The Islamic System of Socioeconomic Regulation

By: Ayatullah Shaheed Sayyid Muhammad Baqir as-Sadr (R.A.)
We may assume that the previous discussion has clarified the meaning and practical significance of pure economics and the socioeconomic policymaking process. Now, we may proceed with an explanation of Islamic economy, and state our reasons for insisting on a specifically Islamic economy.
As we have seen from the previous discussion, Islamic economy is based on its ideological formulation of socioeconomic policy. It is not amenable to a definition within the limited context of pure economics. When we say Islam has a specific concept of an economy, we do not mean that Islam has its own branch of knowledge called economics. For any discovery of economic phenomena and identification of the relevant causes, effects and the interrelationships need not necessarily be specific to Islam, which seeks primarily to justly regulate the socioeconomic activities and functions.
The economy of an Islamic society has much to do with Islamic ideology, including the concepts of social economic justice. Islam does not propound any economic law on the basis of any scientific discovery pertaining to the actually existing or identifiable realities. Thus, any Islamic economy can manifest a distinct socioeconomic policy, rather than any specific branch of knowledge.
For example, if Islam were to discuss any increase of interest on money among the people of Hejaz (Hejaz is the Name of a mountainous region along the greater part of the Arabian Red Sea coast), it would then be a matter pertaining to economics as a science. Without involving any scientific approach, Islam evaluates the usurious practice and its socioeconomic effects and recognises it as an unjust system to be proscribed. Then, it prescribes the relationship between capital and ownership of capital on the basis of 'Mozarebeh'(Mozarebeh; a type of transaction, which takes place when a person passes over his property as capital to another person to invest it for him, on the understanding that both the persons will share the resultant profit. It is necessary for the share to be divided on a percentage basis right from the beginning of the agreement, eg., the owner of the capital contracts with the agent that they share the profit equally, or 1/3 for the owner and the rest for the agent, or the other way round, This is a revocable contract between the owner of the capital and the agent) not usury. Thus, Islam, when dealing with economic matters, makes use of a moral, rather than purely scientific, investigation.
When we are clear in our understanding of the meaning of Islamic economy and we can recognise Islamic economy as a method, not knowledge, then, it is possible for us to remove the most important obstacle that makes one hesitant in his belief about existence of an Islamic economy. Many groups deny the existence of an Islamic economy. In fact, they fail to recognize the difference between pure economics and the socio-economic policy-making process.
Then, the ask: how can Islam contain an Economic system, when in our study of Islam, we find that Islam does not include any knowledge of economics, such as indicated by the theories of supply and demand, or the law of diminishing returns, and it does not postulate a law, such as the "Iron Law of Wages"? Nevertheless, we are all aware that the investigations of knowledge of economy only came into existence within the last century or so, since economic investigators like Adam Smith became famous.
The opponents to an Islamic Economy may harbour a wrong impression that Islam originated economics of its own.
However, if we distinguish between economics as a branch of knowledge, and Islamic Economy as an ideological system, any wrong impression can be corrected. Furthermore, this clarification would mean that Islamic Economy does not necessarily reflect the economic laws of supply and demand in a control-free economy. What Islamic Economy can offer is a specific program for regulating the socioeconomic conditions in a manner harmonious with its ideology.
We will further discuss Islamic Economy in detail in this book bringing in perceptible reasons and aims given in Islamic traditions. However, the easiest way to prove the existence of something is to make it readily perceptible.
Before we offer the proof of the existence of a socio-economic ideology in Islam, we will only state one reason for its existence, which is derived from the ideological comprehensiveness and structural integrity of Islam so that a broad understanding of the Shari'a (Islamic laws) is required.
One basic and inseparable feature of the Islamic laws (the Shari'a) is their comprehensiveness and applicability to practically every aspect of human life. The comprehensiveness is derived not only from the Islamic Commandments themselves, but from the practical applications and interpretations in the processes of jurisprudence and in the traditional sources of Islamic knowledge. We may refer to some of these sources now.
