Dr. M. N. Siddiqi










Presented at the World Parliament of Religions


September 2, 1993





The spiritual relates to man's relationship with his Creator, the Lord, and is spurred by his concerns for life after death; Economic and financial life belongs to this world, its concerns are all earthly, relating to this life on earth.

Man must relate the latter to the former, but how ? Islam's answer:

Life is a test and all that is there is a trust. Success in the test comes through discharging the trust as pleases the Lord Who wills that we care and share while producing and consuming to enjoy the gift of God that is life. Moderation, following the middle path avoiding extremes, is the key to success, for the good things of life tend to be self-destructive if pursued to the extremes, and lack of moderation or intemperate indulgence makes one forgetful of the Lord and neglect his duties towards Him.


Obedience (Ubudiyat) born of gratefulness (Shukr) makes man gear up for the test and trusteeship that is life, giving him the moral orientation of caring and sharing and moderation.

Pursuit of self interest is natural but it could be destructive if it is uncaring. Islam is for an active economic and financial life tempered by care for others and complemented by the willingness to share. Unconstrained profit maximization could be as ruinous to the economy of man as an unrestrained urge to maximize enjoyment could be to his personality, family life or social relationships. Man needs a moral sense, responsibility and accountability, the awareness that no one alone Can have it all good; one has to care and share, for all to have something even while some can have more and more.

Freedom is the essence of being human. Tawheed – the fundamental of Islamic faith – is emancipation of man from all bondages other than his willing obedience to Allah, Whose law is available complete and final. Neither the test that is life nor the trusteeship by which God made this test would make any sense without freedom of enterprise and ownership. Freedom with accountability provides the basis for economics.

Economics is about choice, the message is: let choice be spiritually inspired and morally informed.

Finance is convenience, a means to efficient execution of choices, the message is: let it be a convenience for all, fair and equitable, and generous and accomodative for the weaker ones among the human brotherhood. Though the markets are free, there are goals to be achieved - universal need fulfillment being one of the most basic because of its significance for test and trusteeship.


The Islamic approach to Economics and Finance has been secured with binding obligations (Zakat, Inheritance laws) prohibition of socially harmful practices (gambling, riba - interest) and the reinforcement of internalised moral values by a state that supervises and takes corrective measures to compensate for moral failure as well as market failure.

Zakat transfers part of the wealth from the haves to the have nots. The laws of inheritance disperse wealth among the haves to lessen concentration. Prohibition of gambling seeks to keep earnings tied to work and beneficial contributions. The prohibition of interest is to ensure fair risk sharing through participatory arrangements and remove the injustice of money capital claiming a positive return from such of its uses which fail to create any additional value in an uncertain world.

Individuals are called upon to care for others and look after collective needs through the Islamic concept of fard kifaya (socially obligatory duties).

The Islamic state is envisaged as the guardian of Islamic Law. The State itself is not divine, nor have any of its functionaries any spiritual powers. It is a human agency sanctioned by divine law to oversee the implementation of Shariah. It has a role in economics and finance to give the spiritual basis its fullest possible expression in actual practice.

This should apply within the nation as well as between nations. International economic and financial relations would naturally seek promotion of national interest which could degenerate into socially disruptive practices unless inspired by spiritual/moral considerations.


Expression of the spiritual and moral basis of economics and finance in Islamic history has seen many ups and downs, There is no consistent continuous improvement or decline : it is men who make history, so it had been a mixed affair. By and large the values were internalized and the laws implemented: Zakat flew to the poor, inheritance distributed, neither gambling nor interest were accepted universally. There was a great upsurge of productive enterprise, trade and commerce. Men and women worked, produced , consumed, cared and shared to the benefit of all around. Several factors contributed, however to increase concentration of wealth, perpetuate poverty, erode freedom and slow down economic growth. By the time the Muslim peoples came under the assault of western powers their society was already suffering from low efficiency and poor social justice. It is only now, since the middle of this century, that things have taken a turn for the better wit! h Muslim peoples having regained formal political freedom and right to manage their own economies.


Two-thirds of the world's Muslims live in over fifty countries’ members of the OIC, of the remaining more than half live in India and China, and the rest in the rest of the world. Though Muslims are generally aware of the distinctive Islamic approach to economics and finance, only a few countries and some activists in Muslim minority communities are actually organizing Zakat collection and disbursement, awkaf based education and social services and interest free credit. The grip of capitalist economics and finance is all pervading and tight, leaving little room for maneuvering.

Nevertheless Pakistan, Iran and Sudan are struggling hard to switch over from interest based financial-system they inherited to an Islamic alternative. Malaysia and some Arab countries are encouraging Islamic banking to expand in an environment essentially designed for conventional banking. Insurance and other financial services are also being reorganized. There is a search for alternative strategies of development and for a different pattern of international economic and financial relations in sync with the spirit of Islam and respectful of its law. But the choices of a dependent people are limited indeed.

The world as it is structured today does not allow isolation and withdrawal. All men must live together in the global village and interact, especially in the fields of economics and finance. However, it does, and must, allow for diversity.

the more flexible it is the more it can avoid building up pockets of resentment with the potentiality of developing into perceived alternative systems leading to another confrontation of the type the world has seen during the last seventy years between the two super powers.

The key to universal peace and prosperity lies in broadening the areas of consensus that already exist between peoples in matters economic and financial. All value freedom, accept private ownership, recognize the need of an active State. But self-interest still prevails, both at the individual level and at the national level, to the detriment of a global economy that cares and shares while it grows and expands. Capitalism is spiritually blind. Man must turn to God, remember the life after and look at fellow human beings as well as the natural environment in the new (spiritual) light. Islam with its history, law, and the ongoing contemporary experiment in spiritually oriented economics and finance is in the service of man awaiting his nod.