(5) To arrange social security and foster equitable distribution of income and wealth;
(6) To harmonise international relations and ensure national defence.
There is no specific significance in the order in which the above functions have been stated. All the functions are important and none may be ignored. Each of these functions is briefly discussed below.
(1) Eradication of Poverty, Full Employment and Optimum Rate of Growth
Since economic resources are a trust from God, it is the moral obligation of the trustee to employ these resources efficiently to realise the purpose of the trust, which is the welfare of all the vicegerents of God. This naturally implies: firstly, eradication of poverty and satisfaction of all basic human needs; secondly, full and efficient employment of all human and material resources to attain an optimum rate of economic growth and improve the standard of living of all people; and, thirdly, avoidance of conditions generating deficient or excess demand and leading to unemployment or inflation. The word "optimum" has been preferred here in place of "maximum" or "high" to allow for 'a margin for harmony with the goals of spiritual uplift and social welfare. This is because economic growth is not an isolated phenomenon and is to be viewed against its impact on the moral fabric of Muslim society, the goal-of social and economic justice, and the overall "welfare" of all people.
For a realisation of this objective it would be incumbent upon the Islamic state not to leave the essential function of allocation of resources, particularly scarce resources, or' the determination of aggregate demand to the unhindered operation of blind market forces. It should itself play a positive role and consciously contribute towards the attainment of desired goals through (i) rational planning, and (ii) building the necessary physical and social infra-structure.
(i) Planning. It is now widely recognised that undisciplined self-interest and unguided play of market forces may not always work out for the best of all strata of society and may not necessarily lead to optimum efficiency in the use of resources because of limitations of individual horizon, lack of awareness or appreciation of social costs,' and unbalanced growth in different sectors of the economy unrelated to the welfare needs of the people. The Islamic state should, therefore, resort to planning and play an active role-in the implementation of its plans.
The need for planning does not imply that the Islamic state can resort to regimentation or unscrupulous control of the private sector. What it does imply is that instead of leaving the allocation of resources and the management of aggregate demand primarily to the blind interplay of market forces, the state should play an active and conscious role in not only determining priorities and guiding or channelling the scarce resources in the light of those priorities, but also regulating demand so that occurrence of recession or inflation is avoided.
Priorities should, of "course, be determined in accordance with, firstly, the terms of the trust as laid down in the Shari'ah by the Creator of oil resources, and secondly, the needs and general overall welfare of God's vicegerents. The basic teachings of the Shari'ah are eternal and universal but the needs of man might differ with changes in time, geographical environment, stages of economic and social development and progress of technology. It may be stated that in general the efficient use of resources for the satisfaction of fundamental needs of all trustees should receive the utmost priority.
(ii) Physical and social infrastructure. For the growth of an economy and the development of a healthy and prosperous society, the existence of a basic physical and social infrastructure is generally recognised to be an absolute necessity. Much as investment in necessary physical capital leads to the development of an economy, the provision of such, capital does not appeal to private entrepreneurs because direct monetary returns for investors are small and the amount of capital required is generally beyond their capacity. But since social benefits are so much in excess of private benefits, investment in these sectors must rank high in the development plans of an Islamic state as it should in the development plans of any developing economy.
The Qur'an enjoins upon Muslims to gather whatever strength they are capable of (8: 60). The significance of "strength" here need not be confined to military strength. It could also be implied to refer to the economic strength, which, among others, lies at the root of military strength. An essential part of this latter strength is the provision of an infrastructure through the improvement and extension of roads and highways, building of dams and bridges, provision of irrigation networks, construction of ports, airports and telecommunication services, and furnishing of facilities essential for providing external economies to different sectors of the economy. The role of the state here is obviously of primary importance. Therefore, whenever the Prophet appointed a governor, he instructed him to strive for creating ease rather than hardship for the people.33 One of the means by which the state could generate prosperity is to provide the necessary infrastructure. Public works programmes, therefore, received significant attention during the days "of Umar and other caliphs.
The provision of social capital (education, public health, etc.) should also be an undisputed area of the activity of an Islamic state. The general case for education is obvious. Since according to the Prophet, "acquisition of knowledge is obligatory for every Muslim",34 public investment in education is necessary. Educational errors must, however, go beyond attempts to increase the degree of literacy, for literacy is only a means to real education and not an end in itself. The general aim of education in Muslim society must be to raise Muslims who would conform to the ideals laid down in the Qur'an and the Sunnah, to introduce the process of change that would bring about the Islamic environment, to teach ever-new skills, and to stimulate the incentive for research and invention of new techniques of production and distribution so as to utilise God-given resources more efficiently. The education system, in addition to building upright moral character, should also inculcate in the student the spirit of hard work and efficiency, economy and frugality, avoiding waste and extravagance, and making productive investment of savings so that in addition to the individual, it benefits society in general as well.
If education is one sphere 6f social capital towards which the government should take positive steps, another is public health. The Prophet declared that "a strong Muslim is better and more beloved before God than a weak one",35 and that "cleanliness is half of faith".36 Therefore, it may be inferred that it is the responsibility of the Islamic state to provide a healthy environment combined with adequate medical facilities so as to improve the health and efficiency of people and to reduce suffering from sickness and disease. With respect to a clean and healthy environment one may also argue in favour of better, sanitation facilities, curbing of pollution, provision of clean and safe water supplies, hygienic and comfortable housing, and clearance of slums.
