An Islamic Perspective of Political Economy:
The Views of Muhammad Baqir al-Sadr
by T. M. Aziz
With the collapse communism in Eastern Europe and in its heartland, the Soviet Union, the world is yet again dominated by the practices and laws of capitalism. Today's world economy is shaped according to Adam Smith. No other alternative routes for economic development but to let "the laws of the market" to play its course in the marketplace, and the "invisible hand" of the market is more visible now than at anytime in history to be the determining and decisive factor of the life of men and nations. Consequently, the self-interests acts of members of the society is to become the driving force of the economy, and the law of supply and demand is the regulating mechanism of the profiteers in the society. Even economists in what is used to be the Marxist bloc are subscribing to such economic behavior as the only alternative to save the ills of the economy of their nations.
Not quite true says many Muslim thinkers and political activists. They believe that Islam provide humanity with solutions to problems created by imperfect manmade political system and moral values. Islam, according to them, is divinely ordained social framework that should guide humanity to peace and tranquility in all aspect of life, physical and metaphysical ones. One of those thinkers and political activists was Muhammad Baqir al-Sadr of Iraq. Sadr was executed when he led a revolt against the Ba'thist regime in Iraq in 1980. He had conceived an Islamic political system to replace the existing regimes in the Muslim World, which he considered corrupts. His program for the future is to create new socioeconomic order that would replace the capitalist and socialist orders that are the dominates system in Muslim World. This paper is to focus on his views and the basic principles of the Islamic economic system that he believes is more capable of solving the contradiction of the capitalist system, therefore, more able to satisfy the human needs; and more importantly, has the capacity to develop and progress in accordance with human potentials.
As an Islamic jurist, Sadr derives his basis of argument from Islamic tenets and divine scriptures. Here we are not to question those beliefs but rather to present his conceptual argument and economic engineering of the society and to see how applicable these views and programs to reality. The merit of the study here is to highlight his argument and try to understand the structure of the Islamic economic system. Suffice it to say that Sadr does not believe that his views should be put to test since they are not put into practice for a period of time within a social setting. His views in economics are parts of his general political theory that is designed for the establishment of complete Islamic social system. The behavior of the Islamic economic system should be judge after the creation of an Islamic state where the whole realm of socioeconomic realm of human behavior is engineered according to Islam. Sadr major work in economics was written in 1960-61, and asides from the few pamphlets that he wrote later in his life, the main argument of his thought contained in one work, Iqtisaduna (Our Economics).
The economy of the Islamic state, according to Sadr, is divided between that of the individual as vicar of God (khalifah), and the ruler as the witness (shahid) that supervise the applications of the laws of God. The economic structure of the Islamic state, thus, consists of private property and public property. However, one should not think that the economic structure of the Islamic state is some sort of combination of capitalism and socialism. Sadr strongly rejects this misconception. He argues that the juxtaposition of private and public rights of ownership stems from the fundamental beliefs of Islam. This is similar to the way that private ownership is advocated in the capitalist system or public ownership is advocated by socialists as the logical conclusion of their ideological and philosophical beliefs. To justify private ownership and public ownership in Islam, one must understand the rights and obligations of the individual and the state in Islam. Sadr's detailed description of the economic relationship in the Islamic state and the establishment of its economic structure represents the best available argument for the notion of Islamic economics.
Man's behavior, according to Sadr, is categorized into three types of relationships: social, economical and religious; stems from man basic relationship to other men, to the environment, and to God. The economic relations, however, is outcome of his inner instinct of self-love that "always drives him to bring good things to himself, to secure his interests, and satisfy his needs." Accordingly, man, in his relationship with the environment, is predisposed to utilize all possible resources to satisfy his needs and increase his pleasure. In due time, he is willing to use animals and plants to help him in his struggle with the environment. Although his essential needs were simple in the early period of history, his mental capacity enabled him to develop new means to help him utilize the resources of the environment. Thus, his needs were always expanding due to the complexity of utilizing the resources of the environment.
Man's relationship with others of his kind was the natural outcome of his need to satisfy his desires. The complexity of life, i.e., his relationship with the environment, made it difficult for him to sufficiently cope with his needs. Cooperation with others makes the effort to satisfy his needs manageable. Cooperation with others results in a sharing of benefits with all participants of the community. The inner instincts of self-love that drove man to create the first community are evident. These instincts gave rise to man's exploitation of his brother.