Abi-Basir relates about Imam Sadiq (a.s.) that one day the latter was explaining the comprehensiveness of the Islamic laws as imbibed by the knowledgeable members of the Prophet's Household, by saying, inter alia, that Islam has prescribed solutions to human problems encountered in life. Islam has declared certain things to be lawful and prohibited some other. It has prescribed penalties even for a slight abrasion inflicted on a person's body by another person. And with that sentence Imam Sadiq (a.s.) placed his hand on Abi Basir’s shoulder and said "Am I allowed" Abi Basir answered: "By all means". Then Imam Sadiq (a.s.) increased the pressure of his hand on the man's shoulder and exclaimed, “Even this action has a price to pay in Islam”.
In another text from Imam Sadiq (a.s.) he said: All the matters man faces in his life have been discussed in Islam, there is no matter which is not spoken of, even a penalty for inflicting a scratch on another's hand.
According to Nahjul Balagha, Imam Ali (a.s.) once recalled the advent of the Prophet of Islam and the revelation of the Qur'an through him. The last Prophet came after a long period without an apostle and at a time when mankind had deflected from the right path and human values had become obscure. About the Qur’an, Hadrat Ali (a.s.) is said to have described it as a medicine to heal all human pains and a supremely meaningful guide to living.
These are clear examples reflecting the proof that Islam concerns itself with all aspects of human life even the smallest and most insignificant matters are not forgotten. It must be clear that most certainly Islam has presented a program to deal with socioeconomic difficulties and to regulate the life of Man, presented a program to deal with socioeconomic difficulties, and to regulate the life of Man.
If Islam were to ignore the vital socioeconomic aspects of human life by prescribing no guidelines or programme concerning the same, we could, not have legitimately attributed to it any comprehensiveness. It is inconceivable that a religion, which takes care of the need to respect human integrity to an extent that not even the slightest transgression against a person does not go unrecognized and uncompensated, can ignore human rights concerning man's economic activates, including those of a developer of a plot of land for agriculture, or an excavator of a mine, and the like. No wonder, the Islamic laws and traditions do cover the socioeconomic aspects of human living.
In view of the foregoing, it is a mistake to say that the Islamic laws prescribe a code of behaviour for an individual Muslim and not any socioeconomic program me. This is simply because the Shari' a takes all aspects of human life into consideration. Moreover, it is manifestly wrong to view individual life in isolation from that of his society at large.
The Islamic Laws regulate not only individual life but that of his society. In fact what these envisage for an individual Muslim is equally true for all Muslims in a community. This is something totally consistent with the realities of human life. Accordingly, it is a great mistake to harbour any notion that Islamic regulation is meant for (the private) individual.
Any regulatory system, socioeconomic or political, deals with problems of individual and social importance. This is a basic requirement for its efficacy.
Capitalism, too, may be viewed as a societal regulation system; it highlights freedom of enterprise as the basis of the society's economic life, inevitably this freedom is reflected not only in the individual behaviour of a capitalist but in the manner of contractual interaction with his agent. This is similar to the nature and content of mutual interaction between an userer and another who obtains a loan from him.
The same is true in case of many other societies, with their overall regulatory or facilitation framework based on, and reflected in, individual conduct of business, or approach to work. However, where Islamic Laws emphasize promotion of wholesome individual procedures, these do necessarily provide for a salutary basis of transactions, such as loan financing and employing others, or getting oneself employed. This implies salutary effects on the society, too. Thus, the laws affect both the individual and his society.
Accordingly, if we wish to separate an individual program from the social program, we will be definitely contradicting ourselves. Islam, in stipulating and enhancing the quality of human behaviour, determines or covers all aspects of Man's work, confirming the existence of a societal regulatory system in its legal and ideological framework. I fail to comprehend those who are skeptical about the existence of an Islamic framework for economy and its suitability for solving the economic difficulties. What do they say about the early Islamic period when the socio-economic problems were successfully tackled by the Muslims, so as to result in positive improvements?
