The Economic System of the Early Islamic Period - Institutions and Policies

Foreword

Preface

Acknowledgements

Contents

List of Figures

List of Tables

Part I: Arabian Peninsula in the Eve of the Introduction of Islam

Chapter 1: The Economic and Cultural Situation of the Arabian Peninsula prior to Islam

1 Economic Geography

2 Culture and Social Customs

3 The Era of Barbarism or Jahiliyyah

3.1 The Traditions of Abdul-Mottalib

3.2 The Bilateral Trades of the Era of Jahiliyyah (Ignorance)

3.2.1 Grit Throwing (Al Rami Bel Hesat)

3.2.2 Monabazah

3.2.3 Molamassah

3.2.4 Moavama

3.2.5 Mozabana

3.2.6 Mohaqalah

3.2.7 Habl ol Hableh

3.2.8 Tasreyeh

3.2.9 Sorar

3.2.10 Najsh

3.2.11 Maks

3.2.12 Talaqqi Rokban

4 Conclusion

References

Chapter 2: Invitation to Islam

1 Introduction

2 The Pre-Islam Social Position of Prophet Muhammad (SAAS)

3 The Post-Islam Conflicts of Quraysh with the Holy Prophet Muhammad (SAAS)

4 Before Hijrah to Madinah

5 Precautions of the Holy Messenger, Before Hijrah

5.1 Presentation of the Islamic Worldview and the Principles of Islamic Beliefs

5.2 Declaration of Islamic Verdicts

6 Summary

References

Chapter 3: Migration of the Holy Prophet (SAAS) to Madinah and the Formation of an Islamic State

