Theory of Islamic Economics: Essentials

The concepts of property, enterprise and accountability and the precepts of moderation, sharing and caring stand out among the essentials the theory of Islamic economics comprises since its inception. They are rooted in the Qur’an and Sunnah. The same sources spell out the purposes, which are to guide man in economic affairs. Then the Islamic scholars proceeded to search in other Islamic sciences like fiqh, usul al-fiqh, and Islamic history whatever unfolded the implications of or exemplified the implementation of these essentials.

Whereas property and enterprise were seen to be natural, albeit reinforced by divine endorsement, accountability was instilled by faith. Economic agents were seen exercising ownership and making economic efforts conscious of their obligation toward God and man. This awareness – based on belief in God, His Prophet (pbuh), and the life hereafter – is seen as the distinctive characteristics of a "Muslim" economic agent.

Moderation, sharing and caring about the weak and the deprived were enjoined on every one who owned, acted or exercised the God-given powers and faculties. Some of these Islamic teachings found form in such Islamic institutions as zakat and prohibition of interest. They were supposed to influence behavior of all economic agents.

The state was perceived as the ultimate overseer in these respects. It was expected to devise policies leading to fulfillment of basic needs, lessening disparities and securing development.

A sincere commitment to Islamic beliefs and values changed every thing in economics: consumption, production, exchange, distribution. Islamic economists though using conventional economic terminology averred that their connotations changed under influence of Islam. The more the influence on an economic agent the deeper the change. In this they sought to draw general support from early Islamic history, especially the first 40 years after hijrah. They also proceeded to 'analyze' how Islam in operation will ease the human situation and solve economic problems. Their study of economic reality as it existed focused on how man's disregard of moral values in general and the institution of interest in particular resulted in undesirable consequences. In contrast they sought to project the economy "as it would be” if interest was abolished and moral values were adhered to.

Moral values such as truth, honesty, fairness, compassion and mercy coupled with such rules of conduct as moderation and avoidance of waste as well as laws like zakat, inheritance and abolition of interest and gambling provide a framework in which Islamic economists evaluate their environment and seek to rearrange it.

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