Economic System of Islam 1 – Introduction

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In the Name of God,

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the Merciful, a creator and Sustainer of the universe. I greet you with a greeting that is common in Islam. Assalamu Aleikum, which means peace be unto you. I'm your host Humbert Rashid. Today we're starting a new series. This is our eighth series, we'll be talking about the economic system of Islam. Today is our introductory program to this new series. I have joined me on the program as usual. Dr. Jamal Badawi of St. Mary's University, brother Jamal Assalamualaikum money.

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Could I ask you perhaps to explain how this new series that we're about to embark upon how it relates to the previous series of this program? And what is the relevance of the of the subject in your opinion?

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First of all, with respect to the tie between the series and the previous ones, might notice that in the first three series, the emphasis was more on the articles of faith matters of belief. In the fourth series, the emphasis shift to pure acts of worship, you know, the other Pillars of Islam, and the fifth series

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that put the moral teachings of Islam and all related topics. In the seventh series, which is just finished, we started dealing with some aspects of the application of Islam in the day to day life. And the seven series, the focus was on the social system understand quite an extended series. And so we're simply moving on to other aspects of application of Islam in the day to day life, one of which, of course, is economics. And in the future, we hope also to be able to touch on other aspects, like political system in Islam or system of government control.

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Well, now, I'm sure some of our viewers must be saying to themselves that we've never heard of an economic system for Christianity or Buddhism,

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that many of them may wonder, how does the topic of economics relate to religion?

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Well, to start with, if you look at it in a more general or broad way,

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what is religion? Basically, religion is, you know, a set of beliefs, or tenets which organize or regulate the relationship between the individual and his creator, God, capital G, and between the person and other people, other human beings, between the person and the universe, and even the relationship of the person to himself, or herself.

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And that since then, in a way, you could say that the Muslim, organizes or regulates human behavior. And surely one aspect of human behavior is economic behavior. Because as economists, but in economics really, you're talking about human behavior, in the area of production, distribution and consumption of goods and services. Now, when we talk about human behavior, whether in economic area or other areas, this behavior is not value free, nor is it value neutral. In other words, the question of values and principle is part of that behaviors, it is connected with the ideological foundation

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of that faith. In fact, in Islamic perspective,

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the economic part of human behavior as part of religion, quote, unquote, has been mentioned in the Quran as part of the mission of all Prophets and Messengers in the past. For example, in the Quran in chapter 21, verse 73, speaking about so many prophets in the past, like Abraham and other Israelite prophets, it's still mentioned something that could lead to economics the question of charity or social justice in the economic distribution of wealth, for example, and that speaks about several prophets. In chapter seven in the Quran, particularly verse 85. It speaks about Prophet shipe. And again, how he was teaching his people not to deal in fraud and to be just and fair and

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equitable and in better financial dealings. In chapter 83 in the Quran, also it condemns people who deal in fraud and do not give people their

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Judo, right as part of the commercial activity.

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However, despite of the fact that this is the basic principle abroad, characteristic of the teaching of profits, you will find, though that the followers of those religions have interpreted this economic teachings in a variety of ways, sometimes going into one extreme or the other.

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I think most people are familiar with certain interpretation that views the economic goods or enjoyment of life as something that should not be really focused on. And that person who would like to achieve Felicity and righteousness would do best by avoiding or keeping away from worldly affairs and that richness or wealth in itself. Next difficult for the person to enter into paradise in itself.

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Now, in the case of Islam, we find that it's the economic system is not just a matter of the broad appeal to to charity,

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voluntary charity, which is not enforceable, but we find that Islam gives a more comprehensive

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approach or view of economic life, which in turn is a geologically sound, it is based on the basic teaching and tenets of Islam. Now you use the phrase economic system of Islam, when you use that phrase, is that the same as is the is economics viewed from an Islamic perspective? One, not necessarily, even though it might sound

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too close. You see, when we talk about economics, as such, we're gonna be talking about a science or field of study which

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focus on the study of economic phenomena, and try to derive some principles or laws which regulate

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this

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economy.

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Most people must have heard of the laws of supply and demand, for example,

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supply and demand is a matter that applies or cuts across varieties of economic systems, varieties of geologists, because it's a basic law, in economic life, the same thing when you talk, for example, about efficiency in production, whether you're talking about Eastern or Western economy, you're talking about still basic concept of trying to be efficient, use the minimum resources and get the maximum output out of your production process.

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However, when we speak of economic system,

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then there could be so many systems,

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economic laws, or universal or some of them are universal, but economic systems could vary, you could have the communist economic system, a socialist economic system, a capitalist economic system, and Islamic economic system.

