The ideological battle of the 20th century
that pitted socialism against capitalism cost millions their lives. In
the end, socialism failed. Yet, even capitalism, as an idea, has failed
to put forth a vision of hope for humanity. The West and even the Muslim
world itself have forgotten that there is an alternative – Islamic economics.
Islam is not just a religion; it is a
total, all-encompassing way of life. Islam seeks to strike a chord of harmony
between the spiritual and the material. Islam is able to do this through
an economic system based on justice and equality. The Qur’an clearly
lays out the foundations and principles of Islamic economics. For example,
God addresses us as His vicegerents on earth:
Spend [in charity] out of the [substance] whereof
He has made you Heirs. For, those of you who believe and spend [in charity]
– for them is a great reward. (57:7)
The Qur’an warns the possessing
And there are those who bury gold and silver
and spend it not in the way of Allah; announce unto them a most grievous
Yet at the same time, the Qur’an ends
class war with its call to reconciliation:
O mankind ! We created you from a single pair
of a male and a female and made you into nations and tribes, that you may
know each other [not that you may despise each other]. (49: 13)
Ultimately, Islam seeks to create a system
where justice, not profit reigns supreme. Islamic economics has two primary
goals: to combat poverty and provide for a just and equitable distribution
of wealth. The Islamic state does this through a variety of voluntary and
mandatory mechanisms. For example, Zakah, a powerful redistributive
tool, transfers money from the hands of the rich to the hands of the poor
through charity. The abolition of riba prevents unfair lending schemes
which penalize the poor. In addition, the state is required to provide
each citizen with a minimum standard of living. As the Prophet (sws) said:
‘Any ruler who is responsible for the affairs of Muslims but does not strive
sincerely for their well-being will not enter Paradise with them’ (Muslim,
vol. 1, p. 126). Yet, at the same time, Islam achieves balance and maintains
economic freedom by securing the individual’s right to private property.
It sounds great, doesn’t it? But,
perhaps it’s just too good to be true. Perhaps it’s nothing more than an
empty dream of an Islamic utopia. But there is a precedent. I will argue
that the ideals of economic and social justice discussed above were successfully
implemented during the caliphate of ‘Umar Ibn Khattab, one of the
great companions of the Prophet Muhammad (sws). ‘Umar (rta) took
the Sunnah of the Prophet (sws) and basic Qur’anic principles
and synthesized them into a convincing economic program. The program’s
success had a lot to do with ‘Umar’s extraordinary vision and impeccable
character. Here, it is important to understand Islamic economics as a dynamic
system in which there is room for a variety of approaches. ‘Umar’s approach
was consistent with the demands of the fledgling Muslim empire. In the
context of the times in which he lived, he was able to propose solutions
to the problems and dilemmas that the empire was facing.
The Islamic state that ‘Umar
(rta) ruled was one where equality extended everyone, even the caliph himself.
(rta) believed that no one, no matter how important, should live in a way
that would distinguish him from the rest of the people. ‘Umar (rta)
lived a simple life and detached himself from any of the worldly luxuries.
He wore worn-out shoes and was usually clad in patched-up garments. In
one particularly telling instance, some of his companions were waiting
outside for him and were curious as to why the caliph was taking so long
to come out. They later found out that ‘Umar (rta) had no clothes
to wear. He only had one suit in his possession and had to wait until it
‘Umar (rta) could often be
found sleeping on the bare floor of the mosque. Other times, he was among
his people, helping the poor or delivering water and other goods to the
widows (Ya‘qub, 387). When he would travel from Madinah to
he wouldn’t even bring a tent and instead would sleep under the shade of
the trees. His eating habits also resembled those of a poor man rather
than the leader of a great empire. His usual diet consisted of only olive
oil and bread (Nu‘mani, 340). During the year of famine,
(rta) suffered along with his people eating even less than before. In ‘Umar’s
(rta) mind, it would not have been fair to eat well while his people were
suffering. He cared deeply for the welfare of his people and would go to
great lengths to ensure that everyone was content with his rule. Sometimes,
he would even wander the streets at night as an anonymous passerby, where
he would get the chance to meet and talk to his people, making sure that
they were satisfied (Nu‘mani, 229).
‘Umar (rta) would expect no
less from the governors and officials of the empire. His officers were
not permitted to ride Turkish horses, eat sifted flour, wear expensive
clothing, or keep a doorman at their homes (Ya‘qub, 66). In addition,
when an official was appointed, an inventory of all his possessions would
have to be taken. If any increase in his possessions or in his overall
financial position was noticed, then an inquiry into the matter would have
to be made and the added possessions were usually confiscated (Biladhuri,
219). Officers were often dismissed if they showed any outward signs of
pride or wealth which might distinguish them from the people. One time,
after a battle in 16 AH, ‘Umar (rta) saw Muhallim, a corpulent Bedouin
leader dressed in magnificent regalia with sashes, necklaces, and the like.
