Vol. 2    Issue 25   01-15 May 2008
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IOS Minaret Vol-1, No.1 (March 2007)
Bill Gate
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The Contribution of Early Muslim Scholars to


Dr Sayed Afzal Peerzade and Mrs Rahatun nisa


This paper seeks to address two major concerns. First, it aims to refute the notions of 'history's black hole', 'discontinuity' and the 'great gap' in the history of ideas. Second, it seeks to highlight the seminal and highly significant contributions of Muslim scholars to economics in general and to public finance in particular.


Generally, Western historians of ideas trace the beginnings of intellectual history from the Greco-Roman period, which ended around 300 BC, and then focus on the Renaissance (13th-16th century AD). The history of scientific, social and cultural thought during the period 300 BC-12th century AD is either glossed over or ignored altogether. Morotowitz describes this presumed gap in the history of ideas as "History's Black Hole", while Schumpeter characterizes it as the "Great Gap". Meyer argues that the "the Arabic, Turkish and Persian-speaking East has no continuity of economic ideas such as those which come from the Judeo-Christian West". These writers maintain that the Renaissance somehow arose like "a phoenix" from the "ashes" which had been smoldering for a millennium since the end of the classical Greco-Roman period.

A cursory look at the seminal contributions made by early Muslim thinkers and scholars makes it abundantly clear that no such gap ever existed. In fact one notices a remarkable continuity in the history of ideas between the classical period, the Islamic era and the Renaissance. During the Middle Ages, when Islamic civilization was at the zenith of its intellectual and cultural development, Muslim scholars not only carried forward the legacy of the ancients but also made highly original contributions to various areas of learning and scholarship, including philosophy, medicine, astronomy, history, mathematics, chemistry, logic, and the social sciences. Bernard Lewis, a virulent critic of Islam, recognizes that Islamic civilization during the medieval period had attained the highest level of excellence and accomplishment in the sciences and arts while medieval Europe was surrounded by ignorance, superstition and cultural backwardness [Lewis 2002].


Prophet Muhammad was born at Makkah in the year 571 AD. His entire life was meticulously recorded by his Companions and passed on to subsequent generations. He received the first Quranic revelation at the age of forty. The holy Quran, which was revealed to the Prophet over a period of twenty-three years (610-632 AD), is believed by Muslims to be an eternal source of guidance and inspiration for all times. It covers all aspects of human life, including social, religious, economic, political, cultural and psychological dimensions.

The importance of knowledge in Islam can be gauged from the fact that the first Quranic revelation to the Prophet emphasized the importance of knowledge. The verse says: "Read: In the name of thy Lord who createth; createth man from a clot. Read: And thy Lord is most Bounteous, who teacheth by the pen, teacheth man that which he knew not" [96:1-5]. The Quran describes three important functions of prophecy: to recite before the people the verses revealed to him, to improve upon people's level of knowledge and wisdom, and to purify them of their sins [Quran 2:129; 3:164; 62:2].

The Quran frequently and repeatedly stresses the need to acquire knowledge. In about 200 verses, the faithful are reminded to offer prayers while they are urged to ponder over the signs of God Almighty, to reflect upon His creations and to use their reason. The verses in the latter category are three times more numerous than those commanding the faithful to prayers.

The Prophet led an exceptionally simple life which reflected a perfect balance between his teachings and actions. In addition to the Quran, the teachings and precepts of the Prophet (Sunnah) constitute the most important and valuable source of guidance and inspiration for Muslims.

There are six most authentic collections of Traditions of the Prophet. These include Al-Jami al- Sahih by Imam al-Bukhari, Al-Jami al-Sahih by Imam Muslim, the Sunan of Abu Dawud, the Sunan of Ibn Majah, the Sunan of Nasai, and the Sunan of al-Tirmidhi. In addition to these, there are other reliable collections of Hadith, such as Imam Malik"s Muwatta, the Musnad of Imam Ahmad ibn Hanbal, and the Musannaf of Ibn Abi Shaybah, among others.

Both the Quran and the Traditions of the Prophet are an invaluable source of knowledge and guidance relating to all aspects of human life. It is significant to note that Islam does not admit of any gender-based distinction in respect of the acquisition of knowledge.

The following Traditions of the Prophet emphasize the central significance of knowledge in the life of a Muslim.