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Because when you talk about the system, you're talking about a system, which is based on certain goals, principle, philosophy, which are quite unique to that particular ideology. Now, this economic system could also be extended further beyond the discussion of philosophical

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principles, goals,

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to extend also to look into how the system itself function, what is the functioning of the system, the mechanism, the process and outcome? How, for example, in a given economic system under certain philosophy or ideology, how does consumption, investment and savings

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can be determined? What is the market structure, how to attain a general equilibrium in the economy? So there's some difference there, you know, in terms of general general universal principles, versus a system based on a geology. Now, how do we get the Muslim scholars address the question of economics or

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any economic system? Is this something that has been around for some time? Or is this a relatively new development in Islam? No, it's not. It's not really new. In fact, it's interesting to notice that many economists

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tend to think that the first systematic way of treating or dealing with the economics as a subject goes back to the 18th century, and connected with the name of Adam Smith. This was a Scottish economist, who wrote a classic called The Wealth of Nations.

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But this notion that relates the study of economics to only the 18th century is quite, it's quite incorrect, I should say. There have been so many Muslim scholars who wrote about economics in a systematic way from an Islamic point of view, in their writing goes back as far away as the eighth century in the Christian year. That's more than 1000 years before Adam Smith. I just have to say

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Examples of this here with me but there are others also. For example, this book here

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is called alpha Raj, which deals mainly with what you might call to the macro economic system. And that was written by a man by the name of Abu Yusuf, in the eighth century.

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In fact, in the 10th century, a book with the same title was written by another person also called yahia, urban Adam. So that's another reference. In addition, there is also in the 11th century, a famous writer by the name of university, wrote the book called an academic subterranea, which again deals with the basic

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macro aspects of of economics. And that was again in the in the 11th century. In the same century also another jurist by the name of

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similar

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to ties also, in the 11th century also we find a great writer by the name of roselli, who also addressed some aspects of that, in the 12th century,

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a very famous Muslim philosopher, writers, scholar, by the name of ignorance, was known in the West more as a very, very famous philosopher scholar he also addressed the subject in the 13th century. scholar by the name of Ezekiel navasana also addressed the subject in the 14th century.

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A good treatment of the subject also suggested by famous Muslim jurists by the name of Edna Tamia.

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In the 16th century, there were several contributions, one of which by then a man by the name of McKinsey and the other by inhalten. This is again, recent reproduction of his work.

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khaldoun in particular, was described once by the famous British historian, Arnold Toynbee as the greatest sociologist who ever lived.

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And he was both sociologists economists in some time extensively because he is in some systematic way, with some aspects pertaining to economics. From this few examples, like I said, it's, like I said, it's more than 1000 years before Adam Smith, then the subject of economics in Islam has been addressed at least economics in some systematic

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treatment.

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In addition to this throughout Islamic history, there have been numerous jurists and scholars who also wrote about certain aspects of Islamic economics, or economics view its role in Islamic point of view, then address both actually.

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But of course, this subject or this treatment was scattered in a variety of books of jurisprudence. But more recently, we find there are so many

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scholars in recent decades who started to address the subject. Like say it puts ban no do the use of qaradawi Hamad Baqarah Southern Ramadan Mubarak sibanye episode is Abu Mohammed Abu Zahara monta

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chakra, Amar Chopra, Hamad magetta, Lhasa dukey, there are numerous individuals who belong both to, you might say, the traditional jurist stream as well as those who have, who have had some study of economics in the modern sense. And they have been doing lots of contributions in trying to revive

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already established and economic systems now, which I think would be very relevant to the Muslim as an individual, and his or her own dealings would be relevant to Muslim nations and societies, which in recent decades have been trying to imitate all kinds of important economic systems from east and west, but still, were unable to solve the problem. So there is a kind of code back to the foundation of the heritage of Islamic economics to establish the system and the basic

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guidance of Islam and as such provide a possible alternative to the present system. However, the test is not necessarily an easy one.

