Islam and Economics: An Introduction to Markets, Morality and Justice
By Ali Salman
Acton Institute, USA
ISBN: 978-1880595466

Pakistani public scholar Ali Salman’s new book, Islam and Economics: A Primer on Markets, Morality and Justice, is a must-have, offering a slightly non-academic overview of Islamic economics.

I found myself developing an interest in the book after witnessing a recent wave of public displays of hatred and anger in the name of Islam. The volume offers hope to imagine that vision and determined will can help us shift the focus of our attention from stagnant notions of salvation through the humiliation and lynching of humans, to the larger sense of life that can be found in the realm of ideas and economic activity.

The book is a fairly reasonable read if one is interested in the following questions: Does Islam promote capitalism? Can there be an Islamic capitalism? Does Islam present a case for socialism? Should we fight for Islamic socialism? Does Islam offer a single theory for an economic framework and social justice? What are the ethical principles of the Islamic economic framework?

Salman’s book can be divided into three sections. First, it describes the basic tenets of the Islamic economic framework based primarily on the classical understanding of Islam. Second, it describes the structures and institutions that can ideally play a role in regulating markets in an Islamic state. Finally, it comments on the applicability and functioning of these principles and institutions in Muslim and non-Muslim societies.

A public scholar attempts to chart the doctrinal and historical basis of a framework for economic activity and social justice under Islam

Contrary to popular debates and scholarly literature, Salman addresses three fundamental questions to present his distinctive model of an Islamic economic framework: Who owns what? How is wealth created? How is wealth distributed?

It explores these questions from both a doctrinal and historical perspective to offer an alternative view. He makes it clear that he does not intend to offer a new interpretation but, as the book reveals, he does end up offering some perspective for examining Islamic economics.

Islam respects the idea of ​​private property, but it also establishes that natural resources belong to God and belong to humanity, Salman says. He explains that although these resources are gifts of nature, human efforts to extract them are not free. Islam respects private property and offers no justification for the nationalization of private industry.

In response to the second question, Salman focuses on a verse from Surah An Nisa: “Believers, do not consume your wealth among yourselves out of vanity, but rather trade with it by mutual consent. Trade is a key element of Islamic theory on wealth creation.

Finally, in analyzing the circulation of wealth, Salman argues that “circulation takes place through trade as well as taxes, which in the case of the Islamic economic framework constitutes zakat”. [obligatory charity]bailiff [levy on agricultural produce] and a possible land value tax.

After setting out the main theoretical and conceptual principles, Salman describes certain institutional frameworks that will regulate economic affairs in an Islamic state: freedom of prices, free trade, market regulation, riba [usury, fiscal policy]waqf [“social protection of people by people”] and inheritance law.

Salman repeatedly reminds us that the role of the state is to ensure free trade and that it has no authority to disrupt the market.

He points out that although the Holy Quran does not speak explicitly of price controls, the Prophet Muhammad (PBUH) said that tasir [price control] forbidden. However, later Muslim jurists were found to be divided on the question of freedom of pricing. Imam Abu Hanifa and Imam Malik were conditionally in favor of the tasir for the greater public good.

This idea was developed by the scholar Ibn-i-Taymiyyah, who said that it was obligatory to intervene in special circumstances such as wars and famines. On the other hand, Imam Shafi and Imam Hanbal were against the idea of ​​price controls, arguing that it would increase people’s miseries.

After offering various accounts of Islamic history, Salman argues that the general consensus is that price controls are prohibited by Sharia under ordinary circumstances.

However, like the early jurists, Salman admits that there can be problems with price distortion in the market. To ensure the proper functioning of the market, the office of muhtasib was established by the Prophet, the first named being Hazrat Umar. Notably, the role of the muhtasib was to ensure uninterrupted economic activity, not to obscure it through official means.

Salman repeatedly reminds us that the role of the state is to ensure free trade and that it has no authority to disrupt the market without any legitimate reason. In other words, one of the main arguments of the book is that Islam projects and defends economic freedom. Freedom seems to be at the heart of the Islamic economic framework. Broadly speaking, economic freedom is what ultimately translates into all other forms and expressions of freedom.

In chapter three, Salman mentions that the Islamic State can intervene in commodity markets in cases of “cheating, coercion or theft”. It also describes other scenarios and conditions in which the Islamic State can intervene. The question is: what does an Islamic state mean? This pushes economic theory into other, ie political, spheres.

Salman quotes extensively from the works of theologian Javed Ahmad Ghamidi, also mentioning that “Ghamidi does not consider the establishment of an Islamic state to be a religious obligation”. However, Ghamidi talks about the economic framework and calls it “economic sharia”.

I argue that politics cannot be completely divorced from economics. Practically, one of the main goals of political organization is to create an order where economic stability is ensured and uninterrupted growth is achieved. So how can an economic framework based on Sharia principles be implemented in a secular state? Will the implementation of economic sharia ultimately lead to the creation of an Islamic state?

Ghamidi’s work mentioned in Salman’s book offers no answer. Likewise, Salman also does not talk about the formation and structure of an Islamic state. For an economic theory to be considered inclusive and meaningful, it must have a connection to politics.

Additionally, Salman suggests that iqta [assignment of tax revenue] system can provide “a viable arrangement for the development of natural resources”. Here he fails to acknowledge the fact that iqta during Seljuk rule dealt a major blow to Muslim intellectual and economic dominance.

Andrew Watson, in his book Agricultural Innovation in the Early Islamic World: The Diffusion of Crops and Farming Techniques, argues that iqta was responsible for the agricultural downfall of Muslims around 1000 CE. This not only limited private ownership, but also hurt entrepreneurship.

Although Salman cites several contemporary Islamic scholars, he does not focus on existing socio-political realities. For example, it does not address how an Islamic economic framework will work in the current international system, where not only complex interdependence exists, but also multiple institutions of global governance. Salman’s model appears to have evolved in isolation, as it appears to have no connection to existing global challenges.

But despite certain shortcomings, in a country like Pakistan – where young people are indoctrinated to become extremist defenders of the self-proclaimed idea of ​​religion – books like this are much-needed oxygen to ensure the survival of reason and the promotion of dialogue.

Rather than glorifying extrajudicial executions in the name of faith and grooming young people to die in the name of religion, young people in Pakistan need to be educated about economic activity, entrepreneurship and prosperity rights .

The examiner is a research assistant at San Diego State University.

He tweets @Farah_adeed

Published in Dawn, Books & Authors, May 29, 2022