  • I have been sent as a teacher.
  • Knowledge is life of Islam and a pillar of faith.
  • Seek knowledge from the cradle to the grave.
  • A seeker of knowledge is like the one who strives in the path of God.
  • The ink of the scholar is holier than the blood of a martyr.
  • To attend to learning for one hour is more meritorious than attending the funerals of a thousand martyrs and more meritorious than standing up in prayer over a thousand nights.
  • Knowledge is the friend of a true believer and reason is his guide.
  • Wisdom is the lost property of a believer; wherever he finds it he caches hold of it.
  • The angels, all the creatures living in the skies and on earth and even the ants in their holes pray for the person who spreads knowledge of what is good.
  • There are no better alms than giving knowledge to others.

There is a Tradition of the Prophet to the effect that on the Day of Judgment every Muslim will be asked five questions. Of these, one question relates to the acquisition and propagation of knowledge.

After the passing away of the Prophet, the tradition of acquisition and propagation of knowledge was kept alive by the first four caliphs [632-661 AD]. The Umayyad and Abbasid rulers too patronized learning and scholarship. As a result of the unequivocal importance attached to the acquisition and dissemination of knowledge and learning in Islam, the earlier generations of Muslims emerged as torchbearers of science, at a time when Europe was still in the Dark Ages and scientists were being burned at the stake by the medieval Christian Church [Sikand 2005].


The Prophet not only brought about radical changes in people's faith and rituals but also in their economic practices and institutions. Control over usurious lending, reform of corrupt market practices and a systematic transfer of funds in favour of the poor and the destitute were emphasized by the Prophet.

Islam recognizes those natural urges and proclivities which underpin man's economic behaviour. It recognizes that man should have the freedom to earn his livelihood, that he should be entitled to the fruit of his labour, that disparities may exist among people due to their varying abilities and circumstances. At the same time, Islam introduces certain qualifications to these principles as well as a system of moral checks and balances in order to ensure that freedom may not be misused and that the disadvantaged sections of society may not be subjected to discrimination and exploitation. For this purpose, it adopts a two-fold strategy. First, people are made aware, through education and persuasion, of what constitutes right and wrong. Second, the coercive power of the state is used in exceptional cases and a small loss of private interest is preferred over larger public gain.

Islamic economic thought, which dates backs to 7th century of the Islamic era, refers to the economic ideas enunciated in the Quran and in the Traditions of the Prophet and as interpreted and elaborated by the early Muslim scholars. These scholars drew upon four basic sources, namely: (i) The Holy Quran (ii)the Traditions of the Prophet (iii)Ijma [consensus among jurists and legal experts) (iv) Ijtehad [analogical deduction and creative reinterpretation in respect of legal issues].

The roots of ijma and Ijtihad are embedded in the Quran and in the Sunnah of the Prophet. The conceptual difference between the Sunnah and ijma lies in the fact that while Sunnah refers to the teachings and precepts of the Prophet, ijma emerges as a result of exercising reasons and logic in the face of a rapidly expanding society. Ijma is intended not only for discovering the appropriate legal ruling in the present and in the future but also in the context of the past [Wazir 1992]. At a given period, it has great validity and power. If the consensus among jurists and legal experts is final, it is so only in a relative sense, because ijma can be subjected to revision, modification and rejection according to the requirements of changing circumstances.

Ijtihad refers to the efforts in determining the degree of probability in solving a legal or jurisprudential question in the light of Islamic Shariah. The scope of ijtihad after the Prophet's demise encompasses eight distinctive heads. Seven of these consist in the interpretation of the revealed text, by some method such as analogy, while the eighth is aimed at the derivation of a meaning from sources other than the revealed text, especially by reasoning.

With the march of human civilization, economic issues become more and more complicated and new problems arise from time to time, requiring solutions which might not be known in earlier times. Ijtehad serves as an effective legal tool for finding solutions to complex legal questions in the context of changing times.

In recent times, attempts have been made to cull from the Traditions of the Prophet those teachings and precepts which pertain to economic issues. These have been classified under several heads [Khan 1992]. Similarly, the welfare-oriented role and functions of the Islamic state has also been well documented [Hasan uz Zaman 1981].

Early Muslim scholars wrote on various economic issues in accordance with Islamic laws. Two concerns dominated their writings. First, they dealt with the economic responsibilities of the state. They were guided, in this connection, by a Tradition of the Prophet which says: "Allah and His Messenger are the caretakers of the one who has none". Secondly, they discussed in detail resource mobilization in the context of Islamic legal prescriptions. The Quran and the traditions of the Prophet have in fact institutionalized the whole process of revenue collection and disbursement [Peerzade 2004]. (1) Pertaining to these two, there are explicit instructions in the Quran and in Hadith literature.

