Opinion

Islam's response to contemporary world problems (40)

photo_camera islam

We continue with the theme of "Economic Peace" according to the teachings of the Holy Quran.
(You can consult the Holy Quran references at https://www.ahmadiyya-islam.org/es/coran/)

The Islamic economic system

As with the social system advocated by Islam, the Islamic economic system begins with the premise that everything in the heavens and on earth has been created by God, who has provided man with various provisions in trust. As the custodian, man must account for his responsibility for what is held in trust. The possession or absence of wealth are means of proof, so that in both plenty and adversity, those who are attentive to their responsibility can be distinguished from those who are insensitive and heedless of the suffering of the rest of mankind.

The Holy Quran constantly reminds us:

islam

"To Al'lah belongs the kingdom of the heavens and the earth; and Al'lah has power over all things". (3: 190)

He then teaches that if everything has been created by God for all, some of it should be shared by man.

islam

"Do they have a share in the Kingdom? If they did, they would not give to men even what is in the small hollow of a date stone". (4:54)

islam

"And Al'lah has favoured some of you above others in worldly gifts. But the most favoured will not return any part of their worldly gifts to those who possess their dexterities in order that they may be equal sharers. Will they then deny the favour of Al'lah?"  (16:72)

It is incumbent upon man to discharge his responsibility honestly and fairly:

islam

"Verily, Al'lah commands you to give what is entrusted to you to those who are entitled to it, and when you judge between people, to do so with justice. Verily, excellent is that to which Al'lah exhorts you! Al'lah is the All-Hearing and All-Seeing. (4:59)

The fact that material wealth is a test is expressed in the Holy Quran in this way:

islam

"Surely your wealth and your children are a temptation; but with Al'lah there awaits you an immense reward." (64:16)

An important nuance about possession, according to Islam, is that there are certain resources that are to be confiscated from individual ownership and placed in the hands of all mankind. Thus, mineral resources and the produce of the seas and oceans are not the exclusive property of any individual or group of people.

Zakat.

Zakat is one of the five pillars of Islam, the others being the affirmation that there is no God but Al'lah and that Muhammad (lpbD) is His Messenger; Prayer; fasting during the month of Ramadan and the Pilgrimage to the House of Al'lah in Mecca.

For example, The Holy Quran commands:

islam


"And fulfil the prayer, and give Zakat, and obey the Messenger so that mercy may be shown to you." (24:57)

The Arabic word "Zakat" literally means means means of purification, and in the context of an obligatory tribute would mean that the residual wealth, after deduction of Zakat, has been made pure and lawful for the believers.

A 2.5 per cent levy is usually demanded on disposable assets - above specific thresholds - that have remained in the hands of the owners for more than one year. Although much has been said about the rate or percentage of this tax, no reference to any fixed percentage can be found in the Holy Quran. In this regard, I insist on differing from the dogmatic view of the medieval scholars. I believe that the question of the percentage remains flexible and is to be determined according to the state of the economy of each particular nation.

As Zakat is a tax imposed on capital within certain limits, it can only be used for certain kinds of expenditure. These are broken down in the following verse of the Holy Quran:

islam

"Alms are only for the poor and the needy, for the employees engaged in their collection and distribution, for those whose hearts are to be reconciled, for the release of slaves, for those in debt, for the cause of Al'lah and for the traveller: here is a command from Al'lah. For Al'lah is All-Knowing, All-Wise." (9:60)

The Treasury is charged with the administration of this order. In early Islam, Hazrat Abu Bakr and Hazrat Umar, the first two Khalifas, were famous for personally ensuring the rapid disbursement of alms in what became known as the early welfare state. This system was maintained with great success for centuries throughout the Abbasid period.
As explained above, the driving force of interest is replaced by the driving force of Zakat. If one examines this system in operation, many other differences between the Islamic economic order and other economic systems come to light. The features of a completely different economy emerge.

No amount of idle money, whether large or small, can last for long unless it multiplies faster than the rate at which it is taxed. It is precisely in this way that Zakat boosts the economy in a true Islamic state.

Imagine a situation where a person with a small amount of capital is not able to participate directly in a business and there are no banks to pay him his deposit with interest. If the deposit is large enough to be taxed by Zakat, tax collectors would knock on his door every year to get a percentage of his capital. Zakat has no prescribed limits. These individuals have only two alternatives; either to personally employ their money profitably or to pool their resources to establish small or medium-sized enterprises.

This encourages the creation of joint stock companies and other partnerships, the formation of small companies or public shares in large companies. Such companies will owe nothing to any financial institution to which they have to settle debts with interest. Hypothetically, if one compares the fate of such companies with their equivalents in capitalist economies, one will find them placed on totally different platforms during periods of misfortune and crisis. In the case of commerce and industry faced with a recession in the context of a capitalist economy, the reduction in production due to falling demand can push them to the brink of bankruptcy. The interest they have to pay to cover their debts will continue to rise relentlessly to the point where it will no longer be possible for such companies to stay afloat.

Conversely, if the economy is governed by Islamic principles, a slump in business and commercial opportunities will only drive commerce and industry into a state of hibernation. This is how nature ensures the survival of the best endowed in times of extreme hardship and adversity. When energy input decreases, output must be reduced so that energy does not fall below the critical level necessary for survival. Since there is no relentless pressure on debt in an Islamic financial system, it can withstand much more pressure and challenges during a recession.

(lpbD) - Peace and blessings of God be upon him.

(To be continued in installment 41, continuing with "Economic Peace" according to the teachings of the Holy Quran)