Quarterly Lecture Series Economic Justice in Islam By Khalid O. Adekoya Venue: LCCI, Alausa, Ikeja, Lagos. Date: Sunday, 3rd March, 2013. Time: 11.00am

Quarterly Lecture SeriesEconomic Justice in Islam

ByKhalid O. Adekoya

Venue: LCCI, Alausa, Ikeja, Lagos.Date: Sunday, 3rd March, 2013.

Time: 11.00am

• Islam is the complete and universal version of the Primordial Faith.

• Islam's most fundamental concept is a rigorous monotheism, called tawhīd.

• It is a complete way of life.• The central core of believe in Islam is the

oneness of Allah as stated in Qur’an Chapter 112 verses 1 -4. (Suratul Ikhlas)

What is Islam?

Wednesday, April 19, 2023 2AMP Quaterly Lecture By Khalid Adekoya

http://en.wikipedia.org/wiki/Tawh%C4%ABd

• 1. say: He is Allah, the One and Only;• 2. Allah, the Eternal, Absolute;• 3. He begetteth not, nor is He begotten;• 4. and there is none like unto Him.

Suratul –Ikhlas Q 112 : 1 - 4


Articles of Faith

• God• Angels• Revelations• Prophets• Resurrection and judgment• PredestinationWednesday, April 19, 2023 4AMP Quaterly Lecture By Khalid Adekoya

Pillars of Islam

TestimonyPrayerAlms-givingFastingPilgrimageWednesday, April 19, 2023 5AMP Quaterly Lecture By Khalid Adekoya



Economic Systems in Modern WorldThe most dominant economic systems in the modern

world at present : • Capitalism , Socialism and ISLAMIC.

Capitalism - Western world ( Western Europe and Northern America under the leadership of United States).

Socialism - USSR, Peoples Republic of China and some countries of Eastern Europe.

Islamic - where is it practiced ???????Wednesday, April 19, 2023 8AMP Quaterly Lecture By Khalid Adekoya

Capitalism

• Based on the private ownership of the means of production, distribution and exchange.

• It may be freely used by the owners as they wish in attempting to make profits from their economic enterprises.


Features of Capitalism

• Capital is privately owned• Profit maximization• Economic freedom, free market and

competition• Banking and institution of interest• Wide disparities in the distribution of

wealth• Exploitation of weak by the strongWednesday, April 19, 2023 10AMP Quaterly Lecture By Khalid Adekoya

Socialism• The means of production, distribution

and exchange are owned by the community collectively through the state.

• It is a transitional stage in the development of a society from capitalism to communism.


Socialism Contd.• It is characterized by the distribution

of income according to work rather than need.

• State ownership of means of production, materialism and economic equality are important features of socialism.


ISLAMIC ECONOMIC SYSTEM(IES)

• Islam present a moderate form of economic system.

• Islamic economics refers to the economic system that conforms to Islamic scripture and traditions.

• An ideal mean with none of the drawbacks of the other two systems (Capitalism and Socialism)


CAN YOU LOCATE THE GREEN AMONGST THE

RED?OBVIOUS ISN’T IT?

This is what Islamic Economic system should be among all other economic systems,

Central features of IES• Behavioral norms and moral

foundations derived from Qur’an and Sunna.• Zakat as the basis of Islamic fiscal

policy• Prohibition of Interest (Ri’ba)

Q3:130 ( Suratul Al-Imran O ye who believe! devour not usury, doubled and multiplied; but fear Allah. that ye may (really) prosper).


Features of IES (Contd.)• Reduces gap between the Rich and the Poor• Encourages trade• Discourages hoarding of Wealth• Outlaws interest bearing loans (Usury)• Wealth is taxed through Zakat• Profit sharing and venture capital where the

lender is exposed to risk is acceptable.• Hoarding of food from speculation is also

discouraged.• Grabbing other peoples land is prohibited.


THE ISLAMIC FISCAL SYSTEM

CORES

Zakat Collection

And Distribution

Non-Zakat Revenues

and Expenditure

Functions of the Islamic Fiscal System

1. Collection and distribution ofthe Islamic fiscal Duty: Zakat

2. Collection and employment of Non-Zakat revenues:Taxes and other

State revenues.

3. Control and Management of Public Property and Resources.

4. Provision and development of Public services and utilities.

5. Employment of Fiscal tools when necessary for purposes

of public interest.

6. Estimating need for Public Borrowing If necessary and

Management of Public Debt.

FUNCTIONS


Some HistoryMany Muslim scholars made valuable

contributions to economic theory; • Abu Yusuf (d. 798)• Al-Mawardi (d. 1058)• Ibn Rushd (d. 1187)• Ibn Taymiyyah (d. 1328)• Ibn Khaldun(d.1406) *• Shah Waliyullah (d. 1762)* Considered Father of Modern Economics


Ibn Khaldun’s contributions• Most well-known Islamic Scholar that wrote

about Economics. • He wrote about Economic and Political Theory• He discussed assabiyya (Social Cohesion)• He wrote benefits of Division of Labour.• He noted that growth and development

positively stimulates both supply and demand.• Macroeconomic forces of population growth

were also elucidated.• ……….Wednesday, April 19, 2023 19AMP Quaterly Lecture By Khalid Adekoya

A scientist is experimenting with bacteria that are one micron in diameter and that reproduce by dividing every minute into two bacteria. At 12:00 noon, he puts a single organism in a container. At precisely 1:00 PM, the container is full.

