The economic law of Islam is based on the Qur’ānic philosophy of creation: the Almighty has created this world as a trial and test for man; every person has, therefore, been made to depend on others for his living. No one in this world can live independently as regards his needs and requirements. People of the highest rank must turn to the most ordinary to fulfil them. In other words, every single person has an important role to play without which this world cannot continue. This role depends upon his abilities, intelligence, inclinations as well as his means and resources, which vary from person to person. In fact, it is because of this variation that a society comes into being. Consequently, labourers and workers, artisans and craftsmen, tillers and peasants are as indispensable as scholars and thinkers, savants and sages, leaders and rulers. Every individual is an integral component of the society and contributes to its formation according to his abilities. The Qur’ān says:
"We have apportioned among them their livelihood in this world in such a manner that] We have exalted some in ranks above others so that they can mutually serve each other. And better is thy Lord’s mercy than what they are amassing." (43:32)
By creating various classes of people, the Almighty is testing whether the big and the small, the high and the low create a society based on mutual co-operation and respect or create disorder in the world by disregarding the role each man has been ordained to play. The latter attitude would, of course, lead them to humiliation in this world and to a grievous doom in the Hereafter. The Qur’ān says:
"We are trying you by giving you happiness and sorrow, to test you, and unto Us ye will be returned." (21:35)
Consequently, it is necessary for everyone to acknowledge that scholars and savants, workers and labourers, all are indispensable components of a society. No doubt, the role played by each and the services performed by each are different, but no one can be regarded as petty or ignored in establishing a healthy society. Everyone deserves to be given respect and honour and all the necessary means to prosper. A healthy and a sound society cannot be created by eliminating the various classes, but by acknowledging their existence and providing equal opportunities and ready justice to all.
Basic Principle
It is for the creation of a healthy society that the Almighty has revealed this economic law. The basic principle of this economic law is founded on two premises:
First, the well being and stability of an economy is not based on saving money but on ‘infāq’.
Second, for this well being and stability all forms of interest must be completely abolished.
‘Infāq’ is a special term of the Qur’ān. It means that a person who has been blessed by wealth and riches in this world by the Almighty should spend them in the way of Allah and on his fellow beings just as he spends them on himself. The Qur’ān regards ‘infāq’ the most important deed after prayers and an obligatory directive for all Muslims, as has been stressed in many places. To quote Sūrah Baqarah:
"O ye who believe! spend out of the bounties] We have provided for you, before the Day arrives when there shall be no bargaining, nor will friendship be of any use and nor will intercession be of any avail. The disbelievers of this Day are, in fact, the wrongdoers." (2:254)
The Qur’ān requires of its believers to generously spend whatever remains, after fulfilling their personal and business requirements of the present and future, on the needy as well as on other enterprises of national and religious interest. Consequently, the Qur’ān has made it clear that if a person while remaining indifferent to these needs of the society keeps even a penny with himself then this would be hoarding wealth---something which shall lead him to the raging fire of Hell in the Hereafter:
"Give glad tidings of a grievous doom to those who hoard up gold and silver and spend it not in the way of Allah. On the Day when their gold and silver shall be smelted in the flames of Hell and their foreheads, their flanks and their backs will be branded with them. These are the riches which you hoarded. Now taste of what you used to hoard." (9:34-35)
The Qur’ān , on the basis of its above mentioned concept of infāq, unequivocally states that in certain situations like an enemy invasion and jihād, if the need arises people should wholeheartedly give whatever they have after fulfilling their essential needs. The Qur’ān says:
"They inquire from you that how much should be spent for this purpose]. Say: whatever is left over after your needs have been fulfilled]." (2:254)
It is self-evident that ‘interest’ is the direct opposite of ‘infāq’. The Qur’ān , therefore has explicitly forbidden it. The spirit of infāq creates high qualities like sympathy, courage and seflessness while the incentive of interest creates such condemnable qualities as cowardice, selfishness and cruelty. The Qur’ān has used the word ribā for it. It implies a fixed increase which a lender demands from the borrower just because he has given him the permission to use his money for a certain period. The Qur’ān has vehemently prohibited it:
"Those who devour interest shall rise up on the Day of Judgement like the man whom Satan has driven to madness by his touch because they claim that trading is like interest and how strange it is that] Allah has permitted trading and forbidden interest. Consequently, he who received this warning from the Almighty and desisted in obedience thereto] then whatever he has taken in the past belongs to him and his fate is in the hands of Allah. And those who repeat the offence] shall be companions of the Fire and will abide therein forever." (2:275)
"That which ye give in ribā in order that it may increase on other] people’s wealth has no increase with Allah; but that which you give as zakat, seeking Allah’s countenance, it is these people who will get manifold in the Hereafter] of what they gave." (30:39)
This severity is evident in many traditions as well. Jabir (rta) narrates:
"The Prophet has severely condemned the devourer of interest and the one who pays interest and those who write an agreement for such lending] and the two who are the witnesses over this document and has said: All of them are equal." (Muslim, Kitāb -ul-Buyū’)
The Prophet (sws) has emphatically directed to refrain from the slightest possible trace of interest while borrowing in barter as well1:
"If you lend gold then take back the same type and the same amount of gold and if you lend silver then take back the same type and the same amount of silver; for he who desires more, then this is what is interest." (Muslim: Kitāb -ul-Buyū’)
"If you lend gold in exchange for silver then there is a possibility of interest in this. Similarly for wheat in exchange for another type of wheat, barley in exchange for another type of barley, date for another type of date. Indeed if the exchange is done on the spot, there is no harm." (Muslim: Kitāb -ul-Buyū’)
It should be borne in mind that whether a loan is acquired for personal use or for business or welfare purposes, the real meaning of ribā is not ascertained on these bases. It is an indisputable fact that in the Arabic language the word ribā, irrespective of the aim of the lender and the condition of the borrower, just implies the fixed increase acquired on a loan. The Qur’ān itself has clarified this in the following verse:
"If the debtor is in difficulty grant him respite until it is easy for him to repay and if you write off the debt], it is better for you, if you only knew." (2:280)
My mentor Imām Amīn Ahsan Islāhī comments on this verse in the following words:
"Today some naive people claim that the type of interest which prevailed in Arabia before the advent of Islam was usury. The poor and the destitute had to borrow money from a few rich money-lenders to fulfill their personal needs. These money-lenders exploited the poor and used to lend them money at high interest rates. It is only this type of interest which the Qur’ān has termed as ribā and forbidden. As far as commercial interest is concerned, it neither existed at that time nor did the Qur’ān prohibit it.
