By: Imad A. Ahmad.
Minaret of Freedom Institute, 4323 Rosedale Avenue
Bethesda, Maryland 20814, (301) 656-4717
a Paper Delivered at the International Conference on "Comprehensive Development of Muslim Countries: An Interdisciplinary Approach from an Islamic Perspective"
INTRODUCTION
From the Islamic perspective, economic policy must satisfy both the legal requirements of the sharî`ah and the hard cold facts of economic science. Both come from the will of the Allah. As in the case of physical science (see Ahmad 1992), any perceived conflict between them means that either the sharî`ah or the economic facts of life have been misunderstood.
This paper deals not with Adam Smith's book the Wealth of Nations, although much of Smith's analysis is consistent with what I say here and, as I shall note, Smith to large degree was simply picking up where Ibn Khaldun left off. Our main concern is with the politico-economic policies that account for why some nations are wealthier than others and why nations, or dynasties, may be wealthy at one phase of their existence and poor at others. I recently completed a study which demonstrates this principle through an overview of the rise of Islamic economies of the classical Muslim era under the influence of the Qur'an and sunnah and a parallel analysis of the development of economic theory in the same period (Ahmad 1993a, 1994). That review demonstrated the validity of the tradition attributed to the Prophet Muhammad (peace be upon him) that the first generation of Muslims adheres most closely to the principles of the religion and each successive generation drifts farther from it. The gradual devolution of Islamic economic practice away from the sharî`ah stands in contrast to the evolution of Islamic economic theory which reached its peak with Ibn Khaldun. Market principles enunciated in the Qu'ran were eventually abandoned by Muslim society, leading to its inevitable collapse. As the Islamic classical era neared its end, Ibn Khaldun, inventor of modern sociology, identified the economic policies that lead to the rise and fall of dynasties. By that time, reform based on evolving understanding was abandoned (called the closing of the door to ijtihâd) and the Muslim world began its decline into intellectual darkness and economic stagnation. Economic development and technical innovation was taken over by Western civilization, where an analogous departure of practice from theory is now being felt. The knowledge that Ibn Khaldun enunciated went neglected or misunderstood by Muslim society, while the principles that he and his Islamic predecessors identified found their way into Western economic theory on the wealth of nations. In this paper I shall elucidate the specific implications of my analysis for modern economic policy.
The framework of our analysis is the sharî`ah. Islam is, politically, a nomocracy, that is, a system of rule of law (Ahmad 1993b). It is not, as the Western press is wont to misrepresent it, a theocracy, that is a rule by clerics. The concept of theocracy violates the fundamental premise of Islam--that there is none worthy of worship but God. In the Islamic world-view, each human being is directly responsible to the Almighty. The issue of what is it that God commands has been answered in writing, in the Qur'an. It is the unchanging sharî`ah itself, and not some human being or assembly, that man must obey. The nomocratic nature of Islam cannot be overstated. If there were ever a human being who could make a demand of obedience upon the Muslims it would have to be the Prophet himself, yet of him the Qur'an directs only obedience "in any just matter" (see, e.g., 60:12) and in it God warned the Prophet "nor art thou set over them to dispose of their affairs" (39:41). No human being after the Prophet could ask for more allegiance than that due to the Prophet himself. The early caliphs did not do so. Abu Bakr's inaugural address reflects an attitude in sharp contrast to that of political leaders before him: "Now it is beyond doubt that I have been elected your Amir, although I am not better than you. Help me, if I am right; set me right if I am in the wrong; truth is a trust; falsehood a treason.... Obey me as long as I obey Allah and His Prophet; when I disobey Allah and His Prophet, then obey me not." (Siddiqi, pp. 46-47).
The Qur'an recognizes man as a being at once rational, volitional, acquisitive, and ethical. Being primarily a book of moral guidance, the Qur'an advises man that it is in his best interest to pursue a moderate course. That is, man should act to provide for existence on this material plane without sacrificing his moral sensibilities. The Qur'an insists on the harmony of man's spiritual and material interests. It is guidance on how to achieve success "in this life and the next." The Qur'an maintains that its dos and don'ts are not aimed at putting man through a period of earthly misery before he reaps heavenly salvation, but that they are rather the tonic for earthly trials, with some earthly rewards and unlimited heavenly ones as well.
The economic perspective found in the Qur'an has been summarized in a number of places (e.g., Mannan 1970 and Ahmad 1986). The key element of the Qur'an from the economic point of view is its stress on moderation (see, e.g., verses 7:31-32, 18:46 and 17:29). Consumption is permitted ("O ye people! eat of what is on earth lawful and good...." 2:168) while niggardliness (35:29), wastefulness (6:141) and extravagance (17:27) are condemned. The desire for a livelihood (4:5), for comfort (42:36), even for ornament and adornment (18:46) or protection from future uncertainty (4:9) in this world is never called evil. Instead the Qur'an insists that its precepts are the means for achieving success in these things without trading it in for failure in the life to come. The Qur'an "not only permits the Muslims to disperse in the earth and earn their livelihood after Friday prayers (62:10) but also advises the holy Prophet to cut short the morning prayers in order that economic activity is also not hampered (73:20). It also allows its followers to continue their trade during their journey for Hajj (2:198). Along with these incentives to earn, it repeatedly asks man to satisfy his wants and demonstrate his prosperity (4:37, 82:20), without going to the extent of ostentatious extravagance" (uz-Zaman 1981). The only line drawn is overspending (isrâf) which is prohibited even in charity (17:29).
The Qur'an deals with a number of specific economic issues. Private property is protected (2:188). The fulfillment of obligations is commanded (2:177;5:1) and is accompanied by details of contract law (e.g., 2:282-283). There is a prohibition of fraud (26:181) and a call for the establishment of clear standards of weights and measures (55:9).
The Qur'an upholds the principle and sanctity of private property in general--modifying it only in certain details. The modifications to which I refer include such things as establishing women's full rights to private property and the abolition of primogeniture (granting to relatives other than the eldest son, including women a share in the inheritance), obligating Muslims to grant to the poor and needy a share in their wealth, etc. Any Muslim who followed the explicit rules of the Qur'an could not be denied his property without his consent. The Prophet said so explicitly in his farewell pilgrimage: "Nothing shall be legitimate to a Muslim which belongs to a fellow Muslim unless it was given freely and willingly" (Haykal 1976, p. 487).
We shall now discuss how these principles apply to particular issues of primary importance in guiding economy policies of Muslim economies in the modern world: decentralization and preference for private property; requirement of a hard currency monetary policy; limits on taxation; and limits on the domain of the public sector. I shall state the specific policy recommendations for optimal development that follow from the analysis in each of these areas.
