ECONOMIC INSTITUTIONS

Zakaat and Social Welfare;  Other economic institutions;  Educational Institutions;  Collective Obligations

 

The Muslim community is a practical and caring community. It recognizes the value of material well-being and the fact that people naturally stand in need of one another. The major instrument for ensuring a caring and healthy community is the institution of Zakaat.

 

Zakaat and Social Welfare

For as long as humans are humans, who have differing capacities and motivations fro economic action, there will be some who are poor. Indeed the majority of humankind are now afflicted by poverty. Every human being carries the Divine amaanah or trust to transform the elements of nature into sources of nutrition and comfort, of wisdom and beauty, efficiency and enjoyment for himself and others.

Built into this amaanah or trust is the requirement on those who have been blessed with wealth and means, to spend out of their substance on those in deprivation and misery. Islam teaches people that the poor and the deprived have a ‘title’ and ‘right’ in the wealth of the rich (70: 24-25) and constantly exhorts the rich to meet that obligation. In the sense, the rich stand in need of the poor. If they do not fulfill this ‘right’ of the poor, they sill be called to account.

While voluntary sadaqah or charity is encouraged and its scope extended so that even the poor can offer sadaqah (in the shape of a smile for example). Islam has established the institution of Zakaat to make concern for the poor a permanent and compulsory duty.

Zakaat consists of an annual contribution of two and a half percent of one’s income or ‘appropriated wealth’ to public welfare. The rate of Zakaat on other types of wealth such as agricultural product and jewelry is more. It is incumbent on minors and adults, males and females, living or dead. After debts, zakaat is deducted from the inheritance of any deceased Muslim.

‘Appropriated wealth’ excludes debts and liabilities, household effects (except jewelry) required for living, and land, buildings, and capital materials used in or for production. Zakaat is due on current year’s income as well as on the accumulated incomes of the past and on all stocks in trade.

Islamic law empowers the Islamic state or community to collect the zakaat, and keep a distinct account of it, separate from the public funds of the state treasury.

Zakaat funds must be spent on the eight categories specified in the Qur’an, namely, the poor and the destitute, the wayfarer, the bankrupt, the needy converts, the captives, the collectors of zakaat, and in the cause of God. The last category allows zakaat funds to be used for the general welfare of the community – for education of the people, for public works, and for defense of Islam and the Muslim community.

 

Benefits of zakaat

1.       Being a religious duty, it offers the donor the inner satisfaction of a duty accomplished. The funds on which zakaat has been paid bring satisfaction and reward in this world and the next; funds on which no zakaat has been paid will bring suffering and punishment in this world and the hereafter. The very word zakaat means, ‘sweetening’ and it implies that those funds on which no zakaat has been paid are ‘bitter’. The word zakaat also means purifying.

2.       Zakaat makes for social welfare and solidarity and eliminates class and  economic barriers, class animosity and hatreds; it eliminates arrogance on the part of the giver and humiliation on the part of the receiver.

3.       The need to pay Zakaat acts as a stimulus to investment of income in productive enterprise, for capital that is allowed to remain idle would progressively diminish in zakaat levies. Invested in production, it adds to society’s wealth and could help in job creation. Zakaat also has the basic meaning ‘to grow’: wealth grows with spending and investment.

4.       Zakaat is a great promoter of wealth circulation throughout society, which is one of the main features of any healthy economy. The Qur’an condemns the accumulation and circulation of wealth in the hands of the rich only. (top)

 

Other economic institutions

Zakaat is only the minimum contribution to social welfare in a community. There are other economic institutions that s society would need to develop to preserve its strength and integrity.

A Muslim community needs to have its own institutions for banking and finance, for thrift and insurance, its own investment and consumer priorities that would be in conformity with the moral and legal code of Islam. This requires new thinking and new initiatives. This is within the reach of any community beginning with small-scale projects and starting from the bottom up.

Muslim communities and societies need to have economic polities that would meet the basic needs of the people, change consumer tastes and levels so that people can live within their means specially considering the saying of the Prophet that ‘the little but sufficient is better than the abundant but alluring’. Muslim communities need to be wary of the debt trap through which the energies and resources of a people are mortgaged to international banking institutions. The level of debt from loans and interest remains one of the major sources of impoverishment of many societies. (top)

 

Educational Institutions

Educational institutions in many existing Muslim communities often produce timid and imitative people who are not able to contribute to the welfare and strength of society.

Muslims of today need educational institutions that would produce courageous, enterprising, and creative men and women who aim at ihsaan or excellence in all things, and who are able to contribute to the welfare and strength of society. Muslim communities need an education and an outlook that will not make them accept humiliation and oppression. This was the type of education and training that the Sahabah received in the ‘continuous education school’ of the noble Prophet. The focus of this education was nor fine buildings and expensive equipment but the human mind, heart and body. (top)

 

Collective obligations

While the individual Muslim has the duty to acquire such knowledge as to enable him or her to perform personal obligations such as knowledge of Salaat and the rules of fasting, the community has the collective obligation to ensure that it has the knowledge and skills to meet its essential needs and supplies.

The Islamic community needs for example to promote the industry of certain individuals in farming, weaving and building for people cannot go without food to eat, clothes to wear and dwellings to live in. It is amazing how this simple rule is neglected by many societies who have abandoned agriculture for large-scale industrial development. This has resulted in dependency on outside sources for food. In crisis situations, this has led to starvation, suffering and death and the ransoming of large populations to outside forces.

The study of the Shari’ah is a collective duty since knowledge of it is a prerequisite for enjoining the good and forbidding the bad which is the purpose of the Islamic society or state.

Jihaad is a collective duty, and each community needs to train and equip itself to defend itself against aggression and to protect the freedom of mankind. The concept of fard kifayah thus imposes on the community the need to assess its essential needs, plan for the fulfillment of these needs through training of individuals and the allocation of resources to encourage agriculture, industries and institutions to cater for these needs.

 

These are some of the aspects of community formation and concerns in an Islamic system. It would be seen that the Islamic system does not encourage selfish and destructive individualism. Neither does it stand for rigid collectivization and control from above. It is a society of the middle way where individual freedoms are enjoyed within a guided and disciplined, caring and creative society. (top)