Book Reviews Economic Doctrines of Islam: A Study in the Doctrines of Islam and Their Implications for Poverty, Employment, and Economic Growth By Irfan Ul Haq. Herndon, VA: I I I T , 1996. xiv + 293 p p . Dr. Haq’s book belongs to the same group of issue-oriented studies in Islamic economics that Umar Chapra’s’ books do. However, unlike Chapra, who first provides a critical evaluation of the failed modem economic systems and then establishes the supremacy of Islam’s economic development strategy, Irfan U1 Haq starts out with a comprehensive expository analysis of Islamic m n o m - ic doctrines. He then relies on extensive personal interpretation to derive and then justify various policy prescriptions for the promotion of economic growth in an Islamic economy. The book contains four parts, which are divided into fourteen chapters. The f i t five chapters in the f i t two parts discuss Islamic methodology and Islam’s social and political order. The book‘s major theme is included in the third and fourth parts where the author discusses most of the economic issues and poli- cies. Since the controversial policy-oriented economic subjects are covered in these parts, I will concentrate on the evaluation of these major economic sub- jects. These subjects include the proper role of the public sector,funj ul-kijijyuh and its implications, interest-free financing, land ownership and tenure, taxation, poverty, employment, and the policies to provide economic essentials. Fard al-Kifayah and Its Implications for Economic Policy In discussing the principle of fur4 ul-kijijyuh and the role of the Islamic state in providing public goods, Dr. Haq advocates a policy of nationalization of resources as an appropriate policy for an Islamic state to follow. The same pol- icy is extended elsewhere to include price fixing and direct control of the grain trade, and by implication, of all other commercial activity. Rather than provid- ing a justification for such a policy on economic and Islamic grounds, he carries out his entire discussion on the assumption that big government has the capaci- ty and the means to solve all economic problems. This thesis, in my view, con- tradicts the basic economic philosophy of Islam, which incorporates private ini- tiative and free enterprise with a primary focus on the individual as a decision maker and khurifah of God on earth. The author continues to overlook the fact that equity and efficiency are not complementruy, but often competitive. An over-emphasis on the distributional justice of Islam creates an erroneous impres- sion that in the Islamic worldview, economic growth and development are rele- gated to a secondary role. This is not only incorrect, but it also contradicts the very thesis of his book. Elsewhere I have elaborated on the Qur’anic view of man and its implications for his economic role.2 land Ownership and Tenure In the beginning of chapter 10, the author correctly notes that Islam allows land accumulation without any restrictions and recommends a balanced eco- 284 The American Journal of Islamic Social Sciences 142 nomic life for a Muslim without indulgence in opulence, luxury, and expensive pleasures. A Muslim is portrayed as a person who works hard, is productive, saves his money, invests it profitably, and assists the needy. However, I find the author’s discussion of land ownership and land policy unacceptable both on rational ecoMlmic as well as on Islamic grounds. The author’s assertion that the Qur’an does not mention anywhere man’s ownership of land as being a part of his wealth, in itself, does not make land a public property. If it were so, the Prophet would have declared all land to be publicly owned. He not only refused to interfere with the existing land holding structure, but he left the tenure system alone without imposing even the slightest restriction on the size of land owner- ship. It should be recognized that private land ownership without any limit or restriction is allowed and encouraged in Islam. The author’s single citation about the expropriation of Bilal Ibn al-Harith’s land by Caliph ‘Umar is a description of a very special case. It refers only to that portion of land which he failed to cul- tivate. Islamic law imposes only three specific obligations on the landlord (a) to pay all taxes, (b) to engage in a sharecropping rather than in a fixed-rent arrangement, and (c) to make certain that the land is acquired, accumulated, and maintained in ownership within the bounds of Islamic moral and legal law. As for the newly developed or reclaimed lands, the Islamic government has every right to allocate these to the general public within the framework of the prevail- ing time and space environment. However, when the land is sold to an individ- ual, it becomes a part of his wealth. It cannot be expropriated without a just and fair compensation. In order to justify his position, the author also cites another hadith attributed to the Prophet: “If anyone has land, he should cultivate it him- self, or lend it to his brother for cultivation or otherwise release it from his own- ership” @. 63). Interpreting the release from ownership to mean giving it to the state for free or even to agree to the state’s expropriation is too far-fetched. Also, in recommending small land holdings, the author is endorsing the failed strate- gy of reliance on small subsistence farming, which should be tolerated only tem- Interest-Free Financing and Banking In this section, there are two instances where the author creates confusion. The first instance is when he uses k u r a t e definitions, and the second instance occurs when he draws a wrong policy conclusion. He uses the expressions “uneamed income” and “fkd rent” in an incorrect context @. 