Introduction ALTHOUGH Muslim thinkers have discussed the economic principles of Islam earlier, exclusive attention to the subject is a twentieth century phenomenon. It started in the third decade and specialised works appeared in the fourth. Part of the provocation was provided by the world-wide economic crisis during the thirties and forties and the increasing exposure of the Muslim mind to the Socialist doctrines, and the impact of the Russian Revolution. There was a great spurt in these writings during the fifties and the sixties which is related to the emergence of a number of independent Muslim countries, and the rise of a powerful Islamic Movement which raised hopes of serious attention to the application of the Islamic teachings in the practical affairs of the new states. At this stage general discussion on the economic philosophy of Islam is supplemented by efforts at system formulation and discussions on specific issues relevant to modern life. Analytical study of the economic injunctions of Islam and an analytical approach to the criticism of modern institutions from the Islamic viewpoint is comparatively recent in origin, though it is receiving more and more attention. The modern institutions of banking, insurance, joint stock companies, stock exchange and progressive taxation called for a response from Muslim thinkers and jurists (i.e. ulema specialising in fiqh) as they appeared in these Muslim countries and started involving the religious masses. A review of these institutions in the light of the Shari'ah, a search for alternatives in case some of them were found repugnant to Islam, and for arguments for the legitimacy of those which could be accommodated, led to many works on the subject. By the very nature of this background, the discussions were more juridical than economic. Most of these writers were ulema or journalists with little knowledge of economics. The system of education the Muslim countries had inherited from Imperial Powers had scrupulously segregated Islamic education from modern education and there were no arrangements for producing a trained economist who had direct access to the Islamic sources. This inhibited professional economists from making any significant contributions to the subject. It also accounts for the fact 'that the ulema who found themselves constrained to discuss the subject failed to do justice to it. The first works on the subject by professional economists appeared in English in the late forties of this century, but these writers had to rely on secondary sources so far as Islamic injunctions are concerned. Even now when we have quite a number of economists fully equipped to draw upon the original sources of Islam, the subject lacks the most crucial support required for its proper growth - teaching in Universities. Modern economics, as we now understand the term, is largely the handiwork of University teachers in Economics. But Islamic Economics is not a subject being a taught at the post-graduate level anywhere in the wide world with the sole exception of a few universities in Egypt and Pakistan, where both the syllabus and the teaching facilities leave much to be desired. The institutional framework of a society has a direct bearing on research in Social Sciences, particularly in Economics. The institutions that developed in the Imperialist regimes were alien to the Islamic framework of the society and the economy, and therefore no serious thinking by the professional economist could be directed towards Islamic Economics. The ulema also discussed the economic problems without the actual framework operating on the tenets of Islam. Islamic Economics lacked the live relationship with real life which was a prerequisite to its growth. There was no testing ground for the various hypotheses being formulated and no empirical evidence upon which to draw while making formulations. In this historical situation it would have made a. big difference if a clear commitment to the economic philosophy of Islam had come from some of the new independent Muslim countries. But even this has been lacking till now, and many writers on the subject aimed at soliciting such a commitment from their people and governments, through their writings. They took on themselves the task of convincing their readers of the desirability and viability of the Islamic economic system. They have yet to be called upon to manage the economy and solve its actual problems in the light of Islamic injunctions. These are some of the important facts to be kept in mind while surveying the literature on Islamic Economics as they explain many of its important features, and the relative emphasis placed on the various issues under discussion. There are indications of some change in the situation described above as evidenced by the increasing attention paid to Islamic economics. Both at the popular and the official level. This too is reflected in the recent contributions on such subjects as interest-free banking, Zakat and social security. Analytical study conscious of its relevance to practical affairs is gradually replacing philosophical dissertations on the comparative virtues of the Islamic system, which augurs well for the future growth of the literature. This survey covers the three principal languages in which the bulk of the literature on our subject has appeared in the last half century - Arabic, Urdu and English. Some contributions were made in the Persian, Turkish, French and Indonesian languages, which are planned to be surveyed separately. Multiplicity of languages coupled with deficient communications has also affected the growth of thinking on the subject. No efficient translation and abstraction services have been available. We do not have a single journal exclusively devoted to our subject. Very few review articles are published on the contributions that are made. There have been no across-the-table discussions at seminars and academic conferences. As a result our writers have had few opportunities of knowing each other's views and of benefiting from scholarly criticism. One finds the same points being made again and again in different languages at