Almost all Muslim scholars have adopted a common methodology. On a particular issue, they would first quote the relevant verses from Quran. Secondly, the relevant Traditions of the Prophet are cited to further elucidate the Quranic verses. Thirdly, they profusely quote from the conduct of the four rightly guided caliphs. Fourthly, in the light of above they form their own opinions in support or rejection of other legal opinions.

Towards the end of the first century of the Islamic era, when Muslim rule extended over large parts of the world, they came across certain customs and traditions and were faced with new problems regarding social relationships, business contracts, and trade and commerce. They analyzed and interpreted the basic principles of Islamic Shariah and inferred from these principles legal rulings applicable to the new situations.

Many Muslim scholars made outstanding contributions to the social sciences, especially to economics (Siddiqui 1984, Islahi 1996].(2) These included Qadi Abu Yusuf (d. 798 AD), Yahya bin Adam al Qarashi (d.818 AD), Abu Ubayd al Qasim bin Sallam (d. 858 AD), Ibn abi al-Rabi (d.885 AD), Qudamah bin Jafar (d.932 AD), Abu Jafar Ahmad b. Nasr al Dawudi (d.1052 AD), Al-Mawardi (1058 AD) Ibn Hazm (d.1063 AD),Abu Ya'la (d.1065 AD), Abu Hamid al Ghazali (d. 1111 AD), Nasiruddin Tusi (d.1274 AD), Ibn Taimiyah (d.1328 AD), Ibn Khaldun (d.1406 AD) and Shah Waliullah Dehlawi (d. 1762 AD). (3) The following chart, with the help of the time-scale, explains the contributions made by Muslim scholars.

It is interesting to note that the majority of scholars have titled their works as Kitab al Amwal (Book of Wealth), Kitab al Kharaj (Book of Land Tax) and Al-ahkam al-sultaniyah (Book of Governance). There are at least six well-known books with the title Kitab al-kharaj. Similarly, there are twenty-three books with the title Kitab al-amwal, and two works with the title Al-ahkam al sultaniyah. The books entitled Kitab al-kharaj mainly focus on fiscal issues related to land taxation, leaving out other sources of revenue. On the other hand, works entitled Kitab al-amwal cover all forms of revenue and hence are more comprehensive in their coverage and scope. (4)

Abu Yusuf (d.798 AD) was the chief justice of Baghdad during the reign of Caliph Al-Mahdi and continued in that office till the end of Caliph Harun Al-Rashid' s reign. He authored a major work on land taxation, entitled Kitab al Kharaj. It was written in response to the caliph's queries on religious precepts related to taxation problems, revenue administration and public expenditure.

Abu Yusuf tried to analyze fiscal issues. His contribution lies in demonstrating the superiority of proportional taxation over the system of fixed levy on land. Much before Adam Smith, who is generally regarded as the father of modern economics, Abu Yusuf enunciated the principles of taxation, such as ability to pay, convenience and certainty. He also dwelt on tax administration and stressed the need for strict supervision of tax collectors in order to prevent corrupt and oppressive practices. Abu Yusuf outlined the economic responsibilities of the state. He emphasized the establishment and maintenance of public amenities such as irrigation facilities and highways. He also urged upon the state to ensure the development of agriculture.

Yahya bin Adam al Qarashi (d.818 AD) was a contemporary of Abu Yusuf. His work is also known as Kitab al Kharaj. The importance of this work lies in the fact that he culled more than six hundred Traditions of the Prophet pertaining to matters of revenue administration.

Abu Ubayd (d.858 AD) authored a book entitled Kitab al Amwal. It can be regarded as the most systematic and comprehensive work on public finance. He gathered more than two thousand Traditions of the Prophet which pertain to finance and fiscal affairs.

Ibn abi al-Rabi (d.885 AD) wrote a brief treatise entitled Suluk al Mamalik fi Tadbir al-Mamalik (Conduct of the Ruler in the Management of Kingdoms). In the context of the responsibilities of the ruler, he writes that the state should arrange for water supply for personal requirements as well as for irrigation. The ruler should take appropriate action to ease the hardships of farmers in order to stop them from abandoning their farms in favour of other professions. He should collect taxes in accordance with the norms of justice and the principles of Shariah in order to avoid the possibility of any injustice and tyranny. Al-Rabi emphasized that the supply of necessary goods and services should be maintained and that people should feel protected.