Islam and the Prophet of Islam (S) were instrumental in bringing about the congenial socio-economic (and political) conditions. They had answers to the production and distribution aspects of the economy and society.
It is impossible to imagine a society during the Prophet's time without an economic system. It is impossible that the society did not possess a system in order to improve economic life, and distribute wealth among the people in a just manner. On the other hand, it is inconceivable to imagine an economic system separate and unrelated to Islam and the Prophet of Islam (S).
No doubt, Islam and the Prophet of Islam (S) found the solutions which led to the Islamic socioeconomic system. In other words, they established the basis of Islamic socio-economic policy.
The above explanations may be sufficient for anyone to accept the fact of the Islamic coverage of economic matters. However, it is notable that the Islamic commandments, principles, traditions and laws, although clear in themselves, require to be collected, collated, analysed and consolidated, so as to constitute a distinctive ideological and legal framework for any socio-economic policy- making.
For, instance the Islamic commandments prescribe human brotherhood, justice and equal rights for practice by Muslims in particular, even in the socio-economic sectors of production and distribution of wealth. Then, there are specific legal provisions concerning matters of detail, such as reviving (cultivable) land, extraction of minerals, Rent. Mozarebeh (capitalist-labour Joint enterprise), usury (or interest), taxes (e.g. Zakat, Khoms, Kharraj), and public financing under Bait al-Maal.
In the above context, it is quite possible that any Islamic researcher may not find anything specifically opposed to economic freedom in principle, as implied in capitalism. On the other hand, he will surely find contrasting evidence (signifying moral conditioning of the freedom), in terms of prohibition of usury, legal provisions against owning land(with agricultural/mining potential) without making it productive, and the Shari'a authority to fix commodity and other prices,' among similar other legal provisions,

The Moral Basis of Economics in Islam
Sometimes it is argued that the socioeconomic aspects of Islam represent only a part of its overall ethical code, rather than any specific methodology of economic significance, since, morality constitutes the basis of the Islamic teachings.
This argument treats the Islamic teachings as no more significant than passive moralizations normal for all religions. It presupposes that the practical significance of the Islamic teachings is confined to their promotion of morality in and among individuals.
Further, it implies that the Muslims' sublime rapport with God and their brotherhood with the co-religionists do not extend to any regulation of the social welfare aspect. In short, the skeptics give an impression that the Islamic teachings serve as mere recommendations. In their judgment, these differ from any secular economic methodology, in the same way as a moralist's exhortation of individuals towards mutually establishing salutary human relationships does from a social reformers planned improvement of his people's conditions and seeking to determine their social rights!
In support of the above argument, the skeptics acknowledge that Islam teaches Muslims to unite and practise human brotherhood. They recognize that Islam enjoins its adherents from doing anything contrary to the divine prescriptions of rectitude, truthfulness, honesty, moderation, consideration, patience, and similar other virtues, on the part of the individual Muslims, or even mankind as a whole.
The alleged absence of systematic content of economic significance in Islam is not borne out by the actual position. The skeptical interpretation in this regard seeks to reduce the idea of an Islamic economy from its real position of a school of thought to an imaginary level of recommendatory, moral exhortations.
No doubt, morality permeates Islam. It’s essentially moral teachings are comprehensive enough to render the individual and societal conditions, including the economic status, wholesome; this is made possible through mutually salutary human relationships in the appropriate societal conditions envisaged in Islam.
Islam commands its followers to abstain from and oppose any kind of oppression, selfish exploitation and injustice. The socio-economic aspect of Zakat, for example, is treated not only in quantitative terms of taxation, but in the qualitative terms of its salutary effects on the tax payer and the beneficiaries. What is more significant is the fact that Zakat has been religiously prescribed as an obligatory act of devotion to God, at par with Namaz (Prayer), the Ramadan fast and the Haj. Moreover, the Islamic teachings repeatedly emphasize that .the rich and the affluent must always support and enhance the status of the poor and the needy.
