The Role of Islamic Economics

The importance of Islamic economics is three-fold. It has to do with:

The struggle against underdevelopment through economic growth.
The Islamic world in particular.
The world at large.

2.1.The Role of Islamic Economics and the Struggle against underdevelopment through Economic Growth

2.1.1.The Importance of Economic Growth in Society

The economic struggle today is one of eliminating underdevelopment through economic growth. Economists nowadays agree that it is not enough that the government , as people's representative, control the most important sectors in the national economy such as the financial domain (e.g. banking and insurance foreign trade, major industries as well as the basic means of transport. It is not enough to prepare economic projects and follow their execution at the official level either. what is necessary is a general mobilization of the whole population in order to achieve maximum growth and eliminate all elements of corruption and exploitation . In this case, the importance of economic projects should be clear to all citizens ,who would then act in the most effective way. The fact that each citizen is aware of his clearly defined responsibility within the overall plan of action means that independent action will succeed. Moreover, when citizens share a common responsibility within the framework of the national plan the probability of success is reinforced. This represents at the same time an important redefinition of the concept of national action, replacing the broad, ill-expressed generalities by clear thinking and precise planning. This procedure establishes, on the one hand. the relationship between the individual in his daily struggle for existence, and the united action of society as a whole. On the other hand, It integrates the individual within the concept of development and simultaneously influences events in the long term.

Now, it has long been agreed that economic development is not simply an elegant action, but one that has tremendous effects on society. Hence action has focused on the necessity of the participation of the population at all levels, not only In the discussion of developing projects but also in the evaluation of the results. There is no doubt that the indifference exhibited by the Islamic world in general, and the Arab world in particular, are a consequence of the citizen’s lack of awareness and confidence in the process of their participation in the establishment and realization of economic objectives. It goes without saying that whenever an individual or society achieves success and progress, it is because of a strong belief in the objectives and a firm commitment to ensure their realization. The outcome of this is benefit and profit for the individual and society.

2.1.2.Economic development and the Sacred Jihad

It is generally accepted that the support of the whole society is required to achieve any kind of economic development or to wage a successful battle against sustained under-development. It is, therefore, necessary to study the perception and psychology, as well as the history, of every society in harnessing its energy and potentialities to fight underdevelopment. As far as the Islamic world is concerned, there is no doubt that Islam itself is considered a major, if not the major, factor to assure the success of any action undertaken by society.

Jamal Ed-dine Al-Afghani has succeeded in connecting the idea of the sacred Jihad and that of liberation from the bond of colonialism. Furthermore, because of the force and clarity of Islamic guidelines regarding dignity and liberty, Islamic societies have courageously fought for their independence. Many nations such as Indonesia, Pakistan, Syria, Libya, Morocco and Algeria would not have been able to willingly accept the sacrifice made by millions of martyrs without the impetus of Islam.

Here is what the Lord says in this respect “Whoso fighteth in the way of Allah, be he slain or be he victorious, on him We shall bestow a vast reward” (Woman 74). The Lord adds “And call not those who are slain in the way of Allah ‘dead’. Nay, they are living, only ye perceive not” (Cow 154). Since the basic problem that Islamic societies face today is under-development, it is necessary to unite economic development with the sacred Jihad in order to create an outlet for the energies of the individual Moslem and to transform economic development into religious practice. This is because a basic tenet of Islam is to enjoin people to do good deeds and to forbid them from doing evil. As the Lord says “Ye are the best community that hath been raised up for mankind. Ye enjoined right conduct and forbid indecency” (The Family of Imran 110). Accordingly, to “enjoin right conduct” implies in this case the struggle to achieve economic development. To forbid indecency” would then mean the abolition of underdevelopment which always leads to various negative social conditions and moral failings.

We should, therefore, undertake a sacred war against underdevelopment.

