Financial System

The Economic System of Islam


Basic Precepts of Islam Regarding Wealth

The Islamic point of view in regard to the sources of wealth is expressed in the Holy Qur’an:


That is, everything that is found in the world has been created by Allah for the benefit of mankind.

Mountains, rivers, mineral wealth and other means of human progress are mankind’s collective property, and we all have a share in this collective wealth. All these natural resources provide electricity, gold, silver and other precious metals as well as drugs and chemicals that are used to treat illnesses. There is limitless variety of produced goods, some for personal consumption, some for industry as raw materials and some are traded internationally.

God reminds us that everything has been created for the benefit of mankind. No individual can lay exclusive claim upon these resources, whether it is a Pharaoh, a Hitler, a Churchill or a Roosevelt. Everything that has been created is for the benefit of the entire human race, including the rulers and the ruled, the high and the low, the superior and the subservient. No one may claim that God has created these things only for his own personal use. The Qur’an tells us that “I have created this for you” and that we are all collective claimants of His creation.

Islamic Injunction on the Use of Wealth

The Qur’an spells out the following principle regarding the true purpose of wealth:


[And give them out of the wealth of Allah which He has bestowed upon you.]

The pronoun ‘them’ in this passage, as shown by the context, stands for slaves, i.e. prisoners of war who are not in a position to ransom themselves either out of their own personal and family means, or with the help of the government or country they had fought for.

In such situations, Qur’an instructs us that we should help the prisoners of war by providing them with resources that they can employ to make money and use it to procure their own release by paying the required ransom. We are thus taught that if we are holding some unfortunate people, whom the vicissitudes of life had deprived them of the power to stand on their own feet, they should be given the benefit of a portion of our resources, which really belong to God and in which every creature of God holds a share.

Similarly, the verse quoted above instructs Muslim rulers and kings that the wealth, which God has given them, does not solely belong to them, but all of mankind has a share in it. Even if they capture prisoners of war who are so unfortunate that their own countrymen and family abandon them and show little interest in getting them freed (possibly because people back home wish to usurp the prisoners’ property), it remains the duty of Muslims in authority not to abandon them. In such a situation, they are urged to spend a portion of their wealth to set the prisoners free, since “your wealth is not yours but belongs to God, and your prisoner is created by the same God who created you.

These references demonstrate that: Firstly, according to Islam, the world’s wealth belongs to all mankind. Secondly, the real master of all wealth is only God Almighty. Man is therefore not free to dispose of his wealth in any way he deems fit; what he can do is circumscribed by God’s prescribed limits.

We learn from the Holy Qur’an that this basic principle of ownership of wealth is an age-old truth, proclaimed by every Prophet of God. The Holy Qur’an refers to Hazrat Shu‘aibas when he warned his people against usurping the rights of others, against injustice, and against adopting ways of earning and spending wealth that led to strife. The people’s response was:




That is, “O Shu‘aib! What is the matter with you. The money is ours, the wealth is ours, the property is ours, and we feel that we can give it to whomsoever we please, and we can keep it from whomsoever we please; spend it wherever we please and not spend it wherever we please. Who are you to intrude upon such matters? This wealth is not yours to decide where to distribute or spend; it is ours, and we maintain the choice to spend it however we please. Has your mind become perplexed from offering prayer after prayer that you are now interfering in our financial affairs and telling us that if we spend in this way it shall be virtuous, and if we spend in that way it shall lead to punishment? Whence have you acquired the right to counsel and teach us?

Then the people taunted, “Thou art indeed very intelligent and right-minded,” i.e., who are you to preach in favour of the poor! That is, we accept that you are intelligent and right-minded, but now you claim that you can tell us how we should behave? We reject this claim of yours.

This clearly explains that the teachings of the Holy Qur’an regarding wealth are the same as were presented by the earlier prophets. They did not consider human beings entirely free to earn and spend as they pleased. They believed that all wealth belonged to God ultimately and that spending it against His will was unlawful.

Exhortations for Uplifting of the Poor as a Necessity for National Progress

Islam ordained sympathy for the poor and downtrodden and their uplift was a major concern at its very inception. A study of the chapters of the Holy Qur’an that were revealed in the beginning of Islam shows that the most dominant message in these verses is to support and uplift the poor. Muslims are told that if they desired national progress and God’s pleasure then they must try to help the poor and alleviate their sufferings.

