The Islamic Ummah: The Economic Structure of the Ummah
The Economic Structure of the Islamic Umma
The economic structure of the Islamic Ummah (or Umma), as is in the political and in the social structures, is based entirely on the man-God relationship. It is based on belief in God who provides mankind with their sources of sustenance and wealth and seeking the favour of God in order to attain the felicity in the hereafter.
The Qur'an informs us of the principle of economy in Islam:
‘And seek the abode of the Hereafter in that which God has given you, but do not neglect your portion of this world, and be you kind as God has been kind to you, but do not seek corruption on earth. Verily, God does not love corrupters.' 28: 77
Wealth and possessions are described as test and trial:
‘Assuredly you will be tried in your property and persons.' 3: 186
Humans are described as lovers of wealth:
‘And you love wealth with inordinate love.' 84: 20
The general idea of ownership in Islam is that God has bestowed it as a favour on whomever He pleases. By doing so God has raised people in ranks according to their portions and their response to the message where they will be awarded in ranks according to their deeds in the hereafter:
‘Is it they who apportion your Lord's mercy (wealth)? It is We who have apportioned among them their livelihood in the life of (this) world, and raised some of hem above the others in rank that some of them may take labour from others; and the mercy of your Lord is better than (the wealth) that they amass.' 43: 32
‘See how We preferred some of them above others, and verily the hereafter will be greater in degrees and greater in preferment.' 17: 21
The principles of the economic structure in the Islamic Umma are:
a. Distribution of wealth among Muslims in a welfare community.
b. Expenditure in the way of God.
c. Middle way expenditure.
d. Forbidden income.
e. Platform-ceiling formula where poverty and riches abolished.
The Islamic precept in economic action is that God bestows wealth and man must use it in the way of God while not forgetting his portion of it in the worldly life. In a Muslim community hoarding and monopolizing of wealth are considered wrong doing and are forbidden. Muslims ought to spend of their wealth in charity and must keep circulating wealth among the entire members of the Umma through work. This abolishes accumulation of riches and monopoly of wealth and abolishes poverty. This creates a platform-ceiling modus operandi over which no wealth accumulation is permitted and no poverty of Muslims is permitted.
It is a struggle between material benefit and spiritual aspiration. Natural tension between the two is admitted in the Qur'an. The idea of freedom of choice between the two is offered. Man's choice is based on the divine promise. For those who chose not to believe in God worldly life becomes the only alternative. For those who chose the other world they must work for their choice.
It is a matter of choice by weighing odds against one other.
The Qur'an advances this free and responsible choice:
‘Some of you desire (this) world, and some of you desire the Hereafter.' 3: 152
According to one's choice the individual is given what he desires with the subsequent consequences:
‘Whoso desires the life of the world and its pomp, We shall repay them their deeds therein, and therein they will not be wronged. Those are they for whom is naught in the Hereafter save Fire.'
11: 15-16
‘Whoso desires the harvest of the Hereafter, We give him increase in its harvest. And whoso desires the harvest of (this) world, We give him thereof, and he has no portion in the Hereafter.' 42: 20
‘Whoso desires that (life) which hastens away, we hasten for him therein what We will for whom We please. And afterward We have appointed for him hell; he will endure the heat thereof, condemned, rejected. And whoso desires the Hereafter and strives for it with the effort necessary, being a believer; for such: Their effort finds favour (with their Lord).' 17: 18-19
Sources of wealth
Sources of wealth in Islam are defined in the Qur'an and Hadith. Man is totally responsible for the way he chooses to exploit his wealth.
These sources are:
