Some people think that Islam has no economic system of its own, but it is purely their whim. Islam came, in this world, as the last Divine religion (or ideology of life) for the whole mankind. How could it have been that it had not given requisite guidelines for the economic system of its believers? It is known that for any revolution, whether religious or secular, four pillars, are quite essential for success, namely faith, political system, economic system and social system. It is these four pillars on which the edifice of a nation's life stands. Islam as an universal religion for the whole mankind could not have ignored this most vital and essential aspect of human life. It is due to this reason that the Holy Quran provides guidance for the Islamic economic system.

The basic facts of the Islamic economic system whether it is the law of demand and supply, the theories of production, distribution, consumption, organisation, financial system and the social system have been laid down in this Divine Book. The practical shape of this system was given by the Holy Prophet himself (P.B.U.H.). His practice, actions and sayings are spread in numerous books of Hadith. If one is not aware of his practice and actions, it is his fault, and not the fault of Islam. Some of our scholars want that the books on Islamic economics should have been written in the fashion Adam Smith, J.S. Mill, Marshall, Pigou and Marx etc wrote. But they do not realise that these books have been written during the last three hundred years. The Muslims had already revived the Greek philosophy and had educated and trained the Europeans in financial matters. The early Arabs of 6th and 7th centuries AD. did not know philosophy at all. The Holy Prophet (P.B.U.H.) and his companions were all practical men, and men of action. They were not aware of Greek philosophy. They worked according to the dictates of the Holy Quran. Philosophy came to be known by the Saracens in the reign of Haroon-Al-Rashid and Mamoon-Al-Rashid in the real sense.

The main reasons for such a negative thought of some scholars regarding the Islamic economic system are due to the following:

 1) Islamic economic system ceased to be known as a world's dominating ideology after the downfall of Abbasid empire in Arabia and the downfall of Umayyads in Spain. After the downfall of these empires the Sultanates worked on this system rather indifferently.

2) The Muslim scholars, whether jurists, historians or the philosophers did not write any philosophical books on Islamic economics which could have served as a basic guide for the coming generations (or even for the West); and the chief reason of it was that they knew only the most essential aspects of Islamic economics as enunciated by the Holy Quran and Sunnah.

 3) Due to civil wars among the Muslims, the Soofis and the Ulema always depreciated the worldly life perhaps discouraged the economic activities of the Muslims. They only appreciated and emphasised the life after death. Presumably it was due to this reason that the Muslim scholars of the Medieval ages did not write any philosophical book on Islamic economics. Even today such sermons are recited in our Friday prayers where the worldly life is still cursed by the Maulvis. They hardly appreciate the economic problems of our age.

 4) Whatever Islamic economic system was in vogue in the Muslim world, it was finished by the European powers in 18th & 19th centuries. These Christian governments introduced and stamped on us their own economic system (which was mundane and was based on ideologies enunciated in the Wealth of Nations' and similar western works) which is still in vogue.

It is not possible to discuss the Islamic economic system, in detail, in a brief article like this. I will confine myself only to elaborate the salient features of this system including: (i) definition, (ii) the scope, (iii) the basic principle, (iv) the law of demand and supply, (v) halal and haram, (vi) production, (vii) consumption, (viii) distribution, (ix) financial system and (x) the concluding remarks.

1) Definition of Islamic economics: The Islamic economics is both a science and an art which deals with the daily routine of a Muslim's economic life i.e. how he earns his income and how he spends it. (I have not used the word "human -being" in the place of "Muslim" because Islam is an ideological religion and as such has direct concern only with its followers). It is a science in the sense that it involves many scientific methods in the production of material goods, their distribution and consumption.

