CONTRIBUTION OF ISLAMIC ECONOMISTS By Sahira Uzair It is very wrongly believed and taught us in our Universities and colleges that Adam Smith, a Scottish economist, was the father of economics. He wrote a book “Wealth of Nations” in 1776 in which he argued that free market economies are more productive to societies. Due to “dark ages” phenomenon West will never accept the economic ideas coined by Islam. In fact Europe was in grave darkness when ideas of free market, forces of demand and supply, price effects, income and expenditure, fair profits and price controls were presented by Muslim economists. Economic issues date back to the time when man sat his foot on face of the earth. But it’s an infallible fact that the father of economics in real sense is none other than Prophet Muhammad (SAW). He (SW) laid the foundations of the economy on the basis of right and wrong (halal and haram), justice, benevolence, equity and fair distribution of wealth. It was all done by the direct commandments of Allah ta’ala and his great wisdom (SW). Free market system which was popularized by Adam Smith in 18th century was given by this unlettered (SW) 12 centuries before. He also presented the idea of labor’s right as directed in a famous hadith to pay labor’s right before his sweat dries and assured transparency in transactions. After Prophet’s (SW) death rightly guided Caliphs kept a check on the market for the purpose of which Hazrat Umar appointed an officer. But this discipline was well efficiently organized in the form of books by the economists who came later. Let’s have a brief look on their works. ALLAMA IBN KHULDUN His name was Abu Zaid Abdul Rehman bin Muhammad Bin Khuldun and regarded as pioneer Muslim economist. He was an Arab Tunisian historiographer and historian who is often viewed as one of the forerunners of modern historiography, sociology and economics. In 1964, Joseph Spengler (an American Historian of economic thought) wrote in “Economic Thought of Islam” Ibn Khaldun" appeared in the journal Comparative Studies in Society and History and took a large step in bringing early Muslim scholars to the attention of the contemporary West. Ibn Khaldun is perhaps the most well known Islamic scholar who wrote about Economics. He wrote on economic and political theory in the introduction, or Muqaddimah Tarekh (Prolegomena of History of the World). He discussed what he called asabiyya (social cohesion), which he cited as the cause of some civilizations becoming great and others not. Thirty two long sections of the fifth chapter of Muqadamma Tarekh are related to economics.
He defined economics as “a subject which deals with the struggle to seek and obtain livelihood.”He considered Economics to be positive as well as normative science. Ibn Khaldun presented theory of labor value two hundred years before David Ricardo. He described labor as the source of value, necessary for all earnings and capital accumulation, obvious in the case of craft. He argued that even if earning “results from something other than a craft, the value of the resulting profit and acquired (capital) must (also) include the value of the labor by which it was obtained. Without labor, it would not have been acquired.” He also declared two main functions of money i.e. as a medium of exchange and as a store of value (you will never find this part mentioned with his name in text books). Theory on international trade between rich and poor countries was also given by this great man. He believed that international trade depends upon propensity to import and export. Here again we are taught in fallacious manner that it begins with Mercantilism Another modern economic theory anticipated by Ibn Khaldun is supply-side economics. He "argued that high taxes were often a factor in causing empires to collapse, with the result that lower revenue was collected from high rates." He wrote. Ibn Khaldun also introduced the concept now popularly known as the Laffer Curve, that increases in tax rates initially increase tax revenues, but eventually the increases in tax rates cause a decrease in tax revenues. This occurs as too high a tax rate discourages producers in the economy. IMAM ABU YUSUF He was born in 113 H in Kufa. He attached himself as a pupil to Imam Abu Hanifa (RA). In reign of Khalifa Haroon Rasheed he was appointed a Qazi of the eastern quarter of Bhagdad. He was the author of several books including such well known books as KITABUL ATHAR, KITABUL KHARAJ, AMMALI and ASOOL E FIQH. Imam wrote extensively on taxation and economic responsibilities of state. He expanded principles of laving taxes such as capacity to pay, time and procedure of tax collection and the idea of a Central Bureau of Taxation. Arguing in favor of proportional tax as opposed to a fixed, Imam Abu Yusuf writes: I have come to the conclusion that to levy a fixed quantity of corn or fixed amount of Dirham with varying rates will result in the loss to the Sultan or Bait- ul- mal. This form of taxation will also create problems in the mutual affairs of the tax payers also. The valuable material, presented in his applauded book KITABUL KHARAJ i.e. book of taxation, forms the basis of economic science and has influenced the ideas of modern economists. Some of the important topics are
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Kinds of taxation
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Principles of levying taxes
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Principles of tax collection
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Allocation of revenues
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Tax on traded goods
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Tax on agricultural lands
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Conditions of land revenue and
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Fisheries
IMAM ABU UBAID His name was Qaseem Salam and Abu Ubaid was his title. He was born in Herat. He was the author of thirty-four books. KITABUL AMWAL, the only published work of Imam Abu Ubaid, is a valuable treasure of information on the Fiscal System of Islam. The book is authoritative work on the sources of revenue, their collection, expenditure and system of taxation of an Islamic State. Some of the important topics presented in the book are •
Sources of revenue
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Jazia (poll-tax)
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Allowances for women, children and slaves
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Social security system
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Theory of custom duties and their rates and
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Distribution of zakat in the same are where it is collected from.
