Islam`s Perspective on Economics
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O Children of Adam! Wear your beautiful apparel at every time and place of prayer: eat and drink: but waste not by excess, for God loveth not the wasters.
Say: Who hath forbidden the beautiful (gifts) of God, which He hath produced for His servants, and the things, clean and pure, (which He hath provided) for sustenance? Say: They are, in the life of this world, for those who believe, (and) purely for them on the Day of Judgment. Thus do We explain the Signs in detail for those who understand. (Al-A`raf: 7:31,32)
He also says Believe in God and His Messenger, and spend (in charity) out of the (substance) whereof He has made you heirs. For, those of you who believe and spend (in charity); for them is a great Reward. (Al-Hadid, 57:7)
God created people on earth as His trustees, which means that everyone is created to achieve a certain tasks in this life. God has entrusted human beings with free will in order that they live according to the moral and ethical values that He revealed his messengers.
Many verses in the Holy Qur`an stresses this meaning;
God says: It is God Who hath created the heavens and the earth and sendeth down rain from the skies, and with it bringeth out fruits wherewith to feed you: it is He Who hath made the ships subject to you, that they may sail through the sea by His Command; and the rivers (also) hath He made subject to you. And He hath made subject to you the sun and the moon, both diligently pursuing their courses: and the Night and the Day hath He (also) made subject to you. And He giveth you of all that ye ask for. But if ye count the favours of God, never will ye be able to number them. Verily, man is given up to injustice and ingratitude. (Ibrahim, 14:32,33,34)
He also says It is He Who has made the sea subject, that ye may eat thereof flesh that is fresh and tender, and that ye may extract therefrom ornaments to wear, and thou seest the ships therein that plough the waves, that ye may seek (thus) of the bounty of God and that ye may be grateful. And He has set up on the earth mountains standing firm, lest it should shake with you; and rivers and roads; that ye may guide yourselves (An-Nahl, 16:14)
In another verse, He says That has created pairs in all things, and has made for you ships and cattle on which ye ride, In order that ye may sit firm and square on their backs, and when so seated, ye may celebrate the (kind) favour of your Lord, and say, Glory to Him Who has subjected these to our (use), for we could never have accomplished this (by ourselves). (Az-Zukhruf, 43:12,13)
However, Islam provides an opportunity in material life, to achieve the moral, social, and material progress. For this purpose, God has created everything in this universe to support human beings in fulfilling their responsibility. But, there are many rules that govern the relation between these creatures and humans; humans are not freely the absolute governor. God tells us in the Holy Qur`an ………… how many Clear (Signs) We have sent them. But if anyone, after God’s favour has come to him, substitutes (something else), God is strict in punishment. (Al-Baqarah, 2:211)
Labor and wealth are central to the Islamic concept of property rights. Islam urges man to utilize, to the fullest possible sense, all the resources that God has created and entrusted to him for his use responsibly. Wealth is considered an important means by which man can pave the way for the attainment of his ultimate objective. Islam refers to wealth as “good”, an object of delight and pleasure, and a support for the community. The conception of wealth is qualified in terms of earning, possession and disposition of wealth. Also, it not accepted to use wealth as a means for doing injustice to others.
The earning of wealth is qualified through the stressing the fact that wealth is only a means for the achievement of humans` ultimate objective and not an end in itself. It should be earned through “good”, “productive” and “beneficial” work. This type of work is specified by the Islamic law which defines the methods of earning wealth lawfully, not only are lawful methods of earning wealth specified, but also the types of economic activity which are prohibited are outlined. God says in the Holy Qur`an Those who follow the Messenger, the unlettered Prophet, whom they find mentioned in their own (Scriptures) – in the Law and the Gospel – for he commands them what is just and forbids them what is evil; he allows them as lawful what is good (and pure) and prohibits them from what is bad (and impure); he releases them from their heavy burdens and from the yokes that are upon them. So it is those who believe in him, honor him, help him, and follow the Light which is sent down with him, it is they who will prosper. (Al-A`raf, 7:157)
In Islam, wealth is considered as the life-blood of the community which must be constantly in circulation; therefore, its possession excludes the right of hoarding; O ye who believe! There are indeed many among the priests and anchorites, who in falsehood devour the substance of men and hinder (them) from the Way of God. And there are those who buy gold and silver and spend it not in the Way of God: announce unto them a most grievous penalty. On the Day when heat will be produced out of that (wealth) in the fire of Hell, and with it will be branded their foreheads, their flanks, and their backs, This is the (treasure) which ye buried for yourselves: taste ye, then, the (treasures) ye buried! (At-Taubah,9:34-35). The implication is that lawfully earned wealth must be invested within the community to improve its economic prosperity. The needs of the society, therefore, must be a consideration for the owner of wealth.