Al-Mawardi's (d.1058 AD) work Al-Ahkam al-Sultaniyah [Rules of Governance] is an outstanding work. Al-Mawardi enumerated the responsibilities of the ruling class and emphasized that the ruler should arrange for the collection of kharaj (land tax) and zakat in accordance with the laws of shariah and in the light of the interpretations of jurists without indulging in coercion or extortion. Likewise, the ruler should make available the allowances and stipends from the state treasury to those who are entitled to them. The purpose of these functions is to ensure the requirements of social security.

Another work with the same title is by Abu Ya'la al- Farra (d.1065). The author discusses in detail about imposing additional taxes and the acceptability of public borrowing. The works of Al-Mawardi and al-Farra fundamentally deal with the art of governance. Yet where necessary, the two deal with taxation and public expenditure as well.

The welfare-oriented role of the Islamic state is more explicit in the writings of al-Ghazzali (d.1112 AD). In his works, particularly in Ihya ulum al-Din (The Revival of the Sciences of Religion), al-Ghazzali dwelt at length on the provision of protection by the state, long before classical economists had discussed the issue. In the opinion of al-Ghazzali, the state should protect people's faith, life, intellect, wealth and property. Thus, whatever ensures the protection of these needs serves the public interest and every thing that violates public interest needs to be curbed. Al-Ghazzali is of the view that economic activities are mandated by the Shariah because they are linked to the very survival of human beings.

Nasiruddin Tusi (d.1274 AD), popularly known as Nizam ul Mulk, authored one of the most valuable and interesting works in Persian, entitled Siyast Nama (The Book of Politics). He discussed revenue and expenditure of household budgets and those of the states. He emphasized saving and warned against extravagance in expenditure. He opposed expenditure on assets such as jewelry and uncultivable land. He accorded prime importance to agriculture and secondary importance to trade and vocations. He disapproves certain taxes that have no sanction in Islam.

Ibn Taimiyah (d.1328 AD) has written extensively on different aspects of Islamic Shariah. His major works include al-Siyasah al-Shariah (The Policy of Shariah), Risalah al-Halal wal-Haram (Treatise on the Legitimate and the Illegitimate), and al-Hisbash fil Islam (Inspection of Public Morality in Islam). In his fatawa (legal edicts) he dealt with several economic issues, including price control, market regulation, fair market practices, state intervention and provision of basic needs, and private ownership and its control under certain circumstances.

Ibn Khaldun (d. 1406 AD) has rightly been hailed as one of the greatest philosophers, historians, sociologists and economist of all times. His celebrated work on world history is spread over twelve volumes, of which the first volume, the Muqaddimah, forms by itself an invaluable treatise. Ibn Khaldun discussed a wide range of economic issues, including division of labour, price system, the law of supply and demand, consumption, money, capital formation, population growth, public finance, and trade cycles. He discussed the various stages through which societies pass in respect of economic development.

Ibn Khaldun is of the view that there are three types of states, namely, monarchic, democratic and Islamic. The monarchic state functions according to a set of values that centre round the will of the monarch. A democratic state, on the other, functions on the basis of human reasoning without being guided by divine revelation. In contrast to the above, the Islamic state functions on the basis of human reasoning and at the same time draws inspiration from divine revelations in respect of values as well as methodology.

Ibn Khaldun warns that extravagant expenditure on the part of the state leads to the disintegration of mighty empires. In his writings one comes across the basic idea embodied in the backward bending supply curve of labour. According to Ibn Khaldun, taxes have a point of diminishing returns and pump priming is important to keep the business running smoothly. He also warned against state intervention and believed that a free market ensured proper distribution. Boulakia has rightly observed: "Ibn Khaldun discovered a great number of fundamental economic notions a few centuries before their official birth. He discovered the virtue and necessity of division of labour before Smith and principle of labour value before Ricardo. He elaborated a theory of population before Malthus and insisted on the role of the state in the economy before Keynes…….His name should figure among the fathers of economic science" [Boulkia 1971].