NASIR UD DEEN TUSI Khuaja Muhammad ibn Muhammad ibn Hassan Tusi better known as Nasir ud Deen Tusi was from Khurasan. He is considered to be the greatest of the later Persian scholars. He presented an early definition of economics (what he calls hekmat-e-madani, the science of city life) in discourse three of his Ethics: the study of universal laws governing the public interest (welfare) in so far as they are directed, through cooperation, toward the optimal (perfection).
He discussed the income and expenditure of households and rulers. He also discussed the importance of savings and the losses due to extravagance and unproductive assets like jewelry and uncultivated lands. He also wrote about division of labor. IMAM IBN TAIMIYA Born in 1262 CE Imam Ibn Taimiya is one of illustrious early economists. He wrote a famous book “Al-Justa fi al-Islam” in which he discussed price equivalent and its related topics. Imam conducted research about fixing price in a market free of imperfections. He wrote regarding the famous hadith on Price Control “when its not possible to eliminate some evil in total, it is obligatory to remedy as much of it as is possible. In such cases price control is unanimously declared as an obligatory measure.” Imam supported official intervention in the market in case of Monopoly, Hoarding and Speculation. He stressed on fair competition and honest dealings by enforcing rules of Islamic ethics on Producers, Traders and Middlemen. Besides, he discussed the state responsibility to provide necessities to the public. SHAH WALIULLAH DEHLVI Shah Waliullah was born in Delhi in 1114 H. He was born during the reign of Aurangzeb. Shah Abdul Raheem was his father, was an outstanding scholar. Shah Waliullah received education from his father and also from teachers at Hermain Sharif. He wrote books on various subjects “Hujja Tul Baligha” is the most celebrated among his works. He also expressed his views on economic topics in his books “Albadu al Bazaga” and “Khair ul Kathir”. In his views economic prosperity is the basic characteristic of good life. He discussed the four popular basic principles of economics; the production of wealth, the consumption of wealth, the distribution of wealth and the exchange of wealth. This shows his deep insight into these topics. He writes: When the body does not get proper nourishment and man remain deprived, his soul is inevitably affected and withers. Misery and poverty do not give man respite to work for his eternal merit and welfare. Regarding means he writes: Some natural resources should remain under state control. He says that man needs money to fulfill his economic needs and this wealth saves him from many mortal evils. But man should avoid greed because it causes man to neglect the remembrance of Allah. Man then is reduced to the level of a beast. Hence moderation is essential for men. Shah Waliullah proposed the creation of a party on such principles which would end the outmoded system and would build a new system which ensures the development of society as a whole. CONCLUSION It is evident from the above that the majority of modern economic ideas are deduced from the
principles enunciated in Quran and Ahadees. Further, the foundation of modern economics is based on the work of Imam Abu Yousuf, Ibn e Taymiyyah, Ibn Khaldun etc. The core difference lies in the concept of interest which is absent in Islamic Economic Principles and a threat to humanity.