Islamic Economy: Its Ideological and Legal Foundations

Every system, intending to achieve certain goals, must be designed in a
realistic manner. Therefore, if the system is supposed to be implemented in
order to serve human life, particularly in the long-run, it must serve man’s
goals and be consistent with his fitrah (primordial nature). This is not
possible unless the designer of the system has a command over the knowledge
necessary for understanding social and individual aspects of man. Besides, the
designer should have a thorough understanding of actual relations between those
two aspects of man and the primordial nature of man as well. In addition to
those prerequisites, the designer should understand the historical trends of
such a relationship, the needs for the development of such relationships and
methods for pursuing those needs in order to realize an evolutionary, human
approach toward actualizing the goals of the creation of man.

Every system, intending to achieve certain goals, must be designed in a
realistic manner. Therefore, if the system is supposed to be implemented in
order to serve human life, particularly in the long-run, it must serve man’s
goals and be consistent with his fitrah (primordial nature). This is not
possible unless the designer of the system has a command over the knowledge
necessary for understanding social and individual aspects of man. Besides, the
designer should have a thorough understanding of actual relations between those
two aspects of man and the primordial nature of man as well. In addition to
those prerequisites, the designer should understand the historical trends of
such a relationship, the needs for the development of such relationships and
methods for pursuing those needs in order to realize an evolutionary, human
approach toward actualizing the goals of the creation of man.

Indeed, the way the aforesaid satisfaction of needs is to be carried out should
not overlap other systems which are meant for satisfying other needs of man. In
other words, such a system should observe a wise balance and study the role and
interrelationship of other systems which together comprise the whole system of
life.

If we assume that the designer of the system possesses all those necessary
prerequisites, we should assess subsequent stages in the process of achieving
the desirable realism which is necessary for a system to be able to provide a
proper context for itself. By this we mean the extent to which this system is
compatible with the norms and values of the society (where the system is to be
implemented), the extent of consistence between those norms and values and the
emotional values presented by the system, and finally the extent to which this
system assures the realization of a desirable education to create social
obedience for those ideological views and emotional values.

Although the system may be realistic, accurate, and rational in perceiving the
reality and understanding its needs and their satisfaction, it will remain
incapable if it is not preceded by an ideological impetus which supplies the
society with bases for the stance that it should take toward the universe, the
life, and the man itself. Consequently, the ideological impetus will guarantee
the system the element of iman [faith] rescue it from the most important
civilizational maladies including ilhad [atheism], which is the opposite of iman,
and shirk [polytheism], which signifies the excessive belief in false gods, and
shakk [doubt], which is a manner resembling other destructive attitudes. Unless
these requirements are realized, we cannot assure the provision of the first
contextual element for the system’s implementation. Similarly, as long as the
emotional motivations, which are the focus of education, are not perfectly
compatible and harmonious with the ideological structure of the society, we
cannot guarantee balance in man’s personality when there is a wide gap between
his beliefs and the internal and external values and motivations that the system
provides in order to satisfy his needs. Moreover, these emotional motivations
cannot form human behavior and action unless they are strong and clearly
defined.

So far, we have realized the necessity of two factors for every system intending
to materialize its human goals: first, the planner’s holistic approach towards
human reality, including his relations and needs as well as their fulfillment
concomitant with the rest of the system; second, facilitating its implementation
through faith and compatible emotional motivations.

Realism, in turn, requires the following two fundamental factors: first, the
system should contain legal guarantees binding all those who oppose the
harmonious human nature or those few who have not chosen the complete iman or
the full commitment to the requirements of iman; second, it has a perfect
flexibility to accommodate the temporal and spatial variations in human life and
provides fixed solutions for fixed elements of human life and flexible ones for
the accommodation of its alterable elements.

We believe that Islam was correct in announcing its rule in the form of general
rules. Thus, it did not ignore any one of those aspects, but observed them
perfectly and completed the religion which provides appropriate answers to man’s
needs till the Day of Judgment.

Accordingly, it announces that the whole Islamic system is based on reality and
nature and that it is the fixed truth aiming at serving human beings and
accomplishing the purpose of his creation. Thus, it enjoins whatever is
desirable and forbids whatever is refused by the nature.

