FROM THE EDITORIAL DIRECTOR
Dr. Farida Khanam has been a professor at the Department of Islamic Studies at Jamia Millia Islamia in New Delhi. A Study of World's Major Religions, A Simple Guide to Sufism are two of the books amongst others, of which she is the author. She has also translated many books on Islam authored by Maulana Wahiduddin Khan. Currently, the chairperson of Centre for Peace and Spirituality (CPS International), an organization founded by her father Maulana Wahiduddin Khan, she is a regular contributor of articles to journals, newspapers and magazines. Dr. Khanam has edited Maulana’s English translation of the Quran and has also translated his Urdu commentary of the Quran into English. Under Maulana Wahiduddin Khan Peace Foundation, along with the CPS team, she has designed a series of courses on peace-building, countering extremism and conflict resolution.
THE ECONOMIC TEACHINGS OF THE QURAN
ISLAM not only allows but encourages honest trade and commerce. The Prophet is reported to have said that a truthful and trustworthy trader shall (in the Hereafter) be among the company of the Prophets and the truthful. There are a large number of verses in the Quran relating to trade and commerce. We are reminded that amongst God’s bounties are the beasts of burden created by God for carrying men and material, and the ships which sail by His command carrying men and merchandise. (16: 7; 23: 22)
Legitimate trade is allowed even during the Hajj (2: 198). Men whose business activities do not divert them from prayers and charity are praised (24: 37); while those who leave off prayers when they see some bargain or means of amusement are reprimanded (62: 11); and we are told that the love of God, the Prophet and the struggle for God’s cause must have preference over trade.
All illicit ways of making money have been forbidden. For instance, gambling and games of chance; bribery and corruption; hoarding and profiteering; giving short measure or short weight; and usury.
The Prophet of Islam advised traders not to sell the grain purchased by them until they had weighed it. Another saying is that it is open to the buyer and the seller till they part, either to keep the bargain or cancel it; and that traders must tell the truth and spell out the good and bad points of the goods offered for sale. If they do so, their trade shall be blessed; but if they tell lies and conceal defects, they shall not receive God’s blessings. The Prophet severely warned shopkeepers against selling their goods on false oaths.
Economic activity in Islam is governed by what is economically, socially and morally good. Economic activity that is destructive of man’s innate goodness and harmful to the individual and society has been declared unlawful or haram.
LABOUR AND ECONOMIC RISK
In Islam, gains from economic activity should
be based on two factors: labour and economic
risk. Income from betting or gambling, for
example, is therefore unlawful because it is
not acquired through work or labour. Such
income is called “unearned income”. Income
from lending money at a guaranteed rate of
interest is unlawful because it is not earned
through labour or economic risk. Income
from such activities as usury, gambling,
monopolistic trade practices, hoarding and
speculation is therefore regarded as unlawful
or haram. All the practices that are not based
on productive work can be shown to create
hardship and may even lead to social strain
and upheaval.
Economic activity in Islam is governed by what is economically, socially and morally good. Economic activity that is destructive of man’s innate goodness and harmful to the individual and society has been declared unlawful or haram.
What is most severely condemned in particular is riba which is interest or usury. This involves lending money on condition that you get back not only the sum lent but an additional guaranteed sum—without any work on your part and without any economic risk. Riba exploits the needs of the borrower and may cause further economic hardship. The lender thus becomes a parasite feeding on the needs of the borrower. As such, riba lies at the root of much of the economic and political instability in the world.
PRIVATE AND PUBLIC ENTERPRISE
Public finance as practiced in the early Islamic period was based on
the ethical and social philosophy of Islam. It did not depend on the
discretion of the ruler, rather it was based on guidance from Islamic
Shariah (law) and aimed at public interest. The general principles of public finance in Islam are derived from the verses of the Quran.
Although certain economic teachings are to be found in the scriptures,
the exact details of fiscal policies are not given. These were however
elaborated upon by the Prophet of Islam, and so the Sunnah (way of
the Prophet) is the second most important authority on public finance
in Islam.
