The Objectives of Distribution of Wealth in Islam

The Objectives of Distribution of Wealth in Islam

If we consider the injunctions of the Holy Quran, it would appear that the system for the distribution of wealth laid down by Islam envisages three objects.

  • The Establishment of a Practicable System of Economy

The first object of the distribution of wealth is that it would be the means of establishing in the world a system of economy which is natural and practicable, and which, without using any compulsion of force, allows evert individual to function in a normal way according to his ability, his aptitude, his own choice, and liking, so that his activities may be more fruitful, healthy and useful. And this cannot be secured without a healthy relationship between the employer and the employee, and without the proper utilization of the natural force of supply and demand. That is why Islam does admit these factors. A comprehensive indication of this principle is to be found in the following verse:

“We have allocated among them their livelihood in the worldly life, and have raised some of them over others in ranks, so that some of them may put some others to work” (43:32)

The condition of “proper utilization” has been assumed because It is possible to make improper use of forces, and it has been the case under Capitalism. Islam has struck at the very root of such improper use and has thus eradicated the unbridled exploitation of private property.

Free and Fair Market System in Islam

Islam gives basic freedom to enter into any type of business or transaction provided that the business or transaction is permissible (Halal) and does not violate any of the ordain of Islam. Just as Islam does not restrict anyone from entering into any Halal economic transaction, similarly Islam does not lay any imposition on price determination in an economy and recognizes the market forces of supply and demand in determining the prices and does not restrict any particular level of profit margin to be charged but infect encourages moral ethics to be followed in determining the price.

In General, Islam does not encourage the interference of state or any of the stakeholders in determining the prices in an economy. If some of the players of the market are manipulating some of the market forces, then the state is required to interfere and regularize the market.

During the caliphate of Hazrat Umer Farooq, one trader was selling goods at a price much lower than the market. The Caliph ordered the trader either to raise the price up to the market level or leave the market. The reason for this order was to regularize the market and safeguard the interest of other traders who are following the free-market prices. In the same manner, the state can also interfere in cases where some of the stakeholders are involved in Hoarding and artificially manipulating the market.

  • Enabling Everyone to Get What is Rightfully Due to Them

The second object of the Islamic system of the distribution of wealth is to enable everyone to get what is rightfully theirs. In Islam, the concept and criteria of this right are somewhat different from what it is in other systems of economy. Under materialistic economic systems, there is only one way of acquiring the right to “wealth”, and that is direct participation in the process of production.

In other words, only those factors that have taken a direct part in producing wealth are entitled to share in “wealth”, and no one else. On the contrary, the basic principle of Islam in this respect is that “wealth” is the property of Allah Himself and He alone can lay down the rules as to how it is to be used. So according to the Islamic point of view, not only those who have directly participated in the production wealth but those to whom Allah has made it obligatory upon others to help, are legitimate sharers in wealth.

Hence, the poor, the helpless, the needy, the paupers and the destitute – they too have a right to wealth, for Allah has made it obligatory on all those producers of wealth among whom wealth is in the first place distributed that they should pass on to them some part of their wealth. And the Holy Quran makes it quite explicit that in doing so they would not be obliging the poor and the needy in any way, but only discharging their obligation, for the poor and the needy are entitled to share in wealth as a matter or right. Says the Quran:

“And those in whose riches there is specified right [24] for the one who asks and the one is deprived, [25]” (70:24- 25)

In certain verses, this right has been defined as the right of Allah, which has been mentioned in the following verse:

“And pay its due on the day of harvest.” (6:141)

The words “right” and “due” in these verses makes it clear that participation in the process of production is not the only source of right to “wealth” as its primary owners. Thus Islam proposes to distribute wealth in such a manner that all those who have taken part in the production of wealth should receive the reward for their contribution and then all those too should receive their share whom Allah has given a right to “wealth”.

  • Eradicating the Concentration of Wealth

The third object of the distribution of wealth, which Islam considers to be very important, is that wealth, instead of becoming concentrated in a few hands, should be allowed to circulate in the society as widely as possible, so that the distinction between the rich and the poor should be narrowed down as far as is natural and predictable. The attitude of
Islam in this respect is that it has not permitted any individual or group to have a monopoly over the primary sources of wealth but has given every member of the society an equal right to derive benefit for them.

Mines, forests, un-owned barren lands, hunting and fishing, wild, grass, rivers, seas, spoils of war, etc., all these are primary sources of wealth. With respect to them, every individual is entitled to make use of them according to his abilities and his labor without anyone being allowed to have any kind of monopoly over them.

“So that this wealth should not become confined only to rich amongst you.” (59:7)

Beyond this, wherever human intervention is needed for the production of wealth and a man produces some kind of wealth by deploying his resources and labor, Islam gives due consideration to the resources and labor thus deployed, recognizes man’s right of property in wealth produced. Everyone shall get his share according to the labor and resources by him.

