Market Mechanism as Conceived by Ibn Taimiyah
Tbn Taimiyah had a clear notion of the prices in a free market being determined by the forces we now call demand and supply. He says:
"Rise and fall in prices is not always due to injustice (zulm) of some people. Sometimes its reason is deficiency in production or decline in Import of the goods in demand. Thus if the desires for the good increase while its availability decreases, its price rises. On the other hand if availability of the good increases and the desires for it decrease, the price comes down. This scarcity or abundance may not be caused by the action of any people; it may be due to a cause not involving any injustice or, sometimes, it may have a cause that involves injustice. It is Allah the Almighty who creates desires in the hearts of people..."(Ibn Taimiyah, 1381, vol.8, p. 523).*
(Abdul Azim Islahi, Ibn Taimiyah's concept of market Mechanism, Page # 51, 27. July 1983)
Market Mechanism as Conceived by Ibn Khaldun
According to the famous Islamic thinker Ibn Khaldun, oppression is to seize one’s property, to cut a worker’s wage etc, and it does not matter whoever does this whether it is a government or a private person. In this sense, he believes that those who collect unfair taxes, violate people’s property or confiscate others’ property are the oppressives. “Since all these activities cease the prosperity of the country, the loss and damages belong to the state. Because, if the state is a statue and a figure, these are the materials of that figure, and each of these oppressions decrease the job and working abilities and the power of the exposers. Know that, here it is the reason and wisdom why the legislator forbids oppression. This stems from the fact that oppression removes the prosperity of the world and destroys the world (Khaldun, 1986: 80).
Ibn Khaldun ties the existence of Sharia to the state, the existence of the state to the statesmen who will manage it, the existence of these civil servants and soldiers to possession and money, the existence of possession and money to the restructure of the country, and finally the existence of the restructure of the country to justice. Justice is a measure set up among the creatures of Allah, and Allah has brought an administrator (statesman, government authority) on the head of this measure. This administrator (government) does not judge people’s private property and their private enterprises, because these properties are run more efficiently, create more employment and pay more taxes to the state in the hands of individuals (private sector). If the government confiscates these properties, gives them as a gift to its supporters, and these people can use these places inappropriately, they do not respect their public improvements and care (they do not renew their technological endowments), and they do not pay their taxes regularly. Therefore, it is gone far away from economic efficiency and appears to be a great extravagance of resources. According to Ibn Khaldun, government does never oppress to tribute (harach) and taxpayers1. Otherwise, these people (or firms) abandon their home country, migrate to other countries; consequently, those places are ruined, the government’s sources of income decrease, difficulties in public finance can be exersized, and other countries waiting for an opportunity covet the territory of Islam. (Khaldun, 1986: 78). Morever, these people and firms invest in those countries they migrated instead of investing in their own country, provide employment and pay their taxes to those states.
(1 In this meaning, regarding the justice in tax policy that Islamic states follow see: Abu Yusuf, 1973: 221.)
(EKREM ERDEM, THE FUNCTIONS OF STATE IN DETERMINING ECONOMIC POLICIES IN ISLAMIC TRADITION, Page # 22-23)
PROVING THAT BUSINESS ETHIC WILL BE APPLIED (THE HISBE ORGANIZATION)
In Islamic tradition, generally government intervention is not preferred as long as the things done are appropriate according to basic Islamic rules, because the essential substance in business life is to recognize the freedom of enterprise. In the event of disrespectfulness to basic ethical rules, the government can interfere in the market after completing the required supervisions within the rules under a certain institutional framework. Hisbe organization is the institution that is responsible for the regulation of markets and price controls (narh applications). This organization had succeeded in protecting its existence from the early times of Islam towards the late times of Ottomans. Some of the muhtesibs, who are responsible for market controls for the name of organization, control whether the jobs are being done perfectly or imperfectly, some control whether the craftsmen are straightforward and reliable persons or not, and some others control whether the jobs are being done well or badly
(THE FUNCTIONS OF STATE IN DETERMINING ECONOMIC POLICIES IN ISLAMIC TRADITION, Page # 23-24)
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In spite of being a contested issue among the Islamic scholars and economists, the historical-traditional accumulation mainly represents the idea of state control. In fact, although the market process and economic freedom have theoretically the priority over state control, the idea of state control has dominated the historical accumulation through the impacts of extraordinary conditions such as wars and shortage, and the pre-Islamic local state traditions. In addition to this, because of the respect in statesmen, the state has generally become a consecrated apparatus. This is a controversial issue about how much of this is based on the book and sunnah. Instead of dynamically analyzing the decisions of the Prophet and the early theorists (fuqaha) and practitioners on state and market relationship considering the necessities of their times, some scholars and statesmen in Islamic tradition have preferred the idea of authoritarian holy state to freedom of enterprise, economic development and exchange.
Despite everything, the state has a role in Islamic societies in fulfilling the good and forbidding the bad. Therefore, it is seen as an inevitable necessity that government must follow an economic policy agreeable for the society’s basic moral values because there are five fundamental elements that must be preserved and respected: The religion, flesh, property, intelligence and generation. There is a need for power to protect all these values and give society the impression of being trustworthy; that power is the state! So the need for state in Islamic tradition stems from quite fundamental reasons.
(EKREM ERDEM, THE FUNCTIONS OF STATE IN DETERMINING ECONOMIC POLICIES IN ISLAMIC TRADITION, Page # 34)
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