God, the Exalted, says: "Then set your face upright for religion in the right
state, the nature made by Allah in which He has made men. There is no alteration
in Allah’s creation. That is the right religion but most people do not know."
(30:30)

And He, the Exalted, says: "Say: O people! Indeed there has come to you the
truth from your Lord …" (10:108)

And He, the Exalted, says: "O you who believe! Answer (the call of) Allah and
the Apostle when he calls you to that which gives you life, and know that Allah
intervenes between man and his heart, and that to Him you shall be gathered."
(8:24)

And He, the Exalted, says: "Those who follow the Apostle Prophet, who was taught
neither to read nor to write, whom they find written down with them in the
Tawrah and the Injil [Old and New Testaments], (who) enjoins them to do good and
forbids them from doing evil, and makes the pure and good things halal [lawful]
for them and makes impure and harmful things haram [prohibited] for them, and
remove from them their burden and the shackles which were upon them. So (as for)
those who believe in him and support him and help him and follow the light which
was sent down with him, they are indeed the saved." (7:157)

The proof of this argument is the same one that proves its attribution to the
Great Creator as it proves for this Creator all attributes of knowledge about
all facts and full, absolute control over the formation of shari`ah (the
comprehensive body of Islamic rules), and perfect kindness to the servants and
other attributes which are not imaginable for any body other than Him the
Exalted.

We are not to present any reasoning for this but only point to the Holy Qur’an’s
emphasis on this fact in all occasions when it points to Allah’s kindness and
knowledge:

"Does He not know Who He created? He it is Who made the earth smooth for you,
therefore go about in the spacious sides thereof, and eat of His sustenance, and
to Him is the return after death." (67:14-15)

"Say: Allah suffices as a witness between me and you. Surely He is Aware of His
servants, Seeing. And whomsoever Allah guides, is the follower of the right way,
and whomsoever He causes to err, you shall not find for him guardians besides
Him. And We will gather them together on the day of resurrection on their faces,
blind and dumb and deaf. Their abode is hell, whenever it becomes allayed We
will add to their burning." (17:96-97)

After this introduction, we try to discuss several points pertaining to the core
of the discussion with emphasis on the following subjects:

1. Major attributes of the Islamic economy, their natural character, and
Islam’s emphasis on them.

2. The proper grounds Islam prepares for its economic system.

3. Relationship between this system and other systems.

4. Flexibility of the Islamic economic system.

Salient Features of the Islamic Economy

When we study the Islamic economy as a way which Islam prescribes for individual
and social behavior in the economic field and examine Islam’s rules in this
area, we can conclude that its most important attribute is social justice. In
this respect, the Islamic economy resembles all other systems that claim to be
serving human being and realizing his social aspirations but it differs from
them in the details of its conception of social justice.

Justice cannot emerge unless the following requirements are present: first,
believing in the private and social property on an equal and advanced level in a
way that the private property acts on the fulfillment of man’s natural demands
for possessing the result of his effort and obtaining the benefits of his
business. While the public property aims at guaranteeing that social action
enjoys a social product through which the provision of some needs and shortages
would become possible.

Second, faith in individual economic freedom as a general, continuous,
comprehensive principle which stems from the nature of the ownership along with
the belief in the existence of some limits at which this freedom ends. This is
for the purpose of either guaranteeing individual’s interest as in the case of
objects the use of which was outlawed because of the physical or moral damage
that they could inflict upon the individual, or to secure others’ rights and
liberties which is also a natural guarantee admitted by all religions and human
affiliations.

