of
those who reject Faith.

The first act of political disobedience or transgression was

committed by Iblis refusing to bow to Adam a.s. as commanded by
Allah.

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Q 2 -35-36:- We said: "O Adam! dwell thou and thy wife in the
Garden; and eat of the bountiful things therein as (where and
when) ye will; but approach not this tree, or ye run into harm and
transgression. Then did Satan make them slip from the (garden),
and get them out of the state (of felicity) in which they had been.
We said: "Get ye down, all (ye people, with enmity between
yourselves. On earth will be your dwelling-place and your means of
livelihood - for a time. “

The second act of transgression are both political and economic

transgressions namely rule non compliant of encroaching the
property of Allah having already been warned against it. This
resulted in Man’s temporary sojourn on Earth.

Q 6-70:- Leave alone those who take their religion to be mere play
and amusement, and are deceived by the life of this world. But
proclaim (to them) this (truth): that every soul delivers itself to
ruin by its own acts it will find for itself no protector or intercessor
except Allah. if it offered every ransom, (or reparation), none will
be accepted: such is (the end of) those who deliver themselves to
ruin by their own acts: they will have for drink (only) boiling water,
and for punishment, one most grievous: for they persisted in
rejecting Allah.

The above reaffirms to Man that there is a purpose to his existence

and Man will be accountable for his acts on Earth.

9
Part 2:- Legitimacy of Government

a) Based on Western philosophy

The following table represents the main contributors to Western political

thought. Albeit a summary the following are the writer’s observation:-

a) The exercise of Reason by the following was pre-conditioned by the

condition and/or environment in which they exercise their intellect
b) Originality in thought and reasoning existed however intellectual
debt is owed across generations
c) Intertwined as to the political rights of Man is also the economic rights of
Man
d) Governments in whatever forms is preferred to anarchy or at best “a
necessary evil” since the preferred state of existence is not achievable

Legitimacy of government and political institutions

The The “city-state” was central to Greek thought. A small

Greeks population, racially and culturally homogenous,
economically well-off and political rights was based on
citizenship. Philosophers like Plato and Aristotle had the
opportunity to involve themselves in discussion over the
nature of Man often using the natural environment as their
point of reference. Plato believed in an independent reality
where he established that justice and other virtues exist
independent of Man and living in conformity to these ideals
are preferred. His preferred political arrangement is one that
is led by the philosopher-king. This involves not only mere
education but also a communal structure where common
ownership of property is necessary to reduce the passions
like envy and coveting the property of others. Aristotle was
 more inclined to analyze already functioning body politic
and describe their attributes. To him government functions
insofar to promote the attainment of the “good life” via
“noble actions”. His economic thought recognized private
property; he was also against monopoly and deemed usury
an abomination since money does not function as a tradable
commodity. His concept of justice entails right as something
functioning as it was meant to function.

The The Romans contributed to Western civilization the

Romans foundations of the modern legal system, the Latin language,
architecture, technology and the arts. Most importantly was
the ability of the Romans to forge an empire with diverse
nationalities. The Romans also serves historical lessons
associated with changes in type of governments often forged
out of the will of one person, some arising out corruption of
the body politic. Economically the Roman Empire relied
much on its dominions to supply not only slaves but natural
resources either through appropriation or via taxes.

The Kant (1724-1804) contrasted Freedom (knowledge attained

Germans without the mediation of experience) and Nature
(manifestation). Based on the understandings of the above
he preferred republican government founded on laws and
international organization. Laws guides towards peace and
laws are to be attained through Reason.

Hegel (1770-1831) saw only via the state that Man gains
true reality. The state establishes laws and institutions that
educates and trains Man towards morality. Nevertheless he
also recognized that Man possesses his own standards of
morality and the State merely facilitates the move from
private to a higher ideal. The modern state requires rational
laws, government and sentiment or morals.
 Marx (1818-1883) His thought revolves around the
interaction of opposites (thesis and anti-thesis) which was
evidence in Hegel’s philosophy. In such contradiction lay
movement/change towards synthesis namely an eventual
victory/assimilation of one the opposites. The ruling
principle of his socialist system is grounded in “From each
according to his ability, to each according to his needs”.

