Introduction to Economic Jurisprudence (book)
- Abstract
introduction to economic jurisprudence(in persian: آشنایی با فقه اقتصادی) is a book in the field of Islamic economics that studies some important economic issues from a jurisprudential perspective. This book first states the relationship between jurisprudence and economics and the method of research in Islamic economics, and then presents a detailed explanation for the general and specific jurisprudential principles (jurisprudential economic principles). Following that, specialized elaborations have been provided on jurisprudence of ownership, jurisprudence of production, jurisprudence of consumption, jurisprudence of business and jurisprudence of commerce and trade. The economic jurisprudence of the government, divided into the two sections of role and goals, and duties and revenues, concludes the book.
Introduction to the book and its structure
Introduction to Economic Jurisprudence is a book in the field of Islamic economics, authored by Mahmoud ‘Īsavī, a professor at the ‘Allāmah Ṭabāṭabā’ī University. He holds a PhD in economics. The book Sākhtār-i Bāzār-i Sarmāyi dar Islām va Barrisī-yi Taḥavvulāt-i ān dar Iran (structure of the capital market in Islam and analysis of its development in Iran) is another work by this author in the field of contemporary jurisprudence.
The author has organized the discussions of the book in ten chapters. The knowledge of economics and its scope, the method of research in the knowledge of Islamic economics and the sources of the discipline of jurisprudence form the main discussions in the first chapter. In the second chapter, general jurisprudential principles (such as the principle of negating harm (ḍarar) and difficulty and hardship (‘Usr va ḥaraj)), and in the third chapter, specific principles in economics (such as the principle of salṭanat and the forbiddance of usury (Ribā)) have been stated. Chapters four to eight examine several fundamental economic topics such as ownership, production, consumption, business, commerce and trade. The final two chapters of the book are dedicated to explaining the goals and duties of the Islamic government (guardianship of the jurist (Vilāyat al-Faqīh)).
This book is a collaborative effort by the Research Institute of Hawzah and University and the Secretariat for Supporting Research Projects of the Research Deputy of Hawzah. The book is written to serve as a textbook for the course of “introduction to economic jurisprudence” in the undergraduate economics program (p. 3). Therefore, specialized discussions such as the application of Islamic contracts in modern economics and capital markets should not be expected in it. This is despite the fact that the title on the cover of the book is Fiqh-i Iqtiṣādī (Economic Jurisprudence) (which suggests specialized discussions), while in the bibliographic information (FIPA) and on the first page of the book, it is titled Āshnāyī bā Fiqh-i Iqtiṣādī (Introduction to Economic Jurisprudence).
The relationship between the two disciplines of jurisprudence (fiqh) and economics
Jurisprudence (fiqh) and economics are two distinct disciplines; however, human beings’ economic behaviors can be the subject of these two disciplines and relate the issues of these two fields of knowledge (p. 11). The author divides economic discussions into the three sections of legislative, analytical and managerial economics (p. 13). In legislative economics, the author explains the values and regulations governing the economy within two parts: economic school of thought and economic law. The author refers to socialist, capitalist, and Islamic economic schools of thought, considering the economic school of thought as the foundation and guiding principle, and economic law as the superstructure of the economic school. In defining the economic school, the author follows the definition provided by Mohammad Bāqir al-Ṣadr: Islam’s economic school of thought is a comprehensive and harmonious framework that outlines the main principles of the values that Islam advocates in the areas of production, distribution, and consumption (p. 16).
According to the author, Islamic economics shares some technical similarities with conventional economics (liberalism or capitalism), but it fundamentally differs from and has numerous contradictions to it in terms of principles, objectives, orientation, methodology, content, subjects, and economic solutions. For example, due to the prohibition of usury (ribā) in Islam, the Keynesian school in the form of the IS-LM model, which is based on interest rates, cannot be used. This is because removing the interest rate from economic relations causes an important pillar of this model, and consequently the entire model, to collapse (p. 23).
In the managerial economy and the human process of system-building, religion plays a guiding role in the creation of an economic system, and because of its fixed and variable elements, on one hand, it is less prone to error in the process of system-building, and on the other hand, it demonstrates the necessary flexibility in response to social and economic changes. Therefore, the knowledge of Islamic economics includes the school of thought, law, and the economic system, and is derived through ijtihad (analytical effort), relying on the three sources of revelation, reason, and experience (pp. 24–38).
