Aspects of Islamic economics and the economy of Indian Muslims
Institute of Objective Studies (New Delhi, India)
Interest-free Banking
Reviews ‘Uzair’s book Interest-free Banking (Karachi: Royal Book Co., 1978). Points out a number of ambiguities and inconsistencies in the presentation. But praises the book for its excellent discussion on mudaraba. The review makes a good contribution to the debate on Islamic banking. For Muslim economists. Undocumented.
A Theory of fiscal policy in an islamic state
The present study attempts a theoretical exposition of the fiscal dynamics of an Islamic economy. The author argues that in view of the absence of any empirical base in the modern world, the exposition relies heavily on the following techniques of analysis: 1. The norms and values that are relevant to and direct the economic aspect of individual and collective behaviour in an Islamic society have been spelt out in terms of their likely impact on the allocation, distribution and stabilization branches of public economics. 2. The behaviour of an Islamic economic system in the past has been taken as the datum for theoretical projection in future. In other words, the total absence of any empirical base in the modern Muslim societies has been partly compensated for by a selec tive adoptation of the past Islamic societies, as the sample. In the language of the author, the main elements of this theory is summarised as follows: 1. Islamic economy has been characterised as a three-sector economy, namely, the private sector, the voluntary sector, and the public sector. The three sectors working in conjunction, furnish the institutional framework of an Islamic economy. 2. Zakah provides the base of the fiscal system and defines its scope of operation within the general institutional framework of the Islamic economy. 3. The allocation, distribution and stabilization functions of an Islamic economy are processed and implemented through all these sectors jointly. 4. Public sector’s role is minimal but crucial in so far as it operates continuously to ensure an optimal allocation of community’s resources, rectifies sub-optimal distribution of income, and introduces an element of stability. Thus the objectives of fiscal policy in an Islamic state may be summarised to be; achieving material development that is consistent with Shari’ah economic stability; efficient allocation of resources and an equitable distribution of income by reducing signs of mal- distribution and reducing lavish consumption.
Theory of Fiscal Policy in An Islamic State
An Islamic economy has three sectors: private, public and voluntary. Zakah is the mainstay of the fiscal system. The State can levy secular taxes in addition. The three sectors supplement each other in allocation, distribution and stabilisation of resources in the economy. Meant for economists. Uses diagrams to illustrate the main argument. Based on primary sources. Documented.
Theory of Fiscal Policy in An Islamic State
Public Finance and Institutions
A Theory of Fiscal Policy in an Islamic State
Public Finance and Institutions
Public Budgeting, Capital Accumulation and Economic Growth in an Islamic Framework
Paper presented to the Second International Conference on Islamic Economics, Islamabad, March 1983. Development must accompany re-distribution of re-sources. The concepts of capital and economic growth as explained in the modern economic literature are inadequate from the Islamic point of view. The present-day Muslim countries should adopt a development strategy that concentrates on consumption, distribution, economic development. Zakah should be used to increase the earning capacity of the poor. To finance this strategy the government should prepare (a) a services budget; (b) a re-distribution budget; and (c) a tangible goods budget. Besides zakah, one-time levies for the poor, qard hasan funds and contributions from the profits of commercial banks could be additional sources of funds. Analytical. For Muslim economists. Based on primary sources. Documented.
Zakat and fiscal economics of islam
The present paper is an attempt to analyze Zakat as the irreducible minimum ingridient of the fiscal policy of an Islamic State. At the very outset it rejects the popular stipulation that fiscal management in an Islamic State is coterminous with Zakat. On the contrary, it assumes the permissibility and also occasional desirability of additional mobilization and also occasional desirability of additional mobilization of resources for state production of “social goods” in an Islamic society. It attempts to incorporate Zakat in the overall framework of fiscal policy and studies it as the “leading sector” of the broader complex of revenue-expenditure pattern of public authorities. Zakat is treated here only as an “economic variable”, though its religious importance cannot be minimised. The general economic significance of Zakat happens to be directional and normative. It defines the norms of economic activity, also of fiscal activity as a subsection thereof and determines, through its effects on economic variables, flows and magnitudes, the direction along which the economy is desired to move. The study assumes a socio-cultural milieu based on Islamic precepts and values. The Islamic fiscal policy can operate only as a complement to other facets of socio-economic policy: its success or failure depends on their availability. It refers to an institutional organisation based on Islamic teachings, some important features of which are as follows: (1) Prohibition of interest (riba). (2) Prohibition of gambling, hoarding and fraudulent trade practices. (3) Imposition of Zakat. In addition to the above, the paper analysis assumes minimum mobility of capital and labour as between the interest-free and interest- based societies. It is argued that since the objectives of fiscal policy are derivative from the overall goals and orientations of the socio- economic policy of a society, the paper indicates its two objectives as follows: (1) To ensure minimum means of livelihood to each and every individual in the community. (2) To ensure productive use of economic resources for the material well-being of the community. Within this framework the paper also discusses income elasticity of Zakat, its stability, contra cyclical use, and multiplier effects. The author advocates the Zakat fund be invested to improve the conditions of the eligible recipients.
Public budgeting, capital accumulation and economic growth in an islamic framework
This paper attempts to outline an Islamic strategy of economic development to be implemented by the Muslim countries in the spe- cial context of their economic and social conditions. The chief thrust of the study is towards the integration of redis- tribution with economic development in the light of Islamic teachings and value orientations. It seeks to argue that this integration is possible by pursuing a strategy of development which deliberately aims at improving the economic conditions of the Muslim masses. It involves a carefully devised scheme of investment in human capital, consumption standards, and aid to the earning capacity of the poor and small artisans, farmers, and businessmen combined with effective means to redistribute existing wealth and newly generated assets. The paper is divided into three sections. The first section is devoted to a brief analysis of the concepts of capital and economic growth as explained in modern economic literature and attempts to point out the inadequacy of these concepts as a guide to Islamic policy formulations. The second section deals with setting out the socio-economic priorities of current Muslim societies for the attainment of socio- economic progress. An attempt has been made to delineate an Islamic strategy of policy intervention in the current economic situation of Muslim countries. The last section discusses the impact of the above stated strategy on the pattern of government development expenditure. An analysis of the ways in which public expenditures will be attuned to the elimination of poverty and redistributive growth has been made.