(2) Stability in the Real Value of Money
One of the most serious problems of contemporary society is persistent inflation with accompanying decline in the real value of money and monetary assets. This is not because inflation and growth are necessary counterparts of each other but because of a number of inflation-prone post-war phenomena, which it is not necessary to delve into in this paper. In fact stability in the real value of money is vitally important not only for the continued long-term growth of an economy but also for social justice and economic welfare.
Honesty and justice in all measures of value has been unequivocally stressed in the Qur'an:
And give full measure and weight with justice (6: 152).
So give full measure and weight without defrauding men in their belongings and do not corrupt the world after its reform. This is better for you, if you are believers (7:85; see also, 11: 84-85,17: 35, and 26: 181).
These verses should be considered to apply not only to individuals but also to society and the state and should not be confined merely to conventional weights and measures but should also encompass all measures of value.
Money also being a measure of value, any continuous and significant erosion in its real value may be interpreted in the light of the Qur'an to be tantamount to corrupting the world because of the adverse effect this erosion has on social justice and general welfare which are among the central goals of the Islamic system. This implies that any activity or behaviour of individuals, groups, or institutions in an Islamic state, which significantly erodes the real value of money should be considered to be a national issue of paramount importance and treated with a sense of concern. Nevertheless, there are other goals, which are of equal, or greater, importance. If there is an unavoidable conflict between the realisation of these goals and a compromise becomes inevitable then the goal of stable real value for money may be somewhat relaxed provided that the damage done by such relaxing is more than offset by the realisation of other indispensable national goals.
It may hence be considered obligatory for the Islamic state to resort to healthy monetary, fiscal and incomes policies and appropriate direct controls when necessary, including wage-price controls, to minimise erosion in the real value of money, thus preventing one group of society from knowingly or unknowingly shortchanging others and violating the Islamic norms of honesty and justice in measures.
This does not imply that Muslim countries, individually or collectively, would be able to stabilise the value of their currencies by their own effort. In a world where all countries are mutually interdependent and where the monetary and fiscal policies of some major industrial countries are responsible for a substantial degree of price instability, it may not be possible for the small and open economy of an individual Muslim country to achieve the desired stability unless the major industrial countries follow saner policies. However, what it does imply is that an Islamic state should itself be clear about its role with respect to price stability and should be determined to contribute whatever it can for the attainment of that goal.
(3) Law and Order
The importance of this universally recognised function of the state cannot be overstressed. This is because the degree of law and order in a society and the extent of security of life and property are one of the prime, determinants of growth and stability of an economy and the inner happiness of individuals. In his remarkably terse but powerful farewell pilgrimage address, in which the Holy Prophet forcefully enunciated a number of principles for the socio-politico-economic system of Islam, he declared; "Your lives and your properties are as sacred as this day of Hajj".37 On another occasion he emphasised: "Whatever a Muslim possesses is -unlawful for another Muslim, his wealth and property and his life".38
On the basis of this, Muslim jurists have unanimously stressed the duty of the Islamic state to safeguard the life and property of all individuals within its boundaries39 so that, in the words of the Prophet, "a woman travelling alone from Hira' to the Ka'bah feels such security that she has fear of none but God".40
(4) Social and Economic Justice
Since Islam considers mankind as one family, all members of this family are alike in the eyes of God and before the Law revealed by Him. There is no difference between the rich and the poor, the high and the low, or the white and the black. There is to be no discrimination due to race, colour or position. The only criterion for a man's worth is character, ability, and service to Islam and humanity. Said the Holy Prophet: "Certainly God does not look at your faces or your wealth; He looks at your heart and your deeds".41 "The noblest of you are the best in character."42 To be even more emphatic the Prophet warned of the disastrous consequences of discrimination and inequality before the Law for an individual or a nation:
Communities before you strayed because when the high committed theft they were set free, but when the low committed theft the Law was enforced on them. By God, even if my daughter, Fatimah, committed theft I will certainly cut her hand.43 Whoever humiliates or despises a Muslim, male or female, for his poverty or paucity of resources, will be disgraced by God on the Day of Judgment.44
'Umar, the second Caliph, wrote to Abu Musa al-Ash'an, one of his governors, asking him to treat everyone before him alike in respect so that the weak did not despair of justice from him and the high did not crave
for undue advantage.45 This spirit of social justice thoroughly permeated the Muslim society during the period of the first four caliphs, and even in the later period, though a little subdued, did not fail to find its manifestation on several occasions. It may be pertinent to quote what the renowned jurist Abu Yusuf wrote in a letter addressed to Caliph Harun al-Rashid: "Treat alike all individuals irrespective of whether they are near you or remote from you", and that "the welfare of your subjects depends on establishing the Divine Law and eliminating injustice".46
The Islamic teaching of brotherhood and equal treatment of all individuals in society and before the Law would not be meaningful' unless accompanied by economic justice so that everyone gets his due for his contribution to society or to the social product and that there is no exploitation of one individual by another. This point is also very well stressed in Islamic writings. The Qur'an urges Muslims to "withhold not what is justly due to others" (26: 183),47 implying thereby that every individual must get what is really due to him, and not more by depriving others of their share. The Prophet aptly warned: "Beware of injustice for injustice will be equivalent to darkness on the Day of Judgment".48 This warning against injustice and exploitation is designed to protect the rights of all individuals in society (whether consumers or producers and distributors, and whether employers or employees) and to promote general welfare, the ultimate goal of Islam.