General and specific jurisprudential rules in Islamic economics
In the second and third chapters, three general jurisprudential rules and three specific jurisprudential rules for Islamic economics are presented, along with their Quranic and hadith-based justifications. The rules of the prohibition of harming oneself and others (nafy al-ḍarar va al-ḍirār), negating hardship and extreme burdens (nafy al-‘usr va al-ḥaraj), and prohibiting the domination of disbelievers over believers (nafy al-sabīl) are general rules that are applicable in various jurisprudential discussions. Among the specific jurisprudential rules in the field of economics, the author explains the content and scope of three rules: salṭanat (owner’s full authority to use their property within the framework of law), itlāf (destruction [of the property]), and prohibition of usury (ribā). Although the author has used the term 'jurisprudential rule' to describe the rule of the prohibition of usury, this phrasing does not align with the common terminology used by jurists.
The general rules of nafy al-ḍarar, ḥaraj and sabīl
According to the author of the book, the principle of the forbiddance of harming oneself and others (lā ḍarar va lā zirār) negates both real and conventional (i‘tibārī) harms in Islamic law. This means that in Islam, there are no rulings that, when followed, would cause harm to an individual or the society. If such a ruling exists, as long as the harm persists, that harmful ruling is lifted (lā ḍarar). Additionally, according to this principle, no individual should harm others even in the pursuit of their legitimate rights (lā zirār). This principle, by ensuring economic security in the society, obligates the government to avoid causing harm to individuals or the society by its economic and executive policies, and to compensate for harms if they occur (p. 49).
The principle of negating hardship and excessive burdensomeness (nafy al-‘usr va al-ḥaraj), like the “lā ḍarar” (no harm) principle, is one of the secondary rulings that govern primary rulings. It ensures that no ruling is established in the Sharia and the economic system for the general public that would be unbearable (p. 59). According to the principle of negating the dominance of disbelievers over believers (nafy al-Sabīl), which is established to regulate the legal relations between Muslims and non-Muslims, there is no ruling in Islam that would allow the domination of non-believers over believers. Therefore, Muslims should not structure their economic or non-economic relations in a way that would enable non-believers to dominate them (p. 65).
The specific principles of salṭanat, itlāf and forbiddance of usury
The author considers the principle of salṭanat to be a widely applicable principle in economic-legal matters. With the acceptance of an individual’s ownership, the right to legitimate possession of one's property is also acknowledged. The right of dominion (sulṭih) applies when a person's ownership of their property has been acquired through religiously and legally legitimate, permissible, and corruption-free means. This right is only restricted or revoked in cases where legal or natural limitations arise, such as insanity, bankruptcy, extravagance, or prodigality (pp. 76-78).
Based on the principle of "itlāf" (destruction of property), an individual who has caused damage to the material or intellectual property of others (whether intentionally or unintentionally, directly or indirectly) must compensate for it. In the execution of this principle, determination of the extent of itlāf is based on customary norms, which are defined based on the conditions of time and place (pp. 78-85). Mahmoud ‘Īsavī considers the principle of the prohibition of usury to be one of the distinguishing features of Islamic economics. The principle of the forbiddance of usury applies to loan contracts as well as non-monetary and barter contracts (pp. 96-97). Despite modern perspectives on usury, all the reasons put together point to the absolute prohibition of usury (whether personal, governmental, banking, productive, consumptive, or any other type) (pp. 98-105).
Ownership in Islamic economics (jurisprudence of Ownership)
In the Islamic worldview, ownership has belief (the true ownership belonging to God), ethical (responsibility before God), and social (the right to legitimate use of property for oneself and the society) aspects (pp. 111-115). It encompasses the triad of physical property (‘ayn), benefit (manfa‘at), and right (ḥaqq) (pp. 122-123). According to the author, property must have the following characteristics: it must be desirable to rational individuals, be capable of being appropriated, be scarce, and possess lawful and legitimate benefits (pp. 120-121). Although Mahmoud ‘Īsavī distinguishes between property (māl) and the quality of being describable as property (mālīyat) and considers their relationship to be one of ‘umūm va khuṣūṣ-i muṭlaq (meaning that māl fully encompasses mālīyat) (p. 120), he enumerates the characteristics of property for the quality of being describable as property.