This verse categorically refutes this ‘allegation’. When the Qur’ān says that if the debtor is in difficulty he should be given respite until he is able to pay back his debt, it clearly points out that in those times even the rich used to acquire loans. In fact, if the style and stress of the verse are correctly understood, it becomes clear that it was mostly the rich who used to procure loans. Indeed, there was a stroneg chance that the debtor would find himself in difficulty even to pay the original amount. The money-lender, therefore, is directed to give him more time and if he forgoes the original amount it would be better for him. The words of this verse strongly indicate this meaning. The actual Arabic words of the verse are: wa in kāna zū ‘usratin fa naziratun ilā maisarah. The particle of condition in (if) is not used for general circumstances, but, in fact, is used for rare and unusual circumstances. For general circumstances the particle izā is used. In the light of this, it is clear that the debtors in those times were generally affluent (zū maisarah) but in some cases they were poor or had become poor after acquiring the loan and in that case, the Qur’ān has directed the money-lenders to give them a time rebate." ("Tadabbur-i-Qur’ān ", Vol 1, Pgs 638-639)
He has concluded this discussion by saying:
"Obviously, the affluent would have turned to the money-lenders not to fulfil their personal needs, but, of course, their business needs. So what is the difference between these loans and the commercial loans of today?" ("Tadabbur-i-Qur’ān ", Vol I, Pg 639)
Since the prohibition of interest totally elimates any incentive of profit in lending money, therefore, as an obvious outcome, no institution which provides capital on loan can be established. In other words, this prohibition actually shields an Islamic society from the evils of a capitalist economy. Consequently, in our opinion, interest-free banking and other similar projects through which commercial loans are provided, are totally against the objective for which the Qur’ān has forbidden interest.
There is no doubt that this prohibition of interest entails that people from their own wealth and from the wealth of those who trust them can pool their money on the basis of profit and loss sharing and invest it in business projects, but they should not have the facility to acquire loans which, in the present banking system, they are able to obtain thereby giving rise to the evils which originate on account of concentration of wealth in few hands.
No one can deny the fact that the whole framework of a capitalist economy rests on the pillar of banking. The Qur’ān , therefore, by prohibiting interest, does not merely prohibit a type of fiscal transaction, it actually razes down this pillar of capitalism---which can only be left intact if the spirit of the law which prohibits interest is violated without actually violating the law2.
Regulations For An Economic Framework
In concordance with the above stated basic principle, the following regulations have been formulated in the Qur’ān and Sunnah for the development and systematization of the economy of an Islamic State.
Right Of Ownership
According to this first regulation, the rightfully owned wealth of a person cannot be usurped nor tampered with in any way, except if on account of some violation by him the Shariah endorses so. The Qur’ān says:
"If they repent from all un-Islamic beliefs], establish regular prayers and pay zakat, leave them alone." (9:5)
It follows from the words: ‘leave them alone’ (fa khallū sabīlahum) of the above verse that once a person acquires the citizenship of an Islamic State after fulfilling the conditions stated in the verse, just as the state cannot tamper with his life, honour and freedom of expression, it also cannot tamper with his wealth and property. If he refrains from what is prohibited, establishes regular prayers and pays zakat, the Almighty bids the state to leave him alone and not to demand a single penny from him once he has paid zakat. The Prophet (sws), while explaining this directive, has said:
"I have been ordained to fight3 with these people until they testify to the oneness of Allah and the Prophethood of Mohammad, establish regular prayers and pay zakat. If they accept these conditions, their lives shall be given protection except if they are deprived of this protection on the grounds of some offence they may commit4. As far as their account is concernred, it rests with Allah." (Muslim, Kitāb -ul-Imān)
In the sermon of the Last Haj, the Prophet (sws) has rephrased this in the following words:
"Indeed, your blood and your wealth are as sacred and inviolable as this day5 of yours, this month6 of yours in this city7 of yours8." (Muslim, Kitāb -al-Haj)
Collective Sharing
The second regulation is that everything which is not, or cannot be owned by an individual shall, on the basis of the principle of collective sharing, be regarded as state owned. The Qur’ān says:
"They ask you about the spoils of war. Say: The spoils belong to Allah and the Prophet9." (8:1)
The Prophet (sws) has explained this principle thus10:
"There are three things in which every Muslim has an equal share: water, grass and fire11, and it is illegal for any person] to sell them by taking them in his ownership]." Ibni Mājah, Kitāb -ur-Ruhūn]
Keeping in view the welfare and expedience of its citizens, a state has the right to decide about the usage of such collectively shared12 items. Consequently, the Almighty, taking into consideration the specific circumstances of that period relating to the spoils of war in the verse quoted above, ordained that a fifth of them should be spent on collective needs while the remaining amount should be distributed among the Mujāhidīn, though actually all of them belong to the state. The Qur’ān says:
"You should] know that a fifth of the spoils you get hold of are for Allah and the Prophet and the near relatives and the orphans and the needy and the wayfarers." (8:41)
Moral Misconduct
The third regulation is that every economic activity which leads to moral misconduct in a person should be prohibited. This regulation is based on the following Qur’ānic verse:
"O ye who believe: this liquor and gambling, idols and these divining arrows are abominations devised by Satan. Avoid them that you may succeed. Satan seeks to stir up enmity and hatred among you by means of liquor and gambling and to keep you from the remembrance of Allah and from prayers. Will you not then abstain from them?" (5:90-91)