Disposition of wealth (Zakat and Sadaqah) is also governed by Islamic teachings; And the likeness of those who spend their substance, seeking to please God and to strengthen their souls, is as a garden, high and fertile; heavy rain falls on it but makes it yield a double increase of harvest, and if it receives not heavy rain, light moisture sufficeth it. God seeth well whatever ye do. (Al-Baqarah, 2:265). The first and foremost is the recognition of the rights of others in wealth, resulting from the principle of invariant claim to ownership. Also, among these rules are the levies whose amounts are specified and those levies whose amounts are left to the determination by the wealth owner. All these levies fall due when wealth exceeds a specific minimum amount called nisab. God says in the Holy Qur`an It is He Who produceth gardens, with trellises and without, and dates, and tilth with produce of all kinds, and olives and pomegranates, similar (in kind) and different (in variety): eat of their fruit in their season, but render the dues that are proper on the day that the harvest is gathered. But waste not by excess: for God loveth not the wasters. (Al-An`am, 6:141). Zakat (Alms) is one of the five pillars of Islam and have important place in Islam. The word Zakat in Arabic means growth, purification and extension of wealth. Technically Zakat is a transfer payment which wealth Muslim gives to the poor. By paying Zakat, a person actually clean and purify his wealth. By the payment of Zakat, the circulation of wealth increases which is considered healthy growth of the community. When the circulation of wealth stops and remains in few hand, poverty increases.


Benefits of Islamic Zakat
Spiritual Benefits

God says in the Holy Qur`an Of their goods take alms, that so thou mightest purify and sanctify them; and pray on their behalf, verily thy prayers are a source of security for them: and God is One Who heareth and knoweth. (Taubah)(9:103)

a. Indicating a person faith sincerity, since Zakat shows the commitment of the doer to sacrifice something which he covets.
b. Cleansing individual’s character of greed, avarice, selfishness and miserliness. God says And let not those who covetously withhold of the gifts which God hath given them of His Grace, think that it is good for them: nay, it will be the worse for them; soon shall the things which they covetously withheld be tied to thei ecks like a twisted collar, on the Day of Judgment. To God belongs the heritage of the heavens and the earth; and God is well-acquainted with all that ye do. (Al-Imran)(3:180)
c. Gladdening the heart; when the person gives something, he feels a sense of joy.
d. Zakat is one of the means of entering Paradise and gaining God`s satisfaction. God says in the Holy Qur`an God will deprive usury of all blessing, but will give increase for deeds of charity; for He loveth not creatures ungrateful and wicked (Al-Baqara)(2:276) He also says That which ye lay out for increase through the property of (other) people, will have no increase with God: but that which ye lay out for charity, seeking the Countenance of God, (will increase): it is these who will get a recompense multiplied. (Ar-Rum)(30:39)
e. Zakat leads a man to learn about the laws of God, because he can never pay his Zakat until he has learned the rulings related to Zakat.
f. Zakat purifies wealth, so that the wealth will grow literally and metaphorically.
g. Zakat expiates for sins. The Prophet (PBUH) said: “Charity extinguishes sins as water extinguishes fire.”
Economic Benefits
a. Enhancing the Volume of Production
When Zakat is collected and distributed among the poor, they, in turn, will spend it on various consumer goods. This will increase the demand for various products increasing production of goods.
b. Reducing Hoarding
Zakat reduces hoarding because it is taken from hoarded wealth.
c. Increasing the Level of Income
Zakat increases the level of income due to circulation of wealth.
d. Encouraging investment
Zakat encourages investment because of increasing consumption and production of goods.
e. Reducing Recession
Zakat increases circulation of wealth which, in turn, reduces recession.
f. Reducing inequality of Wealth
Zakat is distributed among the poor, so, it reduces inequality of wealth.
g. Upgrading Standard of Living
Zakat Raises standard of living of the poor.
h. Reducing Unemployment Rates
Zakat reduces unemployment rates and helps the poor to do business with amount of Zakat.
i. Reducing Crime Levels
Zakat is indeed the best way of reducing crime levels because of poverty reducing.
The remainder of wealth, after performing obligatory and voluntarily charities, belongs to the owner but should be used in accordance with Islamic teachings. First of all, the rules that forbid extravagance, opulence, waste or general abuse of wealth. It cannot be used to harm others or to acquire political powers to corrupt the polity.
God tells us in the Holy Qur`an: It is He Who produceth gardens, with trellises and without, and dates, and tilth with produce of all kinds, and olives and pomegranates, similar (in kind) and different (in variety): eat of their fruit in their season, but render the dues that are proper on the day that the harvest is gathered. But waste not by excess: for God loveth not the wasters. (An-An`am, 6:141)
He also says (Saying): Eat of the good things We have provided for your sustenance, but commit no excess therein, lest My Wrath should justly descend on you and those on whom descends My Wrath do perish indeed! (Taha, 20:81)
In another verse He says There was, for Saba’, aforetime, a Sign in their homeland – two Gardens to the right and to the left – Eat of the Sustenance (provided) by your Lord, and be grateful to Him: a territory fair and happy, and a Lord Oft-Forgiving! But they turned away (from God), and We sent against them the flood (released) from the Dams, and We converted their two garden (rows) into gardens producing bitter fruit, and tamarisks, and some few (stunted) Lote-trees. That was the Requital We gave them because they ungratefully rejected Faith: and never do We give (such) requital except to such as are ungrateful rejecters. Between them and the Cities on which We had poured Our blessings, We had placed cities in prominent positions, and between them We had appointed stages of journey in due proportion: Travel therein, secure, by night and by day.