At what time was the container half full?

Tease yourself 1


Characteristics of economic system of Islam

• Right of ownership: In Islam ownership of resources belong to almighty Allah alone. Human only enters into possession and thus accountable to Allah for the utilization of such resources that may come into his possession. Both private and public property are legitimate kinds of property in Islam.


• Economic freedom: Islam allows economic freedom to an individual who is at liberty to earn wealth, own it and spend his wealth at his discretion. But the freedom given by Islam in economic sphere is not unlimited.

Islam makes distinction between halal and haram in every economic activity embracing vast fields of production, exchange and consumption.

Haram things, immoral and exploitive methods are prohibited to a Muslim.


• Distributive Justice: distributive justice is well emphasized as a principle of the Islamic economic system.

• The principle holds that there is proper evaluation of allocation and distribution through prices, and redistribution of output to provide a share to those who ordinarily could not obtain it through market forces.

• The institution of Zakah is the pivot around which this principle rotate


• Institution of Interest: Interest is the life blood of capitalist form of economy but

•Islam strictly prohibited any form of interest or riba.


• Zakat (Alms giving) :The third pillar in Islam. • An income redistribution mechanism, not

necessarily to provide revenue to the state but to correct imbalances in the social structure.

• Literally, Zakat means to purify, to develop and cause to grow. Though a ratio of 2.5 percent is prescribed, income is raised through zakat thus ensuring effective redistribution.


Philosophy of institution of Zakat

• Brings about protection of property from encroachment and grudge

• A means to aid the poor and those in need • Cleanses one's heart from frugality and

parsimony • Gives support and dignity to needy Muslims • A means of expressing gratitude to Allah for

all His bounties


• Inheritance: Inheritance is one of the ways of possessing economic resources in Islam.

• Although different traditions and cultures of the world have different methods of distributing the deceased’s wealth, the inheritance process in Islam is well established in the Quran.


• Social Insurance: Although this is quite common in non-Islamic economies like the United States of America, it has its basis in the Islamic economic system.

• This rule provides that a minimum level of economic wellbeing is achieved in the society.


Social Insurance in Islam

• Umar bn Al-Khattab formally established Welfare state (Bayt al-mal).

• Bayt al-mal ran for hundred years under Rashidun Caliphate, Umayyad period and well into Abbasid era in Islam.

• He also introduced Child Benefit and Pensions for children and the elderly.


• The role of the state: The state is expected to ensure the implementation and compliance of the citizenry with the rules.

• Zakah collected are redistributed to those entitled to collect. In order to finance public goods and social projects.• The state can levy taxes above the zakah rate. This

should be done in a way that ensures redistribution of wealth. • Nationalization of key industries for societal and

security reasons is also permissible. This requires that prior announcement is made and adequate compensation provided to previous owners of nationalized industries.


PROPERTY IN IES

• The Qur’an states that Allah is the sole owner of all matter in the heavens and the earth

Q 2: 284. (To Allah belongeth all that is In the heavens and on earth. whether ye Show what is In your minds or conceal it, Allah calleth you to account for it. He forgiveth whom He pleaseth, and punisheth whom He pleaseth, for Allah hath power over all things.)

PROPERTY

PUBLIC STATE PRIVATE


Classification of Property in Islam


Classification of Property in Islam (Contd)• STATE – Include Certain Natural Resources and other

property that can’t be immediately privatised. Movable or Immovable Acquired through conquest or peaceful means Unclaimed. Unoccupied and heir-less properties Uncultivated land (mawat) Prophet (SAW) directed that 1/5th of Military equipment

captured from enemy in battlefield should be made state property.

Umar considered conquered land to be state rather than private property (Privatising these properties will concentrate resources in few hands; a situation not clement with Islamic values)

Private ownership takes over state property. The prophet said: “Old fallow lands are for God and His messenger, then they are for you”Wednesday, April 19, 2023 33AMP Quaterly Lecture By Khalid Adekoya

Classification of Property in Islam (Cont’d)

• PRIVATE – Islam recognizes and upholds the individual’s right to private ownership

Qur’an discusses Taxation, inheritance, legality of ownership, recommendation to give charity to support right to own property.

Qur’an also guarantees the protection of private property by imposing stringent punishments on thieves. The Prophet (SAW) said

“He who dies defending his property was like a martyr”.


Acquisition of Private Property• INVOLUNTARY – Inheritance, bequests and gifts.• NON- CONTRACTUAL – Collection and exploitation of

natural resources (Not previously claimed as private property)

• CONTRACTUAL – Trading, buying, renting, hiring labour etc.

All the above must be done following the tradition of the Prophet of Islam. He practicalized them and the companions also did.

NB: If Private ownership cause harm, Islam favours curtailing the right in those cases.