Clearly, the Islamic teachings (commandments, exhortations and guidelines) aim at strengthening the morale of individuals. These are action-oriented and, as such, go beyond any passive moralizations. Accordingly, their comprehensive scope and legal significance extends to realization of a systematic Islamic economy, consistent with their socioeconomic implications.
Yet, it does not mean that Islamic role is that of an advisor only, so that it is incapable of formulating a method and system for society in all its aspects, including the economic.
Islam forbids man's injustice to man, or any persecution arising from violation of human rights. In doing so, it invites people to be righteous and just in honouring each other's rights, This it does by first conceptualizing justice (and human values) in its own ideological perspective, so that the enlightened Muslims can clearly distinguish between what is right and lawful in Islam and what is wrong and unlawful or unjust. Thus, they are meaningfully induced not to exceed the (moral, ideological and legal) limits determined by Islam.
Islam does neither allow others to interpret the moral concepts, human values or rights , nor advocate any' existing ones, as advisers normally do, Islam clarifies what it means by justice, and states the general rules concerning matters, such as production and distribution of, and transactions in, wealth. It also explains what it considers to be unjust. or an oppression.
The foregoing indicates the difference between a moralist and an economic school of thought. A moralist does no more than invite people to act with justice, and discourages them from unjust acts. He does not determine any standards of justice, nor does he establish any criteria for determining injustice.
He leaves these up to any good sense of his listener or follower.
However, in Islam, any socio-economic methodology presupposes the relevant standards and criteria of justice as applicable to an Islamic economy. Had Islam allowed the people themselves to determine its concepts of justice 'and injustice, and to come to an agreement on a set of rights by taking into consideration the conditions of their living, their needs, and contemporary values, it would have meant that Islam's role was that of a moralist only. While Islam offers advice to people and discourages them from being unjust, and invites them to justice, it also states clearly its concept of justice and injustice. This is independent of any individual opinions held on these matters.
Islam itself clarifies and distinguishes between the just and unjust paths concerning production and distribution of wealth. For example, Islam regards forcible ownership of (fallow) land, without rendering it cultivable, is an act of oppression. On the other hand, if the land is reclaimed and made cultivable, the, developer becomes entitled to own the same. Further', Islam considers it an act of oppression to increase wealth by means of usury, However any increase in one's wealth due to legitimate earnings is treated as just and fair. In these and similar other cases, Islam clarifies the limits of justice and injustice.
It is also true that Islam encourages the rich to help the poor, but it does not stop there. The Islamic government concerned is religiously obliged to upgrade the living standards of poor to a sufficient level.
According to a tradition attributed to Imam Musa Bin Ja'far (a.s.) a Wali al-‘Amr1 has a specific responsibility concerning Zakat. The Imam is reported to have said that it is incumbent on the Wali al-‘Amr to collect Zakat and dispense it according to the divine commandments. This would necessitate division of Zakat collection into eight parts, including that of the poor and the needy.
The dispensation should be so made as to provide an allowance (to the authorized person) that is sufficient to take care of his household needs for one year. If, at the end of a year, it is found that some amount of the Zakat allowance is still left, it should be returned to the authority concerned. Then, if the poor continue to be in need, the authority concerned has a duty to provide the necessary subsistence allowances.
Clearly, the social responsibility and the necessity of securing a good life for everybody is deemed to be an Islamic duty. This is definitely more than mere advice. It involves compliance with a socio-economic requirement as a matter of social responsibility, which is treated as one of the major responsibilities of Wali al-‘Amr in Islam, so that the Islamic authorities are duty-bound to look after the poor and the needy by all means. This represents just a small part of the foundations of a socioeconomic system in Islam, Islam envisages appropriate practice of whatever it preaches. To illustrate this point, let us consider an Islamic tradition and the relevant Islamic practice. The tradition says: "Those who go to sleep, after dining to their hearts' content, and in a state of insensibility to the sufferings of their neighbour(s), who remain hungry and restless through the next morning, do not actually believe in God and the Day of Final Judgement."