The Quran says: ‘...of their wealth take alms’ (9: 103), and the method of the Prophet clarifies how the dues collected from the wealthy are to be distributed amongst the poor. The aim was to achieve a healthy circulation of wealth in society. This task was entrusted to the state: this may be considered an example of the earliest public enterprise in Islam. The system of public financial enterprise at the time of the Prophet was very simple as the Prophet himself did not own anything of any great value, nor did the community give much importance to wealth. At the time of the first four Caliphs, who were also Companions of the Prophet, the public money collected consisted of alms (Zakat) or certain taxes. All the funds were collected in the public treasury (bait ul maal).
The money was used for specific purposes like the running of the government and the welfare of society. However, a major part was reserved for the support for orphans, widows, travellers, the sick and destitute and for assistance in the marriage of orphan girls.
The second Caliph, Umar said: ‘Taxes are justified only when they are collected in a just and legal way and they are spent justly and legally.’ Since Islam kept in view the totality of human activities, the state assumed an active role in looking after the welfare of its members. Public works and care for the subjects of the states were always considered to be religious and moral obligations of the ruler. Abu Yusuf, a famous jurist always maintained the need for such state policies to secure the wellbeing of the people and increase the welfare of the subjects. Abu Musa al-Ash’ari says: ‘The best of men in authority are those under whom people prosper and the worst of them are those under whom people encounter hardship.’
Al-Ghazali too includes fulfilment of the basic needs of members of society as one of the social obligatory duties carried out by the state. He states: ‘It is incumbent on the ruler to help the people when they are facing scarcity, starvation and suffering especially during a famine or when prices are high as people fail to earn a living in these circumstances and it becomes difficult for them to make both ends meet. The ruler should, in these circumstances feed the people and give them financial assistance from the treasury in order to improve their lot.’
To sum up, the fulfilment of basic economic needs, the safety of society, support in times of famine and similar disasters are the social obligations of the state. In Islam the state enterprise is thus the public enterprise established with the sole aim of serving humanity. It is achieved through collection of dues and taxes by the state into the state treasury and the utilization of these public funds for the good of the whole society and all its members, on an equal basis according to their needs. Islam does not lose sight of the human community in any of its commandments as revealed in the Quran and expounded in the teachings of the Prophet.
THE CONCEPT OF ZAKAT AND SADAQAH AND THEIR IMPORTANCE
Zakat is the fourth ‘pillar’ of Islam. Zakat means setting apart for God,
every year a certain portion of one’s savings and wealth (generally 2.5
percent) and spending it upon religious duties and on needy members
of the community. The fulfilment of this duty is, in fact, a kind of
reminder that all one has is in trust from God. Man should, therefore,
hold nothing back from God. To whatever one may amass in one’s
lifetime, one’s own personal contribution is insignificant. If the Supreme
Being, who is at work in the heavens and on the earth, refused to assist
man, there would be nothing that the latter
could accomplish single-handedly. He would
not be able to plant so much as a single seed
to make things grow. Nor could he set up any
industry, or carry out any other enterprise. If
God were to withdraw from us His material
blessings, all our plans would go awry, and all
our efforts would be brought to naught.
The second Caliph Umar said: ‘Taxes are justified only when they are collected in a just and legal way and they are spent justly and legally.’
Zakat is the practical recognition of this fact through the expenditure of money for the cause of God. Islam requires man to consider his personal wealth as belonging to God and, therefore, to set apart a portion for Him. No maximum limit has been prescribed, but a minimum limit has been fixed. According to statutory Zakat, individuals must spend a fixed minimum percentage of their wealth every year in the way prescribed by God. While spending from this wealth, one is not permitted to belittle the recipient or to make the recipient feel obligated. This wealth must be given to the needy in the spirit of it being as a trust from God that is being handed over to the genuine titleholders. The giver of Zakat should feed others so that he himself is fed in the Hereafter, and he should give to others so that he himself is not denied succour by God in the next world.
Zakat is a symbol of one’s duty to recognize the rights of others and have sympathy with them in pain or sorrow. These sentiments should become so deep-rooted that one should begin to regard one’s own wealth as belonging, in part, to others. Moreover, one should render service to others without expecting either recognition or recompense. Each individual should protect the honour of others without hope of any gain in return. He should be the well-wisher of not just friends and relations, but of all members of society. Zakat, first and foremost, makes it plain to people that their ‘possessions’ are gifts of God, and, secondly, dissuades the servants of God from living in society as unfeeling and selfish creatures. Indeed, throughout their entire lives, they must set aside some portion for others.
