Skip to main content
main-content
Top

About this book

This book provides an economic analysis of the earliest Islamic society, focusing on the policies of the Messenger of Islam (Sawa) and his successors during the first four formative decades of Islam. Two institutions of great importance – the market and the public treasury (Baitul Mal) – and their roles in the development of the private and public sectors are particularly emphasized in this study. The first part of the book is devoted to the economic and cultural dimensions of life in the Arabian Peninsula during the pre-Islamic period, including an analysis of trade and financial relationships with the Roman and Persian economies; the challenges faced by the Messenger’s mission and the economic policies of the Messenger after the migration to Madinah are also examined in detail. The author then moves on to a devoted analysis of the nature and functions of the public treasury, its revenues and expenditures, as well as financial and fiscal policies. Also examined is the role of the public sector in maintaining equilibrium in the financial and real sectors, as well as in promoting economic growth and employment. Analysis of the institution of the market, its characteristics, and its functions during the earliest Islamic period constitutes the third section of the book. The behaviors of consumers, producers, and investors in an economy without an interest rate mechanism are also addressed here. The final section investigates the fundamental objective of Islam for human societies – that is, justice – within the context of discussions in earlier parts of the book. The author uses historical economic data, facts, and evidences that are reported from the period, both prior to and after the establishment of the Islamic State, to explore the economic relations, policies, and models that were in practice and applied at that time.

Table of Contents

Frontmatter

Arabian Peninsula in the Eve of the Introduction of Islam

Frontmatter

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

Abstract
In this chapter, the economic and cultural situations of the Arabian Peninsula, prior to Islam, are introduced. The natural environment, the production possibilities and the economic activities which prevailed prior to the emergence of Islam are also reported. The objective is to show the scarcity of the resource base of the Peninsula at the time and the importance of transforming it into a fostering economy after Islam, and also changing a tribal culture and a belief in a system of idolatry into an Islamic universal worldview.
Seyed Kazem Sadr

Chapter 2. Invitation to Islam

Abstract
This chapter gives a brief presentation of the reactions of Makkah’s inhabitants to the Messenger of Islam before and after his prophethood, and reveals the degree of their opposition and resistance towards the invitation of the Holy Prophet (SAAS). Despite immense difficulties, the Messenger presented his mission by introducing its scope and by training a large number of Muslims accordingly. The doctrinal principles of the Islamic worldview and the ritual practices, which were made obligatory or recommended prior to migration to Madinahh, will also be presented here.
Seyed Kazem Sadr

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

Abstract
This chapter studies the process of forming an Islamic state. First, it provides an estimate of population size, employment opportunities and national income. Second, it presents the articles of the first constitution passed by all members of the new Islamic community and discusses the freedom and economic parity rights that it secured for all members, regardless of their religions, races and genders. Next, the property rights system is presented, including proprietorship, exchange rights and the distribution of natural wealth and income. Finally, the chapter describes the policies and measures adopted by the Holy Prophet (SAAS) to develop the economy of the early Islamic state.
Seyed Kazem Sadr

Public Treasury and Public Finance

Frontmatter

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

Abstract
The major goal of this chapter is to present the model of public leadership and governance in Islam. This is undertaken with reference to Imam Ali’s (AS) directives and traditions. The objectives, obligations and behavioral characteristics of governors are delineated on the basis of the mandate, the principles and the roadmap that Imam Ali (AS) instructed to Malik Ashtar when he appointed him as the Governor of Egypt. He dedicated considerable time and effort to clarifying governors’ missions, their status and obligations, and the methods for the collection of taxes and disbursements during his caliphate. The second objective of this chapter is to acquaint the reader with the process of establishing the Baitul Mal and its development from the time of the Prophet (SAAS) to the end of the caliphate period.
Seyed Kazem Sadr