Third, faith in the principle of mutual responsibility. Islam guarantees, for
every individual in the Islamic society, the subsistence level, i.e., provision
of his natural needs. The government is obliged to provide this minimum for all
and it is absolutely impermissible that even a single needy person is found in
the Islamic society. Regarding how to make the society economically capable of
doing this, the following factors may be mentioned:

* Obliging individuals to accomplish their responsibilities and duties with
respect to the provision of the necessary needs of others. Since one of
government’s responsibilities is to compel individuals to perform their
obligations, even those which are individual, it may bind individuals to carry
out these duties as well.
* The legal power of waliy al-amr [head of the Islamic government] to determine
the limits of public domain (saddu mantaqat al-mubahat) through legislation
supplies the government with the desirable power.
* Public properties and anfal [properties with no particular owner/s] which are
designated by the government as public properties which the government oversees
and uses to achieve the above goal.
* Financial punishments and methods that are devised by Islam to transfer
private properties to the public ownership as with respect to mawqufat
[endowments] or the lands the inhabitants of which perished or the dead without
heirs and so forth.
* Nature of the Islamic legislation–as Shahid al-Sadr (r) put it–which aims at
strengthening the social structure for the realization of this mutual
responsibility.

Fourth, belief in the principle of social balance and refusal of the class
system in the Islamic society. We came to know through the third point that the
required minimum is to provide subsistence for all individuals. As far as the
maximum is concerned, it may be assumed through the following factors:

1. The prohibition of tabdhir and israf [wasting and squandering] in all areas,
therefore, an individual cannot possibly trespass to the line of israf.

2. The prohibition of every action that leads to misuse of particular
properties, and of lahw [amusement] and mujun [impudence].

3. Rejection of all social and economic privileges which discriminate between
different groups of people which, in turn, eliminates all the grounds for the
emergence of the class system.

If we go back and scrutinize all of these features and expose them to human
nature and conscience we will find them principles that may be admitted in a
natural way. This explains the return of each of the two extremist systems of
capitalism and socialism to a moderate position after its collision with
opposing natural factors–as we believe.

The natural basis of these views is evidently emphasized by general regulatory
and conceptual authoritative texts (nusus) that are numerous and to some of
which we point here:

There are nusus that stress the inherence character of private and public
property:

The Exalted says: "And the man shall gain nothing but what he strives for."
(53:39) (naturally if we interpret it as including worldly possession).

Amir al-mu’minin (`a) says: "This property is indeed neither mine nor yours but
it is a collective property of the Muslims … what is earned by their hands
does not belong to any mouths other than theirs." (Nahj al-Balaghah, sermon 232)

There are some nusus that emphasize the economic freedom in a natural form the
clearest of which is the rule on which all fuqaha’ [Islamic scholars] rely,
namely the rule (Al-nasu musallatuna `ala amwalihim [people are in control of
their properties]). Naturally, there are some limits to this freedom which are
mentioned by other nusus stressing that this restriction is only for the benefit
of the individual and the society.

There are some nusus that emphasize the inherence of mutual responsibility and
cooperation and further consider all kinds of negligence with respect to this
principle as a general rejection of din [faith and religion]. The Exalted says:
"Have you seen the person who rejects the religion? He is the one who treats the
orphan with harshness, and does not urge (others) to feed the poor." (107:1-3)

Finally, there are some nusus that stress the necessity for the realization of
balance in the society through their emphasis on the prohibition of israf and
also the necessity of renouncing poverty and providing subsistence for every
individual. The Imam (`a) says, while speaking of the duties of the waliy al-amr
[leader] toward the needy: "He keeps giving him from zakah till he makes him
needless."

The Proper Grounds Which Islam Prepares for Its Economic System

In this regard, the analyst can find in front of him a huge wealth of noble
nusus that emphasize various concepts and numerous rules and fixed historical
laws and that all serve the cause of Islamic economy and participate, in a
natural way, in the realization of its far-reaching goals. We mention below a
number of these issues:

A. The Real ownership belongs to Allah, the Exalted: This principle is the most
important tenet that forms man’s image as it leaves its visible marks on the
economic behavior of Muslim individual. Ownership belongs only to the Unpaired,
Almighty Allah and He the Exalted bestowed an assumed, legal ownership upon the
human being so that it distributes the properties among its individuals and
exercises this ownership according to the purposes that Allah chose for the
benefit of humanity. This notion has great influence on the exclusion of
negative effects on ownership in its absolute capitalistic form.

