Sayyid Abul Ala MawdudT FIRST PRINCIPLES OF ISLAMIC ECONOMICS. Edited by. Khurshid Ahmad. Translated by. Ahmad Imam Shafaq Hashemi

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1 Sayyid Abul Ala MawdudT FIRST PRINCIPLES OF ISLAMIC ECONOMICS Edited by Khurshid Ahmad Translated by Ahmad Imam Shafaq Hashemi THE ISLAMIC FOUNDATION

2 Contents Transliteration Table v xii Foreword " xiii Translator's Note xxxvi Author's Preface * '> xxxviii Introduction xxxix PART ONE THE ISLAMIC CONCEPT OF ECONOMIC WELL-BEING 1. Mankind's Economic Problems and Their Islamic Solutions The problem of a partial approach The real issue The root cause of economic mismanagement Self-aggrandizement and luxuries Capital worship The element of antagonistic competition Cartels and monopolies TJie recipe of communism The super capitalist An exploitative system Slaughter of the,self The fascist solution ; The Islamic solution Basic rules Earning money Ownership rights Rule for spending money Eliminating the capitalist trend Circulation of wealth and social security Points to ponder 22

3 FIRST PRINCIPLES OF ISLAMIC ECONOMICS 2. Economic Teachings of the Qur'an Fundamental truths Parameters of permissible and impermissible Parameters of private ownership Irrational concept of economic parity Monasticism or moderation and balance Distinction between Haldl and Hardm means of livelihood Forbidden means of livelihood Prohibition of stinginess and hoarding Lust for money and greediness '-.. _ Unchecked spending Correct way of spending money Reparation for sinful transgressions Preconditions for the Divine Acceptability of charity Charity in the Way of Allah Collection and distribution of Zakdh One-fifth of revenue from war gains Disbursement of Zakdh funds Division of inheritance The will Rights of those of weaker understanding Safeguarding public interest in state holdings Guiding principle about taxation Salient features of Islamic economics - a resume Index of source material The Differences between Islam and Capitalism Distinction between lawful and forbidden means of livelihood Bribery and embezzlement Breach of trust and misappropriation of funds, public or ( private Theft and burglary Mishandling of the orphan's property Fraudulent transactions/disregard of weights and measures, Trading in immorality and all means of obscenity and promiscuousness Income generated through the sex trade, brothels, adultery or fornication 64 VI

4 CONTENTS The production, sale, transportation and marketing of alcoholic beverages Gambling, betting, lottery and all means of income based not on one's labour but on chance Idol-making trading in idols and serving in temples Fortune-telling and soothsaying Usury and all forms of interest-based transactions The accumulation of wealth Money is to spend Zakah ^ Law of inheritance War gains and division ofj the conquered land's revenue Injunctions about economy and balance The Economic Philosophy of Islam Basic values of the economic philosophy of Islam Social justice Equitable economic system People-friendly political system Equality of opportunity Eight fundamental principles of the economic philosophy of Islam First principle: General accessibility of the bounties of nature Second principle: The right to make a living Third principle: The right to ownership Fourth principle: The spirit of healthy competition Fifth principle: No artificial way to enforce equality Sixth principle: No 'free economy' Seventh principle: Duties obligatory upon individuals Eighth principle: Duties obligatory upon society' The Principles and Objectives of Islam's Economic System Basics of the Islamic economic system The objectives of Islamic economics Personal freedom Harmony in moral and material progress Promotion of cooperation, harmony and justice 90 vn

5 FIRST PRINCIPLES OF ISLAMIC ECONOMICS 5.3. Basic principles of Islam's economic system Parameters of private ownership Equitable distribution of wealth Social obligations Zakdh Law of inheritance Position of labour, capital, and organization Zakdh and social welfare Interest-free economy Interrelationship between economic, political and social systems Some Principles of Economic Life Basic values of Islamic society The Islamic path of moral and economic rejuvenation The concept of earning and spending Principles of spending Principles of moderation and balance Economic honesty and justice Distributive justice 113 PART TWO THE ECONOMIC SYSTEM OF ISLAM: SOME BASIC FEATURES 7. The Question of Land Ownership The Holy Qur'an and the question of private ownership Precedents of the Holy Prophet and his Caliphs First category of land Second category of land Third category of land Fourth category of land, Ownership rights on the basis of settlement Award of state lands The Shari'ah perspective on the award of state lands Feudal estates and Islamic Shari 1 ah Respect for ownership rights Islamic social order and private ownership The question of delimitation of agricultural land Sharecropping between landlord and farmer Principles of property management 142 viu

6 CONTENTS 8. The Question of Interest Islamic injunctions concerning interest Meaning of Ribd Ribd of the Days of Ignorance Basic difference between Ribd and Bay' Rationale for prohibition Strict nature of the ban Need for interest: a rational reassessment Compensation for elements of risk and sacrifice Compensation for opportunity and grace period Sharing of profit Compensation for time Reasonableness of'an interest rate Rationale for varying rates of interest? 'Economic benefits'of interest? Need and utility of interest? Demerits of interest Economic growth without interest Some misunderstood facts First step towards reform End result of a ban on interest Availability of loans in an interest-free system For personal needs For commercial purposes For non-productive public sector needs International lending ,.5. Capital needs of profit-making projects Islamic modes of banking Economic and industrial loans from non-muslim countries Zakdh in Theory and Practice Essence of Zakdh Meaning Apostolic tradition Zakdh's place in social life The Divine Command concerning Zakdh Various categories of Zakdh distribution Al-Fuqard' Al-Masdkln 200 IX

7 FIRST PRINCIPLES OF ISLAMIC ECONOMICS Al-'Amiltn Mu'allafafl-Qulub or 'those whose hearts are to be reconciled' Fil-Riqdb or 'to free those in bondage' Al-Ghdrimin or 'those burdened with debt' H-SaHWJj/i or'in the Way of Allah' Ibn al-sabil or 'the Wayfarer' Basic rules of Zakdh Is any change possible in Nisdb and the rate of Zakdh's deduction? Company shares and Zakdh Zakdh's applicability in Mushdrakah and Muddrabah Prescribed minimum limit for Kunuz (gold and silver) The difference between Zakdh and tax Is it permissible to levy income tax over and above Zakdh Islam and Social Justice Falsehood in the garb of truth Deception One: capitalism and secular democracy Deception Two: social justice and communism The modern Muslim's intellectual servility Social justice in theory and practice Islam alone guarantees social justice Social justice: the goal before Islam Growth and development of the human personality Personal accountability Individual freedom Social institutions and their writ Failings of capitalism and communism Communism: the worst form of social oppression Justice in Islam Parameters of personal freedom Preconditions for the transfer of wealth Restrictions on the use of wealth In service of the society Eradication of injustice Nationalization and public interest Use of the public treasury (Bayt al-mdl) The basic issue! 242

8 CONTENTS 11. Issues of Labour, Insurance and Price Control Labour-related issues and their solutions What has caused the damage? The real need Resolution of problems Agenda for reform Insurance and measures for reform The question of price control Recodification of the Economic Laws of Islam The constant and the variables The need to modernize, Essential prerequisites for modernization of statutes and by-laws First prerequisite Second prerequisite Third prerequisite Fourth prerequisite General rules of exception Relaxation in the case of interest 269 Glossary 273 Short Biographies 279 Index 287 XI

What is wrong with Interest? Ansar Finance Group. Islamic Finance for the Community by the Community

What is wrong with Interest? Ansar Finance Group Islamic Finance for the Community by the Community What is wrong with Interest? Islamic point of view Interest has been declared Haram (forbidden) by Allah