The fulfillment of basic economic needs, the safety of society, support in times of famine and similar disasters are the social obligations of the state.
We must serve our fellow human beings only in the hope of receiving a reward from God. We must give to others with the divine assurance that we will be repaid in full in the next world. In a society where there is no exploitation, feelings of mutual hatred and unconcern cannot flourish. A climate of mutual distrust and disorder is simply not allowed to come into being; each person lives in peace with another, and society becomes a model of harmony and prosperity. On the legal plane, Zakat is an annual tax, or duty; in essence and spirit, it is recognition on the part of man of the share which God, and other men, have in his wealth. There are two forms of charity in Islam— obligatory and voluntary. In addition to Zakat there is sadaqah. Zakat, derived from the word zakah, means to purify. By giving up a portion of the wealth in one’s possession, the remainder to be used by the almsgiver, is purified or legalised.
According to the teachings of Islam, the giving of sadaqa serves a number of functions. Sadaqa, first and foremost acts as expiation for sins. Believers are asked to give sadaqa immediately following any transgression. Voluntary alms-giving can also compensate for any shortcoming in the past payment of Zakat. Sadaqah is recommended ‘by night and by day, in secret and in public’ in order to seek God’s pleasure (2: 274). The constant giving of a little is said to please God more than the occasional giving of much. Sadaqa is also a means of moral edification. It purifies the soul of the evil of avarice, and is a reflection of the generosity of God the All-Giving.
Inspired by the verses of the Quran and the teachings and practices of the Prophet and his Companions, the giving of sadaqa to individuals or institutions remains a widespread practice among Muslims. The Prophet, the most generous of men, used to make personal donations.
Zakat is a symbol of one’s duty to recognize the rights of others and have sympathy with them in pain or sorrow. These sentiments should become so deep-rooted that one should begin to regard one’s own wealth as belonging, in part, to others.
Zakat is God’s due portion of what we own and what we produce. There are many ways of making a living in this world: one can work on the land, in a factory, a shop or in an office. But what part do we actually play in all this? Our role is, in fact, minimal. Multiple forces are at work in the universe and within us. All these forces come together to enable us to earn a livelihood. All this has been ordained by the Lord of the Universe. That is why, once a year, one should calculate one’s earnings, and put aside a portion for God. By doing so, one acknowledges the fact that it is all from God.
Without His help, one could earn nothing. To spend for the cause of God is to express a sublime attachment to the Lord. It shows a yearning to empty oneself before Him. One should feel as one gives that one is offering everything to God and seeking nothing for oneself. The following verse shows the spirit in which a Muslim should help others: ‘We feed you for the sake of God alone, we seek neither recompense nor thanks from you.’ (76: 9)
There are eight categories of people, eligible to receive Zakat which have been specified in this verse of the Quran:
'Alms are only for: the poor and the destitute, for those who collect Zakat, for conciliating people’s hearts, for freeing slaves, for those in debt, for spending for God’s cause, and for travellers in need. It is a legal obligation enjoined by God. God is all-knowing and wise.' (9: 60)
Zakat funds are to be spent, according to the Quran, on the poor and the destitute, the wayfarer, the bankrupt, the needy, those who newly embrace Islam, captives, collectors of Zakat and in the cause of God. The last category allows Zakat funds to be used for the general welfare of the people—education, social work, etc. Zakat in spirit is an act of worship, while in its external form, it is the carrying out of a social service.
Zakat is thus not merely the payment of a tax, as it is generally understood, but rather a matter of great religious significance. Its importance is underscored by the fact that the Quran treats it on par with (salat) prayer. The Quran frequently enjoins the believers, ‘to say prayers and pay the Zakat’ and goes to the extent of saying that one cannot attain righteousness unless one spends out of one’s wealth for the love of God:
‘By no means shall you attain righteousness unless you give of that which you love.’ (3: 92)
Moreover, the Quran disapproves of people who make a show of their alms-giving. (2: 271)
Zakat is a test of the sincerity and unselfishness of the believer. For there is no authority to force any Muslim to pay it. It is entirely up to the conscience of the individual whether they pay or not. The willingness to pay shows that one’s heart is free of the love of money. It shows that one is prepared to use one’s money for the service of humanity.