different times, while a promising idea suggested b one thinker has to wait for quite a long time before it is taken up by some other writer to develop further. There is controversy but little criticism, there are many opinions but few conclusions arrived at after systematic discussion. The implications of such a state of affairs for the "survey" are obvious. Constraints of time and space make it necessary to keep this study brief. It has not. been possible to go into the details of the subjects discussed in the, survey. It was considered specially desirable to avoid details where these details were more juridical in nature than economic. For the sake of brevity we had also to exclude from this survey works on economic history and those relating to the economic problems of the present-day Muslim countries. A survey of contributions relating to the entire area of economics raises serious methodological problems. One is always left with a feeling that a more suitable scheme could be evolved. It is hoped that in future the different topics covered in this study will be surveyed separately and more critically by some economists. As a glance at the table of contents would reveal, we begin with a brief consideration of the economic philosophy of Islam, followed by the general outlines of the economic system of Islam. Specific aspects of the economic system which might attract greater attention from economists have been treated separately at some length in the third section. We have tried to focus attention on analytical discussions by dealing with them in two separate sections: Islamic critique of contemporary economic theories and systems, and development of economic analysis in an Islamic framework. The last section notes contributions on the history of economic thought in Islam. An economist reading the first two sections may feel that undue importance is being attached to views relating to ownership, ends of economic enterprise and the code of conduct for various economic agents. These subjects do not figure very prominently in modern economics as certain views have been accepted long since and nobody feels like questioning them. The concern of Islamic economists with these basic issues is borne of their feeling that the divergence of Islamic economic thinking from the other schools of thought is rooted in this area. They also think that these are the foundation stones for the development of the institutions favourable for the growth of the society and the economy according to Islamic values. This survey covers books as well as the periodical literature. In the circumstances it is not possible to claim that one knows about each and every contribution to the subject. This is especially true of the papers contributed to the numerous popular journals in the three languages. Yet, I do hope that I have not missed many of them, as a glance at the bibliography will show. We have generally avoided mention of particular authors when recording a view that is held unanimously. Specific contributions are noted when a subject is controversial or because of their originality. This survey was completed in December, 1974 for presentation at-the First International Conference on Islamic Economics scheduled for March, 1975. The Conference was eventually held in February, 1976 and more than sixty papers were presented on various aspects of Islamic Economics.In revising this survey for publication due notice has been taken of these contributions, alone with such other recent works as were available to the writer. The Bibliography originally appended to this survey has now been replaced by its improved version published separately by the U.K. Islamic Foundation. All numbers appearing in parenthesis in the text of the survey refer to this printed bibliography. The figure following the colon indicates the page number of the reference cited. Other references appear as footnotes. The bibliography is being appended to this survey for ready reference. I
ECONOMIC PHILOSOPHY OF ISLAM The key to economic philosophy of Islam lies in mans relationship with God, His universe and His people, i.e. other human beings, and the nature and purpose of mans life on earth. Man-God relationship is defined by Tawhid. The essence of Tawhid is a total commitment to the will of Allah, involving both submission and a mission to pattern human life in accordance with His will. The will of Allah constitutes the source of value and becomes the end of human endeavour. Life on earth is a test, and its purpose should be to prove successful in the test by doing Allah's will. The entire Universe with all the natural resource and powers is made amenable to exploitation by man, though it is owned by Allah and Allah alone. Life on earth being a test and all the provisions available to man being in the nature of a trust, man is accountable to Allah and his success in the life hereafter depends on his performance in this life on earth. This adds a new dimension to the valuation of things and deeds in this life. With every human being sharing the same relationship with God and His Universe, a definite relationship between man and man Is also prescribed. This is a relationship of brotherhood and equality.1 "Tawhid is a coin with two faces: one implies that Allah is the Creator and the other that men are equal partners or that each man is brother to another man." (7: 3 5). While the writers on the subject agree on this basic philosophy, one finds variety of emphasis in their elaboration of the last-mentioned point: the relationship between man and man in sharing the bounties of Allah. It is agreed that for the test life is to be conducted in fair circumstances and no one should go without an adequate share of resources that are needed for survival and a good life. Equality of opportunity and social life of the disabled is the minimum that this calls for. They differ. However, regarding the mode of equal or equitable sharing of these resources by individuals. And the degree of social control necessary - a subject we take up later on. It is also agreed that Islam rejects asceticism and a good life means, among other things, a materially well provisioned life. Basing his argument on two clear verses of the Qur'an2 , another writer declares that sufficiency (Kifayah) and peace (amn) are the two inalienable features of the good life envisaged by Allah (77, I: 6-9), a point that finds the widest support in the literature on the subject (73: 24) Economic Enterprise The above philosophy provides the proper perspective to man's economic activities. No inhibitions attach to economic enterprise. Men are encouraged to avail themselves of the vast opportunities of productive enterprise afforded by the almost limitless bounties of Allah: "And if ye would count the bounty of Allah ye can not reckon It,"
