Our Socio-Economic Order

Mufti Mohammad Taqi Usmani, Shakir Rizwani

• Publisher: Prophetic Economics
• Year: 2025
• eBook ISBN: 9789366082509
• Edition: 2
• Topic: Teologia e religione
• Subtopic: Business generale

Authentic Islamic Economics in Theory and Practice

Our Socio-Economic Order by Mufti Mohammad Taqi Usmani represents an essential contribution to Islamic economic thought, offering both systematic critique of dominant modern economic systems and comprehensive articulation of authentic Islamic alternatives. Originally composed as a series of scholarly essays addressing Pakistan's post-independence economic challenges, this work has endured as a foundational reference for understanding how Qurʾānic teachings, prophetic guidance, and Islamic jurisprudence provide practical solutions to persistent problems of wealth distribution, social justice, and economic development.

The Crisis of Modern Economics

The work begins by diagnosing the fundamental failures afflicting contemporary economic systems. Mufti Usmani demonstrates that capitalism, despite its productivity and technological advancement, systematically concentrates wealth through four pillars of exploitation: interest (ribā), speculation, gambling, and hoarding. These mechanisms enable capitalists to accumulate national wealth while assuming no risk of loss, leaving laborers and consumers increasingly impoverished despite industrial progress. The analysis reveals how monopolistic practices, protected by government policies favoring large industrialists, create artificial scarcities and manipulate prices, reducing the majority to economic servitude.

The work then turns to socialism, examining its claims to liberate workers from capitalist exploitation. Mufti Usmani demonstrates that socialism merely replaces multiple individual capitalists with a single, more powerful state monopoly. Rather than workers genuinely owning factories and farms, a small bureaucratic elite controls all means of production, determining wages, prices, and working conditions without meaningful worker participation. The promised “workers' government” proves illusory; actual workers lack rights to organize, strike, or protest, making their condition potentially worse than under capitalism, where such liberties, however constrained, still exist.

Islamic Economic Foundations

Having demonstrated both capitalism's and socialism's failures, Mufti Usmani systematically presents Islamic economic principles. The foundation is theological: Allāh alone possesses absolute ownership of all wealth, and humans function as trustees bound by divine commands in their economic activities. This framework rejects capitalism's notion of unlimited private ownership and socialism's denial of private property, instead establishing that humans may own wealth through legitimate means but must deploy it according to Sharīʿah constraints that prevent exploitation and ensure circulation of wealth.

Islam prohibits the four mechanisms through which capitalism concentrates wealth. The prohibition of interest (ribā) ensures that capital providers share risk with entrepreneurs rather than extracting guaranteed returns regardless of business outcomes. Banning speculation prevents artificial price manipulation and the concentration of profits in speculators' hands at consumers' expense. Prohibiting gambling eliminates mechanisms whereby the poor's money flows to wealthy individuals through games of chance masquerading as investment or insurance. Outlawing hoarding prevents artificial scarcities that enable price gouging during times of need.

Beyond prohibiting exploitative practices, Islam mandates redistributive mechanisms ensuring wealth circulation. Zakāt, the annual levy on accumulated wealth, prevents hoarding and transfers resources to eight specified categories of recipients. ʿUshr, the agricultural tax, ensures that land productivity benefits broader society rather than solely landowners. Islamic inheritance laws, by mandating distribution among multiple heirs rather than primogeniture, prevent land and capital concentration across generations. Maintenance obligations create legal claims whereby relatives, orphans, and others possess enforceable rights to support from those with means.

Profit-Sharing as the Alternative to Interest

The work provides detailed analysis of how profit-sharing partnerships (muḍārabah and mushārakah) can replace interest-based financing. In these arrangements, capital providers and entrepreneurs share both profits and losses proportionally. This alignment of interests produces several beneficial effects: capital flows to genuinely productive enterprises rather than merely profitable ones; entrepreneurial talent receives support regardless of existing wealth; risk is distributed equitably; and wealth circulates broadly rather than concentrating in lenders' hands through guaranteed returns.

Mufti Usmani addresses practical objections, demonstrating that Islamic banking has historical precedent—Muslim societies operated successfully on these principles for centuries—and contemporary viability, as evidenced by the growing global Islamic finance industry. He includes detailed responses to questions about implementing interest-free banking, covering deposit accounts, business financing, insurance, and provident funds, showing how each can function according to Sharīʿah principles.