The Prophet, peace be upon him, says in this respect “Each nation has its own destiny, and the destiny of my nation, is the Jihad in the way of the Lord”. When asked, one day, what was best in Islam, the blessed Prophet replied:" Faith in Allah and in the Day of Judgment and fight in the way of Allah". The blessed Prophet also declared one day after his return from one of his successful battles We have returned from a little battle to face a greater one” (Al-Bukhari and Muslim). The former battle, here, refers to war, while the latter refers to the personal struggle to establish a society based on the principle of enjoining the right conduct and forbidding evil. As the Prophet, peace be upon Him, says "Jihad continues until the Day of Judgment” (Assayuti), for life is a continuous struggle between right and wrong, and between what exists and what should exist. So, Jihad which is the goal and raison d’etre of Islam and whether it is carried out in war or in peace, aims principally at warding off injustice and establishing a God-fearing society. This society is one that enjoins right conduct and development, and forbids evil and backwardness.

Sacred Jihad in the domain of Islamic economics is a fight against underdevelopment It is a fight for economic growth and progress. Hence, the importance of Islamic economics and the role its plays in its domain. Development projects thus become for the Islamic world a sacred Jihad and a religious practice.

2.1.3. The Reality of the Israeli Challenge

Islamic economics and the role it plays in the struggle against under- development are quite important, especially for the Arab world. Thus, the Israeli challenge is not one of military power only, but is rather, and more importantly, an economic challenge. In reality, Israel’s objective is to gain economic control of the Arab world. So, our struggle with Israelis not simply limited to eliminating Israeli aggression, but should also reflect the need to combat underdevelopment and to promote rapid development. The latter requires the mobilization of all available resources and the exploitation of all Arab potential.

The danger that we face today is not Israel’s power, but rather the Arab world’s disunity and underdevelopment (especially in the economic field), and this in spite of the available human and economic resources. [Note: It is obvious that the Arab world has the human and natural resources, the know-how and the money to make it a great power able to Compete with the USA, the USSR, Western Europe, Japan or China. This is not, however, the case for the simple reason that the countries of the Arab world remain disunited and do not complement each other economically: The Arab world, in fact, still imports what is basic to its immediate needs, and is dependent of foreign countries even for its food and the like, in spite of its 250 million acres of arable land that has not been exploited yet. Of these 250 million acres; 100 millions are in the Sudan, 40 millions in Morocco, 25 millions in Irak, 14 millions in Algeria, 12 millions in Syria, 11 millions in Saudi Arabia, 9 millions in Tunisia, 8 millions in Egypt, 7 millions in Jordan, etc.]

Thus we realize the necessity for Arab unity - This sacred unity is required not simply for the sake of history but first and foremost for our future generations We live in an era where there is no place for small entities -and when the requirements for economic development surpass the resources of any single country Some Arab countries such as Saudi Arabia - Libya - Kuwait and Abu Dhabi for example have the necessary capital to enable them achieve economic development but they lack the workforce and technological skills. Other countries such as Egypt have abundant labor force and technological skills but lack the capital. If their countries pool their resources together they can complement each other. Development can thus be secured and underdevelopment eliminated with the elimination of underdevelopment - which is, in fact - the central issue in our struggle with Israel - neither Israel, nor its supporters will represent any danger to us. we would ultimately, be strong enough to withstand the enemy and emerge triumphant.

In order to achieve this objective, we must be totally aware that it is not possible to impose overall Arab unity by slogans and speeches which stir emotions. It cannot be achieved through politics and constitutions - but only through unified economic action. (See Al-Kasibi 1978:5-15) - The unity of the German States was possible only because the latter were linked by railway -and custom systems (Zollverein ). European economic unity was made possible only after the Benelux agreement between the Netherlands. Belgium and Luxembourg. Europe-in political unity, likewise, is now taking place through the European Economic community. similarly, the rise of Japan following its defeat in the Second World War, its present economic challenge to the USA as well as the impact it has left on the world nations are the clear result of its new -and rational policy. The latter is based on the principle of politics for the benefit of the economy - and not the reverse.

