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10-The Origin of IE -Brahimi_03

10-The Origin of IE -Brahimi_03

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Review of Islamic Economics

,

No,

10, 2001,

pp. 67-89

The Origin of Islamic Economics"
Abdeihamid Brahimi

Abstract: economic

Although the Qur'an and the Sunnah have not provided an model as such, they contain principles and rules that allow the "ulama' and the economists to find solutions to the different aspects of human life that are adapted in function of the evolution of society in time and in space. This paper aims to show that the economic analyses developed by Muslim writers preceded the economic ideas advanced by European writers by six to seven centuries. It is thus the objective of this study to present these contributions in the different fields of economics science.

Introduction It is convenient, at the outset, to recall that the Qur'an, the Sunnah and the iima' of the 'ulamd' (consensus of Muslim scholars) constitute the permanent reference of entrepreneurial activities in society. However, the economic questions are not dissociated from other philosophical, metaphysical and spiritual dimensions of Islam. The Qur'an and the Sunnah have not provided an economic model as such, but contain principles and rules that allow the 'ulama' and the economists to find solutions to the different aspects of human life that are adapted in function of the evolution of society in time and In space. The economic questions that make a part of an indissoluble whole have been dealt with in Islam under the title of mu'iimaldt (human relations or transactions) since the time of the Prophet

H.E. PROFESSOR ABDELHA:\lIDBRAHLvll was a former Prime Minister of Algeria (I984-1988), and is presently Director General of the Centre for Islamic and Maghreb Studies, London. He is the author of several works, including, Strategies de deueloppement pou Algerie (Economica, Paris, 1991), and justice sociale et deueloppement en economic islamique (La Pen see Universe lie, Paris, I993). ". The consent of the editor of Islamica is gratefully reprint of this article in this issue. acknowledged for permitting the

68

Review of Islamic Economics, No.

10, 2001

Muhammad (pbuh). Besides, the economic problems were analyzed, throughout the history of Islam, by the [uqahii' (experts in Islamic jurisprudence), the philosophers and the historians at the same time. The importance of the special place reserved for economics in the works of great Muslim thinkers varies from one author to another. Some economic analyses of rare quality appeared, in the writings of Muslim scholars many centuries before the birth of the economic science in eighteenth-century Europe (if we accept that the main preoccupation of the Mercantilists of the sixteenth and seventeenth centuries was the accumulation of gold and silver and that their contribution to Economics was marginal). The first works, in Europe, that approached economics scientifically date from 1758 with the Tableau Economique of Quesnay and 1776 with An Inquiry into the Nature and Causes of the Wealth of Nations of Adam Smith, followed by other works such as those of Malthus (1798 and 1820) and Ricardo (1817). Since then economic science has seen a tremendous expansion and development with the Theory of Marginal Utility of Menger (1871), Bohm-Bawerk (1884) and F. Von Weizer (1889); the Theory of General Equilibrium of L. Walras (1896) and V. Pareto (1896/97); Alfred Marshall's Theory of Partial Equilibrium (1890); and the macroeconomic analysis of the famous book of ].M. Keynes, General Theory of Employment, Interest and Money (1936). At the same time a different doctrinal current was developed with Karl Marx who in 1848 published with Engels, The Communist Party Manifesto. He also published in 1859, Critique of Political Economy, and in 1867, Das Kapital. This brief reminder shows that the economic analyses developed by Muslim writers preceded the economic ideas advanced by the European writers by six to seven centuries. We will now examine closely the economic content of some of the works of the great Muslim thinkers.
I

Division of Labour The importance of the role of labour in the creation of wealth was underlined by al-Ghazali (1058-IIl1), Ibn Taymiyya (1263-1328) and Ibn Khald un (1332-1406). The textbooks of economics,

Cooperation among human beings allows them to obtain results that would never have been realized individually. source of all riches. al-Ghazali." Even more astonishing is that al-Ghazall used the example of a needle factory to illustrate his point while Adam Smith used the example of a pin factory. The development of diversified industrial activities that lead to an increase in exchanging goods and services should be encouraged to guarantee the satisfaction of the basic needs of the population." Ibn al-Qayyim (1292-1350) emphasized the necessity of establishing economic cooperation between the different parties of a society which constitute the whole. The same is true for incomes generated from the exploitation of mines. No. highlighted the importance of the division of labour required by the necessary diversity of human activities. who had analysed. 2001 economic thought and history present Adam Smith as the father of political economy." However. the value of labour is always included in the costs .Review of Islamic Economics.' Ibn Khaldun tells us that labour generates an income that allows its proprietor to exchange it for the goods that he needs. by affirming that laziness and idleness were condemned by Islam. value and the division of labour . In fact seven centuries earlier. The division of labour induces multiplication and diversification of economic activities. inter alia. and from agriculture or pastoralism from which no income can be generated without labour. Whether it is a question of industrial activities or of raw materials that are used. 10. In his writings.five centuries before David Ricardo and Karl Marx. it is Ibn Khaldun who should receive credit for analysing with a greater scientific rigour the concepts of labour. al-Ghazali encouraged the diversification of economic and industrial activities in the country to avoid the latter being dependent on the outside should there be a limited production of goods. the question of the division of labour. and thus accounted for. he stressed the virtues of labour. As for Ibn Taymiyya. Gain or profit cannot be achieved except through effort and labour. or a question of a profession where labour is not visible. followed by other Muslim thinkers. which implies a division of labour among the different industrial branches. This is quite apparent in manual jobs where labour is visibly performed. The income that a worker gets from a certain job therefore represents the value of his work power.