B. The purpose is to reclaim the land through a joint, human effort and
responsibility: In this way, the man believes that the human effort from the
beginning to the end is one and that the important goal is to make the humanity
subservient before God, establish the worshipping society and prepare the
grounds for it through making the earth inhabitable, extract the greatest
benefits from it to the advantage of all through performing the duties arising
from the joint responsibility. Diversion from this is diversion from the
purpose.

C. Ethical concepts in the service of economic cause: Islamic nusus are full of
a magnificent ethical plan which leads to its contribution to this economic
system and to the realization of its goals. Most of the riwayat [traditions], on
one hand, encourage in the human being the spirit of cooperation,
responsibility, Islamic fraternity, ithar [self-sacrifice], zuhd [piety], and
compassion for the miseries and aspirations of others. On the other hand, they
drive away from the human being such vices as stinginess, greed, exclusivism,
transgressing the rights of others, opportunism, avarice, and envy. Imam Sadiq
(`a) counted all good manners as the troopers of `aql [wisdom] and all vicious
attributes as the troopers of jahl [ignorance]. We can neither mention all of
the riwayat in this regard nor touch on their educational details, therefore,
only point to this particular fact that the Islamic ethics and educational
system augment in human being the spirit of generosity before they emphasize the
economic freedom and the possibility of using it to his own particular benefits.
The story of Qarun [Korah] is well-known for its focus on this ethical principle
(And seek by means of what Allah has given to you the otherworld’s abode and do
not neglect your share of this world … (28:77)).

This story and this principle is a multifaceted Islamic creed which, if prevails
in the society, will provide the greatest grounds for the implementation of the
desirable economic system.

D. Al-infaq al-mustahabb [commendable spending for a divine cause] and the
extended life: Here, a wonderful aspect of the solution to the problem of
conflict between the inherent motivations for serving one’s self and the
motivations for serving the society is manifested. According to this notion, one
begins with the prolongation of his own life and ends up with a level of
eternity in the hereafter. He finds out that self-interest and social interest
are integrated; a notion that encourages him to make continuous infaq which does
not ever run out of its driving forces according to the principle which says
"whoever establishes a favorable habit he will be rewarded both for it and for
the action of whoever follows it." And here we would like to remind emphatically
the extended effect of waqf since, as the result of these motivations, the
private property is transferred to the public ownership and man’s permanent
exploitation of his property is realized.

E. Shukr al-ni`mah [gratitude for a blessing] means to make the best use of the
wealth and avoiding its waste: The major problem in the global economic domain
does not lie in the weakness of growth rates of natural resources and their
failure to keep up with the population growth rate but it lies in the failure to
make ideal use of natural resources or, as the nusus put it, in kufran al-ni`mah
[ingratitude for the blessing] and squandering the natural, mineral and animal
resources and so forth (And He gave you of whatever you asked Him for and if you
count Allah’s blessings you will not (possibly) obtain their number. Man is
indeed very unjust, very ungrateful. … (14:34))

And it is a kind of shukr al-ni`mah to make ideal use of he labor force and to
avoid wasting it. For this reason, the nusus emphasize the continuous work and
even declare it obligatory for those who are able.

F. Relationship between moralities and material pursuits at the civilizational
level: There is an amazing civilizational fact that nobody can perceive it
except those who believe in the ghayb [the metaphysical world] and its various
aspects. The Holy Qur`an stresses that zulm [injustice] leads to halak
[annihilation] (Thus, because of their injustice We destroyed them) and that ‘adl
[justice] and du`a’ [praying] and shukr [gratitude] leads, in a lawful way, to
rakha’ [comfort] (Ask for your Lord’s forgiveness, surely He is the most
Forgiving. He will send down the cloud upon you pouring down abundance of rain.
And help you with properties and sons, and make for you gardens and make for you
rivers. (71:10-12). This fact arouses, in hearts, a great hope in the future,
even the material future, and opens the way for a social and economic dynamism.

Add to what was mentioned above other major factors that contributes to this
background.

Strong Connection With Other Systems

It is evident in all systems devised by Islam that they are put forward as parts
of a larger system which includes, in general, the whole universe. These systems
are in strong and close interconnection in such a manner that none of them can
achieve its desired goal without the implementation of other systems (and
naturally, we do not claim here that the obligation to set up the system hinges
on the establishment of other systems but what we emphasize is the issue of
system’s achievement of all of its desired goals.)