A. Natural sources.
B. Exchange of commodities.
C. Work for a salary.
D. Inheritance.
E. Wealth given or shared by Muslims.
God provides
According to the Qur'an, everything is provided by God. God has created mankind and He has provided them with their means of subsistence:
‘And the earth We have spread out; set thereon mountains and produced therein all kinds of things in due balance and proportion. And We have had provided therein means of subsistence: for you and for whose sustenance you are not responsible.' 15: 19-20
‘Is it they who would portion out the Mercy of your Lord? It is We who portion out between them their livelihood in the life of this world.' 43: 32
Employment
Employment in Islam is part of the socio-economic structure:
‘And We raise some of them above others in ranks, so that some may employ others for work. But the Mercy of your Lord is better than the wealth they amass.' 43: 32
The conditions of employment are well specified in the Tradition. The Qur'an specifies conditions of employment in the following example of Moses:
‘Said one of the (girls): "O father, engage him on wages: truly the best of men for you to employ is the man who is strong and trustworthy."' 28: 26
Moses was proposed the following contract:
‘He said: "I intend to wed of these my daughters to you, on condition that you serve me for eight years; but if you complete ten years, it will be (grace) from you. But I do not intend to place you under a difficulty. And you will find me, God willing, one of the righteous."' 28: 27
Moses agreed to the conditions of his contract:
‘He (Moses) said: "Be that (agreement) between me and you: Whichever of the two terms I fulfil let there be no ill-will to me. And God is a witness to what we say."' 28: 28
Moses has fulfilled the terms before he was charged with the divine Message:
‘Then when Moses had fulfilled the term, and was travelling with his house folk, he saw in the distance a fire.' 28: 29
Muslims are commanded to fulfil their contracts:
‘And fulfil (every) engagement, for (every) engagement will be enquired into (on the Day of Judgement).' 17: 35
Inheritance:
Inheritance in Islam is a right and an obligation. The rules of inheritance are specified in details. The following verses explain these rights:
‘To every one, We have appointed sharers and heirs to (wealth and property) left by parents and relatives.' 4: 33
‘Unto the men (of the family) belongs a share of that which parents and near kindred leave, and unto the women a share of that which parents and near kindred leave, whether it be little or much: a legal share. And when kinsfolk and orphans and the needy are present at the division (of the heritage), bestow on them there from and speak kindly unto them. And let those fear (in their behaviour toward orphans) who if they left behind them weak offspring would be afraid for them. So let them mind their duty to God, and speak justly.' 4: 7-9
‘God charges you concerning (the provision for) your children: to the male the equivalent of the portion of two females, and if there be a woman more than two, then theirs is two-thirds of the inheritance, if he have a son; and if he have no son and his parents are his heirs, then to his mother appertains the third; and if he have brethren, then to his mother appertains the sixth, (the distribution in all cases) after the payment of legacies and debts. Your parents and your children: You know not which of them is nearer unto you in usefulness. It is an injunction from God. Verily God is all-Knowing, all-Wise. An unto you belongs a half of that which your wives leave, if they have no child; but if they have a child then unto you the fourth of that which they leave, after any legacy they may have bequeathed, or debt (they may have contracted, has been paid).
And unto them belongs the fourth of that which you leave if you have no child, but if you have a child then the eighth of that which you leave, after any legacy you may have bequeathed, or debt (you may have contracted, has been paid). And if a man or a woman have a distant heir (having left neither parent nor child), and he (or she) have a brother or a sister then to each of them twain 9the brother and the sister) the sixth, and if they be more than two, then they shall be sharers in the third, after any legacy that may have been bequeathed or debt (contracted) not injuring (the heirs by willing away more than the third of the heritage) has been paid. A commandment from God. And God is all-Knowing, all-Indulgent.' 4: 11-12
These commandments ought to be implemented. The Qur'anic text informs of the consequences of whether or not Muslims conform to such commandments:
‘These are the limits (imposed by) God. Whoso obeys God and His messenger, He will make him enter gardens under which rivers flow, where such will dwell for ever. That will be the great success. And whoso disobeys God and His messenger and transgresses His limits, He will make him enter Fire, where he will dwell for ever; his will be a shameful doom.' 4: 13-14
‘They ask you (O Muhammad) for a pronouncement. Say: God has pronounced for you concerning distant kindred. If a man dies childless and he has a sister, hers is half the heritage, and he would have inherited from her had she died childless. And if there be two sisters, then theirs are two-thirds of the heritage, and if they be brethren men and women, unto the male is the equivalent of the share of two females.