70 Review of Islamic Economics. lies in the difference of the nature of activities undertaken. any increase in labour generates an increase in the overall value of the community whose prosperity improves and leads to the diversification of production. when the inhabitants of a region or a city work in groups in order to satisfy their wants. Contrary to those who prohibit credit sale . leading to cumulative development. overall expenditure. industry and commerce constitute activities which provide a means of subsistence through the exchange of produced goods and services. artistic or industrial. which in its turn will result in increasing income. No. Thus. the volume of employment. rich regions and poor ones. Wages and Profits Zayd bin Ali (699-73 8) tackled the question of prices through credit sale . they will discover that they need only spend a part of their labour for this purpose and that the rest of their labour will be available for producing other goods to be exchanged for different products of the same value that they can import from other regions. Therefore any income or profit represents the value of labour. 2001 of the goods. the size of the market and the importance of the total surplus obtained. As income represents the value of labour spent. Agriculture." Zayd allowed credit sale at a higher price than cash sale. Ibn Khaldun then concludes that the primary cause of the gap between rich towns and poor ones. and an improvement in prosperity. their diversity. collective labour permits the production of foodstuffs whose quantity exceeds the needs of the persons involved in the considered activity. Therefore. The product of collective or cooperative work far exceeds the needs of the group. 10. Ibn Khaldun then describes the different economic activities whose raison d'etre is to produce goods and services for the market. The increase in production and exchange that result therefrom contribute to the increase in wealth." Furthermore he tells us that as an individual is incapable of satisfying all his needs on his own. This is made possible by the fact that each worker specializes in one operation whether it be agricultural. and at the same time generate a profit or surplus. Prices. he organizes himself with other persons to cooperate by being socially involved.often the subject of controversy.

Ibn T aymiyya. The question of the 'price of the equivalent' arises during the operations of selling. our author thinks that such transactions are covered by the Qur'anic verse: '0 you who believe. The merchants buy agricultural produce from farmers at a low price. stocking." 1.Reuieu/ of Islamic Economics. except through trade by mutual good-will. Hence the necessity of the commercial function and its corollary. AI-GhazaiI also tackled the problem of prices in his analysis on the functioning of the rnarket. wages and profits. 2001 71 by comparing it to riba (interest). Ibn Taymiyya used the two words 'just' and 'fair' interchangeably in his analysis on prices. No. 10 . In the history of Islamic economic thought. The latter constitutes the price of money whose value should not change over time. the credit sale is an exchange operation of a commodity against future money which protects the seller because his raison d'etre is to search for a profit from the difference of prices of the commodities between the two periods of time. This presentation implies that prices are determined by the forces of the market where the function of transport plays an important role in making the supply of products meet the demand of the consumers.' (Qur'an. in particular. buying or exchanging goods. devoted a great deal of attention to the questions of prices. 4:29). do not devour your wealth among yourselves in vanities. Thus the difference between the cash sale price and the credit sale price is completely different from interest. This is valid not only for agricultural products but for all commodities. By contrast. ro.. The Principle of the 'Price of the Equivalent' The concept of the just or fair price existed since the time of the Prophet (pbuh) and the Four Caliphs.f Production and consumption are two operations that cannot take place at the same time. which is generally accepted as the equivalent of the value of similar goods at the same time and in the same place. Certainly Ibn Taymiyya admits that prices are determined by the confrontation of the forces of demand and supply in the market but makes it clear that 'the price of the equivalent' is the rate at which the people sell their goods.. stock it and then sell it to consumers at a higher price in order to realize some profits. based on the Qur'anic injunction which demanded justice in socio-economic relationships.

The 'wage of the equivalent' is defined by Ibn Taymiyya as follows: 'The wage of the equivalent will be determined by the quoted wage imusamrnds if such quotation exists.72 Review of Islamic Economics. 2001 The 'price of the equivalent' is the one that takes effect in normal conditions of transparency (al-wajh al-macruf) and competitiveness without injustice or fraud. .knowledge of products. Also important is the transparency of the market . That is why our author foresees the state controlling prices with the aim of ensuring that the market operates well and guaranteeing the satisfaction of basic needs especially in such critical times as famine. The employer and employees should agree on a wage whose level corresponds to the wage established and accepted for the same activity. We will describe later some aspects that are linked to the market mechanism when we look at the role of the market and its limits. the state may intervene to fix the wage of the equivalent at a level that can neither be reduced by the employer. nor increased by the employee. No.excluding thus. the labour market is not transparent enough and is full of uncertainties that might affect the interest of one of the parties. 10.v" The principle is valid also in the determination of wages by the state as well as the individual. the quoted price (thaman musammdi will be held as the price of the equivalent. to which the two parties may refer. If for some reason. But in normal times. 12 According to Ibn Taymiyya. This wage is obtained in normal conditions through negotiations between employees and employers. the 'wage of the equivalent' is determined by the labour market. II 2. the integrity of operators and freedom of choice all being vital factors. just as in the case of sale or hire. war. and so forth. Ibn Taymiyya recommends that all the conditions of freedom of competition apply . The 'Wage of the Equivalent' The concept of the 'wage of the equivalent' is based on the same principle as that of the 'price of the equivalent'. all forms of collusion between professionals and monopolies. Labour is thus considered as a commodity that is subject to the law of supply and demand.

A trader should not charge from an unaware person a profit higher than he charges from others: in the same way. 5 I In this. nor the consumer.. He remained very faithful to the teachings of the Qur'an and the Sunnah. As for industrial profit. The 'Profit of the Equivalent' The 'profit of the equivalent' is defined by Ibn Taymiyya as the profit that is commonly regarded as 'normal' in the activity and whose level should neither adversely affect the interests of the seller. He said: A person who acquired goods to earn income and to trade with them at a later date is permitted to do so but he is not allowed to charge from a needy person a higher profit than the customary one. I4 As profit is included in the price. No. it is considered the result of both labour and capital. if there is a needy person who is bound to buy the good to fulfil his need. the analysis of these two economic categories by Ibn Taymiyya is based on the same reasonmg. and he ought not increase the price for him due to his need .. Ibn Taymiyya follows the tradition of the Prophet (pbuh) who prohibited the exploitation of needy peoples in commercial transactions. The state should intervene in sonic cases to rectify unjust situations. the seller must charge a profit equivalent to the profit charged from a person not so bound. 2001 73 3. 10. I6 The concept of prices. He rejects the exorbitant profits that result from the exploitation of particular situations of non-transparency in the market or of rigidity of demand (in the case of essential products). wages and profits developed by Ibn Taymiyya show his concern for preserving the equilibrium of interests and guarantee immutative justice (or equilibrium of obligations and charges) in socio-economic relations. protect the needy and preserve the general interest. That is why Ibn Taymiyya believed that workers and capital owners should be remunerated on a just basis according to their contribution to production without exploitation of the workforce.Reuieu/ of Islamic Economics. . forbid exploitation.

