ASSIGNMENT OF ISLAMIC ECONOMICS

“Role of state in Islamic Economics”

Submitted To:

Mam. Rabia Nazir

Submitted By:

Group No. 03

Roll Nos. 09, 27, 32, 35, 42, 46

Class: M.Sc Economics with Finance

1st Semester, (2009-2011)

Due Date: 15-12-2009

Department of
Economics
The Islamia Univeristy of
Bahawalpur
Bahawal Nagar Campus
MEANING OF THE STATE

An institution which has sovereign powers and which can enforce its will.

Its aim is to build a society which helps the individual to release their potential

and people have peaceful, pleasant and prosperous life under just and equal

conditions.

ISLAMIC CONCEPT OF THE STATE

Islam establish a handsome relationship between the state and individual

in which the individual have complete obedience to the state and the state

becomes the will wisher and servants of the individual.

MEANING OF AN ISLAMIC STATE

A state which defined their policies rules and regulations according to will

of Allah Almighty. Islamic state is the state in which sovereignty belong to Allah,

Allah’s will is the supreme law. The ruler of the Islamic state work only as a

vicegerent of Allah and the servant of public.

As Islam is not merely a complex of metaphysical doctrines but complete

code of individual and collective life of man. This code contains a comprehensive

plan of the temporal and internal welfare of man.

 To implement of this plan Islam formulates a particulars matrix of family

living, education and training, business and economy, believes and worships and

within it a model of thoughts and characters. Islam uses the authority and powers

of the state to carry out this plan. The major sources of rules which Islam has

mentioned for a state are Holy Quran and Sunnah Rasool (S.A.W.W).

When the government has to legislate to regulate the affair of the state.

The law should not contravene, but conform to Divine-made laws. All affairs of

the state should be settled according to Allah’s will. The main motive and

objectives of the state action should be social welfare not the satisfaction of the

will or caprice of an individual.

AIMS AND FUNCTIONS

The basic aims of the Islamic state to establish and maintain the Islamic way

of life obeying the law of Allah and to create a society which is the home of

justice and equality and individual can work with full freedom of thought and

conscience. The whole society is based on four pillars and it’s the duty the state

to strengthen and fortify these pillars. These four pillars are:

1. Establishment of Salaat.

2. Establishment of the system of Zakat.

3. Eradication of Evil.

4. Promotion of Good.

Economic Role of The Islamic State in the light of its duties.

1. ESTABLISHMENT OF SALAAT
 Namaz is the center and pivot of Islam. It is the most effective means of

bringing man nearer to his creator and ties man with Allah. It also purify man’s

thought and action and keeps him on the straight path of life. It also awakens

other moral values.

The first and foremost duty of the Islamic state is to establish system of

Namaz in its territory. It wakens in people the essence of moral values, save him

from forbidden things, i.e., craving for wealth and power, makes him content with

lawful income and shun all that is unlawful.

The importance of Namaz is clear form the Holy Quran and the Ahdees of

Apostle (S.A.W.W). There are almost 700 times Allah’s says for establishing the

Namaz in the Holy Quran as:

……and establish regular prayer; for prayer restrain from shamful and

unjust deeds……(29;45).

The establishment of Namaz promotes of capital investment by building

mosques and their proper maintenance. The mosques are the principal means of

assisting helpless, poor, the needy, the strangers, and the travelers. They are the

center of learning where the thoughts and morals of the individual are purified

and the sprit of struggling for their livelihood in the light of Quran and Sunaah.

Namaz also causes of meeting between several person abiding in a

society due to which they are awaited about current circumstances of their

environment .This thing is a solid reason of the presence of mutual

understanding among the people by which a society can be developed

economically well and rapidly.

2. ESTABLISHMENT OF THE SYSTEM OF ZAKAT:

Namaz establishes man’s bond with Allah; Zakat linds man with man.

Zakat transfers wealth from the rich to the poor. It increases the purchasing

power of the poor and makes it easy for them to get necessaries of life. Even if

the Zakat is paid and received at individual level, much economic good and well-

being flows from it. However, Islam has basically given it a collective form and

has assigned its administration to government. The state in exercise of its wide-

ranging powers collects Zakat according to the Ordinance of Shariat. In this way

it has at its disposal a huge fund to help the destitute, the poor, the needy and

the helpless and to assist and rehabilitate the sick and the unemployed.

A survey of the application of Zakat to various purposes and its heads of

expenditure reveals that Zakat sets in motion a permanent transfer of wealth

from the haves to the have-nots. It is not a temporary device like a tax.. It is a

permanent act of worship like Namaz. It has been levied at a fixed rate on every

person who possesses wealth above a certain level. The Zakat fund can only be

of the society and to support their economic wants. Help can be given from the

Zakat exchequer to the victims of accidents involving damage to life or limb or

financial loss in order that they may be made self-supporting. Zakat fund may be

used to relieve the helpless debtors of the burden of loans and to give them

Qarz-i- Hasna to rehabilitate their businesses. Zakat money may be expended on

preaching and propagation of Islam, Jihad and strengthening of national defense

so that the citizens may enjoy security of property and honor and pursue their

economic activities confidently within secure border.

