THE ECONOMIC LAW OF ISLAM (Part 2/2)

 

EVIDENCE AND DOCUMENTATION

The fourth regulation is that in transactions, especially those involving lending and borrowing for a certain period of time, the parties involved should write down a document and call in witnesses over it to avoid any dispute or damage in the future. Following is the detailed directive of the Quran in this regard:

"O ye who believe! When you acquire a loan for a fixed period, record it in writing, and let a scribe write it down between you with fairness; the scribe should not refuse to write, and just as Allah has taught him to write, he should also write for others; the one who has incurred the debt should have [the document] written and fearing Allah his Lord, he should not make any reduction in it. If the debtor is indiscreet or feeble or unable to have it written, let his guardian do so with justice. And call in two male witnesses from among your men, but if two men cannot be found, then one man and two women1 from among your likable people so that if one of them gets confused, the other reminds her. And witnesses must not refuse when they are summoned. And whether the loan is big or small, be not negligent in documenting the deal upto its period. This is more just in the sight of Allah, it ensures accuracy in testifying and is the most appropriate way for you to safeguard against doubts. But if it be an everyday transaction, it does not matter if you do not write it down. And call in witnesses also if you sell or purchase anything. And let no harm be done to the scribe or the witness. If you do so, then this will be a transgression which shall cling to you. And fear Allah. Allah is teaching you. He has knowledge of all things." (2:282)

 

INCOMPETENCE

The fifth regulation is that since a person's way of using his wealth and property also influences the development and welfare of a society, the state has the right to deprive him from using them if he is proved to be incompetent. The Quran says:

"Do not give to the feeble-minded the wealth and property which the Almighty has made a means for your support and development. But feed and clothe them with magnanimity, and speak to them with kindness." (4:5)

It is clear from the context of this verse that it pertains to orphans and their guardians, but the basis of the directive is their incompetence not their status as orphans. Therefore, the above right granted to the guardians with regard to the orphans, by analogy, should also be granted to a state with regard to its citizens. Consequently, if a person squanders away or ruins his wealth and resources, it is the duty of the state to strip him from their control and management and take charge of them. However, in this case, it must generously cater for his requirements from his wealth and whole-heartedly adjust all matters.

 

CURTAILED TAXATION

The sixth regulation is that a state cannot levy any tax upon its Muslim citizens2 other than zakat, whose various rates have been fixed by the Almighty Himself through His Prophet (sws). The Quran says:

"Then if they repent [from all un-Islamic beliefs], establish regular prayers and pay zakat, leave them alone." (9:5)

It is clear from the words `leave them alone' (fa khalloo sabeelahum) of the above verse that after the believers have paid zakat an Islamic State, in times of need, can though make an appeal to its citizens for economic asssistance, it cannot force them to do so. The Quran has binded it not to demand anything from the believers after they have paid zakat. The Prophet (sws) while explaining this Quranic directive has said:

"I have been ordained to fight3 with these people until they testify to the oneness of Allah and the Prophethood of Mohammad, establish regular prayers and pay zakat. If they accept these conditions, their lives shall be given protection except if they are deprived of this protection on grounds of some offence they commit4.As far as their account is concerned, it rests with Allah." (Muslim, Kitab-ul-Iman)

If those in authority violate this directive, then this is a grave transgression on their part. The Prophet (sws) has warned:

"No tax-imposer shall enter Paradise." (Abu Daud, Kitab-ul-Kharaaj)

It should also be borne in mind that according to the various heads mentioned in the Quran, zakat is not merely for the poor, destitute, wayfarers and those inflicted with losses but under al-aamileen-a-alaihaa, it can be used to pay the salaries of all government officials, under al-mu'allafat-i-quloobuhum, it can be spent to meet all political expenditures in the interest of Islam, under fee sabeelillaah, it can be expended on da`wah ventures and mosques, education and research, Haj and Umrah facilities, Jihaad and Qitaal, and public welfare projects like roads, bridges and hospitals, etc. The Quran says:

"Zakat is only for the poor and the needy, and for those who are `aamils over it8, and for those whose hearts are to be reconciled [to the truth]6, and for the emancipation of the slaves and for those who have been inflicted with losses and for the way of Allah7 and for the wayfarers. An obligation decreed by the Almighty, the All-Knowing and the Wise." (9:60)

The rates and nisaab of zakat which have been transferred to the Ummah as Sunnat-i-Thaabitah5 and stated in various collections of Ahaadith are all fixed and determined. However, there are five more aspects which must remain clear in this regard:

(1) There is no basis in the Quran and Sunnah for the of personal-possession (tamleek-i-zaatee) imposed by our jurists. Therefore, in our consideration, just as zakat can be given in the personal possession of an individual, it can also be spent on projects of public welfare9.

(2) Nothing except means of production, personal items of daily use and a fixed quantity called nisaab are exempt from zakat. It shall be levied annually on all sorts of wealth, all types of animals and all forms of production of every Muslim citizen. However, if a need arises, an Islamic State can give a relaxation on any item.

(3) If the basis of the directive is kept in consideration, then all forms of industrial produce, all forms of production based on various skills and all forms of rent of various items or buildings must be classified as produce and not as wealth; therefore, their rates and nisaab should be those specified by the Prophet (sws) for land produce.

(4) The rates of zakat in all forms of production should be fixed on the basis of the principle derived from the Prophet's directives. According to this principle zakat on all items which are produced both by the interaction of labour and capital is 5%, on items which are produced such that the basic factor in producing them is either labour or capital, it is 10% and on items which are produced neither as a result of capital nor labour but are actually are a gift of God, it is 20%.

(5) According to the above principle, zakat on leased-out houses, properties and other rented items should be 10% of the rent and if they are not rented out, it should be 2 1/2 % of their net value.

 

CONCENTRATION OF WEALTH

The seventh regulation is that all forms of economic ventures, and all types of projects of wealth allocation and distribution which result in concentration of wealth in a particular sphere of the society should be prohibited. In Surah Hashr where the directives relating to fai have been stated, the Quran explicitly says: `You have been given this directive so that money does not keep circulating among your rich class', (59:7). Following are the Quranic directives which are based on this regulation:

1. Every person has been directed to spend as much as he can on the needy among his relatives, and on social and public welfare from the wealth the Almighty has endowed him with:

"And spend of that which We have bestowed on you before death befalls anyone of you and he would say with sorrow: O Lord! Why did not ye give me a little more respite so that I could give [largely] in charity. Had I been able to do so, I would have been among the righteous." (63:10)

2. Everyone has been obligated to pay zakat to the Bait-ul-Maal: If his wealth exceeds a certain quantity called nisaab at the annual rate of 2 1/2 %; if he is a businessman at the annual rate of 2 1/2 % on his trade capital; if he is a land owner at the rate of 5 % on the time of harvest if his lands are irrigated by canals and at the rate of 10 % if they are rainy lands; if he is an industrialist at the rate of 5% of his industrial produce and at the same rate if he owns mineral reserves; at the rate of 10 % if he has rented out his property; if he is a herdsman a fixed share from his heard10, and if he owns a treasure at the rate of 20% so that the state is able to distribute the wealth of the rich among those who need it:

"And establish regular prayers and pay zakat and generously lend to Allah [for emergency needs]." (73:20)

3. It has been ordained for everyone that if he leaves behind wealth, whether in a small or a large amount, instead of accumulating it in a single place by handing it over to the eldest child or to the family jointly, it should be distributed and divided among near and far relatives according to their respective nearness with the deceased. The manner in which this distribution should take place has been described by the Quran in verses 11-12 and the last verse of Surah Nisaa:

If a deceased has outstanding debts to his name, then first of all they should be discharged. After this, any legacies he may have bequethed should be paid. The distribution of his inheritance should then follow.

After giving the parents and the spouses their shares, the children are the heirs of the remaining inheritance. If the deceased does not have any male offspring and there are only two or more girls among the children, then they shall receive two thirds of the inheritance left over, and if there is only a single girl, her share is one half. If the deceased has only male children all his wealth will be distributed among them. If he leaves behind both boys and girls, then the share of each boy shall be equal to the share of two girls and, in this case also, all his wealth shall be distributed among them.