IS Nizam al-Mulk al-Tusi (r rth century) advocates state control of the economy. fraud clamped down on. I7 Al-Mawardi (IIth century) was also a proponent of state intervention in the economy through the muhtasib whose function. The precision of weights and measures would have to be assured. State granaries should be maintained in the Empire to provide plentiful foodstuffs during natural calamities or bad harvests. would be to regulate the market. He admits the determination of prices through the free play of supply and demand though he maintains the necessity of measures that tend to block monopoly.74 Review of Islamic Economics. According to him. No. among other things. especially in cases of catastrophe or drought. Hoarding and cornering of necessities must be stopped and punished. 10. Abu Yusuf (73 1-798) belongs to this same current. His thinking may be summarized as follows: Food should be plentiful and the state should organize free kitchens for the needy and the poor.r? Al-Chazali implicitly recognized in his works the idea of determining prices by the forces of the market (in his analysis of commercial activities and the related functions of transport and . The agricultural produce should be kept up so that there is no shortage of food stuffs. and commercial operations controlled so that they conformed with Islamic legislation. That is why they anticipate the intervention of the state in case of dysfunction of the market in order to protect the general interest. fraud and corruption. The market is to be controlled in the interests of the consumer. emphasizing the necessity of maintaining national stability. 2001 The Role of the Market and its Limits The many thinkers and 'ulama' who tackled the economic questions recognize private property. such stability would not be obtained unless the basic needs of the population were safeguarded. the liberty of economic activities and the free movement of the market forces but within the confines of Islamic values. I9 Nizam al-Mulk al-TusI was preoccupied by the necessity of organizing assistance to the poor and needy amid the struggle against the penury of alimentary products by assuring their permanent availability in the markets.

200r 75 storage). The price changes according to the abundance or the .Reuiew of Islamic Economics. of which we reproduce only a part here: • 'People's desires are of different kinds and change frequently'. the activities that are subject to control. Centuries before the emergence of the consumer associations of today. On the other hand. the reason for it is deficiency in production or decline in import of the goods in demand. if availability of the good increases and the desire for it decreases.t" First. r o. and the nature amid rules of supervision. On the supply side.for example practices that are widespread today. He also cites the elements that have some effects on the global level of demand and thus on prices. Sometimes. Second. This scarcity or abundance may not be caused by the actions of any individuals.r ' The recourse to such practices in commercial activities is condemned by al-Chazali who suggests two types of actions to be taken in such instances. He has also indicated some other areas that need to be supervised . But he also evoked al-hisba (supervision and control) by describing the qualities of the muhtasib (supervisor). No. Thus if desire for it decreases. such as concealing the defects of products or services and false declarations for achieving profit. the price comes down. alGhazalr suggests that those who detect such harmful practices should make them known to consumers in order to protect them against fraud. Ibn Taymiyya has also well expounded the role of the market where prices are determined by the laws of supply and demand. to guarantee the transparency of the market and to take appropriate measures to eliminate wrong commercial practices. Ibn Taymiyya points out that there are two factors which affect the supply level: local production and imports. to ensure the availability of products almost everywhere.tVariations in prices according to him. it may be due to a cause not involving any injustice. al-Chazali propounded their creation in order to protect consumers and regularly inform them of the quality of products and their equilibrium prices. the institution of al-hisba. He wrote that: Rise and fall of prices are not always due to an injustice by certain individuals. the price rises. he wrote. are not necessarily the result of fraudulent manipulations.

should result from consultations with the concerned people involving representatives from both sellers and consumers. according to our author. dissimilation. shows the importance of his contributions to economic analysis at the dawn of the fourteenth century. 2001 scarcity of the good in demand.with the government intervening to determine prices in the case of the former. If the need is widespread and intense. Ibn Taymiyya proposes that the state should intervene in fixing the prices of necessary products. In this context. he will be forced to sell it at a just [fair] price. or at least limiting as far as possible. he wrote.Review of Islamic Economics. that in such cases the intervention of the state becomes inevitable in eliminating. he recommends that the guilty merchant 'should be punished and deprived of the right to sell'. when he has surplus food and the people are faced with starvation. on the contrary. 'The prices should not be fixed without the consent of the parties concerned'. It is clear. A product is more desired when it is scarce than when it is abundant. If the number of persons who demand a product is great. conscious of real constraints which could disturb the normal function of the market. he suggests that the fixing of prices by the state should not be authoritarian but. He wrote: 'It is for the authorities to compel a person to sell his goods at a fair price when people are in need of it. In the event of a natural catastrophe or of a war. illustrated by citations from Ibn Taymiyya. he foresees two kinds of situations: exceptional and normal .27 However. If for example. 10.r+ This brief reminder. Ibn Taymiyya suggests that the state should not intervene in fixing prices except in the event of an injustice. But Ibn Taymiyya goes beyond the limits of the market mechanism by proposing a policy of price control by the state.'25 In a normal situation. the price rises and the opposite occurs when the number is reduced. • The price also varies as a function of the number of people who demand it. or voluntary withdrawal of merchandise from the market circuit to realize illicit profits. . • The price is also affected by the intensity of the need for a product and by the vastness of that need. monopoly. 26 In the case of practising exorbitant prices and discrimination. No. the price will be higher than where the need is negligible. market imperfections.