The basis for forbidding liquor, idols and divination of arrows, together with gambling is that they are filthy and impure works of Satan. It is clear that gambling has been regarded as an impure work of Satan because it gives rise to moral misconduct in a person which gradually encompasses his personality. The reason is that if an economic activity is based on rights and services and rational decisions, it produces a high moral character and if an economic activity is based on chance, fortune and fortuity, it produces an attitude which is based on avoidance of hardwork and service. This gives rise to such mean qualities as cowardice and faint-heartedness which subsequently eliminate the innate qualities of honour, sincerity and self-respect. As a result, the remembrance of the Almighty finds no place in a person’s heart and he has nothing left but enmity and hatred for his fellow beings. Gambling, on this basis, is a condemned handiwork of Satan, and it is clear from the Qur’ānic directive which prohibits it that if any other economic activity produces a similar moral misconduct in a person, then it should also be prohibited in an Islamic State. Consequently, on this particular basis, other things which have been prohibited by the Qur’ān and Sunnah are the following:
1. Excessive spending and squandering of wealth: ie, a person instead of spending in the way of Allah and adopting a balanced attitude towards his needs and desires, spends lavishly and wastefully so that his pets live regally whilst his neighbours may have nothing to eat. The Qur’ān says:
"Eat the fruits of these orchards when they ripen and give away the share of Allah on the harvest day and waste not: for Allah does not like those who spend wastefully." (6:141)
"Give to the near of the kin their due and also to the destitute and the wayfarer, and squander not in extravagance. Verily, such squanderers are brothers of Satan and Satan is very ungrateful to His Lord." (17:26-27)
The Prophet is said to have said:
"Eat, drink and spend in the way of Allah and clothe yourself guarding against wastefulness and vanity." (Ibni Mājah, Kitāb -ul-Libās)
If the various ways of squandering wealth which have been explicity forbidden in the Qur’ān and Sunnah are kept in consideration, then no one among the believers can:
(i) waste his wealth in gambling. (5:90-91)
(ii) throw away his money in drinking, adultery and other similar acts of wantonness. (5:90), (17:32)
(iii) make clothes, rugs, pillows and pack-saddles from silk, tissue and other types of expensive cloth and hides:
"He who wore silk in this world, shall never wear it in the Hereafter." (Bukhārī , Kitāb -ul-Libās)
"The Prophet has forbidden us to wear silk and tissue and to sit on bedclothes made out of them." (Bukhārī , Kitāb -ul-Libās)
"He who wore a dress for show and fame in this world, the Almighty shall make him wear the dress of ignominy in the Hereafter and then ignite fire in it." (Ibni Mājah, Kitāb -ul-Libās)
(iv) use jewellery and utensils of gold and silver13 or use other expensive items:
"The Prophet has prohibited us from eating and drinking in utensils of gold and silver." (Bukhārī , Kitāb -ul-Libās)
"The Prophet has forbidden us to ride on a pack-saddle made from cheetah’s skin and to wear ornaments of] gold except if a few pieces are stitched in an attire." (Abu Daud, Kitāb -ul-Khātim)
"The Prophet has prohibited seven things for us: 1. gold rings 2. silk 3. brocade 4. tissue 5. red silk or an expensive hide as cover for pack-saddles 6. silk-mixed clothes 7. utensils of silver."14 (Bukhārī , Kitāb -ul-Libās)
2. Transactions of prohibited items: ie, those items whom the Almighty has prohibited because of an intrinsic or extrinsic tendency in them to lead to immorality; a person instead of informing others of this immorality and urging them to refrain from them, makes them his means of livelihood or sells them to make profit:
"The Prophet has prohibited the fee of a soothsayer and a prostitute." (Bukhārī , Kitāb -ul-Buyū’)
"The Prophet has said: Do not buy and sell songstresses nor give them the training to sing. There is no good for you in their trade and to sell them is totally forbidden." (Tirmazi, Kitāb -ul-Buyū’)
"The Prophet has said: The Almighty has severely condemned liquor, he who provides it, he who sells it, he who buys it, and he who makes an essence out of it, and for whom the essence is made, and the one who brings it, and for whom it is brought." (Abu Daud, Kitāb -ul-Ashribah)
"It is narrated by Jaber (rta) that on the occasion of the conquest of Mecca he heard the Prophet saying: Indeed, the Almighty has prohibited the selling of liquor, dead meat, pigs and idols." (Bukhārī , Kitāb -ul-Buyū’)
"The Prophet has said: God cusre the Jews. When the Almighty forbade them to eat] the fat of animals, they sold it and devoured the money." (Bukhārī , Kitāb -ul-Buyū’)
3. Hoarding: ie, when commodities of general use are stored to create a shortage and thereby increase their prices in the market. The Prophet (sws) is said to have said:
"He who hoarded edibles for forty days should know that he has no relationship with the Almighty nor does the Almighty has any relationship with him." (Musnad Ahmad Bin Hambal, Vol 2, Pg 33)
"He who interfered in any way to increase the rates in the markets of the Muslims, the Almighty has the right to make his abode in a great fire on the Day of Judgement." (Musnad Ahmad Bin Hambal, Vol 5, Pg 27)
4. Aklul-Amwālil-Bātil: ie, to eat up other people’s wealth and property against all norms of justice and fairness. The Qur’ān says:
"Do not devour one another’s wealth by unjust means." (2:188)
In this regard, the foremost thing which the Almighty has forbidden is bribery:
"Do not devour one another’s wealth by unjust means and do not use it as a means to reach the authorities in order that you may wrongly and knowingly devour other people’s wealth." (2:188)
To quote Abu Daud:
"The Prophet has severely condemned the person who gives bribes and the one who accepts bribes." (Kitāb -ul-Aqdhiah)
Similarly, theft, usurpation, misrepresentation, co-operation with evil, embezzlement, misappropriation, fraudulent weighing and consuming unclaimed items without publicizing them, all are various forms of aklul-amwālil-bātil. According to the Qur’ān this is a major sin. Consequently, about a similar sin the Qur’ān says:
"Indeed, those who are unjustly devouring the wealth of the orphans, they do not but swallow fire into their bellies; they shall certainly be flung into the raging Fire of Hell." (4:10)