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Well, given that we've had the source material has existed for such a long period of time. Why is it that research in this area appears to be so difficult? Well, there are a number of reasons for for this difficulty. First of all, the way that previous scholars used to write is a little bit different from what we're used to today. For example, you can go now and find certain books that has the title of economics or some aspect of economics, or one is a specialized area of economics. However, the way that Muslim jurists vote did not make that strict separation because they viewed Islam as a complete

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way of life and most of the discussions of economics were were also interspersed with other subjects that they were dealing with. So in order to pick the specific aspect dealing with economics, it required lots of digging in this heritage or this literature. That's one thing. Another problem also that most of these references, for example, the three examples I have here, from very Oberth, going back to the eighth century, are all in Arabic. And there are few attempts, really, there have been some attempts to translate some of those works. But of course, not all work is available in other languages, but have had, of course, the reason behind that possibly has been that the this writings

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or works were written at the time when the Arabic language was the language of civilization and culture, being the supreme

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and prominent thing in the world that this time, just like when you say today, English and French or German, or the language of learning, so that was the case at this time. So that would be another difficult, of course, the knowledge of the language, or at least working together, and closely with someone who knows the language. But in addition to this, there is another difficulty also,

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that any researchers in static economics today would have to make a clear distinction between the principles enunciated in the primary sources of Islam in the Quran and prophetic tradition.

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And between the various interpretations or application that has taken place in different points in history.

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Now, the principles are binding on all and all times, for principle, but the specific application of those principles are not necessarily binding on Muslims today. I'm not saying principle, just specific detailed application, or institutions. For that matter, I think it would be an important thing to sift through literature to find out which applications are subject to adapt adaptation, which application need to be reconsidered, but still without violating the basic rules of Islamic law. But despite all of this, difficulties, we find that

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Islamic economics has its own

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General, or basic methodology and its own distinct ideological Foundation, and given enough time and effort, reconstruction will not be too different.

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For now, what is meant by the basic general methodology for the study of economic systems of Islam? Could you perhaps explain that? Okay, I need some quick reference. But perhaps it wasn't clear in the previous previous question, when I was mentioning that the Islamic economic system

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has its own principles, and philosophy. And as such, the only way really to get to grips with this principles and philosophies is to refer back to the what I call the primary sources of learning about Islam and its principles. And that's mainly the Quran viewed by Muslims as the Word of God. And the prophetic tradition, which had to explain and elaborate and give indication as to how to apply those, those principles.

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This means then, that contemporary scholars trying to study Islamic economics would have to learn how to consult this primary sources directly. And that's required certain methodology because there are certain methodology also of how to interpret and apply and properly understand

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those principles. He had to learn also, and that's an important part of the methodology, what are the basic rules or way of arriving at a solution to new problems, which may occur from time to time or place to place and to make sure that the solution of contemporary economic problems does not contradict the text or the spirit of Sharia or Islamic Islamic law.

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So it's very important in this kind of study that it would be based on those principles and to make sure that there's consistency in the application of this principle. But mind you, it should not be really that hard for one reason, that aside from certain aspects of Islamic economics or relating to Islamic economics, in the Quran, such as the law of inheritance and so on. The rest are basically growth rules, birth guidance, which are applicable in a variety of situations.

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Now, you mentioned in your other remarks that the economic system of Islam has its own

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distinct ideological basis. Could you outline that ideology for us? One,

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the cornerstone to start with if I were to summarize it, perhaps in six basic principles, the first one, which is the cornerstone,

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is that whether you're dealing with the economic arena, or any other aspects

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of life, or any other system in Islam, be it social, economic, political, you name it.

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Everything has to start first, from the belief in Allah, or God, capital G,

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as the sole creator of North and Sovereign of the universe, which means it's not just lip service, belief, but also the preparedness, to submit to His world to accept His guidance and to have complete an unqualified servitude to God. This is the cornerstone, it might sound similar, but it's not because everything falls in line,

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on the basis of this

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human being, then on the level of individual or on collective level,

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would be much better off,

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or cannot be better off to be more accurate unless God is taken as the source of belief, the source of values of what sense of right and wrong, and to have this complete preparedness to obey Him in whichever he ordained us to do, and to avoid things that he forbade us from the that's the first principle.

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The second basic principle is that

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Islam does not

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accept the definition of religion, quote, unquote, as something which is confined or restricted to the spiritual aspect of, of human life, or the moral ethical aspect.

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But as indicated early, it takes religion as a complete way of life, something that guides your life in the moral, social, ethical,

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economic, political unit, they're all

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in one with a one basic, confined, that confined is based on the guidance of God and all of these aspects. That's why we find that in the Quran, for example, in chapter two, verse two or eight, there's a beautiful reference to that. It says, Yeah, you had Lavina and Sidney kapha, or you will believe, enter into Islam, enter into unqualified submission and acceptance, conscious submission to the will of God katha wholeheartedly. So it's not a question of saying, All right, I'll accept God's teaching in the matter of, of worship, I worship Him as He ordained, or I'll accept his teaching with respect to some broad general, ethical or moral arena. And then I say, right, but as far as my

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economic life or social life, I know better. No, that's not the case, everything would have to be within that basic guidance to have consistency.