Of special significance here is the relationship between the employer and the employee which Islam places in a proper setting, specifying norms for the mutual treatment of both so as to establish justice between them. An employee is entitled to a "just" wage for his contribution to output and it is unlawful for a Muslim employer to exploit his employee. Three persons, declared the Prophet, who will certainly face God's displeasure on the Day of Judgment are: he who does not fulfil his covenant with- God; he who sells a free person and enjoys the price; and he who engages a labourer, receives due work from him, but does not pay him his wage.49 This hadith, by placing exploitation of labour on an equal footing with contravention of the covenant with God and enslaving of a free person suggests how repugnant exploitation of labour is to the spirit of Islam. Besides being paid the "just" wage, Islam requires that labourers should not be made to work so hard or in such miserable conditions that their efficiency declines, their health deteriorates, or their ability to enjoy income or participate in family life gets impaired. If they are made to perform a task, which is beyond their capacity they should be provided with sufficient help (manual or technical) to enable them to do the job without undue hardship. Said the Holy Prophet:
"Your, employees are your brethren whom God has made your sub-ordinates. So he who has his brother under him, let him feed him with what he feeds himself and clothe him with what he clothes himself and not burden him with what overpowers him. If you do so then help him".50
On the basis of these teachings, fixation of minimum wages and maximum working hours, creation of appropriate working conditions, enforcement of precautionary measures against industrial hazards, and adoption of technological innovations to reduce hardships would be fully in conformity with the spirit of Islamic teachings.
While this is the treatment expected of an employer to his employees, Islam, because of its commitment to justice, protects the employers by placing certain moral obligations on the employee as well. These include, among others, honesty, diligence and efficiency In the performance of the function for which the employee has been hired. "An employee who excels in his devotion to God and also renders to his employer the duty, sincerity and obedience that he owes him, for him there is double reward [with God]."51 In this field, the Islamic state could play an important role through inculcation of Islamic work ethics in employees and imparting of appropriate vocational education.
(5) Social Security and Equitable Distribution of Income and Wealth
Given the commitment of Islam to human brotherhood and to social and economic justice, gross inequalities of income and wealth could only be repugnant to its spirit. Such inequalities could only destroy rather than foster the feelings of brotherhood that Islam wishes to create. Besides, since all resources are gifts of God to all human beings (al-Qur'an, 2: 29), there is no reason why they should remain concentrated in a few hands. Hence, Islam emphasises distributive justice and incorporates in its system a programme for redistribution of income and wealth so that every individual is guaranteed a standard of living that is humane and respectable and in harmony with the dignity of man inherent in his being the vicegerent of God on earth. A Muslim society that fails to guarantee such a humane standard is really not worthy of the name as the Prophet declared: "He is not a true Muslim who eats his fill when his next-door neighbour is hungry".52
Hence, Islam emphasises distributive justice and incorporates in its system a programme which seems to contain the following five essential elements: one, as discussed earlier, making arrangements for training, and then rendering assistance in finding gainful employment to those unemployed and looking for work in accordance with their ability; two, enforcing a system of "just" remuneration for those working; three, making compulsory arrangements for insurance against unemployment and occupational hazards, old-age pensions and survivors benefits for those who can afford to provide for this; four, providing assistance to those who, because of disability, physical or mental handicaps, or adolescence are unable to support themselves or to attain a respectable standard of living by their own effort; and five, collecting and distributing Zakat and enforcing Islamic teachings related to the division of the estate of a deceased person to accelerate the distribution of income and wealth in Muslim society so that, in the words of the Qur'an: "wealth does not continue to circulate merely among your rich" (59: 7).
It is the duty of the Islamic state to ensure a respectable standard of living for every individual, who is unable to take care of his own needs and hence requires assistance. The Prophet clearly declared that: "He whom God has made an administrator over the affairs of Muslims but remains indifferent to their needs and their poverty, God will also be indifferent to his needs and poverty".53 He also said that: "He who leaves behind him dependants, they are our responsibility,54 and that "the ruler, [state] is the supporter of him who has no supporter".55 These and other similar Ijadlths lay down the gist of Islamic teachings in the realm of social security.
'Umar, the second Caliph, explaining redistributive justice in Islam, emphasised in one of his public addresses that everyone had an equal right in the wealth of the community, that none, not even he himself, enjoyed a greater right in it than anyone else, and that if he were to live longer, he would see to it that even a shepherd on Mount Sinai received his share from this wealth.56 Caliph 'All is reported to have stressed that "God has made it obligatory on the rich to provide the poor with what is adequate for them; if the poor are hungry or naked or troubled, it is because the rich have deprived them {of their right], and it will be proper for God to hold them responsible for this deprivation and to punish them".57 The jurists have almost unanimously held the position that it is the duty of the whole Muslim society in general, and of its rich in particular, to take care of the basic needs of the poor, and if the well-to-do do not fulfil their responsibility in spite of their ability to do so, the state should compel them.
The Islamic concept of justice in the distribution of income and wealth does not require equal reward for everyone irrespective of his contribution to society. Islam tolerates some inequalities of income because all men are not equal in their character, ability, and service to society (6: 165, 61: 71, and 43: 32). Therefore, distributive justice in the Islamic society, after (i) guaranteeing a humane standard of living to all members through proper training, suitable job, "just" wages, social security and financial assistance to the needy through the institution of Zakat, and (ii) intensifying the distribution of wealth through its system of dispersal of the estate of a deceased person, allows such differentials in earning as are in keeping with the differences in the value of the contribution made or services rendered to society.