In the absence of children, a deceased's brothers and sisters shall take their place. After giving the parents and spouses their shares, the brothers and sisters shall be his heirs. The proportion of their shares and the mode of distribution will be the same as that of the children stated above.

If a deceased has brothers and sisters, whether he has children or not, the parents shall receive a sixth each. If he does not even have brothers and sisters, then after giving the husband or wife his (or her) share, one third of what remains shall be given to the mother and two thirds to the father. If there is no one among the spouses, all of the inheritance shall be distributed among the parents in the same proportion.

If the deceased is a man and he has children, his wife shall receive one eighth of what he leaves and if he does not have any children his wife's share shall be one fourth. If the deceased is a woman and does not have any children, then her husband shall receive one half of what she leaves and if she has children, the husband's share is one fourth.

Together with these rightful heirs, after them or in their absence a deceased can make a near or a distant relative except his parents and children the heir. If the relative who is made an heir has one brother and one sister, then they shall be given a sixth of his share and he himself shall receive the remaining five sixth. However, if he has more than one brother and sister then, they shall be given a third of his share and he himself shall receive the remaining two thirds.

If a person dies without making anyone his heir, his remaining legacy shall be distributed according to the principle li aulaa rajulin zakar, (for the closest male relative) 11.

4. It has been divinely ordained that the spoils of war shall be regarded as state-owned and a fifth of them12 shall necessarily be spent on collective needs and on the needy:

"They ask you about the spoils of war. say: these spoils belong to Allah and the Prophet." (8:1)

"[You should] know that a fifth of the spoils you get hold of are for Allah and the Prophet and the near relatives and the orphans and the needy and the wayfarers." (8:41)

5. Similarly, it has been ordained about fai13 that it shall be spent on collective needs and on the needy:

"Whatever Allah takes away from these city-dwellers and returns to His Prophet, it is for Allah and the Prophet and for the kindred and for the orphans and for the needy and for the wayfarers." (59:7)

These are the directives based on the principle`kaee laa yakoona doolatam bainal aghniyaai minkum' (so that money does not keep circulating among your rich class). Today also, it is necessary that those charged with authority should keep this principle in mind while deciding about the prohibtion or legality of an economic venture.

 

FINANCIAL RESPONSIBILITY OF THE MASSES

The eighth regulation is that the government should provide the basic necessities of life like food, clothing, shelter, health and education to those who are unable to support themselves. According to the Quran, this is their right, and while highlighting the qualities of the believers it says:

"In whose wealth the deprived and the needy who ask have a fixed share." (70:24-25)

It is because of this right that the most important head under which the taxes collected in the Bait-ul-maal are to be expended is the poor and the needy. Therefore, this head is mentioned foremost in the verse pertaining to the expenditure of the zakat fund:

"Zakat is only for the poor and the needy, and for those who are `aamils over it, and for those whose hearts are to be reconciled [to the truth], and for the emancipation of the slaves and for those who have been inflicted with losses and for the way of Allah and for the wayfarers. An obligaton decreed by Allah, the All-Knowing, the Wise." (9:60)

The Prophet (sws) has further said about these taxes:

"They shall be taken from their rich and returned to their poor." (Bukhari, Kitab-uz-zakat)

The importance of this right can be further appreciated from the Prophet's directive in which he has instructed the administrators of an Islamic State to always leave their doors open to the needy:

"A ruler who closes his doors on the poor and the needy, [should know that] the Almighty shall close the doors of Heaven on his needs, indigence and poverty." (Tirmazee, Kitaab-ul-Ahkaam)

"If a person whom the Almighty entrusted with the state affairs of the Muslims [became indifferent] to their needs, requirements and poverty hiding [behind walls, then he should know that] the Almighty shall hide from his eyes, remaining indifferent to his needs, requirements and proverty." (Abu Daud, Kitab-ul-Imaarah)

It is clear from this that it is the right of the needy to be provided by the society and it is the responsibility of the Islamic State to discharge this duty by taking the zakat money from the rich and distributing it among the deprived. In fact, it must provide the deprived and the needy with the basic nessecities of life with a sense of responsibility epitomized by one of its most illustrious rulers who went so far as to say: `The responsibility of even the dogs that die of hunger on the banks of Euphrates lies with me'.