119). His dis- cussion leaves one with the impression that these two sources of income are completely forbidden in Islam, which is far from the uuth. Another instance w h he draws a judgmental policy conclusion is when he recommends nation- alization of banks on the basii of an undefined, theoretical concept of “social profitability.” We fM no support from economic theory or the experience of the developing or socialist world to indicate that nationalized banks contribute to social profitability. Instead, banks in the public sector are often found to be eco- nomically inefficient, bureaucratic, unresponsive to public needs. and an embodiment of waste and misallocation of BcoIwlmic resources. Taxation in Islamic Economy His views about taxation policy in an Islamic state are derived from the appli- cation of the same overextended personal logic and individual ijtihad that he has used throughout the book. In order to establish a “basis for a state taxation of income and wealth,” he cites two W i t h @. 168) and then makes the following POrarilY. Book Reviews 285 statement: “Therefore it can be deduced that in the Islamic perspective all forms of income and wealth are taxable whether it is the p w i t of capital, the wages from labor, the return to entrepreneurship, or the produce of the land, or whether wealth is held as precious metals, bank accowlts, real estate, or any other form. This accords with the Shariah’s rule of the permissibility of things unless cate- gorically prohibited” (p. 169). It is quite clear that with this statement, the author is not only turning the principle of permissibility upside down, he is also erro- neously providing a justification for the government to h v e a free hand to levy a tax on every imaginable economic resource. The author’s conclusions are clearly wrong and untenable for the following reasons: The fm M t h is spe- cific to zakah, while the second hadith only mentions a duty on property apart from ~akah, which can be met thrbugh sadaqah and other extra charity. here is no other hadith that one can quote to justify any mandatory collection of any other tax in Islamic economy. In times of special need, the Prophet used to ask for contributions from the citizens. This practice further proves that in an Islamic state, tax levies are not fixed or mandatory. Rather, they are primarily ad hoc and need based and at times voluntary. Therefore, the clear and unam- biguous conclusion from this practice in the context of current economic policy is that the only space- and time-neutral mandatory obligation on all Muslims is to pay zakah. As for other taxes, their collection depends primarily on the needs of the economy and the consensus of the citizens with regards to the amount of services they expect from their government. Poverty Employment and Economic Growth The major problem with the author’s presentation throughout the fourth part remains his preoccUpation with a big public sector. According to his vision, the government not only acts as “producer and provider of services, as sources of finance. as the makes of rules, but it carries the overall responsibility for plan- ning, coordination, organization, and delivery of goods and services” (p. 216). In his concluding remarks, this vision takes a diameaically opposite turn. He states, “Islam does not envision a welfare state supporting a large class of wel- fare recipients. On the contrary, it perceives an economy based on the ethics of work and productive economic enterprise” (p. 231). Here again the author fails to recognize that within the framework of rational economic theory, these two visions are inconsistent and incompatible. In conclusion, I would like to point out that the author has been very success- ful in effectively presenting an excellent expository analysis of Islamic eco- nomic docaines. His coverage of various economic topics is extensive and his sou~ces are comprehensive. His presentation is clear and succinct and his con- clusions are consistent with his economic hypothesis. While allowing for the existence of private enterprise, he perceives the Islamic economic state as an active player in all aspects of a Muslim‘s life, including prodmion and overall management. It is in this area that I believe that the author’s position is incon- sistent with the broader economic philosophy of Islam. In my opinion, the state in Islam plays a residual rather than an active role. The policy presuiption that he recommeRds is, therefore, preachy, idealistic, simplistic, and often Ronim- p l e d l e . Although Dr. Haq alludes to the fact that Islam’s emphasis on the establishment of a just, legal, and equitable social and economic order does not presuppose any specific economic policy or operarional strategy, his operational economic modeL presupposes an active and all-engaging public sector as a 286 The American Journal of Islamic Social Sciences 14:2 modus operandi of an Islamic economic system. Finally, throughout his discus­ sion of economic subject and issues he has exercised too much liberty and per­ sonal ijtihad and has relied too heavily on his own deductive reasoning in car­ rying out interpretative analysis of the Qur'an and the Sunnah. Furthermore, in attempting to portray an idealistic economy, he often tarts a dJscussion of pol­ icy pre criptions with a set of unreali tic, implistic, and untenable assumptions. The re ult has been that the policy conclusions he draws are neither supportable within the framework of a liberal interpretation of Islamic principles nor con­ sistent with rational economic theory. His major thesi lead to a policy recom­ mendation for the I lamic state to pick up and implement a broad ocial welfare spending agenda without any concern how the e policieswill be financed. His advocacy of limiting the size of land owner hip without any regard to how the land was accumulated in the first place as well as his recommendation for the Islamic tate to follow an open-ended tax policy clearly violates Islam's com­ mitment to private ownership and free enterpri e. Notes I. Umar Chapra, Islam and the Economic Clzallen>:e (Leicester, UK: IIIT, 1992). 2. "The Role of Public and Private Sector in an Islamic Perspective," in Proceedings of the Fifth International Islamic Economic Seminar (Herndon. Ya: IIIT Publications. 1993). lmtiazuddin Ahmad Depanment of Business and Economics University of Maryland, Eastern hore Princess Anne. Maryland