In any case, we must declare Jihad against Israeli injustice and our economic backwardness. In order to eliminate all traces of this injustice -and to ensure economic development, our fight must be linked to the concept of Jihad. Similarly. Arab countries must be economically united first as this is the surest -and shortest way to political unity.

2.2.The Role of Islamic Economics in the Islamic World

2.2.1.Islamic Economics is what Works Best for the Islamic Countries

The Islamic world embraces more than one billion Moslems (150 millions of which are Arabs), that is about 15 % of the worlds population. In other words, one person in every six or seven people professes Islam. To quote Handam (1971 : 12). “Islam is always acquiring new territories and new forces in the four corners of the Globe. There is little doubt that Islamic population will remain the increase, and that by the end of the Century. one fifth of the world will be of Moslem faith”.

These Islamic communities are closely bound to Islamic law in faith, mind and feeling, as well as politically and economically. It follows that Islam remains the best way to urge these communities to act and to obtain a quick response from them. It should be remembered that during the Bolshevik Revolution there was strong resistance from the Moslems of the Soviet Union, particularly in the areas where there was a Moslem majority such as those of the Caucasus and the Tartars.

The Soviet leaders could only penetrate those areas when they pretended to go there in order to apply Islamic law, such as eliminating monopolies and exploitation or establishing equality and democracy and building an economy devoid of riba. (Cf. Al-Fanjari 1970 :148 ff and 1971.)

It is certain that when we choose a strategy of reform, we must take into consideration the specific conditions of each nation as well as its historical and social contexts. We must also keep in mind that changes in the Islamic world take place when Islam supports them, or at least when it does not object to them.

The importance of Islamic economics and the role it plays within the Islamic world is, thus, quite obvious. Moslems everywhere trust it, respect it and respond favorably to it.

2.2.2.Islamic Economics is the Most Effective Economic System

In addition to what was said above, it should be emphasized that Islamic economics is based on Sharia which Moslems believe is sacred and inviolable. This is, of course, due to their profound belief in Islam as a divine religion transmitted by the last Prophet, and to their belief that Islam does not limit itself to prayer but is rather a way of life, a political, social and economic ordering of the Islamic community.

The fact that Islamic economics is bound to religious faith, undoubtedly, paves the way to, and creates the right circumstances for the acceptance and execution of its legislation. And if the only way to achieve social and economic change or betterment is first to impregnate the population with ideas and principles to be put into action, then we should benefit from the Islamic religious faith for this is a religion of change, growth and common interests . (Cf. Al-Fanjari 1968, 1971.) In this kind of faith, belief - as mentioned earlier - is not abstract or metaphysical, but is rather a specific belief liked to action and production, for the Lord says : “(And) Lo those who believe and do good works are the best of created beings” (The Clear Proof 7). It is also linked to even handed justice and fair redistribution, for the Lord says : “Deal justly, that is nearer to your duty” (The Table Spread 8). The worst denial of religion is to let individuals suffer from perdition and deprivation. The Lord says “Hast thou observed him who deniefth religion ? That is who repelleth the orphan, And urgeth not the feeding of the needy” (Small kindness 1, 2, 3). We must establish, therefore, our economy on the basis of Islamic guidelines to assure effectiveness and execution. This is the purpose of any economic strategy meant to be successful and permanent. The significance and role of Islamic economics in the Islamic world are thus made clear. They constitute the economic path followed faithfully by Islamic populations for its effectiveness and for its power of execution.

2.2.3. Islamic Economics is a Strategy which Assures Unity and Harmony

There is another issue which compels responsible people in the Islamic world to practice and stick to Islamic economics since its principle is to eliminate the conflict from which Moslems are suffering because they are torn between their religious consciousness and their conventional laws.

