Forum Comments:

Poverty, Zakah and the Economic System


Dr. Mohammad Omar Farooq
Associate Professor of Economics and Finance
Upper Iowa University 

IBF-Net; 4/5/07; Message #6600

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In response to:
http://finance.groups.yahoo.com/group/ibfnet/message/6600
===========================================
 
Salam and greetings.
 
Sister Aisha wrote:
"It was Omar ibn Abdel Aziz (who a lot of historians argue was the last of the caliphs) not Omar (RAA) who after implementing a great economical system was looking for recipients of Zakah,  and could not find poor eligible for zakah.  In the end he told his 'hisbah' people to buy seeds and throw it over the hills for birds to feed on.  It is a lovely story and I am surprised that you don't know about the economical system that was in place then.  I suggest you read a book called (Al hisbah) I don't know if it is available in English but it is a must read for anyone interested in 'Islamic/Ethical' finance. I am surprised you don't know about the book.  The system that is described in that book is baffling masha Allah.  It is by no way primitive but rather so complicated that I am sure systems today can learn a lot from. I think we should take more pride in our heritage and study our history, I am stunned how little Muslims know about their history; did you know that in the times of Khalifa Omar, he appointed the first woman 'minister'."
 
Sister Aisha is already surprised that I "don't know about the economical system that was in place then." She is also surprised that "I don't know about the book." Indeed, she is even "stunned" that "how little Muslims know about their history."
 
1. A woman "minister"?
 
Indeed, does anyone on this forum know that Hadrat Umar appointed the "first woman minister"? Well, I am among the ignorant ones. This is so because I don't know in what sense the word "minister" is being used. I am aware that a woman was appointed by Hadrat Umar as a market inspector (another word, a public official), whose job was to see that market functions are carried out as well as market participants behave as supposed to.
It is reported about Shifa' Bint Abdullah: "Umar often entrusted her with market responsibilities (i.e., as a market inspector).". [Afzal-ur-Rahman, Role of Muslim woman in society, Seerah Foundation; 1st ed, 1986,  p. 86, based on Al--Isti'ab fi Asma' al-Ashab by Jalal U. Ansar Umri]
If Sr. Aisha is referring to that appointment, then I know. However, a "minister"? I really don't. Does that mean Hadrat Umar had a "ministry"? Since we all have limitations of our knowledge and I am no exception, I would very much like to know if Sr. Aisha is referring to the same as I have mentioned. Then, the word "minister" does not apply here. "Minister" as a word carries certain connotations about the position or responsibility.
 
2. Hadrat Umar II or, much earlier, Hadrat Umar?
 
As far as the book is concerned, I believe Sr. Aisha is referring to Ibn Taymiyya's Al-Hisbah, which is available in English as Public Duties in Islam: Institution of the Hisba [Islamic Foundation, 1982]. I am familiar with the book, even though currently I don't have it in my personal collection. My asking for corroboration was not an indication that I am not familiar with the book [an unnecessary jumping to conclusion]. Rather I wanted to know if the source Sr. Aisha is referring to goes beyond Ibn Taymiyya's al-Hisbah. Somehow we have a tendency not to provide information when we assert something, and then when we are asked for corroboration, we feel uncomfortable (or even condescending). Even in this case, suppose I am familiar with the book and I can easily look up. However, for someone who hasn't read the book, does the interested reader need to read the entire book to find out where the narrative about Hadrat Umar II appears in the book? If we really want to help each other in a mutually enriching learning environment, then as writers we also need to present a little bit more information while we are writing.
 
Anyway, as Sr. Aisha correctly reminded that we should learn more about our history. My asking for corroboration was precisely for that purpose. As I mentioned in my previous message that the observation - Zakat personnel used to seek out eligible zakat recipient, but could not find - relates to a period much earlier than Hadrat Umar II. Therefore, if we want to learn about history, in this context, we have to go back to the period of Hadrat Umar.
 
In this regard, I invite the readers to a well-researched contemporary book Economic Functions of an Islamic State: The Early Experience by S. M. Hasanuzzaman [Islamic Foundation, 1991]. This book is rather comprehensive and broad in drawing on relevant works from the past. One of the things we learn from sources like al-Tabari [d. 310 AH], a much earlier source than Ibn Taymiyyah [d. 728 AH],  the author of al-Hisbah, that Zakat collectors were already finding surplus in the zakat fund. There are also reports that they were not finding eligible zakat recipients.
 
