An Islamic Perspective of Political Economy

Chapter 7 : Economic Development

The third part of the Islamic solution to the economic problem, according to Sadr, deals with "fostering production and utilization of natural resources of the environment to their fullest extent." [^25] God has created an abundance of resources in nature to satisfy human needs on earth. Man, accordingly, is encouraged to use the abundance of God's bounties to his benefit. According to Sadr, "Islam, ideologically speaking, has set the development of economic wealth and the utiliza­tion of natural resources to the greatest possible extent as a goal for society." [^26] Islam is similar to capitalism in affirming this economic objective; however, they differ in their approach to achieving it.

While capitalism "rejects any means of development of production or increase of wealth that hinders the principle of economic freedom, Islam, on the other hand, rejects those means which are contrary to its theories of distribution (of the economic resources) and its principle of jus­tice." [^27]

Notwithstanding, Islam, as mentioned before, discourages individuals from pursuing strictly materialistic objectives, downgrading the passing gains of this transitory existence. Sadr regards economic pros­perity as the goal of a virtuous society, not of the individual. God, after all, has created everything on earth and the heavens to serve the existence of man.

[^28] Islam only rejects materialistic gain as the ultimate ambition of man, which leads him to the oppression of others. Islam encourages zuhd (austerity) as a value which trains man not to consider materialistic wealth as his final goal in life. [^29] Zuhd is man's mechanism for self-regulation which he utilizes to fight his desires and direct his objectives toward God. However, it is not the goal of the social order of the faithful.

Suffice it to mention that affluence and a high standard of living help mankind in its journey to God. Suffering can hinder such move­ment. In fact, there is a direct relation between man's relationship to God and his relationship to nature. The more men strive for God, the more bountiful nature will be in providing for man's needs. Social affluence is the sign of God's satisfaction with man. On the other hand, man's thankless attitude to God, of which social injustice is the out-ward expression or symptom, results in the ruin of economic resources and productivity as well as degeneration of man's social existence. [^30]

Islam also expedites the social drive toward production in its religious regulations. Under die Islamic economic system, earning is exclusively linked to working. All other means of earning and owner­ship are abolished. The possession of natural resources is not considered legitimate without continuous human efforts to develop it. Any type of earning that does not require any human labour, in commerce as well as in production, is forbidden.

For this reason, the use of financial capital to generate earning is abolished-The only legitimate way to make use of capital is to invest it in production and share the risk of profit and loss. To insure the utilization of capital in economic develop­ment, Islam strongly forbids the hoarding of money and initiates a yearly tax to downgrade any wealth that is not enrolled in the produc­tion process. Additionally, any type of useless economic activities, such as gaming, magic and jugglery, are forbidden in Islam. [^31]

Furthermore, Islam makes it a requirement for Muslims to explore all fields of knowledge and seek any efficient means of production in order to utilize to maximum benefit the natural resources of the environment. [^32] The economic strength of Muslims is analogous to their military strength. The power of the Islamic State is judged on the merit of its economic progress and social prosperity. For this reason, Islam places a heavy emphasis on the role of political leadership to regulate social economic activities to enhance economic development and eliminate waste.


[^25]. Iqtisaduna, 649. [^26]. Iqtisaduna, 650. [^27]. Ibid., 649.

[^28]. Sadr, in support of his argument, cites a letter of Imam `All (A) to the governor of Egypt that exemplifies the social order of the believers as one that encompassed the affluence of the world and the hereafter. See Iqtisaduna, 651.

[^29]. Here Sadr gives his interpretation of two sets of apparently contradictory prophetic traditions of which some exhort austerity and reject materialistic gains, and others invite man to make use of wealth for his benefit. He sees no contradic­tion between the two when the former is looked at as discouraging man from making economic wealth as the final objective of his life. See Iqtisaduna 669-672.

  1. Al-Sadr, Muqaddimah fl al- tafsir(Kuwait:al-Dir al-'Islimiyyah, 1982), 104-107.

[^31]. Iqtisaduna, 670.

[^32]. Ibid, 671.

Chapter 8 : The Role of the State

As indicated in the theory of distribution, the Islamic State possesses the sole right of ownership of natural resources. Consequently, it has absolute control over all aspects of economic activities. The owner of natural resources or, primary commodities, according to Sadr, is the sole owner of the secondary commodities. Basically, the govern­ment of the Islamic State can determine the flow of wealth in society and define the economic process. The major objective of the Islamic State is to set up policies to develop the natural resources to the fullest extent to benefit the entire society.