The relevant Islamic injunction lays .down that a Wali al-‘Amr is charged with the responsibility to under-take the maintenance of the poor and the needy until the latter- are no longer in need of help.
While the above Islamic tradition may be construed as even a moralization, the relevant practice cannot evidently be treated as such. No doubt, the Islamic practice is action -oriented to a vital aspect of socioeconomic welfare.
Furthermore, it may be recalled that Zakat has been treated as an important act of worship (in that the tax-payer obeys not only the divine commandment in this regard, but earns virtue in this world for the hereafter), while its practical socio-economic implications, too, are emphasized.
The foregoing explanation shows that the overall responsibility of Wali al-‘Amr concerning Zakat and its dispensation is rendered practicable through the relevant provisions, so that Zakat represents not only a significant individual act of devotion, to God,' but a vital .socio-economic methodology, of Islam, too.

Concluding Remarks
In conclusion, I reiterate my inability to understand how those who dismiss the Islamic socio-economic methodology as no more significant than a set of moral exhortations can bestow a distinctive importance to capitalism and communism as socioeconomic system! Specially, we have a right to ask how capitalism and communism are entitled to, or deserve to be called "systems", while denying the same title to the socioeconomic methodology of Islam?
The Shari'a laws of Islam are geared to improving the same conditions which capitalism seeks to improve under its own rules. This is notwithstanding the fact that the Islamic judgments differ from that of capitalism. Then, how can anyone legitimately proclaim capitalism to be an economic system, and the Islamic socioeconomic system to be only a collection of moral orders and advices In the above context, let us 'consider two' more examples to prove that the Islamic views on the economic matters are at least as efficacious as those of the other economic, schools of thought. The first example concerns the question of private ownership, around which the main differences between the economic or socioeconomic systems revolve. From the point of view of capitalism, private ownership is the principal consideration or the general rule, while public ownership is a subsidiary or exceptional matter.
This can mean that all kinds of wealth and the natural resources, should be privately owned, unless any exigency of circumstances demand public ownership of some of these, On the other hand, Marxism favours public ownership as the principal consideration, Moreover, it rules out private ownership of natural wealth and industrial raw materials production, unless and until private ownership becomes inevitable.
In contrast, Islam prescribes a different method, in that it allows private-cum-public ownership, within clearly defined limits. The Islamic treatment of the socioeconomic problems evidences at least as much discernment as that of capitalism and communism. Even so, the perspicacity of these three schools of socioeconomic thought has resulted in the emphasis on private property in one, public ownership in the other and private-cum-public ownership in the third one. The reasons for which are rather intriguing!
The second example concerns profit, interest, or other income realized through ownership and rental, or loaning, of real assets and means of production, as in capitalism. Earnings of this kind involve no actual work on the part of the earner and, as such, are prohibited in communism.
Thus, what is admissible in capitalism is inadmissible in socialism or Marxism, so that usury and rental are basic to capitalism and antagonistic to Marxism, Islam chooses a third alternative, in the sense that it considers income derived from ownership and rental of some real assets and means of production as legitimate, and some others as illegitimate. For instance, it prohibits usury and earnings derived from it, while it treats some other income derived from rents as legitimate.
Thus, capitalism and Marxist Socialism (communism) are at loggerheads with regard to endorsement of usury and rental (earnings without work). Capitalism bases its approach on the principle of man's economic freedom. Marxist Socialism, on the other hand, considers work to be the determinant of the legitimacy of one's earnings, in as much as a property-owner who does no work is not entitled to any wages or rental. The Islamic approach, too, is based on its own ideology concerning wealth production and distribution. While Islam prohibits a capitalist from seeking an increase in his wealth through usury, it permits a landowner rental from his tenants.
The Capitalist, Marxist (socialist, communist) and Islamic approaches, explained above, involve different points of view, all concerning the question of wealth distribution, Then, how come the capitalist and the Marxist positions, and not that of Islam, are regarded as "systems"!
Notwithstanding what the skeptics say or do not say, the fact remains that Islam does represent a socio-economic school of thought of its own distinct from that of the others.