“We have allocated among their livelihood in the worldly life and have raised some of them over others in ranks, so that some of them may put some others to work.” (43:32)

But, in spite of this difference among social degrees or ranks, certain injunctions have been laid down in order to keep this distinction within such limits are as necessary for the establishment of a practicable system of economy, so that wealth should not become concentrated in a few hands.

Of these three objects of the distribution of wealth, the first distinguishes the Islamic economy from Socialism, the third from Capitalism, and the second from both at the same time.

Written by Dr. Muhammad Imran Usmani

DISCLAIMER: Copyrights are reserved by Usmani and Co.

Factors of Production in Islam

Factors of Production in Islam

To better understand the factors of Production in Islam, we now compare the factors of production in other economic systems including Capitalism and Socialism.

Factors of Production in Islam

The Capitalist View

In order to understand the Islamic point of view fully, it would be better to have a look at the system of the distribution of wealth that is obtained older than the capitalist economy. This theory can be briefly stated like this:

“Wealth should be distributed only among those who have taken part in producing it, and who is described in the terminology of economics as the factors of production.”

According to the Capitalistic economy, these factors are four:

  1. Capital: which has been defined as “the produced means of production” – In other words, a commodity which has already undergone one process of human production, and is again being used as a means of another process of production.
  2. Labor: It is defined as, any exertion on the part of man.
  3. Land: which has been defined as “natural resources” (i.e. those things chic fi are being used as means of production without having previously undergone any process of human production).
  4. Entrepreneur, or Organization: The fourth factor that brings together the other three factors, exploits them and bears the risk of profit and loss in production.

Under The Capitalist economy, the wealth produced by the co-operation of these four factors is distributed over these very four factors as one share is given to Capital in the form of interest, the second share to Labor in the shape of wages, the third share to Land in the shape of rent (or revenue), and the fourth share (or the residue] is reserved for the Entrepreneur in the form of profit.

The Socialist View

On the other hand, under the Socialist economy, capital, and land instead of being private property, are considered to be national or collective property. So, the question of interest or rent (or revenue) does not arise at all under the philosophy of this system. Under the Socialist system, the entrepreneur to is not an individual but the state itself. So profit as well is out of the question here – at least in theory. Now, there remains only one factor namely labor. And labor alone is considered to have a right to wealth under the Socialist system, which it gets in the shape of “Wages”.

Let it be made clear that we are here concerned only with the basic philosophy or theory of socialism, and not with its present practice, for the actual practice in socialist countries is quite different from this theory.

The Islamic View

The Islamic system of the distribution of wealth is different from both the Capitalist and Socialist economic system. From the Islamic point of view, there are two kinds of people who have the right to wealth:

  1. Primary Right to Wealth

The Primary right denotes the right to wealth which is directly in consequence of participation in the process of production. In other words, the primary right is for those factors of production that have contributed in the process of producing some kind of wealth.

  • Secondary Right to Wealth

The Secondary right holders are those who have not directly contributed to the process of production. but it has been made an obligation upon the producers to make them co-sharers in their wealth. e.g. Beneficiaries of Sadaqat-ul-Wajibaat.

The primary right to wealth is enjoyed by the factors of production, but the factors of production as per Islamic theory are not specified or technically defined, nor is their share in wealth determined in exactly the same way as is done under the Capitalist of the economy. In fact, the two ways are quite distinct. From the Islamic point of view, the actual factors of production are Instead of four i.e.

  1. Capital: It is defined as the means of production that cannot be used in the process of production until and unless during this process, it is either wholly consumed or completely altered in form and which, therefore, cannot be let or leased (for example, liquid money or foodstuff, etc). The share of capital is in the form of profit and not interest.
  • Land: That is, those means of production, that are used in process of production in a way that their original and external form remains unaltered, and which can hence be leased (for example, land houses, machines, etc). Its share is in the form of rent.
  • Labor: That is, human exertion, whether of the Bodily organs or mind or heart. This exertion thus includes organization and planning too. ”The share of labor comes in the form of wages. As in the case of Mudarabah (Islamic mode of partnership), the compensation of labor is in the form of profit.

Whatever “wealth” is produced by the combined action of these three factors would be primarily distributed over these three factors.

Socialism and Islam

As we said, the Islamic System of the distribution of wealth is different from both socialism and capitalism both. The distinction between the Islamic economy and the Socialist economy is quite clear. Since Socialism does tot admit the idea of private property, wealth under the socialist system is distributed only in the form of wages. On the contrary, according to the Islamic principles of the distribution of wealth which we have outlined above, all the things that exist in the universe are in principle the property of Allah Himself. Then, the larger part of these things has been given equally to all men as a common trust. lt includes fire, water, earth, air, light, wild grass, hunting, fishing, mines,  un-owned and uncultivated lands, etc., which are not the property of any individual, but a common trust. Every human being is the beneficiary of this trust and Is equally entitled to its use.

