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An Islamic perspective on political economy

This article is part of the author’s dissertation on “The Islamic Political Theory of Muhammad Baqir al-Sadr of Iraq.” He is a Visiting Scholar at the Center of Near Eastern Studies, UCLA.


With the collapse of communism in Eastern Europe and in its heartland, the Soviet Union, the world is yet again dominated by the practices and laws of capitalism. Today’s world econo­my is shaped according to Adam Smith. No other alternative routes for economic development are envisaged but to let “the laws of the market” play their course in the marketplace. The “invisible hand” of the market is more visible now than at any time as the determining and decisive factor in the lives of nations and men. Consequently, the self­-interest of members of society is to be the driving force of econo­my, and the law of supply and demand the regulating mechanism of profiteers in society. Even economists in what used to be the Marxist bloc are subscribing to such economic behaviour as the only alternative to remedy the ills of the economies of their nations.

Not quite true, say many Muslim thinkers and political activists.

They believe that Islam provides humanity with solutions to problems created by imperfect man‑made political systems and moral values. Islam, according to them, is a divinely ordained social framework that should guide humanity to peace and tranquillity in all aspects of life, physical and metaphysical.

One of these thinkers and political activists was Muhammad Baqir al‑Sadr of Iraq. Sadr was executed because he led a revolutionary movement against the Ba’athist regime in Iraq in 1980. He had conceived an Islamic political system to replace the existing regimes in the Muslim world, which he considered corrupt. His programme for the future is to create a new socioeconomic order that would replace the capitalist and socialist orders which are the dominating systems in the Muslim world.

This article intends to focus on his views and the basic principles of the Islamic economic system, which he believes is more capable of solving the contradictions of the capitalist system and, therefore, more able to satisfy human needs; more importantly, it has the capacity to develop and progress in accordance with human potentials.



As an Islamic jurist, Sadr derives his basis of the argument from Islamic tenets and sacred sources. Here our purpose is to present his conceptual argument and economic engineering of society and to see how applicable these views and programmes are to reality. The aim of the study here is to highlight his argument and try to understand the structure of the Islamic economic system. His views on economics are part of his general political theory designed for the establishment of a complete Islamic social system. The behaviour of the Islamic economic system should be judged after the creation of an Islamic State, where the whole realm of socioeconomic human behaviour is determined according to Islam. Sadr’s major work in economics was written in 1960‑61, and aside from the pamphlet that he wrote later in his life, the main argument of his thought is contained in one work, Iqtisaduna (Our Economics).

The economy of the Islamic State, according to Sadr, is divided between that of the individual as the vicar of God (khalifah), and the ruler as the witness (shahid) who presides over the application of the laws of God. The economic structure of the Islamic State thus consists of private property and public property. However, one should not think that the economic structure of the Islamic State is some sort of combination of capitalism and socialism. Sadr strongly rejects this misconception.

He argues that the juxtaposition of private and public right of ownership stems from the fundamental beliefs of Islam.1 This is similar to the way that private ownership is advocated in the capitalist system, or public ownership by socialist: as the logical conclusion of their ideological and philosophical beliefs. To justify private ownership and public ownership in Islam, one must understand the right and obliga­tions of the individual and the State in Islam. Sadr’s detailed descrip­tion of economic relationships in the Islamic State and its economic structure represents the best available argument for the notion of Islamic economics.

Economic relationships

Man’s behaviour, according to Sadr, is categorized into three types of relationships: social, economic and religious. They stem from man’s basic relationship to other men, to the environment, and to God. The economic relations, however, are the outcome of his inner instinct of self‑love that “always drives him to seek good things for himself, to secure his interest, and satisfy his needs.” Accordingly, man, in his relationship with the environment, was predisposed to utilize all possi­ble resources to satisfy his needs and increase his pleasure. In due time, he was willing to use animals and plant to help him in his struggle against the environment. Although his essential needs were simple in the early period of history, his mental capacities enabled him to devel­op new means to help him utilize the resources of the environment. Thus his needs are always expanding due to the complexity of utilizing the resources of the environment.

Man’s relationship with others of his kind was the natural outcome of his need to satisfy his desires. The complexity of life, arising from his relationship with the environment, made it difficult for him to cope adequately with his needs. Cooperation with others made the effort to satisfy his needs manageable. Cooperation with others results in a shar­ing of benefit with all participant in the community. The inner instinct of self‑love that drove man to create the first community is evident. These instincts give rise to man’s exploitation of his brother. Because people were not equal in their physical and mental capacities, they obviously differed in their utilization of the resources of the environment. Such differentiation of capabilities is part of the divine plan for bringing about cohesion through the division of labour to the human community. People of different capabilities function in different tasks within the social order.

However, man’s desire to maximize his interest drove some men to exploit the situation for their benefit. Human needs were growing due to man’s mental and economic development. His experience broadened his capacities to utilize the resources of his environment. His passion to acquire more of the environmental resources for himself became prevalent. Consequent­ly, some men were willing to oppress others to satisfy their greed and egos (both outcome of self‑love). It was then that the human com­munity faced oppression in the form of economic exploitation. This conflict between social peace and individual instinct of maximizing interest was persistent throughout history. This historical conflict, Sadr argues, is between two classes: those individuals who control the environmental resources (economic and social) and endeavour to protect their interest, and the rest of the society which strives to live in peace and cooperation.

Marxist believe the problem originated with a few people controlling economic resources. The only way to bring about peace to the social order is through the revolution of the oppressed class to destroy the special interest of the privileged class. Capitalist, on the other hand, believes such social conflict to be the result of limited natural resources of the environment, which are not sufficient to satisfy the needs of all people. Thus, social conflict will always be prevalent. Only through incremental and gradual reforms can society hope to manage social conflict from overtaking human progress. On this basis, capitalists oppose any type of social revolution. However, Islam disagrees with both the views and considers environ­mental resources to be sufficient to satisfy all people’s needs.

According to Sadr, the proem rests with the channelling of human nature: how can the instinct of self‑love be directed in a proper manner? Unless a solution emerges to control human desires and deflect the potential for exploitation of others, social order rests on shaky foundations. Therefore, Sadr clearly states that the socioeconomic problem is the result of the misconduct of man. He specifies two reasons for the socioeconomic problems: (1) the oppressive character of man, arising from his self‑love; and (2) man’s inefficiency in the utilization of economic resources. According to Sadr’s interpretation, the ills stemming from man’s oppressiveness in the economic realm of life persist in the form of inequitable distribution of economic resources on the one hand and from inefficient utilization of these resources, which result in under­development of economic resources and their waste. A solution must overcome these two basic ills of the economic behaviour of man. Sadr specifies three components of the Islamic solution:

  1. Cessation of the various forms of oppression manifest in the unjust distribution of economic resources
  2. Disciplining of human nature to achieve control of the instinct of self‑love
  3. Utilization of economic resources to satisfy the needs of all humanity.

(Source)

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2 Comments

  1. Brilliant again. Please discuss the prohibition of compound interest as well. This is why Islam is attacked. There is great evil that rules this world, and compound interest is essential.

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