 

RESOURCES FOR THE ECONOMY

If the economy of an Islamic State is constituted on these regulations and the Muslims as a nation adopt a God-fearing attitude in the other collective spheres as well by totally obeying and following the directives of the Quran, the Almighty has promised them that they shall never need to depend on anyone as far as economic resources are concerned. The Almighty shall provide them abundantly:

"Had the people of these cities accepted faith and kept from evil, We would have showered the blessings of the heavens and the earth upon them. But they rejected [the truth] and [so] We punished them for their misdeeds." (7:96)

To quote the Old Testament:

"And it shall come to pass, if thou shalt hearken diligently unto the voice of the Lord thy God, to observe and to do all his commandments which I command this day, the Lord thy God will set thee on high above all nations of the earth: and all these blessings shall come on thee, if thou shalt hearken unto the voice of the Lord thy God. Blessed shalt thou be in the city, and blessed shalt thou be in the field. Blessed shall be the fruit of thy body, and the fruit of thy ground, and the fruit of thy cattle, the increase of thy kine, and the flocks of thy sheep. Blessed shall be thy basket and thy store. Blessed shalt thou be when thou comest in, and blessed shalt thou be when thou goest out. The Lord shall cause thine enemies that rise up against thee to be smitten before thy face: they shall come out against thee one way, and flee before thee in seven ways. The Lord shall command the blessings upon thee in thy storehouses, and in all that thou settest thy hand unto; and he shall bless thee in the land which the Lord thy God giveth thee. The Lord shall establish thee holy people unto Himself, as He hath sworn unto thee, if thou shalt keep the commandments of the Lord thy God, and walk in his ways. And all the people of the earth shall see that thou art called by the name of the Lord; and they shall be afraid of thee. And the Lord shall make thee plenteous in goods, in the fruit of thy body, and in the fruit of thy cattle, and in the fruit of thy ground, in the land which the Lord sware unto thy fathers to give thee. The Lord shall open unto thee his gold treasure, the heavens to give the rain unto thy land in his season, and to bless all the work of thine hand: and thou shalt lend unto many nations, and thou shalt not borrow. And the Lord shall make thee the head, and not the tail; and thou shalt be above only, and thou shalt not be beneath." (Deuteronomy, 28:1-13)

 

CONCLUSION

This is the economic law mentioned in the Quran and Sunnah. Today, whatever system is evolved on its basis, it is clear that every scheme which provides capital on loan shall be eradicated owing to the prohibtion of interest. Therefore, as a necessary consequence, it is essential that:

Firstly, all Banks should be converted into various branches of the Public Treasury (the Bait-ul-Maal), where people can deposit their savings. These branches shall provide protection, exchange and other similar facilities. In return for this service, the deposited money shall only be spent by the government to create a broad-based public sector by keeping in view the collective requirement and welfare of all the people with the precondition that without being given any profit on the original amount, the depositers would be returned their money whenever they demand it.

Secondly, the public sector so created shall not be run by the government. Leaving it in state ownership, its running and management shall be entrusted to the private sector by adopting either or both of the following two modes, depending upon the circumstances: (i) selling a certain quantity of shares to the private sector, (ii) imposing kharaaj14 (tribute) on the party of the private sector which is entrusted with the job of management.

Thirdly, the only form of absentee partnership permitted should be one in which people directly become shareholders in various projects of the private and public sector.

As a result of these measures, without prohibiting the right of private ownership and establishing an `iron curtain', a naturally developed broad-based public sector shall come into being parallel to the private sector. This would, perhaps, rightly depict the moderate set-up of an Islamic Economic System in contrast with the two extremes of Capitalist and Socialist Economies.

This is the economic law the Almighty gave us centuries ago. But Alas! After the industrial revolution, when the world most needed it we were not in a position to guide mankind to the right path in this regard. Undoubtedly, the future of the world still depends on this law but, unfortunately, there is not a single country in the Muslim Ummah, extending from Morroco in the West to Indonesia in the East where the splendour of this majestic sun can irradiate its beholders.