Money and Monetary Policy The theme of money was tackled very early on in history by a number of Muslim thinkers such as al-Ghazali. He argues that money is not a commodity and therefore has no intrinsic value. money allows the acquisition of all sorts of goods and services. Ibn Taymiyya. Money serves. The proprietor of clothes possesses only his clothes but the proprietor of money may acquire what he likes with his money. In fact.Review of Islamic Economics. an object of transaction and a source of profit (interest). money becomes a necessary means of exchange to overcome the problems of a barter economy. nor hoarded and withdrawn from the commercial circuit.2001 77 He also pointed out the inconveniences and the dangers of any arbitrary policy of determining prices which is not supported by the population (such as black market. Al-Chazali has highlighted two functions for money: means of exchange and a measure of value. clandestine displacement of products). as a means of exchange in commercial activities. 10. No. Ibn Khaldun and al-Maqrizr. Trading in money that . Ibn Taymiyya recommends the same procedure as that followed for determining and controlling prices. Al-Ghazali says that money also constitutes a unit of value and an instrument of measurement whose role is to increase exchange and commercial relations. Ibn Taymiyya believes in the free play of market forces but recommends state intervention to protect the population and to safeguard the general interest . The proprietor of clothes has to convert his clothes into money by selling them before he can satisfy his need for other products. or in normal conditions by curbing all monopolistic or monopsonic situations and anything that disturbs the smooth operation of the market and its transparency. Ibn al-Qayyirn. firstly.in exceptional circumstances. This was to be done in a framework which would today qualify as democratic because the authorities would have to consult representatives of the population before the adoption of any price policy. Overall. corruption. That is why al-Ghazalr insists on the fact that money should not be considered as a commodity. Concerning the remuneration of the factors of production.r'' Thus.

Ibn Taymiyya. Ibn Taymiyya not only established the relationship between the quantity of money. Furthermore. a standard of measurement and a means of exchange. and condemns the trade in money. would lead to monetary depreciation and to higher prices.l? This illustrates eloquently the synthesis which was achieved by the pertinent economic analysis of Ibn Taymiyya and the Islamic values to which he was deeply attached. He said that. based on the accumulation of money as an in itself. The latter would include the consequences of monetary depreciation and the subsequent rise in prices on purchasing power. 10. 'bad money chases good money'. Accordingly. import reduction. the erosion of money (hence its instability). malfunctioning of the economy. attributed later to Thomas Gresham and known as Gresham's Law in the textbooks of political economy. namely. or an increase in monetary mass lacking a simultaneous increase in wealth and the global volume of transactions. examines two functions of money. and so forth. He believed that the trade in currency as well as the printing of money.Reuieu/ of Islamic Economics. and the illicit profits generated through the issue and commercialisation of moneyidentified by him as the source of monetary erosion and inflation. he examined the problem of money erosion and also its impact on the general economic situation and on the welfare of the population. 2001 generates remuneration in the form of an interest rate. is considered an injustice according to Qur'anic teachings and the Sunnah .v" By studying the monetary and economic phenomena observed around him and with reference to Islamic values. No. 'The authorities should issue the money (other than gold and silver) up to the level that is just necessary to correspond to the volume of transactions of the peoples without causing them any injustices. commercial malaise. the global volume of transactions and the general level of prices but also took a stand against wrongful practices in this sphere. This would penalize the population 'by devouring the wealth of the people' and would also result in the illicit betterment of a small minority. This led Ibn Taymiyya to describe the principle. the analysis of Ibn Taymiyya shows the importance of the conception and application of a monetary policy that is . shortages. 3 I In total. he maintains that such situations are sources of injustice and contrary to the general interest because they are accompanied by loss of confidence in the currency. like al-Chazali.

Ibn al-Qayyim recognizes the two functions of money described by the earlier scholars. Therefore money should be stable so as to facilitate the evaluation of the products and their exchange. that gold and silver do not constitute wealth as such. and guarantee economic progress and social welfare. well before them. Ibn al-Qayyim stood up against the injustices and the prejudice caused to society by the instability of money. According to Ibn Khaldun. the source of wealth. condemned the renting of money. He wrote that 'money is issued not for its own sake but to be used in transactions (that is to say that it constitutes only a means of exchange). but have a value of exchange like other metals or precious stones. Ibn Khaldun demonstrated. in applying the teachings of the Qur'an and the Sunnah. Like his teacher. 53 Concerning riba (interest). reinforce the citizens' confidence. the utilization of the means of production and the search for profit that contribute in augmenting total production. A disciple of Ibn Taymiyya. because all products suffer from price fluctuations in the market except gold and silver. Contrary to what many people believe the prosperity of a country does not depend on the abundance of gold and silver but in the development of agricultural. some goods are accumulated solely with the goal of acquiring gold and silver. 2001 79 appropriate and just in order to stabilize the economy. The argument of Ibn Khaldun is based on the theory of value which he put forward centuries before Karl Marx.'32 This money should be stable. That is why he considers that the Dinar (made of gold) and the Dirham (made of silver) are the names of the prices of goods and thus constitute the standard of measuring prices in order to know the values of the goods. People have used them also as means of reserves and hoarding. God has created gold and silver to serve as a standard (or yardstick) of measurement for all goods. which contributes to increasing or decreasing the quantity of precious metals. industrial and . in improving social well-being.J" Contrary to the Mercantilists. he said. Ibn al-Qayyim. It is the social effort. Sometimes. The countries producing gold and silver exchange them against money to acquire the goods they need. It is human labour. but he was more precise in his formulation. 10.Review of Islamic Economics. No. the trade of currency and the conditions of issuing money. in developing cities and activities of all sorts and increasing exchange.

