Islamic Political Economy and Sustainable Social Development

Policies: An Analytical Study

Auwal Adam Sa’ad, Sayed Musa Alhabshi and Salina Kassim

IIUM Institute of Islamic Banking and Finance – IiiBF, International Islamic University Malaysia, Malaysia

Keywords: Islamic Politica, Economy, Social Policies, Suistainable Development.

Abstract: In the contemporary economic societies, the world is witnessing a vibrant transformation from vague

economy to an economic reality; the emergence of the Islamic economic system has been in trial for almost

five decades. The current achievements of Islamic banking and finance industry were believed to have

realized through the accelerated efforts of governments across the globe and their enthusiasm and

compassion towards the development of Islamic Financial industry. It was argued that the Islamic economic

system has all the potentials to becoming the world prevailing system due its reliance on justice, fairness,

socio-economic reality and sustainable development. This might be achieved through the realization of the

Islamic social policies and its possible implementations across the globe. The Islamic political economy has

all in need to sharpen the socio-economic development of the contemporary societies towards a sustainable

economic development around the world and has the strong mechanisms for social support and

achievements. However, this prediction has to do with the return of the Islamic political economy that had

tremendous impacts in the development of Islamic empires and its renowned social impact projects,

innovations and proper reactions to economic problems and social welfare. This paper aimed at analyzing

the economic ideas and policies introduced by Islamic leaders to solving economic problems, and analyses

the social policies that made the Islamic societies a unique society with proper economic policies for

sustainable social developments. For instance, the Prophet peace be upon him prioritizes borrowing than

taxation in his policies, he borrowed armored dresses from Safwan bin umayyah, for the battle of Hunain,

this exercise shows that a nation can borrow from the wealthy individuals within the society for the bailout

in a critical need, despite that the number of the Muslim army was around twelve thousand troops

participated in the battle of Hunain, some scholars argued that taxation could be imposed on this large

number of troops to solve the problem. However, the prophetic exercise showcases the idea of sustainability

by addressing the economic issue with the least possible option and prioritizes public relieve in the event of

critical situation. Likewise, the prophetic policy in dealing with the situation in khaibar where the prophet

divides the land into two and asked the people of khaibar to work on one part indicates the idea of

sustainable agricultural produce in the nation, where Muslims learned the agricultural skills from their

counterpart in khaibar, this is to make sure that the agricultural sustainability is achieved. The paper also

addresses some key policies introduced by Umar bin Khattab and other significant policies introduced by

Muslims leaders for a sustainable social-economic development.

1 INTRODUCTION

The executive government’s involvement in the

design and delivery of proper economic policies has

started during the prophet Muhammad peace be

upon him. Many scholars indicate that the prophetic

economic policies are one of the most vibrant and

important policies ever for better economic stability

and sustainable social development. These policies

continue to exist and adopted by the second

caliphate Abubakar peace be upon. During the

period of umar peace be upon him, the

transformation of public economic policies has come

to an aged where several policies were proposed and

the new policies are adopted based on the ijtihad

conducted by Umar peace be upon him. Umar was

among the first Muslim rulers to design progressive

economic policies for the wellbeing of the then and

future Islamic societies. Before Umar policies, the

lands conquered by Muslims are divided and

distributed to the Muslim fighters, as that was the

Sa’ad, A., Alhabshi, S. and Kassim, S.

Islamic Political Economy and Sustainable Social Development Policies: An Analytical Study.