In this regard the following points should be made:

A. Certain areas of the social system are reserved to be filled by the waliy al-amr
(or by some one appointed by him) due to his ijtihad [ability to extract Islamic
rule whenever needed] and determination of the nature of the prevailing
situations and ummah’s interest. This is what we observe, for example, in
economic, legal, and penal systems and in the institutions of waqf [endowment],
mu`amalat [transactions], irth [inheritance], and so forth. This fact indicates
the complete connection between these institutions and the ruling political
system.

B. The economic system is strongly related to the system of `ibadat [worshippings].
This is the issue which is sometimes presented as the companionship of the
prayers and zakah in tens of Qur’anic cases. Zakah and khums are two financial `ibadahs.
Financial kaffarat [expiations] are, in fact, also a huge economic participation
by `ibadat system in the service of public economic interest. It should not be
ignored that some `ibadahs like sawm [fasting] and hajj provide the elements of
economic grounds, to which we clearly pointed. There are certain `ibadahs that
strongly contribute to the public ownership such as waqf, if we require niyyat
al-qurbah [proximity intention] in it.

C. The economic system and its goals and pecularities naturally have a strong
connection with the system of mu`amalat [transactions] which is designed in such
a manner to provide the proper environment for the realization of mutual
responsibility, balance, and dual ownership, emphasize the labor element, and
prohibits riba [usury], ‘akl al-mali bi al-batil [financial misappropriation],
harmful acts, lahw [debauchery], and wasting of the wealth.

D. There is a considerable linkage between the economic system and the system of
jihad [military defense] in Islam for the latter system involves, in addition to
combative rules and methods, implications for ownership, war spoils, and so
forth.

E. Undoubtedly, the economic system is also related to the social system
including the form of society’s principle cell, i.e. the family, and also the
social relations among the families, and individual’s relations with the
society. All of these are predominated by social Islamic rules including mutual
responsibility and balance, which form the most important characteristics in the
economy as we mentioned frequently. This argument also involves the rules
regarding mahrs [dowries], nafaqahs [allowances], various methods of division of
labor, and such issues as irth [inheritance], wasiiyyahs [bequests], and the
rulings with regard to children, qada’ [adjudication], financial ta`zirs
[discretionary punishments] and other varieties of financial punishments, and
others which may not be all discussed in this limited space.

G. Touching on these relations, the late Ayatullah al-Sadr points to another
aspect of the issue, namely the relationship between government’s economic
doctrine and its financial policy which is, in fact, a part of government’s
planning for enforcement of the laws of Islamic economy, thus, it is a part of
the economy itself.

H. We already pointed to the link between Islam’s economic system and its
ethical system which makes the latter one of the major preludes and the
motivating element for the ummah in the way of implementing the economic system
and realizing its goals to such an extent that it becomes hard to distinguish
between the two systems.

Here I would like to point, as a diversion from the main course of discussion,
to the fact that Islam addresses the whole life in general and devises for it
the best system which guides toward the goal in a deliberate manner and based on
principles of justice and equity. Whereas we find the positivist world today
floundering in the establishment of a desirable system for the protection of
human dignity, distribution of responsibilities, and realization of rights.
Therefore, social systems collapse, one after another, and admit their defeat
while Islam remains a straight religion without any deviation.

As an example for this argument, we focus on the slogan which the positivist
world spouts through giving it a widespread global character and which has
recently altered to a sweeping emotional wave, namely the slogan of equality of
women and men in all situations, periods, and places, and with respect to all
rights without any exceptions whatever it would be. We have been finding this
slogan tens of times in the documents presented in the conferences of Mexico
City, Bucharest, Cairo, and recently in a strong and explicit form, in the
Beijing Conference on Woman. We see the document produced by this conference
concentrating, specifically, on the issues of inheritance, absolute material
equality, judgeship, and the so called sexual freedom rights for all ages and so
forth.