The In respond to dynastic rulers receiving supported from both

French by vested interests of the landowning aristocracy and the
Christian clergy. The philosophers were associated with the
Age of Enlightenment, putting Man back to the center as
opposed to the notion of Divine Rights of Kings which had
the stamp of approval of the clergy. Much of the ideas
became the rallying call for the French Revolution under the
banner of liberty, equality and fraternity.

The British Conditioned by an early history of hereditary monarchy after

the Roman conquest. This period was included the first
attempt to control the monarchy (Magna Carta 1215). This
did not prevent absolute rule of Kings or the likes of Oliver
Cromwell. Periods of war, civil strife in Britain or in Europe
fashioned the thoughts of men like Hobbes (State of Nature
of Hobbes resembles a State of War) Others like Locke saw
government is limited in its powers and exists only by the
consent of the people. Bentham introduced the concept of
utility in determining the relationship between government
and the people. To him the only goal for legislators should
be to ensure the pleasures and the security of the people.
J.S Mill re-examined the utilitarian principles of Bentham
and his father James Mill which tends towards “hedonism”.

Overall the British philosophers tend to favour limited

government arising out of “social contracts” entered into by
 Man (with inalienable rights of varying types). The limited
government also entails the needs for representation.

The The early Americans were Puritans dissatisfied with the

Americans conditions in England. Although the Church of England was
independent of Rome, some Puritans were not satisfied.
Migration to the Americas entails disconnect from England.
The struggle for independence arise out of the acts by
Parliament in Britain without the Americans having been
consulted and represented in matters of economic policy
(taxation). Government are recognized as long as it does not
infringe on political and economic freedom (rights of Man).
Much affected by federalism (Central government
encroachment on state rights must be curbed since it is
seen to be encroaching on individual freedom) and the
doctrine of separation of powers attributed to Montesquieu
(Executive, Legislative and the Judiciary). The early
Americans were indebted to France in their philosophical
outlook and France as a counterbalancing force to England
supplied the Americans with military support during the
War of Independence.

The Governments as extension of God’s power on Earth. St

Christians Augustine (354-430) was largely influenced by the Greco-
Roman thoughts (he was of Roman origin). He seek to
reconcile Greco-Roman understanding with Christianity
itself. Thomas Aquinas (1225-1274) was largely influenced
by Al-Farabi (circa 870-950), Moses Maimonides (1135-
1204) and tracing all the way to Plato and Aristotle. Central
to the Christians was dealing with reason and revelation.
Reconciliation was sort and not to be seen as opposing
forces.

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b) Based on the Al-Quran

Q 49-13:- “O mankind! Lo! We have created you male and female, and have
made you nations and tribes that ye may know one another! Lo! the noblest
of you, in the sight of God, is the most righteous”

Q 4-59:- O ye who believe! Obey Allah, and obey the Messenger, and those
charged with authority among you. If ye differ in anything among
yourselves, refer it to Allah and His Messenger, if ye do believe in Allah and
the Last Day: That is best and most suitable for final determination

Q 3-159:- It is part of the Mercy of Allah that thou dost deal gently with
them. Wert thou severe or harsh-hearted, they would have broken away
from about thee: so pass over (Their faults), and ask for ((Allah) "s)
forgiveness for them; and consult them affairs (of moment). Then, when
thou hast taken a decision put thy trust in Allah. For Allah loves those who
put their trust (in Him)

Q 22-41:- They are those who, if we establish them in the land, establish
regular prayer and give regular charity, enjoin the right and forbid
wrong, with Allah rests the end and decision of all affairs

Based on the above, human interaction is inevitable and diversity is a given.

In fact the universal appeal of Islam is it tolerance of diversity. The concept
of ummah is peculiar to Islam. Judaism is grounded on the idea of race.
Christianity had the universal appeal however it became subverted by the
clergy creating a class upon itself. The schism between the Catholicism and
Protestantism to a large extent is related to this.

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Following on it is clear that an Islamic government is subservient to the
rules of Allah, the Sunnah of the Prophet and in compliance with the
Shariah. Invariably it is a government that promotes justice (enjoin the
right and forbid wrong) in all areas including the economic sphere.

Ibn Khaldun’s definition of Government being an institution which prevents

injustice other than such as it commits itself (the best definition in political
theory according to Ernest Gellner)

Part 3:- Government and Economic Management

A government that promotes justice will surely need to address certain

distributive rules as outline in the Al-Quran and the Sunnah. This is as
follows.

