Regulations for an Economic Framework
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 this, 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 heard1, 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 and handing it over to the eldest child or the 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 husband or wife 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 the husband or wife 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 eight 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 his 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)2.
4. It has been divinely ordained that the spoils of war shall be regarded as state-owned and a fifth of them3 hall 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 fai4 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 `kaee lā yakoona doolatam 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 prohibtion 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." (Bukhari, Kitab-uz-zakat)
The importance of this right can be further appreciated from the Prophet's directive in which he has directed 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." (Tirmazee, 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, Kitab-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 basic necessities 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 Muslims as a nation adopt a God-fearing attitude in other collective spheres, 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 blessing 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 heaven 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 prohibition 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 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 kharāj5 (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 when we, Muslims, were blessed with the leadership of the world in place of the Jews and the Christians. 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. (Concluded)
(Translated from Ghamidi's "Meezān")
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1. For details see "Kitab-uz-Zakat"
in Hadith collections.
2. For details see "Renaissance" Sep91 and Oct91 `The Islamic Law of Inheritance'.
3. 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 had to even provide for themselves 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.
4. ie, the wealth obtained from the enemy without a battle.
5. 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 their produce.