Because people were not equal in their physical and mental capacities, they obviously were different in their utilization of the resources of the environment. Such differentiation of capabilities is part of the divine plan for bringing cohesion, through the division of labor, to the human community. People of different capabilities function in different tasks within the social order. However, man's desire to maximize his interests drove some men to exploit the situation for their benefit. Human needs were growing due to man's mental and economic development. His experience broadened his capacities to utilize the resources of his environment. His passion to acquire more of the environmental resources for himself became prevalent. Consequently, some men were willing to oppress others to satisfy their greed and egos (both instincts the outcome of self-love). It is then that the human community faced oppression in the form of economic exploitation.
This conflict between social peace and individual instincts of maximizing interests was persistent throughout history. This historical conflict, Sadr argues, is between two classes: those individuals who possess the environmental resources (economical and social) who are endeavor to protect their interests, and the rest of the society who strive to live in peace and cooperation. Marxists believe the problem originated with a few people controlling economic resources. The only way to bring about peace to the social order is through the revolution of the oppressed class of the society to destroy the special interests of the privileged class. Capitalists, on the other hand, believe such social conflict is the result of the limited natural resources of the environment which are not sufficient to satisfy the needs of all people. Thus, social conflict will always be prevalent. Human society can only hope to manage, through incremental and gradual reforms, the social conflict from overtaking human progress. Based on this, capitalists oppose any type of social revolution. However, Islam disagrees with both views and considers the environmental resources to be sufficient to satisfy people's needs.
According to Sadr, the problem rests with human nature: how can the instinct of self-love be directed in a proper manner? Unless a solution comes to control human desires and deflect the potential of human energies for exploitation of others, the social order rests on superficial foundations. Therefore, Sadr clearly states that the socioeconomic problem is the result of the misdeeds of man. He specifies two reasons for the socioeconomic problems: 1) the oppressive nature of man, i.e., his self-love; and 2) man's inefficiency in the utilization of the economic resources.
According to Sadr's interpretation, the ills persists in the economic realm of life stem from man's oppressiveness comes in the form of inequitable distribution of economic resources on the one hand and from the inefficient utilization of these resources which result in underdevelopment of economic resources and their waste. A solution must overcome the two basic ills of the economic behavior of man. Sadr specifies three components to the Islamic solution: 1) the cessation of forms of oppression which is manifested in the unjust distribution of economic resources; 2) purification of human nature to achieve control of the desires of self-love; and 3) utilization of economic resources to satisfy the needs of all humanity.
The Islamic Theory of Distribution
The first step to end the contradiction of the economic structure of society begins with the distribution of economic resources between people. A just social system is the one that allows all people to benefit from the economic wealth. The Islamic economic system, accordingly, is judged upon this criterion.
The first form of economic wealth is the natural resources of the environment. The unjust distribution of the economic wealth begins with the problem of ownership of these natural resources. One must know who has the right of ownership of these resources in Islam. Sadr, thus, must develop the theory of distribution of the natural resources at two stages: preproduction and postproduction stages, or what he calls primary wealth and secondary wealth, respectively. His endeavor is to discover the doctrinal basis of Islamic teaching concerning economic ownership. For him, the study of economics in its empirical sense at this stage is irrelevant to the issue of social justice. In other words, he is building an ideological theory which addresses this issue. The empirical study of economics comes much later to evaluate whether the application of the ideological theory in the realm of life has an adequate basis in reality.
a) Distribution of Natural Wealth
In constructing the conceptual faramework of his theory, Sadr also disagrees with political economists on the scope of economic resources. He disregards capital and labor to be considered as part of the economic resources. It is only nature that can be taken into account in the theory of distribution of natural resources. "For capital is in fact a produced wealth and not a primary source of production, because it represents, economically [speaking], any wealth which is produced and generated through human labor that can be reinvested in the development of new wealth."
On the other hand, nature itself is classified into four categories: 1) land; 2) raw material; 3) water; and 4) other natural resources such as living species in air, sea and on land. Although the canon laws of Islam seemingly contain different regulations for each one of these categories, Sadr used his ingenuity to discover the common ground between them, and reveal his interpretation of what he calls "The General Economic Theory of Islam.
The sole owner of the land and raw materials is the Islamic state/government. People may gain special rights of ownership if they invest their labor to develop these natural resources, such as cultivating land and mining minerals. Individuals may gain precedence over others for a piece of land or the minerals which they worked. The special right of ownership may be gained only through labor invested in developing that land or raw material, and such right expires as soon as that development ends. People utilizing these resources must pay property taxes for their usage to the Islamic state.