and not exceed. 'in the nature of things and according to the Sharf'a_36 Analyzing the pro blen of inflation which he observed. One must have a good intention before undertaking an economic activity. Wealth. the total volume of transactions. al-Maqrtzi proposes that the increase in mass-money should correspond to. He considers gold and silver constitute money which could be used as a of value. within the confines of Islamic values. No. is legitimate and does not necessarily hinder one's aspirations for success in the akhira. a disciple of Ibn is known for his works on money and prices. that only standard aI-DIn Ahmad al-Maqrtzi (1364-1444). 10.80 Review of Islamic Economics.t ' TaqI Khaldun. 2001 commercial acnvities. his family and his relatives (to make him independent of others) and to perform his Islamic duties. should serve for succeeding in al-akhira. On the other hand. if it can be considered wealth at all. Economic Development Two tendencies can be identified in Islamic literature on questions related to development. On the one hand there is the great philosopher al-Chazali and the Sufi school (Islamic mysticism) which deem that wealth and economic activities should not be pursued except as a means for succeeding in the eternal al-ahhira.37 He lists seven conditions which a man should fulfil in undertaking his economic activities within the framework of accomplishing his Islamic duties. alMaqnzr identifies corruption and bad management as factors responsible for price rises as well as the strong fiscal pressure applied to farmers and the augmentation of mass-money other than gold and silver. The acquired wealth should be used in four . Because of the relationship between the non-measured issue of money and the rise in prices. the pursuit of economic activities should aim to satisfy the needs of the individual. The difference between people and between communities depends on the difference in these activities. Muslim thinkers and writers agree that the search for wealth and well-being in this world.I" These are: I. The search for material possessions beyond these two objectives to accumulate wealth and not to spend it on charity is condemned. According to al-Ghazall.

Ibn Taymiyya. 5. the search for profit and wealth should not be considered as an end in themselves. because it permits the accomplishment of a number of duties such as helping the poor. (c) to manage economic affairs with justice and benevolence (Cadi wa ihsan). 3. If someone has earned enough money. If all seven conditions are followed. is the same as the need for food. The only limits which are imposed in economic matters are derived from the Shari' ah. This is quite normal because there is no one model of economic development that is revealed by Islam. The human need for wealth. he says. No. shelter. one will be among the truthful isiddiqins. One should behave well and should treat all affairs with rationality and equity. One should not display cupidity by spending all his time in an economic activity. are duties that every Muslim economic operator should respect. As the seven conditions allow for a number of possible combinations. Contrary to the attitude of the Sufis. (b) to contribute to the well-being of other Muslims. according to al-Chazali. The seven conditions. etc. 7. for example."? He considers wealth to be superior to poverty even on a moral level. One must have the intention of fulfilling the social duties (fartj kifaya) in undertaking an economic or commercial activity. In other words. clothing. 6. One should not only abstain from the prohibited but also from doubtful things in his commercial relationships. But many Muslim philosophers and thinkers have different positions concerning strict economic questions. 2001 81 directions: (a) to satisfy his needs and the needs of his relatives. he should withdraw from the market to do some work for alahhira (the hereafter). 4. and mutual help amid cooperation as . IO. and (d) to enjoin good and forbid evil ial-amr bi'lma'ruf uia'l-nahy 'an al-munhari in economic matters. the people will get the place they deserve on the Day of Judgement depending on their behaviour and their implementation of Islamic principles. 2. One should remember the presence of God in his commercial activities. Ibn Taymiyya prefers wealth over poverty because it helps to lead a good life and to correctly fulfil one's religious duties. understands that economic activities could be undertaken and developed in order to improve social wellbeing.Reuiew of Islamic Economics. The pursuit of economic activities should not deter someone from his Islamic duties.

t ' Agriculture occupies a central place in his relative approach to economic development. seven or eight centuries ago. it has made clear the undesirable and the prohibited ones. Even though the Shari' a has not provided a model of methods to be followed in undertaking and developing economic activities. the Sunnah or on considerations of the general public interest.t? What finally counts in the economic life of people is respect for Islamic values such as integrity. Ibn al-Qayyim gives great importance to social well-being and that is why he gives priority to public interest over private interest in his efforts to solve the economic problems of his time. is always based on the principles of the Qur'an. But their worthy analyses. In his works. al-iihad (holy struggle). he adheres to the steps taken by Ibn Taymiyya and denotes his preference for wealth which. 10.t" He further enunciates that economic activities should aim at realizing the public interest and economic and social well-being.Review of Islamic Economics.t ' Ibn alQayyim considers that wealth permits one to accomplish all sorts of good actions whether they are obligations such as al-haji (pilgrimage). sacrifice. to guarantee the eradication of poverty and to improve social well-being in its material and spiritual dimensions that guarantee the economic and moral health of society as well as its prosperity. people can engage themselves in economic activities as they please so long as the Shart:a does not forbid it. allows one to accomplish one's duties towards society. 2001 regards the rest of the community. No. Ibn Taymiyya cited the example of the mudaraba (partnership) that was practised in the period before Islam but which was retained later by Islam. reflect the preoccupation and the economic conditions of their times. according to him. Referring to the Sunnah. and in the freedom of their actions and transactions. or voluntary acts such as the charitable deeds that are beneficial to individuals (helping the poor and the needy) and to the community (such as mosques. justice. schools and roadsl. al-zaluih. despite being of different approaches. . That is why Ibn Taymiyya raises to the rank of religious practices the efforts of economic development in its agricultural. Thus. industrial and commercial forms. which tend to assure the satisfaction of the basic needs of the population. As for Ibn al-Qayyim. The manner in which Muslim thinkers have approached the questions related to the development of economic activities. cooperation.