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A third principle is that God created the human being on Earth

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as his trustee, so you and I, and he and everybody else, they are created, we are created

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to fulfill certain job to fulfill certain responsibility on this earth, that God has entrusted us to establish a civilization, which is based on the moral and ethical spectrum and values that you've provided us. But in the meantime, it provides also for ample opportunity for material progress, so it combines moral and social material progress in a harmonious direction.

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I would not wish to go into detail in this particular issue, because in the previous one of the previous series model teaching in Islam, we spent quite a bit of time

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describing this concept of khilafah, trusteeship and what it means and what it entails, by way of human responsibility. But for those who might be interested in researching evidence directly from the Quran, on this concept, I just give a few references in chapter two, verse 30, and six 165. And

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in 4262 57, seven, in all of these and other verses in the Quran, it is clearly laid down, that you are not used on earth by way of punishment or any other reason we are here because God wants us to do and fulfill certain noble duty in our life here on Earth.

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The first principle

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is that God in order to help the humankind to fulfill that responsibility of justice shipped, or khilafah,

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he has made everything in this universe, subservient to the human.

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There are so many moving verses in the Quran and just refer to one for the time being in chapter 45, verse 12, it says that God created for you made subservient to you everything

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On Earth, and then heavens, which does not restrict human

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energies from harnessing and utilizing everything in quote unquote nature, which Allah has created or God created in nature. And this is not by any means the only reference in the Quran, for example, in chapter 2265, and 3120, and 6715. These are all verses in the Quran that urges the humankind to harness the various resources that God has made available to them on this earth. It follows from this first principle, that enjoyment of the good thing that God has created, innocent enjoyment within the boundaries that God has given, is not regarded as sin, so long as it follows his path and does not deviate from his limits. Like, for example, in chapter seven, verses 31 through 33. It

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says, basically, if I were to just paraphrase it, say, who has forbade the good thing, and the bounties that God has created for his servants. So this is something that God has given to us there is no hanga provided that the person would not go into an extreme, making his sole

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concern, getting the maximum enjoyment from this life. So it's not an objective in itself, but it's not condemned either.

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The first principle is the principle of accountability, that there is a life here after that as God has given us this trusteeship, and resources is going to hold us accountable and the big judgment as to how did we behave during our earthly life, which includes, of course, economic behavior, how did you behave also in the pursuit of our needs, and satisfaction of our

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needs. The sixth principle

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is that the difference in wealth, or variation was in itself does not give a person neither inferiority, nor superior, because God looks not into our property or our faces, he looks in our hearts. So the question of what should not be a source of social distinction are superior.

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Now how in your view, can the principles that you've just espoused influence day to day economic activity? Okay, let's go to the first one, that God is the source of all values and the ultimate authority. It means that for Muslims, individuals, and collectivities, or nations, they should not imitate or emulate any other system, which is different from their particular principles, such as, for example, you share your interests. Secondly, implication of Islam as a complete way of life means again, that there's an organic connection between economic activities, and social and political activities, we cannot separate them, you can say, all right, businesses business, this is

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just economics, you have to look at it in the context of society, and ethics as a whole. Thirdly, implication of the concept of trusteeship of human being on earth means that God is the sole owner of this universe. And we are only justice, which means that there is a different concept of wealth and rights of property altogether that we do on certain things. But the ultimate owner is God Himself, and we have to behave in a way consistent with his one. The first principle, for example, dealing with the universe, being subservient to us, means again, that poverty is not a virtue in Islam. And that productivity, so long as it's within the boundaries that God has ordained is

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something which is praiseworthy. The fifth principle in terms of responsibility, it means that the control on economic behavior would not have to depend totally, totally, I should say, on the government or police, enforcement, but there's also an individual policeman with a within yourself that is the conscious itself become part of it, and that makes it quite unique and different from any other secular economic system. And the sixth principle, for example, variations in once means that it should not be tolerated in a truly, truly Islamic Society not paying lip service. It should not be tolerated that some people because of their worlds would have more control on the affairs of

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the rest of the people that there should be some degree of equality. And all of this principle have more specific application has moved on to deal with some specific concepts like right of property and work.

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But we'll leave it at that for today.

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This is going to prove to be God willing, a very interesting series dealing with economics and Islam. I want to thank you for watching Assalamu alaikum, peace be unto you

Economic System of Islam 1 - Introduction
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