DOI: 10.5220/0010115600002898

In Proceedings of the 7th ASEAN Universities International Conference on Islamic Finance (7th AICIF 2019) - Revival of Islamic Social Finance to Strengthen Economic Development Towards

a Global Industrial Revolution, pages 109-114

ISBN: 978-989-758-473-2

109

prevailing law of the land during the prophet peace

be upon him. However, when it comes to the “Ard

al-sawad” the dominant Muslims land, or in another

word, the land of Iraq and Egypt, Umar rethinks this

exercise when he predicts a possible economic crises

if the current situation continues, this shows that the

government can initiate an economic policy once

there is a need to do so, in critical situation therefore

the government interference is a most for a better

economic progression and sustainable development

but with certain limitations. Umar did not divide the

remaining of the conquered land or known as (Ard

Al-sawad) to the fighters but instead its ownership

remains and belongs to the general public so as to be

inherited by their descendant Muslims who might be

living in those areas in the future. The economic

difficulty foreseen by Umar was the hardship that is

going to occur to future generations if the land was

divided to the few individuals, he things that the

generation to come has the right to the current

properties owned by the Muslim ummah. Umar did

not do this on his own but guided by the holy Qur’an

as revealed in Surat al-hashr, Allah the almighty

said: “And those who came after them they said oh

our lord forgive us and our brothers who have

believed before us” “And those who came after them

say: "Our Lord! Forgive us, and our brethren who

came before us into the Faith, and leave not, in our

hearts, rancour (or sense of injury) against those

who have believed.” (Qur’an 59/10) Umar may

Allah be pleased with him said; let us preserve the

land for those believers who are coming after us.

And this has marked the beginning of the

transformation of Islamic political economy and

policies based on ijtihad (legal reasoning) by

prevailing public interest to solve current and future

economic difficulty for the Muslim ummah.

2 DISCUSSION

History of Islamic Political Economy

The historical background of Islamic Political

Economy could be traced back to the time of the

prophet Muhammad peace be upon him, the prophet

has reacted to fulfilling the need of the nation during

the economic disarray, the prophet follows various

ways to subjugate the economic difficulties of the

nation using his power as the highest political leader

of the nation, the Prophet used various technics to

resolve the immediate problem. These prophetic

reactions could be seen as the backbone of the

history of Islamic political economy. The prophet

peace be upon him has introduced various economic

policies, which are going to be discussed in details

within the next coming paragraphs. First, the prophet

peace upon him divided the land of khaibair into

two, one portion was given to the fighters and the

other portion was given to the state and at the same

time, the prophet had another agreement with the

skilled jews in khaibar to use the state land on

contract base on sharing the harvest with the state.

This has tremendously meant to create jobs and

good opportunities for Muslims residing in Madinah

and the neighboring villages. One of the economic

prospects is that the Muslims will learn the

agricultural skills and harvesting technics from the

Jews who have vast experiences in agricultural

produce. Second, to prepare the Muslims take over

the state land after they already learned the skills and

have the needed man power and the skilled

individuals to develop the land, this could be one of

the reasons why Umar may Allah be pleased with

him ordered for the total eviction of the Jews later

after he understands that the state is no longer in

need of them during his tenure. (Sunan Abi dawud,

3013).

Second, the prophet peace be upon him has also

introduced a viable economic policy in distributing

the land of Bani-Nadhir, the prophet looks into the

critical need of Muslim migrants those who migrated

to Madina and have no land, he gave the land only to

the migrants for their critical need at that time and

few other individuals from the people of Madinah

for their critical need as well. (Imam al-Qur’tubi,

2006). This has actually showed that an economic

policy could be created to address an economic issue

of a particular society, or a critical issue of some part

of the nation; this is aimed at breaching the

economic gab between the citizens of a Muslim

nation which leads to the financial inclusion.

Third, the Prophet peace be upon him borrowed

armored dresses from Safwan bin umayyah, for the

battle of Hunain, this exercise shows that a nation

can borrow from the wealthy individuals for bailout

within the state in a critical need, and this request by

the Prophet was by compulsion, looking into the fact

that safwan was not Muslim at the time of the

exercise he feels as if the prophet is taken the

armored dresses by force and without planning to

return them back, Safwan said oh Muhammad was it

a snatch? The Prophet said no, but borrowing which

will be returned back to the owner. (Musnad, Imam

Ahmad, 1998). This particular economic policy has

actually supported the issuance of sukuk to solving a

particular economic need of the Muslim society.