Chapter 5. Fiscal Policies in Early Islam

Abstract
The objective of this chapter is to elaborate the fiscal policies of the early Islamic era. These policies are included in the terms of references of regional governors in persuading the objectives highlighted Chap. 4. In order to become acquainted with these policies, first, different kinds of taxes will be introduced and the characteristics of them will be inferred. Taking into account their common features, we shall set forth a tax model from the early Islamic era. Then we shall enumerate the different expenditures of the Baitul Mal, so that the public revenue–expenditure cases and their general features will come to light. The method in which these expenditures are financed and balanced against the revenues of the Baitul Mal will also be discussed. Taking into account the features of early Islamic taxes, the methods in which they are spent and the impact of these policies on growth and economic development; the fiscal policies of the early Islamic era will be deduced.
Seyed Kazem Sadr

Chapter 6. Money and Finance in the Early Islamic Era

Abstract
This chapter discusses the developments in the type, demand and supply process of money and the regulations that led to stability of its circulation in the early Islamic economy. The variety of financial services in the private sector for channelling savings deposits into investment activities are also described here. The chapter closes with a presentation of the financial policies and innovations that contributed to the growth of the economy and ensured its stability and resilience.
Seyed Kazem Sadr

Market and the Private Sector

Frontmatter

Chapter 7. The Markets in the Early Islamic Era

Abstract
This chapter describes the characteristics of markets in the early stages of Islam and infers their structure, conduct and state of competition. The efficiency of the process of price determination is discussed accordingly. The measures and policies taken to enhance market activities are also described, with particular emphasis on the sanctification of economic activities and its impact on the private sector of the nascent Islamic economy. Finally, the complementary role that markets performed in connection with the Baitu Mal is illustrated.
Seyed Kazem Sadr

Chapter 8. Consumption Theory

Abstract
This chapter gives a brief presentation of the reactions of Makkah’s inhabitants to the Messenger of Islam (SAAS) before and after his prophethood to show the degree of their opposition and resistance towards the invitation of the Holy Prophet (SAAS). Despite enormous difficulties, the Messenger presented his mission by introducing its dimensions and training a large number of Muslims accordingly. The doctrinal principles of the Islamic worldview and the ritual practices which were made obligatory or recommended prior to migration to Madinah will also be presented here.
Seyed Kazem Sadr

Chapter 9. Production Theory

Abstract
The chapter reviews firm theory and applies it to Islamic production rules of behavior, such as refraining from wastage, extravagance and harming others. The discussion is preceded by an exposition of the concept of efficiency and how it can be achieved in production activities. The chapter concludes by explaining why the concept of efficiency is not applied to consumer behavior in the conventional theory.
Seyed Kazem Sadr

Chapter 10. Exchange

Abstract
The processes of market exchange and the necessary conditions for efficiency are discussed in this chapter with the help of the Edgeworth box diagram and the contract curve. Also, the effect of policies and measures that were implemented by the Prophet of Islam (SAAS) on the initial distribution of wealth, and the impact of market ethics and rules of exchange on the efficiency of market price determination and income distribution among the Muhajerin (immigrants) and the Ansar (helpers) is also discussed. The chapter will conclude by showing the effect of Islamic property rights on the relative shares of factors of production.
Seyed Kazem Sadr

Chapter 11. Investment and Saving

Abstract
This chapter is composed of two main parts; the first is a presentation of a model for savings and investment decisions in an interest free economy. This model is constructed with the help of a new observable variable that is determined in the capital market. Subsequently, factors that affect savings and investment functions are discussed. The second part deals with the outcomes of eliminating Riba from the economy. A discussion of the impacts of implementation of this rule on the real and financial sector of the economy concludes the chapter.
Seyed Kazem Sadr

Justice

Frontmatter

Chapter 12. Efficiency and Justice

Abstract
This chapter expounds on efficiency and justice. The concepts of absolute and relative efficiency are defined and shown to depend on the underlying definition of justice in alternative economic systems. Then, various definitions of justice, including that from an Islamic standpoint, are deduced and applied. On the basis of this notion, the social welfare function and general equilibrium point is obtained and it is shown that all consumption, production and exchange processes are both efficient and equitable.
Seyed Kazem Sadr

Backmatter

Additional information

Premium Partner

    Image Credits