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Quranic Economics, Term Paper Example

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Term Paper

The Quranic view of wealth is that it is a blessing from Allah, but a blessing that comes with a great deal of responsibility. The faithful believer must show their gratitude towards Allah by spending their wealth in a responsible manner: they must faithfully pay the obligatory zakat, one of the Pillars of Islam, charitable almsgiving for the poor. In the teachings of the Quran, wealth is something that is meant to be enjoyed responsibly, and the best way to do this is to be generous, compassionate, kind, and scrupulously fair to all.

First and foremost, in Islam wealth is a blessing from Allah (God) (Dien, 2000, p. 130). Wealth is a blessing, and as such it should be used and enjoyed in a responsible manner: wealth should be appreciated, not shirked, and it can and should be spent (p. 130). However, it is a cardinal duty for those who are wealthy to engage in almsgiving for charitable purposes, in order to minister to the less fortunate (pp. 131-132). Using wealth properly, then, requires the believing Muslim to be generous to the poor and less fortunate, rather than miserly (p. 131).

From this it follows rather naturally that in Islam, responsible consumption of wealth is that which necessarily avoids “’abominable wastage, israf, of wealth’” (Asqalani, qtd. in Dien, 2000, p. 131). Responsible spending is spending in a manner that encourages life, a manner that promotes the flourishing and thriving of life (p. 131). As such, perhaps the best word for a properly Islamic pattern of consumption is isti’mal, which connotes the morally correct and upright way to utilize goods (p. 131). And in this proper, Islamic context, isti’mal consumption means consumption that is cyclical with respect to society: the believing Muslim who has been blessed by Allah with wealth should engage in isti’mal consumption such that they bring benefit to others (p. 131).

As the Holy Quran says: “And what Allah restored to His Messenger from the people of the towns—it is for Allah and for the Messenger and for [his] near relatives and orphans and the [stranded] traveler—so that it will not be a perpetual distribution among the rich from among you” (59:7, Sahih International). In essence, this verse means that wealth must be purified by giving some of it in charity, for the benefit of the poor (Dien, 2000, p. 132). In fact, charity, zakat, is one of the Five Pillars of Islam: by paying zakat to benefit those in need, the wealthier Muslims can ‘purify’ their wealth (p. 132). The payment of zakat should be of the believer’s own volition: they should do it without even being asked (p. 132). This is necessary if they are to be a good steward of that which Allah has given them.

As the Holy Quran says: “And among them are those who made a covenant with Allah , [saying], “If He should give us from His bounty, we will surely spend in charity, and we will surely be among the righteous” (9:75, Sahih International). As Khanam (2001) explained, zakat is an important institution in Islam: it is a moral and religious, sacred duty for believers: they must contribute two and one-half percent of their wealth to the upkeep of the poor (pp. 121-122). This is highly significant, because it makes the upkeep of the poor a significant and very permanent priority for the Islamic ummah, the community of all Muslim believers (p. 122). There is also a zakat assessed on a number of other kinds of wealth, including agricultural produce and jewelry, for example: although these rates of zakat vary, they are consistently over 2.5% (p. 122).

The Holy Quran specifies eight categories of people who should receive the benefit of the zakat: “relatives, orphans, the needy, the traveler, those who ask [for help], and for freeing slaves; [and who] establishes prayer and gives zakah [zakat]; [those who] fulfill their promise when they promise; and [those who] are patient in poverty and hardship and during battle” (2:177, Sahih International). The first six are relatively self-explanatory; as for the rest, the Quran is talking about paying those who collect the zakat dues, and lastly, using them for the purposes of providing for “the general welfare of the community—for education of the people, for public works, and for any other need of the Muslim community” (Khanam, 2001, pp. 122-123).

Beginning in medieval times, charitable foundations known as waqfs were established towards precisely these ends of providing for the needy and the community in general (Meri, 2004, p. 146). These waqfs were used to found hospitals, such as that founded by Nur al-Din ibn al-Zanki (d. 1174) in Damascus, and that founded by Sultan al-Mansur Qalawun in Cairo, in the year 1284, for the purpose of providing “food, shelter, and medicine to patients” (p. 146). Still another, special kind of waqf was the maktab, established for the purpose of providing for orphans (p. 146). Maktabs were founded with the purpose of providing orphaned boys with financial support, food aid, and some education: in addition to stipends and food, they were taught the Holy Quran, and how to read and do arithmetic (p. 146). Widows were another group singled out for especial concern by waqfs, specifically the ribats or “homes for widowed or divorced women” (p. 146). Generally speaking, the founders of ribats were wealthy women, and women were also responsible for administering them (p. 146).   