On the other hand, there are certain things where the right to private property must be recognized in order to establish a practicable and natural system of economy. If the Socialist system is adopted and all capital and land are totally surrendered to the state, the ultimate result would only be that, we would be liquidating a large number of smaller capitalists and putting the huge resources of national wealth at the disposal of a single big Capitalist – the state, which can deal with this reservoir of wealth quite arbitrarily, thus would lead to the worst form of the concentration on of wealth. Moreover, it produces another great evil. Since Socialism deprives human labor of its natural right to individual choice and control, compulsion and force become indispensable in order to make use of this labor, which has a detrimental effect on its efficiency as well as on its mental health. All this goes to show that the Socialist system injures two out of the three objects of the Islamic theory of the distributor of Health i.e. the establishment of a natural system of economy, and securing for everyone what rightfully belongs to him.

These being the manifold evils inherent in the unnatural system of the Socialist economy, Islam has not chosen to put an end to private property altogether but has rather recognized the right to private property in those things of the physical universe which are not held as a common trust. Islam has, thus, given a separate status to Capital and to Land and has at the same time made use of the natural law of “supply and demand” too in a healthy form. Hence Islam does not distribute wealth merely in the form of wages, as does Socialism, but in the form of profit and rent as well. But, along with it, Islam has also put an interdiction on the category of “Interest”, and prescribed a long list of the people who have a secondary right to wealth. It has thus eradicated the great evil of the concentration of wealth, which is an essential characteristic inherent in Capitalism, an evil, which Socialism claims to remedy. This is the fundamental distribution of the Islamic view of the distribution of wealth, which sets it apart from Socialism.

Capitalism and Islam

It is equally essential to understand fully the difference that exists between the Islamic view of the distribution of wealth and the Capitalist point of view. This distinction being rather subtle and complicated, we will have to discuss it in greater detail.

By comparing and contrasting the brief outlines of the Islamic and the Capitalist systems of the distribution of wealth, we arrive at the following differences between the two systems:

  1. The entrepreneur, as a regular factor, has been excluded from the list of the factors of production, and only three factors have been recognized, instead of four. But this does not imply that the very existence of the entrepreneur has been denied. It does mean is just that the entrepreneur is not an independent factor, but is included in any one of the three factors.
  2. It is not “interest” but “profit” that has been considered as the “reward” for Capital.
  3. The factors of production have been defined in a different manner in Capitalism and Islam. Capitalism  defines “Capital” as “the produced means of production.” Hence, Capital is supposed to include machinery, etc. as well, besides money and foodstuff. But the definition of “Capital” that we have presented while discussing the Islamic view of the distribution of wealth, includes only those things which cannot be utilized without being wholly consumed, or, in other words, which cannot be let or leased – for example, money. Machinery is to be excluded from “Capital”, according to this definition.
  4. All those things which do not have to be wholly consumed in order to be used have been brought under “Land”. Hence, machinery falls under this category.
  5. The definition of “Labor” has been generalized so as to include mental labor and planning.

Let us now go into the details of this discussion. Under the Capitalist system, the most important characteristic of the entrepreneur (which entitles him to “profit”) is supposed to be that he bears the risk of profit and loss in his business. From the Capitalist point of view, “profit” is a kind of reward for his courage to enter into a commercial venture where he alone will have to bear the burden of a possible loss, while the other three factors of production will remain immune from loss, for Capital would get the stipulated interest, Land the stipulated rent and Labor the stipulated wages.

On the other hand, the Islamic point of view insists that the ability to take the risk of a loss should, In reality, is inherent within the Capital itself, and that no other factor should be made to bear the burden of this risk. Consequently, the Capitalist, in so far as he takes the risk, is an entrepreneur too, and the man who is an entrepreneur is a Capitalist as well. Now, there are three ways in which Capital (in general) can be invested in a business venture:

Ways of Capital Investment:

  1. Private business: The man who invests Capital may himself run the business without the help of any partners or shareholders. In this case, the return which he gets may be called “profit” from the legal or popular point of view; but, in economic terms, this “reward ” would be made up of
  2. “profit” in as much as capital has been invested, and
  3. “wages”, as earnings of management.
  • Partnership: The second form of investment is that several persons may jointly invest capital while another manages the business and jointly bear the risk of profit and loss. In the terminology of the Fiqh, such a venture is called “Shifrkat-UI-Aqd” or Partnership in contract.