The Islamic stress on distributive justice is so emphatic that there have been some Muslims who have been led to believe in absolute equality c£ wealth. Abu Dharr, a companion of the Prophet, was of the opinion that it is unlawful for a Muslim to possess wealth beyond the essential needs of his family. However, most of the Prophet's companions did not agree with him in this extreme view and tried to prevail upon him to change his position.58 But even Abu Dharr was not a protagonist of equality of flows (income). He was in favour of equality of stocks (wealth accumulations). This, he asserted, could be attained if the entire surplus of income over "genuine" expenses (al-'afw) was spent by the individual in improving the lot of his less fortunate brothers in particular and society in general. The consensus of Muslim scholars in spite of being intensely in favour of distributive justice, has, however, always been that if a Muslim earns by rightful means and from his own income and wealth fulfils his obligations toward the welfare of the society by paying Zakat and other compulsory and voluntary contributions, there is nothing wrong in his possessing more wealth than other fellow Muslims.59
In reality, however, if the Islamic teachings of halal and haram about income and acquisition of wealth are sincerely followed, if the norm of justice to employees and consumers is applied, if provisions for redistribution of income and wealth are implemented, and if the Islamic law of inheritance is enforced, there will remain no gross inequalities of income and wealth in Muslim society.
(6) International Relations and National Defence
With respect to the wider sphere of mankind and the Muslim ummah, it is the responsibility of the Islamic state to try to make as rich a contribution as it can toward the spiritual and material uplift of mankind. If resources permit, it should provide assistance to relieve hardship and promote growth and accelerated development in deserving countries. The guiding principles of its policies in international economic relations may in the light of Islamic teachings be briefly stated to be: one, to co-operate in all matters contributing to "righteousness" and "piety" and to refrain from co-operating in "aggression" and "sin",60 and two, to work positively for the welfare of mankind because it is the family of God.61
These principles, of course, relate to all countries and all people to whom the Islamic state is linked by bonds of universal human brotherhood as propounded by Islam. However, with Muslim countries to which the Islamic state is also united by bonds of common ideology, it should manifest greater solidarity and co-operation in all fields of life to enhance the unity and dignity of the ummah and the glory of Islam.
The Islamic state should also promote international understanding and peace in keeping with the teachings of Islam, which by its very name stands for peace. It should encourage and support any constructive move towards peace, and should honour all treaties and agreements to which it is a partner. Nevertheless, while working for peace as a basic objective, the Islamic state should do its utmost to strengthen its defences so as to prevent or frustrate any aggression against its faith, territory, freedom and resources since the Qur'an enjoins: "And prepare against them whatever force you can" (8: 60). This may be understood to imply preparedness in terms of both men and hardware, including compulsory military service, efficient training, high morale, and diversification of sources of supplies if these cannot be produced locally or in collaboration with other Muslim countries. Nevertheless, in compliance with Islamic teachings, the military strength of the Islamic state should be used only for a "just" cause in a "just" manner against those who nurture, or resort to, aggressive designs:
And fight in the way of God against those who fight against you, but do not transgress limits for God loves not the transgressors (2: 190).
c. The Wherewithal
To live up to all the above obligations, the Islamic state would naturally stand in need of adequate financial resources. This is not the subject of this paper but without its review, even though it might have to be confined to a consideration of some of its basic principles, the paper would remain incomplete.
One principle which is clearly recognised by all jurists is that the state has no right to acquire resources by confiscating property duly possessed by individuals or groups.62 However, if income or property has been wrongfully acquired, then the state not only has the right to confiscate it, rather it is its moral responsibility to rectify this state of affairs.
As for the means of income of the Islamic state, they are the following:
The Primary Sources
If the acquisition of resources through either confiscation or nationalisation without just compensation is to be ruled out then the primary sources left would be the following in addition to the sale of revelant services.
(i) Zakat,
(ii) Income from natural resources;
(iii) Taxation; and
(iv) Borrowing.
In this paper these different heads cannot be treated in detail. What we are attempting to do below is merely to state some broad principles.
(i) Zakat
To enable Muslims to bring to fulfilment a society which is like a single nuclear family, where wealth is equitably distributed and where the essential needs of all deserving individuals are met primarily by mutual help with the planning and organisational assistance of the state, Islam has instituted a powerful social security system giving it a religious sanctity which il enjoys nowhere else in the world. It is a part of the religious obligations of a Muslim to pay Zakat at a prescribed rate on his net worth or specified income flows to the Zakat fund.63 Of such great significance is the institution of Zakat in Islam that whenever the Qur'an speaks of the obligation to establish prayers it also simultaneously stresses the obligation of Muslims to pay Zakat. The Prophet went so far as to declare that "whoever offers prayers but does not pay Zakat, his prayers are in vain".64 .
There is a general consensus among jurists that collection and disbursement of Zakat is essentially the responsibility of the Islamic state.65 This was the practice during the days of the Prophet and of the first two " Caliphs; Abu-Bakr and 'Umaf. Abu Bakr even used coercion against those who refused to pay Zakat to the state. It was 'Uthman, the third caliph, who allowed the payment of Zakdt directly to the needy. Abu Bakr al-Jassas, the renowned commentator of Qur'anic legal injunctions, argues on the basis of the Qur'anic verse: "Take alms out of their assets to cleanse and purify them thereby" (9:103), that it is the duty of the state to institute a system for the collection of Zakat.66
However, even if the state collects Zakat, the proceeds are likely to be limited. Moreover, the expenditure heads for Zakat are clearly enumerated in the Qur'an.67 Even though some jurists have widened somewhat the coverage of the expression fi sabil Allah (in the way of Allah), it can hardly be made to include all expenditure heads of the Islamic state. Thus, if the Islamic state is to live up to its obligations it must have access to resources beyond the Zakat collection. In view of this the contention of some jurists that the state has no claims on the wealth of individuals beyond the Zakat is simply not tenable. Revenues would have to be raised through other means.