Although at that point other injunctions of Islam-such as, how to pray, how to trade, how to judge, how to deal with each other, the rights of husbands and wives, the rights of rulers and ruled, and the rights of employers and employees-were not yet revealed, the Qur’an drew attention to supporting and uplifting the poor. The people were reminded that nations that did not help their poor and ignored the rights of the downtrodden were destined to be destroyed and would face God’s wrath.

Emphasis on Ameliorating the Conditions of the Poor in Early Islamic Teachings

History shows that the first chapter to be revealed was Surah Al-‘Alaq (Chapter 96). The opening verses of this Surah were revealed in the first instance, followed by a gradual revelation of the whole chapter, spread over a short time period. Four of the chapters that followed immediately after this Surah have been called a ‘soliloquy’ by Sir William Muir, a well-respected European Orientalist, who was, at one time, the Lieutenant Governor of U.P. He held that these chapters gave expression to the thoughts that filled the mind of the Holy Prophetsa prior to his claim of Prophethood.

According to Sir William Muir these four chapters are Surah Al-Balad, Surah Al-Shams, Surah Al-Lail and Surah Al-Duha. Muslim scholars believe that these four chapters were revealed after Surah Al-‘Alaq, and historical evidence supports this view. However, Muir was of the opinion that these four chapters were revealed prior to Surah Al-‘Alaq. His argument was based on the thesis that Surah Al-‘Alaq begins with the Arabic word iqra’, meaning, ‘read’. Thus it must be the case-according to Muir-that there were chapters that had been already revealed and were to be read.

In any event, these four chapters of the Holy Qur’an are the very earliest chapters according to Islamic history, and according to Muir they were revealed even before the Holy Prophetsa claimed that he had been commissioned as a Prophet. When we look at these four chapters, we find that three of them declare taking care of the poor to be necessary for salvation and national progress. They also instruct the rich to reform themselves. For example, it is stated in Surah Al-Balad:


Allah the Almighty says: 2015-July-Arabic_Inserts_-Request_pdf__1_page_Every rich man in the world says, ‘I am very rich and I have spent enormous wealth without any concern for the amount spent and therefore, I am entitled to honour and respect in the public.’” The Arabic word lubad in this verse means ‘heap after heap’, and this is an accurate description of the scale at which wealth is wasted by the rich in worthless pursuits.

Then He says: 2015-July-Arabic_Inserts_-Request_pdf__1_page_Does such a foolish one think that no one sees him?” i.e., by spending countless amounts he thinks that he has done a favour to the country, but people can see that he is doing it for show and is not motivated by sympathy and love for the poor. If he had those feelings, he would have spread his enormous expenditure over many days for the benefit and feeding of the poor, but he totally lacked such motives. His only motivation was to be known for his wealth. “Does he imagine that no one sees him?” He is totally wrong. The world is not blind and stupid. It is clear to everyone that his spending was not for human welfare, but for self-glorification.

Then He adds: 2015-July-Arabic_Inserts_-Request_pdf__1_page_Have We not given him two eyes?”-he should have used them to look at conditions prevailing around him. The poor are dying of hunger with no one to care for them, but he is spending heaps for his glory. Had he not been granted eyes, with which he could see the conditions surrounding him.

And then He says: 2015-July-Arabic_Inserts_-Request_pdf__1_page_And he had been given a tongue and two lips”, with which he could have discussed the situation and the proper uses of money.

The verse continues: 2015-July-Arabic_Inserts_-Request_pdf__1_page_And We have pointed out to him the two highways” of material and spiritual progress, i.e., placed within his nature the impulse to seek the ways of attaining nearness to Allah as well as practising human sympathy and concern. But he did not employ any of the three means, and spent his wealth without a valid purpose. Therefore, he only wasted the money.

Then Allah the Almighty says: 2015-July-Arabic_Inserts_-Request_pdf__1_page_But he attempted not the ascent courageously”-despite having eyes to see the condition of the poor, and having the tongue and the lips to enquire about it, and having an ingrained feeling for the love of God and humanity-“he attempted not the ascent courageously.” Like an overweight man, he got tired and failed to scale the heights-i.e., kept spending his wealth for show rather than the real purpose of achieving human welfare through it.

There are many other examples of wasteful spending. For example, some pleasure-seekers spend a fortune on dancing women; others, for lack of alternatives, spend it on gatherings of poetry recitals. There may be a poor widow in their backyard holding in her lap her hungry and crying children all night, but the rich give little thought to feeding the orphans, as they care more for their fame. However, God declares that they are not spending their money but rather wasting it.

