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Comparison with the Welfare State

The preceding definition of the Islamic state is the cornerstone of the Islamic system of government. It stands in contrast with each of the capitalist state, the communist state, and the welfare state since each of these three states is limited to the worldly affairs only and is a product of non-lslamic ideology.

The capitalist state came about as a result of the individualism and utilitarianism that prevailed in Western Europe and Northern America. Its economic content is laissez-faire. The communist state came as a result of the radical reactions to the miseries and exploitation of the capitalists and their political model in Europe. Its economic content is complete state authority on production and distribution.

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On the other hand, the concept of the welfare state is attached to social policies and relief for the poor. The first step to the “welfare state” came only after the inadequacy of the capitalist state had become widely accepted, i.e. since the middle of the nineteenth century. The term “welfare state” itself is a British invention. By the year 1948, social security was expanded in Britain to virtually all people, national health insurance came in full application, unemployment benefits were enacted and extended to cover more workers, widows, orphans, and old-age pensions became more comprehensive, the principle of secondary education for all was accepted, and the practice of building houses and letting them at subsidized rent was well established.

The emergence of the notion of “welfare state” from the thoughts of the British politicians and economists and the practices of the British government contributed a lot to the shaping of this notion and its dimensions. The “welfare state” is the result of eco-political compromises that took place within the British form of democracy. It is, consequently, an English combination of individualism and collectivism. According to T. H. Marshall, “the welfare state has not rejected the capitalist market economy, but gives it only qualified approval since there are some elements in civilized life of greater importance which can be attained only by restricting or supplanting the market.”

Titmuss suggested a comprehensive outlook of the aims of the welfare state, to include: (1) increasing the economic efficiency by increasing productivity, facilitating workers’ mobility, and enhancing growth; (2) affecting the birth rate in the desirable direction; (3) integrating minorities into the society; (4) reducing inequality of income and command over resources.

From the aims, the policies, and the evolution of the welfare state, its characteristics can be derived. Since the welfare state is democratic in nature, the combination of collectivism and individualism and their proportions become a matter of political choice. In pursuance of the democratic practices, the public vote is the determinant of the rights and duties of individuals. The extent of the obligations of the individuals to the state becomes subject to the social contract. This contract of the majority vote defines the degree of political freedom as well as the share of taxes.

Moreover, the welfare state defines welfare and happiness in the utilitarian context. Thus, it tends to measure its achievements in terms of economic gains. Moreover, it is also nationalist, whereby its scope of concern is the economic well-being of the nation. It does not have a universal vision. And lastly, the welfare state is bureaucratic. It creates a huge administrative apparatus.


Source: Fiscal Policy and Resource Allocation in Islam, Ziauddin Ahmed, Munawar Iqbal and M. Fahim Khan. Republished with permission.