(ii) Income from Natural Resources
It has already been established that natural resources have been provided by God for the welfare of all people. The monetary benefit derived from these resources should, therefore, permeate to all people and should not under any circumstances be allowed to be diverted solely to certain individuals or groups. The acceptance of this principle does not necessarily restrict the management of these resources to the state alone. Whether the state or private enterprise should manage the exploitation of these resources should be determined by the criterion of efficiency. However, even if private enterprise is to manage and operate these resources the profit derived by it should not be more than what is justified by the services rendered and the
efficiency attained. .
In countries with abundant natural resources to contribute an adequate income to the state treasury to finance public expenditure (as. is the case in some major oil-producing Muslim countries) there may be little need for additional sources of revenues. However, countries where income from this source is either not available, or if available, is not sufficient, the state would have to supplement its income by resorting to taxation and/or borrowing if necessary.
(iii) Taxation
The right of the Islamic state to raise resources through taxes cannot be challenged provided that taxes are raised in a just manner and are within a certain "bearable" limit. This right is defended on the basis of the Prophetic saying that "in your wealth there are also obligations beyond the Zakat"68, and one of the fundamental principles of Islamic jurisprudence that "a small, benefit may be sacrificed to attain a larger benefit and a smaller sacrifice may be imposed in order to avoid a larger sacrifice."
Most jurists have upheld the right of the state to tax. According to Marghinani, if the resources of the state are not sufficient, the state should collect funds from the people to serve the public interest because if the benefit accrues to the people it is their obligation to bear the cost.69 Abu Yusuf also supports the right of the ruler to increase or decrease taxes depending on the ability of the people to bear the burden.70 However, only a just tax system has been held to be in harmony with the spirit of Islam. A tax system, which is oppressive and too onerous as compared with the ability of the people to bear has been unanimously condemned. All rightly-guided caliphs, particularly Umar, 'Ali and 'Umar ibn 'Abd al-'Aziz are reported to have stressed that taxes should be collected with justice and kindness, that they should not be beyond the ability of the people to bear, and should not deprive the people of the basic necessities of life.71 Abu Yusuf indicated that a just tax system could only lead to an increase in tax receipts and the development of the country.72 Mawardi emphasised that taking more is iniquitous with respect to the rights of the people, whereas taking less is unfair with respect to the rights of the public treasury.73
Ibn Khaldun genuinely reflects the trend of thinking during his time on the question of justice in the distribution of the tax burden by quoting from the letter of Tahir ibn al-Husain to his son who was the Governor of a province:
So distribute [taxes] among all people with justice and equity, making them general and not exempting anyone because of his nobility or wealth, and not exempting even your own officials or courtiers or followers. And do not levy on anyone a tax, which is beyond his capacity to pay.74
In view of the goals of social justice and equitable distribution of income a progressive tax system seems to be perfectly in harmony with the goals of Islam. It must, however, be emphasised that from the discussion of the jurists what is relevant from the point of view of modern times is the right of the Islamic state to tax with justice. It would not be proper to conclude that taxation should be strictly confined to the items mentioned by the jurists. Circumstances have changed and there seems to be the need for devising a tax system, which is in harmony with the goals of Islam and yields sufficient revenue to allow a modern Islamic state to discharge its functions as a welfare state.
(iv) Borrowing
If total revenue from all the above sources (including sale of services) is not sufficient, the Islamic state would stand in need of borrowing. In this case because of the Islamic injunction against interest, the borrowing would need to be free of interest.
For certain sound income-yielding projects amenable to sale of services and distribution of dividends it may be possible to raise funds on the basis of profit-sharing. However, the scope for this is limited in the case of most public projects. In case profit-sharing is not possible or feasible, the Islamic state may have to borrow funds and this would be possible only if the private sector of the Muslim society is so highly inspired by the ideals of Islam that it is willing to forego the return. In modern acquisitive Muslim societies imbued perhaps more with hedonistic ideals of the economic man as conceived by Adam Smith rather than by the altruistic teachings of Islam, and with continuous erosion of the real value of savings because of the high rate of inflation, it may be expected that borrowing without any return may tend to be unproductive unless it is made compulsory.
Expenditures financed by borrowing from the central bank tend to be inflationary, unless accompanied by a corresponding increase in the supply of goods and services, thus violating the norm of monetary stability as already discussed. Therefore, under normal circumstances borrowing from the central bank may be resorted to when a corresponding increase in output can be more or less ensured. Borrowing from the central bank may also be defended under certain special circumstances even if there is no corresponding rise in output provided it is felt that damage done by a small degree of inflationary financing is more than offset by other economic or non-economic gains that are likely to be realised. This seems to conform to the principle that a smaller sacrifice may be imposed to avoid a larger sacrifice and that the smaller of two evils may be tolerated.
"Richest" or "Ideal"
It may be contended here that all Islamic states may not have access to "adequate" resources to finance the functions discussed above and could not hence become "ideal." Here it is important to clarify that the "ideal" Islamic state should not be confused with the "richest" one. The ideal is to be construed in the light of general spiritual and material welfare attained for God's vicegerents within the framework of resources. Hence an Islamic state may be considered to have attained the position of "ideal" if it has at least (i) elevated the spiritual level of the Muslim society and minimised moral laxity and corruption; (ii) fulfilled its obligations for general economic welfare within the limits of its resources; and (iii) ensured distributive justice and has weeded out exploitation. Adequacy of resources is a relative term and is to be judged against attainable standards in the light of the stage of economic development.