1 Introduction

2 Post-Islam Economy of the Arabian Peninsula

2.1 Population

2.2 Occupations and Employment

2.3 Income

3 Formation of an Islamic Community and Codification of their Basic Rights

3.1 The Basic Articles of an Islamic State Treaty

3.1.1 The Community (Ummah)

3.1.2 Dimension and the Limits of the Community

3.1.3 The Community Leadership

3.1.4 The Rights and Obligations of the Community Members

3.1.5 The Rights of Non-Muslims

3.1.6 The Rights of Muslims

3.1.7 Dealing with the Quraysh

3.2 Economic Rights

3.2.1 Ownership of Natural Resources

3.2.2 Methods of Utilization

3.2.3 The Shares of the Owners of Factors of Production

3.2.4 The Rights of Muslims and Non-Muslims

3.2.5 The Priority of the Social Benefits over Individual Benefits

No Wastage

No Extravagance

No External Cost

No Worthless Earnings5

Prevention of System Distortions

4 Provisions of Production Facilities and Employment Opportunities

5 Summary

References

Part II: Public Treasury and Public Finance

Chapter 4: The Public Treasury (Baitul Mal) and the Governing System

1 Introduction

2 Establishment and Organization of the Baitul Mal

3 The Objectives, Obligations and Characteristics of Baitul Mal Attendants

3.1 Missions and Objectives of a Waaly (Governor)

3.2 The Functions of a Waaly

3.3 The Behavioral Model of a Governor (Waaly)

3.4 Characteristics of a Waaly (Governor)

3.5 The Significance of Public Relations

3.6 Different Groups in Masses

3.7 The Relationship of the Waaly with His Troops

3.8 The Relationship of the Waaly with the Judges

3.9 The Behavior of the Waaly (Governor) with His Executives

3.10 The Importance of Tax Payment and Collection

3.11 The Conduct of the Registrars

3.12 The Characteristics of Advisors

3.13 The Importance of Merchants and Craftsmen

3.14 The Importance of Looking After the Weak and Poor People

3.15 The Wizards of Kinsfolk and Relatives of the Governor

3.16 Affairs that Must be Attended to by the Waaly Personally

4 Summary

References

Chapter 5: Fiscal Policies in Early Islam

1 Introduction

2 The Revenues of the Public Treasury

2.1 Kharaj

2.2 Zakat

2.2.1 Zakat on Dinars and Dirhams

2.2.2 Zakat on Agricultural Crops and their Characteristics

2.2.3 Zakat on Livestock

Zakat on Sheep

Zakat on Cattle

Zakat on Camels

2.2.4 Characteristics of the Zakat on Sheep, Cattle and Camels

2.2.5 Zakat ul Fitr

2.3 Khums

2.4 The Jizyah (Poll Tax)

2.5 Other Revenues

3 Methods of Collecting Taxes

4 Expenditure Accounts of the Baitul Mal

4.1 The Propagation of Islam

4.2 Cultural Measures

4.3 Promotion of Science and Technologies

4.4 Infrastructure Investments

4.5 Development of Defense and Security Establishments

4.6 The Provision of Social Welfare

5 The Domain of the Public Treasury’s Activities

6 Fiscal Policies

6.1 The Expenditures of the Baitul Mal

6.2 The Methods of Financing Government Outlays

6.3 No Budget Deficit in the Annual Budget

7 Taxes

7.1 Automatic Stabilizers

7.2 Contractionary and Expansionary Fiscal Policies

7.3 Specific Uses of Different Taxes

7.4 The Regional Priorities of Spending Tax Revenues

7.5 Allocation of Resources and Income Distribution

7.6 Tax Collection Method

8 Fiscal Stimulus

9 The Outcome of Fiscal Policies

9.1 The Equilibrium of Aggregate Demand and Supply

9.2 Growth and Development

9.3 Social Justice

References

Chapter 6: Money and Finance in the Early Islamic Era

1 Introduction

2 Definition of Money

3 Money versus Capital

4 Capital and Debt

5 Money in the Early Islamic Era

6 The First Coin Struck in Islam

7 Money Supply and Demand in the Early Islamic Era

8 Circulation and Velocity of Money

9 Effects of Islamic Fiscal Policies on  the Value of Money

10 Financial Services and Instruments

10.1 Saving Deposits

10.2 Payment System

10.3 Financial Services

11 Regulations

11.1 Prohibition of Tatfif, or Skimping

11.2 Kanz

11.3 Prohibition of  Riba

11.4 Prohibition of the Kali-bi-Kali Transactions

12 Pecuniary Incentives

13 Summary

References

Part III: Market and the Private Sector

Chapter 7: The Markets in the Early Islamic Era

1 Introduction

2 Markets in Early Islam

3 Work and Business Ethics in Islam

4 The Characteristics of Markets in the Early Islamic Era

4.1 Large Number of Market Participants

4.2 No Trade Barriers

4.3 Private Goods

4.4 Codes of Conduct for Transactions

4.5 Maturity

4.6 Rules of Compliance with Shariah

4.7 Prohibition of Hoarding

4.8 No Price Setting

4.9 No Transaction Tax

4.10 No External Harm

4.11 Prohibition of Creating No Value Added5

4.12 Forbiddance of No Value Creating Intermediation

4.13 No Demolition and Damage

4.14 Prohibition of Extravagance

4.15 Prohibition of Najsh

4.16 Prohibition of Riba

4.17 Not to Skimp (Tatfif)

4.18 Abandonment of Prohibited Deals

4.19 Appointing a Market Superintendent

4.20 Options

5 Evaluation of the Performance of Early Islamic Markets

5.1 The Market Share

5.2 Information

5.3 Efficiency

5.4 Certainty and Security

5.5 Transaction Cost

5.6 Technological Advancement

5.7 Initiatives and Innovations

5.8 Returns to Scale

5.9 Excess Capacity

5.10 Stable and Continuous Supply

5.11 State of Competition

5.12 Profit Level

5.13 Customer Satisfaction

6 Summary

References

Chapter 8: Consumption Theory

1 Introduction

2 The Parts of a Scientific Theory

2.1 The Axiom of Consumption Theory

2.2 The Justification for the Assumptions

3 Citations from Consumption Manners of the Holy Prophet (SAAS)

3.1 Moderation

3.2 Food

3.3 Hospitability

3.4 Clothing

3.5 Love to Work

4 Pre-eminent Muslim Consumer Behaviors

4.1 Infaq (Philanthropic Expenditure)

4.2 Khums

4.3 Constraints on Consumer Behavior

5 The Supply of Factors of Production

6 Conclusion

References

Chapter 9: Production Theory

1 Introduction

2 The Rule of Diminishing Returns

2.1 No Wastage

3 Production Function, Isoquant Curves and the Producer’s Equilibrium

3.1 No Extravagance

3.2 No External Harm

4 Production Cost Curves

4.1 Equilibrium of the Firm

4.2 The Supply Curve of the Firm

5 Efficiency

6 Summary

Chapter 10: Exchange

1 Introduction

2 The Edgeworth Box Diagram

2.1 Initial Allocation of Resources

2.2 Exchange Efficiency

2.3 Infaq and Exchange

2.4 An Example of Exchange and Infaq amongst the Muslims from the Early Islamic Era

3 The Effects of Regulatory Guidelines

3.1 No Extravagance

3.2 No Valueless Intermediation

3.3 No Hoarding

3.4 Riba Prohibition on Exchanges

4 Initial Allocation of Wealth and the Exchange Efficiency in the Early Islamic Era

4.1 Initial Allocation of Production Possibilities Between Ansar and Muhajerin

4.2 Exchange Efficiency

5 Shares of the Owners of Factors of Production

6 Summary

References

Chapter 11: Investment and Saving

1 Introduction

2 Criteria for Intertemporal Decisions

3 An Intertemporal Analysis of the Consumer’s Behavior

4 An Analysis of Investor Behavior

5 Factors Affecting the Nesiah Rate

6 Nesiah Rates versus Interest Rates

7 The Consequences of Eliminating Riba

7.1 Harmonious generation of income in both financial and real sector of the economy

7.2 Saving Incentives Are Maintained

7.3 Investment Incentives Are Promoted

7.4 Increased Output and Redistribution of Income

7.5 Rapid Adjustment to External Shocks

8 Summary

References

Part IV: Justice

Chapter 12: Efficiency and Justice

1 Introduction

2 Relative Efficiency

3 Justice

3.1 Equality

3.2 Equal Utilization Opportunities

3.3 Inequality

4 Social Welfare Function

4.1 Total Welfare

4.2 Equality in Welfare

4.3 Intermediate State Welfare

5 General Equilibrium

6 Justice in Islam

6.1 The Three Definitions of Justice

6.2 Intrinsic Rights

6.3 Shariah Rights

7 Formation of Social Rights

8 Meaning of Justice from the Viewpoint of Martyr Motahhari

8.1 Social Welfare Function

9 General Equilibrium in the Economy of the Early Islamic Era

10 Summary

References

Index