God expounds unto you so that you do not err. And God is Knower of all things.' 4: 176
Spoils of war
The Qur'an prescribes a defensive war of Muslims for their religion and against those who take away their property and their lives. No aggression is permitted as the Qur'anic text indicates:
‘And fight in the way of God against those who fight against you but do not begin hostilities. Verily, God does not love aggressors.' 2: 190
The division of the spoils of war is indicated in the following text:
‘And know that whatever you take as spoils of, a fifth thereof is for God, and to the messenger (indicating the Umma) and for the kinsman (who has need) and orphans and the needy and the wayfarer, if you do believe in God and that which We revealed unto Our servant on the Day of Testing, the day when the two armies met. And God is Able to do all things' 8: 41
Forbidden income
Islam prescribes legitimate means of income and forbids certain types of income:
‘O you who believe! Spend of the good things which you have earned, and of that which We bring forth from the earth for you, and do not seek the bad (with intent) to spend thereof (in charity) when you would not take it for yourselves save with disdain. And know that God is Absolute, owner of Praise.' 2: 267
Usury is forbidden:
‘Those who swallow usury cannot rise up save as he arises whom the devil has prostrated by (his) touch. That is because they say: Trade is just like usury; whereas God permits trading and forbids usury. He unto whom an admonition from his Lord comes, and (he) refrains (in obedience thereto), he shall keep (the profits of) that which is past, and his affair (henceforth) is with God. As for him who returns (to usury): such are rightful owners of the Fire. They shall abide therein for ever.' 2: 275
‘God has blighted usury and made almsgiving fruitful. And God does not love the impious and guilty.' 2: 276
Intoxicants, gambling and lottery
These are to be avoided and considered as forbidden by the Tradition:
‘O you who believe! Intoxicants and gambling, dedications of stones and division by arrows (lottery) are an abomination, of Satan's handiwork: Eschew (such abomination) that you may prosper.' 5: 90
Cheating in commercial deals:
‘And do not eat up your property for vanities, nor use it as bribes for the judges, with the intent that you may eat up wrongfully and knowingly some of the other peoples wealth.' 2: 188
‘Fill the measure when you measure, and weigh with the right balance; that is meet, and better in the end.' 17: 35
‘And unto Median (We sent) their brother, Shu‘ayb. He said: O my people! Worship God. You have no other God save Him. Verily, a clear evidence has come unto you from your Lord; so give good measure and full weight and do not wrong people in their goods, and do not corrupt in the land after the fair ordering thereof. That will be better for you, if you are believers.' 7: 85
‘Verily, God commands you that you restore deposits to their owners. And if you judge among men that you judge justly'
4: 58
Orphan's wealth
The rights of orphans are highly guarded in Islam:
‘Come not neigh to the orphan's wealth except to improve it is the best of means, until he attains the age of strength.'
17: 34
‘Make trial of orphans until they reach the age of marriage; if then you find sound judgement in them, release their wealth to them; but do not consume it wastefully, nor in haste against their growing up. If the guardian is well-off, let him claim no remuneration, but if he is poor, let him have for himself what is just and reasonable. When you release their wealth to them, bring witnesses in their presence: And God is All-sufficient in taking account.' 4: 6
‘Restore to orphans their wealth, nor substitute your worthless things for their good ones; and do not devour their substance by adding it to your own. For this is indeed a great sin.' 4: 2
Transactions in Islam
Muslims are commanded in the Qur'an to keep to their contract undertakings:
‘O you who believe! Fulfil your contractual undertakings.'5: 1
Transactions in Islam are free agreements of exchange stemming from a bond in which the two parties are bound to God. The conditions of the transactions should be ratified with witnesses wherever the case applies. The transaction should be carried out by mutual consent:
‘O you who believe! Do not squander your wealth among yourselves in vanity, except it be a trade by mutual consent.' 4: 29
According to Islamic references there are two major kinds of transactions. The first is when commodities, moral (immaterial, service) or concrete (material) of transactional exchange are present. The second is when a future promise is made for a transactional exchange, whether moral or concrete.
Conditions of trade and transactions are subject in Islam to strict rule, control and witnessing.