It is, of course, the duty of the Islamic state to make* a concerted effort" to muster the maximum feasible level of resources and to harness them as efficiently as possible for fulfilling the widest possible range of responsibilities. Resources at the disposal of any society, rich or poor, may generally be expected to be scarce compared with the demands on them and every Islamic state would have to establish a schedule of priorities in the light of the Shari'ah and the welfare needs of the people. Planning would hence be an essential function of every state. Since planning could be misdirected to satisfy certain vested interests, decision-making in planning should be through the Islamic process of consultation so that different viewpoints and interests are given due consideration.
Raising an optimum level of resources and utilising it efficiently within the framework of a "just" plan demands unscrupulous honesty on the part of the common man as well as government employees. This demands that, on the one hand, the common man should be willing to provide honestly to the treasury the resources needed for attaining general social welfare, and, that on the other hand, corruption, including offering of gifts, let alone undisguised bribery, for obtaining an undue advantage in money, position, jobs or contracts is to be completely eliminated:
And swallow not your wealth among yourselves by false means, nor seek to gain access thereby to judges to swallow other people's property wrongfully with knowledge thereof (2: 1.88).
The Prophet (peace be on him) is reported to have said:
"How can a governor I have appointed say, this is for you [the treasury] and this is a gift for me! Why doesn't he sit in his parent's home and see if he gets those gifts? By God, in Whose Hand is Muhammad's life, anyone of you who takes [unduly] anything from this [what belongs to the treasury] will have it around his neck on the Day of Judgment." The Prophet then raised his hands and said twice: "O God! Have I conveyed?"75
While this honesty is expected in both the public and the private sectors, there are certain additional demands which public sector employees must fulfil. A Muslim public servant would be failing in his duty to God and society if he takes his remuneration but does not render his due in terms of diligence, efficiency and conscientiousness:
Any Muslim ruler entrusted with the affairs of Muslims who dies while he was cheating the people will find Paradise foreclosed for him.76
Unless this level of honesty is attained and every individual works diligently and conscientiously for the implementation of Islamic teachings, the Islamic ideal of a morally-orientated welfare state cannot be fully realised. The ruler and the ruled must work hand in hand for the realisation of these goals. While the state stands duty-bound to make an honest effort to create the ideal conditions, which Islam visualises, it is also obligatory for the public to render to the state their best in terms of co-operation and goodwill to crown the state efforts with success. It must be fully realised that the extent of movement towards the "ideal" Islamic state would necessarily depend on the quality and character of the people and the cower elite in Muslim society.
d. Nature and Identity
The above discussion indicates that the Islamic state is essentially a welfare state and is duty-bound to play an important role in the economy for the fulfilment of the goals of the Shariah in the economic field as briefly specified above. This welfare role is, however, to be played within the framework of individual freedom which Islam values greatly. The most important pillar of the Islamic faith is the belief that man has been created by God and is subservient to none but Him (13: 36) and that one of the primary objectives of the prophetic mission of Muhammad (peace be on him) is to release mankind from all burdens and chains enslaving it (7: 157). This provides not only the essence of the Islamic charter for individual freedom from all bondage but also subjects man to the sovereignty of God in all aspects of life which essentially implies subordination of man to the moral law as specified in the Qur'an and the Sunnah.
Because man is born free, no one, not even the state, has the right to abrogate this freedom and to subject him to regimentation. It is this respect for freedom, which prompted 'Umar, the second caliph, to declare: "Since when have you begun to enslave people although their mothers bore them as free men?"77 This commitment of Islam to individual freedom has led to a consensus among Muslim jurists that in normal circumstances restrictions may not be imposed on a free and sane adult. Thus freedom of expression, occupation and movement are assured in an Islamic state.
It is to realise this norm of individual freedom that Islam has incorporated in its economic system the essential elements of free enterprise after conditioning it to its own norms and values. The institution of private property along with the market mechanism has been integrated into the Islamic system in such a manner that an "appropriate" part of the production and distribution of goods and services is left to individuals and voluntarily-constituted groups enjoying freedom in their dealings and transactions.78 The profit motive has also been upheld as, besides being consistent with human nature, it provides the necessary incentive for efficiency in the use of resources which God has provided to mankind.
However, since social welfare has a place of absolute importance in Islam, individual freedom -- though of considerable significance -- does not enjoy a place independent of its social consequences. It is sacred only as long as it does not conflict with the larger social interest or the overall spiritual and material goals of Muslim society, or as long as the individual does not transgress the rights of others. Property can be owned privately but is to be considered a trust from God and is to be acquired and spent in
accordance with the terms of the trust. The profit motive has also been subjected to certain moral constraints so that it serves individual interest within a social context and does not lead to economic and social ills or violate the Islamic goals of social justice and equitable distribution of income and wealth.
Mixed Capitalism? Socialism?
All these various considerations make the Islamic state completely distinct from both the socialist and the capitalist systems. First of all, socialism, as conceived by Marx, is basically amoral and based on the concept of dialectical materialism; while capitalism, being a secular ideology is, at best, morally neutral'. In contrast Islam lays emphasis on both the moral and the material aspects of life and erects the edifice of economic well-being on the foundation of moral values. The foundation being different, the superstructure is bound to be different too.