Justice• It is one of the central values of Islam• Any economic system that is not based

on justice cannot be acceptable in Islam.• Qur’an greatly emphasizes distributive

justice and expresses full and unqualified support to the weaker ones (musad’ifun). It also condemns arrogant ruling class (mustakbirun)


In our times• Globalization and Liberalization of economy

allows few people to accumulate wealth.• It brings polarization between rich and the poor.• This will lead to social tensions as it did in Mecca

as reported in Surah Al-Humazah (Q.104 : 1 –9).1. woe to every (kind of) scandal-monger and-backbiter,2. who pileth up wealth and layeth it by,3. Thinking that His wealth would make Him Last for ever!4. by no means! He will be sure to be thrown into that which breaks to pieces,5. and what will explain to Thee that which breaks to pieces?6. (it is) the Fire of (the wrath of) Allah kindled (to a blaze),7. the which doth Mount (right) to the hearts:8. it shall be made into a vault over them,9. In columns outstretched.

• These tensions form the fabric of societal decadence as we have it now.Wednesday, April 19, 2023 37AMP Quaterly Lecture By Khalid Adekoya

• Justice is so central in Qur’anic ethics that Allah’s name is Adil.

• Qur’an Ch 5 : 8 says “ Do Justice, it is close to piety”

• If Muslims had taken these verses seriously and put them to practice…..

• We would have been the role model for the world


Models

In distributive Justice Conflict-free world World without wars and blood shed Peaceful world where everyone will be secure

and peaceful. A form of paradise on earth.


• Three students checked into a hotel and paid the clerk $30 for a room ($10 each). When the hotel manager returned, he noticed that the clerk had incorrectly charged $30 instead of $25 for the room. The manager told the clerk to return $5 to the students. The clerk, knowing that the students would not be able to divide $5 evenly, decided to keep $2 and to give them only $3.

• The students were very happy because they paid only $27 for the room ($9 each). However, if they paid $27 and the clerk kept $2, that adds up to $29. What happened to the other Dollar?

Tease yourself 2


Debt Management

• Qur’an Ch 2 : 280 Suratul Baqarah -if the debtor is In a difficulty, grant Him time till it is easy for Him to repay. but if ye remit it by way of charity, that is best for you if ye only knew.

• IMF conditionalities contradicts above• Muslim countries are neck-deep in foreign

debts.• Most Muslim countries are among the poorest

in the world.


• 80% of the world refugees are Muslims• Muslim countries are torn apart by economic

hardship and war, even though many of them are rich in Natural Resources.

• The World order in Economics today has ensured economic imperialism and colonialism.

• If we can go back to the Qur’an, Shariah and Sunnah, we can Practice Islamic economics flavoured with Justice and the whole world will be better for it

• (Sahib Bieher, General Secretary, Islamic party of Britain)Wednesday, April 19, 2023 42AMP Quaterly Lecture By Khalid Adekoya

Evidence from Umar Ibn Abd Al Aziz• When he became the Caliph, he wrote to his

governors several instructions on Islamic Economic Justice.

• He established deep-rooted rules of respect and admiration for the sanctity of the public Wealth.

• He lived a moderate life full of exemplary character and purpose of leadership that commanded respect for Islam in his era.


Some extracts from Umar’s letters

• Take tax rightly and then distribute and spend it justly.

• Every blind person should have a guide to lead him and fulfill his needs on the expense of the state.

• Every sick person should be treated on the expense of the state

• People in debts should be counted and debts fulfilled on their behalf by the state


Extracts continued

• No single person should get two salaries• Do not practise trade while you are Governors• Do not force the people to work for you with

no fare, and every one should have a charge for his labour.

• Ensure Justice in Economic matters as JUSTICE and RIGHT will straighten the dissidents in society NOT SWORD or MISCHIEF


Comment by an author• “It should astonish you by the fact that all

historians were unanimous that poverty and poor persons almost disappeared during the time of the ruling of this pious holy person, Umar Ibn Abd Al-Aziz. It was said that the rich people would set out with the obligatory charity of their wealth, but they would find no poor person to take it , or even stretch his hand towards it”.- Khalid Muhammad Khalid in “The Successors of the Messenger”


Summary

• In a continuously globalizing world where inflation rises continuously, youth unemployment is on the rise leading to agitation and restlessness snowballing into insecurity. Islamic economic system based on Justice and equitable distribution of wealth is the panacea.

Summary (contd)

• The world will be better for it to consider Islamic Political Economic system as against the crude Capitalism called globalization which authors have described as Casino capitalism

Conclusion

• The Islamic Economic System is a fundamental system that is far above the other economic fabrications. Evidence abound that it is the only system that suites mankind and allow us to earn barakah of Allah in this world and prepare us for a blissful hereafter.

• IMPLEMENTATION STRATEGY!!!

50Wednesday, April 19, 2023 AMP Quaterly Lecture By Khalid Adekoya

Documents

Quarterly Lecture Series Economic Justice in Islam By Khalid O. Adekoya Venue: LCCI, Alausa, Ikeja, Lagos. Date: Sunday, 3rd March, 2013. Time: 11.00am