To achieve such an economic objective, the State has the right to distribute social economic resources to attain the maximum amount of production that brings prosperity to all people. The State has the responsibility to provide for the minimum essential needs of society and ensure the economic welfare of the people. It is unlike the capital­ist State, which leaves that function to the fluctuations of the market.

Nor it is like the Marxist-Leninist theory that advocates State control of all aspects of economic activities. The Islamic State sets the direction of economic activities, while giving individuals the right of private ownership to achieve the social goal. The government's role is to over­see and regulate economic activities. Accordingly, Islam has left the government with a high degree of flexibility in developing new regula­tions to meet any emergent economic circumstances. Sadr called the absence of restrictions in the Shari'ah as manatiq al-faragh (the dis­cretionary sphere of the law), where the jurist; has the authority to make judgements and rulings according to the principles of jurispru­dence.

[^33] He considers this area of legislation on the part of the lawgiver as a realistic approach to ensure the development of economic activities and the means of production. The leadership of the Islamic State then could initiate any new legislation and regulations that it sees as appro­priate to the new emergent circumstances in order to meet the eco­nomic needs of the people and secure maximum utilization of eco­nomic resources.

In other words, the Islamic government is free to adopt a wide range of economic policies from full control of the economy to free-enterprise in order to achieve its social goals. In this case, the government must depend on the economists and experts to watch for tile best possible alternative policies to set the direction of the State economy (provided that it will not overrule tile theory of distribution.)

Such an unlimited role of government in the economy of the Islamic State is justified because of its substantial social involvement. The State is responsible for the social welfare of all people. [^34] The economic resources in the Islamic State are distributed not only accord­ing to work and ability to produce, but also according to needs. Not all people in society are able to work, and some of those who do are not able to satisfy their needs. Sadr identifies three economic classes in society:

(1) those who have the mental and/or the physical power to produce more titan their needs; (2) those who are able to work, but only to the extent of meeting their essential needs; and (3) those who do not have the mental or physical power to work productively. The government's responsibility is to provide for the needs of the latter two classes, which are not limited to essential human needs. The people in the Islamic State must live in dignity, i.e., their economic status must be raised to an acceptable general level. Therefore, the State must have the economic resources to be able to finance the social welfare programme.

Whatsoever spoils of war God has given to His Messenger from the people of the cities belong to God, and His Messenger, and the near kinsman, orphans the needy and the traveller, so that it be not a thing taken in turns among the rich of you. (59:7)

The verse, according to Sadr, indicates two things: first, the allocation of economic resources between the government and the needy people; second, die distribution of wealth in such a way as to prevent the rich from controlling the economy. Based on the above interpretation, Sadr argues that the main principles of Islamic economics are:

(1) public (i.e., State) ownership of the means of production and dis­tribution, and (2) centralized economic planning. It is only through the control of all the community's resources by society that the common need of social security is guaranteed and the essential economic rights of the individual are insured. Accordingly, the legitimate Islamic government has the responsibility to make longterm plans for serving the common good and overcoming instabilities of the market.

Islam recognizes differences of income between people, but strives to create an equitable standard of living. To realize such a socio-economic condition, Islam, although it specifies fixed taxes to be collected from prosperous people, establishes a social and moral mechanism. A lavish and extravagant style of living is totally dis­couraged in Islam.

Islam also forbids waste in production and consump­tion in order to direct the resources of the economy to produce com­modities that satisfy the needs of all people and bring about social equity. The State also has the authority to regulate wages and prices so as to overcome the selfishness and greed of those who possess economic wealth and insure an equitable standard of living for all people. In sum, the major goal of the Islamic State is the prosperity of all citizens.


[^33]. The jurist, according to Sadr, shall not change any of the primary princi­ples of Islam, i.e., the sphere of halal and haram, that which is obligatory and prohibited, respectively; but he may act within the realm of “secondary” matters, i.e the mandub and makruh, that which is ‘desirable’ and ‘reprehensible’, respectively. The jurst may forbid any mandub action, or encourage any makruh ones.

[^34]. Iqtisaduna, 607