1) The efficient administration of Zakat

Q 51-59:- And in their wealth and possessions was remembered the

right of the needy, him who asked, and him who (for some reason) was
prevented from asking

Q 9-60:- The alms are only for the needy and the destitute, and those who
collect them and those whose hearts are reconciled (to Islam), and to free the
captives and the debtors, and for the cause of Allah is Knower, Wise"

Q 59-7:- What Allah has bestowed on His Messenger (and taken away) from
the people of the townships, belongs to Allah,- to His Messenger and to
kindred and orphans, the needy and the wayfarer; In order that it may not
(merely) make a circuit between the wealthy among you. So take what the
Messenger assigns to you, and deny yourselves that which he withholds
from you. And fear Allah. For Allah is strict in Punishment.
15
The above verses points to the fact that Zakat is obligatory and is not
“charity”. This follows that all property, wealth and income derived belongs
to Allah and Allah has allocated a certain portion of the zakatable wealth as
belonging to the intended recipient of Zakat. To deny as such is
transgression and rendering injustice.

Economically, Zakat serves to distribute income/wealth from the rich with a

lower marginal propensity to consume (MPC) to the least well-off who has a
higher MPC. This has a direct impact on aggregate demand based on the
“multiplier” effect:-
GDP = Consumption (C) + Investment (I) + Government (G) + Net

Exports (X

Shifts in the Aggregate Demand Curve
Price
Level

2.0%

AD2
AD

Y1 Y2
U = 5% U = 2%
Real GDP

Consumption has the effect of shifting the aggregate demand curve to the
right leading to increase in Real GDP. In this analysis, the impact on the
price level has been ignored.

Zakat also plays the role in reducing income disparities between the rich
and the poor. Retracing history, much turmoil has been linked to the
widening gap between the rich and the poor. Transgression in this particular
case letting wealth makes a circuit between the wealthy leads to further
16
transgression largely due to “populist” or even genuine sentiments being
fanned by certain individuals/groups in society. Another important role of
zakat is that it has positive contribution towards developing human capital
if we are to take into consideration the intended recipients.

Another important point to stress in that zakat can act as an “automatic

stabilizer” of fiscal policy i.e. preventing fluctuations in the levels of
economic activity, price level, etc. which is necessary to ensure justice and
pave the way for economic development.

In essence, all the intended beneficiaries of zakat should receive an

“economic gain” from the proceeds. Therefore zakat can be summarized as
being distributive, developmental and stabilizing in nature.

Keynes favoured progressive taxation to combat unemployment however

taxing income alone cannot spur overall economic activity. Zakat has been
cited as more progressive as the contribution is not derived only from
income but also from idle assets i.e. accumulated wealth or idle assets.
Other drawback of conventional taxation is that revenues may not be
channelled direct to recipients and more often than not will be used for
developmental spending or on bureaucratic organizations (the monetarist
argument against “big” government). Zakat has clearly defined recipients
and we foresee that in the utilization of zakat proceeds these recipients will
rank first instead of being at the mercy of the politicians. Another critique of
conventional taxation that it is a disincentive to hard work and from
businesses making investments.

The zakat response to this is three-fold. First it is a religious obligation, if

rational Muslim behaviour is to enrich their afterlife spiritual deposit, then
there is utility to be derived from paying zakat.

17
It is a spiritual investment of purifying “god given” income and wealth.
Secondly, Islam promotes self-reliance, disparages poverty and encourages
giving rather than receiving.

The Prophet (s.a.w) has said:- “ Charity is not permissible to a rich

person or to one who is able bodied” (Hadith recorded by Abu ‘Ubayd)

Thirdly, zakat as mentioned is a tax on assets/idle balances. In essence,

individuals are encouraged to use these balances for productive means
rather than keeping them idle. As a result, it encourages investment thus
having a positive effect on overall economic growth.

2) Ensuring sanctity of private ownership and freedom to accumulate

Much literature has been expanded on Islam supposed pre-occupation with

redistributive policies. One aspect that needs to be highlighted is that Islam
is neither socialism nor communism.

