The Khilafah does not have a planned economy where the government controls and regulates production, distribution and prices through some all-encompassing macroeconomic plan. Private ownership of land, factories, shops and corporations in order to generate profits is highly encouraged within the Khilafah.
The Messenger of Allah (saw) said, ‘The truthful and trustworthy merchant will be in the company of the Prophets, the upright and the martyrs.'36The shari'ah restricts state intervention in the economy in many areas. Violation of these by the state would be considered government oppression (mazlama) that can be overturned by the Court of Unjust Acts (Mahkamat ul-Mazalim). Having said this, the Khilafah does not permit the concept of freedom of ownership like in Capitalism where if enough demand exists companies can supply goods even if they are detrimental to the wider society.
Public/Private PropertyIslam makes a distinction between private and public property within the Khilafah. There is no concept of Nationalisation where private property is transferred to the State if the State viewed it was in the public interest. Only if the nature of the property changed can it then be deemed public property and ownership transferred to the state.37 There are three types of public property defined by Shari'ah:
The Messenger of Allah (saw) said, ‘The truthful and trustworthy merchant will be in the company of the Prophets, the upright and the martyrs.'36The shari'ah restricts state intervention in the economy in many areas. Violation of these by the state would be considered government oppression (mazlama) that can be overturned by the Court of Unjust Acts (Mahkamat ul-Mazalim). Having said this, the Khilafah does not permit the concept of freedom of ownership like in Capitalism where if enough demand exists companies can supply goods even if they are detrimental to the wider society.
Public/Private PropertyIslam makes a distinction between private and public property within the Khilafah. There is no concept of Nationalisation where private property is transferred to the State if the State viewed it was in the public interest. Only if the nature of the property changed can it then be deemed public property and ownership transferred to the state.37 There are three types of public property defined by Shari'ah:
- That which is considered a public utility, so that a town or a community would disperse in search for it if it were not available. E.g. water, electricity, gas and oil reserves
- The uncountable stores of minerals. E.g. diamond mine.
- Things which, by their nature, would prevent the individual from possession. E.g. rivers, seas, lakes, public canals, gulfs, straits.38
Outside of these categories all other property is private property and can be owned by individuals. The only exception to this is those properties that belong to the state such as government buildings, tax revenues and army weapons. These are termed as State property.39Therefore the factors of production: land, labour and capital are not owned and controlled by the state as is the case in a planned or command economy.
Price fixing
The Khilafah cannot intervene directly in the economy to fix the level of prices.
Imam Ahmad narrated from Anas who said: Prices increased at the time of the Messenger of Allah (saw) so they said, ‘O Messenger of Allah, we wish would you price (fix the prices).' He (saw) said: ‘Indeed Allah is the Creator, the holder (Qabidh), the Open-handed (Basit), the Provider (Raziq), the Pricer (who fixes prices); and I wish I will meet Allah and nobody demands (complains) of me for unjust act I did against him, neither in blood or property.'40Printing moneyThe world today operates a paper-based currency that is not based on gold and has no intrinsic value. The value of the paper results from people's confidence in the economy and with the government who prints the currency. One of the biggest oppressions committed by governments today is their free reign in printing money and increasing the money supply in the economy. This leads to inflation and in some cases in the Muslim world leads to hyperinflation where the currency devalues on an hourly basis.
The Khilafah cannot just print money as it deems fit. Money in the Khilafah must be based on gold or silver. Paper money will be in circulation but at anytime this paper money must be transferable in to 100% of its value of gold or silver.41TaxationThe taxation that can be imposed in the Khilafah has been restricted by the shari'ah. If the fixed taxes such asKharaj, Jizya and Al-Ushur are insufficient to fund the state then a wealth tax can be imposed. However, this tax can only be imposed on the excess wealth of the people not their income or on their goods and services. Oppressive taxation such as value added taxes on goods and services or income tax are prohibited.
Referring to the unjust taxes the Messenger of Allah (saw) said:
‘The tax-collector will not enter Paradise.'42
Imam Ahmad narrated from Anas who said: Prices increased at the time of the Messenger of Allah (saw) so they said, ‘O Messenger of Allah, we wish would you price (fix the prices).' He (saw) said: ‘Indeed Allah is the Creator, the holder (Qabidh), the Open-handed (Basit), the Provider (Raziq), the Pricer (who fixes prices); and I wish I will meet Allah and nobody demands (complains) of me for unjust act I did against him, neither in blood or property.'40Printing moneyThe world today operates a paper-based currency that is not based on gold and has no intrinsic value. The value of the paper results from people's confidence in the economy and with the government who prints the currency. One of the biggest oppressions committed by governments today is their free reign in printing money and increasing the money supply in the economy. This leads to inflation and in some cases in the Muslim world leads to hyperinflation where the currency devalues on an hourly basis.
The Khilafah cannot just print money as it deems fit. Money in the Khilafah must be based on gold or silver. Paper money will be in circulation but at anytime this paper money must be transferable in to 100% of its value of gold or silver.41TaxationThe taxation that can be imposed in the Khilafah has been restricted by the shari'ah. If the fixed taxes such asKharaj, Jizya and Al-Ushur are insufficient to fund the state then a wealth tax can be imposed. However, this tax can only be imposed on the excess wealth of the people not their income or on their goods and services. Oppressive taxation such as value added taxes on goods and services or income tax are prohibited.
Referring to the unjust taxes the Messenger of Allah (saw) said:
‘The tax-collector will not enter Paradise.'42
Ref:
36 Tirmidhi
37 Taqiuddin an-Nabhani, ‘The Economic System of Islam,' translation of Nizam al-Iqtisaad, Al-Khilafah Publications, Fourth Edition, p. 212
38 Ibid, p. 206
39 Ibid, p. 210
40 Musnad Ahmed on the authority of Anas
41 Taqiuddin an-Nabhani, ‘The Economic System of Islam,' Op.Cit., p. 268
42 Abdul-Qadeem Zalloom, ‘Funds in the Khilafah State,' translation of Al-Amwal fi Dowlat Al-Khilafah, Al-Khilafah Publications, 1988, p. 120
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