Praise be to Allah, Lord of the worlds, and the most honorable prayer and peace be upon the master of the first and the last, our master, Muhammad, the chosen, the trustworthy, and upon his pious and pure family, his faithful companions, and those who followed them in goodness until the Day of Judgment, may Allah Almighty be pleased with them all.

Islam is not just a religion which regulates the relation between humans and their God, it is a system of life including three basic points: creed, the relation of a person with himself, and the relation of a person with others.

Creed or belief system is the relation between humans and their God, regulated through a system of rules based upon what every Muslim must believe: the existence of Allah and His attributes; angels, prophets, and messengers; the books He revealed to humans; the day of resurrection and reckoning; and lastly the belief in destiny, be it good or bad. Allah says in the Qur’an: “The Messenger believes in what has been sent down to him from His Lord, and so do the believers. Each believes in Allah and His Angels, His Books, and His Messengers, we do not differentiate between any one of His Messengers. They say: ‘We hear and obey. [We ask] Your forgiveness Lord, and to You is the final destination” (surah 2, ayah 285).  Similarly, when prophet Muhammed peace be upon him was asked about faith, he answered: “It is that you believe in Allah and His angels and His Books and His Messengers and in the Last Day, and in fate, both in its good and in its evil aspects” (Sahih Muslim). The second point is the relation of the Muslim with himself: how he has to be honest to himself, and how to protect himself from internal and external harm. The third point is the relation with others: how to achieve mutual interests and protect others from harm. This point includes many aspects, be them political, economic, social, etc.

One of the important aspects of any society is the economic aspect. A strong economy is the backbone of every state, for it determines the incomes of the state in general and of individuals as well. Islam legislated general rules of income in the Islamic shari’ah, which create a wide range of activities, such as commerce and investments. Likewise, Shari’ah restricted economic activities with the general purpose to be compatible to the basics established by the Qur’an and sunnah, such as the principle of property rights, for no one is allowed to sell what he or she does not own. The principle of (no harm is allowed) is another general rule in the Islamic economy which is taken from the hadith in which the prophet peace be upon him says: “There should be neither harming nor reciprocating harm” (sunan Ibn Majah 2341), which is an interesting statement given that many view Islam as a vengeful religion, when in fact it promotes justice for all, but that is a topic for another post.

One of the great purposes of the Islamic economy is also the redistribution of wealth to those who are needy. Poverty exists in every society; this is a fact. The burden of the state, according to Islam, is to eradicate this problem in a way that does not contradict the main rules and at the same time does not harm others. Zakat, according to Islamic teachings, is one of the best ways to redistribute wealth in the community. The philosophy of zakat is that when a Muslim retains a certain amount of money, namely the amount of 100 grams of gold or more, over a full lunar year, then he/she has to give 2.5% of this amount to the eight charitable categories mentioned in the Qur’an, “The obligatory charity (zakat) shall be only for the poor and the needy, and for those who work to collect it, and to influence hearts (to belief), for ransoming captives, and debtors in the Way of Allah and the destitute traveler. It is an obligation from Allah. Allah is Knowing, Wise” (surah al-Tawba, ayah 60). One of the thoughts behind distributing a portion of savings is that when this amount of money (100 grams of gold or more) is kept back from circulation in the market, it may directly or indirectly harm merchants and will definitely affect and harm the poor and needy. By virtue of their poverty, they can’t compensate for these losses in the market and are instead given charitable money each year. This amount of obligatory wealth taken from the rich and given to the poor and needy is a clear and legislative way of wealth redistribution in Islam.

Another way to redistribute wealth is through an Islamic endowment. The endowment is an asset owned by someone and he/she relinquishes his/her right of property over that asset, and voluntarily puts it under the service of certain people, the poor and needy in most cases. The income of these assets could be invested to expand the range of the assets or the range of the targeted poor and needy helped by the endowment.

The open market is also one of the important means to lessen the difference in the incomes between the rich merchants and the poor and needy. All shapes of monopoly are forbidden in Islam due to that the overall philosophy of the Islamic economy is to circulate capital equally. “Equally” here is mainly meant in the equality in opportunities, not the outcomes of taking such opportunities. In this regard, the poor and needy are free to have their opportunities in the market as well, to make deals and have their own incomes, which is eventually giving them their share in the market. This is a healthy way to achieve societal prosperity and eliminate the range of inequalities and differences among the sectors of the society. With all that said, Islam does not agree that the poor and needy may stay lazily at home and receive their share of zakat or ask people for charity instead of seeking for legitimate and honorable ways to earn their own ways.

Islam urges all people to work to earn their living. Prophet Muhammed peace be upon him said, “By Him in Whose Hand my life is, it is better for anyone of you to take a rope and cut the wood (from the forest) and carry it over his back and sell it (as a means of earning his living) rather than to ask a person for something and that person may give him or not” (sahih al-Bukhari, 1470). Bear in mind that a lumberjack was considered a humble job, but the Prophet says that it is better to take this job than asking people for charity.

Another great point in the economic vision of Islam is the free ownership of land. In every community, when you want to establish a project, you have to put in consideration for the land on which you are going to create that project, and that land has to be bought, whether from the state or from another person who owns it. This means extra expenses for sure. In Islam, the situation is different, as one of the companions of the prophet peace be upon him said, “I testify that the messenger of Allah peace be upon him decided that the land is the land of Allah, and the servants are the servants of Allah. If anyone brings barren land into cultivation, he has more right to it. This tradition has been transmitted to us from the prophet peace be upon him by those who transmitted the traditions about prayer from him” (sunan Abi Dawud, 3076). Cultivation in the hadith refers to anything which is regarded as turning barren land into producing land, be it agriculture or industry or even residence. If a person failed to cultivate his own land, then another person has the right to cultivate it, which creates an honest competition among all individuals to take every opportunity available in a manner that does not contradict the main principles of the Islamic Shari’ah.

Another important point in the economic vision of Islam is the absence of taxes. Islam’s economy might be the only system with zero taxes. Taxes are regarded as forbidden and one of the greatest sins in Islam, as it is a huge burden on those who perform commerce and other economic transactions. This view is related to the shape of the government, as the government in Islam is nothing but a hired professional administration of the resources of the state to ensure the best ways to distribute them equally among people, as well as protecting the divine rights of all humans living on that land. This administration has no right whatsoever to demand certain shares of the wealth of people coercively, as in taxation. Thus, in Islam, taxation is completely haram. Taxes have their effects, as well, on the level of prices, for the merchant has to compensate for the share of taxes in higher prices, which has in its turn a negative impact on the purchasing power of the consumer. The absence of taxes is another motivation within the Islamic system for people to work and earn money, which is a tool to create social prosperity. These are only glimpses of the Islamic economical system, which I hope will enlighten people in the world to adopt it.

Praise be to Allah, Lord of the worlds.

Sheikh Ali


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