Actually, most constitutions in the Islamic countries assume that Islam ‘is the official religion of their country as the Islamic Sharia is the main source of legislation. However, these assumptions will remain mere insignificant slogans as long as jurists do not make the social, political and economic Islamic guidelines clear, and as long as they do not show how these can be implemented in different places at different times. This will also remain true as long as the rulers do not put these guidelines into practice allowing for counsel and freedom of expression, and for self sufficiency and economic balance between all the people. (Cf. Al-Fanjari 1967, 1981.)

Hence the importance of Islamic economics and its function in the Islamic world since it is an economic strategy which can achieve unity and harmony between the material and the spiritual life of the people.

2.2.4.The inevitability of the Islamic Solution

A logical conclusion of what has preceded is “the inevitability of the Islamic solution”. We do not use this expression here as mere rhetoric like those in the Moslem world in general or in the Arab world in particular who talk of the “inevitability of the socialist solution” or “the inevitability of free market.” We use this expression to refer to the circumstances, events and conjunctures in our Arab world and our Moslem world that will inevitably lead to this Islamic solution, especially after the failure of all imported solutions and the decay of all artificial systems. (Cf. Al-Kasraoui 1971: 5 ff.).

2.3.The Role of Islamic Economics in the World at Large

2.3.1.The Essence of Islamic Economics

Two opposing trends are discernable in the world, the individualist (capitalism) and the collectivist (socialism). We have seen that each of these two trends has a specific economic policy with advantages and drawbacks. We have also made it clear that Islam has a specific orientation and distinctive policy. And even if the latter resembles other economic policies in various aspects it remains, nevertheless quite unique since it is:

a static and developing policy at the same time It is static in principles and foundations, and in its assurance, from the very beginning, of the basic needs of both the individual and society regardless of its degree of development or the prevailing means of production. It is also a developing policy because its basic tenets are susceptible to different methods of application in time and place.
a policy which serves both the individual and common interests. It does not ignore the interest of the community as is the case with the individualist system, nor does it ignore that of the individual as the socialist system does. The Islamic economic policy is rather, from the start, concerned with both interests as it permanently tries to maintain them in balance.

However, if this harmony or equilibrium is not possible. such as in the exceptional circumstances of war, epidemics or famine, then common interest should prevail at the expense of the interest of the individual. In such circumstances, the Islamic solution, compared with all other systems, allows for the most extreme measures to be taken and solves the most difficult problems just as the Prophet’s companion Abu Dur Al-Ohufari once did.
A policy that serves material welfare as well as spiritual needs. It considers individual in his economic activity pious as long as his activity has been planned and oriented for the cause of Allah the Almighty. Moreover, the individual is gratified and rewarded to the extent that his activity is thorough and beneficial to the majority of the Moslem community.

In Islam there is no conflict between matter and soul as there is no separation between economy and religion. There is rather a strong bond between the two, a fact which guarantees success in this world and in the Hereafter. After all, this world is a field for the next. Man is the “viceroy of Allah on His earth”, and the purpose of Islamic economics is to construct the world and endow it with life.

2.3.2. The Dialectic of Islamic Economic Policy

As we saw earlier, economic policy in Islam is a global policy that takes all human aspects in consideration. It takes care of all human needs and tries to accommodate them in a dialectic way (See 1.4).

This dialecticism is special in its own way, for Islam recognizes the social contradictions that are inherent in life, viz., the static versus the developing individual versus common interest. material versus spiritual needs. However, the major point of difference between Islam and other systems resides, as we saw earlier. in the fact that these social contradictions are seen in Islam as the basis for cooperation and complementarily , not for conflict and killing. Islam, therefore. contrary to all other systems, makes sure these contradictions exist and accommodates them all without jeopardizing any. In some instances, however, one element may take over , at the expense of the other. When this happens, it is on a temporary basis and according to the need in order to re-establish the balance and guarantee cooperation.