Similarly dealings which lead to deceit and damage for the parties involved, is also a class, which come under this directive. Following are the traditions in which the Prophet (sws) has explained them:
Sale and Purchase]
"The Prophet has prohibited the deal which is based on deceit." (Musnad Ahmad Bin Hambal, Vol 1, Pg 302)
"The Prophet has said: He who deceives others should know] that he is not of us." (Muslim, Kitāb -ul-Imān)
"The Prophet has said: As long as a fish is in water do not sell or buy it because there is a chance of deception in this deal." (Musnad Ahmad Bin Hambal, Vol 1, Pg 388)
"The Prophet has forbidden the sale and purchase of offspring of an animal prior to their birth and the selling of milk while it is in an animal’s udders except if its quantity is ascertained, and the sale or purchase of run-away slaves, and the sale or purchase of the spoils of war before they are distributed, and the sale or purchase of charity before it is given to the recipients and a deal in which a sea-diver is told that whatever he shall obtain in a dive shall be bought for so much money15." (Musnad Ahmad Bin Hambal, Vol 3, Pg 42)
"The Prophet has said: the person who buys grain should not sell it unless he takes it into his possession." (Bukhārī, Kitāb -ul-Buyū’)
"The Prophet has forbidden a person to rent out a bull for breeding." (Bukhārī, Kitāb -ul-Ijarāh)
"It has been narrated by Abdullah Ibni ‘Umar (rta) that he said: I observed that in the time of the Prophet, when people bought grain in mounds, and before bringing it to their places sold it out then they were punished for this." (Bukhārī , Kitāb -ul-Buyū’)
"The Prophet has said that no city dweller should sell and buy for a villager and has further] said: Do not increase your bid at an auction] only to deceive others], and no one among you should make a deal when your brother is bargaining." (Bukhārī , Kitāb -ul-Buyū’)
"The Prophet has forbidden people to exploit others in sale and purchase." (Musnad Ahmad Bin Hambal, Vol 1, Pg 116)
"The Prophet has forbidden a person to sell his crop when it is still in spikes, and to sell a date tree in exchange for dates16, and to sell the fruits of an orchard for many years, and to adopt the methods of crop division in which the profit of the landlord has been fixed, and to leave an unspecified exception in a bargain17." (Muslim, Kitāb -ul-Buyū’)
"The Prophet has prohibited the deal of pebbles18." (Muslim, Kitāb -ul-Buyū’)
"The Prophet has prohibited the deal of pre-Islamic times in which every person without thinking just touched the other person’s cloth and a bargain would take place in this manner." (Muslim, Kitāb -ul-Buyū’)
"Abdullah (rta) narrates that the Prophet has prohibited the deal in which people used to sell camels by saying that]: whatever offspring this camel gives birth to and when that offspring gets pregnant, whatever it gives birth to, then the last] offspring is bought." (Bukhārī , Kitāb -us-Silm)
"The Prophet has forbidden the deal of pre-Islamic times in which people would throw something towards one another and, in such a way, a bargain would take place." (Bukhārī , Kitāb -ul-Buyū’)
"The Prophet has forbidden the sale of fruits of a tree if their nature has not become evident." (Muslim, Kitāb -ul-Buyū’)
"The Prophet has forbidden the selling of dates before they catch colour, and the selling of spikes before they turn white and become safe from calamities." (Muslim, Kitāb -ul-Buyū’)
"The Prophet has forbidden the sale and purchase of fruit before their nature has become evident, and the sale of wool as well when it is still on an animal’s body, and that of butter oil when it is in milk, and that of milk when it is still in the udders." (Behqi, Kitāb -ul-Buyū’)
"The Prophet has said: losses caused by calamities should be compensated for." (Muslim, Kitāb -ul-Buyū’)
"Uqbah Bin Amir narrates that he heard the Prophet saying that no believer should sell a commodity to his brother which is defective, except when he has informed him about these defects." (Ibni Mājah, Kitāb -ut-Tijarāt)
"It is narrated that the Prophet has said: do not hold the milk of camels and goats in their udders before selling it." (Bukhārī , Kitāb -ul-Buyū’)
"The Prophet has forbidden people to intercept tradesmen and buy their merchandise before they reach the markets." (Muslim, Kitāb -ul-Buyū’)
"The Prophet has forbidden the deal in which money given in advance becomes the right of the buyer if the deal does not ultimately take place." (Ibni Mājah, Kitāb -ut-Tijarāt)
"The Prophet has said: The person, who makes a deal by giving money in advance such that he shall obtain the item after it is ready, should carry out this transaction for a fixed measure, a specified weight and a definite period of time." (Bukhārī , Kitāb -us-Silm)
Muzāra’at]
"Rāfai’ bin Khudaij narrates that he says: we had most of the agrarian lands among the people of Medina. We used to divide the produce in such a manner that the produce of a certain part of the land called the landlord’s part would be ours. Sometimes the produce of that part would be defective while the rest of the produce would be secure and sometimes the produce of the landlord’s part would be secure while the rest of the produce would be defective. Consequently, we were forbidden from such a division of crop." (Bukhārī , Kitāb -ul-Harth)
"Zaid Bin Thābit (rta) says: This only happened when two people among the Ansār, who had a quarrel, came to the Prophet and the Prophet said: If this is the result, then do not rent out your lands19." (Abu Daud, Kitāb -ul-Buyū’)
Pre-emption]
"The Prophet has decreed for all properties which have not yet been divided that they should not be sold without giving the sharers a chance to buy them. But if the boundaries have been determined and the paths have been separated then this is not necessary." (Bukhārī , Kitāb -us-Shuf’ah)
"The Prophet has said: the neighbour is more entitled to be given the chance to buy a property when it is put up for sale. If he is not present, his arrival should be awaited; But this only necessary when both have the same pathway." (Tirmazī, Kitāb -ul-Ahkām)
Since all the above directives are based on moral misconduct, the directive of prohibition shall be dissolved in circumstances in which this basis no longer exists, just as if as a result of evolution of societies this basis emerges in a new economic activity, then those charged with authority can prohibit the activity and it shall no longer be allowed.
