Equitable Distribution of Wealth: The Economic System of Islam

New York City. Photo: The Rag Blog

This post is co-written by Inside Islam blogger Colin Christopher and Anwar Bin Hayat, Secretary to the Vice Chancellor of Lahore Islamic University. Bin Hayat has also served as a financial officer for more than 25 years and has graduate degrees in economics, Islamic studies, and a higher diploma in Islamic Law and the Judiciary.

Given the current fiscal crises in wealthy countries and the Occupy Movement’s response to wealth distribution, Islamic perspectives on economics have garnered increasing attention in even non-Muslim majority countries. In this post, we’ll attempt to highlight some core Islamic principles that specifically address wealth, distribution, and justice. Islam not only requires the fulfillment of everyone’s basic needs, primarily through a respectable source of earning, but also emphasizes an equitable distribution of income and wealth so that, in the words of the Holy Qur’an, “Wealth does not circulate only among your rich.” (59:7)

Inequalities are permitted in a Muslim society only in proportion to the distribution of skill, initiative, effort, and risk. Extreme or highly skewed inequalities are incompatible with Islamic teachings, which emphasize that resources are not only a gift of God to all human beings (Qur’an 2:29), but also a trust (Qur’an 57:7).

Previous posts here on Inside Islam have discussed zakat, one of the five pillars of Islam. Inheritance is another important aspect of Islam, in line with the Islamic vision of creating dignity and brotherhood throughout humankind, not only in Muslim societies.

Sharia, or Islamic Law, provides specific guidance on inheritance for both men and women, and these laws are to be followed with the goal of establishing socioeconomic balance through more equitable distribution. Under Islamic inheritance law, no one can make a will for more than one third of their estate (property). Further, that third has to be given toward charitable objectives or for persons not already entitled to a share in the estate. Both the living parents of the deceased are assured a share. This not only ensures their welfare, but also enables the distribution of the parents’ shares to the brothers and sisters of the deceased after the parents pass on. If applicable, spouses are also given a share. The balance of the remainder goes to the children of the deceased, and it is impermissible to pass the entirety of the remaining amount to a single child if there are other siblings. All of these rules are intended to generate a wider span of wealth distribution.

Timur Kuran, Professor of Economics at Duke University, highlights inheritance law in his recent book, The Long Divergence. Kuran argues that Islamic inheritance law explains the high degree of fragmentation of family fortunes at each generation. Thus, there are hardly any examples in Islamic economic history of “successful business or merchant families that remained dominant for more than a  few decades.”

There are other interesting aspects of Islamic law related to economics that relate to an equitable distribution of wealth. Although it is obligatory for every Muslim man to earn his own livelihood, there are further obligations on the part of the entire Muslim community as well. The Muslim society, or ummah, is required to satisfy the needs of all who are unable to help themselves due to something that is out of their control (e.g., a disability). Abu Zar Ghaffari, a companion of the Prophet, was of the opinion that it is not proper for a Muslim to possess wealth beyond the essential needs of his family. Interestingly, most of the Prophet’s companions did not agree with him in this extreme view.

Regardless of where Muslims stand on the level of wealth redistribution, it is also important to note that the fundamental Islamic principle of adalah (justice) should be applied in each and every situation. And because poverty still exists alongside affluence in Muslim contexts, this alone calls into question the Islamic character of many places that claim Islamic piety and justice.

As the international community continues to discuss austerity measures and other painful fiscal decisions, it would well serve all countries–whether Muslim majority or not–to reflect upon the teachings of Islam around wealth distribution. There will always be a few people at the decision-making table who hold different perspectives on the question of just distribution. However, these “differing opinions” often derive from similar philosophical traditions, and rarely give space to fundamentally divergent conceptions of distribution and justice. The inclusion of Islamic principles in current financial discussions in the West could provide important points of reflection, and facilitate an opportunity for western perspectives of capitalism to more clearly define their conceptions of wealth distribution and economic progress.

What do you think about the philosophical principles behind Islamic economic activity? In what ways does Islamic law attempt to prevent poverty, and do you think that these rules adequately address wealth inequality? Please share your thoughts below.

4 thoughts on “Equitable Distribution of Wealth: The Economic System of Islam

  1. “Inequalities are permitted in a Muslim society only in proportion to the distribution of skill, initiative, effort, and risk.” The problem is the distribution of inheritance for men and women in Islam is not equal, and it is not based on skill, initiative, effort, and risk. It will be better for this article to explain this point, and how this inequality is also part of equitable distribution of wealth. For instance, explaining that although men have double right than women in inheritance, they have to use it for the prosperity of their family while women can use it only for themselves.

  2. Asalaamu Alaikum, Fitri. Thanks for your comment. As you pointed out, under Sharia law, there is a seemingly inequitable distribution, depending upon if the inheritor is a man or a woman. However, and as you also highlight, the reasoning relates to the different responsibilities of men and women. For example, the distribution of inheritance to a man is double that of a woman because he is also responsible for all family expenses. Conversely, whatever a woman earns through her work or inherits from her family, is solely hers. Of course she can also assist the family with household expenses, and would be expected to do so if the man was unable to provide, however, it is her right to spend her own money in whatever ways she wants.

  3. Asalaamu Alaikum, Fitri, despite according to my limited depth knowledge of such issues, Islam did not make women less privileged or less right. If you look into the division of benefits given to women by Islam, it is interestingly not less than men. She gets inheritances from every different relationships with her family. Being a wife she gets share in inheritance, she gets her share being a daughter, she gets a share being mother, she gets a share being aunty and sister. So the women in Islam do not get inequitable shares from inheritance. Regards