It is not surprising to note that Ibn Khaldun has been hailed as "supply-sider". Arthur Laffer, the distinguished American economist who served as an advisor to the US President Ronald Reagan in the early 1980s, was inspired in the drawing of his famous "Laffer Curve" by Ibn Khaldun. He shot to fame on account of his famous Laffer curve. The idea is rather simple: At both extremes of taxation-zero percent and one-hundred percent, the government collects no revenue. At one extreme, a 0% tax rate means the government's revenue is, of course, zero. At the other, where there is a 100% tax rate, the government collects zero revenue because (in a "Rational" economic model) taxpayers have no incentive to work or they avoid taxes, and the government collects 100% of nothing. Somewhere between 0% and 100%, therefore, lies a tax rate that will maximize revenue. This is illustrated with the help of a curve popularly known as the Laffer curve:

T* represents the optimum tax rate where the maximum amount of tax revenue can be collected. Laffer and other right-wing economists used the curve to argue that taxes were currently too high and should therefore be reduced to encourage incentives and harder work (a supply-side policy. Others argue that we are already well to the left of T*. It justifies tax cuts and intends to show that government can maximize revenue by setting a tax rate at the peak of this curve.

Laffer reportedly sketched the curve on a napkin to illustrate the concept, which immediately caught the imagination of people. Laffer himself professes no recollection of this napkin, but writes, "I used the so-called Laffer Curve all the time in my classes and with anyone else who would listen to me" [www.bized.ac.uk]. It is significant to note that Laffer did not claim to have invented the concept but attributed it to Ibn Khaldun.


Unfortunately, there is no mention of the contributions of any of the afore-mentioned thinkers and scholars in any standard work on the history of economic thought. The highly important and seminal contributions of these scholars need to be acknowledged and recognized. The observation of Joseph Schumpeter and others of his kind who have spoken about a "great gap" and "discontinuity" in the history of economic thought was born out of sheer ignorance and is short-sighted, to say the least.

Muslim thinkers and scholars articulated and developed their economic theories long before the birth of the science of economics. As Professor M. N. Siddiqui has rightly pointed out, "From Abu Yusuf in the second century to Tusi and Waliullah we get a continuity of serious discussions on taxation, government expenditure, home economics, money and exchange, division of labour, monopoly, price control, etc Unfortunately, no serious attention has been paid to this heritage by centers of academic research in Economics" [Siddiqui 1984].

Supplementary Notes

By Professor A. R. Momin

(1) A distinctive feature of the contribution of Muslim scholars to economic thought is that they discussed economic institutions, processes and issues not in isolation or in themselves but in relation to cultural values, the wider society, political institutions and psychological propensities. Similarly, they looked at economic issues and problems in a dynamic framework, as subject to processes of change and transformation.

Karl Polanyi has pointed out that one major pitfall of classical and neoclassical economic theory is that it regards the economy as an autonomous, self-regulating domain. In actual practice, however, economic processes are always regulated by moral values and social relations. Islam takes due cognizance of this reality and subjects economic activities to a system of moral checks and balances. In Islamic perspective, ethics and economics are indissociable. It is note-worthy that the bearing of ethical norms on economic activities and economic behaviour is now increasingly recognized by eminent economists such as the Nobel Laureate Amartya Sen.

(2) The earliest comprehensive treatise dealing with economic processes and issues within an Islamic framework is Kitab al-Kasb (The Book of Livelihood) by the distinguished scholar and jurist Imam Muhammad ibn Hasan al-Shaybani (d. 189 AH). The book discusses a wide range of economic issues, including variations in means of livelihood, the distinction between legitimate and illicit means of livelihood, trade and commerce, ownership of property, renting out property, industry, purchase and sale, gifts, and agriculture. He examines these issues in the light of Quranic injunctions, the Traditions of the Prophet, and the opinions and precepts of the Companions and Followers.

The eminent jurist Shams al-Aimma al-Sarakhsi (d. 483 AH) wrote a commentary on Kitab al-Kasb. The book, together with al-Sarakhsi's commentary, was edited and published by the late Shaykh Abul Fattah Abu Ghuddah in 1997.

(3) A discussion of economic processes and issues in the wider context of Islamic polity can be found in Al-Siyar al-Kabir by Imam al-Shaybani, I'lam al-Muwaqqi'in, by Ibn al-Qayyim, Ara ahl al-madinah al-fadilah, by al-Farabi, Al-I'tisam and Al-Muafiqat by al-Shatibi, Al-Imamah was-Siyasah by Ibn Qutaybah, and Al-Mabsut by al-Sarakhsi.

(4) A detailed list of these works, along with an indication of their present status (whether published, or in manuscript, or extinct) can be found in Carl Brockelmann's Geschichte der Arabischen Litteratur (Leiden, 1943-49) and in Geschichte des Arabisches Schrifttum by Fuat Sezgin. The latter work is also available in Arabic translation, Tarikh Turath al-Arabi.


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