While Islam considers lawfully acquired wealth as subject to the protection of the Islamic law , it regards the wealth owner as a trustee who holds his wealth as a trust on behalf of God and the community. Hence, his inability to use his wealth properly provides the basis for the forfeiture of his right to his wealth. Extravagance, waste and general abuse of wealth is the basis upon which the community can consider him a person of weak understanding and one in possession of “weak intellect”; and a person who along with his own financial and moral loss is damaging the interest of the community. There is a principle according to which such a person’s wealth is made the ward of the community, or it’s legitimate representatives, which may limit his right to use only a part of his property to meet his basic needs. God says in the Holy Qur`an To those weak of understanding make not over your property, which God hath made a means of support for you, but feed and clothe them therewith, and speak to them words of kindness and justice.(An-Nisa`, 4:5).
Also, wealth cannot be used as a means for doing injustice to other. Islam forbids all forms using wealth in harming others. Among these forms, is Riba (usury). Riba (Usury) is one of those unsound transactions which have been severely prohibited in Islam.
However, in jurisprudence terminology, Riba means an increase in one of two homogeneous equivalents being exchanged without this increase being accompanied by a return. Riba has two kinds; first, riba al-nasi’ah where the specified increase is in return for postponement of, or waiting for, the payment. The second category is riba al-fadl, which means that the increase mentioned is irrespective of the postponement and is not offset by something in return.
Riba is totally forbidden in Islam; God says In the Holy Qur`an: Those who devour usury will not stand except as stands one whom the Evil One by his touch hath driven to madness. That is because they say: Trade is like usury, but God hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for God (to judge); but those who repeat (the offence) are Companions of the Fire; they will abide therein (forever). (Al-Baqarah, 2:275)
He also says:
God will deprive usury of all blessing, but will give increase for deeds of charity; for He loveth not creatures ungrateful and wicked…………… O ye who believe! Fear God, and give up what remains of your demand for usury, if ye are indeed believers. (Al-Baqarah, 2:276-278)
O ye who believe! devou ot Usury, doubled and multiplied; but fear God; that ye may (really) prosper. (Al-i-‘Imran, 3:130)
That they took usury, though they were forbidden; and that they devoured men’s substance wrongfully; We have prepared for those among them who reject Faith a grievous punishment. (An-Nisa`: 4:161)
The Prophet (PBUH) said: Do not sell gold for gold, except like for like, and do not differentiate among it; and do not sell silver for silver except like for like, and do not differentiate among it, and of these, (gold and silver), do not sell something present for something to be later delivered.
The Prophet (PBUH) cursed the receiver and the payer of riba, the one who records it and the two witnesses to the transaction and said: They are all alike [in guilt].
Jabir ibn ‘Abdullah, giving a report on the Prophet’s Farewell Pilgrimage, said: The Prophet (PBUH)addressed the people and said All of the riba of Jahiliyyah (the period before Islam) is annulled. The first riba that I annul is our riba, that accruing to ‘Abbas ibn ‘Abd al-Muttalib [the Prophet’s uncle]; it is being cancelled completely.
The Prophet (PBUH) said: A dirham of riba which a man receives knowingly is worse than committing adultery thirty-six times
The Prophet (PBUH) said: On the night of Ascension I came upon people whose stomachs were like houses with snakes visible from the outside. I asked Gabriel who they were. He replied that they were people who had received riba.
The Prophet (PBUH) said: Riba has seventy segments, the least serious being equivalent to a man committing adultery with his own mother.
The Prophet (PBUH) said: God would be justified in not allowing four persons to enter paradise or to taste its blessings: he who drinks habitually, he who takes riba, he who usurps an orphan’s property without right and he who is undutiful to his parents.
The previous verses of the Holy Qur`an and Prophetic traditions make it clear that the main reason for profiting Riba is exploitation. However, it is not the only reason;
The reader who is not familiar with the end of verse 279 of the chapter of Al-Baqarah “la taz.limuna wa la tuz.lamun”, believes that this verse is a proof that the (sole?) objective served by the prohibition of Riba is the avoidance of injustice (in the sense of exploitation of the poor debtor by the rich creditor). However, the meaning of the ending of the verse – as explained by ’Ab u Ja‘far, ’Ibn ‘Abbas, and others is much closer to: “if you turn back, then you should collect your principal, without inflicting or receiving injustice”. The exegetes then explain “without inflicting or receiving injustice” as “without increase or diminution”, where both an increase or a decrease of the amount returned relative to the amount lent would be considered injustice .
Based on the rule of gaining good and preventing evil, the Islamic economic system was founded. God has founded an Islamic economic system that guarantees the common interest of all individuals an all ages.

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