Q 2-256:- Let there be no compulsion in religion: Truth stands out clear

from Error: whoever rejects evil and believes in Allah hath grasped the most
trustworthy hand-hold, that never breaks. And Allah heareth and knoweth
all things.

Q 4-32:- And in no wise covet those things in which Allah Hath bestowed
His gifts More freely on some of you than on others: To men is allotted
what they earn, and to women what they earn: But ask Allah of His
bounty. For Allah hath full knowledge of all things.

Subject to rule compliant behaviour, Man is free to accumulate wealth via

working and employment. Islam recognizes work and employment as the
most preferred avenues to attaining wealth.
18
A hadith of Prophet Muhammad s.a.w.:- "When the son of Adam dies, all his
good deeds come to an end except three: ongoing charity, knowledge from
which others may benefit after he is gone, and a righteous son who will pray
for him." (Sahih Muslim)

Q 2-83:- And remember we took a covenant from the Children of Israel (to
this effect): Worship none but Allah. treat with kindness your parents and
kindred, and orphans and those in need; speak fair to the people; be
steadfast in prayer; and practise regular charity. Then did ye turn back,
except a few among you, and ye backslide (even now)

Government must ensure the sanctity of private property and guarantee the
freedom to accumulate. Threats of confiscation and laws intent on force
distribution of income and wealth constitute zulm (transgression and
injustice). With this freedom intact, philanthropic Muslim of previous
generations established the waqf’, which has been recognized as the
voluntary 3rd sector in the economy. Throughout Muslim history, the
institution of waqf have provided for supplies of public goods namely which
in modern economics are essentially under-provided since there is no
market for such goods and it being subjected to the “free-rider” problem.

Besides the waqf’, the eligibility to pay zakat (Nisab) is subject to the
person/s attaining a certain level of income/wealth. Since zakat has direct
benefits on the recipient and the economy the more eligible person/s paying
the zakat the more benefit it accrues. Other form of charity like the sadaqah
in monetary form is also predicated by the person/s having excess wealth to
be given away out of the desire to attain Allah’s pleasure. On the treatment
of orphans, we need only to look at the social and economic status of Abu
Talib who became the guardian to Prophet Muhammad s.a.w.
19
Lastly citing history, when the Muslims were evicted out of Christian Spain,
the rich had the opportunity to pay their passage out of Spain whilst the
poor Muslims were forced to convert to Christianity. This proved that wealth
in this instance assisted to secure religious freedom.

3) Promoting a “just” and “conducive” environment for economic growth

Various factors influence economic growth. Central is the government view

of its position as either an engine of growth (interventionist and utilizing
public funds) or as a facilitator of growth (providing an environment for
personal and private initiative).

Economic historians such as Murat Cizacka have attributed economic

growth in Islamic history to personal and private initiative. Following this
argument, to facilitate growth is contingent on the availability of the factors
of production. A growing healthy population contributes to both a ready
supply of labour and a readily available market thus the following practices
constitutes transgression, injustice (zulm).

Q 89 – 8-9:- When the female (infant), buried alive, is questioned, or what

crime she was killed

Q 26- 165-166:- Of all the creatures in the world, will ye approach males,
and leave those whom Allah has created for you to be your mates? Nay, ye
are a people transgressing (all limits)

In modern economics, the increase in the factors of production is an element

that contributes to the potential shift outward of the Production Possibility
Frontier (PPF) as depicted below.

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 Arrows points to a shift in the PPF

This however is contingent to the economy as operating already at the point

of productive efficiency which is deemed attainable in a rule compliant
Islamic economy.

Thus in ensuring justice prevails, an environment that promotes for

population growth is necessary. Population growth is not only related to the
above two verses but also providing for law and order, ensuring crimes
against population/property is dealt with, the provision of health facilities
and also educational facilities. This provisioning however should not be
burdensome in a rule compliant setting since there is realization amongst
members of the society pertaining Fard Kifayah and the provision supplied
through the waqf’ system.

Q 96 4-5:- “Day, but man doth transgress all bounds. In that he

looketh upon himself as self-sufficient”.

Q 8-73:- The Unbelievers are protectors, one of another: Unless ye do this,

(protect each other), there would be tumult and oppression on earth, and
great mischief
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Q 96 (4-5) points to “self-sufficient” as linked to transgression. Although this
may employ several meaning “self-sufficient” maybe linked to wealth
obtained.

