Fiqh of Transactions Part 09

The Beginning and Evolution of the Economy from Ancient Times: Highlights from the Eras of the Prophets (Peace be Upon Them)

All praise is due to Allah. During my last visit to India, I had the opportunity, through the goodwill of the esteemed teachers of Alma Mater, (Madare Elmee) Darul Uloom Lunawada (اللَّهُمَّ اجْعَلْنِي خَيْرًا مِمَّا يَظُنُّونَ بِي - May Allah make me better than their perception about me), and at the command of sincere teachers and mentors, to deliver a lesson (lecture) titled "An Introduction to the Economy and its Connection with Islamic Teachings."

Whenever I visit my "Alma Mater" or am honored to sit in the company of scholars of religion to learn Islamic knowledge, (وَاللّٰهُ عَلٰى مَا نَقُولُ وَكِيلٌ-and Allah, over what we say, is Witness.") those moments and the efforts to acquire religious knowledge are the most beautiful moments of my life. They become a remedy for my spiritual ailments. (عسي الله ان يجعلها سببا للمغفرة لي ولوالدي عند الله-May Allah make those moments the reason of forgiveness for me and my parents with Him). The spirituality, sincerity, and peace of heart that one experiences in these gatherings and in the pursuit of Islamic knowledge are unparalleled, even in major worldly conferences.

اللَّهُمَّ لَا تَحْرِمْنَا بِذُنُوْبِنَا مِنْ عِلْمِ النُّبُوَّةِ وَالْعِلْمِ النَّافِعِ وَصُحْبَةِ الْعُلَمَاءِ الصَّالِحِينَ.

"O Allah, do not deprive us, due to our sins, of the knowledge of prophethood, beneficial knowledge, and the companionship of the righteous scholars."

Discussion Topics

The discussion was divided into two main parts:

1. The Beginning and Evolution of the Economy from Ancient Times

- Conventional Perspectives: The development of the economy from the Stone Age to modern technology.

- Islamic Perspective: Highlights of economic principles during the eras of the Prophets and their teachings. (This topic was not elaborated upon during this lecture.)

2. Fiqh Al-Muamalat and Islamic Economics Principles

3. Conventional Financial Institutions vs. Islamic Financial Institutions

All praise is due to Allah; the first two topics were discussed. However, due to time constraints, the third topic and the Q&A session could not be completed. InshaAllah, the third topic will be discussed further in a future session, with Allah’s help.

The History of the Economy: From the Stone Age to Modern Technology

1. The Stone Age: The Beginning of Economic Activities

The initial form of human economy becomes evident in the Stone Age:

- Basic Economy:* Humans lived as hunters and gatherers (of fruits etc.). The economy was limited to basic necessities like food, shelter, and clothing.

- Barter System: To exchange surplus items, the barter system was introduced, where one good was traded for another.

- Limited Specializations and Skills: People acquired various skills based on physical strength and available resources, such as tool-making or hunting.

2. The Agricultural Revolution (Around 10,000 BCE)

The Agricultural Revolution marked a significant milestone in economic history:

- The Beginning of Settled Life: With crop cultivation and animal domestication, humans transitioned from nomadism to permanent settlement, leading to the formation of villages and early civilizations.

- Surplus Production: Agriculture made surplus production possible, paving the way for trade and wealth accumulation.

- Concept of Private Ownership and Wealth: The idea of private ownership of land and other resources emerged, creating social hierarchies.

- Growth of Trade: Surplus goods, such as grains, tools, and livestock, began to be used for local and regional trade.

3. Early Civilizations and Trade (Around 3,000 BCE)

Further economic development took place in ancient civilizations like Mesopotamia, Egypt, the Indus Valley, and China:

- Introduction of Currency: The barter system was replaced by early currencies, such as silver in Mesopotamia and grains in Egypt.

- Trade Infrastructure: Roads, markets, and ports were developed, facilitating local and long-distance trade.

- Skilled Labor: Professions such as artisans, traders, and merchants emerged, diversifying the economy.

4. Feudal Economy (Circa 500–1500 CE)

During the Middle Ages, feudalism dominated Europe and Asia:

- Land-Based Economy: The economy was agriculture-based, with landlords owning the land and peasants (farmers- wages service based) working for them.

- Barter and Limited Markets: Currency usage was limited, and transactions primarily occurred through the barter system.

- Guilds of Artisans: Guilds emerged in cities to organize trade and production systems.

5. The Commercial Revolution (Circa 1500–1700 CE)

The Age of Exploration and the discovery of new trade routes brought major economic changes:

- Global Trade Network: Economies became interconnected through trade between Europe, Asia, Africa, and the Americas (South and North Americas).

- Rise of Mercantilism: Emphasis was placed on wealth accumulation and trade surplus.

- Banking and Credit Systems: Italian banks, like the Medici Bank, and credit systems facilitated trade.

6. The Industrial Revolution (Circa 1750–1850 CE)

The Industrial Revolution transformed agricultural economies into industrial societies:

- Mechanization: Inventions like the "steam engine" and the "Spinning Jenny" revolutionized production and enabled mass production.

- Urbanization: The establishment of factories led to the transformation of rural areas into cities.

- Rise of Capitalism: Adam Smith's Wealth of Nations laid the foundation for modern capitalism (though its fundamental concept existed during the time of Prophet Shuaib, as indicated in the Qur'an: "قالوا يا شعيب أصلاتك تأمرك أن نترك ما يعبد آباؤنا أو أن نفعل في أموالنا ما نشاء" ‘O Shu‘ayb does your way of prayer command you with the obligation to make sure that we should leave what our fathers used to worship of idols or that we should cease to do as we will with our goods? [Surah Hud: 87]). *Mufti Shafi Usmani in his paper Distribution of Wealth also elaborates on this.