(XIV: 34)
Every writer on the subject cites verses from the Qur'an and traditions from the Prophet to show that agriculture, trade, commerce and industry and the various forms of productive enterprise known in the early days of Islam have been explicitly mentioned in this context. What is crucial, however, is the motivation, the ends of economic activity. Given the right motivation all economic activity assumes the character of worship ('lbadah). Many writers discuss the proper ends of economic enterprise in detail These ends may be individual or social. Legitimate individual ends include the fulfilment of personal needs and those of the family. Saying to provide for the future and the desire to leave an inheritance are also recognised as proper ends of productive effort. The minimum necessary for survival is in fact a duty to earn. While no maxima are fixed in quantitative terms, moderation in fulfilment of these needs is emphasised and greed, avarice and the unsuitable yearning for more and more comforts and luxuries is decried. Moderation is generally defined with reference to the negative concepts of extravagance (israf) and expenditure on goods and services prohibited by Islam (tabdhir). Indulgence in luxurious living and the desire to show off is condemned (29: 438-453; 120: 68-73). Islam cannot tolerate conspicuous consumption of the leisure class (62: 141-144). Recent writings on economic enterprise attach great importance to the social ends, which are summed up by the phrase "striving in the cause of Allah". Eradication of hunger and poverty, disease and illiteracy and mobilisation of resources for strengthening the Islamic state and spreading the message of Allah are stated to be the laudible aims of individual economic activities. One who engages in productive activities for these purposes is doing Gods will, and is promised adequate rewards here and hereafter (77, I: 130-138; 24; 619: 25-30; 477). The authors of the Jama'at-i-Islami Pakistan Economic Committee Report regard it an end of economic enterprise "to make the Islamic society economically strong so that it develops and is able to compete successfully with other economies the world over" (125: 26). It is pointed out that in view of the limitless nature of the social ends of enterprise, as against the limited nature of the individual ends, economic enterprise as such is afforded limitless scope and utmost encouragement. Ownership The nature and scope of ownership has been one of the most discussed subjects in the literature on Islamic Economics, works exclusively devoted to the subject being available in a number of languages. Every important writer has touched on the subject and all the different approaches to an Islamic reorganisation of the modern economy show themselves in their treatment of property rights in Islam. Below we shall try first to state what is generally agreed upon and then to differentiate between specific contributions. Real ownership belongs to Allah, man holds property in trust for which he is accountable to Him, in accordance with rules clearly laid down in the Shari'ah and the economic philosophy underlined above. Acquisition of property as well as its uses and disposal are subject to limits set and should be guided by the norms laid down by Allah. Absolute ownership of m-an is a concept alien to Islam, as it belongs to Allah alone. There are definite obligations towards others attending upon the individual rights of owner ship. Besides private property, public ownership is a central concept in Islam. The respective scopes of the two are not rigidly defined but left to be determined in the light of certain principles, depending on the needs and circumstances (3: 8; 62: 111-119, 160-162; 70: 80; 134; 158: 41-90; 171: 150). Differences centre around three main points: The central position of private ownership; The relative scopes of public and private ownership; and The degree of social control on private ownership rights and the circumstances justifying abrogation or abridgement of such rights.
Some writers assert that the Real Owner has bestowed ownership rights to the whole of human society, in the first, place and it is wrong to give individual ownership a central position in the Islamic economic system. They stand for social ownership of land and other natural resources, confining private property to articles of consumption, living quarters and the like. Perwez (60) and Nasir A. Sheikh (154: 139-225) in Pakistan and some Arab socialists take that position. While this extreme socialistic position does not find sizeable support in the literature, and is generally rejected as an unsuccessful attempt to mould Islam according to socialism, there are eminent authorities denying a central place to individual ownership rights. The martyr, Abd al-Qadir Audah deserves quoting at length in this context: "The society (Jama'ah) through its functionaries such as rulers and counsellors has the authority to organise the ways and means of utilising wealth. All wealth belongs to Allah but Allah has made it for the good of the society. The rule in Islam is that all rights belonging to Allah are for the good of the society which sits in authority over them, and not the individuals. The society, through the rulers representing it, can, when the public interest demands, abrogate the individual ownership of benefits of a property, subject to the condition that a suitable compensation is paid to the owner of the benefits involved.