Water, on the other hand, can be owned if it is possessed for economic development. Although the sole proprietor of the natural resource of water is the state, all people have access to it for their use. The only exception is underground water, where the individual who invests his labor to develop its utility has an exclusive right to its usage and benefits.
Other natural resources, such as birds, animals, plants and marine life, are publicly owned. These sources of economic wealth may become private property through individual efforts. As such, people, not the state, have the exclusive right to own resources via their labor. They may not loose this right indefinitely, or pay property taxes for their possession.
Based on this view, Sadr concludes that people themselves, or in a more concrete term, their representative government, are the sole and legitimate owner of the natural resources. Individuals may gain special privileges to make use of these resources only through their invested labor to develop these resources. Other types of individual labor, such as the use of force to possess, are not considered legitimate means to ownership. Specifically, it is only invested human work that has legeal significance for ownership of the natural resources. Genreally speaking, Islam gives individuals the right to own private property only through their continuous effort to develop these resources to benefit society as a whole. Once private development of these natural resources is suspended, the right of private ownership would cease too. From this Sadr derives the first principle of his theory:
All natural wealth is part of the public sector and individuals gain the special rights to use them only on one ground, that is labor which characterized by development [of these resources] by the direct work [of the individual himself].
According to the above principle, the individual may not use other individuals to develop the natural resource to have the right of ownership of large estate, for example, otherwise they share the ownership and the benefits of that natural wealth on the basis of their labor. Islam totally rejects the capitalist principle of individual ownership of vast natural resources on the ground that they are developed by the labor of others. For the same token, industries for the development of the natural resources, e.g., oil and minerals, can be owned and managed only by the state. Notwithstanding the emphasis of public ownership of the natural resources, Sadr introduces the concept of the "priority right of use" of the natural economic resources by the individual. He states that those who possess the labor and the will to exploit the resources have the right to gain access to them such exploitation serve the public interest.
b) Distribution of Produced Wealth
Sadr, furthermore, develops an Islamic theory of distribution of the produced commodities. Produced wealth is classified into: 1) the primary commodities, such as agricultural produce and raw materials; and 2) the secondary commodities, which are the primary commodities manufactured into different products. In both of these stages of production, capital generated from previous economic endeavors as well as the means-of-productions (tools and machineries) take part in the production process of these advanced economic activities. However, contrary to the capitalist theory, each of these components has no share of the product but they gain special rights for their usage and their wear-and-tear in the production process.
As in the previous principle of theory, Islam gives the worker the sole right of ownership of the produced goods. However, Sadr relizes that human labor is but one of the components of the production of the primary commodities. The other components are the natural environment and the tools which help man in the process of production. The tools, or any means-of-production, according to Sadr, "contained potential works of previous stages of productions that will be exhausted and depleted during their usage in the process of production." In this case, if the tools are not the property of the worker who benfeted form their useage during the process of production, then the legitimate owner of these tools must get paid for the amount of usage of his tools, i.e., the exhausted potential work of the tools. According to Sadr, herein lies one of the major ideological differences between capitalism and Islam. The former regards the owner of the means-of-production as the sole owner of the produced commodities; where Islam considers the laborer to have the only legitimate claim to the produced commodities. In capitalism, tools get a share of the product because they, as human labor, expend a certain amount of work in the production process. In Islam, tools only assist and aid man to facilitate the process of production, thus, they must be gratified in rent, not in profit sharing.
Accordingly, the laborer only has the legitimate claim for the products of his effort. Therefore, it is unthinkable in Islamic economics, states Sadr, for someone to employ others and provide them with rent and tools, where he alone owns the products of their labor. Likewise, industries and production entriprises that employed many labors, in an Islamic state, can only function if they are owned publically. There is noway in Sadr theoratical vision that an industiral capitalist production to evolve in an Islamic economic system except through state's direct involvement and control in the economic development. The state, in the name of the society which the sole owner of the economic resources, can employ people and pay them only wages for their labors and not give them share of the produced commodities.
Furthermore, since the utilization of the economic wealth of the environment is the responsibility of the society as a whole, the sole proprietor and beneficiary of the natural resources, society gets a share of the product extracted from the primary commodities. The state, in this stage of production, has the right to collect what is known as tisq [property tax] from producers to finance the social welfare expenditure and meet the economics needs of the people.