“Tumult and oppression on earth, and great mischief” is synonymous with

corruption. Whilst power corrupts and absolute power corrupts absolutely,
corruption via the use of economic power is also a phenomenon to be rooted
out by a rule compliant government. Corruption increases transaction costs,
information asymmetry increases and moral hazard in abundance. This
constitutes a “leakage” and beneficiaries of corruption “make a circuit” of ill-
gotten gains. The wealth obtained from these transgressions is enormous
thus “hoarding” is a sine qua non with corruption.

Q 7-31:- 0 Children of Adam! wear your beautiful apparel at every time and
place of prayer: eat and drink: But waste not by excess, for Allah loveth not
the wasters

Q 30-41:- Mischief has appeared on land and sea because of (the meed) that
the hands of men have earned, that ((Allah)) may give them a taste of some
of their deeds: in order that they may turn back (from Evil)

Corruption leads to waste, misallocation of resources as well as contributing

to pollution. Through these forms of injustices productive efficiency is
thwarted as well as negative externalities with regards to the pollution
requires additional cost related to clean-up and monitoring.

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4) Ensuring defense and propagation of Islam

Q 2-217:- They ask thee concerning fighting in the Prohibited Month. Say:
"Fighting therein is a grave (offence); but graver is it in the sight of
Allah to prevent access to the path of Allah, to deny Him, to prevent
access to the Sacred Mosque, and drive out its members." Tumult and
oppression are worse than slaughter. Nor will they cease fighting you until
they turn you back from your faith if they can. And if any of you Turn back
from their faith and die in unbelief, their works will bear no fruit in this life
and in the Hereafter; they will be companions of the Fire and will abide
therein.

Q 8-60:- Against them make ready your strength to the utmost of your
power, including steeds of war, to strike terror into (the hearts of) the
enemies, of Allah and your enemies, and others besides, whom ye may not
know, but whom Allah doth know. Whatever ye shall spend in the cause
of Allah, shall be repaid unto you, and ye shall not be treated unjustly.

Q 2- 278-279:- O ye who believe! Fear Allah, and give up what remains of

your demand for usury, if ye are indeed believers. If ye do it not, Take
notice of war from Allah and His Messenger. But if ye turn back, ye shall
have your capital sums: Deal not unjustly, and ye shall not be dealt with
unjustly

Q 2-190-193:- Fight in the cause of Allah those who fight you, but do
not transgress limits; for Allah loveth not transgressors. And slay them
wherever ye catch them, and turn them out from where they have turned
you out; for tumult and oppression are worse than slaughter; but fight them
not at the Sacred Mosque, unless they (first) fight you there; but if they fight
you, slay them. Such is the reward of those who suppress faith. But if they

23
cease, Allah is Oft-forgiving, Most Merciful. And fight them on until there
is no more Tumult or oppression, and there prevail justice and faith in
Allah. but if they cease, Let there be no hostility except to those who
practise oppression

War, killing, acts of violence, act of deceit and duplicity has been a common
feature of human history. These acts were committed in the name of states,
nations, race, and religion and for economic reasons. Allah abhors war and
killing yet repetitively Muslims have been told to be on their guards or to
take the offensive. Nevertheless, Allah has put rules on the conduct of war.
War is seen as an act of defending justice as long as the rules are not
transgressed.

Some human progress has itself been related to the idea of war and defence.
The harnessing of nuclear energy as we know it is partially related to the
Manhattan Project where scientists of American, German and European
origin worked on the atomic bomb. The fear of the Russians prompted
Kennedy to challenge America to put man on the moon before the end of the
1960s. The Internet itself was initially developed in collaboration between
academia and the Department of Defense. The Arab-Israeli Wars fought
pitched US made weapons of war against their Soviet counterparts and
these wars are usually used to test these weapons and battlefield tactics.
The outcome being the lost of Arab lands to the Israeli regime.

Wars have taken new shapes. Wars fought on the ideological front and using
economic might for instance the Cold War led to the demise of the Soviet
Union in a matter of 70 years (the Ottoman Empire survived 624 years from
1299-1923). Ideology, economic power combined with technological
superiority resulted in the current Western hegemony in world affairs.