Moreover, Islam is also fully committed to human brotherhood with social and economic justice, to equitable distribution of income, and to individual freedom within the context of social welfare. Although both socialism and mixed capitalism also claim to pay allegiance to social justice, the concept of justice in socialism or mixed capitalism is not based on human brotherhood reinforced by inviolable spiritual criteria for social
and economic justice. In fact Marxist socialism under the influence of dialectics condones injustice done by one group to the other and even the annihilation of one group by the other. In laissez faire capitalism with its slogan of "Don't interfere, the world will take care of itself" there was no innate ideal of social justice to be attained through conscious state effort, while in mixed capitalism the roots of social justice lie in group pressures rather than in an intrinsic belief in human brotherhood.
Although capitalism also recognises freedom of the individual there are no spiritual constraints on this freedom. The constraints that do exist are determined primarily by the pressures of competition or the coercive power of the state, and secondarily by changing social norms without any spiritual sanctity. In the Islamic system, however, the individual is subject to inviolable spiritual values in all aspects of life, including the acquisition, spending and distribution of wealth. Islam normally recognises, like capitalism, the freedom of enterprise with the institution of private property the market system and the profit motive, but it differs from capitalism because, as already indicated, property in Islam is a trust from God and man as trustee and vicegerent of God is responsible to Him and subject to His guiding principles.
Although both socialism and capitalism recognise equitable distribution of income, in capitalism this recognition is again an outcome of group pressure while in socialism it is accompanied by negation of individual freedom. Islam achieves this equitable distribution within the framework of individual freedom but with spiritual and legal imperatives to safeguard public interest, moral constraints against unearned income, and social obligations to ensure a just distribution of income and wealth.
The Islamic welfare state is hence neither capitalist nor socialist. It I based on its own values and guided by its own goals. It has its own identity and bears no resemblance to any other form of state.
Notes and Sources
1 Yusuf ibn 'Abd al-Barr al-Qurfubl, Jdmi* Jaydn al-'I/m wa Fadluh (Madina: al
Maktabah al-'IImiyyah, n.d.), vol. 1, p. 62.
2 Muhammad ibn Idris al-Shafi'I, al-Risdlah (Cairo: Mustafa al-Babi al-Halabi
J940),ed.AhmadM.Shakir,p.419: 1154.
3 Abu Ya'la Muhammad ibn al-Husayn, al-Ahkdm al-Sultdniyyah (Cairo: 'Isa al
Babial-yalahf, 1938), p. 3.
4 Abu Ya'la, op. cit., p. 3.
5 Abu al-Hasan 'All ibn Muhammad al-Mawardl, al-Ahkam al-Sultdniyyah (Cairo:
'Isa al-Babf al-Halabf, I960), p. 5.
6 'Abd al-Rahman ibn Khaldun, Muqaddimah (Cairo: al-Maktabah ai-Tijariyyah al-
Kubra, n.d.), pp. 191-96.
7 'Abd al-Salam ibn Taymiyyah, al-Siydsah al-Shar'iyyah fi Isldh al-Rd'i wa al-
Ra'iyyah, ed. Muhammad al-Mubarak (Beirut, Dar-al-Kutub al-'Arabiyyah, 1961)pp. 138-44. . '
8 Shah Waif-Allah al-Dihlawf, 'Hujjat-Alldh al-Bdlighah, Urdu translation by 'Abdul
Rahfm (Lahore: Qawml Kutubkhana, 1953), vol. 2, p. 601. 9 Muhammad Iqbal, The Reconstruction of Religious Thought in Islam (Lahore:
Shaikh Muhammad Ashraf, 1954), p. 155.
10 For a discussion of the essential difference between Islam, democracy and theocracy,
the significance of man's vicegerency and the implication of this for the political
system of Islam, see Abul A'la Mawdudf: "Economic and Political Teachings of
the Qur'an" in M. M. Sharif (ed.), A History of Muslim Philosophy (Wiesbaden:
Otto Harrassowitz, 1963), vol. 1, pp. 193-4 and 197, and KhUafat wa Mulukiyyat'
(Lahore, Islamic Publications, 1966), pp. 31-36 and 69-70, The Political Theory of
Islam (Lahore, 1960), and Islamic Law and Constitution (Karachi, 1955).
11 "Whoever, male or female, does good and is a believer, We shall certainly make him
live a good life and give him his reward for the best of what he did" (16: 97).
"Serve your Lord and do good that you may have welfare (fald/i)" (22: 77).
12 "God desires ease and not hardship for you" (2:185).
13 "And if the people of the towns had believed and kept their duty, We would cer
tainly have opened for them blessings from the heavens an.' the earth" (7: 96).
"And the good land - its vegetation comes forth abundantly by the permission of
its Lord. And the bad land, its vegetation comes forth but scantily. Thus do We
repeat the messages fora people who give thanks" (7:58). ^
14 "Those who believe and do good deeds for them the Beneficent will rurely bring
about love" (19:97).
15 "If you do it not there will be discord and great mischief" (8: 73).
"Corruption has appeared in the land and sea on account of what people have dene
to make them taste a part of their doing so that they may return" (30: 41).
16 "And Allah sets forth a parable: A town safe and secure to which its provisions
come in abundance from every quarter; but it was ungrateful for Allah's favours,
so Allah made it taste a pall of hunger and fear because of v*hat they did" (16:112)."
"So let them serve the Lord of this House who feeds them against hunger and gives
them security against fear" (106:4).
