Economics and the Principle of Justice

The requirement that justice hold in all aspects of human activity will be one of the most important determinants of economic behaviour in an Islamic economy. In order to ensure that justice prevails, all impediments to its establishment must be removed. As long as such impediments prevail, injustices will surely recur. This is at least one of the methods of establishing justice adopted by Islam. The prohibition of riba is one example of removing an impediment towards justice. In other words, since it is an unjust practice, riba in all its forms must be completely removed from society so as to pave the way for practices which are in the eyes of Islam. Indeed, all prohibitions have the same import and purpose. If justice is to prevail in all aspects of activity, then the basic consumption, production and distribution relationships will in a certain state of equilibrium which would avoid the concentration of economic power in a few hands. It follows then that monopolies in both the goods and factor markets will not be consonant with Islamic sense of justice. The obvious exception will be public utilities whose size will be determined by the amount of “externalities”. Hence, state enterprises may essential for efficiency as well as welfare reasons. However, the individual consumers or producers cannot lower the social welfare by dictating price and output levels. Justice here demands that the price level should be determined by the natural forces of demand and supply. This is possible in an Islamic economy because Islam has removed all obstructions to justice in the form of ‘monopolistic hoarding’ or “ihtikar”’ cheating, deceit, etc.The second transformation that an economy would undergo through Islamisation is with regards to the distribution of income and wealth. Islam unequivocally rejects the acute inequality of income and wealth. “Let it (wealth) become not a commodity between the rich among you” [Al-Hashr (59):7]. The implication here is that growth must be simultaneously accompanied by distribution. Distributional efforts must be planned and executed, for otherwise will definitely set in. “He set on (earth) mountains standing firm, high above it, and bestowed blessings on the earth, and measured therein all things to give them nourishment in due proportion, in four periods, in accordance with (the needs of) those who seek (sustenance)” [Al-Fussilat (41):10]. This is a very pertinent verse with regards to income and wealth distribution pattern. The creation of mountains on earth, not only helps to stabilize the earth which moves at a great speed on its axis around the sun, but it also helps with the formation of rivers and streams. The first part of this verse describes clearly these two purposes of the creation of mountains. The second part of the verse describes the creation of food as source of nourishment and strength to all creatures on earth. One of the main sources of food comes from water (river and streams) and the other from the mountains themselves. As we know, these mountains are normally filled with all kinds of minerals which form the sources of wealth to man. Allah specified that the whole process of creation of all these sources of food and riches took four long periods. This means that two-thirds of the time taken to create the whole universe (six periods) was spent on the creation of food and riches for all creatures. What is important is the fact that the quantity of food created was sufficient for each and every creature in accordance with the individual needs all those who seek such sustenance. In other words, Allah (S.W.T.) has created enough for every creature on earth. The question is, how should the distribution be? If the nourishment is sufficient, then should everyone get equal amount? In actual fact, Islam allows the accumulation of wealth without limits, but it does not allow anyone to be deprived of his basic needs. The basic needs to live as a human being should be provided at any cost.
The obligation to provide for the basic needs falls upon, first, the next of kin, followed by the immediate society and then the government, in that order. Once the basic needs are fulfilled, there is no necessity to redistribute. This view is consonant with the verse (41:10) above, “in accordance with (the needs of) those who seek (sustenance)”. It implies that the wealth accumulated should be proportionate to the needs of the individual in question, as well as the effort and ability of the person. The needs refer to the needy who are either in desperation which may be temporary, or the invalid, including the young or the very old. Whereas those seek refers to those able-bodied people who could make the effort to obtain their need to accumulate wealth.In other words, the Islamic system states that everyone ought to be able to live decently while others may enjoy the luxuries of this life in accordance with the ethical standards as determined by the Quran and Sunnah. This concept simply implies equitable distribution and not equal distribution. It calls for an economic system which allows for the interplay of the normal demand and supply forces, without distortion. At the same time, it calls for essential institutions whose responsibility is to regulate such interplay of market forces. The distributional aspect has to be undertaken deliberately and not left to the market mechanism.In order to attain this state of affairs, Islam prohibits hoarding of wealth:
“Who hoard their wealth and rejoin avarice on others, and hide that which Allah hath bestowed upon them of His bounty. For disbelievers We prepare a shameful doom” [An-Nisaa (4):37]
“Woe to every (kind of scandal-monger and backbiter, who piles up wealth and lays it by, thinking that his wealth will him last forever!” [Al-Humazah (104)1-3]
(The author is presently pursuing Masters in Financial Economics at Madras School of Economics, Chennai, Tamil Nadu. Views are his own) [email protected]