24
With this arisen new economic challenges brought about by globalization,
the pressure to provide access to domestic markets and implement the
Western version of freedom only increases the tumult or oppression
forewarned by Allah to Muslims.

Thus if Islamic governments was to champion justice, to enjoin the right

and forbid wrong, it is then obligatory to allocate expenditure in
preparation for and in defence of the Islamic state be it militarily but more
importantly in raising the spiritual, the intellectual and economic positions
of Muslims.

Q 8 – 22:- For the worst of beasts in the sight of Allah are the deaf and the
dumb, those who understand not

Q 3-118:- O ye who believe! Take not into your intimacy those outside your
ranks: They will not fail to corrupt you. They only desire your ruin: Rank
hatred has already appeared from their mouths: What their hearts conceal
is far worse. We have made plain to you the Signs, if ye have wisdom

Out of ignorance and lack of intellectual might, nations suffer degradation in

its ability to fend off outside influences. External political and economic
manoeuvrings often results in surrender of both political and economic
sovereignty which results in nations becoming dependent on foreign aid with
pre-conditions to be met for aid rendered. Certain world bodies like the
United Nations and the IMF were established under the notion of “might is
right” as opposed to rules prescribed and observed based on justice. Any
responsible Islamic government will resist these attempts of external
interference either by being self-reliance or developing alliances with other
Muslim government under the banner of protecting the “Ummah” from
transgression.

25
Q 2 – 278-279:- O ye who believe! Fear Allah, and give up what remains of
your demand for usury, if ye are indeed believers. If ye do it not, take notice
of war from Allah and His Messenger. But if ye turn back, ye shall have
your capital sums: Deal not unjustly, and ye shall not be dealt with
unjustly

Allah and his messenger has declared war on the practice of usury
(contrasted to zakat (which reduces) usury widens the income disparities
between the rich and the poor), thus any rule compliant Muslim government
should follow suit. Usury is but one part of economic transgression, it relies
on the current conventional economic and financial system for its
legitimacy. Included in the system is the debt/credit creation machine,
money created within the fractional reserve system and out of seignorage, a
win-lose approach to risk taking and a system where rule compliance is
weak and the regulators themselves subjugate the rules for their own
interests.

Part 4:- Ijtihad on the role of Islamic government in Economic

Management

Much of Islam’s experiment with government and the role it plays have been
via the exercise of Ijtihad. The validity of Ijtihad is unquestionable (Muaz ibn
Jabal case in point). Most scholars define Ijtihad as the effort of a “Mujtahid”
to coming to a decision pertaining to a legal matter by reference to the
sources of Islamic law (the collective term for Islamic law being Shariah, the
primary sources being the Al-Quran and Sunnah) and other secondary
sources namely qiyas, ijma, istihsan, urf etc.

26
The following tables captures but a glimpse of the past and present efforts
been made in the area of government and economics.

Ibn Khaldun
Muqaddimah Defence
Law and Order
Justice
Public administration
Basic Need fulfillment
Da’wah activities
Enjoining right conduct and
forbidding wrong
Fulfillment of such socially
obligatory duties as
the private sector fails to perform

M.N. Siddiqi Expenditure functions assigned

Public Expenditure in Islam
by the Shariah on a Permanent
Basis
Expenditure functions derived
from the Shariah on the basis of
the Institution of Ijtihad
For the present situation
Expenditure functions assigned to
the government by the people
through the process of
consultation

M.Umar Chapra Education and Training

Employment
The Islamic Welfare State and its Adequate food and clothing
Role in the Economy
Comfortable housing
A generally healthy environment
Combined with appropriate
medical facilities
Adequate transport facilities for
mobility of the labor force and for
producers to deliver their produce

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Ibn Taimiyyah
Government is indispensable and Institution of Al-Hisba
a religious duty
Ensuring rule compliant i.e.
observance of the Shariah in an
Islamic economy

The Arabic word ‘hisba” means

“sum”, “reward”, “arithmetic
problem”