"Though Islam allows ownership without limit, it authorises society, as the entity for ensuring the rights of God and for organising utilisation of wealth, to subject the individual ownership of particular kinds of property to limits, when this is necessitated by public good-This it can do through its representatives. This Pay apply to ceilings on agricultural holdings or to urban property." (214: 48-49). This approach gives priority to social good and makes representatives of the society the sole arbiters in determining the demands of social good. Abdul Hamid Abu Sulaiman recognises the individuals right to own the fruits of his labour, but so far as the natural resources, natural powers, and general circumstances of the society are concerned every individual has an equal share in them. As all individuals do not have equal capacity to put these resources to proper use, the more capable are allowed to use more than their due share. They cannot, however, claim the whole of their produce from this extra use if resources, only the share of labour belongs to them while the part of produce ascribable to natural resources belongs to the society as the representative of those who use less than their due share of these resources (7: 17-19; 8: 69-70). Private ownership of land, capital or other natural powers cannot be allowed to become a means of exploiting other individuals and subjugating them (8:43). The rationale of allowing inequality in the private ownership of means of production is stated by him in these words: "A strict equality in the ownership of natural resources would require very frequent redistribution of those resources among members of society. This would be disruptive to economic activity and social relations. A reasonable alternative is, first, to avoid frequent redistribution and permit private ownership of resources, thus achieving stability; and second, to redistribute equally among members of society that part of income which is due to natural resources, thus achieving equality and justice" (8: 70).
Equal sharing of the "income from natural resources" is basic to Abu Sulaiman's understanding of riba and his views on land rent, share cropping and profit-sharing, subjects which we discuss below at appropriate places. Though he cites specific texts in support of specific views they are basically results of an analytical system rooted in his conception of Tawhid. Most of the writer approach the subject in an eclectic manner as their basic source material is the vast fiqh literature on the subject. As a position midway between fiqh-based eclecticism and, a system derived from one basic principle can be mentioned. Siddiqi's effort to derive the basic tenets relating to ownership rights from Islam's worldview, its social outlook and its philosophy at law (158: 41-90), concluding that "the individual, the state and the society each have claim on property rights in view of the principle that the Islamic State has a jurisdiction over individual rights, being the embodiment of Gods vicegerency on earth and representative of the people. This jurisdiction is however, functional, depending upon the values and objectives cherished by Islam" (158: 74). These principles are followed up by a detailed discussion of the circumstances justifying abrogation or abridgement of individual property rights by such measures as nationalisation, ceilings, control on prices, profits and rents and compulsory purchase or borrowing, etc. (221, II: 155-282). Baqir al Sadr is also critical of the view that in Islam individual ownership is the rule and public ownership the exception. He regards individual ownership, state ownership and. communal ownership as three forms existing parallel to one another in Islamic Law (171:257). Though Tahawi's eclecticism makes him assign the central position to individual rights of ownership, he puts the state representing the society on an almost equal footing as regards vicegerency of the Real Owner (77: I: 174). This gives the state "the right to intervene in private property by regulating it, putting ceilings or confiscating after due compensation when the owner deviates from the basic role of property that it should be an instrument of service to the society" (77, I: 217). The early writings of Mawdudi lean heavily towards assigning the central place to individual ownership (51: 32). His later views are nearer to the middle position that admits social control whenever social interest calls for it. But he would still like to keep state intervention at the minimum (51: 116). Far from the position taken by Abu Sulaiman, his views on specific issues like land reforms are shaped by this approach, for which he finds support in the fiqh literature. A, similar position is taken by the martyr Sayyid Qutb who declares the right of individual ownership basic to the Islamic system. Both of them emphasise, however, the need of ensuring the fulfilment of the basic needs of each and every individual and justify such social action as may be necessary for that purpose (Mawdudi 51: 404-407; Qutb 62: 162). This, however, is one of the points on which there is a complete consensus. What distinguishes some of them is their insistence on specific provisions in the fiqh literature relating to individual rights that sometimes stand in the way of radical reforms that modern life calls for. One is inclined to agree with Ali Abdul Qadir (224: 11) that the econoomic: philosophy of Islam relating to right of ownership "did not change the ordinary juristic attitude to the practical relations of people and property" which finds expression in fiqh literature. Notwithstanding