- Expansion of Global Trade: Mass production enhanced international trade.

7. The Technological Revolution (20th Century to Present)

Modern technology revolutionized the global economy:

- Digital Economy: The invention of algorithms (first introduced by Muhammad ibn Musa Al-Khwarizmi), computers, and digital platforms gave rise to industries like e-commerce, fintech, and digital marketing.

- Automation and Artificial Intelligence: Robotics and AI increased efficiency in production and services, reducing reliance on human labor.

- Globalization: Advances in transportation and communication connected the global economy, enabling free movement of capital, services, and goods.

- Knowledge Economy: Education and innovation became critical economic drivers, with intellectual creativity and technological advancement forming the basis of modern industries.

Key Themes in Economic Evolution:

- Skilled Labor: From hunter-gatherers to digital entrepreneurs, economies have consistently evolved through skill enhancement.

- Innovation: Every era introduced new tools and ideas, from stone tools to blockchain.

- Connectivity (Communication and Transportation): Trade systems evolved from local barter to global digital transactions.

- Efficient Resource Utilization: Human progress has been marked by better utilization of resources, from stone tools to renewable and recyclable energy.

Conclusion:

This progression highlights humanity’s journey in adapting economic practices to meet evolving needs and challenges. Each era strengthened and energized human economies, paving the way for further development. (However, history bears witness that wherever resources were not utilized in accordance with natural principles, it led to significant losses and negatively impacted human life. There is a risk of further harm if resources are not used and wealth is not distributed according to natural principles.)

Economic Systems in Islamic Eras and Economic Glimpses of Prophets' Times:

Islamic teachings not only provide guidance for the economy in every era but also showcase economic activities during the times of Prophets, offering insights into the social and economic systems of those periods. This section highlights the economic systems during the times of Prophets (peace be upon them):

1. Era of Prophet Adam (peace be upon him)

Commencement of Economic Activities:

Prophet Adam (peace be upon him) was sent to Earth, where he was encouraged to labor and engage in agriculture, marking the beginning of agriculture and basic economy.

Use of Resources:

The utilization of land, water, and primitive tools became essential for human survival.

2. Era of Prophet Noah (peace be upon him)

Shipbuilding:

The mention of Prophet Noah (peace be upon him) building the Ark reflects the technical skills and resource management of that time.

Technological Advancement:

Shipbuilding is an example of early technology and the development of the economy.

3. Era of Prophet Shu’aib (peace be upon him)

Weights and Measures:

As mentioned in the Quran, Prophet Shu’aib’s (peace be upon him) people were warned against cheating in weights and measures:

"O my people! Give full measure and weight with justice and do not deprive people of their due and do not cause corruption upon the earth."_ (Surah Hud: 85)

Additionally:

"They said, O Shu‘ayb does your way of prayer command you with the obligation to make sure that we should leave what our fathers used to worship of idols or that we should cease to do as we will with our goods? [Surah Hud: 87]).

This indicates the presence of capitalism and issues within the trade systems of that time.

Transparency in Trade:

The emphasis on principles of weights and measures indicates the concept of trade fairness in that era.

4. Era of Prophet Salih (peace be upon him)

Livestock Economy:

The mention of providing water to the she-camel in the Quran highlights the prevalence of livestock farming during this time.

Resource Management:

Livestock rearing and water distribution were key components of the economy.

5. Era of Prophet Yusuf (peace be upon him)

Hoarding and Planning:

The Quran describes how Prophet Yusuf (peace be upon him) systematically stored and distributed grain during famine.

Grain as Currency:

Grain was used as currency for trade and exchange, as detailed in the exegesis (Explanatories and Commentaries) of Surah Yusuf.

Economic Planning:

Efficient strategies for managing resources with principles of safeguarding, trust and skilful utilization of resources (“Appoint me over the storehouses of the land; indeed, I will be a knowing guardian”) reflect the economic development of the time.

6. Era of Prophet Musa (peace be upon him)

Wage-based Labor System:

The Quran mentions:

"Indeed, I wish to marry one of these two daughters of mine to you, on the condition that you serve me for eight years."_ (Surah Al-Qasas: 27)

This verse demonstrates the existence of a wage-based labor system.

Principle of Wages:

The concept of compensation for labor was clearly established in this era.

7. Era of Prophet Dawood (peace be upon him)

Iron Industry:

According to the Quran, Allah granted Prophet Dawood (peace be upon him) the skill to make armor from iron:

"And We made the iron pliable for him."(Surah Saba: 10)

Industrial Development:

The iron, and weapons industry was a significant part of the economy, laying the foundation for modern steel and iron industries.

8. Era of the People of the Cave (Ashab-e-Kahf)

Use of Coins:

The Quran mentions that the People of the Cave had coins, which reflects the monetary system of that time.

Economic Stability:

The mention of coins indicates the presence of trade and financial transactions during that era.

Characteristics of Islamic Economy

Justice and Transparency:

Economic dealings in all Prophets’ eras emphasized fairness and transparency.

Equitable Resource Usage and distribution:

The teachings of Prophets encouraged the equitable utilization and distribution of resources.

Economic Progress:

The economy evolved across different Prophets’ eras, encompassing agriculture, industry, trade, and finance.

Conclusion:

Islamic economics not only offers a moral framework but also provides glimpses of economic systems during the Prophets’ times, helping us understand the social and economic structures of the past. These principles continue to guide solutions to modern economic challenges.