According to the terminology of Islamic economics, in this case, too all the partners will be entitled to “profit” in so far as they have invested capital and also entitled to “wages” in so far as they have taken part in the management of the business. Islam has sanctioned this form of the business organization too. This form was quite common before the time of the Holy Prophet P.B.U.H until he permitted people to retain it, and since then there has been a consensus of opinion on its permissibility.

  • The co-operation of Capital and Organization {Mudarabah)

The third form of investment is that one person may invest Capital while another may manage the business, and each may have a share in the profit. In the terminology of Fiqh, it is called “Mudarabah”. According to the terminology of Islamic economics, In this case, the person who invests his capital (“Rabb-UI-Mai”) will get his share in the form of “profit”, while the person who has actually managed the business will get it in the form of “wages”. But if the person who has been managing the business (“Mudarib”) eventually suffer a loss in the business, his labor will go wasted just as the capital of the investor would go wasted.

This form of the business organization too is permissible in Islam. The Holy Prophet P.B.U.H made such an agreement with Hazrat Khadijah before their marriage. Since then, there has been a complete consensus of opinion on this among the jurists of Islam.

Money Lending Business

The fourth form of investing Capital, which has ever since been practiced in non-Islamic societies is the money-lending business. As per this business, one person lends out capital in the form of debt, and a second person puts in his labor, if there is a loss, it has to be borne by labor but regardless of profit or loss, interest does accrue to Capital in any case. Islam has interdicted this form of investment.

“O you who believe, fear Allah and give up what still remains of riba if you are believers.”(2:278)

The Holy Quran also says:

“But if you do not (give it up), then listen to the declaration of war from Allah and his Messenger. However, if you repent, yours is your principal. Neither wrong nor be wronged.” (2:279)

In these two verses, the phrases “what is still due to you from the interest” and “you shall have the principal” makes it quite explicit that Allah does not condone the least quantity of interest, that “giving up the Interest” implies that the creditor should get only the principal. Thus, one can clearly see that Islam every rate of interest to be totally inadmissible.

In the pre-Islamic period, certain Arab tribes used to carry on with the help of money borrowed on the basis of interest from other tribes. Islam puts an end to such transactions altogether, Ibn Juraij says:

“In the pre-Islamic period, the tribe of Banu Amr bin Auf used to take interest from the tribe of Banu-al-Mughira used to pay this interest. When Islam came, the later owed a considerable amount of money to the former”. And further on: “The Banu-al-Mughira used to pay interest to the Banu Thaqif”

Let it be understood that the position of every Arab tribe was like that at a joint company, carrying on trade with the joint Capital of its individual members. So, when a tribe would borrow collectively from another tribe, it would usually be for the purposes of trade. The Holy Quran has prohibited even this practice.

Thus, under the Islamic system of the economy, if a man wants to lend his money to a businessman to invest in the business,  he will first have to decide clearly whether he wishes to lend this money in order to have a share in the profit or simply to help the businessmen with his money. If he means to earn the right to a share in the profit by lending his money, he will have to adopt the mode of “partnership” (Musharakah) or that of “Co-operation” (Mudarabah) then, where he too will have to bear the responsibility of profit or loss as well. If there is eventually a proof in the enterprise, he shall have a share in the profit; but if there is a loss, he shall have to share the loss too proportionate to his Investment.

On the other hand, if he is lending his money to another person by way of help, then he must necessarily regard this help as no more than helpful and must forgo all demand for a “profit”. He will be entitled to get back only as much money as he has lent out.

Islam considers it is not only unjust but also meaningless that he should fix a rate of “interest” and thus place all the burden of a possible loss on the debtor.

This discussion makes it clear that Islam places the responsibility of “taking the risk of loss” on Capital. The man who invests capital in a risk-bearing business enterprise shall have to take this risk.

Written by Dr. Muhammad Imran Usmani

DISCLAIMER: Copyrights are reserved by Usmani and Co.


Islamic Economic System

The Islamic Economic system is a system which is in conformity with the rules of Shariah. Sharia h can be explained as a “Pathway to be followed ” and can
Further, be explained as a set of divine injunctions and laws that regulates every aspect of a human being in their individual and collective lives. All aspects of the individual and collective life of a human being can be divided into five categories. Thus, Shariah a pathway to be followed in all these five categories.