Cruelty is finished by the establishment of Zakat in an state. State based

on the fundamental rules of Islam I highly responsible to the perfect arrangement

of Zakat system. In several countries the Bait-ul ma is responsible for the

collection of Zakat from government which they achieve from government.

System of Zakat made in a state make possible the fast circulation of

money in the environment of people which causes of diminishing the poverty.

3.Elimination of Evils:

It is also incumbent upon the Islamic State to eliminate those unlawful acts

and evils which produce economic inequalities and trade malpractices. In this

connection steps will have to be taken to purge and purify all sectors of economy

i.e., Consumption, production, distribution and exchange of wealth. Consumption

of unlawful goods will have to be curbed. Restrictions will have to be put on

extravagance and ostentation. Interest, speculation, gambling, narcotics

hoarding, deception, fraud and all other harmful and oppressive trade practices

will have to be banned. Unjust monopolies and employers exploitation of the

workers must be eradicated, industrial peace must be ensured by removing

conflict and promotion cooperation between entrepreneurs and workers. Every

form of slavery and drudgery must be curbed.

4. PROMOTION OF GOOD

It is open of the duties of the Islamic state to strive for the promotion of

good and well-being with all its power and authority so that a truly, peaceful,
prosperous and just society madly come into being. Just as promotion of good

and well-being is necessary in other spheres of collective life, it is necessary and

important in the economic spheres of collective life, it is necessary and important

in the economic sphere also.

There can be many forms of promoting good in the economic sphere of

which the following are especially noteworthy:

A) To make the people prosperous:

Allah like’s contented and prosperous people. The apostle of Allah

(s.a.w.w) has enjoined the Muslims to seek Allah’s refuge against poverty,

deprivation and want and want and ask hi9m for prosperity Islamic state to

relieve its citizens of poverty and hunger and to make them prosperous.

For this purpose the following responsibilities have been laid upon the state

i) Public Maintenance:

It is incumbent upon the Islamic state to provide basic needs of life to all

the citizens, Muslims or non-Muslim, living in its territory. No one should remain

in want of clothing, shelter, food, medical care and education.

ii) Measures for Economic Development:

It is the duty of an Islamic State to take all necessary measures to

promote economic construction and development in its jurisdiction. The Islamic

State will encourage private enterprise to step up economic progress and

harmonies it with its overall concept of life.

 iii) Establishing a system of equitable distribution of

wealth:

Equitable distribution of wealth is not only necessary for the stability of the

state because it eliminates the class conflict between rich and poor, but is also

essential for the achievement of economic prosperity and carrying forward the

process of development.

iv) Protection of Labor Rights:

It is one of the economic responsibilities of the Islamic state to protect the

rights of the factors of production i.e. land, labour and capital on equal basis. The

state should pay special attention to protect and promote the labor interest. The

state should ensure that necessary measures are taken to provide social welfare

to the workers. Medical aid, facilities of education and training and recreation

should be provided to them. In case of accident at workplace the victim should be

given adequate compensation.

V) Achievement of full employment:

One of the duties of the Islamic state is to adopt measures for the full

utilization of human resources along with natural resources. The best form of the

utilization of human resource is that every citizen of the state who is able to work

should be engaged in some productive venture according to his capacity.

Beggary and dependency on others have been declared heinous sins in Sharih

of Islam.

B) Maintenance of law and order and provision of justice:

 Like every civilized state it is the basic duty of the Islamic state to maintain

the law and order and provide justice in the territorities under its jurisdiction. The

individual citizen can realize full potential only in a peaceful and just society. The

Sharih of Islam declare of life to property and owner of all men as sacred without

exception inviolable. It is the fundamental duties of the Islamic state to institute

necessary and effective steps for the protection of this fundamental human

rights, raise an army to defend the state foreign aggression, organize a police

force to maintain internal law and order, establish the judicial system to provide

justice and settle the dispute and form an efficient administration for the removal

of public grievances.

C) Moral Elevation:

Morality and just economic enterprise are interlinked If the dealings

between the employer and the workers, land owner and tenant, buyers and

sellers, consumers and producers, borrower and lender are based on principles

of morality many social ills and causes of class conflict would disappear. The

economic system of Islam is based on moral values that is why the Islamic state

are custodian of the system takes positive interest in promoting these moral

values and adopts effective measure.

In this sphere the Islamic state realize more on education, counseling,

means of morals instruction and training and the public opinion of righteous

people rather than legal force. The Islamic state fully participate in the reform and

strengthening of the believes and in the creation of a proper atmosphere for the

performance of the devotions.