This prophetic policy also indicates that a leader

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might compulsorily collect from the wealthy

individuals to solve an immediate economic problem

of the nation and might also borrow from them by

force. This particular policy was debated by the

Muslims clerics and shade the line on the prophet

decision to take from Safwan, while in other hand he

might solve this issue by just imposing a simple tax

on the huge number of Muslim army for Hunain

battle, which is estimated as twelve thousand army

personal, a small amount of tax on the army can

solve this issue, however this is an indication that

the Prophet peace be upon intends to avoid taxation

wherever possible on the citizens if there are

wealthy individuals who can provide for critical

need, and this is a best economic policy to be

implemented than taxation. Many scholars

understand the policy of (Qard Ijbari) compulsory

loan from this exercise of the prophet peace be upon

him. (Sarakhsi, 1993).

The policy of Qard al-Ijbari was later

implemented by Umar may Allah be pleased with

him, he collected the horses from the tribe of

hulailah and pass the houses to the youth and young

soldiers who have no horses. Imam Al-Sarakhsi

mentioned that Umar used to borrow a horse from a

person who is not participating physically in the war

and give his horse to a bachelor who is ready to

participate physically in the war but has no horse,

and he used to say one of you fights with his horse

and the other fights with his body. However, this

policy could be adopted by the ruler when he

understands the need of implementing that policy,

and will provide a solution to the public importance.

(Al-Sarakhsi,1993). Fourth, the Prophet peace be

upon him has also collected an earlier payment of

zakat for two consecutive years from Abbas. (Imam

al-tirmizi, No. 678). This exercise occurred at the

critical economic situation of the nation, and in our

time there might be a need in some critical time to

do the same exercise on companies who have their

businesses registered with the nation to participate in

paying early zakat to help the nation solve measure

economic trouble.

This might also be the basis in which some

scholars allow the calculation of zakat for employees

who have income that if calculated for twelve

months is zakatable, these individuals are mostly the

middle income class and many in numbers and when

the country is in need it might impose the early zakat

payment for them and calculate the twelve month

zakat for the benefit of the ummah. However, this is

solely depends on the ruler to decide based on the

need. One of the most important objectives of public

economic policy is to provide policies that will

change the direction of the economic situation from

a bad moment to a better economic expansion and

financial inclusion. During the Umar period, the

Islamic nation has started to expand and becoming

bigger than it was, Umar realizes the need to

creating sustainable income to the Muslim nation.

That is why he started a different policy on military

reward (bounty). The economic policy should be

created to change the economic situation for better

and make sure the public is benefiting from the

policy either in present oh future economic situation.

Islamic economic policies are not made to favor

some wealthy individuals, but they are made to help

economically vulnerable individuals to achieve some

economic needs in a way to achieving the Islamic

economic inclusion.

When Madina was having so much visitors and

settlers from surrounding villages Prophet

Muhammad prohibits keeping the “Luhum Al-

dhahi” the meat for Eid sacrifice for more than three

days duration. Therefore all the meat should be

distributed to the people around before three days,

this policy was just for that particular situation,

when the situation passed, the prophet reviewed the

policy and said “I used to prohibit it because of the

vulnerable villagers, now you can eat, give for

sadaqah and keep as you wish” (Al-Bukhari, hadith

No.1971). This policy could be implemented to any

other similar situation that needs a temporary policy

to solve an immediate economic hardship or make

sure that a particular economic benefit reached a

particular segment of the society for better economic

inclusion and social economic wellbeing. However,

once the particular situation has ended and the

normal situation prevailed, then the policy should

also the lifted as well.

