The Economic Law of Islam
Javed Ahmad Ghamidi


    The economic law of Islam has been revealed by the Almighty through His last Prophet (sws) for the purification of the economy. It is based on the Qur’anic philosophy of creation. According to this philosophy, the Almighty has created this world as a trial and test for man; every person has therefore been made to depend on others for his living. No one in this world can live independently as regards his needs and requirements. A person of the highest rank must turn to the most ordinary to fulfill them. In other words, every single person has an important role to play, without which this world cannot continue. This role depends upon his abilities, intelligence and inclinations as well as upon his means and resources, which vary from person to person. In fact, it is because of this variation that a society comes into being. Consequently, laborers and workers, artisans and craftsmen, tillers and peasants are as indispensable as scholars and thinkers, savants and sages, leaders and rulers. Every individual is an integral component of society and contributes to its formation according to his abilities. The Qur’an says:

نَحْنُ قَسَمْنَا بَيْنَهُمْ مَعِيشَتَهُمْ فِي الْحَيَاةِ الدُّنْيَا وَرَفَعْنَا بَعْضَهُمْ فَوْقَ بَعْضٍ دَرَجَاتٍ لِيَتَّخِذَ بَعْضُهُمْ بَعْضًا سُخْرِيًّا وَرَحْمَةُ رَبِّكَ خَيْرٌ مِمَّا يَجْمَعُونَ (32:43).

We have apportioned among them their livelihood in this world [in such a manner that] We have exalted some in status above others so that they can mutually serve each other. And better is your Lord’s mercy than what they are amassing. (43:32)

    By creating various classes of people, the Almighty is testing whether the big and the small, the high and the low create a society based on co-operation and respect or create disorder in the world by disregarding the role each person has been ordained to play. The latter attitude would, of course, lead them to humiliation in this world and to a grievous doom in the Hereafter. The Qur’an says:

وَنَبْلُوكُمْ بِالشَّرِّ وَالْخَيْرِ فِتْنَةً وَإِلَيْنَا تُرْجَعُونَ (35:21).

We are trying you by giving you happiness and sorrow to test you, and to Us you will be returned. (21:35)

    It is to salvage man in this trial that the Almighty has guided him through His Prophets and revealed this economic law to cleanse and purify him.
    Following is a summary of this law:
    1. The Obligation of Zakah: It is obligatory upon a Muslim to pay Zakah according to the way prescribed by the Shari‘ah from his wealth, produce and livestock if he is liable to it.

    2. Sanctity of Ownership: If a Muslim has paid his Zakah dues, then his rightfully owned wealth cannot be usurped or tampered with in any way, except if on account of some violation by him. So much so that an Islamic State has no authority to impose any tax other than Zakah on its Muslim citizens.

    3. Formation of a Public Sector: For the just distribution of wealth, the establishment of a public sector is essential. Consequently, everything which is not, or cannot be owned by an individual should in all cases remain in the ownership of the state.

    4. Incompetence: Since a person’s way of using his wealth and property also influences the development and welfare of a society, the state, while acknowledging him to be the owner, has the right to deprive him from using them if he is proved to be incompetent.

    5. Usurpation of Wealth: It is prohibited to devour other people’s wealth and property by unjust means. Gambling and interest are some horrendous forms of usurpation. Other economic activities should also stand permissible or prohibited in the light of this principle.

    6. Documentation and Evidence: In affairs such as various financial transactions, making a will and acquiring a loan, the parties involved should write down a document and call in witnesses to safeguard against any moral misconduct by either of the parties.