The Prophet of Islam was always very concerned for the poor and the needy. He went so far as to say:
‘He is not a believer who eats his fill while his neighbour remains hungry by his side.’ (Muslim)
THE UTILIZATION OF ECONOMIC RESOURCES
Agriculture is essential and should be given priority in any community.
According to the Quran, God has spread out the earth and made it
fertile and therefore fit for cultivation. He sends the “fertilizing winds”
to drive the clouds and scatter the seeds and He sends down rain to
bring forth vegetation of all kinds. The many verses in which these
bounties and favours of God are mentioned all serve to encourage
people not only to thank God but to engage in farming.
There are many sayings of the Prophet which commend agricultural production. The Prophet of Islam said:
‘When a person plants a tree or cultivates a crop, from which birds or human beings eat it is accounted as a (rewardable) charity for the one who plants’.
Stressing the importance of irrigation and land reclamation for agricultural purposes, the Prophet also said:
‘Whoever brings dead land to life, for him there is a reward in it, and whatever any creature seeking food eats of it, shall be considered as charity from him.’
Agriculture is a vital activity which has benefits in this world and rewards in the Hereafter. This was one occupation, which the Prophet considered very dignified. Although many people do not look upon farmers and shepherds with respect, the Prophet gave dignity to this occupation when he said:
“God did not send a prophet without his having tended sheep.” “You too, O Messenger of Allah?” asked his Companions. “Yes, I tended sheep for wages for the people of Makkah.”
One should observe all the Islamic advice and regulations about the proper care and treatment of animals: to provide for them all that their kind require, not to burden them beyond what they can bear, not to injure them and if they are used for food, to slaughter them in the most kind and efficient manner.
INDUSTRIAL PRODUCTION
While agriculture is essential and highly encouraged as an occupation,
the Prophet saw that it was undesirable that people should confine
their economic efforts solely to agriculture and pastoral pursuits.
In addition to agriculture, Muslims needed to develop the industries,
crafts and skills needed to build a strong community.
The Quran mentions the opportunities and the needs for various types of industrial production involving the use of iron, copper and other minerals—resources which God has placed at the disposal of man. 'And We provided and revealed the use of iron, in which there is great power and benefits for mankind...' (57: 25)
It speaks, for example, of the value of shipbuilding and the vast expanses of ocean, which can be explored in various ways for the benefit of mankind.
In engaging in industrial production and the manufacture of goods, the benefit of mankind and the environment in general must be given high priority. Whatever is harmful, or is intended for a harmful purpose, should not be manufactured or produced. Whatever is harmful to the beliefs, good morals and life style of a society should likewise not be produced.
TRADE
The Quran and the Hadith of the Prophet, urge Muslims to engage in
trade and commerce, and to undertake journeys for what the Quran
refers to as “seeking the bounty of God”.
All trade in Islam is allowed unless it involves injustice, cheating, making exorbitant profits, or the promotion or selling of something which is haram.
It is haram to do business in alcoholic drinks, intoxicants, harmful drugs, or anything the consumption and use of which, Islam has prohibited. One should not promote such products which are haram. Professions involving the use or propagation of harmful knowledge are also not allowed.
The Prophet, said:
'When God prohibits a thing, He prohibits (giving and receiving)
the price as well.'
Any healthy community or society needs a variety of professions to meet its needs. Professions relating to man’s basic needs—food, clothing, shelter, health care, education, and defence. It is the basic teaching of Islam that in choosing one’s profession one should be driven by what is essential for the humankind and not by what gives the individual huge profits. All the commandments of God, the teachings of the Prophet point towards the fact that one should involve oneself only in those economic activities which are totally beneficial to humankind and shun even the smallest economic activity which is harmful to humankind. There is huge accountability regarding this aspect.
Dr. Farida Khanam
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