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The Economic System of Islam4 min readViewed 1 time

22.1 Economic Equilibrium in Society


Islam has made the circulation of currency between all citizens an obligation, and it has forbidden the restriction of such circulation to a certain group of people to the exclusion of others. Allah (swt) says:

“Lest it circulates solely among the wealthy from amongst you.” [Al-Hashr: 7]

If there were an excessive disparity between individuals within society in terms of securing the needs, and if society needed to be rebuilt anew, or if this disparity was caused by neglect of or the indifference in the implementation of the Islamic rules, the State would be under obligation to redress the situation by handing out financial assistance to those in need, until these basic needs were satisfied, and until a balance in distribution was struck. The State should endeavour to provide both movable and immovable commodities, for its aim should not only be to temporarily fulfil one’s needs, but also to provide the means which would assist the individual in his quest to fulfil his own needs over the long term. If the State were short of funds, and if its revenues were insufficient to generate such a balance within society, it would be wrong for it to impose taxes on its citizens for the sake of bringing about such balance, for this matter is not the duty of all the Muslims; it should rather endeavour to generate funds from sources other than taxes, such as the war booties and public properties in order to bring about the balance. Therefore, whenever the State feels that there is a disparity in the economic balance within society, it should address this disparity by handing out financial assistance from the treasury to those in need, provided funds gained from booties and public properties were available.

When the Messenger of Allah (pbuh) realised that there had been a disparity in wealth between the Muhajireen and the Ansar, He (pbuh) divided the booty gained from Bani Nadheer exclusively among the Muhajireen, in order to generate an economic balance. It has been reported ‘that when the Messenger of Allah (pbuh) peacefully conquered Bani Nadheer and then expelled the Jews from it, the Muslims asked the Messenger of Allah (pbuh) to divide the booty among them; so Allah (swt) revealed the following verses:

“What Allah has bestowed on His Messenger from them, for this you have madeno expedition” [Al-Hashr: 6]

So Allah (swt) had placed the wealth gained from Bani Nadheer exclusively at the disposal of the Messenger of Allah (pbuh), to spend in whichever way He deemed fit. The Messenger of Allah (pbuh) divided it among the Muhajireen and did not give any of it to the Ansar except to Abu Dajana Sammak ibn Kharsha and Sahl ibn Haneef who both were at that time poor just like the Muhajireen.’ It has been reported on the authority of Ibn Abbas that the Messenger of Allah (pbuh) said to the Ansar: “If you wish I could ask you to share your homes and your wealth with the Muhajireen and divide among you this booty, or if you wish you could keep your homes and your wealth and I shall not have to give you anything from this booty.” Upon this the Ansar said: ‘We would rather share our homes and wealth with our brothers and let them have the booty as well.’ Allah (swt) then revealed:

“But they give them preference over themselves even though poverty was their own lot” [Al-Hashr: 9] Therefore, Allah (swt) saying:

“Lest it circulates solely among the wealthy from amongst you.” [Al-Hashr: 7]

means lest it circulates only amongst the rich. The Arabic word “Doola” means the object that circulates or changes hands amongst people; it also refers to the circulated wealth; this means that the booty which by right should be granted to the poor to help them secure a living, should not be exclusively circulated among the rich.

The booty of Bani Nadheer, which is part of the funds of the Bait ul- Mal that belonging to all the Muslims, was exclusively shared among the poor while the rich were excluded, in order to strike a balance in the provision of the basic needs within the society. Handing out financial aid from the treasury is performed by the State, provided these funds have not been collected from the Muslims, but rather from the war booties and the public properties revenues. If the funds have been collected from the Muslims, it should not be spent on generating such a balance. This approach should be followed at all times, for the precept lies in the generality of expression not in the particularity of the cause. Therefore, the Khalifah must ensure that the economic balance is established by handing out financial assistance exclusively to the poor from the treasury’s funds, which belong to all the Muslims, thereby ensuring that economic balance is maintained. However, this is not considered to be part of the fixed expenditure of the treasury, but rather a remedy for a specific situation from specific funds.