    7. Distribution of Inheritance: The wealth of every Muslim must necessarily be distributed after his death among his heirs in the following manner:
    If the deceased has outstanding debts to his name, then first of all they should be paid off. After this, any legacies he may have bequeathed should be paid. The distribution of his inheritance should then follow.
    No will can be made in favour of the heirs ordained by the Almighty. Similarly, no one can be an heir to a deceased who has severed his kinship with him because of some inappropriate deed or conduct.
    After giving the parents and the spouses their shares, the children are the heirs of the remaining inheritance. If the deceased does not have any male offspring and there are only two or more girls among the children, then they shall receive two-thirds of the inheritance left over, and if there is only one girl, then her share is one-half. If the deceased has only male children, then all his wealth shall be distributed among them. If he leaves behind both boys and girls, then the share of each boy shall be equal to the share of two girls and, in this case also, all his wealth shall be distributed among them.
    In the absence of children, the deceased’s brothers and sisters shall take their place. After giving the parents and spouses their shares, the brothers and sisters shall be his heirs. The proportion of their shares and the mode of distribution shall be the same as that of the children stated above.
    If the deceased has children or if he does not have children and has brothers and sisters, then the parents shall receive a sixth each. If he does not even have brothers and sisters, then after giving the husband or wife his (or her) share, one-third of what remains shall be given to the mother and two-thirds to the father. If there is no one among the spouses, then all of the inheritance shall be distributed among the parents in this same proportion.
    If the deceased is a man and he has children, then his wife shall receive one-eighth of what he leaves, and if he does not have any children, then his wife’s share shall be one-fourth. If the deceased is a woman and does not have any children, then her husband shall receive one-half of what she leaves and if she has children, then the husband’s share is one-fourth.
    Together with these rightful heirs or in their absence or, as in some cases, from the left over inheritance, the deceased can make a near or a distant relative, aside from his parents and children, an heir. If the relative who is made an heir has one brother or one sister, then they shall be given a sixth of his share and he himself shall receive the remaining five-sixth. However, if he has more than one brother or sister, then they shall be given a third of his share and he himself shall receive the remaining two-thirds.
    If a person dies without making anyone his heir, then his remaining legacy shall be distributed among his male relatives according to the principle ‘اَلْاَقْرَبْ فَالْاَقْرَبْ’ (nearest to the next nearest).


    This is the law the Almighty has revealed to us to purify our economic dealings. While following this law in letter and spirit, a person may encounter financial difficulties and he may have to sacrifice his interests. The real reward for this is the Kingdom of Heaven which the Almighty will grant him on the Day of Judgment. However, He has promised that if the Muslims in their collective capacity adhere to faith and adopt a God-fearing attitude, the Almighty shall provide them abundantly in this world as well:

وَلَوْ أَنَّ أَهْلَ الْقُرَى آمَنُوا وَاتَّقَوْا لَفَتَحْنَا عَلَيْهِمْ بَرَكَاتٍ مِنْ السَّمَاءِ وَالْأَرْضِ (7:96).

Had the people of these cities accepted faith and kept from evil, We would have showered the blessings of the heavens and the earth upon them. (7:96)

    According to the Qur’an, the Prophet Noah (sws) recounted before his nation this established practice of the Almighty in the following words:

فَقُلْتُ اسْتَغْفِرُوا رَبَّكُمْ إِنَّهُ كَانَ غَفَّارًا  يُرْسِلْ السَّمَاءَ عَلَيْكُمْ مِدْرَارًا وَيُمْدِدْكُمْ بِأَمْوَالٍ وَبَنِينَ وَيَجْعَلْ لَكُمْ جَنَّاتٍ وَيَجْعَلْ لَكُمْ أَنْهَارًا (71 :10-12).

I said to them: ‘Ask forgiveness from your Lord. He is Oft-Forgiving. [As a result], He shall send rain upon you in abundance and give you increase in wealth and children and bestow on you gardens and shall bring forth for you springs of water’. (71:10-12)

    The Old Testament says in this regard:

If you fully obey the Lord your God and carefully follow all his commands I give you today, the Lord your God will set you high above all the nations on earth. All these blessings will come upon you and accompany you if you obey the Lord your God: You will be blessed in the city and blessed in the country. The fruit of your womb will be blessed, and the crops of your land and the young of your livestock – the calves of your herds and the lambs of your flocks. Your basket and your kneading trough will be blessed. You will be blessed when you come in and blessed when you go out. (Deuteronomy, 28:1-7)

    After this preliminary discussion, I will now attempt to explain this law in detail. (The verses of the Qur’an on which this law is primarily based are stated in bold.)

1. The Obligation of Zakah
2. Sanctity of Ownership
3. Formation of a Public Sector
4. Incompetence
5. Usurpation of Wealth
6. Documentation and Evidence
7. Distribution of Inheritance