As for the production of the secondary commodities, Islam gives the owner of the primary commodities the right to establish his claim to the final products. The legitimacy of his ownership does not cease because someone aids him in transforming his commodity into different forms. An individual if s/he owns the raw materials, then s/he has the right to the manufactured commodities produced out of that material. To put it plainly, the worker, in this case, does not only own the product of the natural resources but also the produced commodities in latter stages of productions. If the state, for example, extract or mine certain natural resources through its publically owned entriprices, then it also has the right of ownership of all the processed goods extracted from those natural resources. People who participate in the production should get paid for their labor. Industries to develop natural resources, such as oil and minerals, theoratically speaking, in an Islamic economic system cannot be owned privately. It is because the state is primary owner of the natural resouces which gives it the right to own the produced product. However, there is a theoratical loop-hole to make capitalist flurish in an Islamic economic system which is through the leasing the natural resources from the state by private entrprises where the latter can claim legitimate ownership of the produced commodities.
In any case, the ownership is not affected by the usage of the means of production belonging someone else. The owners of the tools and machines get paid for the usage of these tools and machines in the production process. By the same token, the owner of the primary commodities may also hire someone else to manufacture his goods. The worker, in this case, gets the salary for his labor, which should be specified in the job contract. The worker, consequently, has no claim for the final product he produces.
Islam specified two means of payment for a hired worker: the first one is through wages, where he is paid for the amount of work he does in accomplishing a task; the second is the sharing in the profit of the final product. In this case, the worker gets only a percentage of the profit specified in the agreement between him and the owner of the primary commodities. The general principle, in Islam, for earning is:
...that earning is only based on contribution of labor during the process [of production], so the contributed labor is the only legitimate mean for someone to get paid from the owner of the process...and without such contribution, there is no legitimacy for his earning.
Based on this economic principle, the owner of capital will not receive fixed payment from the owner of the primary goods, i.e., usury is prohibited. The monetary capital will not contribute any amount of labor at all. Fixed payment is allowed in Islam only in one case, when there is a consumption of work, either directly through a worker, or indirectly (reserved work) through the means of production. As for the monetary capital, no such work will be exhausted or depleted. In this matter, the owner of the capital is allowed to share the profit and the loss with the owner of the primary commodities. The legitimacy of earning, in this situation, is based on his help in facilitating the process of production, and he is deserving of gratitude and appreciation which is expressed in profit sharing.
Purification of Human Nature
The first task of the Islamic political system is to eliminate forms of oppression within the economic relationship and to lay the ground for the establishment of a just system of distribution of economic resources. However, the source of the injustice, according to Sadr, is neither the social settings nor the means of production, but rather human nature itself, the inner instincts of self-love that drive man to secure survival for himself only. Such an instinct is essential for the survival of human life on earth. Profit, which is the economic manifestation of self-love and is generated from private investment, is the great engine of human economic accomplishment. It gives the individual the personal incentive to work hard and to overcome difficulties and challenges. However, when left without moral control it will manifest itself in different forms of oppression. Man will be concerned only with securing his own interests to the point of abusing the interests of others. Unless a solution to the problem of human nature is found, man will find the escape routes to abuse even in the just system of distribution. In fact, the social contradiction stems from the individual prejudice of self-love. In the capitalist system, it manifests itself in the form of economic exploitation of others. In the communist system, where private property is eliminated, man's self-love manifests itself in political oppression, such as the struggle for power and the securing of special social privileges.
Religion, according to Sadr, gives humanity the only solution to this basic and deep-rooted problems of human nature. Religion overcomes the problem of human nature by specifying many channels of self-control that properly regulate or direct man's instincts into the appropriate social behavior. In other words, it will end the contradiction between social and private interests.
The first of these mechanisms for self-control is a spiritual one, the psychological power that makes man control his behavior. Man is the vicar of God, which means he is the representative of the Almighty on earth. In the economic sense, he is the trustee of God for the wealth created for mankind. This sense of vicarage implies that man is responsible for his economic deeds before God. Vicarage also means controlling personal behavior, and limiting the usage of the natural resources according to God's will. Improper behavior and the waste of the wealth of God will make man accountable for his deeds and bring severe punishment. In the same manner, abiding by God's will guarantees a good reward and overwhelming gratitude.
It is He who has appointed you viceroys in the earth, and has raised some of you in rank above others, that He may try you in what He has given you. Surely thy Lord is swift in retribution; and surely He is All-forgiving, All-compassionate.(4:165)
Accordingly, man is expected to receive guidance as to how the wealth of God should be distributed and treated. It is this link between the here and now and the hereafter that brings accommodation between social and private interests. Anyone who sacrifices for the sake of others is rewarded. The religious solution, then, is not materialistic, but spiritual and trains man in the service of others, and in the sacrifice of private interests for the sake of social benefits. In doing so, he is serving and benefiting himself as well. In Islam, it is the fear of God and the desire of His gratitude that replaces the competitive greed of human nature. Once religion succeeds in bringing up this man who has control over his inner instincts and passions, the social order can be saved from contradictions and individual abuses and manipulations.