Hadith of the Prophet: ‘Whosoever

cheats is not among us”- Sahih
Muslim

The role of a Muhtasib – modern

day Regulator
Hadith of the Prophet: 'If three
persons set out on a journey, they
should appoint one of them their
leader.'
Duty of commanding good and
forbidding Evil cannot be
completely discharged without
power (quwwah) and authority
(imarah). The same applies to all
religious duties, like holy war
(jihad), justice, establishment of
pilgrimage and prayers, helping
those who are wronged and
meting out punishment in
accordance with the legal
penalties (iqamah al -hudud).
Since all these tasks cannot be
carried on without government
and power, the institution of
government and state is necessary
from the religious point of view.
Al-Ghazali
Expenditure should be geared Preservation of Religion
towards preservation of the
Maqasid al Shariah
In approaching as such, Preservation of Life
categories in terms of importance
were applied:-

1) Daruriyyah (The Essential)

2) Hajiyyah (The Complementary)
3) Tahsiniyyah (The
 Embellishments)
Emphasis on the “Fard’ Kifayah” Preservation of Reason
(socially obligatory duty)
Preservation of Family
Preservation of Property

Other areas of Ijtihad in Islamic Price Regulation

Economics
Various forms of taxation
Permissibility of Government
Borrowing i.e. Budget Deficit

The decline of Islam has been commented as related to the decline in Ijtihad.
Perhaps this remains a simplification, the author points towards disunity,
the secular approach of some Caliphs post Ali Ibn Talib, the repression
meted out to scholars and perhaps lack of “religious” leadership who saw
large scale rebellion contrasted to one person opposition to zulm (which
is obligatory) as a valid weapon against zulm. Whether the Iranian
Revolution of 1979 can be classified under large scale rebellion against zulm
remains an area for discourse.

Much Ijtihad or thought have been applied in the area of Islamic Economics
but not much discussions have been employed in questioning the legitimate
authority of Muslim governments to rule.

Q 42-38:- Those who hearken to their Lord, and establish regular Prayer;
who (conduct) their affairs by mutual consultation; who spend out of what
We bestow on them for Sustenance

Democracy has often been associated with being the best form of
government that ensures the attainment of both political and economic
freedom however the practice of democracy have often resulted in zulm
employed by the majority on the minority.

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Certain practices in democracy have been subjected to “interest group”
politics. Much of the Muslim world is not practising democracies or being
ruled by hereditary monarchs or various forms of dictatorship. Thus suffice
to say that even the institutions of government are practising zulm towards
its form and people.

Even in the area of Islamic Economics the writer cites the following.

The Pew Forum on Religion & Public Life (2009) estimated that there are
1.57 billion Muslims in the world making up 23% of the world population.
More than 60% of the global Muslim population is in Asia and about 20%
is in the Middle East and North Africa. Two-thirds of all Muslims
worldwide live in 10 countries, six are in Asia (Indonesia, Pakistan, India,
Bangladesh, Iran and Turkey), three are in North Africa (Egypt, Algeria and
Morocco) and one is in Sub-Saharan Africa (Nigeria). Economically these
countries rank low in terms of per capita income faced with numerous
handicaps such as ruled by corrupt and dictatorial governments, having
little or dwindling resources and subjected to international sanctions in the
case of Iran.

Our present inclination remains preoccupied with ensuring rule compliant

in the areas associated with the “sukuk” market (an area which should
have been a given), areas in muamalat associated with concept of “bai”,
murabahah and other fiqh related matters at the expense of perhaps the
Maqasid of Shariah.

If the institution of government or the persons entrusted with government

is unable or unwilling to internalized, institutionalized and practice the
notion of Amar Makruf Nahi Munkar via establishing rules and enjoining

30
compliant, perhaps the following serves to guide

Q 2-281:- And fear the Day when ye shall be brought back to Allah.
Then shall every soul be paid what it earned, and none shall be
dealt with unjustly.

In doing justice to ourselves, we should not be dependent on either the body

politics or on Islamic Economics in paving the way towards our on salvation.

Part 5:- Conclusion

Reason and revelation need not be at odds with each other. Imperfect
reasoning or “transgression” against our own fitrah is the cause of misery
and strife. Where strife and mutual distrust are implements of Iblis and his
supporters, much of these challenges can be met by building up the
spiritual, the intellectual and the material of the Islamic Ummah. Through
rule compliance being internalized, practiced and institutionalized in the
conduct of Man, governments, socio-economic institutions and in all other
areas the attainment of Justice with all its rewards is assured.

31
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