Shari’ah understanding of Economic Policy

Shari’ah economic rules and policies are of two

types, the economic rules and policies that accept

changes due to the changes of circumstances and

ecological changes or because of the change of an

economic interest and the economic rules and the

policies that are permanent and could not be

changed in any situation. It is important to

understand that political ideas and new policies

could only affect the rules and policies that are

subjected to changes under Shari’ah law. The

examples of the Shari’ah economic policies that are

not to be changed are the decided dividend of

inheritance. This could not be chanced whatever the

situation. Zakat decided amount and percentage, is

also part of this. However, the distribution of zakat

and zakat collections are subject to change according

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to the economic policy invented by the leaders. That

is the reason why Abubakar may Allah be pleased

with him continue the exercise of zakat collection as

mandatory to be collected by the state, while uthman

may Allah be pleased with him has the opinion that

it is not necessary to be collected by the state.

Likewise imposing some other taxes and payments

on companies or wealthy individuals if the zakat

might not fulfill the need of the society then this is

part of the Islamic economic policy that could be

adopted. (Al-Zarqa, 1990).

Islamic economic policies are part of the Islamic

concept of politics, which is provided and adopted

by the Islamic political arm of government to

subjugate the economic difficulties affecting the

Islamic society or the nation at large. One of the

most important uniqueness of Islamic economic

policies are meant to achieve the two objectives, one

is the worldly economic achievement and the other

one is to achieve the objectives towards the eternal

life. Therefore, the economic situation should be

dealt with according to the precise rules and

regulation of Shari’ah. Any economic policy must

be in line with the general Shari’ah objectives as

well. (Ibn khaldun, 2004) Muslims were addressed

by the holy Qur’an as “ruhama’’” meaning those

who are merciful to each other. One of the

objectives of the economic policies is to be mercy to

others especially those who are economically

disadvantaged. That is the reason why one of the

most explicit Islamic economic policies was

disapproving hoarding, which is meant to prevent

bad economic effect to the Muslin society. Based on

this objective, the Khalifa Harun al-rashid has made

a very vital economic policy which was the review

of the agricultural land taxation from a fixed amount

to a percentage of the agricultural production, this

has a very strong and positive economic impact on

farming and the farmers and increases the

agricultural production across the nation. This policy

transformation has helped the government of harun

al-rashid to achieve the targeted agricultural

produced that year and at the same time the taxation

on the product percentage becomes more lenient and

humane than before. (Abu Yusuf, 1985).

Rules of Islamic Economic Policies

Before initiating an Islamic economic policy, the

policy must be subjected to the following two rules

that need to be observed. Firstly, the economic

policy should follow the precise Shari’ah objectives

Maqasid al-shari’ah and general Shari’ah goals.

Therefore, the chosen policy should not be a policy

that will cause the destruction of public wealth and

other public importance and should not be a policy

that promotes excessive risk (Gharar) or a policy

that interrupts the public interest and other important

contractual obligations as well as other Shari’ah

objectives of wealth protection. And also anything

that may cause trouble and misunderstanding among

the general public (Shatibi, 1997).

Secondly, the economic policy should not

contradict a clear detailed evidence of Shari’ah law;

the contradiction here means to contradict the

essence and the consequence of the Shari’ah rule.

One of the examples here could be seeing in “pricing

policy” and its Shari’ah ruling. During the time of

the prophet peace be upon him, there was an issue of

inflation and people asked the prophet if he can fix

price for them, the prophet peace be upon him said:

“The Almighty Allah is the one who priced and he is

the provider and the preventer, I hope I will meet the

almighty Allah without me been questioned for

oppressing one of you on his life or wealth”. (Imam

al-Tirmizi, 3/1314). This hadith indicates the reason

why the prophet did not introduce the pricing policy,

because of his fear of being oppressive, so if the

pricing was done in a way the leader oppresses

merchants by introducing a price that create loses in

the market then it is an oppress against the

merchants and therefore the pricing is not allowed.

