You are on page 1of 34

Lecture 3

Islamic Economy
Issue to be discussed
The state of economy after 60 years
The role of the government

Governments proactive Fiscal Policy


Eradication of Zulm
Concept of Taxation in Islam
Bait-ul-Maal – Subsidy Powerhouse
Inflation control
Pro-employment policies
Pro-development policies
Monetary policies
Important Hadith (Bukhari-vol3,book 43 Hadith # 655)
Narrated Abu Huraira ®: The Prophet (s) said,
"When an adulterer commits illegal sexual intercourse, then he is not a believer at the time, he is doing it,
and when a drinker of an alcoholic liquor drinks it, then he is not a believer at the time of drinking it,
and when a thief steals, then he is not a believer at the time of stealing,
and when a robber robs, and the people look at him, then he is not a believer at the time of doing robbery.
The state of economy after 60 years
–Islamic Republic of Pakistan
The state of economy after 60 years
–Islamic Republic of Pakistan
The state of economy after 60 years
–Islamic Republic of Pakistan
The state of economy after 60 years
–Islamic Republic of Pakistan
The state of economy after 60 years
–Islamic Republic of Pakistan
The state of economy after 60 years
–Islamic Republic of Pakistan
The state of people after 60 years
Progress primarily because of the
technological era in which we live!
What the Qur’an DECLARES (4:59):
Ayah
Verily! Allah commands that you must
render back the trusts to those, ignored
to whom they are due; for
and that when you judge between men, centuries!
you judge with justice. 

Verily, how excellent is the teaching which He (Allah)


gives you!
Truly, Allah is Ever All-Hearer,

Establishment of Justice – FARD!


Government’s Role
To provide & facilitate in the people’s interest, as
ordered by ALLAH

Build economic environment

Provide ALL kinds of safety

Implement Shariah with enforcement !

Seek the Help & Guidance of ALLAAH

Responsibility must be answered for!


Common Government Satanic Practices
 All injustices in the name of ISLAM

 Intention: to please other than ALLAH

 Excessive taxes & inefficiencies

 Excessive luxuries/protocols MUST lead


 Blatant ignorance
with best
example !
 Leaders right to always rule = BEST Decision

 Criticism intolerable = Punishable !


Good Governance Example
Saheeh Muslim (Book 20, Number 4494):

Abd al-Rahman bin Shumasa who said: I came to A'isha


to inquire something from her. She said: From which
people are you?

I said: I am from the people of Egypt.

She said: What was the behaviour of your governor


towards you in this war of yours?

I said: We did not experience anything bad from him.


Good Governance Example (contd)
If the camel of a man from us died, he would bestow on him a camel.
If any one of us lost his slave, he would give him a slave.
If anybody was in need of the basic necessities of life, he would
provide them with provisions.
She said: Behold! the treatment that was meted out to my brother,
Muhammad bin Abu Bakr, does not prevent me from telling you
what I heard from the Messenger of Allah (may peace be upon
him).

He said in this house of mine: O God, who (happens to) acquire


some kind of control over the affairs of my people and is hard
upon them-be You hard upon him, and who (happens to) acquire
some kind of control over the affairs of my people and is kind to
them-be You kind to him.
Pro-active Governance
20% direct influence on economy (C+I+G+[X-M])

Maximize GDP Compare


Pro-competition
Pakistan &
Japan
Anti-Monopoly

Enhancing productivity & efficiency

What should the tax rate be ?


Erradication of Zulm - Injustice
Eradication of all un-islamic practices & injustices

Lawful dealings only (ban all Satanic trades)

Avoidance of Gharar (uncertainties)

Eliminating hoarding, shortage, monopolies

Cheating & fraud – totally unacceptable


Taxation in ISLAM
100% taxation ? Zakat is not
tax
0% taxation ?

What should the tax rate be ?

What should tax revenue be used on ?

The more the tax, the more the inefficiencies,


corruption, luxuries & protocols
Bait-ul-Maal – Subsidy Power House
Subsidy is an integral component

Strategic use of subsidies

Subsidy on core consumer items

Effect of subsidy on technology


Receivers of Zakat
Poor
Needy
Travelers
To reconcile hearts towards islam
(Da’wah)
To spread Islam (Jihad)
Collectors of Zakat
Freeing slaves
Debtors
Sadaqah-Charity
A religious obligation changing
humanities attitude towards the
“have-nots”

The concept of saving = Sharing ?

The concept of wealth multiplication

Private sector Sadaqah-e-jariah


How can a tax-free, subsidy-based
economy survive ?
By efficient management of natural resources
(oil, gas, chromite, marble, precious stones,
etc)

Ifno natural resources, must be creative &


innovative (Coke/Pakola, medicine,
handicraft, hand made wonders, etc)

Example: Middle Eastern countries, North


Korea
Pro-employment & Pro-investment
Problem of unemployment, over-employment, &
national inefficiency

Converting population into skilled-labour

Nurturing & retaining human capital

Investment in infrastructure -> Nation building

Real investment in evolving military assets


Monetary policy – ANTI-inflation

Biggest note ?
Interest rate ?
Restrict money supply
Investment in real industry

DEFLATION ??