2) Scope of Islamic economics: The scope of Islamic economics is very vast. As I have already said, Islam is a Divine religion, hence its economic system is also Divine. This fact is evident from the teachings of the Holy Quran. Those who have studied this Holy Book know that human beings have been created as the vicegerent of Allah on this earth, and as such the whole universe has been put in their services. There are many verses in the Holy Quran which depict this fact. I am quoting only a few. The Quran says, "And when thy Lord said to the Angels, I am going to create a viceroy, of Mine, on this Earth", they said, "Willt Thou create, such a generation (on this earth) who will quarrel among themselves and will shed the blood of their own brethren, and here we are who are praying and praising Thee". Then God replied, "I know those matters (or things) which you do not know". (The Holy Quran, Surah Al-Baqra, VerseNo. 30). At another place Allah declares: "It is He who causeth rain (i.e. water) from the sky which you drink, and the fodders are also created for your animals. Besides it, the agricultural crops, olive trees, dates, grapes and many other fruits are created and produced by this water. Indeed, there is a great lot of thinking for those persons who ponder over them". "And it is He who has confined the days and nights; the sun and the moon, and all the stars for your service. Indeed, there is a great lot of thinking for those persons who are wise and intelligent". "And whatever He has created on this Earth of different colours, there is a great lot of thinking for those persons who deduce lessons from them". "And it is He who has reserved the Oceans (for you), so that you may eat fresh meat from them and bring out such things from them which you can use as ornaments; and you also see the big ships which ply on the bosoms of the oceans for your trade and business". "All these things have been created for you so that you may seek the bounties of Allah and may pay thanks to Him." "And it is He who has fixed the mountain son this earth so that it may not deflect from its path (and you may be thrown away in the space); and It is He Who has created rivers, natural paths and the stars, so that you may find your ways and may reach your destination", "Then, is That One Who has created all such things, equal to those (The idols) who cannot create such things". "And if you would try to count all these things, you can not. Indeed, He is the most gracious and forgiver". (Al-Nahal: verses No. 10 to 18).

 Though this lengthy passage is addressed to the pagans, Jews and Christians and to all human-beings but I have narrated it to show the vast scope of Islamic economics. Now, it will be quite evident how vast is it and how far it reaches? It embraces the whole Universe. But as we are living on this earth, our first concern will be with the natural resources of this earth.

 3) Basic principle of Islamic economics: The basis of Islamic economics is enshrined in the spiritual norms of Islam. Unlike the modern economic systems which are based on the mundane philosophy, the Islamic economic system is directly guided by Allah Almighty Himself. As Islamic economic system was passing through its early stages of development, the Quran guided the Holy Prophet (P.B.U.H.) with regard to its effective enforcement. Since this system is Divine guided, it is spiritual. Additionally, all important aspects of the Islamic economic system and the applicable norms are thoroughly discussed in the Holy Quran. Whether it is production, consumption, distribution or the financial system, they all have been discussed in this Divine Book sufficiently. Quran itself declares that Allah Almighty created the human being as His Viceroy on this Earth, and as such He created all needed provisions so that they may consume them and may satisfy their wants. He declares, "O! you human beings, pray your own Lord (The Nourisher) who created you and those before you (i.e. the Genies) so that you may fear Him. It is He Who made this Earth as a bed for you and the sky as a canopy for you, and He causeth the rain and creates different types of fruits v and corns from it, so that you may consume them (as your provision). Hence, do not make any copartner with Him; and you know it better. (Al-Baqarah: 21 and 22).

 4) Law of Demand and Supply: The question of demand and supply stems from the fact that all human beings have been given the natural instinct of hunger and thirst and other requirements of life. The things which are most essential for human life, have been supplied by Nature quite abundantly, such as, air, water and food etc. To fulfill other demands, they have been asked to manufacture their own essential goods. Quran declares, 'There is nothing for human beings than what they endeavor for." This clearly shows that to fulfill other demands they will have to labour hard in all walks and branches of life. But for this purpose they have only been allowed to create or produce such things which have been declared as "Halal" (lawful) by Islamic Shariah. The "Haram" (unlawful) things have totally been banned to be produced or manufactured. (Their details have been given in full in Islamic jurisprudence). Hence, the question of "Halal" and "Haram" comes first in Islamic economics and is a basic, qualitative guidance with regard to supply and demand.

 5) Halal and Haram: The question of 'Halal' and 'Haram' (lawful and unlawful) is an important principle of Islamic economics as briefly described above. It was introduced in Islamic economics quite gradually because at the time of Islamic Revolution the people were illiterate and they did not know what was 'Halal' and 'Haram'. The question of 'Halal1 and 'Haram' at that time, was related with three aspects of life:

a) In edible things;

b) In financial matters; and

c) In the daily business of life.

