New Age Islam
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Islamic Society ( 15 Sept 2014, NewAgeIslam.Com)

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Financial Duties of the State and the Individual in Islam



By Nikhat Sattar

September 12, 2014

THE global economy thrives on capitalism. The emphasis is on reducing the cost of production and maximising profits, resulting in accumulation of wealth on one side, and exploitation on the other.

Financial institutions grow as they lend to borrowers who pay heavy interest. The result is growing poverty, as world resources are consumed by the minority, and the cost of degradation is borne by the poor. On the other hand, the state-controlled economy is restrictive.

Islam brought a system of cumulative financial responsibility based on a unique understanding of custodianship of resources, equity and interdependence among human beings. Everything in the universe belongs to God. But if we can never ‘own’ anything and must eventually return to Him, how can we lay claim to wealth that we only appear to accumulate in this world?

According to Javed Ahmed Ghamidi, the diversity of human beings on earth has necessitated that each one of us be dependent on the other for skills we may lack, but that are essential for the smooth running of our lives. We are given a particular role according to our mental, physical and emotional abilities. We could be scientists or teachers, or tasked with sweeping rooms or the streets.

Wrongdoing In Trade Is Severely Admonished In Islam.

We may not be aware of this, but our lives depend on how well the others perform their work. We are thus bound to each other by ties that go beyond blood and clan.

God has also allocated to some of us more wealth and resources than others, not because we are better, but so that each group may be of use to the other, and so that He may test us in our willingness to share, use wisely and redistribute what we have been given in excess.

The seemingly inequitable distribution of wealth and our interdependence are entwined and must be understood so that we may purify our wealth and prove ourselves worthy in this life. This is a trial from God.

Financial responsibilities of the state and the individual have thus been clearly laid out. Muslims must pay Zakat on assets and production. It is to be distributed to deserving relatives, the poor (Muslims or not), or to causes as defined. If this is well-managed, an Islamic government must reorganise other taxes accordingly. This issue requires careful deliberation by intelligent scholars.

All property that is not privately owned (through legitimate means) must become state property and be made available to all for common use. This may include land, water, other natural resources and their use among people may be decided by consultation between the latter and the state. This is necessary so that resources do not remain restricted to a few, depriving others of their benefits.

Muslims are strictly forbidden to usurp wealth or property that belongs to others. Immoral or unethical means in financial transactions include corruption, bribery, fraud, cheating and lying, gambling, taking interest, false advertisements, adulteration, black marketing, hoarding, speculation and all small and big actions that are considered ethically wrong.

Wrongdoings in trade include the practice of weighing less and charging more. This is severely admonished in the Quran (83:1-6). Such actions may render all prayers, fasting, Haj and Zakat irrelevant in the eyes of God. God forgives sins committed against Himself; He does not forgive those that man commits against fellow human beings.

Financial transactions must be accompanied by documentary evidence (2:282-283). Verbal dealings can be exploited and may not be honoured, hence are discouraged.

Loans must be given without interest, businesses should operate on a profit-and-loss basis and the borrower must make every effort to pay back the loan. So important is returning a loan that the borrower cannot go for Haj if he is indebted. If he dies while indebted, the first action his inheritors must carry out is to pay off the debt.

God requires Muslims to live within their means and not be spendthrifts. “And give to the kinsman his due and to the poor and to the wayfarer. But spend not wastefully (your wealth) in the manner of a spendthrift” (17:26).

“And let not your hand be tied (like a miser) to your neck, nor stretch it forth to its utmost reach (like a spendthrift), so that you become blameworthy and in severe poverty” (17:29).

A truly Islamic society demonstrating financial responsibility would have Muslims paying Zakat into a Baitul Maal, without fear of corruption, with the state responsible for the poor and for general welfare services. People would live simply, giving away part of their excess wealth and the market would operate on principles of fairness and justice with appropriate checks and balances in place.

Nikhat Sattar is a freelance contributor with an interest in religion.