individual stances, some of the powerful collective movements for Islamic reorientation of modern life have tended towards the approach closer to the "economic philosophy of Islam". Both the Ikhwan al-Muslimun and the Jama'at-i-lslami have, on occasions, issued manifestos- recommending ceilings on rural and urban property and other measures of social control (125; 168). One tends to conclude that the more our thinkers attend to the actual conditions prevailing in their societies the more realistic their approach becomes. Policy recommendations directed at the Islamic transformation or a society moulded over a long period by feudalism and capitalism draw more and more inspiration from the ultimate Goals of the Islamic system rather than, being governed by specific legal rulings given in normal circumstances. Relations of Production: Co-operation With a positive attitude to economic enterprise and socially-oriented purposive rights of ownership, individuals and groups in the brotherhood of man are enjoined to co-operate with one another in patterning life on earth in accordance with the Will of Allah. Economic relations, especially those in production and exchange of wealth, should be co-operative in nature. "Rivalry and cut-throat competition make no sense in this context" (73: 27). Co-operation is seen as the basic value in Islam's economic philosophy (8: 6; 77, II: 199; 10: 27). Besides being required by human brotherhood and equality, unity of purpose and common ultimate interests, and also besides being explicitly enjoined by the Qur'an and the Sunnah it is the attitude that suits the practical interests of mankind today and can save it from the ravages of Capitalistic competition. Ali Abd al-Rasul calls, in this context, for "constructive competition" aiming at what is best for the society and high quality production, while avoiding all activities injurious t o other producers and the consumers.3 As regards the institutionalisation of the co-operative attitude, and how far the new institutions will be different from those prevalent in the fields of production, exchange and distribution, detailed studies are still awaited. Siddiqi's study of entrepreneurial behaviour is only a beginning (619: 139-152). Despite the great attention paid to the subject by Kahf (612: Chapter IV) no progress is made along these lines. The Islamic view of co-operation does not rule out free and fair competition in the market, provided all economic agents adhere to Islamic morality. Competition is, emphasised in contrast to monopoly whose elimination is regarded as a prerequisite to ensuring justice and growth (51: 152; 619; 181). This makes it still more necessary to visualise how the co-operative spirit will translate itself into action where millions of individual units are involved, knowledge is imperfect and communications involve costs. Development and Growth Islam's economic philosophy does not stop at teaching men to co-operate after having encouraged them in productive enterprise. It creates a powerful drive for development. A true Muslim looks upon developmental efforts as striving in the cause of Allah (jihad fi sabil Allah) (595: 128; 477: 36; 484). The Muslim society orients its policies in order to ensure sufficiency and peace for all and any relaxation in this regard is looked upon as rejection of the bounties of Allah (77: I: 6-9). Economic development has become a necessary condition to be fulfilled to enable the Muslim, peoples to perform their mission with the humanity that the Qur'an declares to be their raison d'ętre. This mission is related to the well-being of all human beings. It cannot be performed while Muslim countries continue to be politically and economically subservient to the powers which stand for alien cultures (158: 130, 484). A narrow nationalistic approach to economic development does not harmonise with the Islamic spirit which calls for a global approach ensuring co-operation between the rich and poor nations to usher in an era of universal prosperity and banish hunger and fear from human society. As to the Islamic strategy for economic development its chief distinguishing feature is that social justice and growth go together (177: 51/13). This is ensured by the motivation that Islam provides for economic development (56: 45). Individual profit motive is not the chief propelling force in Islam. Developmental efforts are mainly social and the individuals willingly co-operate in this venture (475: 43, 96-113). Seen in the context of the Islamic world view, developmental efforts cannot become an end in themselves, nor a rising GNP the only index of "growth" in the Islamic sense. The aim is a good life with all its dimensions, the economic aspect being only one of them. Emphasising this point Tahawi (77, 11: 229-232) goes on to state how Islam's emphasis on work, on the fullest exploitation of natural resources, and on an active role for the state will ensure growth with justice. End of Part One ------------------------------------------------- Notes and References: - Research Report I : Contemporary Literature on Islamic Economics, 1978. 69p.
- "Allah coineth a similitude: a township that dwelt secure and well content, its provisions coming to It in abundance . . . ." (XVI: 112.)
"so let them worship the Lord of this House, Who hath fed them against hunger; and hath made them safe from fear" (CVI: 3-4). - Ali Abd al-Rasul: "Suluk al-Mustahlik wa'l munsh'ah fi'l itar al-Islam". Paper presented at the First International -Conference on Islamic Economics Makka. 1976. Mimei 31p.
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