Since this goal is utopian in its outlook, Islam has derived a social mechanism to secure peace and harmony in the human society. God has assigned the vicarage role not to the individual per se, but rather to mankind. It is the social group that is the trustee of God over economical wealth. They, as a group, hold the responsibilities of managing the natural resources and human wealth to benefit the welfare of the group. The following Quranic verse refer to such social responsibility.
But do not give to fools their property that God has assigned to you to manage.(4:5)
According to Sadr's interpretation of the above verse, God considers the financial wealth of the ignorants as the wealth of the general public. The whole society is then responsible for not allowing any misappropriation of the ignorants' wealth. Such social control over economic wealth makes the individual accountable not only before God, but before his own people.
Islam also disavows any values that a society attaches to the possession of economic wealth. Affluence and economic prosperity of the individual are not signs of social prestige. Islam wants the individual to consider wealth as burdensome and places a responsibility on the shoulders of the wealthy individual to serve both himself and others. It is a means to achieve the goal of humanity. Affluence should not be the goal for the individual to achieve in his life, as in a capitalist society which makes man use all possible means to increase his possession of wealth, even if it brings harm and oppresses others' interests. However, if one thinks of wealth as the means to realize the appreciation of God, then helping others, not oppressing them, becomes the social norm of the rich and wealthy. In other words, Islam is determined to change the social values related to the possession of wealth and private property. There is no need to abolish ownership of private property as suggested by Marxism. The social policy of elimination of private property, according to Sadr, will not be successful because it goes against human nature. The only solution is to reform social values in such a way that wealth is changed from an individual goal to a social means to achieve a higher moral goal.
The third part of the Islamic solution to the economic problem, according to Sadr, deals with "fostering the production and the utilization of the natural resources of the environment to its fullest extent." God has created an abundance of resources in nature to satisfy the human needs on earth. Man, accordingly, is encouraged to use the abundance of God's gift to his benefit. According to Sadr, "Islam, ideologically speaking, has set the development of economic wealth and the utilization of the natural resources to the greatest possible extent as a goal for the society." Islam is similar to capitalism in affirming this economic objective; however, they differ in their approach to achieving it. While capitalism "rejects any means of development of production or increase of wealth that hinders the principle of economic freedom, Islam, on the other hand, rejects those means which are contrary to its theories of distribution [of the economic resources] and its principle of justice."
Notwithstanding, Islam, as mentioned before, discourages individuals from pursuing strictly materialistic objectives, downgrading gains in this contemporary existence. Sadr regards economic prosperity as the goal of the virtuous society, not of the individual. God, after all, has created everything on earth and the heavens to serve the existence of man. Islam only rejects materialistic gain as the ultimate ambition of man, which in such cases leads him to the oppression of others. Islam encourages zuhd [austerity] as a pedagogy which trains man not to consider materialistic wealth as his final goal in life. Zuhd is man's mechanism for self-regulation which he utilizes to fight his desires and direct his objectives toward God. However, it is not the goal of social order of the faithful.
Suffice it to mention that affluence and a high standard of living help mankind in his journey to God. Suffering can hinder such efforts. In fact, there is direct effect between man's relationship to God and his relationship to nature. The more men strive for God, the more bountiful nature will be in providing for man's needs. Social affluence is the sign of God's gratification to man. On the other hand, man's thankless attitude to God, of which his social injustice is the outward expression or symbol, results in the ruin of the economic resources and productivity, and the degeneration of man's social existence.
Islam also expedites the social drive toward production in its religious regulation. Under the Islamic economic system, earning is exclusively linked to working. All other means of earning and ownership are abolished. The possession of natural resources is not considered legitimate without continuous human efforts to develop it. Any type of earning that does not require any human labor, in commerce as well as in production, is forbidden. For this reason, the usage of the financial capital to generate earning is abolished. The only legitimate way to make use of the capital is to invest it in the production process and share the risk of profit and loss. To insure the utilization of capital in the economic development, Islam strongly forbids the conservation of money and initiates a yearly tax to downgrade any wealth that is not enrolled in the production process. Additionally, any type of useless economic activities, such as gambling, magic and superstition, jugglery, are forbidden in Islam.