The five categories are:
1) Beliefs (Aqaid]
7) Acts of Worship (Ibadat)
3) Dealing with others (Muamlaat)
4) Manners (Ikhtaqiat )
5) Economics {Maistiat)

The nature of Shariah rulings are followed:

Halaal – All those acts that are permitted and declared lawful by Shariah.
Haraam – All those actions that are prohibited and declared unlawful by Shariah and their impressibility is derived from either the Holy Quran, Hadiths Mutawatir, or Ijma. Sunnah e Mutawaatirah as the strongest narrations of the Holy Prophet P.B.U.H. in terms of their narrators, i.e. the narrators are in such a large number that is impossible for all of them to have agreed on a false issue.
Faraz – All those actions that are declared mandatory by either Quran or Sunnah e Murawaatirah or Ijma.
Wajibaat – All those actions that are declared mandatory on Muslims by the narrations which are not as strong in terms of narrators as-Sunnah Mutawaatirah.
Sunnah – All those actions that are recommended to be performed by Muslims, based upon the association of those actions with Holy Prophet P.B.U.H.
Nawafil (All those actions that are made optional and rewardable on Muslims by Shariah).

Sources of shariah

The rules and regulations laid down by Islamic Shariah are derived from the following sources:


Quran is the word of Allah Ta’ala revealed over Prophet Muhammad P.B.U.H. The Holy Quran is the primary source of knowledge and Shariah rulings for Muslims. The injunctions mentioned In the Holy Quran are mandatory to follow and anyone who denies express injunctions of the Holy Ouran is regarded as Non-Muslim. Most of the injunctions mentioned in the Holy Quran are prescriptive in nature such as Order for offering Salah but information about the method and other descriptive information about offerIng salah may be obtained from other sources of Shariah such as-Sunnah:

”And obey Allah and His Messenger; if you are believers.” (8.’1)


Sunnah is defined as a word spoken of the act done or rectified by the Holy Prophet P.B.U.H. The Sunnah provides detailed information about the code and conduct of every sphere of life and Is also considered as Divine Revelation. The details about Sunnah are preserved in
The form of Ahadith. On the basis of clear Injunctions of Holy Quran. Sunnah can thus be regarded as the second source of Islamic Shariah after the Quran e.g Rules for Riba al Fadal has been extracted from Sunnah.


Ijma means the consensus of scholars of Ummah on a particular issue. It is one of the most authoritative sources of Islamic Shariah since it encompasses the unanimous opinion of the scholars of a particular era over the interpretation of the Quran and Hadiths on some particular issue. The status of ljrma as an authoritative source of Sharlah has also been ascertained from the following saying of Holy Prophet P.B.U.H.

“My Ummah shall never be, combined on an error.”


Qiyas means to apply a recognized rule of Shariah expressly mentioned in the Holy Quran and Sunnah, to a similar thing or situation by way of analogy.


Ijtihad literary means “Utmost Effort” and technically it means to exert utmost effort to discover the ruling of Shariah regarding a particular situation. The practice at Ijtihad has been duly endorsed by the Prophet Muhammad P.B.U.H in the following Narration:

”When the Holy Prophet P.B.U.H intended to send his companion Mu’adh, to Yemen as a ruler and as a judge. He asked him: How will you adjudicate a matter when it will come to you?”

He said, “I shall decide on the basis of Allah’s Book (the Holy Quran).”

The Holy Prophet P.B.U.H. asked, “if you do not find it in Allah’s Book (what will you do)?”\

He said: “then, on be the basis of Sunnah of Allah’s Messenger.:

“If you do not find it even in the Sunnah of Allah’s Messenger (what will you do)?’ The Holy Prophet asked.

He replied: “I shall make Ijtihad on the basis of my understanding And will not spare any effort (to reach the truth).”

On This, the Holy Prophet P.B.U.H tapped the chest of Hazrat Mu’adh, with happiness and said, “Praise be to Allah, who has let the messenger of the messenger of Allah to do what pleases Allah’s messenger”. (Abu Dawood, Hadith Ho. 3592).

It is an important and often misunderstood question whether the doors of ijtihad are still open or not. For all those issues where there are clear injunctions of the Holy Quran, Sunnah, and Ijma, Ijtihad cannot be done on those issues. IjtIhad can only be done on those new issues and situations where no explicit injunctions of Shariah are available or there are some meticulous changes that require further exploration of the issue by the Scholars.

It is also important to note that Ijtihad is not merely one’s own opinion based on rational judgment- but it is indeed the result of the unbiased and utmost effort of Mujtahid on the basis of principles laid down by Shariah and it must not contradict with any clearly defined rules of Islamic Shariah. On the basis of complex nature of Ijtihad, not every scholar can perform Ijtihad but only the most learned, senior and the pious Of the scholars are eligible for the role of Mujtahid who have in-depth knowledge and understanding of Quran, Tafasir Arabic, Background of the revelation of verses of Quran, Ahadith, Usool e Fiqh, etc.

Introduction of Islamic Economics
One of the forms nf capitalism, that has been flourishing in non- Islamic societies of the world is the interest-based investment. They are normally two participants in such transactions. One is the Investor who provides capital as on loan against interest and the other is the Manager who runs the business. The Investor has no concern whether the business runs into profit or loss, he automatically gets an interest (Riba) in both outcomes at a fixed or variable rate on his capital. Islam prohibits this kind of business And the Holy Prophet P.B.U.H enforced the ruling, not in the form of some moral teaching, but as the law of the land in Islam.