5. Pettiness: ie, a person adopts a mean attitude in his dealings and transactions or adopts a means of livelihood which is much below his status as a human being. Abu Hajīfah narrates:
"The Prophet has prohibited the price of blood and that of dogs20." (Bukhārī , Kitāb -ul-Buyū’)
The Prophet has said:
"The person who starts begging from people without having any need should know that this habit shall become a stigma on his face on the Day of Judgement." (Dārmi, Kitāb -uz-Zakāt)
It is on this basis that the Qur’ān has prohibited the pledging of securities against acquired loans except in a journey when it is not possible to write down such transactions and in this regard has further directed the believers to return this security to the borrower as soon as written documentation is possible21. The Qur’ān says:
"If you are on a journey and a scribe cannot be found, then a pledge with possession should serve the purpose]. Then if a situation of mutual trust arises, then the person who has been entrusted with the security] should return this trust and let him fear Allah, His Lord." (2:283)
6. Bai’-’indat-tā’āt: ie, instead of responding to the call for prayers during the time of worship, a person remains involved in his business. The Qur’ān says:
"O ye who believe! when the call for prayers is sounded on Friday, hasten earnestly to the remembrance of Allah and cease your trading. This is better for you, if you but know." (62:9)
Evidence and Documentation
The fourth regulation is that in transactions, especially those involving lending and borrowing for a certain period of time, the parties involved should write down a document and call in witnesses over it to avoid any dispute or damage in the future. Following is the detailed directive of the Qur’ān in this regard:
"O ye who believe! When you acquire a loan for a fixed period, record it in writing, and let a scribe write it down between you with fairness; the scribe should not refuse to write, and just as Allah has taught him to write, he should also write for others; the one who has incurred the debt should have the document] written and fearing Allah his Lord, he should not make any reduction in it. If the debtor is indiscreet or feeble or unable to have it written, let his guardian do so with justice. And call in two male witnesses from among your men, but if two men cannot be found, then one man and two women22 from among your likable people so that if one of them gets confused, the other reminds her. And witnesses must not refuse when they are summoned. And whether the loan is big or small, be not negligent in documenting the deal upto its period. This is more just in the sight of Allah, it ensures accuracy in testifying and is the most appropriate way for you to safeguard against doubts. But if it be an everyday transaction, it does not matter if you do not write it down. And call in witnesses also if you sell or purchase anything. And let no harm be done to the scribe or the witness. If you do so, then this will be a transgression which shall cling to you. And fear Allah. Allah is teaching you. He has knowledge of all things." (2:282)
Incompetence
The fifth regulation is that since a person’s way of using his wealth and property also influences the development and welfare of a society, the state has the right to deprive him from using them if he is proved to be incompetent. The Qur’ān says:
"Do not give to the feeble-minded the wealth and property which the Almighty has made a means for your support and development. But feed and clothe them with magnanimity, and speak to them with kindness." (4:5)
It is clear from the context of this verse that it pertains to orphans and their guardians, but the basis of the directive is their incompetence not their status as orphans. Therefore, the above right granted to the guardians with regard to the orphans, by analogy, should also be granted to a state with regard to its citizens. Consequently, if a person squanders away or ruins his wealth and resources, it is the duty of the state to strip him from their control and management and take charge of them. However, in this case, it must generously cater for his requirements from his wealth and whole-heartedly adjust all matters.
Curtailed Taxation
The sixth regulation is that a state cannot levy any tax upon its Muslim citizens23 other than zakat, whose various rates have been fixed by the Almighty Himself through His Prophet (sws). The Qur’ān says:
"Then if they repent from all un-Islamic beliefs], establish regular prayers and pay zakat, leave them alone." (9:5)
It is clear from the words ‘leave them alone’ (fa khallū sabīlahum) of the above verse that after the believers have paid zakat an Islamic State, in times of need, can though make an appeal to its citizens for economic asssistance, it cannot force them to do so. The Qur’ān has binded it not to demand anything from the believers after they have paid zakat. The Prophet (sws) while explaining this Qur’ānic directive has said:
"I have been ordained to fight24 with these people until they testify to the oneness of Allah and the Prophethood of Mohammad, establish regular prayers and pay zakat. If they accept these conditions, their lives shall be given protection except if they are deprived of this protection on grounds of some offence they commit25. As far as their account is concerned, it rests with Allah." (Muslim, Kitāb -ul-Iman)
If those in authority violate this directive, then this is a grave transgression on their part. The Prophet (sws) has warned:
"No tax-imposer shall enter Paradise." (Abu Daud, Kitāb -ul-Kharāj)
It should also be borne in mind that according to the various heads mentioned in the Qur’ān , zakat is not merely for the poor, destitute, wayfarers and those inflicted with losses but under al-āmilīn-a-alaihā, it can be used to pay the salaries of all government officials, under al-mu’allafat-i-qulūbuhum, it can be spent to meet all political expenditures in the interest of Islam, under fī sabīlillāh, it can be expended on da’wah ventures and mosques, education and research, Haj and Umrah facilities, Jihād and Qitāl, and public welfare projects like roads, bridges and hospitals, etc. The Qur’ān says:
"Zakat is only for the poor and the needy, and for those who are ‘āmils over it26, and for those whose hearts are to be reconciled to the truth]27, and for the emancipation of the slaves and for those who have been inflicted with losses and for the way of Allah28 and for the wayfarers. An obligation decreed by the Almighty, the All-Knowing and the Wise." (9:60)
The rates and nisāb of zakat which have been transferred to the Ummah as Sunnat-i-Thābitah29 and stated in various collections of Ahādith are all fixed and determined. However, there are five more aspects which must remain clear in this regard:
(1) There is no basis in the Qur’ān and Sunnah for the of personal-possession (tamlīk-i-zātī) imposed by our jurists. Therefore, in our consideration, just as zakat can be given in the personal possession of an individual, it can also be spent on projects of public welfare30.