Furthermore, Islam made it a requirement for Muslims to explore all fields of knowledge and seek any efficient means of production in order to utilize to maximum benefit the natural resources of the environment. The economic strength of Muslims is analogous to their military strength. The power of the Islamic political state is judged on the merit of their economic progress and social prosperity. For this reason, Islam places a heavy emphasis on the role of political leadership to regulate social economic activities to enhance economic development and eliminate waste.
The Role of the State
As indicated in the theory of distribution, the Islamic state possesses the sole right of ownership of natural resources. Consequently, it has absolute control of all aspects of economic activities. The owner of the natural resources, or the primary commodities, according to Sadr, is the sole owner of the secondary commodities. Basically, the government of the Islamic state can determine the flow of wealth in the society and define the economic process. The major objective of the Islamic state is to set up policies to develop the natural resources to the fullest extent to benefit the entire bulk of the society.
To achieve such an economical objective, the state has the right to distribute the social economic resources to attain the maximum amount of production that brings prosperity to all people. The state has the responsibility to provide the minimum of the essential needs of the society and ensure the economy of the people. It is unlike the capitalist state, which leaves that function to the fluctuation of the market. Nor it is like the Marxist-Leninist theory that advocates the state control all aspects of the economic activities. The Islamic state sets the direction of the economic activities, while giving individuals the right of private ownership to achieve the social goal. The government has the role to oversee and regulate economic activities. Accordingly, Islam has left the government with a high degree of flexibility in developing new regulations to meet rising economic circumstances. Sadr called the absence of restrictions in the Shari'ah as manatiq al-furagh (the discretionary sphere of the law), where the jurist has the authority to make judgments and rulings according to the principles of jurisprudence. He considers this area of legislation on the part of the law-giver as a realistic approach to ensure the development of economic activities and the means of production. The leadership of the Islamic state then could initiate any new legislation and regulations that they see as appropriate to the new rising circumstance in order to meet the economic needs of the people and secure the maximum utilization of the economic resources. In other words, the Islamic government is free to adopt a wide range of economic policies from full control of the economy to free-enterprise in order to achieve its social goal. In this case, the government must depend on the economists and experts to watch for the best possible alternative policies to set the direction of the state economy (provided that it will not overrule the theory of distribution.)
Such an unlimited role of government in the economy of the Islamic state is justified because of its substantial social involvement. The state is responsible for the social welfare of the all people. The economic resources in the Islamic state are distributed not only according to work and ability to produce, but also according to needs. Not all people in the society are able to work, or if some do, they are not able to satisfy their needs. Sadr identifies three economic classes in the society: 1) those who have the mental and/or the physical power to produce more than their needs; 2) those who are able to work, but only to the extent of meeting their essential needs; and 3) those who do not have the mental or the physical power to work productivity. The government's responsibility is to provide for the needs of the latter two classes, which are not limited to the essential human needs. The people in the Islamic state must live in dignity, i.e., their economic status must be raised to the acceptable general level. Therefore, the state must have the economic resources to be able to finance the social welfare program.
Whatsoever spoils of war God has given to His Messenger from the people of the cities belongs to God, and His Messenger, and the near kinsman, orphans, the needy and the traveller, so that it be not a thing taken in turns among the rich of you.(59:7)
The verse, according to Sadr, indicates two things: first, the allocation of economic resources between the government and the needy people; and second, the distribution of wealth in such a way as to prevent the rich from controlling the state of the economy. Based on the above interpretation, Sadr argues that the main principles of Islamic economics are: 1) public (i.e., state) ownership of the means of production and distribution; and 2) centralized economic planning. It is only through the control of all the resources in the community by the society that the common need of the society to be protected is guaranteed, and the essential economic rights of the individual are insured. Accordingly, the legitimate Islamic government has the responsibility to make a long-term plan for serving the common good and overcoming instability in the market.
Islam recognizes differences in income between people, but strives to create equitable standard of living. To realize such a socioeconomic condition, Islam, although it specifies fixed taxes to be collected from the prosperous people, establishes a social and moral mechanism. A lavish and extravagant style of living is totally discouraged in Islam. Islam also forbids waste in production and consumption in order to direct the resources of the economy to produce the commodities that satisfy the needs of all people and bring about social equity. The state also has the authority to regulate wages and prices so as to overcome the selfishness and greed of those who possess economic wealth and insure an equitable standard of living for all people. In sum, the major goal of the Islamic state is for the prosperity of all citizens.