We consider this slogan as a blind assertion although it has an attractive
appearance since equality is one of the principles favorable to the human taste
concerning two individuals whose rights are equal in terms of their human
dignity and affiliation, i.e. the man and the woman. But this principle is not
too general to have exceptions. This is due to the natural differences between
man’s and woman’s physical and emotional structures, nature of the social
responsibility which is to be carried out by each, and the extent of
participation by each in the social construction including the establishment of
social justice. Hence, we may not call out the slogan of quantitative equality
without considering the desired balance otherwise we will commit, through this
equality, injustice and unfairness. When the principles of equality and social
justice are in conflict, one may ask to which one the priority goes?
Undoubtedly, the principle of justice is the one which common-sense testifies to
its generality and insusceptibility to exception, therefore, social justice
qualifies the principle of equality and even determines its socially desired
form.

We feel great regret on the blind, sweeping, global wave that has been put
forward thoughtlessly and that criticizes against the Islamic inheritance system
pretending to ignore that it is part of a whole and that there is a wonderful
balance between this system and the nafaqah [allowance] system and the duties of
each of the man and the woman in the social life.

The Flexibility of Islamic Economic System

This subject is, in general, related to the flexible character of Islamic rules
but we will show it from the economic angle. Briefly, Islam supplied this system
with all necessary elements which enable it to accommodate the vital changes
which occur frequently and rapidly in the economic field. The reason is that
economy is a field related to the complexities of man’s social life as well as
to nature’s ability to provide, and the proper environmental conditions, and so
on. Therefore, with respect to land distribution and ownership, there is a great
difference between the situation of land’s perfect abundance and man’s
insufficient physical power and the situation of scarcity and increasing
shortage resulted from human growth rates on one hand, and man’s immense
technological power to reclaim the land. This difference may affect the issues
of hiyazah [occupancy] -which is considered as an ownership factor-, social
development, mines’ ownership, vertical ownership -both in depth and in
altitude-, energy’s ownership, etc.

This difference may also influence the issue of alteration of the nature and
effects of property relationship leading mujtahids [jurists] to keep aloof from
the issue of absolute ownership of land and suggest the subject of haqq al-ikhtisas
[exclusivity right] which results from the impact made by the individual on the
land, thus when the impact ceases to exist the right will expire and returns to
the public domain which can be used by the Islamic state according to the public
interest.

Therefore, existence of the element of ijtihad and its constant openness
represents one of flexibility elements without which one cannot know the
developments’ effects on the nature of the rule deduced form the nusus.

The fact that Islam put forward certain broad economic rules and related them to
the `urf [prevailing standards of conduct] concept has a special connotation for
notions like israf and tabdhir [wasting and squandering], faqr and ghina
[poverty and needlessness], al-nafaqat al-muta`arifah [customary allowance], al-manfa`at
al-muhallalah [lawful profit], ma`un [basic need], riba [usury], mithliyyah and
qimiyyah [fungibility and being ad valorem], circulation and depression of cash
currencies, daman [liability], individual and social damage, haraj [impediment],
darurah [urgency], al-maslahat al-`ulya [the higher expediency], being asbaq
[preceding] in waqf, being `aqdiy [contractual], being bay`iy [exchange], trade
through taradi [mutual agreement], being qimariy [gamble], lahw, and even `adalah
[justice], zulm [injustice], ta`addi [transgression], and akl al-mal bi al-batil
[misappropriation of property]. Thus, `urf intervenes when these concepts
change, often due to change in conditions, and consequently, as a result of
change in the `urfi [commonplace] view of the subject the judgment also changes
as we saw in the issue of shatranj [chess] for example.

However, the most important element on which the Islamic system concentrates is
the element of intervention by the mujtahid, just waliy al-amr in the economic
life. This intervention has its own criteria, rules, and what the late al-Sadr
calls the penetrating beams that illuminate Islam’s positions and give it the
spirit of the system and its promising goals1. In such a system, the waliy has
the obligation to take advantage of his social power and true commitment to
Islam and the Islamic expediency of the ummah and, through consultation with the
masters of knowledge and expertise, carry out his duties which can be summarized
as the following:

1. Identification of the best methods and executive arrangements for the
enforcement of the fixed rules of Allah, e.g. looking for the best way to
eliminate riba in the society while preserving the positive activities performed
by the banks.