(2) Nothing except means of production, personal items of daily use and a fixed quantity called nisāb are exempt from zakat. It shall be levied annually on all sorts of wealth, all types of animals and all forms of production of every Muslim citizen. However, if a need arises, an Islamic State can give a relaxation on any item.
(3) If the basis of the directive is kept in consideration, then all forms of industrial produce, all forms of production based on various skills and all forms of rent of various items or buildings must be classified as produce and not as wealth; therefore, their rates and nisāb should be those specified by the Prophet (sws) for land produce.
(4) The rates of zakat in all forms of production should be fixed on the basis of the principle derived from the Prophet’s directives. According to this principle zakat on all items which are produced both by the interaction of labour and capital is 5%, on items which are produced such that the basic factor in producing them is either labour or capital, it is 10% and on items which are produced neither as a result of capital nor labour but are actually are a gift of God, it is 20%.
(5) According to the above principle, zakat on leased-out houses, properties and other rented items should be 10% of the rent and if they are not rented out, it should be 2 1/2 % of their net value.
Concentration of Wealth
The seventh regulation is that all forms of economic ventures, and all types of projects of wealth allocation and distribution which result in concentration of wealth in a particular sphere of the society should be prohibited. In Sūrah Hashr where the directives relating to fai have been stated, the Qur’ān explicitly says: ‘You have been given this directive so that money does not keep circulating among your rich class’, (59:7). Following are the Qur’ānic directives which are based on this regulation:
1. Every person has been directed to spend as much as he can on the needy among his relatives, and on social and public welfare from the wealth the Almighty has endowed him with:
"And spend of that which We have bestowed on you before death befalls anyone of you and he would say with sorrow: O Lord! Why did not ye give me a little more respite so that I could give largely] in charity. Had I been able to do so, I would have been among the righteous." (63:10)
2. Everyone has been obligated to pay zakat to the Bait-ul-Māl: If his wealth exceeds a certain quantity called nisāb at the annual rate of 2 1/2 %; if he is a businessman at the annual rate of 2 1/2 % on his trade capital; if he is a land owner at the rate of 5 % on the time of harvest if his lands are irrigated by canals and at the rate of 10 % if they are rainy lands; if he is an industrialist at the rate of 5% of his industrial produce and at the same rate if he owns mineral reserves; at the rate of 10 % if he has rented out his property; if he is a herdsman a fixed share from his heard31, and if he owns a treasure at the rate of 20% so that the state is able to distribute the wealth of the rich among those who need it:
"And establish regular prayers and pay zakat and generously lend to Allah for emergency needs]." (73:20)
3. It has been ordained for everyone that if he leaves behind wealth, whether in a small or a large amount, instead of accumulating it in a single place by handing it over to the eldest child or to the family jointly, it should be distributed and divided among near and far relatives according to their respective nearness with the deceased. The manner in which this distribution should take place has been described by the Qur’ān in verses 11-12 and the last verse of Sūrah Nisā:
If a deceased has outstanding debts to his name, then first of all they should be discharged. After this, any legacies he may have bequethed should be paid. The distribution of his inheritance should then follow.
After giving the parents and the spouses their shares, the children are the heirs of the remaining inheritance. If the deceased does not have any male offspring and there are only two or more girls among the children, then they shall receive two thirds of the inheritance left over, and if there is only a single girl, her share is one half. If the deceased has only male children all his wealth will be distributed among them. If he leaves behind both boys and girls, then the share of each boy shall be equal to the share of two girls and, in this case also, all his wealth shall be distributed among them.
In the absence of children, a deceased’s brothers and sisters shall take their place. After giving the parents and spouses their shares, the brothers and sisters shall be his heirs. The proportion of their shares and the mode of distribution will be the same as that of the children stated above.
If a deceased has brothers and sisters, whether he has children or not, the parents shall receive a sixth each. If he does not even have brothers and sisters, then after giving the husband or wife his (or her) share, one third of what remains shall be given to the mother and two thirds to the father. If there is no one among the spouses, all of the inheritance shall be distributed among the parents in the same proportion.
If the deceased is a man and he has children, his wife shall receive one eighth of what he leaves and if he does not have any children his wife’s share shall be one fourth. If the deceased is a woman and does not have any children, then her husband shall receive one half of what she leaves and if she has children, the husband’s share is one fourth.
Together with these rightful heirs, after them or in their absence a deceased can make a near or a distant relative except his parents and children the heir. If the relative who is made an heir has one brother and one sister, then they shall be given a sixth of his share and he himself shall receive the remaining five sixth. However, if he has more than one brother and sister then, they shall be given a third of his share and he himself shall receive the remaining two thirds.
If a person dies without making anyone his heir, his remaining legacy shall be distributed according to the principle li aulā rajulin zakar, (for the closest male relative)32.
4. It has been divinely ordained that the spoils of war shall be regarded as state-owned and a fifth of them33 shall necessarily be spent on collective needs and on the needy:
"They ask you about the spoils of war. say: these spoils belong to Allah and the Prophet." (8:1)
"You should] know that a fifth of the spoils you get hold of are for Allah and the Prophet and the near relatives and the orphans and the needy and the wayfarers." (8:41)
5. Similarly, it has been ordained about fai34 that it shall be spent on collective needs and on the needy:
"Whatever Allah takes away from these city-dwellers and returns to His Prophet, it is for Allah and the Prophet and for the kindred and for the orphans and for the needy and for the wayfarers." (59:7)
These are the directives based on the principle ‘kaī lā yakūna dūlatam bainal aghniyāi minkum’ (so that money does not keep circulating among your rich class). Today also, it is necessary that those charged with authority should keep this principle in mind while deciding about the prohibition or legality of an economic venture.