The Islamic Shariah prohibited them gradually because doing unlawful things had become a second 'nature' of the people. Hence, in edible things, Islam at first prohibited all carnivorous animals and such birds which used their claws while they eat. In the same way eating of all dead animals and birds was also prohibited. All insects and crawling animals were also declared 'Haram'. Drinking, of wine, blood and other filthy things were prohibited (All these details are given in the books of jurisprudence). In financial matters all types of usury and interest (i.e. 'Riba') were prohibited and their dealings and practice were declared a deadly sin. In the same way six other items which were most important and were often used as a means of exchange, were also called unlawful if they were not exchanged hand to hand and in equal weight. Such items were gold, silver, dates, barley, wheat and salt. Many Ahadith of the Holy Prophet (P.B.U.H.) have been narrated, in this connection. The practice of usury and interest was prohibited so strictly that a religious war (i.e. Jihad) was declared again the offenders.

In the daily business of life, gambling, cheating, fraud, games of char bribes, theft, dacoits, murders, monopoly and hoarding of the corns w all declared illegal and unlawful and severe punishments were present for them.

6) Production of Wealth: In order to fulfill the daily needs and requirements, Islam permits the Muslims to produce and manufacture such things which are quite essential for human lives. Such things are of two categories. 1) One, which is naturally produced. It includes all the natural wealth which is related with land, seas, mountains, forests and minerals etc. 2) The other things are human made. They include all the manufactured goods and things which the human labour can produce. But here, again Islam puts a ban on the production of such things which are injurious for human health and have been prohibited by Islam, such as, the manufacturing of wine and narcotics except for medical purposes. For the production of consumer goods the combination of land, labour, capital and organisation has been approved by Islamic economics. Quran and Ahadith, both speak highly about the human labour for producing things beneficial for the Muslims and the Muslim society. A great dignity has been ascribed to human labour in Islam. It discourages idle life and wastage of time in useless pastimes. But it encourages healthy pastimes and professions like daily exercise, wrestling, recreation and tournaments and many other similar activities.

 7) Consumption: Islam speaks very highly about the consumption of lawful worldly things. Unlike some other religions of the world which ask their followers to pass an austere and ascetic life in this world so that they may enjoy a better life in the next world, Islam encourages and orders its followers to eat and utilise every thing of this world which is pious, neat and clean and not 'Haram' (unlawful). The consumption and use of the worldly things is so, important in Islam that no part of the Holy Quran repeatedly stresses this point. In every part of the Holy Book, Allah orders the Muslims to eat and to utilise the produce of this earth in a legal way. In the very beginning of the first surah of the Holy Quran, Allah orders human beings to praise Him as as ‘Nourished’ because it is He Who has created Human beings and is responsible for their nourishment. It is He Who has made this earth as a bed (for the Human beings) and the sky as a canopy and causes rain (on this earth) so that different types of fruits are produced for their provision (Al-Baqarah: 21, 22).

In another verse He declares, "He, It is, Who has created fruitful gardens which are trellised and untrellised, dates, olive trees, different types of corns, pomegranates of equal size and of unequal size. Hence, eat them when they bear fruits and pay the share of Allah and don't be prodigal. The Holy Quran, Surah No.6 and Verse No. 142. Not only the things which are produced on this earth or in the oceans rather the whole universe has been put under the service of human beings. This is due to this reason that the human beings have been declared as vicegerents of the Almighty Allah on this earth.

 However, people have been ordered to engage themselves in production actively to satisfy their wants. For this purpose they have also been ordered to carry trade and business.

8) Distribution of Wealth: Perhaps in no religion of the world, the distribution of wealth has been emphasised so much as in Islam. Islam disdains poverty in any form chiefly because man has been created on this earth as a viceroy of Allah, and. He does not like His viceroy or his progenies should pass poor life. But it was the kings, monarchs and the capitalists who took possession of all resources of production and left the people to become impoverished.

