ECONOMIC MODELS as we now know are the product of modernity and of European philosophy, despite the disparities between those systems. The advocates of the Islamic state naturally cannot rely on these Western models, whether liberal capitalist or socialist because, as we mentioned, they are modern, secular systems. Following Islamic logic, and in line with the hadith of the Prophet that every innovation is going astray, and every going astray is in the Fire^[1]and that one may only rely on an ‘Islamic’ economic model, they are faced with a dilemma: the fact that Islam did not provide us with an actual economic model other than a wartime economy based on raiding and plundering conquered peoples under the banner of Islam, so as to provide booty for Muslims and for the Muslim exchequer.

Islam did not provide us with an actual economic model other than a wartime economy based on raiding and plundering

This is what the Islamic Caliphate state was founded on for thirteen centuries. But since the world has now changed and there are great powers that Muslims are not in a position to overpower, the Islamists find themselves in a state of confusion. And the confusion lies in the fact that their model cannot provide a real economic mechanism on which a state can be based. If we accept their proposition – taking into account this lack of an economic model for their state and that any reliance they have on secular models is evidence of the weakness and fragility of their proposition – is their Islamic project possibly compatible with any of these modern economic models, be they socialist or capitalist?

Socialism and Islam 

With the failure to present the Islamic project – if one may call a project any reliable economic mechanism – the advocates of Islamization and the Islamic state might try to depend on the socialist model. This is a model that calls for the nationalization of private property and its transformation into public property under the management and supervision of the state, with public ownership of the means and tools of production. This would constitute a certain kind of skin change from what we are used to hear from the Islamists. 

But is their reliance on a socialist model sound? Does socialism not contradict their Islamic fundamentalist outlook? In fact, they themselves and their shaykhs have long rejected socialism and dubbed it disbelief and misguidance. Shaykh Ibn Baz the Saudi faqīh says the following about socialism:

One of the infidel beliefs that are contrary to the correct faith, and oppose what the messengers brought – peace and blessings be upon them – is what the atheists in this era believe, those followers of Marx, Lenin and the other advocates of atheism and disbelief. Whether they call it socialism, or communism, or Baathism or any other names, the starting point of these atheists is that there is no God, and life is a purely materialistic matter. Among the principles they hold is the denial of the Resurrection, the denial of Heaven and Hell, and a disbelief in all religions. Whoever looks at their books and examines where they stand on these, knows this for certain. There is no doubt that this doctrine is contrary to all of the monotheistic faiths, and leads its people to the worst consequences both in this world and in the Hereafter.^[2]

If they have described socialism as disbelief and atheism, then it cannot be taken as an economic model in their Islamic state

If they have described socialism as disbelief and atheism, then it cannot be taken as an economic model in their Islamic state. It is an infidel and misguided ideology and is rejected by Muslim scholars, and this is in addition to the fact that Islam did not prohibit private property, as the Prophet Muhammad himself owned private property, including the land of Fadak.^[3] So how can they prohibit what God permitted, and nationalize private property and turn it into public property?

Capitalism and Islam

By rejecting this socialist model, they will have no choice but to resort to the alternative model, which is capitalism. But is it possible that capitalism, which derives from secular liberalism, can march alongside fundamentalist Islam which also rejects it? We should first understand that capitalism is an economic model based on the freedom to own the means of production and the tools of production, and the existence of a free market that allows the implementation of those productive resources. The capitalist model demands some basic requirements and specifics, such as the existence of banks that lend to investors and citizens who entrust their money to those banks as deposits and who earn interest from those deposits. This is so that banks may lend to their investors from the liquidity they derive from these citizens’ deposits. It also implies speculation on the stock exchange where shares of joint stock investment companies may be purchased by large or small investors who contribute and become shareholders in those companies. But does what this system offer contradict Islam in some way? The answer is yes – and what we mean here, of course, is the fundamentalist view on Islam, the view upon which the Islamic project bases itself in the first place.

Now if we were to talk about deposits and bank interest from an Islamic point of view, we may cite IslamWeb and the fatwā of Ibn al-Mundhir, and his view on the consensus of the Muslim imams in this respect:  

Putting money in riba-based banks in return fr a pre-determined interest with a capital guarantee is out-and-out usury, which the Qur’ān was revealed to prohibit. Yet some seek to portray this as a ḥalāl investment. This is a bogus attempt that is invalidated by evidence of the Qur’ān, the Sunna, the Consensus and the facts on the ground. It is worth mentioning here the view of Ibn al-Mundhir (may Allah have mercy on him) citing the consensus of Muslim scholars: “All of the credible scholars unanimously agree that a loan is impermissible in one or both of the parties stipulate for himself even a few dirhams.^[4] 

Shaykh Ibn Bāz says on this:

It is not permissible to take out insurance from usury-based banks, even if they do not charge interest, because that would aid them in their sin and transgression, and Allah Almighty has forbidden that. [5]

He forbids even taking employment in these banks:

There is no doubt that working in banks that deal in usury is not permissible, because that constitutes aiding them in committing sin and transgression, and Allah Almighty has said on this: And help one another in goodness and piety, and do not help one another in sin and aggression; and be careful of (your duty to) Allah; surely Allah is severe in requiting (evil). [Qur’ān V (al-Mā’ida), 2] It is established that the Prophet (peace and blessings of Allah upon him) cursed the practice of usury, the agent, the accountant and the witnesses alike.^[6]

How can they resort to the capitalist model for their state when they are rejecting the most basic foundations?

Talking about speculation on the stock exchange, the website Islam Q&A cites the decision of the Islamic Fiqh Academy of the Muslim World League: 

It is permissible to deal in commodities via the stock exchange, if the conditions of valid transactions are fulfilled, one of which is that a person sells what he owns. In fact in the case of the stock exchange, people often sell what they do not own and what is not in their possession, and this is forbidden by the Sharī‘a. Abū Dāwūd (3503), al-Tirmidhī (1232) and al-Nasā’ī (4613) narrated from Ḥakīm ibn Ḥizām (may Allah be pleased with him) that he said: ‘I asked the Prophet (peace and blessings of Allah be upon him): “O Messenger of Allah, people come to me wanting to buy something that I do not possess; should I buy it for the from the marketplace?”. He said: “Do not sell that which you do not possess”’. This hadith was classed as ṣaḥīḥ by Al-Albānī in Ṣaḥīḥ Al-Nasā’ī. ^[7]

They also have forbidden speculation on the stock exchange unless you sell what you possess, and they admit that this is difficult to achieve on the stock market. If they have forbidden bank lending, deposits, bank interest and even merely taking employment in banking institutions, or speculating on the stock exchange except under some impossible conditions, how can they resort to the capitalist model for their state when they are rejecting the most basic foundations on which its economic activity is based?

How can a society or state exist without a real economic model or mechanisms? Are they to take us back to prehistoric societies?

In the end, Shaykh ‘Alī Nāyif al-Shaḥūd gives us an answer in his Encyclopaedia by prohibiting capitalism outright:

The capitalist system is a man-made system that does not govern according to God Almighty’s law. One of its most conspicuous features is that it sees the state as having no other function than to protect the owners of capital and to defend the country in which they reside. The owners of capital develop it in every way they want, even if this violates all laws and freedoms. Capitalism does nothing to prevent religious, intellectual, behavioural or social chaos, so long as these do not directly harm their wealth.

In the end, we wonder whether their Islamic project actually provides a real model for an economy. If we made concessions to them while still adopting secular economic models and necessarily recognizing the failure of Islam to provide a real economic vision, we find them rejecting all such models under the pretext that they violate the law of God. So how can a society or state exist without a real economic model or mechanisms? Are they to take us back to prehistoric societies?

Suggested Reading

Is the Qur’ān an encyclopædia of science? (Part 2)

Or are they, as usual, mixing words with bullets and not actually giving us anything to scrutinise? Is it our problem, then, that they are yet to give us a clear model that can be taken up and responded to, or is it their problem? As a matter of fact the Islamic groups and advocates of political Islam and the Islamic state have never presented us with a coherent proposal on anything. No one takes on slogans as a doctrine or makes a religion out of terrorism and prohibitions. These people are just empty, they do not recognise any restriction and want us to go back fourteen centuries. They want us to go back to an economy of invading countries, plundering their wealth, oppressing human beings and selling them in the marketplace, just as their predecessors did – may God be pleased with them. 

This, in point of fact, is their economic project and these are the features of the state they wish to bring about.

^[1] ‘The worst of things are those that are newly invented; every newly-invented thing is an innovation and every innovation is going astray, and every going astray is in the Fire’ (Sunan al-Nasā’ī 1578).

^[2] Ibn Bāz, العقيدة الصحيحة وما يضادها p.18.

^[3] In May 628 AD, according to Muslim historiography, the inhabitants of Fadak, who had allied with anti-Muslim Arabs, surrendered to Muḥammad without a fight, in exchange for giving away half their land and wealth to Muḥammad. Qur’ān LIX (al-Ḥashr) 6-7 is said to be related to this event. (Ed.)

^[4] See the text on IslamWeb here.

^[5] Ibn Bāz, مجموع فتاوى ومقالات الشيخ ابن باز, 19/153.

^[6] Ibn Bāz, مجموع فتاوى ومقالات الشيخ ابن باز.

^[7] See the text on Islam Q&A here.