Financial Responsibility of the Masses
The eighth regulation is that the government should provide the basic necessities of life like food, clothing, shelter, health and education to those who are unable to support themselves. According to the Qur’ān , this is their right, and while highlighting the qualities of the believers it says:
"In whose wealth the deprived and the needy who ask have a fixed share." (70:24-25)
It is because of this right that the most important head under which the taxes collected in the Bait-ul-māl are to be expended is the poor and the needy. Therefore, this head is mentioned foremost in the verse pertaining to the expenditure of the zakat fund:
"Zakat is only for the poor and the needy, and for those who are ‘āmils over it, and for those whose hearts are to be reconciled to the truth], and for the emancipation of the slaves and for those who have been inflicted with losses and for the way of Allah and for the wayfarers. An obligaton decreed by Allah, the All-Knowing, the Wise." (9:60)
The Prophet (sws) has further said about these taxes:
"They shall be taken from their rich and returned to their poor." (Bukhārī, Kitāb -uz-zakat)
The importance of this right can be further appreciated from the Prophet’s directive in which he has instructed the administrators of an Islamic State to always leave their doors open to the needy:
"A ruler who closes his doors on the poor and the needy, should know that] the Almighty shall close the doors of Heaven on his needs, indigence and poverty." (Tirmazī, Kitāb-ul-Ahkām)
"If a person whom the Almighty entrusted with the state affairs of the Muslims became indifferent] to their needs, requirements and poverty hiding behind walls, then he should know that] the Almighty shall hide from his eyes, remaining indifferent to his needs, requirements and poverty." (Abu Daud, Kitāb -ul-Imārah)
It is clear from this that it is the right of the needy to be provided by the society and it is the responsibility of the Islamic State to discharge this duty by taking the zakat money from the rich and distributing it among the deprived. In fact, it must provide the deprived and the needy with the basic nessecities of life with a sense of responsibility epitomized by one of its most illustrious rulers who went so far as to say: ‘The responsibility of even the dogs that die of hunger on the banks of Euphrates lies with me’.
Resources for the Economy
If the economy of an Islamic State is constituted on these regulations and the Muslims as a nation adopt a God-fearing attitude in the other collective spheres as well by totally obeying and following the directives of the Qur’ān , the Almighty has promised them that they shall never need to depend on anyone as far as economic resources are concerned. The Almighty shall provide them abundantly:
"Had the people of these cities accepted faith and kept from evil, We would have showered the blessings of the heavens and the earth upon them. But they rejected the truth] and so] We punished them for their misdeeds." (7:96)
To quote the Old Testament:
"And it shall come to pass, if thou shalt hearken diligently unto the voice of the Lord thy God, to observe and to do all his commandments which I command this day, the Lord thy God will set thee on high above all nations of the earth: and all these blessings shall come on thee, if thou shalt hearken unto the voice of the Lord thy God. Blessed shalt thou be in the city, and blessed shalt thou be in the field. Blessed shall be the fruit of thy body, and the fruit of thy ground, and the fruit of thy cattle, the increase of thy kine, and the flocks of thy sheep. Blessed shall be thy basket and thy store. Blessed shalt thou be when thou comest in, and blessed shalt thou be when thou goest out. The Lord shall cause thine enemies that rise up against thee to be smitten before thy face: they shall come out against thee one way, and flee before thee in seven ways. The Lord shall command the blessings upon thee in thy storehouses, and in all that thou settest thy hand unto; and he shall bless thee in the land which the Lord thy God giveth thee. The Lord shall establish thee holy people unto Himself, as He hath sworn unto thee, if thou shalt keep the commandments of the Lord thy God, and walk in his ways. And all the people of the earth shall see that thou art called by the name of the Lord; and they shall be afraid of thee. And the Lord shall make thee plenteous in goods, in the fruit of thy body, and in the fruit of thy cattle, and in the fruit of thy ground, in the land which the Lord sware unto thy fathers to give thee. The Lord shall open unto thee his gold treasure, the heavens to give the rain unto thy land in his season, and to bless all the work of thine hand: and thou shalt lend unto many nations, and thou shalt not borrow. And the Lord shall make thee the head, and not the tail; and thou shalt be above only, and thou shalt not be beneath." (Deuteronomy, 28:1-13)
Conclusion
This is the economic law mentioned in the Qur’ān and Sunnah. Today, whatever system is evolved on its basis, it is clear that every scheme which provides capital on loan shall be eradicated owing to the prohibtion of interest. Therefore, as a necessary consequence, it is essential that:
Firstly, all Banks should be converted into various branches of the Public Treasury (the Bait-ul-Māl), where people can deposit their savings. These branches shall provide protection, exchange and other similar facilities. In return for this service, the deposited money shall only be spent by the government to create a broad-based public sector by keeping in view the collective requirement and welfare of all the people with the precondition that without being given any profit on the original amount, the depositers would be returned their money whenever they demand it.
Secondly, the public sector so created shall not be run by the government. Leaving it in state ownership, its running and management shall be entrusted to the private sector by adopting either or both of the following two modes, depending upon the circumstances: (i) selling a certain quantity of shares to the private sector, (ii) imposing kharāj35 (tribute) on the party of the private sector which is entrusted with the job of management.
Thirdly, the only form of absentee partnership permitted should be one in which people directly become shareholders in various projects of the private and public sector.
As a result of these measures, without prohibiting the right of private ownership and establishing an ‘iron curtain’, a naturally developed broad-based public sector shall come into being parallel to the private sector. This would, perhaps, rightly depict the moderate set-up of an Islamic Economic System in contrast with the two extremes of Capitalist and Socialist Economies.
This is the economic law the Almighty gave us centuries ago. But Alas! After the industrial revolution, when the world most needed it we were not in a position to guide mankind to the right path in this regard. Undoubtedly, the future of the world still depends on this law but, unfortunately, there is not a single country in the Muslim Ummah, extending from Morroco in the West to Indonesia in the East where the splendour of this majestic sun can irradiate its beholders.
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1. It must be kept in mind that
our jurists have erroneously derived the concept of ribal-fadhl from such
traditions. We are afraid that the narrators have mixed up the correct words
of most of these traditions which has given rise to it. However, the above
two traditions, in which the words have very nearly been correctly stated,
should be considered as the basic ones in this regard, and as is obvious
from their meaning are themselves based on the tradition: "Ribā is only in
transactions of loan." (Muslim, Kitāb -ul-Buyū’)
2. It is by not understanding this fact that the various economic models proposed in recent times by our learned economists are no less than comical fantasies which, we are afraid, can have no place in the world of reality.