As Tosun (2012) explained, the seminal importance of charity in Islam is that it is based on values that are important to Allah Himself: “beneficence, generosity, and mercifulness” (p. 150). Charity is a very important part of expressing care for other people, taking care of them out of compassionate and generous hearts. After all, in Islam, all things are created by Allah; thus, believers should act accordingly by being generous to their fellow human creations (p. 150). This is why zakat is the third pillar of Islam: because it is such an important duty, one that draws on things that are so important to Allah (pp. 150-151). Moreover and as such, zakat is a kind of prayer in its own right: it is a way of praying to Allah using one’s wealth (p. 151). After all, a devout Muslim should give Allah priority over money (p. 151).

If all humans are indeed the creations of Allah, as Islam holds that they are, then Allah can be seen as uniting all humanity in the manner of brothers and sisters (Tosun, 2012, p. 151). Thus, the basic vision of charity in Islam is a familial metaphor: the believing Muslim is supposed to give of their means to help the poor; they must give at least 2.5%, but they should feel free to give more if they have the means to do so, as well as the generosity of spirit to give more to the poor (p. 151).

Thus, there are two different types of charity in Islam: voluntary and obligatory (Agwan, 2001, p. 107). Obligatory charity is exactly that: obligatory upon all Muslims as an act or sign of faith; they must pay it, though they are also encouraged to engage in voluntary charity if they are able and willing to do so. According to the early Islamic sources, when the Prophet Muhammad died (632 CE), the majority of the Arabian tribes he had united defected, and declared that they would no longer pay the zakat, the obligatory charity (Agwan, 2001, p. 107; Bonner, 2003, p. 15). In the Wars of Apostasy or Ridda Wars (632-634 CE), Caliph Abu Bakr sent out armies to subdue the apostates and collect zakat (Bonner, 2003, p. 15). Thus, the giving of charity is inseparable from faith, in that it is incumbent upon the believer who has the means to do so to give to charity, out of their faith in Allah and His Messenger (Agwan, 2001, p. 108). In fact, the Quran explicitly equates apostasy or lack of faith with lack of charity, stating that the one who lacks faith “is the one who drives away the orphan, And does not encourage the feeding of the poor” (Quran 107:1-3, Sahih International).

As Bonner (2008) explained, the Holy Quran also encourages the believers to fight in the way of Allah, in jihad (p. 30). The economics of warfare in the Quran, however, are often described using the language of giving and generosity: as with charity, Muslim believers “are exhorted repeatedly to give generously and to spend ‘in the way of God’—which… has to do with fighting and military service” (p. 30). Even for those believers who cannot fight, giving to the cause of warfare is still an important moral duty, and failing to do so when one has the means to do so is actually reprehensible in the sight of Allah (p. 30).

In fact, the believers are encouraged to “spend” two different categories of ‘currency’ in jihad: “’They [the Believers] have striven with their possessions and their persons (wa-jahadu bi-amwalihim wa-anfusihim) in the path of God’” (qtd. in Bonner, 2008, p. 30). In this vein, it is considered very praiseworthy for wealthy members of the community to sponsor other, poorer members, who wish to fight but lack the means to do so (p. 30). Although it is considered very praiseworthy, however, it is not an obligation: it is only that doing so is very good, and a voluntary act of generosity towards poorer believers (p. 30).

However, even fighting in a jihad does not absolve the mujahid from the responsibility of contributing towards it financially (Zaman, 1999, p. 170). This is because it is incumbent upon all Muslims to contribute towards major social causes, including jihad; for this reason, no one who has the means to contribute towards jihad is exempt from doing so (p. 170). As Zaman explained, jihad is a very important duty in the Quran, and it should be an economic priority: believers must prioritize spending on the jihad and on defense of their own communities (p. 360). The reasoning for this is simple: the believers must be prepared to deal with their enemies, and to show both known and unknown enemies that they are ready to do this (p. 360). Thus, spending on jihad and spending on defense has the function of deterrence, in that believers will deter many more of their enemies (p. 360).

Accordingly, the believers should be prepared with mujahideen (jihad fighters) and with armaments and all necessary accoutrements of warfare (Zaman, 1999, p. 360). This must be a collective effort on the part of all the believers, with everyone contributing financially in order to secure it, and obviously some contributing with their fighting skills in the way of jihad (p. 360). Also under the Quran, it is perfectly legal to take prisoners of war and then later free them by means of a treaty; ransom may accompany this (p. 360). Thus, ransom too is a part of the economics of warfare and jihad in the Holy Quran (p. 360). Plunder may also be taken, and this too is a very important part of the economics of warfare and especially jihad in the Holy Quran (p. 360). In addition to merely being in keeping with established custom, the taking and distribution of plunder amongst the mujahideen is a good incentive for them to engage in jihad, fighting in the way of God (p. 360).