(rta) was disgusted by this extravagant display and so he ordered him to
take everything off in front of his own people (Tabari, 2454). While
these specific actions were not based on any specific laws in the Qur’an
the Hadith, they were certainly in keeping with the spirit of the
and its command to establish justice. To modern sensitivities, these
restrictions might seem contrary to individual freedom. In some cases,
though, the good of the community takes precedence over the individual.
Infusing the empire with the ideals of egalitarianism and justice would
not have been possible unless government officials set the best of examples.
After all, it is impossible to have true justice without leaders who themselves
It is amazing how far Muslim countries
today have gone from the example set by ‘Umar (rta) and his government.
Muslim leaders today live in palaces as kings, separate from their people.
Ibn Khaldun in his works speaks of this type of arrangement where there
is a clear distinction between the khassah (the privileged) and the ‘ammah
(the ordinary). The masses are constantly at odds with the elites. ‘Umar
(rta), in contrast, wanted to blur the lines between the haves and have-nots,
thereby erasing class distinctions which might inevitably lead to conflict.
If there is anything that captures the essence of Islamic justice it is
the idea that the leader of one of the greatest empires of the time would
sleep under a tree in the desert like any other man.
Till now, We have discussed how the
leaders of the empire lived as equals among their people. Now we will go
into more detail, looking at the workings and mechanisms of the Islamic
welfare state during ‘Umar’s reign.
While many West European countries
did not have unemployment insurance until the late 19th century, the Islamic
empire had it from the beginning. When a man was injured or lost his ability
to work, then it would become the responsibility of the state to make sure
that his minimum needs were met. He and his family would receive an allowance
from the public treasury (Ya‘qub, 85). ‘Umar’s state also
provided ‘social security’ for the elderly; the old who had stopped working
could count on receiving a stipend from the public treasury. Abandoned
babies were also taken care of. One hundred dirhams per year were spent
on each orphan’s development (Biladhuri, 452).
‘Umar (rta), acting as guardian
of the poor, would go to great lengths to make sure that no one in his
empire went hungry. Sometimes ‘Umar (rta) would even distribute
stipends among the people with his own hands (Nu‘mani, 228). During the
great famine of 18 AH, the Islamic welfare state was tested. In the end,
though, those who were in need of food, regardless of social position,
received food coupons with which they could obtain wheat and flour (Nu‘mani,
In distributing the spoils of
war, the caliph abolished all distinctions based on wealth, privilege,
or position. He instead distributed the stipends based on service in the
path of God. And while this was certainly subjective, some of the criteria
that were looked upon included one’s performance in battle and one’s overall
service to the community (Ya‘qub 456). Uthamah Ibn Zayd, for example, a
slave, received a greater sum than ‘Abdullah, ‘Umar’s own son (Nu‘mani,
Justice and equality were ideals that
(rta) and his government upheld in every facet of life. With all the money
that was pouring into the treasury during ‘Umar’s time, one would
expect that it would be used to build magnificent and ornate buildings.
Yet the caliph was very careful to maintain the simplicity of government
buildings (Nu‘mani, 90). Showy and extravagant displays were avoided. ‘Umar
(rta) did not want to waste money on unnecessary luxuries. He believed
that the money would be better spent if it went towards the welfare of
the people rather than towards lifeless bricks.
This brings us to the concept of public
trusteeship or ownership, another integral part of the Islamic economic
system under ‘Umar (rta). What this means is that utilities, infrastructure,
or resources are allotted for public consumption as opposed to individual
ownership. Specifically, Awqaf, or charitable trusts, serve to transfer
wealth from the individual or the few to a social collective ownership
(Iqbal, 183). Awqaf are intended to provide services to the community
at large. For example, ‘Umar (rta) once bought a piece of land from
the Banu Harithah. Instead of keeping it for his own individual benefit,
he made it into a charitable trust. The profit and produce from the land
went towards benefiting the poor, slaves, and travelers (Nu‘mani,
The goal of Islamic economics is to
establish social and economic justice. Implicit is the recognition that
Muslims will be able to focus on Allah if their basic needs are provided
for. The caliphate of ‘Umar (rta) succeeded in ensuring a minimum
standard of living for all; virtually no one lived under the poverty line.