Then Allah the Almighty says:2015-July-Arabic_Inserts_-Request_pdf__1_page_Do you know what the uphill ascent is?” and then goes on to explain that it is the feeling of sympathy that yearns to help and free that slave who toils in alien soil away from his family and home. It is the feeding of the poor and the hungry, instead of wasting money on feasts for the rich, sometimes involving the slaughter of hundreds of camels in one day. In times of drought and extreme cold, when food is scarce, it is the caring of the downtrodden, the feeding of the hungry and the clothing of the naked. It is the feeding of the orphan, instead of wasting money on lavish dinners, or gambling or wasteful sports.

The verse “feeding of an orphan, near of kin” does not mean that one should only feed the orphan who is a relative. As it is, even the most miserly person would feed an orphan who was related to him. Instead, this verse highlights the fact that there are two types of orphans. First there are orphans who do not have any relatives. These orphans are so helpless and friendless that at times even the most stonehearted of men would feel sympathy and feed them. But then there is a second category of orphans, who may have close relatives, such as, brothers, sisters, uncles, etc. People tend to pay less attention to such orphans, as they are held to have family to support them. However, God expects such a high standard of compassion that, even for an orphan with relatives, we should feel such love in our hearts that we consider him or her as our own kin.

The last part of the verse asks why “a poor man lying in the dust” was not fed. The Arabic expression dha-matrabah, or “lying in the dust”, in this verse implies the kind of extreme poverty that reduces one to near non-existence. Persistent destitution can deprive one of even the ability and energy to raise a voice. There are beggars who go from door to door seeking relief. Some of them beg insistently and refuse to take no for an answer. Others raise a hue and cry in protest, and organise themselves to press the government and the rich to help them. However, God expects us to have such sympathy and love that we must seek out the helpless poor who do not even have the capacity to protest and beg at someone’s door. Such a person is not a member of a ‘trade union’ of beggars; his lips remain sealed even though his stomach may be empty; he remains hidden away in sickness and grief; he is friendless with no hope or energy left.

Islam expects the rich to reach out to such hopeless poor and strive to heal their bruised hearts. Islam expects the rich to achieve such heights of moral advancement that, after doing everything in their power in the service of the poor, they do not regard themselves as superior for being charitable. Instead, Islam expects the rich to remain humble before God and constantly prod their hearts to ascertain if they have truly fulfilled their duty towards the poor. The rich must not remind the poor of their help, nor should they consider it as a favour to the recipient. Rather, they should constantly engage in self-examination if they have fulfilled their God-given obligations.

The next verse 2015-July-Arabic_Inserts_-Request_pdf__1_page_And exhort one another to be steadfast” describes the next stage on this ‘uphill road.’ It indicates that: beyond helping individuals, one seeks to address the troubles of the entire nation.[5] One should not blindly indulge in the life of ease while the poor are living a life of distress. These days, because of rationing, the rich are able to get the goods while the poor are left empty handed. The rich must not content themselves in just helping the poor; they should also persuade their friends and relatives to do likewise. Everyone should collectively work to improve the nation’s well-being and support each other in that effort. The next stage is that, despite all the good works, they are still left feeling that nothing has been done. And in that spirit, they must continue to remind one’s fellow beings the importance of helping and caring for the weak and the poor and continue such exhortations up to the last breath of their lives.

This teaching belongs to the earliest period of Islam, when the Holy Qur’an had just begun to be revealed and details of its commandments had yet to come. It was a time when even the people of Makkah were scarcely aware of Islam. Sir William Muir maintains that these were the thoughts of Holy Prophetsa and tendencies that led him eventually to claim (God forbid) Prophethood. We believe that these teachings comprise the earliest revelations to which applied the Divine command embodied in the word iqra’ (read)-i.e. convey these teachings to the people. Nevertheless, these teachings, revealed in the very early days of Islam, make clear that while individual freedom and struggle for personal material progress are permitted, it is not acceptable that a few individuals live a life of luxury while others suffer in pain and misery.

Continued in the next edition.



  1. Holy Qur’an, Surah Al-Baqarah, Verse 30.
  2. Holy Qur’an, Surah Al-Nur, Verse 34.
  3. Holy Qur’an, Surah Hud, Verse 88.
  4. Holy Qur’an, Surah Al-Balad, Verses 7-18.
  5. Holy Qur’an, Surah Al-Balad, Verse 18.