If Islamic economics, as we have just seen, accommodates conflicting interests in order to secure the interest of all, to solve economic problems and hence those of war and peace, it is advisable that this Islamic economics contributes to solving world problems as well.

Hence, if the importance of the role of Islamic economics for the world has not been fully appreciated, it is because our Moslem Ulema have not exhibited the characteristics, value, essence and superiority of Islamic economics.

2.3.3.Islamic Economics Seen by Non-Moslem Scholars

In spite of the little effort done to show the value of Islamic economics, we have been hearing lately of Non-Moslem scholars advocating this system. These scholars have argued in favor of Islamic economics simply because some aspect or other has become clear to them, e.g., the accommodation of individual and common interests, that of material and spiritual needs or that of the stable and the ever developing.

We do not know how far the world would go if all aspects of Islamic economics and their application have been made clear. G.B. Shaw, for one, has declared that he saw in Islam the religion of Europe in the end of the 20^th Century. (Quoted in Ben Nabi 1971). The German thinker Goethe has, likewise, declared “ If this is Islam, are we not all Moslems ?” (Quoted in Bammate 1958:21) [Note: The quotation is in French and goes as follows : Si tel est I’lslam, ne sommes-nous pas tous Musulmans ?” (Goethe). The Swiss scholar, George Rivoire who became Moslem under the name of Haidar Bammate adds : “L’Islam devient un des elements essentiels du jeu dont dependra le sort futur.du monde”.]

The French Economist Jacques Austruy wrote in 1961 in his book Islam and Economic Development that the way to development is not restricted to the capitalist or socialist systems but is apparent in a third one which is Islamic economics. The latter, in his view, will dominate the world in the future because it is a global way of life that guarantees success and avoids evil. [Note: The author also states (1961:175) ‘.L’avenir n’appartient a personne, et c'est une erreur historique aussi grossiere que commune de croire les sources d’invention humaine taries avec notre jeunesse. L'avenement d’une economic musulmane qui s’annonce apportera, sans doute. Ia preuve que Ia croissance esycholomique n’est pas necessairement soumises aux modalites psychologiques et sociales quc montrent tes deux systemes aujourd’hui dominants. Les chances de ertation economique de l’lslam onus paraissent grandes et ses tentatives de construction d’un systCme originat sont I encourager”.]

The French scholar Raymond Charles (1969), in a critique of my Ph.D. thesis presented in 1967, argues that Islam shows an advantageous way to development. In the production domain, it glorifies work and forbids all aspects of exploitation. In the domain of redistribution, it first guarantees the basic minimum to everybody and then advocates the system of "to each according to his work” irrespective of his religion or nationality. As the Hadith says ‘There is no objection to the rich, provided he is pious.” In any case, Islam allows wealth and riches only after poverty and deprivation have been eliminated. It does not allow extravagance and secures the economic balance between individuals. [Note: Raymond Charles (1969) also writes : “La specificite de l’Islam doit, en ces domaines comme dans celui de Ia science, s’integrer au rythmc do developpement mondial, auquel elle-meme ouvrira des voies originates. L’Islarn exalte Ie travailleur et detourne toute forme d’exploitation, il s’efforce d’edifier one societe fondee sur Ie labeor. Qoant a Ia distribution, il honore les deox principes fondamentaux A chacun selon ses besoins et a chacun. seIon son travail; Ie premier est garanti a titre de droit de Dieu par Ia societe a ses membres sans discrimination de race, dc religion ni de nationalite’, toute transgression entrainant Ie rejet pourt infideli’te hors de Ia communaute; Ie deuxieme ne saurait engendrer aucun ecart de classe, ni luxe ni l’opulence ne sont toterables tant qu’iI subsiste un seul necessiteux dont Ia misere doit disparaitre, tot-ce par Ia confiscation privee sans indemnite, au bref par Ia socialisation des biens".]

This is a clear proof that many Orientalists argue for the need to go back to Islam and to study its strength especially in the political, social and economic domains. (See Gardet 1969).