Islam remains the only religion which has treated the question of poverty and its necessary eradication with depth and precision. We have retained four among them for the purpose of illustration: Ibn Hazrn. If they try to neglect or avoid it or deflect from this responsibility. a number of subjects which although discussed centuries ago. reasonable clothing and accommodation. No.44 He argued that the state should endeavour to guarantee the satisfaction of the basic needs of the disabled population in the following domains: nourishment. however.Review of Islamic Economics. All revealed or nonrevealed religions have a social and humanitarian dimension. clothing and shelter. if adapted to modern conditions of the functioning of the economy and the exigencies of the future. scientific and technical progress. and the correct spiritual dimension to the Islamic approach. al-Ghazali. That is why a number of Muslim thinkers. Ibn Taymiyya and Ibn al-Qayyim. However. Social Justice and the Eradication of Poverty The themes of social justice and poverty were the subject of constant preoccupation throughout human history. 10. such as the theme of social justice and the eradication of poverty. drinking. There exist. writers and jurists have tackled the subject of social justice since the beginning of the Islamic era. allow appropriate solutions which take into consideration economic. But the revealed religions have conferred a more important place to benevolence and to assisting the poor and the disabled. 2001 The historical reminder of the economic thinking of Islamic thinkers and philosophers helps to identify some constants which. tax should be levied upon the rich Muslims to provide the poor with enough food. He wrote: The rich are obliged to provide sustenance to the poor living in their region. the Head of the State must compel them to part with some of their wealth for the maintenance of the poor and the needy. Ibn Hazrn (994-r066) is known for his works on social justice and his struggle for social well-being through the improvement of the conditions of the pOOr. In case the zakah is not sufficient to satisfy the basic needs of the poor. will always remain fresh.t> .

10. such as for example the general level of prices. Ibn Hazrn insists on its mandatory aspect and on the role which the rich could play in eradicating poverty. al-Ghazah has not formulated concrete suggestions to eradicate it. advocates social well-being by the transfer of wealth to the benefit of the poor through the medium of zakah and by the interventiom of the state through the medium of taxes in order to relieve the destitute. He set aside a whole chapter on zakah under the title 'Kitab Asrar AlZakah' (The Book of the Mysteries of Zakah) in his voluminous [hya' 'Ulicm al-Dzn. This may result from a strong demographic growth. AI-GhazaII. he would be punished and declared to be an apostate. In sum. poverty will increase. Dignity and piety are to be found in poverty as it manifests a preference of al-ahhira (the hereafter) over al-dunya (this life) by the voluntary renunciation of wealth. On the other hand. No. Even in the case of a refusal to pay zakah. the amount due must be paid whether one likes it or not. On the one hand. however. In the event of further opposition by a rich person. the conditions of exoneration from zakah and its conditions of allocation to the different beneficiaries. Then al-Chazali took on the question of poverty in a chapter with the title: 'Kitab Al-Faqr uia'l-Zuhd' (The Book of Poverty and Asceticism) where he defined poverty as 'the privation of basic needs' Y In his study of poverty. orphans. 2001 The author defines poverty as the non-satisfaction of basic needs. The ascetic attitude is seen as a generator of moral force. he considered that people should have an activity or employment in order to obtain a legitimate income that helps them avoid the absolute poverty which leads to begging or dependence on others. Ibn Hazrn relying on the Shari'a and on the general public interest. alGhazalr looked at poverty from the spiritual perspective by relying in his argument on the merits of asceticism.Review of Islamic Economics. a growth of needs or from the increase in a particular category of the population (old people. tackled the question of poverty differently. The aggravation of the disparities between rich and poor can only worsen the situation of the latter when the rich enjoy a number of privileges and influences on the administration and on the strategic variables of the economy. etc. AI- . On the question of zakah.46 He explained in this chapter the different categories of zakah. If needs increase more rapidly than the income available to satisfy them.).

the state should proceed to impose additional levies. consists of a mental attitude which does not make wealth an objective of life. On the contrary. According to Ibn T aymiyya. the state should rank its priorities in favour of the projects that are most productive. He thinks that people should search for wealth in order to fulfil their social obligations.t? does not. to which Ibn al-Qayyim allocates long sections. thinks that asceticism does not necessarily mean the rejection of the good things of this world. Rather. according to him. The responsibility of the state is not limited to guaranteeing the vital minimum to the population. Ibn Taymiyya thinks that justice occupies a central place in Islamic legislation whether it be in economic activities or in any other domain. The state has a determining role in the establishment of social justice as required by Islamic values and the Shari ah . give precise recommendations as to how to combat poverty. 52 Similarly.>' Ibn Taymiyya is one of the few Islamic thinkers to advocate that if the financial resources coming from zakah and other legal sources prove to be insufficient to meet the needs of the poor. Asceticism. as is the case of Ibn Hazm or Ibn Taymiyya. 10. based on his Sufi conviction.Review of Islamic Economics. who were rich but also very pious. like Ibn Taymiyya. No. 53 He cites the case of a number of the Companions of the Prophet (pbuh). the eradication of poverty is part of a state's task. and through voluntary donations and mobilization of additional financial resources (in a manner conforming to Islamic principles) should permit the creation of employment that generates permanent incomes in a dynamic way which will exterminate poverty by the creation of wealth on a durable basis. the institution of zakah. the state should guarantee the equitable distribution of incomes between the rich and the poor.t'' His analysis. he does not make a eulogy to poverty. as such. Ibn al-Qayyim. Unlike other thinkers of the time. however.>? The implementation of the Shari ah through the prohibition of interest. . wealth allows its owner to fulfil properly his religious obligations among which are zakah and the eradication of poverty. become independent and accomplish their religious duties. 2001 Chazali allocated long sections to asceticism and its different forrns. in the domain of expenses.