We should look into how this was possible. ‘Umar (rta) did this
by first determining the poverty threshold. He then ordered that twenty-five
seers of flour be baked. This amount of flour fed thirty men. The conclusion
was then drawn that fifty seers would be sufficient to feed a man for a
month. And indeed, the poor would receive a food ration of fifty seers
of flour each month (Nu‘mani, 223). Not only that, but the poor and disabled
were guaranteed a cash stipend as well. Today, in the richest and most
advanced country, the United States, thousands are homeless and must struggle
day-in and day-out to find enough food to survive. This notion of an income
floor was quite innovative and ‘Umar (rta) and the Islamic state
should be credited with beginning this practice.
In the spirit of balance though, to
make sure that these government services weren’t taken advantage of, begging
and laziness were not tolerated. Those who received government benefits
were expected to be contributing members in the community (Nu‘mani,
226-7). Furthermore, the Islamic state did not go so far as
to advocate absolute equality, for such a notion is clearly at odds with
the different capabilities and talents that God blessed us with. And, absolute
equality could only come about at the expense of the individual economic
freedom that God has granted us. The Qur’an acknowledges the inevitable
existence of inequality:
God has bestowed His gifts of sustenance more
freely on some of you than on others. (16:71)
The goal of the Islamic state is therefore
not to abolish inequality but rather to minimize it as much as possible.
The caliphate of ‘Umar (rta) provides students
of history with a fascinating example of the historical application of
Islamic economics. But, ultimately, why is this relevant? It is relevant
because humanity is in need of economic and spiritual alternatives to the
existing socio-economic structures. Socialism and capitalism both have
advantages, yet they also have grave defects which make them far from ideal.
Socialism is essentially a reaction to the evils of capitalism. It replaces
the dictatorship of the economic elite with a dictatorship of the proletariat.
Ultimately, the individual is subject to a totalitarian system devoid of
a moral or spiritual compass. Capitalism is at best morally neutral. At
worst, it is a system that dehumanizes the individual and makes him a slave
to profit maximization. The Islamic economic system is unique in that it
strives to achieve a balance between these extremes. It seeks to strike
a chord between the need for individual economic freedom and the need to
serve the common good.
Man is motivated by self-interest
and this is inevitably true in both socialist and capitalist systems. Without
religion or a spiritual foundation, self-interest can only lead to an ever-widening
gap between the rich and the poor. That is why socialism failed to accomplish
what it set out to do – establish economic equality. Yet, Islam resolves
the conflict between self-interest and the collective good. It expands
and stretches the usually narrow concept of self-interest to include not
only the desire for worldly things but also the desire for Paradise (Chaprah,
28). It is in every Muslim’s self-interest to reach Paradise. This interest
cannot be served except by fulfilling one’s social obligations and by working
for social and economic justice in one’s community. So, in other words,
in an Islamic system, one’s desire for material wealth will be kept in
check by one’s greater desire for Paradise, resulting in a synthesis of
the material and spiritual.
The emphasis here is on the spiritual foundation of Islamic
economics. ‘Umar (rta) was just in his rule because of his genuine
love for the people but also because of his love of God and his fear of
hellfire. He knew he would be held accountable in front of God for the
welfare of his people. This accountability, which does not exist in secular
economic systems, motivates rulers to be more just in how they use the
wealth and resources at their disposal.
‘Umar’s economic model provides
us with an attractive alternative. But, the question is how to apply it
in today’s world? Of course, it would be impossible to copy ‘Umar’s
The challenges that we face in today’s world are quite different than the
challenges that Muslims faced in the 7th century. Today, countries must
provide for millions of citizens. Back then, there were less people to
account for. In addition, the phenomenon of globalization has given us
a challenging paradigm in which to work.
Nevertheless, the spirit of ‘Umar’s
decisions can certainly serve as useful markers for students of economics
everywhere. Specific redistributive measures such as Zakah, income floors,
poverty threshold, and Awqaf can certainly be implemented within the modern
context. But for these measures to ensure equality and distributive justice,
then they must be accompanied by a strong religious and spiritual foundation.
Yet, the turbo-capitalist-globalist
model which currently dominates international economics is a model which
ignores the complexity of man and his spiritual needs. It is an imbalanced
system that encourages greed and condones exploitation. Capital is used
to make a profit. The profit is then reinvested in order to accumulate
even more capital. And, so on. In the Islamic system, the means are not
confused with the ends. Acquiring wealth and making profit is simply a
means to the greater end of establishing justice and fulfilling God’s will.
The spirituality of man is not neglected. And this is what sets the Islamic
economic system apart.
Today, the world is ripe with gross
economic inequality and extreme poverty. To plot a better future for our
children, perhaps we would be well-served to look at and learn from the
past. We need not be restricted to either capitalism or socialism. The
Islamic alternative is one that deserves the careful attention of all students
of history, Muslim and non-Muslim alike. In a world where darkness and
despair reign supreme, perhaps the spirit and the principles of Islamic
economics can provide us with a ray of light.
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