3. It should be noted that the opponents in this case were the Bani Ismael, the nation towards whom the Prophet (sws) was directly assigned. Since the truth had been unveiled to them in its ultimate form, the law for them was either to accept faith or face death.
4. For example, they shall be executed if they kill someone or if diyat is extracted from them.
5. ie, the day of Sacrifice.
6. ie, the month of Zulhaj.
7. ie, the city of Mecca.
8. Consequently, the Prophet (sws) is said to have said: ‘One who dies while protecting his wealth shall be considered a shaheed.’ (Muslim: Kitāb -ul-Iman)
9. "belongs to Allah and the Prophet" means, if context and arrangement permit, state ownership.
10. Though the chain of narrators of this tradition in these words is weak, yet what is implied is stated in another tradition having no weakness in its chain of narrators.
11. ie, that water, fire and grass which are not specific for someone, for example, rain water, springs and forest grass.
12. for eg. the Prophet (sws) regarded certain lands in his time as Himā (Bukhārī , Kitāb -ul-Masāqāt, Chapter 11), or gave certain lands to certain individuals (Abu Daud, Kitāb -ul-Kharāj), or fixed the principle of ‘the nearest, the next nearest......’ for using canal or spring water. (Bukhārī , Kitāb -ul-Masāqāt, Chap 7), or the way the Caliph ‘Umar imposed kharāj on the state owned lands of Iraq and Syria conquered in his times, according to the nature of their produce, while leaving them in the hands of their owners. (Kitāb -ul-Kharāj, Abu Yusuf, Pgs 26-29)
13. Likewise, other expensive metals shall be included in this directive.
14. The exceptions of gold and silk for women for ornamentation, which is their natural requirement, in quantities and means which cannot be regarded as hoarding and ostentation however, exist on the basis of perpetual adherence of the Ummah to them. Indeed, in some Ahādith they are unconditionally prohibited (Abu Daud, Kitāb -ul-Khātim, Chapter 8)), but since these Ahādith are against the perpetual practice of the Ummah as well as against those Ahādith in which both (silk and gold) of them have been explicitly allowed for women, it is necessary to relate them to hoarding and ostentation. (See: "Ahkām-ul-Qur’ān ", Abu Bakr Jassās, Vol 3, Pgs 387-388)
15. The spirit of gambling also exists in this, but since it is actually a case which may cause damage or lead to deceit, we have placed it under this head. A little deliberation would reveal that ‘Bai’-ul-Hisāh’ ie, ‘the deal of pebbles’ is also a similar affair.
16. ie, a person for example says that he shall sell the fruit of this date tree for two kilograms of dates.
17. ie, a person says: ‘I sell my grain to you but I shall take something out of it’.
18. In pre-Islamic times, such a bargain existed generally in two forms: (1) people used to make a deal about a piece of land and then the buyer would throw a pebble; the distance covered by the pebble would be regarded as the length of the sold land, (2) people used to throw a pebble and say that whatever thing it touched would be considered as sold.
19. The real nature of muzāra’at is what is evident from these two traditions. Hence, other traditions in which they are unconditionally forbidden, should be understood in the light of these two.
20. ie, dogs which have not been reared for a specific purpose like hunting or breeding by the seller.
21. For further details see "Tadabbur-i-Qur’ān ", Amīn Ahsan Islāhī, Vol I, Pgs 642-44.
22. The context and style of the verse is such that it cannot relate to law or the judicial forums of the state. It is not that after addressing the courts it has been said that if such a law suit is presented before them by a claimant then they should call in witnesses in the prescribed manner. On the contrary, the verse directly addresses the people who lend or borrow money over a fixed period. It admonishes them that if they are involved in such dealings, then an agreement between the two parties must be written down, and to avoid dispute and damage, only witnesses who are honest, reliable and morally sound should be appointed. At the same time their personal involvements and occupations should be suited to fulfil this responsibility in a befitting manner. The verse does not at all mean that a law suit shall stand proven in a court only if at least two men or one man and two women bear witness to it. We reiterate that the verse is merely a guidance for the general masses in their social affairs and counsels them to abide by it so that any future dispute can be avoided: it is for their own benefit that this procedure should be adopted.
23. On non-Muslims, however, who have become citizens of an Islamic state after being subdued through a war, Jizya and other taxes can be imposed.
24. As mentioned earlier, the opponents in this case were the Bani Ismael, the nation towards whom the Prophet (sws) was directly assigned. Since the truth had been unveiled to them in its ultimate form, the law for them was either to accept faith or face death.
25. For example, they shall be executed if they kill someone, or if Deeyat is extracted from them.
26. āmileen-a-alaihā.
27. mu’allafat-i-qulūbuhum.
28. Fī sabeelillāh.
29. The established customs of the Prophet (sws) which were passed on as religion to the Muslim Ummah by a vast majority of the Companions of the Prophet (sws) through their practical consensus or perpetual adherence to such customs.
30. For details see "Taudhīhāt", ‘Masala-i-Tamlīk’, Amīn Ahsan Islāhī.
31. For details see "Kitāb -uz-Zakat" in Hadīth collections.
32. For details see ‘The Islamic Law of Inheritance’ in the next issue.
33. As far as the remaining four-fifth is concerned, it was given to the soldiers in those times. The reason for this was that they used to fight with their own weapons and on their personal horses or camels, and even had to provide themselves with all the necessary items needed in travelling. However, today the position has totally changed; therefore, its directive shall be similar to fai, as is evident from the verse: ‘The spoils are for Allah and the Prophet...’, and like fai, all of it shall be spent on the collective needs of the state.
34. ie, the wealth obtained from the enemy without a battle.
35. This would be analogous with how Hadhrat ‘Umar had dealt with the conquered lands of Syria and Iraq. He had kept them in state ownership, but had left them with their original owners, imposing a fixed kharāj (tribute) on them according to the nature of their produce.