 At the time of Islamic revolution, there was much poverty throughout the world including Arabia. It was due to this fact that Allah ordered not only to the Muslims but also to the pagans to spend their wealth on poor. There are many verses in the Holy Quran to this effect. "Establish prayers and pay Zakat", is a Divine order repeated more than as other order in the Holy Quran. In the same way the Muslims have always been prompted to spend on the poor and the needy. "They ask thee, what should they spend?" "Say, whatever is left after your (genuine) expenditure." (spend them on your other brethren). In Islam, the Muslims have been asked to pay to the Islamic Government in the following forms so that the wealth may be spent on the poor and the needy and on State affairs. These items are the booties, Fai, Zakat, Sadaquat, Ushr, Khums and other taxes. In Surah Tauba, Allah Himself has ordained to distribute Zakat proceeds on eight items, i.e. the poor, the paupers, the collectors of Zakat, those new Muslims whose hearts are to be reconciled, the; slaves, the insolvent debtors, in Jihad and for the travelers. (Surah Tauba, V. No. 60). The non-Muslims have also been ordered to pay to the Islamic government Kharaj, Jizya and Oshoor on their merchandise. They are also bound to pay to the government other taxes at time of need. In the same way the Muslims are also asked to pronounce their wealth as Waqf (Trust) in the way of Allah (which will be spent on the poor and the needy). Their wealth is also subject to further distribution as inheritance among their heirs after death. All these facts clearly show that Islam does never want the concentration of wealth in a few hands rather it wants that it should remain rotating in the whole society so that everyone be saturated from it. The hoarders of wealth have greatly been warned with severe punishments in the Quran.

 9) The Financial System of Islam: Islam as a last ideology (religion) for the whole mankind could not have ignored this most important: aspect of human life. It was due to this fact that the Holy Prophet (P.B.U.H.) gave to the Muslims the unparalleled financial system of Bait-al-Mal which was to dominate all economic activities of the Muslims throughout the world. The institution of Bait-al-Mal was already established by the pious hands of the Holy Prophet (P.B.U.H.) before the battle of Badr. Ibn-e-Kathir declares, in his famous exegesis, that Saad-bin-Malik, a companion of the Holy Prophet (P.B.U.H.) found a sword in the battle of Badr. He brought this sword to the Holy Prophet (P.U.B.H.) and requested that the same may be given to him. The Holy Prophet (P.U.B.H.) replied that the sword did not belong to him nor to the companion. He should deposit it in the Bait-al-Mal. The sword was deposited there. (Tafseer-Ibne-e-Kathir, Surah Anfal). This clearly shows that the institution of Bait-al-Mal was already established during the Holy Prophet's (P.U.B.H.) time, though no especial edifice was built for that. It was Masjid Nabawi (The mosque of the Prophet (P.B.U.H.) which served this purpose. The main sources of income of Bait-al-Mal, at that time, where (1) Khums, i.e. the fifth part of the booties of battles, (2) Fai, (3) Zakat, (4) Sadaquat, (5) Ushr, (6) Kharaj, (7) Jiisya, (8) Ransom money, (9) the Khums of Treasure Trove, (10) the income of Waqf and the (11) contribution of the Muslims at time of need. The income of Bait-al-Mal thus collected was spent on the poor, the paupers, slaves, Mujahedeen and State affairs.

 In this way the entire function of the Islamic Government was financed from the sources of Bait-al-Mal. In order to control the monetary system the Holy Prophet (P.U.B.H.) had permitted bimettalism in the Islamic State. In this way the coins of all countries were in free circulation in Arabian market. No special coin was minted at that time. It was done during the reign of the second Caliph. The real functions of Bait-al-Mal were also evinced during his reign where all the State affairs were carried through this august institution.

 10) Concluding Remarks: In this brief article I have only discussed the salient features of Islamic economics, though not in details.

 However, this article will provide a true picture of Islamic economic system and it will show that how it was established by the Holy Prophet (P.B.U.H.) and the Caliphs. Now, it is upto us to see whether we are passing our lives according to the dictates of this system. Some people think that it is not workable in this modern age. But I think that it is purely their whim. If there is a 'will' there is a 'way'; and for a nation it could be a challenging task but not an impossibility.

* The author is the Research Officer, State Bank of Pakistan, Karachi.

The ideas expressed in this article are the personal views of the writer. It has no concern with Bank's policy.