However, Sita (2002) argued that “the ‘Jihad of the Sword’ has ended according to the teachings of the Islamic religion”, and has been replaced with the second form of jihad, “the ‘Jihad of the Purification of the Spirit,’” which entails the struggle (jihad) for righteous living (p. 9). The way to live righteously is, of course, to live one’s life in accordance with the Islamic faith (p. 9). And an important of the ‘Jihad of the Purification of the Spirit’ is, of course, missionary activity: spreading the message of the Holy Quran by missionary activity to the unconverted (p. 10). As with the historic Jihad of the Sword, all Muslims everywhere who have the means to do so are obligated to give to this noble cause: they must contribute funds towards it through zakat, and some of them will, of course, undertake the actual missionary endeavors to win converts for Islam (p. 10). Thus, the message of jihad is now concerned much less with warfare and plunder, and far more with spreading the word of Allah as revealed to His Messenger, the Prophet Muhammad (p. 10).

In Holy Quran, the word for usury is Riba, from raba meaning “’increase’ or ‘addition’” (Timm, 2004, p. 21). Shariah distinguished two types of Riba, Riba al-fadl or “’usury of increase’”, and Riba al-nasi’ah “’usury of deference’” (p. 21). Riba al-fadl entails the lending out of a commodity of some kind, which has to be recompensed to the owner at higher amounts than the original loan (p. 21). With Riba al-nasi’ah, the lender grants a loan of money, and the borrower must pay it back within a certain period of time, with additional interest (p. 21). Islam prohibits both kinds of Riba, because both involve the earning of money by nothing more than lending it out, effectively extending it (p. 21). In Islam, money is not viewed as a commodity, but rather solely as a medium of exchange: thus, it should only be exchanged fairly for goods and services, not lent out and then repaid at a higher value (p. 21).

Properly speaking, riba is applied to describe those cases whenever the object of a transaction increases “over and above its original value, size or amount” (Khorshid, 2004, p. 32). The Holy Quran does condemn riba in the very strongest of terms, as a great evil: “Those who consume interest [riba] cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, ‘Trade is [just] like interest.’ But Allah has permitted trade and has forbidden interest” (2:275, Sahih International). Thus, the Quran distinguishes well between trade and interest, and permits the one but prohibits the other. But as Khorshid (2004) explained, only interest from debts is usury and thus riba: this does not apply to purchases and sales, and thus trade is not forbidden (haram), while usury is for precisely the reasons that have been seen (pp. 33-34).

As the Holy Quran says: “And whatever you give for interest to increase within the wealth of people will not increase with Allah. But what you give in zakah, desiring the countenance of Allah – those are the multipliers” (Quran 30:39, Sahih International). In Islam, the one who lends money cannot simply profit by charging Riba, because this brings no favor with Allah (Timm, 2004, p. 20). However, the lender can still profit from the exchange: they are entitled to a share of the profits from the borrower’s enterprise, in return for assuming a share of the risks (p. 21). Thus, usury is unjust, because it involves making a profit at the expense of others, while not shouldering an equal share of the risks.

The Prophet Muhammad’s condemnation of riba had a great deal to do with his vision for social and economic order of Mecca (Saeed, 1996, p. 17). His vision was for fair business practices, and chief among them was, again, charity: repeatedly, the Quran condemns the rich who do not give to the poor, and do not seek to alleviate their sufferings and distress (pp. 17-18). In fact, spending in the form of charitable giving is extolled as the best kind of business practice: the Quran “further states that spending for the sake of God is like a business which suffers no loss” (p. 19).

An important dimension of fair business practices in Mecca, as enjoined by the Holy Quran, is honesty: complete and total honesty (Zaman, 1999, p. 313). Weights and measures must be correct, which is to say they must be completely accurate and honest in every way (p. 313). Given the importance of trade to Mecca at the time, and in many Islamic societies down the ages since, this was of considerable practical importance as well as moral importance to please Allah (p. 313). Honesty in the delivery of goods of a certain quality is also mandated: the seller must be honest with the buyer, and not engage in any dissembling or untruthfulness in the quality of goods which they provide (p. 313).

The Quran does not recommend undue control of markets: indeed, in Madinah (Medina) in the Prophet’s own time, certain issues pertaining to scarcity in the markets were due to simple scarcity, rather than any manipulation on the part of the merchants (Choudhury, 2004, p. 37). As with all other aspects of Islamic Law (shari’ah), cardinal values here are “justice, fairness and compassion” (p. 37). Thus, as with every other aspect of life, Islam teaches the believers that they must engage in honest, fair, and just dealings with each other: they must be straightforward and truthful, rather than duplicitous and guileful. By conducting themselves in such a straightforward and forthright manner, the believers can gain favor in the sight of Allah and enjoy His blessings all the more (p. 37).

