The Economic System of Islam

We begin a serialisation of an epic lecture delivered in Lahore by the Second worldwide Head of the Ahmadiyya Muslim Community. His renowned scholarly acumen, both secular and religious, was preserved in a volume consisting of over 200 books on a huge variety of topics.

After reciting Tashahhud, Ta‘awwudh and Surah Al-Fatihah, Hazrat Mirza Bashir-Ud-Din Mahmud Ahmadra said:

Importance of the Subject

My sermon today deals with the economic system of Islam. This is a vast subject that is hard to address thoroughly within the limited time available. Discussion can at times become ambiguous and its import difficult to grasp if, for the sake of brevity, the core elements and context of the subject are not properly explained. Nonetheless, I shall endeavour—as far as possible—to present a succinct account of the Islamic economic system in a way that is easy to understand, and to explain its fundamental principles and the broader environment in which they have been placed.

Since the Islamic economic system has certain features that appear to be in common with the so-called Communist system, my discourse would be incomplete if I did not describe the Islamic viewpoint regarding Communism and did not elucidate the differences between the two economic systems.

It should be remembered that just as branches grow out of the stem of a tree, important issues sprout out of the established prior fundamentals. Without an understanding of these fundamentals, the significance of those issues cannot be fully appreciated. I therefore deem it necessary that, before describing the Islamic economic system, I should briefly explain the foundation on which it rests.

Sovereignty of Allah and its Implications for Those in Authority

Islam lays the foundation of all its systems, whether political, economic, social or any other, on one fundamental principle—that the ultimate sovereignty and ownership belongs only to God Almighty. As it is stated in Surah Al-Zukhruf that:2015-May-Arabic_Inserts_pdf

That is, greatly blessed is Allah to whom belongs the kingdom of the heavens and the earth. Similarly, all that is between them is also under His ownership and control. To Him also belongs the knowledge of the last Hour—when all of these have served their purpose and the time for them to perish has arrived. Ultimately, everything will be brought back to Him.

In this verse Almighty God announces that the rules over the heavens and the earth and whatever lies between the two is under His ownership and control. Furthermore, it is God alone who knows the destined time when every living being, after fulfilling the purpose of its creation, must face its end and return to Almighty Allah. In brief, this verse lays down that the kingdom of the heavens and earth really belongs to God, and everything that exists therein is destined to return to Him.

When a person is made responsible for a specific task, or is entrusted with something of value, he is answerable to the one who entrusted him with those responsibilities; but a person who regards himself free and unanswerable to anyone would be inclined to do whatever he pleases. This verse of the Holy Qur’an is a reminder that all worldly governments, kingdoms and powers are under God’s command and are granted to human beings only as a trust. Man must not consider himself unaccountable just because he has the power and ownership of material wealth that he is given in this world. He may appear to have authority and ownership on the surface, but in truth he is only holding a trust from God. Human beings are answerable before God that they rightfully discharged the trust that was reposed on them.

Authority Emanates from Allah

The Holy Qur’an categorically declares that authority emanates from God and no individual has any inherent right over it. It is stated:2015-May-Arabic_Inserts_pdf

That is, O you who is being addressed, declare that: “O Allah, Lord of sovereignty, You give sovereignty to whomsoever You please; and You take away sovereignty from whomsoever You please. You exalt whomsoever You please and You abase whomsoever You please. In Your hand is all good. You surely have power to do all things.

This verse reminds us that whenever an individual gains authority, it is a trust from God Himself. This does not mean that every ruler and person in authority—no matter how cruel, corrupt, foul or worthless he might be—is appointed by God as His representative. Rather this verse implies that circumstances that lead one to gain authority are created by God. Thus, if someone attains authority, it is due to him taking advantage of God’s created circumstances.

Since authority comes from God, anyone who gains authority or power in this world can at most consider himself as a subordinate and trustee of God. He cannot consider himself to be the absolute ruler or authority. The ultimate authority and decision rests with God Almighty. Any ruler, king, dictator or parliamentarian, who is entrusted with the affairs of a state, is answerable before God for the laws he enacts in this world. If laws promote things that God has forbidden or prohibit things that God has ordained, then such rulers will stand guilty before God Almighty just as an insubordinate and rebellious servant is made to stand before his master. Regardless of their status—whether they be a king, dictator or a parliamentarian—they will surely be punished by God Almighty for their actions.

Thus the above-quoted verse does not imply that every person who gains authority is appointed by God Himself. Instead, it means that if a person is given authority within his circle of influence, he must rule within the limits prescribed by God Himself—the ultimate authority. Doing otherwise would be considered sinful. It is true, however, that under certain circumstances, God does directly appoint people in authority, who are noble and just, but their rule is spiritual not worldly.