ro. . consisted of establishing justice on earth. in Sadeq and Ghazal! (eds. 8. M. Vol. 2. cit. pp. 95-6. pp. our author militates in favour of social well-being and the general interest of the majority by privileging them against the private. The Quran condemns fraud and corruption: 'Woe to those that deal in fraud. 122. Furthermore. Sadeq.. op.86 Review of Islamic Economics. PP·97-98. The Islamic Foundation. No. Leicester. 2. in Sadeq and Ghazail (eds). 'Introduction: Islamic Economic Thought'. 5. 'Economic Thoughts of Ibn Al-Qayyim'. 7. Abdul Azim Islahi.. 1988.H. Abdul Azim Islahi. Ibn Khaldun. 10. exact full measure. 230. p. pp. Readings ill Islamic Economic Thought. AbulHasan Sadeq and Aidit Chazalr (eds. A. ibid. Nejatullah Siddiqi.M. Cited by Islahi. Zakah. 4. 911. 'Recent Works on History of Economic Thought in Islam: A Survey'. all the Muslim thinkers. See Charles Issawi.. those who. 200r According to Ibn al-Qayyim. when they have to receive by measure from men. who was sent as a mercy for all mankind. 34-5. Ibn Khaldun. 3. cit. 2. 5 5 In fact. 159. egoist interest. Economic Concepts of Ibn Taymiyyah. Cf. ibid. in ibid. the mission of the Prophet (pbuh). playa very important role in the equitable distribution of incomes. 'Al-Ghazal: on Economic Issues'. ibid. edited by AliAbd al-Wahid Wafi. 222-36. 9-10.. ch. cit. he thinks that justice is the essence of the Islamic legislation. 75-101. 6. 'Al-Ghazalt on Economic Issues and Some Ethico-Juristic Matters Having Implications for Economic Behaviour'. pp. and see also by the same author.. See Abdul Azim Islahi. a fundamental pillar of Islam. Shart ah That is why he wishes it to be taken into account in all socio-economic relationships as well as in establishing social justice by fighting poverty. 1992. 9. cit. Readings in Islamic Economic Thought. p. Economic Concepts of Ibn Taimiyah.. if applied correctly. NOTES 1. ibid. 11. Readings in Islamic Economic Thought. Sadeq.). p. al-Muqaddima. On the history of Islamic economic thought. 'ulamii' and writers have dealt with the central question of social justice in their works related to the treatment of zakah.. 'Ibn Khalduns Analysis of Economic Issues'.. Kuala Lumpur. and d. op. in the eradication of poverty and in the promotion of economic development. op. op. 5. al-Muqaddima (in Arabic). Any manifestation of justice in society is an essential religious act and a form of obedience to God. d.l" By integrating the notion of general public interest in his work.). can. Vol. Longman Malaysia.

94-5. The Islamic Quarterly. 31. 88. Do they not think that they will be raised up on a mighty day. ibid... cir. one IS obliged to eliminate it to the extent he can'. 141. Sadeq. ibid. Siddiqi. but when they have to give by measure or weight to men. 'Economic Thought of Nizarn al-Mulk al. 124. 99. 61-2. 22. Ibid. 25. 'not to start business in money by purchasing copper and minting coins thus doing business with them. 'Al-Ghazali on Economic Issues'.. six centuries later: 'the essential . p. cit. 10. lhva' 'Ulum al-Din. 143. 32. pp. Cf. 18. p.. 28.). p.. 16. 98. ibid.. Readings in Islamic Economic Thought. Dar al-Nadwa al-jadida. 20. 83:1-6). This formulation is to be compared with that advanced by Geoffrey Crowther.. pp.). 90-1. 'Recent Works on History of Economic Thought in Islam'. M. Readings ill Islamic Economic Thought. 'If the ruler cancels the use of a certain coin and mints another kind of money for the people. al-Ghazall. Sadeq. give less than due. pp. in Sadeq and Ghazalt (eds. p.' Ibn Taymivya cited by Islahi. Nejatullah Siddiqi. he will spoil the riches which they possess. Ibn Taymiyya said: 'If abolition of the whole injustice is not possible. op. Ibn al-Qayyim cited by Islahi. p. p. Umar Chapra. See A. 'Islamic Economic Thought: Foundations. Evolution and Needed Direction'. cit.14(1). pp. M. 140. Rizwan Ali Rizvi.' Cited in Islahi. cit.. p. So (the value of) people's goods will be damaged. 2001 87 12. For more details see ibid. p. 79 and 84-6. 15. No. 79. p. pp. Ibn Taymiyya advised the Caliph. 29. Ibn Taymiyyah cited by Islahi. 30. 'AI-GhazaII on Economic Issues'. A day when all mankind will stand before the Lord of the Worlds' (Qur'an. Readings in Islamic Economic Thought. 100.Tust'. pp.). Economic Concepts of Ibn Taimiyah. by decreasing their value as the old coins will now become merely a commodity owned by them. Moreover. 'The Economic System of Islam'. op. Ibid. op. cit. Ibid. and while keeping in view the public welfare.A.. 27. Ibid. Ibid.. op. Sh.Reuietc of Islamic Economics. ibid. 23. Beirut. he should pay the salary of workers from the public treasury without doubt. ed. op. 38. pp. 21. 18. Ibn Taymiyya cited by Islahi. trading in money means opening a great door of injustice for the people and of devouring their wealth by false pretences. 1978. 19... Muhammad Ashraf. Economic Concepts of Ibn Taimiyah.. 12-4. cited by Aidit Ghazalr. Lahore. ibid. if the intrinsic value of coins are different it will become a source of profit for the wicked to collect the small (bad) coins and exchange them for good money and then take them to another country and shift the small (bad) money of that country (to this country). 2. Rather. 13. 'Economic Concepts of Ibn Taimiyvah'. op. Cited by Islahi. p.. nor should he invalidate the money in the people's possession and mint other kinds of coins. op. Vol. he should mint coins of real value without aiming at any profit by so doing. 14. p. cit. p. op. p. 312-34. 17. 24. 123. 26.. Islahi. in Sadeq and Ghazali (eds. 95-6 and 100-3.. cit. 14 1. S. 1970.. cit. Nizam al-Mulk al-Tnsl. in Sadeq and Chazali (eds.