2. Filling the public domain with laws in accordance with the supreme Islamic
expediency while preserving, as much as possible, the primary rule regarding the
various cases.

3. Determining the extent to which the conditions are favorable for the
enforcement of Islamic rules and institutions. Therefore, if the faqih finds the
conditions and the rules in such a serious incompatibility that is called by the
scholars of usul as tazahum [conflict], namely tazahum between the wujub [obligatoriness]
of implementing the hukm [ruling] and the prohibition of resulting evil
consequences, he must produce the best possible solution to facilitate the
implementation of the hukm while compensating its mafsadahs [damaging results].
If this appears to be impossible he should shift to the area of tarjih bi al-ahammiyah
[preference based on priority] which is a vast area that follows the opinions of
experts and mujtahids. The situation may reach to a point that due to the
priority of preventing the mafsadah caused by it, the implementation of a
certain hukm is suspended. This area is an accurate and a delicate one which is
not to be resorted to except in rare situations.

Conclusions

Based on what was discussed above we can briefly highlight the following
practical conclusions:

First, we repeatedly see or hear those who suggest the idea of cross-combination
of ideology and system which signifies the establishment of a socialist or a
capitalist economic system in an Islamic environment or the implementation of
Islamic institutions in secular social structures. When these combinationists do
not achieve desirable results from their efforts they tend to ignore the
contradiction between the system and its implementation context and place the
blame on the system itself. We may mention two experiences as examples here:

1) the experience of establishing socialist systems in our Islamic world and
their quick failure as in Algeria — during Houari Boumedienne’s presidency —
and Libya.

2) the experiment of setting up al-qard al-hasan [interest-free loan] funds
under secular systems where it was struck with unsatisfactory results that
encouraged the opponents to attack the resulting situation as cacophony and
accusing the planners of neglecting the absence of favorable conditions.

Second, If we wish to achieve good results in our Islamic community, we must
provide the desirable grounds through deepening the faith in Allah and
disseminating the elevated Islamic ethics, explicate the Islamic concepts
related to economics and convey them to the public, and strive to mobilize the
feelings and sensations and give them a desirable Islamic shape. As long as we
do not accomplish this task we should not expect ideal results. In this regard,
I would like to draw your attention to some advertising tactics employed by the
banks which concentrate on the profits generated by the money deposited in al-qard
al-hasan funds and on prizes that it may bring for the depositors without ever
referring to the great reward which ensues whenever they participate in the
revitalization of the public economy and server the society through their bank
activities and deposits and without mentioning the noble ayat and ahadith which
call for such deeds.

Third, we propose that Islamic banks form a fiqhi committee consisting of
prominent scholars, and further, that the mujtahids in al-hawzat al-`ilmiyyah
(Islamic theological schools) undertake a study about the legitimacy and
plausibility of the proposed economic, financial, and banking systems from the
viewpoint of Islamic laws and constantly express their opinions concerning new
forms for such systems.

Bay` al-salam [forward sale], and bay` al-salam al-mumathil [fungible forward
sale], bay` al-istisna’ [manufactural sale], tawrid [mutual forward] contracts,
murabahah [resale with stated profit] contracts, and so on are examples of
economic institutions that provide banks with more alternatives for economic
activities. This is what the late Shahid al-Sadr proposed a quarter of a century
ago through his famous proposal known as riba-free banking and what I put
forward as the draft law for the prohibition of riba in the Islamic Republic of
Iran. Ijtihad is indeed a source of blessing and Islamic rules are overflowing
reserves that can undoubtedly help us to safeguard the Islamic character and
spirit and overcome the difficulties caused by the developments of modern life.

Endnotes

1. These goals include, for example, Qur’an’s emphasis on avoidance from
creating a situation that causes exclusive circulation of wealth only among the
rich, and its emphasis on the necessity to prohibit the manipulation of the
property which Allah made the sustenance of the ummah, or the emphasis by some
nusus on the view that the purpose of trade is to extract benefits or on the
prohibition of hajj if its opening results in evil consequences and so on.

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