It is very important to know the definition and forbidden Of Riba and the injunctions relating to its unlawfulness in all respects. On one hand, there are severe warnings of the Qur’an and Sunnah against it and on the other, it has become an integral part of the world economy today. The desired liberation from Riba seems to be infested with difficulties as the problem is very complex, detail-oriented, and has to be taken up in all possible aspects.

First of all, we have to deliberate Into the correct interpretation of the Quranic verses on Riba and what has been said in authentic ahadith and then determine what Riba is in the terminology of the Quran and Sunnah, which transactions It covers, what ts the underlying wisdom behind its prohibition and what sort of harm it brings to the society. We will start by looking at the economic philosophy of Islam via-a-vis interest.

The Economic philosophy of Islam vis-a-vis Interest

The economic philosophy of Islam has no concept of Riba because according to Islam, Riba is that curse in society, whIch causes wealth to accumulate among a handful of people and it results inevitably in creating monopolies, opening doors for selfishness, greed, injustice, and oppression.

In an interest-based economy, deceit and fraud prosper in the world of trade and business. Islam, on the other hand, primarily encourages highest moral ethics such as universal brotherhood, collective welfare, and prosperity, social fairness, and justice. Due to this reason, Islam renders Riba as absolutely haram and strictly prohibits all types of interest-based transactions. The prohibition of Riba in the light of the economic philosophy of Islam can be explained vis-a-vis distribution of wealth in a society.

Distribution of Wealth

The distribution of wealth is one of the most important and most controversial subjects concerning the economic life of man, which has given birth to global revolutions in today’s world and has affected every sphere of human activity from international politics down to the private life of the individuals. For many centuries now, this question has no one been the center of fervent debates, but also of armed conflicts. The fact, however, remains that whatever has been said on the subject without seeking guidance from Divine Revelation and relying merely on human reason has had the sole and inevitable result of making the confusion worse confounded.

Islamic Perspective of Distribution of Wealth

Here we convey the point of view of Islam regarding the distribution of wealth as extracted from the Holy Qur’an, the Sunnah, and the writings of the Shariah research scholars. But before explaining the point, it is imperative to clarify certain basic principles which distinguish the Islamic point of view about economics from the non-Islamic point of view.

The Importance of the economic goals

No doubt, Islam is opposed to monasticism and views the economic activities of man quite lawful, meritorious, and some times even necessary and obligatory. It acknowledges the economic progress of man and considers a Lawful and righteous livelihood an obligation on every individual. Notwithstanding all this, it is no less a truth that it does not consider “economic activity” to be the basic purpose of man, nor does it view economic progress as the be-all and end-all of human life.

Many misunderstandings about Islamic economics arise just from be confusion between the two facts i.e. considering economics as the ultimate goal of life and further considering it as a necessity in order to have a prosperous life through lawful means. Even human logic can comprehend to show that activity being lawful, or meritorious or necessary is different from it being the ultimate goal of human life and the center of thought and action. It Is, therefore, very essential to make this distinction as clear as possible at the very outset. In fact, the profound, basic, and far-reaching difference between Islamic economics and materialistic economics can be summarized as:

Arcording to materialistic economics:

“Livelihood is the fundamental problem of man and economic developments are the ultimate end of human life.”

While according to Islamic economics:

“Livelihood Is necessary and Indispensable, but cannot be the true purpose of human life. “

So, while we find in the Holy Quran, the disapproval of monasticism and the order to:

”Seek the grace of Allah.”(62:10).

At the same time, we also find in the Quran to restrain frum the temptations of wo Idly life. And all these worldly things in their totality have been designated as “Ad-Dunya” (“the mean”) – a term which, in its literal sense, does not have a pleasant connotation.

Apparently, one might feel that the two commands are contradictory, but the fact is that according to the Quranic view, all the means of livelihood are no more than just stages of man’s journey, his finaI destination lies beyond them. The success in this ultimate destination is achieved by good intentions and through rightful means of earning livelihood in this world.

The real problem of man and the fundamental purpose of his life is the attainment of these-two goals. But one cannot attaln them without traversing the path of this world. So, all those things too which are necessary for his worIdly life, become essential for man. It comes to mean that so long as the means of livelihood are beIng used only as a path leading towards the final destination, they are the benevolence of Allah, but as soon as man gets lost in the mazes of this pathway and allows himself to forget his real destination, the very same means of livelihood turn into a “temptation” or into a “triaI”:

“And be a ware that your possessions and your children are but a trial.” (8:28).