However, if the pricing is based on an unjustifiable

inflation and introduced to help the public out of the

inflation without oppressing the merchant and

pricing a reasonable price with profit realization the

it is allowed and accepted as an Islamic compatible

economic policy. (Ibn al-Qayyim, 2007). A nation

might not always need a specific evidence of

Shari’ah rules to introduce an economic policy, but

it is okay to take into account the general Shari’ah

objectives and aims in which the policy will comply

with, whenever the policy realizes the formation of

pubic economic wellbeing, and protects the interest

of the general public, protects the wealth and

develops public assets and creates wealth to the

public then it is regarded as an Islamic compatible

policy. (Izzuddin bin Abdussalam, 1991)

The Islamic Economic Policy of Ard al-sawad

“The Land of Iraq, Syria and Egypt”

The land of Iraq, Syria and Egypt are the most fertile

lands conquered by the Muslim army during Umar’s

regime. There are so many calls by the army leaders

to divide the land to the combatants as that was the

usual exercise, however, umar refuses to do so, he

instead left it for the existing occupant in preparing

an economic sustainability for the future generation

to come. Umar intends to make sure that a

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sustainable income has been introduced to the

rapidly Islamic developing nation, which in his time

reaches Iraq and Egypt. Furthermore, Umar realizes

that agriculture is one of the most important tools to

drive the nation’s economy for growth and new

policies must be initiated and implemented to

safeguard this vibrant economic apparatus for the

new developing Islamic nation. Agriculture is the

backbone of any developing economy, through

agriculture people gets their daily meals and other

basic economic needs. From agricultural produce,

nations produced the needful raw materials for

clothing, businesses, building materials and

medicinal products, and these are among the most

essential items for nation building. (Imam al-ghazali,

1963).

The umar’s economic policy shows that the

Islamic nation is a nation that cares more about the

right of the entire citizens other than the right of few

individuals Umar may Allah be please with him

relied on the verse of Surat al-hashr, “And those

who come after them” (Qur’an, 59/10). Meaning that

and those who come after are many generations who

will be in need of the land even more than the

combatant. Mu’az bin Jabal supported Umar on this

opinion and commented that “if you divide the land

and pass it to the combatant they will soon die and

left it to the few individuals and in the end huge

Muslims land will be left for a woman who cannot

be able to invest in it”. Any Islamic economic policy

should be based on public interest, Imam ibn rushd

refutes the idea that Umar used the verse of fai’ in

other to replace it with the verse of bounty

distribution which stated that “And you should know

that any war bounty..” However, he argued that both

verses meanings still prevailed, but umar selected

the one that favored public interest other than the

verse of bounty distribution, in other to actualize the

Shari’ah wisdom in considering other general

Shari’ah rulings that urged to protect the interest of

the community and the nation at large. (Ibn Rushd,

2004)

After the issue of the ard al-sawad, Umar may

Allah be pleased with continues to think of another

sustainable military income since there are a lot of

criticism on him for not dividing the ard al-sawad

and gave the land to the public other than the

military. Umar then provide an alternative to the

military, as he was the first Muslim leader to create

military salary scheme. (Diwan Al-Jund). After the

Diwan al-Jund many other Diwans were created to

address public policies leading to Islamic socio

economic development.

3 CONCLUSION

It is important to understand that Islamic political

economy is all about social justice and economic

viability and economic sustainability of the Muslim

society. The Islamic economic policies introduced

by the Prophet peace be upon him and other Muslim

rulers indicates the state’s concern on ensuring the

public economic wellbeing and sustainable

development with notable consideration of the

economic policies that will address future economic

sustainability of future generations. The political

economy in the context of Islamic law is there to

provide economic justice and freedom in all

economic activities. That means the policies adopted

by the Islamic nation should be flexible in a way that

each and every citizen in the Islamic nation should

be able to exercise his economic activities with full

autonomy and independency, the state has to provide

the enabling environment and the maximum security

for pubic safety so as to prepare the ground for

everyone who has the interest to start an economic

activity to benefit from the available resources of the

Islamic nation.

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