'Economic Thoughts of Ibn Ai-Qayyim. Ibid. REFERENCES Al-Ghazali. Cf. pp. 160. Readings ill Economic Thought. 41. cir. See Islahi. 218-20. See also Sadeq.88 Reuiew of Islamic Economics. op. Umar (1970) 'The Economic (1). M.2. 118.. op. 29. 200r 33. op. 167... al-Jadida.. 'You have seen the corruption in people's transactions and the loss suffered by them because the money is treated as a commodity to earn profit. 152-161. Islahi. pp. is that it is not desired by itself.. 241-3..5. op. pp. cit. AI-GhazaII. pp. 48. ro.in«. see Aidit Ghazalt. 161. . Cf. cir. The Islamic Quarterly. op. p.. cit. pp. Beirut: Dar al-Nadwa Chapra. op. 12-4. cit. cit. Ibid. in Sadeq and Ghazalr (eds.' Ibn al-Qayyim cited in lslahi. 45. pp. 'Al-Ghazali on Economic Issues'. cit. op. 96-8. Issawi. p. It is. T. 190--213. Ihya' 'Ulam . Imam al-Chazalr had already done this analysis in his Ibya' 'Ulum at-Din by highlighting the virtues of poverty. P·I04· On Sufism see al-Ghazali. op. al-Muqaddima. lbyd=Ulum al-Din. Ilryi:' 'Ulum at-tn». 'Economic Thought of Ibn Hazm'. op. 190. 'Recent Works on History'. Ibid. Ibid... pp. had the values of other commodities been measured by it and had it nor been subject to evaluation by other things. pp. 51. 53. cit. pp. Vol. pp. 1967. No. 55. 44.u. cit. TA. Had the money been made a fixed instrument of price without allowing for fluctuations in values. 172-3. 2. 40. I. Ibn Khaldun. op. 208-30. 917.. AI-GhazaII. 38. 'It is the duty of the ruler to collect money from where it is dure to put it where it is just and proper to do so and never deprive the deserving. 43. ibid. which sets it apart from all other substances.3.. For a more detailed study on the works of Ibn Hazrn. op. 37. 172. the problem faced by the people would have been solved. 54.. 50. Vol. Islahi. p. Islahi... p. Economic Concepts of Ibn Taimiyab. in the fullest sense. p.. p. see also Sadeq. pp. 4. 'Economic Thoughts of Ibn Al-Qayvim'. 49. London. cit. p. 67-73' Ibn Hazrn cited in ibid. cited in Islahi. 226-7. cited in Islahi. 14 System of Islam'. 'Ibn Khaldun's Analysis of Economic Issues'. 235 and 236. cit. See Vol. T. Majmu' Fataioa Shaykh al-Islam. T. 181-2. 47. 36.. 83-7.. Ibya' Ulum at-tn». Ibn Taymiyya. pp. p. Al-Maqrlzi cited in Siddiqi.. 34. 35.. T. 50.' Geoffrey Crowther. p. 42. 'Al-Chazalt on Economic Issues'. 39.' Ibn Taymiyya as cited by Islahi.3. 181. Ibid. 52. pp.. cit. and also pp. Economic Concepts of Ibn Taimiyab. 'Economic Thoughts of Ibn Al-Qavyim'. Marabi al-Riyadh. 'Economic Thoughts of Ibn AIQayyirn'. As a result the injury has become common and injustice prevails. 182. op. T. 46. 42-257. Ibid.. An Outline of Malley.). 68. characteristics of money. a medium or means or mechanisn of exchange. Ibid. p. p. pp. ibid. 190-1.

H. Siddiqi. al-Muqaddima (in Arabic). London: Thomas Nelson & Sons. Kuala Lumpur: Longman Malaysia. Evolution and Needed Direction'.) Readings in Islamic Economic Thought.) Readings in Islamic Economic Thought. in AbulHasan Sadeq and Aidit Ghazalr (eds.) Readings ill Islamic Economic Thought.) Readings in Islamic Economic Thought. Geoffrey (1967) An Outline of Mone). Ibn Khaldun. Majmu' Fatauia Shaykh al-l sldm. ro. Muhammad Ashraf. in AbulHasan Sadeq and Aidit Ghazali (eds. in AbulHasan Sadeq and Aidit Ghazali (eds. in AbulHasan Sadeq and Aidit Ghazali (eds. Nejatullah (1992) 'Islamic Economic Thought: foundations. edited by Ali Abd al-Wahid WafT.M. Concepts of Ibn Taimiyah. Abdul Azim (1988) Economic Islamic Foundation. (1992) 'Introduction: Islamic Economic Thought'.Review of Islamic Economics. (1992) 'AI-GhazaII on Economic Issues and Some Ethico Juristic Matters Having Implications for Economic Behaviour'. in AbulHasan Sadeq and Aidit Ghazalt (eds. No.) Readings in Islamic Economic Thought. Ibn Taymiyya. The Islahi. in AbulHasan Sadeq and Aidit Ghazal) (eds. Rizwan Ali (1978) Nizam al-Mulk al-Tusi. Rizvi. Abdul Azim (1992) 'Economic Thought of Ibn Al-Qayyim'. A. Kuala Lumpur: Longman Malaysia. S.H. 200r Crowther. Lahore: Sh. Issawi. Kuala Lumpur: Longman Malaysia. Nejatullah (1992) 'Recent Works on History of Economic Thought in Islam: A Survey'. Kuala Lumpur: Longman Malaysia.. Kuala Lumpur: Longman Malaysia. AbulHasan and Aidit Ghazalt (eds. Sadeq. . Sadeq. A. Kuala Lumpur: Longman Malaysia. M. Kuala Lumpur: Longman Malaysia. Sadeq. Siddiqi.) (1992) Readings in Islamic Economic Thought. Matabi al-Riyadh. M.M. Leicester: Islahi. Charles (1992) 'Ibn Khaldun's Analysis of Economic Issues'.) Readings in Islamic Economic Thought.

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