The Holy Quran has enunciated this basic truth very precisely in a brief verse:
“And seek the betterment of the) Ultimate Abode with what Allah has given to you.” (28:77).

This principle has been stated in several other verses too. This attitude of the Holy Quran towards “the economic activity” of man and its two aspects would be very helpful in solving problems of man in Islamic economics.

The Real Nature of Wealth and Property

The other fundamental principle, which can help solve the problem of the distribution of wealth, is the concept of ’wealth’ in Islam. According to the illustration of the Holy Quran, ’wealth’ in all its possible forms is a thing created by Allah, and is, in principle His “property”. Allah delegates the right of His Property over a thing. which accuses to man, to Him. The Holy Quran explicitly says:

According to.the Holy Quran, the reason for this philosophy is that al a man can do is invest his Iabor into the process of production. But Allah alone, and no one else, cam cause this endeavor to be fruitful and actually productive’. Man can do no more than sow the seed in the soiI, but to bring out a secdIing from the seed and make the seedling grow into a tree is the work of someone other than man. The Holy Quran says:

“Well, tell Me about that (seed) which you sow; (63) is it you who grow it, or are we the one who grows? 64” [56:63”64]

And in another vorse:
“Did they not see that We have created for them cattle, among things made (directly) by our hands, and then they become their owners? (35:71).

All of these verses throw ample light on the fundamental point that “wealth”, no matter what its form, is in principle “the property of Allah”, and it is He who has bestowed upon man the right to exploit. So Allah has the right to demand that man should subordinate his exploitation of this wealth to the commandments of Allah.Thus, man has the “right of property” over the things he exploits but this right is not absolute or arbitrary or boundless, it carries along with it certain limitations and restrictions, which have been Imposed by the real Owner of the ‘wealth’, We must spend it where Allah has commanded it to be spent, and refrain from spending it where Allah has forbidden. This point has been clarified more explicitIy in the following verse

’And seek the (betterment of the) Ultimate Abode with what Allah has given to you, and do not neglect your share from this world, ond do good as Allah did Good to you, and do not seek to make mischef in the lond.” (28:77)

This verse fully explains the Islamic point of view on the question of property. It places the following guidelines before us:

Whatever wealth man possesses has been given by Allah.
Man has to use it in such a way that his ultimate purpose should be to seek the bountles and blessings of Allah in this world nnd hereafter.
Since wealth has been given by Allah, its use by man must necessarily be subject to the commandment of Allah.

Now, the Divine Commandment has taken two forms:-

Allah may command man to convey a specified production of ”Wealth° to a not her ma n. This Commandment must be obeyed, because Allah has done good to you, so He may command you to do good to others — “do good as Allah has done good to you
He may forbid you to use this ”wealth” in a specified way. He has very right to do so because He cannot allow you to use “wealth” in a way which is likely to produce collective ills or spread disorder on the earth.

This is what distinguishes the Islamic point of view on the question of property from the Capitalist and Socialist point of view. Since the mental background of Capitalism is (theoretically or practicaly) materialistic, it gives man the unconditional and absolute right of property over his wealth, and allows him to employ it, as he Iikes But the Holy Quran has adopted an attitude of disapprobation towards this theory of property, in quoting the words of the nation of Hazrat shu’aib. They used to say:
“Does your Salah {prayer) command you that we should forsake what our fathers others used to worship or that we should not deal with our wealth as we please?” (11:87).

These people used to consider their property as really theirs or “Our property”, and hence the claim of “doing what we like” was the necessary conclusion of their position. But the Holy Quran has, in the chapter ” Light” substituted the expre Psion “Our possessions” for the term “the property of Allah “, and has thus struck a blow at the very root of the Capitalistic way of thinking. And at the Same time, by adding the qualification “that Allah has bestowed upon you”, it has cut the roots of socialism as well, which starts by denying man’s right to private property. Similarly,
“thus they acquired the right property over them”

A verse in the Chapter “Seen”, explicitly affirms the right to private. property as a lift from Allah.

Difference betwéen lslam, Capitalism end Socialism.

Now we are in a position to draw clear boundary lines that separate Islam, Capitalism and 5ocialism from one another. Capitalism affirms an absolute and unconditional right to private property whereas SociaIIsm totally denies the right to private property.

But the truth however, lies between these two extremes – i.e, Islam admits the right to private property but does not consider it to be an absolute and unconditional right that is bound to cause.”dis rder on the earth”.

Written by: Dr. Muhammad Imran Usmani

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Covid-19: A High Time To Consider Takaful

The sudden outbreak of COVID-19 has left all of us bewildered, and just in a span of a few months over 1.8 million people in Pakistan lost their jobs because of the lockdown. Such high and unanticipated unemployment is followed by disastrous impacts on the lives of the affected individuals and families. A typical family in Pakistan comprises of 5 to 6 members, all being supported by just a single breadwinner. And when in this scenario the only job feeding the entire household comes to a sudden halt, the family crashes. The savings, which were tiny, to begin with, become their sole reliance in such testing times. And God forbid, even if one member contracts the deadly disease the huge hospital bill multiplies their agony.