" ... within three months of Abu Bakr's reign, Zakat income exceeded the requirements of the people of Madina." [p. 182, referring to Tabari, I, 1880]
 
"Zakat funds were distributed within the tribes of the paying locality for as long as there were deserving cases. In the case of dire necessity the centre could take some or the whole of it. After the minimum level of incomes of the beneficiaries are achieved--when they were no more entitled to receive Zakat -- the entire amount of Zakat could be transferred to the centre. It is reported that Mu'adh remitted a portion of Zakat to Caliph Umar on the ground that it exceeded the requirement of his district. Within the next two years the whole of the Zakat receipts are reported to have been declared by him as surplus to local requirements and remitted to Madina. (referring to Abu Ubayd's Kitab al-Amwal, 1911) The report suggests that in the district, the general level of incomes was relatively higher than in other districts and as a result the number of deserving persons was also smaller. Moreover, through the process of redistribution of wealth a certain minimum level of incomes was achieved so as to remove them from the list of beneficiaries. The policy seems to have been pursued in even in the far-flung newly-converted Muslim communities of Barqa and Zawila (referring to al-Baladhuri's Futuh al-Buldan, 226), where Zakat collections were distributed in toto, during Caliph Umar's time. The report that Umar II returned the Zakat proceeds of Uman for local distribution (al-Baladhuri, p88) suggests that at least some of the rulers before him did not care much to satisfy the local requirements. But along with it, the report that the Zakat of Banu Kalb was declared surplus to local requirement and was retained for expending the following year (referring to Ibn Sad's al-Tabaqat, 5, 257) suggests that by that time the distribution of Zakat had already brought some degree of satiety at some places." [pp. 187-188; also note that each of these sources are much earlier than Imam Ibn Taymiyya's al-Hisbah.]
 
Therefore, for those who want to be better informed about history, please find out from sources earlier than Ibn Taymiyya's al-Hisbah that during the period of Hadrat Umar - much earlier than Hadrat Umar II - many communities became free from the need of Zakah.
 
3. Distribution vs. Production?
 
It is well-established from early Islamic sources that from the period of Khulafa-i-Rashidoon, especially beginning with Hadrat Umar, significant redistribution program was undertaken, which had some meaningful and broadbased welfare effect. However, for those who claim or suggest that this was due to Zakat should check the historical sources and do so more closely. First of all, those early periods coincided with significant conquests and expansions, which brought to the Bait al-mal a lot of ghanimah (booty), fai' and Jizya. There is no recorded data to know or ascertain as to the composition of sources of Bait al-Mal.
"The total collections of Zakat cannot be determined for any period up to the end of the Umayyad rule. The historians and geographers have given many valuable statistical details about the later period but they cannot be made a point of analogy, interpolation or extrapolation for want of information about as many factors as the changes in population, religion, land tenancy system, and other sources of income and the per-head average holding of wealth liable to Zakat." [Hasanuzzaman, p. 186]
Since Hadrat Umar II was also from Umayyad dynasty, the above information applies to his reign as well that we don't about what part of Bait al-Mal came from Zakat.
 
Please refer to pp. 158-160 in Hasanuzzaman to get a picture of how just Ghanimah made many people rich. Within a few years after the Prophet's death "less than 100,000 men were deployed on different fronts, and the amount of Ghanima that they might have acquired can be conceived by the fact that Khalid, who took part in various expeditions for about five years, collected goods and cash valued at 160,000 dirhams. Even so this would be a modest figure if the picturesque accounts of the Ghanima accruing from Mada'in, Bukhara, Ifriqiyya, and Andalus, as reported by the historians, are correct."
 
Thus, the initial redistributive effect, including the period of Umayyad dynasty, was in large part from non-Zakat sources: Ghanimah, fai', and Jizya. That the redistribution program was somewhat egalitarian had a broadbased socio-economic effect. However, quite notably, Hadrat Umar II served as Khalifah during 717-720 AD - only for three years. The kind of egalitarian redistribution that was suspended (or sabotaged) after the Khulafa-i-Rashidoon was reinstituted by Umar II. However, his aggressive and bold program of redistribution cost his life. "His reforms in favor of the people greatly angered the nobility of the Umayyads, and they would eventually bribe a servant into poisoning his food." [Wikipedia]
 
What we learn from his period is populist redistribution. However, what information do we have from the production side? Elimination of poverty in just 3 years is no small feat. The multiplier effect must have been astronomically high. Can Sr. Aisha shed some light on that? She wrote: "I am surprised that you don't know about the economical system that was in place then."
 
Well, Sr. Aisha, I am disappointed at myself for my ignorance. However, an economic system is based not just on the distribution, but also production side. We must remember that gradually Ghanimah, fai' and even Jizya sources of revenue for Bait al-Mal shrunk considerably. To sustain the beneficial effects of the distribution, the production side must have taken off as part of a sophisticated or "complicated" system. Therefore, can you please enlighten us about this economical system, especially in regard to the production side?
 
Maybe you can identify and list 5-10 salient aspects of this economic system that covered or affected the distribution as well as the production side?
 
One humble request. Let's write with corroboration. It does help all of us in mutually enhancing our learning.
 
Fi amanillah.


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