Islamic Tradition in Economics

Economic thought in its Islamic tradition has always been inspired by moral purpose. This followed from clear Islamic injunctions laying down social goals and individual norms of conduct relevant to man's economic life. The Qur’an itself outlined a definite framework for the organization of man's economic life which could and did provide a distinctive paradigm for Islamic economics. To note its salient features: The world of nature is there for man to make a living out of it, promising sufficiency for all human beings. Man has to ensure this through his efforts for which he has freedom of ownership and enterprise. Justice must, however, be ensured, if necessary through law. Cooperation and benevolence rather than self-centeredness and avarice should be the norm for men in economic affairs. Allah being its real owner, property has to be handled as a trust and all economic activity conducted in the framework of trusteeship. Poverty is an empirical reality, hence the rich must surrender a part of what they possessed to the have-nots. Trade is lawful but interest is prohibited. Waste is sinful and it is imperative to economize and be sufficient. Worldly wealth should be treated as a means to good moral life leading to eternal bliss rather than as an end in itself. The Prophet (pbuh)  reinforced this approach with his elaborations. There is a clear emphasis on a cooperative attitude, the motto being: "utilize the resources given by Allah, including your own abilities, to live and help others live a well provisioned life conducive to moral excellence". It was this motto which inspired the rightly guided caliphs in their management of the economy, the jurists in their working out the details of the Shari’ah relating to economic affairs and the social thinkers when they surveyed economies, and made policy recommendations. Thus we find AbuYusuf (123-182 AD / 731-798 AC) emphasizing need fulfillment and justice and reminding the ruler of his responsibilities in this regard. He argued in favor of efficient management and elimination of waste. Individual freedom was not to be encroached upon unless inevitable and the social authority should arrange for growth and development. He derived his ends from the Qur’an and the Sunnah and did not hesitate to refer to the generally recognized good (ma'ruf) for complementing the same. His method was flexible, resorting to deductions when needed and inferring from facts of life frequently. He analyzed with a purpose, but was always faithful to facts. In making policy recommendations he frequently referred to the ultimate goals mentioned above: need fulfillment, justice, efficiency, growth and freedom. This is brought out very well by his discussions on the economic responsibilities of the ruler and on the tax system.

What applies to AbuYusuf applies to economic thinking in Islam in general. This is not to deny variety in emphasis and scope of the economic thinking of Abu Yusuf and other great scholars like Abu Ubayd, Ibn Khaldun, Ibn Taymiyyah, al Ghazali, al Tusi and Shah Waliullah of Delhi. This, however, is not the time and place to discuss these distinctive features. What concerns us here are the common elements shared by every Islamic thinker noted above. All these writers analyzed the existing economic reality with reference to the social goals and norms of individual behavior they derived from shari’ah and proceeded to make policy recommendations designed to transform the existing reality into what they considered to be Islamic ends and values. In doing so they were also influenced by the social and political conditions of their times and their sense of what was within the range of possibilities. They had a practical approach to the problems though some of them, like Ibn Khaldun and Shah Waliullah, did arrive at generalizations valid far beyond their time and place. The jurists among them also tried to deduce from particular traditions, rules and laws of general validity. But we do not propose to go into the details of the methods followed by various scholars. What we wish to note is that our scholars had an open mind as far as methodology was concerned. Their theory of knowledge told them that only Allah had all the knowledge and that man's knowledge was always deficient, even with respect to what concerned him directly. Just as human knowledge was limited, so was reason deficient to decide what was good. Man was in need of hidayah (guidance) from Allah, which was duly provided through the Prophets, and the Books revealed to them. Divine guidance was therefore the starting point of all social thinking and economics was no exceptions. We first enquire of what is desired by the Shari’ah and what rules are already prescribed for its realization. With reference to the actual economic problems facing man and society not directly covered by Shari’ah, we try to infer the appropriate rule by analogy wherever possible and by reasoning in the light of the public good (maslahah) where necessary. In order to make laws for society, or prescribe good behavior to the individual or recommend a policy to the ruler, one has to analyze the reality unburdened by any notions that are not derived from the Qur’an and the Sunnah.

Source: Dr. Muhammad Nejatullah Siddiqi, Economics An Islamic Approach. Republished with permission.