Which is more powerful Fiscal or


Monetary?
How did U$ get out of the Great Depression?

Stock market crash Isn’t this situation


Severe drought similar to the
High unemployment (30%) current
High Inflation Pakistani
Social unrest
economic
Increase in organized crime
disaster ?
Fear of spreading communism
Dwindling economy
Capital flight
Banking system failed
Pro-Active Fiscal Policy
 Maximizing GDP (Investment, Production, Export), Minimize government
spending on luxuries
 Tax rate ~ ZERO
 Real use of Bait-ul-Maal (Zakah Fund, Sadaqah Funds, resource
harvesting/mining)
 Subsidization of all core consumer items (wheat, rice, sugar, petrol, gas,
electricity, cement, plastic, metal, wood, etc)
 Education 100% FARD
 Transforming population into labor force
 Widely dispersed vocational training institutes, avoid non-sense industries
 Nurturing & retain human capital
 Promote permanent residency (only temporary travel)
 Curb capital flight, pro-investment
 Strategic employment
 Pro-competition, anti-monopoly
 Build infrastructure (roads, electricity, gas, water, education, health, etc)
 Evolve strategic military assets
 Strict and strategic use of imports
 Strict law enforcement & regulations
Trade creates surplus
Unlike RIBA, trade creates surplus (money)
Compare with RIBA example:

Riba-free loan Raw->supply


Sajid 1,000 Fishes Earning profit to pay
Navid 1,000 Farms interest-free loan
Farid 1,000 Fruit Jam (manufactures)
State bank introduces money, value is added to
products, individual wealth is earned, money
circulation continues.
Future of Islamic Economy
All other economies have failed!

No economy has performed as stated theoretically

Human made economies have evolved, adapted


and failed

Islamic economy has always succeeded when


applied

Proof of the global spread of Islamic Economy !


Future of Islamic Economy
ah has promised those among you who believe,
d do righteous good deeds,
t He will certainly grant them succession to
e present rulers) in the earth,
He granted it to those before them,
d that He will grant them the authority to practise their religio
t which He has chosen for them (i.e. Islam).
d He will surely give them in exchange a safe security
er their fear (provided) they (believers)
rship Me and do not associate anything (in worship) with Me.
t whoever disbelieved after this,
y are the Fasiqun (rebellious, disobedient to Allah).
urah Nour, ayah # 55)
Future of Islamic Economy
-Allaah bin Masud (r) reported the Prophet (s) as saying:

nly one day of this world remained,


ah would lengthen that day
ording to the version of Za'idah),
e raised up in it a man who belongs to me or
y family whose father's name is the same as my father's,
o will fill the earth with equity and justice
t has been filled with oppression and tyranny”
ording to the version of Fitr).
d Ahmed:(1/448) & (1/376/377). Also authenticated by Dr Bastawi in Al-Mahdi Al-Muntadhar, page 239, #21. Isnad are Sahee
woud: Kitab Al-Mahdi, volume 3, page 1191, hadeeth # 4269.
hi: Authenticated (judged Sahih) in Sahih At-Tirmithee (4/505), hadeeth # 1819.
Future of Islamic Economy
tar narrates:

have been told that Mahdi will make something that


ar bin Abdul-Aziz did not do.” We asked: “What is it ?”

aid: “A man will come to him and ask him


ive him), then he will say:
inside (cashier) and take.’
will go inside and take.
n he will go out and see people not hungry (satisfied)
n he will become sorry (feel guilty)
come back to him and say: ‘Take what you gave me.’

will reject and say: ‘We give and don’t take.’”


tar is a follower of the followers (Tabi Al-Tabiye’en).
(99), and Al Waredah fi Al-Fitan (5/1064), # 585.
icated by Dr Bastawi in Al-Mahdi Al-Muntadhar, page 226, # 18. Conclusion: Isnad are saheeh.
Future of Islamic Economy
Muhammad Al-Tijani Al-Samawi:

‘Imam Muhammad ibn Al-Hasan Al-Mahdi,


o will fill the earth with justice and equality
t has been filled with injustice and despotism,
ind whom Maryam’s son (Jesus will pray,
by whom Allaah will perfect His light and the believers will rejoice.

d from Al-Samawi, Dr Muhammad Al-Tijani. Translator Hasan Muhammad Najafi.


hia:The Real Followers of the Sunnah (Ash-Shia Hum Ahlul-Sunnait. Ansariyan Publications, Iran. Page 143.
Future of Islamic Economy

You might also like