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Chapters (110)
  1. 11 Introduction to the Economic system
  2. 21.1 The Capitalist Economic System
  3. 31.2 The Economic System versus Economic Science
  4. 41.3 The Socialist Economic System
  5. 52 Economy
  6. 62.1 The Basis of the Economic System
  7. 72.2 The View of Islam towards the Economy
  8. 82.3 Economic Policy in Islam
  9. 92.4 The General Economic Principles
  10. 103 Types of Ownership
  11. 113.1 Private Ownership
  12. 123.2 Definition of Private Ownership
  13. 133.3 The Meaning of Ownership
  14. 143.4 The Means of Owning Property
  15. 154 The First Means of Ownership - Work
  16. 164.1 Cultivation of Barren Land
  17. 174.2 Extracting that which exists inside the earth
  18. 184.3 Hunting
  19. 194.5 Mudharaba
  20. 204.6 Share Cropping - Musaqat
  21. 214.7 Hiring-Employing an Employee
  22. 225 The Work Of The Employee Worker
  23. 235.1 Definition of the Work
  24. 245.2 The Type of Work
  25. 255.3 Duration of the Work
  26. 265.4 Wage for Work
  27. 275.5 The Effort Spent in the Work
  28. 285.6 The Ruling Regarding Hiring Over Prohibited Benefits
  29. 295.7 The Ruling of Hiring Non-Muslims
  30. 305.8 Hiring Someone to perform Worships and Public Services
  31. 315.9 Who is the Employee?
  32. 325.10 The Basis upon which the Assessment of the Wage is Established
  33. 335.11 Estimating the Employee's Wage
  34. 346 The Second Means Of Ownership
  35. 356.1 Inheritance
  36. 367 The Third Means of Ownership
  37. 377.1 The need for Property for Sustenance
  38. 388 The Fourth Means Of Ownership
  39. 398.1 That which the State gives of its Properties to the Citizens
  40. 409 The Fifth Means Of Ownership
  41. 419.1 The Property obtained by Individuals
  42. 4210 The Way To Dispose Of Property
  43. 4310.1 Right of Disposal
  44. 4410.2 Increasing Property
  45. 4510.3 The Rules of Lands
  46. 4610.4 Cultivation of Barren Land
  47. 4710.5 Disposal of Land
  48. 4810.6 Preventing the Leasing of Land
  49. 4911 Trading And Manufacturing
  50. 5011.1 Trade
  51. 5111.2 Manufacturing
  52. 5212 The Laws Of Partnership Companies
  53. 5312.1 The Company in Islam - Partnership
  54. 5412.2 The Company of Equal - Al-Inan
  55. 5512.3 The Companies of Bodies - Al-Abdan
  56. 5612.4 The Company of Body and Capital - Mudharaba
  57. 5712.5 The Company of Reputation Faces - Wujooh
  58. 5812.6 Company of Negotiation - Mufawadha
  59. 5912.7 Dissolving the Company
  60. 6013 Capitalist Companies
  61. 6113.1 Commercial Company of Joint Liability
  62. 6213.2 Joint-Stock Company - Share Companies
  63. 6313.3 Shares of the Share Stock Company
  64. 6413.4 Co-operative Societies
  65. 6513.5 Insurance Ta’meen
  66. 6614 The Prohibited Methods of Increasing Ownership
  67. 6714.1 Gambling
  68. 6814.2 InterestUsury (Riba)
  69. 6914.3 Criminal Fraud
  70. 7014.4 Deceit in Trade
  71. 7114.5 Monopoly
  72. 7214.6 Price-Fixing
  73. 7315 Right of Disposal to Spend in Gifts and Maintenance
  74. 7416 Public Property (AlMilkiyyah Al- Ammah)
  75. 7517 State Property
  76. 7618 Nationalised Property is neither Public nor State Property
  77. 7719 Seclusion (Hima) in the Public Interests
  78. 7820 Factories
  79. 7921 Bait ul Mal (The State Treasury)
  80. 8021.1 Revenues of Bait ul-Mal
  81. 8121.2 The Expenditures of Bait ul-Mal
  82. 8221.3 The State Budget
  83. 8321.4 Zakat
  84. 8421.5 The Head Tax (Jizya)
  85. 8521.6 The Land Tax (Kharaj)
  86. 8622 Distributing Wealth among the People
  87. 8722.1 Economic Equilibrium in Society
  88. 8822.2 The Prohibition of Hoarding Gold and Silver
  89. 8923 Riba and Currency Exchange (Sarf)
  90. 9023.1 Riba (Interes-tUsury)
  91. 9123.2 Currency Exchange (Sarf)
  92. 9223.3 Exchange Transactions
  93. 9324 Money-Currencies (An-Nuqood)
  94. 9424.1 The Gold Standard
  95. 9524.2 Benefits of the Gold Standard
  96. 9624.3 Problems facing the Gold Standard
  97. 9724.4 The Silver Standard
  98. 9824.5 Metallic Money
  99. 9924.6 Paper Money
  100. 10024.7 Issuing of Currency
  101. 10124.8 Exchange Rate of Currencies
  102. 10225 Foreign Trade
  103. 10325.1 The Reality of Foreign Trade
  104. 10425.2 Balance of Tarde
  105. 10525.3 Currency-Monetary Relations Between Countries
  106. 10625.4 Foreign Trade Policy
  107. 10725.5 Free Trade
  108. 10825.6 Protectionism
  109. 10925.7 National Economy
  110. 11025.8 Policy of Self-Sufficiency