Islamic Economics: The Total Revolution

From: www.islamicity.com

By: Robert D. Crane
AmericanMuslim.org* - Aug 23, 2007

I. The Economics of Tawhid
In a revolutionary age, half-assed revolutions accomplish nothing and merely bring on more injustice by failing to solve the real problems. For decades, Muslim economists have focused on the micro-problems of usury, but failed to address the larger problem of the wealth gap. The charging of interest on loans is indeed a contributing factor, but a minor one. So-called Islamic banks have been established and expanded their assets into the many billions of dollars by conning individual Muslims into "investing" their money in them as a requirement of their din. In fact, these banks, and especially the Islamic banking arms of the big multi-nationals, are fraudulent as means to promote economic justice because they have deliberately and assiduously joined the global banking system, with all of its institutional defects, in order to fit in. In Islam, everything is interconnected in accordance with the overarching paradigm of tawhid. This coherence of unity in diversity, which reflects the Oneness of the Creator, is manifested in the form of what the great jurisprudents of Islam have called the universal principles of justice. These are known as the maqasid al shari'ah. The most controversial of these in both modern Muslim ideology and secular Western thought is haqq al mal. The core meaning and principle of this universal principle of economic justice is respect for the sacredness of private property in the means of production and for the universal right of every person to capital ownership. This is disputed because in secular thought nothing is sacred. All the parts of creation are disposable because there is no concept of tawhid to give meaning.

II. The Two Principles of Economic Justice
The principles of economic justice are discussed in Chapter Seven, entitled "Human Rights in Islam from the Economic Perspective," in the early draft of Volume One on the Islamic Perspective published for feedback in June, 2007, in http://www.theamericanmuslim.org as part of a nine-part series under the title, The Natural Law of Compassionate Justice: Source of Convergence Between Science and Religion. The Islamic concept of economic justice is based on two principles. The first is the ultimate sovereignty of Allah over all of creation. This means that private property ownership of the means of production is sacred, but only because it implies the responsibility of stewardship by the individual owner. Whoever earns from the use of capital, including land and infrastructure, has a right to enjoy the profits, but he must earn them honestly and spend them to support the needs not only of his own family but of the marginalized in society who no fault of their own either are poor wage-slaves or incapacitated.
This social element in private ownership is based on the fundamental Islamic virtue known as infaq, which is the inclination to give rather than take in life. This is universal in every person but must be cultivated culturally because otherwise the selfish nature of every person, known as nafs al ammara or "the commanding and demanding self," will claim absolute sovereignty over what belongs to Allah. This is why one of the "five pillars" or actions to maintain one's submission to God is charity.
Charity consists both of sadaqa, which is voluntary giving to others based only on their need, and zakat, which is mandatory and is based on the capital intensivity of the means of production with rates decreasing in proportion to the increase in human input either through labor or capital. Earnings from labor are taxed at 2% of one's wealth (not on income), but earnings from cultivated land are taxed at ten percent, because the land but not the water is produced by God. Profits from uncultivated land as well as from mining ores, which come primarily from the bounties of God, are taxed at 20%. This provides incentives to invent and apply technology and pursue science in order to improve it.
The second basic principle of Islamic economics is that economic power and political power are dependent on each other. Economic justice is not merely one aspect of political justice but provides its foundation. Neither is possible without the other. This is part of the Islamic concept of tawhid, which teaches the interdependence of everything in the universe. The pulverization of knowledge into unrelated parts is the principle cause of chaos. The principle cure is the reestablishment of cosmos.
The most important derivative of this second principle for Islamic economic thought and the most important aspect of haqq al mal or respect for private property ownership in the means of production is recognition that such ownership is a universal human right. It may not be usurped by government as in socialism, whereby the "ownership" by the proletariat is pure fiction. Furthermore, Islamic principles of universal ownership are incompatible with the welfare economics of capitalist economies, which have constructed barriers to universal access to ownership and justified this politically by redistributing profits from the rich to the poor. The result is the concentration of ownership and a constantly growing wealth gap both within and among countries.
Economic justice in traditionalist Islamic thought may be compared to the design of modern input-output theory, whereby every person has a right to participate through either labor or capital in the production of wealth, and an equal right to the distribution of this wealth based on one's own input. The sole role of government is to maintain the principle of limitation through what I developed some twenty years ago as the principle of harmonic justice, which is to assure that contributive and distributive justice remain in balance. Both economic socialism and either monopoly or oligarchical capitalism violate all three principles.

The father of modern Islamic economics is Shaykh al Islam Muhammad al Tahir ibn Ashur. He taught at Zaituna University in Tunis, which traditionally ranked right after Al Azhar in Cairo as the leading Muslim university in the world, and rose to become the Grand Mufti of Tunisia. His major contribution to Islamic thought was to revive the normative study of Islamic jurisprudence in the first half of the twentieth century, which had been moribund in the Sunni world for six hundred years ever since the death of the last great Islamic jurisprudent, Al Shatibi. Ibn Ashur was inspired by the publication in printed form of Al Shatibi's manuscript, Al Muwafaqat, when Ibn Ashur was a boy and by his association as a student at the age of 24 in 1903 with Shaykh Muhhamad Abdu.