If the leading practical initiative of Islamic economics has been Islamic bank ing, the second has been the establishment of Islamic redistribution systems modelled after the zakdt system practised in seventh century Arabia. Like every other major religion, Islam stands opposed to great inequalities in the distribution of resources. It advocates compassion towards the poor and the disadvantaged. The extent of charity is left to the individual’s conscience, although it is clear that full equality is not an objective, only the alleviation of the worst imbalances. The Qur'an provides two instruments for lessening inequality. One is an inheritance law that limits testamentary freedoms, most
10 Kuran, Islam and mammon, pp. 12 13.
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Importantly, in requiring equal treatment of all children of the same sex. The other, which Islamic economics considers more fundamental, is zakat.
In the earliest Muslim community people of means paid zakat to the treasury on specific forms of income and wealth, including livestock and precious metals. In accordance with the Qur'an, the proceeds were used for assistance to specific categories of expenditure, such as the spread of Islam, travellers in difficulty, dependants of prisoners, the poor and the handicapped. Significantly, expenditures were not limited to inequality or poverty reduc tion.11 However, it is the distributional objective that has caught the attention of modern Islamists. Literature produced especially in the 1970s and 1980s argued that fourteen centuries ago zakat was a very effective instrument of inequality reduction and that today’s vast inequalities may be reduced by reviving zakat throughout the Islamic world.
Actually, no hard evidence exists on how zakat affected the distribution of income among early Muslims. In any case, the effects would doubtless differ substantially in a modern economy, where most wealth is held in forms not covered by zakat housing, industrial capital, transportation vehicles, stocks, bonds and most income is earned outside of agriculture. Moreover, the traditional rates are generally lower than those of the prevailing secular taxation systems. It follows that reviving zakat in its ancient form could produce perverse results. Nevertheless, in certain countries, including Pakistan, Malaysia, Saudi Arabia, Sudan and Yemen, governments of the mid and late twentieth century put in place obligatory zakat systems, each resembling the original zakat system in important respects, but exhibiting also major differences.12 In each of these countries, a major justification for reviving zakat, as opposed to making the existing tax code more progressive, is that it would be easy to collect. People would willingly pay zakat, it was said, even as they evaded tax obligations, for the typical Muslim considers it an expression of piety. Muslims widely believed, it was also claimed, that zakat pays for itself, in that payers became financially more successful through Divine Grace. Finally, because of its religious nature, the system would essentially be free of corruption.
None ofthese high expectations have materialised. Inequality has not fallen in any country with an official zakat system. By the early 1990s even leading
11 Timur Kuran, 'Islamic redistribution through zakat: Historical record and modern realities’, in Michael Bonner, Mine Ener and Amy Singer (eds.), Poverty and charity in medieval contexts (Albany, 2003), pp. 276 84.
12 Kuran, Islam and mammon, pp. 19 28.
World History