Injunctions for Those in Authority

The Holy Qur’an states that some among the rulers are such that:2015-May-Arabic_Inserts_pdf

That is, there are many rulers and kings in the world, who when they assume power—that is, when they acquire authority by employing God-given capacities—they run about in the land to create disorder in it instead of serving the country and its inhabitants. Their activities create disturbances and disorder between different tribes, nations and religious groups, and result in economic disruption, cultural degradation, and the ruin of future generations.

This verse points out that there are rulers and kings who gain authority because of God-given faculties. However, once in power, instead of serving their country or its people, and establishing peace and security, they introduce measures that lead to conflict between people of different countries, tribes and religions, and create chaos in the land. They also adopt ways that destroy the country’s social and economic fabric and bring ruin to future generations.

The word harth in the Qur’anic verse literally means an ‘agricultural crop’, but here it is used figuratively with a wider connotation to all resources of economic development and financial well-being. The reference is to the rulers who do not adopt measures appropriate for economic growth and financial improvements of their people, but, instead, make laws that destroy the country’s society, its economy and its financial situation. In this way, they create obstacles for the progress of future generations and make laws that deprive them of the capacity and knowledge needed for growth and development. God reminds us: “Allah loves not disorder”. Thus, He regards such sovereigns and rulers with displeasure, and worthy of divine chastisement.

The conclusion from the above verse is that, according to Islam, the rulers, in the true sense of the word, are those that provide peace, improve economic well-being of their subjects, make their lives secure, and do not squander the country’s resources in unnecessary wars resulting in wanton loss of life. In other words, the state is obligated to ensure peace, security and well-being of its citizens.

Justice Among People and Nations

The Holy Qur’an states at another place:2015-May-Arabic_Inserts_pdf

That is, O people, Allah commands that when you are in a position to make over the trust of authority to someone, you should grant it to those worthy of discharging the responsibility. [Then those who are placed in authority are addressed with the admonition that since they have been elected to positions of authority by the people, it is their duty that] When you make certain decisions, do so with justice. And surely Allah admonishes you! Excellent is that with which Allah admonishes you. Verily Allah is All-Hearing, All Seeing.

This verse instructs the people that when given the opportunity to choose someone as the ruler, they should select the best candidate for the task, who is capable of discharging the affairs of the State with integrity and competence. He should be the best leader, committed to promoting general welfare.

The latter part of the verse, “And surely excellent is that with which Allah admonishes you”, tells us that divine injunctions are not like those of some rulers who issue orders without due consideration or thought, instructing people to behave one way or the other. Instead, this injunction comes from your Creator and Master and is for your own good and welfare. If you appoint rulers who are good, who appropriately discharge the affairs of the state and understand the importance of the trust reposed on them, then it is all for your own benefit.

If rulers protect people’s lives and wealth, make decisions based on justice and fairness, do not discriminate against individuals or communities, treat the weak and the strong equally, maintain order within the state and do not tread the path of rulers who show favouritism and bias, then they would not only be carrying out God’s commandment, but would themselves benefit from this conduct.

The Holy Qur’an further states “Allah is All-Hearing, All Seeing”, meaning that God watched as people were trampled upon and destroyed by tyrannical and ruthless rulers who usurped the people’s rights. God witnessed this state of affairs and His sense of justice and fair play was aroused as mankind continued to suffer cruelty while the rulers did whatever their whims dictated. Therefore, God decided to give instructions on these matters Himself. When injustice reached its zenith and the people pleaded for mercy with agony that, “O Lord! Such rulers are being imposed on us who do not grant us our rights.” God then decided that in his next sharia, [religious law] He would ordain that rulers be appointed through election, and only those persons be elected who would act with equity and justice, and were capable of running the affairs of the state. Similarly, God instructed the rulers in His sharia that they must always act with equity and justice, strive constantly to uplift the nation’s economic condition, protect the life and property of its citizens, and not discriminate between individuals and nations and not adopt ways that would be detrimental to the development of the country and future generations. Instead, the rulers should always adopt such means and laws that are essential for the country’s progress.



1.Holy Qur’an, Surah Al-Zukhruf, Verse 86.
2.Holy Qur’an, Surah Aal-e-‘Imran, Verse 27.
3.Holy Qur’an, Surah Al-Baqarah, Verse 206.
4.Holy Qur’an, Surah Al-Nisa’, Verse 59.

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