In Islamic economics, there are three types of ownership based on the type of owner: Imam’s ownership (ownership by the Islamic state), public ownership (ownership by the general public over properties), and private ownership (ownership by individuals over their own property) (p. 124). The ownership of the Islamic state includes two categories: anfāl (non-transferable natural resources) and mubāḥāt al-‘āmmah (transferable natural resources) (p. 130). The author lists three purposes for the exercise of possession by the Islamic state over anfal: the just distribution of wealth; the independent financing of the state; and the prevention of economic, social, and political crises (p. 126). Also, the following are three wise reasons for accepting private ownership in Islam based on a doctrinal, social, and economic perspective: the tool for human spiritual development, further human progress in economic activities, and the emergence of exchanges and markets (p. 139).
Production in Islamic economics (jurisprudence of production)
Based on the Islamic worldview, “production consists of any economic activity aimed at actualizing the utilization of divine blessings by humans” (p. 156). Production can be analyzed from the two technical and value-based aspects (p. 157). According to ‘Īsavī, contrary to the teachings of capitalist economics (where profit is the goal), in Islamic economics there are a combination of material and worldly, individual and collective and spiritual and other-worldly motivations (p. 160) and goals are the provision of legitimate individual and social needs, social justice, economic welfare and self-sufficiency of the Islamic society (p. 168). In Islamic economics, goals can be divided into the three types of immediate, intermediate and ultimate, which are longitudinally related. In this combination, the individual’s immediate goal is to secure his livelihood and to earn profit and income, his intermediate goal is to produce goods and services, and his ultimate goal is to please God and seek nearness to Him (p. 172).
Based on the jurisprudence of production, production of all types of goods and services is permitted, unless if it is obligatory or forbidden; in which case, productive activities are divided into the two main categories of obligatory and forbidden. Factors of production, including material capital, and human and natural resources should also be lawful (mubāḥ) from a religious perspective (pp. 174-177).
Consumption in Islamic economics (jurisprudence of consumption)
In conventional microeconomics, limits of consumption depend on the individual’s income and budget, while in macroeconomics, increased profit and production require more consumption (consumerism and extravagance) (p. 184). In Islamic economics, unlike the capitalist system, the motivation for consumption is to attain the greatest and most sustainable material and spiritual pleasure by fulfilling physical and psychological desires and needs, ultimately aiming to achieve closeness to God. Moreover, the religious ruling on the consumable goods depends on the ruling about their intended use. Therefore, in Islamic economics, like productive activities, consumption expenditures fall under one of the five rulings of forbiddance (ḥurmat), obligation (Vujūb), recommendation (mustaḥab), dislike (kirāhat) or permissibility (Ibāḥah) (p. 216).
‘Īsavī believes that in Islamic economics, the optimal level of consumption is the level of moderation (kifāf); that is consumption which is free from wastefulness and prodigality or excessive strictness and stinginess: above the level of necessity and below the level of wastefulness. He views the culture of asceticism (zuhd) in Islam as one of the factors that limit consumption. Additional to its psychological aspect, it practically prevents a culture of consumerism and leads to the optimal use of natural resources, appropriate production of goods and services, economic growth and increased employment (p. 217).
Business in Islamic economics (jurisprudence of businesses)
Human beings’ genetic freedom brings about legislative freedom, and legislative freedom entails rights and responsibilities for them. The right to ownership is one of the fundamental rights of human beings which is accompanied by effects such as the freedom to possession and the freedom to choose an occupation and business, as the primary jurisprudential principle implies man’s freedom in his business activities (p. 222). Despite this, the author believes that the freedom to choose one’s profession is not absolute; rather, it has a specific framework and falls under the five jurisprudential rulings (p. 227).
In most cases, the evidence for prohibition of forbidden business activities (makāsib al-muḥarramah) is the forbiddance of consuming wealth unlawfully, whose instances are hoarding, monopolization, collusion and gambling (such as speculation in the stock market) (pp. 229-247). Although, according to the majority of jurists, the prohibition of hoarding applies only to wheat, barley, dates, raisins, and oil, the author considers the prohibition of hoarding to apply to everything on which people's livelihoods depend (p. 237). Monopolies in economics occur in two forms: natural and unnatural. In cases of monopoly, the government must consider public interests and, by enacting appropriate laws and regulating the market, prevent the formation and improper functioning of monopolies (p. 239).