Now imagine the very same scenario, but with a slight change- the family has subscribed to health takaful. So even when the family’s breadwinner loses his job and household income falls to zero, there is one less worry on the family. The hospital expense will be borne by takaful. Therefore, with strong social protection (takaful) or insurance of individuals, the cost to society imposed by such severe lockdown may be reduced in terms of deprivation and hunger.

We have various takaful companies in Pakistan that are providing their current customers complimentary benefit with respect to COVID-19 and have also introduced a protection plan for COVID-19 which can currently be bought at an affordable price. These takaful companies have further eased the burden of their participants by providing a grace period for payment of the contribution of up to 75 days. How have these companies managed to provide all these benefits? It is therefore imperative here to mention, TAKAFUL.

Takaful is an alternative to conventional insurance but one that follows Islamic law. It is based on the concept of cooperation (ta’awun) and risk-sharing. All participants contribute to a pool of donation (tabarru) fund, which allows participants to provide financial assistance to fellow participants who might suffer a loss. The recompense to the participant, in the event of loss, is according to the actual loss either totally or partially depending on the resources of the fund.

A takaful model, therefore, can be depicted as a co-operation among participants who commonly secure and ensure the interest of each other, in the spirit of brotherhood, by mutually sharing obligation to pay for potential misfortunes that may happen, through donation into a common fund. A takaful operator(company) facilitates this cooperation by providing its expertise in managing the fund. It manages the funds by investing in halaal activities and since all the risk is shared among participants, the surplus that might arise because of the investment is added back to the fund.

It is important to note here that it is investing in halaal activities that always brings with it Allah’s blessing (barakah). A takaful operator(company), however, by adopting a mudharabah, wakalah or other contractual Islamic business models can adequately sustain a fund even in a calamity such as COVID-19.

ا أَيُّهَا الَّذِينَ آمَنُوا لَا تَأْكُلُوا الرِّبَا أَضْعَافًا مُّضَاعَفَةً وَاتَّقُوا اللَّهَ لَعَلَّكُمْ تُفْلِحُونَ

Allah says in Surah Al-Imran verse 130, “….devour not usury, doubling and quadrupling, the sum lent. Fear Allah and observe your duty to Him, that you may really prosper.”

Furthermore, the intention of donation and easing the burden of a fellow Muslim in times of need only brings with it more blessing(barakah) in any situation.

Abu Huraira reported: The Messenger of Allah, peace, and blessings be upon him, said, “Whoever relieves the hardship of a believer in this world, Allah will relieve his hardship on the Day of Resurrection. Whoever helps ease one in difficulty, Allah will make it easy for him in this world and in the Hereafter. Whoever conceals the faults of a Muslim, Allah will conceal his faults in this world and in the Hereafter. Allah helps the servant as long as he helps his brother. Whoever travels a path in search of knowledge, Allah will make easy for him a path to Paradise. People do not gather in the houses of Allah, reciting the book of Allah and studying it together, but that tranquility will descend upon them, mercy will cover them, angels will surround them, and Allah will mention them to those near him. Whoever is slow to good deeds will not be hastened by his lineage.” (Source: Ṣaḥīḥ Muslim)

With the right advisory compliance solutions and retakaful, one can manage risk and inefficient management practices. Unfortunately, because of ineffective marketing strategies, there is a lack of awareness among individuals and a lack of basic health information among the masses. Taking care of all these challenges and an affordable health takaful plan for groups, individuals, and families can create a snowball effect of wellness and serve the masses.

It comes in Surah Ar Raad verse 11,لَهٗ مُعَقِّبٰتٌ مِّنۡۢ بَيۡنِ يَدَيۡهِ وَمِنۡ خَلۡفِهٖ يَحۡفَظُوۡنَهٗ مِنۡ اَمۡرِ اللّٰهِ​ؕ اِنَّ اللّٰهَ لَا يُغَيِّرُ مَا بِقَوۡمٍ حَتّٰى يُغَيِّرُوۡا مَا بِاَنۡفُسِهِمۡ​ؕ وَاِذَاۤ اَرَادَ اللّٰهُ بِقَوۡمٍ سُوۡۤءًا فَلَا مَرَدَّ لَهٗ​ۚ وَمَا لَهُمۡ مِّنۡ دُوۡنِهٖ مِنۡ وَّالٍ

“ …….Verily never will Allah change the condition of a people until they change it themselves…….”

Written by: Sadaf Sawant (MSC in Islamic Finance from INCEIF, Malaysia)