Agricultural Reform and Feudal Oppression

Significant attention addresses agricultural sector injustices, particularly relevant to societies where feudal landholding patterns persist. The author demonstrates how large landholdings contradict Islamic inheritance laws, which should naturally divide estates among multiple heirs. He proposes strict enforcement of inheritance laws, elimination of interest-based land mortgages that enable landlords to accumulate holdings, and investigation of lands acquired through illegitimate means, with redistribution to rightful owners or landless peasants.

The work addresses crop-sharing arrangements (batai), showing how exploitative conditions imposed on peasants violate Islamic principles of contractual justice. Proposals include fixing minimum peasant shares, prohibiting forced labor conditions, establishing accessible dispute resolution mechanisms, and creating cooperative marketing systems that bypass exploitative middlemen. These reforms aim not at wholesale nationalization but at ensuring justice within relationships between landowners and cultivators.

The Ulema Consensus

A remarkable feature is analysis of the 22-Point Economic Plan developed jointly by 118 ʿulamāʾ representing all major Islamic schools of thought. This unprecedented consensus demonstrates that scholarly differences regarding ritual matters do not extend to economic principles. All agreed on prohibiting interest, eliminating speculation, breaking up monopolies, ensuring equitable wages for labor, addressing feudal oppression of peasants, and implementing Islamic redistributive mechanisms. This consensus refutes claims that “Islamic economics” represents modern innovation rather than authentic Islamic teaching.

Critique of “Islamic Socialism”

Mufti Usmani systematically refutes attempts to reconcile Islamic economics with socialist ideology. He demonstrates that slogans like “Islamic socialism” are conceptual contradictions. Islam's concern for social justice does not validate socialist nationalization programs; rather, Islam protects legitimately acquired private property while mandating specific redistributive mechanisms and prohibiting exploitative practices. Nationalization often violates Islamic principles by seizing lawfully acquired property, and historical experience shows it typically benefits bureaucratic elites rather than common people.

Spiritual and Social Dimensions

Throughout, the work emphasizes that economic reform cannot succeed without broader Islamic revival. The early Muslim community's extraordinary achievements in economic justice stemmed from profound faith motivating voluntary sacrifice for the common good. Contemporary reform requires educational transformation, rejection of Western consumerism, simplified lifestyles, effective judicial systems accessible to the poor, and—fundamentally—spiritual reformation grounded in God-consciousness (taqwā) and accountability before Allāh.

Implementation Challenges and Government Critique

The latter chapters track Pakistan's efforts to implement Islamic banking, offering both encouragement and frank critique. Mufti Usmani analyzes specific schemes introduced by various governments, demonstrating when superficial name changes masquerade as genuine reform. His analysis of “mark-up” arrangements, profit-and-loss sharing accounts, and “Islamic” savings schemes reveals how technical Sharīʿah compliance can be achieved without addressing the fundamental economic justice concerns that motivated prohibiting interest. These chapters model engaged scholarship, maintaining principle while acknowledging practical constraints, encouraging genuine progress while refusing to validate cosmetic changes.

Contemporary Relevance

Though written addressing Pakistan's challenges, the principles and analyses remain directly applicable to Muslim-majority nations worldwide and Muslim communities in non-Muslim-majority contexts. The work serves scholars researching Islamic economics, policymakers seeking to implement Sharīʿah-compliant systems, Islamic finance professionals requiring authoritative guidance, and serious general readers seeking authentic understanding of how Islam addresses humanity's perennial struggle to balance individual enterprise with social welfare.

Our Socio-Economic Order combines rigorous jurisprudential analysis with practical policy expertise and prophetic vision. It demonstrates that Islam offers neither capitalism's exploitative individualism nor socialism's oppressive collectivism, but a divinely revealed middle path that protects legitimate private property, prohibits exploitation, mandates wealth circulation, and grounds economic activity in consciousness of divine accountability. For anyone serious about understanding and implementing economic justice according to Islam, this work remains indispensable.

Table of contents

• Foreword
• Our Socio-Economic order
• Economic improvements required for an Islamic Order
• The Ulema Plan
• Our Economic Problems and Islamic proposals for resolving them.
• Socialism and the Poor
• Islam, Democracy, and Socialism
• Socialism and Economic Equality
• Socialist Objections
• Agricultural Reforms
• Interest and Banking
• Remembrance and thought Interest-free Counters.
• Savings week and Government's Revenue Schemes
• New Scheme of Musharika (Co-sharing)
• Interest-free banking: some impressions
• Total end to "Interest"
• Interest-free Banking: Government's latest auspicious measures
• New Budget and Interest-Bearing Schemes
• Endnotes