The following transactions are not allowed unless where it is specifically applicable:
a. Faulty selling.
b. Selling twice the same commodity to two different parties.
c. Transactions involving unidentified commodities.
d. Trading with contracts without specification of commodities.
e. Selling a commodity on vain promise.
f. Price must be justified and the right of the purchaser to return the commodity is reserved if not as the market price.
g. Conning a person into a transaction.
h. Fraud.
j. Selling a commodity for a higher price then re-buying it from the same person for a lesser price.
k. Trading without knowing the price nor of merchandise is not allowed.
l. Both parties must be well acquainted with the conditions of the transaction.
m. Commodities must be delivered according to the conditions of the transaction.
n. Commodities must be available.
o. Dishonesty in all its form in the transaction. Examples: presentation, specifications, quality, quantity, time and place of delivery, terms of contract.
q. Taking advantage of a situation to sell for higher prices or to buy for lesser prices, such as in wars and catastrophes.
p. Manipulation of prices and conditions of deals.
s. Exploitation of other parties.
The transaction must be witnessed by two witnesses. A just scribe must write down the conditions of the transaction. In case of a difficulty of payment Islamic Law allows for a specific period of time where due payment is regulated later on.
Abiding by the Shari‘a the concerned parties in the transaction must implement the conditions of their contract. Unjust and unfair conditions of transactions can be subject to legal return until justice is established.
The Qur'an makes direct reference to debt and transactional contracts and its conditions:
‘O you who believe! When you contract a debt for a fixed time, record it in writing. Let a scribe record it in writing between you, in equity. No scribe should refuse to write as God has taught him, so let him write, and let him who incurs the debt dictate, and let him observe his duty to God his Lord, and diminish naught thereof. But if he who owes the debt is of low understanding, or weak, or unable himself to dictate, then let the guardian of his interests dictate in equity. And call to witness, from among your men, two witnesses. And if two men be not (at hand) then a man and two women, of such as you approve as witnesses. So that if the one errs (through forgetfulness) the other will remind her. And the witnesses must not refuse when they are summoned.
Be not averse to writing down (the contract) whether it be small or great, with (record of) the term thereof. That is more equitable in the sight of God and more sure for testimony, and the best way of avoiding doubt between you; save only in the case when it is actual merchandise which you transfer among yourselves from hand to hand. In that case it is no sin for you if you do not write it. And have witnesses when you sell one to another, and let no harm be done to scribe or witness. If you do harm to them, verily, it is a sin in you. And observe your duty to God and God is instructing you. And God is all-Knowledgeable of all things.' 2: 282
In case the transaction is carried out while on travel then the following terms apply:
‘If you be on a journey and cannot find a scribe, then a pledge in hand (shall suffice). And if one of you entrust to another let him who is trusted deliver up that which is entrusted to him (according to the pact between them) and let him observe his duty to God his Lord. And do not hide testimony. He who hides it, verily his heart is sinful. And God is all-Aware of what you do.' 2: 283
‘And if the debtor is in straightened circumstances then (let there be) postponement to (the time of) ease.' 2: 280
Means of expenditure
Circulation of wealth
Islam establishes a balanced system of means of expenditure where Muslims are commanded to take a middle way between extremes of spending and keeping their wealth. In this way the wealth of Muslims is circulated among the whole Umma.
The Qur'an clearly indicates the formula of circulating wealth among the entire entity of the Islamic Umma.
The following text forbids treasuring and monopolizing wealth among a certain group or a minority or a majority of Muslims. It ought to be diffused among Muslims:
‘In order that it may not make a circuit between the wealthy among you.' 59: 7
Reference in this text is made to spoils of war but it denotes the economic principle of not treasuring or monopolizing wealth. This reference is supported by other references of expenditure as we shall see further on.
Middle way equilibrium
According to Muslim exegetes the following verse:
‘And thus have We made of you middle Umma (justly balanced).'
Is a reference to the structure of the Islamic Umma as a middle way between extremes namely in Christianity and in Judaism. Christians calls for abstaining from the befits of worldly life seeking the Hereafter. This is expressed by leaving this world and following Christ. It is an invitation to shun material things and seek pure spirituality. Jews have gone to the other extreme by seeking the goods of this world devoting themselves material acquisitiveness.
Islam aspires to establish a middle way system where Muslims seek with their wealth the benefits of the Hereafter. It is a middle way between spirituality and materialism.