Another important business practice concerns inheritance: the Holy Quran mandates that a deceased person’s business assets be inherited by his heirs; as Zaman (1999) explained, from that point on these heirs “automatically become business partners in the property” (p. 313). Inheritance is very important in Islam as well: when a person dies, their heirs must include “children, spouses, and a few others”, all of whom must be given a share of the inheritance (p. 170). Women have considerable rights under the Islamic system of inheritance, inasmuch as widows are entitled to remain in the homes of their deceased husbands “for some period” of time (p. 170). Women may receive the same inheritance as men in some situations, and less in others—notably because in Islam, prior to marriage, “the man is required to give or pledge his wife an amount of wealth that his wife accepts” (Tosun, 2012, pp. 200-201).

Thus in some situations, men are entitled to inherit more from an inheritance, but only for one purpose: to ensure that they are better able to perform their duties of caring for their families (Tosun, 2012, p. 201). Thus, because men have larger financial obligations than do women, they may be entitled to a larger share of an inheritance (Alkouatli, 2006, p. 36). However, this is not simply a benefit for them to enjoy, but rather enables them to better discharge their responsibility of caring for their families. And because it is the man’s duty to care of his family, it is therefore the right of the family members to receive this provision from the man of the household. As in all things, within Islam blessings come with additional responsibilities: responsibilities to use what Allah has provided to take care of others (p. 36).

Islam is very much concerned with family life: as seen, the Quran teaches that a man is responsible for providing for his wife or wives, and his children as well (Alkouatli, 2006, p. 36; Tosun, 2012, pp. 190-191). Men may be given what seems to be the greatest share of privileges in Islam, in that they are the heads of the households, but this only really comes with additional responsibilities: men must provide for their families, which is itself a form of responsible consumption (pp. 190-191). Men are also forbidden very strictly from engaging in adultery or consuming alcohol (pp. 190-191). Thus, family life is far more important in Islam than money: indeed, money is a blessing from God in part in order to maintain the family life; it is not an end in itself, whereas family life is an end in and of itself (pp. 190-192).

Fairness, justice, honesty, generosity, and responsibility: all of these describe Quranic economics. The Holy Quran contains the teachings of Allah as committed to His Messenger, the Prophet Muhammad; as such, the Holy Quran is concerned with helping believers to live their lives in accordance with the will of God. And because wealth is a blessing from God, it must be used in a very responsible manner: it must be used to glorify God, by helping those who are less fortunate. The believer should be generous to those who have less, and fulfill their obligations towards those who depend on them. By so doing, they can gain the favor of Allah.

In conclusion, in Islam wealth is a blessing from Allah as long as it is honestly gained, and thus a good thing rather than a bad thing. However, it can be used in a good or evil manner, and should be used in a good manner: not simply for one’s own needs and desires, but also to be a blessing to other people. At the heart of the Quran’s teaching on wealth is the central vision of Islam: a vision wherein all people are Allah’s creations, and equal in His sight.

References

Agwan, A. R. (2001). The Qur’anic concept of charity. In W. Singh & N. K. Singh (Eds.), Spiritual value of social charity (pp. 103-120). Delhi, India: Global Vision Publishing House.

Alkouatli, C. (2006). Islam. Singapore: Marshall Cavendish.

Bonner, M. (2003). Poverty and charity in the rise of Islam. In M. D. Bonner, M. Ener, & A. Singer (Eds.), Poverty and charity in Middle Eastern contexts (pp. 13-28). Albany, NY: SU New York Press.

—. (2008). Jihad in Islamic history: Doctrines and practice. Princeton, NJ: Princeton University Press.

Choudhury, M. A. (2004). The Islamic world-system: A study in polity-market interaction. New York: Routledge.

Dien, M. I. (2000). The environmental dimensions of Islam. Cambridge, England: The Lutterworth Press.

Khanam, F. (2001). The concept of charity in Islam. In W. Singh & N. K. Singh (Eds.), Spiritual value of social charity (pp. 121-130). Delhi, India: Global Vision Publishing House.

Khorshid, A. (2004). Islamic insurance: A modern approach to Islamic banking. New York: Routledge.

Meri, J. W. (Ed.). (2004). Medieval Islamic civilization. New York: Routledge.

Saeed, A. (1996). Islamic banking and interest. Leiden, The Netherlands: Koninklijke Brill NV.

Sita, A. (2002). The true meaning and implications of jihad. Lincoln, NE: iUniverse, Inc.

Timm, H. (2004). The cultural and demographic aspects of the Islamic financial system and the potential for Islamic financial products in the German market. Munich, Germany: GRIN Verlag.

Tosun, E. (2012). Guide to understanding Islam. Istanbul, Turkey: Esen Ofset Matb.

Zaman, S. M. H. (1999). Economic guidelines in the Qur’an. Islamabad, Pakistan: International Institute of Islamic Thought.

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