Trade in Islamic economics (jurisprudence of commerce and trade)
According to the author, commerce and the exchange of goods yield jurisprudentially legitimate profits only when conducted within the framework of jurisprudential rules regarding transactions (such as the prohibition of usurious and speculative (ghararī) transactions) (p. 263). Additionally, in jurisprudence, there are conditions for various types of commercial contracts concerning the parties, the subject matter, and the object of the contracts that must be observed. These conditions include the legal capacity of the parties (such as maturity, reason, development, free will, etc.) and that what is subject to the contract must be describable as property and transferable (p. 266).
In economic jurisprudence, commercial contracts are of the two types of exchange-based and participatory. Various forms of sale (cash, credit, prepayment, and deferred payment), leasing, and ji‘ālah (reward-based contracts) fall under exchange-based contracts, each with specific conditions and rulings (such as the prohibition of usurious credit transactions), and in some cases (like deferred payment sales), they are considered invalid according to the majority of jurists (pp. 270-275). In participatory contracts, capitals or labor and capital are combined to enable economic activities. Two types of contracts, partnership (shirākat) and muḍārabah (profit-sharing), are participatory contracts that have their own specific rulings and conditions (p. 279).
The right to annul a transaction (Khīyār) is one of the principles of economic jurisprudence, which is divided into two types: common (applicable to all contracts, such as Khīyār al-Ghabn, ‘Ayb, Ru’yah, Sharṭ, and Takhalluf al-Sharṭ) and specific (exclusive to sales, such as Khīyār al-Majlis, Ta’khīr, and ḥayavān). Khīyār in transactions is legislated to prevent the infringement of the rights of the parties and to compensate for potential losses resulting from the failure to adhere to the conditions and obligations of the contracts (p. 285).
Economic jurisprudence of the Islamic government
According to the author of the book, the Quran, hadiths, and the social and political conduct of the Prophet (PBUH) indicate the necessity of government. From a jurisprudential perspective, the condition for the implementation of many religious rulings is the existence of a government (pp. 305-309). From the Islamic viewpoint, God has delegated government to the Prophet (PBUH) and then to the Imams (AS). According to most Shia jurists’ view, during the Occultation of Imam Mahdi (AS), the government of the Islamic society has been delegated to just jurists (p. 310). In Islamic economics, the duty of the Islamic government is not merely to oversee the economic activities of the private sector. Rather, in many cases, the government has the right to directly intervene in the economy, and specific goals, duties, and authorities have been assigned to it (p. 314).
Goals, duties and revenues
Mahmoud ‘Īsavī has divided the economic objectives of the Islamic government into the three categories of ultimate, intermediate and executive (operational) goals. The ultimate goal is to reach proximity to the Lord, and intermediate objectives are economic justice, ensuring security, expanding social welfare, and economic strength and independence (pp. 315-316). He identifies the sources of the government’s revenues in economic jurisprudence to be the anfāl and common resources, fixed Islamic taxes (such as zakat on properties, fiṭrah, Khums, Kharāj and jizyah), governmental taxes (variable taxes), the supply and sale of goods, public services and etc. (p. 365). According to the author, the economic duties of the Islamic government are carried out to achieve the intermediate objectives, and its four ongoing duties are: resource allocation, income distribution, economic stabilization, and oversight. Government intervention in resource allocation should, as much as possible, be left to the market and is only permissible in cases where the market is unable to fulfill its role or where there are more significant interests that require prioritizing investments and production of goods and services (p. 340).
The distributive duty of the government includes the distribution of wealth (pre-production distribution) and the distribution of income (post-production distribution). In income distribution, attention must also be paid to both functional distribution (the share of production factors according to merit) and personal distribution (p. 340). One of the government's responsibilities for establishing social justice is to create economic balance, which is achieved through two strategies: the distribution of natural and financial resources, and the regulation of wealth and assets of the society (pp. 341-345). Social security is among the duties of the Islamic government in its distributive role and is aimed at assisting the poor and needy and providing for the essential needs of those who, for various reasons, have no income or whose income is insufficient to cover their living expenses (pp. 348-352). Job creation and controlling inflation are two stabilizing responsibilities of the government in Islamic economics (p. 359). Additionally, according to the author, the extensive ownership and heavy responsibilities of the government in Islamic economics have necessitated a supervisory role for the government (p. 362).