‘Make not your hand tied to your neck (like a niggard's), nor stretch it forth to its utmost, so that you become blameworthy and destitute.' 17: 29
‘The servants of God… those who, when they spend, are not extravagant and not niggardly, but hold a balanced middle way between those extremes.' 25: 67
‘ And seek the abode of the Hereafter in that which God has given you, but do not neglect your portion of (this) world.' 28:77
The three main principles of expenditure in Islam stem from considering that wealth belongs to God and Muslims ought to manage it seeking the favour of God and the benefit of the Hereafter. These three principles are:
a. Sharing in wealth with other Muslims.
b. No treasuring of wealth is allowed.
c. No monopolization of wealth is allowed.
These principles establish and maintain the circulation of wealth among the whole members of the Islamic Umma. They establish a platform-ceiling of economy where poverty and riches are abolished.
Expenditure of wealth
It is incumbent on every Muslim to spend a portion of his wealth in the way of God.
The Qur'an urges Muslims to spend seeking the favour of God:
‘O you who believe! Spend out of the bounties We have provided for you, before the Day comes when no bargaining will avail, nor friendship nor intersession.' 2: 254
‘By no means shall you attain righteousness unless you give freely of that which you love; and whatever you give God knows it well.' 3: 92
‘O you who believe! Spend of the good which you have earned, and of that which We bring forth from the earth for you, and do not seek the bad (with intent) to spend thereof (in charity) when you would not take it for yourselves save with disdain; and know that God is Absolute, owner of Praise.' 2: 267
‘They only are believers whose hearts feel fear when God is mentioned, and when His revelations are recited unto them they increase their faith, and they put their trust in their Lord; who establish regular prayers and spend of that.
We have bestowed on them. Those are they who are in truth believers. For them are grades (of honour) with their Lord, and pardon, and a bountiful provision.' 8: 2-4
The Qur'an stresses the reward of the believers who spend of their wealth in the way of God declaring the nature of the relationship between man and wealth since God is the provider and man is merely a trustee:
‘Believe in God and His messenger, and spend of that whereof He has made you trustees; and such of you as believe and spend (aright), theirs will be a great reward.' 56: 7
‘And the likeness of those who spend their wealth, seeking to please God and to strengthen their souls, is as a garden, high and fertile: heavy rain falls on it and makes it yield a double increase of harvest, and if it receives not heavy rain, light moisture suffices it. And God sees well whatever you do.' 47: 7
‘The parable of those who spend their wealth in the way of God is that of a grain of corn: it grows seven ears, and each ear has a hundred grains. And God gives a manifold increase to whom he pleases.' 2: 261
The benefit of the giver returns unto himself:
‘Whatever of good you give benefits your own souls and you shall only do so seeking the Face of God. And whatever good you give, shall be rendered back unto you, and you shall not be dealt with unjustly.' 2: 272
Constant giving in charity, whether openly or secretly is commanded by Islam:
‘Those who spend of their goods by night and by day, in secret and in public, have their reward with their Lord: on them shall be no fear, nor shall they grieve.' 2: 274
‘Those who rehearse the Book of God, establish regular prayer, and spend out of what We have bestowed on them, secretly and openly, hope for commerce will never fail.' 35: 29
The Qur'an urges Muslims to spend of their goods whether in prosperity or in adversity according to every one's means:
‘Be quick in seeking the forgiveness from your Lord, and for a Garden whose width is that of the whole of the heavens and of the earth, prepared for the righteous, those who spend whether in prosperity or in adversity.' 3: 134
‘Let the man of means spend according to his means: and the man whose resources are restricted, let him spend according to what God has given him. And God puts no burden on any person beyond what He has given him.' 65: 7
Giving in charity should not be followed with neither reminder of charity or with injury to the person who receives charity:
‘O you who believe! Cancel not your charity by reminders of your generosity or by injury; like those who spend their substance to be seen of men, but believe not neither in God nor in the Last Day. They are in parable like a hard, barren rock, on which a little soil: on it falls heavy rain, which leaves it a bare stone. They will be able to do nothing with aught they have earned. And God guides not those who reject faith.' 2: 264
Believers should refrain from these mal-practices:
‘Those who spend their wealth in the way of God, and follow not up their spending with reminders of their generosity or with injury; for them their reward is with their Lord: on them shall be no fear, nor shall they grieve.' 2: 262
The attitude of unbelievers in spending in charity is referred to in the following text:
‘And when they are told: Spend you of the bounties with which God has provided you. The unbelievers say to those who believe: ‘Shall we feed those whom, if God had so willed, He would have fed?' But you are in nothing but manifest error.' 36: 47
‘Behold, you are invited to spend in the way of God: but among you are some that are niggardly. Any who are niggardly are so at the expense of their own souls. And God is free of all wants but it is you that are needy.' 47: 38
The Qur'an promises punishment to the niggardly:
‘Those who are niggardly and enjoin niggardliness on others, or hide the bounties which God has bestowed on them, for We have prepared for those who reject faith a punishment that steeps them in contempt.' 4: 37
‘And let not those who covetously withhold of the bounties which God has given them of His grace, think that it is good for them: No, it will be the worse for them: soon shall the things which they covetously withhold be tied to their necks, on the Day of Judgment. To God belongs the heritage of the heavens and the earth; and God is well-acquainted with all that you do.' 3: 180
Amassing, hoarding and treasuring wealth, in any way is forbidden in Islam. The Qur'an is clear on this subject. This prescription allows the circulation of wealth among all members of the Umma:
‘And there are those who amass and treasure gold and silver, and spend it not in the way of God: the Day when heat will be produced out of that wealth in the fire of Hell, and with it will be branded their foreheads, their flanks, and their backs: This is the treasure which you treasured for yourselves: taste you then, what you have treasured.' 9: 34-5
Spending in the way of God is defined in terms of the right of the poor and the needy in the wealth of other Muslims. It is prescribed in two ways:
a. Al-Zakat which means alms-giving which is incumbent on every Muslim who has wealth. It represents in al-Shari‘a a fixed 2.5 per cent yearly. The Arabic Qur'anic denotation of al-Zakat is literarily ‘purification', that is to say ‘purifying one's wealth and self from sins and dutiful obligations and responsibilities towards God by giving the needy.
‘And in whose wealth there is an acknowledged right, for the beggar and the destitute.' 70: 24-25
‘And be steadfast in prayer, practice the Zakat, and bow down with those who bow down (in worship).' 2: 43
b. Al-Sadaqa means charity. In this respect there is no limit for giving in charity.
Beneficiaries of expenditure
The following categories benefit directly from spending in terms of alms-giving and charity:
‘It is not righteousness that you turn faces toward East or West; but it is righteousness: to believe in God and the Last Day, and the Angels, and he Books, and the Messengers; to spend of your subsistence, out of love for Him, for your kin, for orphans, for the needy, for the wayfarer, for those who ask, and for the ransom of slaves; to be steadfast in prayer, and practice al-Zakat, to fulfil the contracts which you have made, and to be firm and patient, in suffering and adversity and in periods of calamity. Such are the people of truth, the pious.' 2: 177
‘Alms are for the poor, and the needy, and those employed to administer the funds, for those whose hearts have been reconciled (to Islam), for those in bondage and in debt; in the cause of God, and for the wayfarer: (it is) ordained by God. And God is all Knowledgeable, all Wise.' 9: 60
‘Eat you thereof, and feed such as beg not and live in contentment, and such as ask.' 22: 36
‘Then eat you thereof and feed the distressed ones in want.' 22: 28
‘For those in need, who, in God's cause are restricted and cannot move about in the land, seeking (for trade or work): the ignorant man thinks, because of their contentment abstaining from asking, that they are free from want, you shall know them by their faces: they beg not importunately from all and sundry. And whatever of good you give, God knows it well.' 2: 273
‘The righteous… and they feed, for the love of God, the indigent, the orphan, and the captive, (saying). We feed you for the sake of God alone: no reward do we desire from you nor thanks. We only fear a Day of distressful Wrath from Our Lord.' 76: 5, 8, 9, 10
The economic structure of the Islamic Umma stems from man-God relationship. It is based on belief in God and obedience to His will.
Muslims seek with their wealth, which is bestowed on them by God, the favour of God.
The Islamic system establishes a platform-ceiling formula of which riches and poverty are abolished. Muslims follow a middle way in economy.
The economic system is inseparable to the social and political systems where brotherhood, cooperation, justice and solidarity mark its characteristic features.