17 "Those who believe and whose hearts find peace in the remembrance of Allah.
Surelv.Jt .is in the remembrance of Allah that hearts find peace" (13:28).
'18 Abu al-Husayn Muslim al-Nfsaburf, $ahih Muslim (Cairo: 'Isa al-Babi al-Halabf, 1955). vol. I, p. 126.
19 Abu Yusuf Ya'qub ibn. Ibrahim, Kitab al-Khardj, 2nd ed. (Cairo: al-Mafba'ah
. al-Salaffyah. A.H. 1352), pp. J4-J5.
20 Muhammad Abu Zahrah. Usul al-Fiqh (Damascus: Dar al-Fikr al-'Arabi, 1957), ,
p. 355. . '
21 AbuYusuf, op. cit., pp. 3-17.
22 "He it is Who created you from clay" (al-Qur'an, 6:2).
23 "And when thy Lord said to the angels: 'I am going to create a mortal of sounding
clay, of black mud fashioned into shape; so when I have made him complete and
breathed into him of My Spirit, fall down making obeisance to him'" (15: 28-29).
24 "But if they repent and keep up prayer and pay the zakat they are your brothers-in-
faith"(9:ll).
''The believers are nothing but brethren; so make peace between your brethren and keep your duty to Allah that you may be treated mercifully" (49:10). "Mankind is the family of God and the most beloved of them before Him is he who . is best to His family", Wall al-Dln al-TabrlzI, Mishkdt al-Ma?dbih (Damascus: al-Maktab al-lslami, A.H. 1381), ed. M. Nasir al-Dln al-Albanl, vol. 2, p. 613:4998.
25 Abu Hamid Muhammad al-Ghazall, al-Mustasfa (Cairo: al-Maktabah al-Tiiarlyah
al-Kubra, 1937), vol. 1, pp. 139-40.
26 Jbn al-Qayyirn al-Jawziyyah, Vldm al-Muwaqqi"m (Cairo: al-Maktabah al-Tijariyah
al-Kubra, 1955), vol. 3, p. 14.
27 By way of example it may be pointed out here that Ibn Hazm, on the basis of the
Qur'anic verse: "Then if one of them does wrong to the other, fight the one who
. does wrong until he returns to the command of God" (49: 9), argues that it is proper to fight with those who deprive others of basic necessities of life because the one who has denied his brother his due right has in essence wronged him. He also argues that it is the responsibility of the rich in every country to fulfil the needs-of the poor and the ruler [state] should compel them to provide the necessary sustenance, protective clothing, and housing that ensures protection and privacy. He also quotes the following hadith of the Prophet narrated by Abu Sa'Id al-Khuclri: "He who has a surplus animal to ride on should give it to one who has none, and he who has surplus provisions should give them to him who has none, and the Prophet mentioned so many items of wealth that we felt none of us has any right over his surplus wealth" (Ibn Hazm, al-Muhalla, vol. 6, pp. 156-59: 725). See also p. 200 ff. above.
28 Abu Dawud al-Sijistanl, Sunan Abu Ddwud (Cairo: 'Isa. al-Babl al-HalabT, 1952),
vol. 1, p. 382.
29 Muhammad ibn Yazid ibn Majah al-Qazwinl, Sunan Ibn Mdjah (Cairo: 'Isa al-
Babl al-Halabi, 1952), vol. 2, p. 723: 2138; and Abu 'Abd al-Rabman ibn Shu'ayb
al-Nisa'l, Sunan al-Nisd'i(Cairo: Mustafa al-Bab! al-Halabi, 1964), vol. 7, p. 212.
30 'All al-TantawI and Najt al-Tantawi, Akhbdru 'Umar (Damascus: Dar al-Fikr,
1959), p. 268. -
31 Qurtubi.op.cit., vol.2, p. 15.
32 Cited on the authority of BayhaqI, Shu'ab al-Imdn by Jalal al-Dln al-Suyuti, al-
Jdmi"al-Saghlr (Cairo: 'Abd al-Hamld Ahmad Hanafi, n.d.), vol. l,p. 15.
33 Muslim, op. cit., vol. 3, p. 1358; and Abu Dawud, op. cit., vol. 2, p. 559.
34 Muhammad ibn Yazid ibn Majah al-QazwlnT, Sunan Ibn Mdjah (Cairo: 'Isa al-
Babi al-Halabi, 1952), vol. 1, pp. 81-224; see also, Qur{ubl, op. cit., vol. 1, pp. 3-13.
35 Ibn Majah, op. cit., vol. l,p. 31: 79. • «
36 Muslim, op. cit., vol. 1, p. 203:1.
37 Muslim, op. cit., vol. 2, p. 889x147; and Ibn Majah, op. cit., vol. 2, p. 1297:393.
...38. .Abu.D.awud, 6p. cit., vol. 2, p. 568. .
39 Abu Ya'la, bp.~ cit.v p. 11; Maw'ardl, op. cit., p. 16; and Abu al-Hasan 'All al-
MarghlnSnl, al-Hlddyah (Cairo: 'Isa al-Babl al-Halabi, 1965), vol. 2, pp. 98 and 132.
40 Muhammad ibn Isma'Il al-Bukharl, al-Jam? al-Sahilj (Cairo: Muhammad 'All
§ubayh, n.d.), vol. 4, p. 239.
41 Muslim.op. cit., vol.4, p. 1987:34.
42 Bukharl,op.cit.,vol.8, p. 16.
43 /6W.,p. 199.