Afghanistan Economic Policy Proposal

Principle: Guaranteeing Basic Needs for All:

According to Islamic jurists, the protection of life is one of Sharia’s goals, alongside the protection of religion. Al-Ghazali observes that religion can only be preserved through the acquisition of knowledge and the performance of prayers, both of which require bodily health, survival, and the availability of minimal clothing, shelter, and other necessities. Consequently, the protection of religion also necessitates need satisfaction, which is already a requirement for ensuring another Shariah objective, namely the protection of life.

Similarly, the Quran declares human beings to be dignified and dignity presumes need fulfilment. Several verses of the Qur’an affirm that sufficient provisions have been made in man’s environment with the specific purpose that he should avail himself of these and so have his needs fulfilled. The fact that provisions provided by Allah (swt) are sufficient for all coupled with His desire that everyone should draw sustenance from these provisions, make it a socially obligatory duty to ensure need fulfilment for all members of the society.

Indeed, We have dignified the children of Adam, carried them on land and sea, granted them good and lawful provisions, and privileged them far above many of Our creatures (17:70).

We have indeed established you on earth and provided you with a means of livelihood (7:10).

The Messenger of Allah (saw) said: A ruler who, having obtained control over the affairs of the Muslims, does not strive for their betterment and does not serve them sincerely shall not enter Paradise with them (Sahih Muslim Book 20, Hadith Number 4502).

The primary responsibility of looking after the poor and the needy is on the family, the tribe and the society at large. However, if relatives, neighbours and society’s non-profit organizations fail in reaching out to the poor and needy, the government needs to take care of the society’s basic needs.

Policy implications

1. The constitution must contain a clause incorporating the principle of guaranteeing basic needs for all. This is needed to reassure the weak and the poor that the state stands by them as well as to ensure that the government does not fail in its duty.
2. There must be a way for the one actually in need of food, clothing, and shelter to get his needs fulfilled through some social agency which is easily accessible.
3. Long-run objective should be to enable the needy to acquire the necessary means to fulfil their needs on their own making grants unnecessary.
4. There is a need to institutionalise Zakah as a form of direct transfer of income to the poor as an established policy from the rich to the poor. The state can finance its income transfer programme through Zakah and should there be a shortfall, additional taxes may be levied on the rich alone.
5. Taxation should not hit the poor and hence, indirect taxes should be avoided except when they relate to luxury items.
6. Two obvious targets for direct taxation are capital gains and economic rents
7. Public provision of essential consumer goods and services is a more efficient method of need fulfilment than income transfers. Direct supply of essential consumption goods and services would ensure that basic needs are met first and at lower cost to society.
8. Medical care should be provided for all but its cost may be partly covered by obligatory contributions from those with incomes above a certain level.
9. The state should normally try to ensure fair practises on the part of all economic agents leaving the prices of commodities to be determined by the market However, state intervention may be necessary to ensure adequate supplies of essential goods and services at reasonable prices. Similarly, intervention in the factors market would aim at ensuring fair wages to labour.

Self-Sufficiency:

Comparative advantage is one of the most pervasive and erroneous theories in economics. This theory must be completely rejected because it has caused a great deal of suffering and hardship for people all over the world. The theory dictates that a nation should only produce the goods and services in which it has a comparative advantage, i.e., those goods and services that can be produced at a lower opportunity cost than other countries. The theory suggests that remaining products and services must be imported via trade. In contrast, the more resilient and sustainable concept is self-sufficiency, in which a country attempts to produce goods and services domestically to meet the basic needs of all its citizens. In this model, imports are drastically reduced. Historically, Muslim societies were administered in this manner and proved to be successful for 1200+ years. The majority of westernised economists will advise nations to concentrate on the production of a small number of goods and services, but this recommendation should be vehemently rejected.

Policy Implications:                                                            

1. The basic needs of the citizens should be fulfilled through domestic production and imports should be minimised.
2. Protectionist policies should be adopted to protect and promote local industries. Imports of non-essential items and foreign products that can be produced in the country should be taxed.

Iqta:

Iqta is defined by Fuqaha as “a grant by a government to a qualified private person of a public property already entrusted to the government.” Iqta does not necessarily exclude the possibility of certain compensation or fees to be paid by the beneficiary against this transfer. Iqta may be made free or conditional on certain lump sum or periodical payments to the government’s treasury. There are two kinds of Iqta: Iqta al Tamlik (ownership Iqta) and Iqta al Irfaq (usufruct Iqta).  Ownership Iqta transfers ownership of a public property to a private party. Usufruct iqta does not transfer ownership of the asset, it only gives the beneficiary a privilege to use the public property and extract its benefits.

Policy Implications:

1. Iqta may be applied to lands and other public properties. It may also be free of charge or against lump-sum or periodical fees. A system of Iqta may be initiated in such a way that may give privileges to workers in the public enterprises or to residents in the local neighborhood of privatized enterprises while at the same time preserving the right of the whole society by means of a well-designed special Iqta’ taxes.
2. Iqta al Irfaq may be used as a tool of enhancing the productivity of a publicly-owned enterprise and subjecting it to market forces without sacrificing the public ownership of the property.
3. Iqta must aim at fulfilling certain public interest of the society. This means that Iqta can only be made if there are clear benefits to the society as a result of granting it. This benefit relates essentially to the idea of reclamation and revivification of land and other natural resources whether for agricultural, industrial, commercial or residential use, i.e., Iqta, in Shari’ah, is tied to the objective of development and growth. The right to own/use the land by the beneficiary does not exist by the mere government action of granting the land, but by the action that involves reclamation and revivification undertaken by the beneficiary. This is derived from the practice of the early Islamic state at the time of Omar, the second Khalifah, when he took back a piece of land given by the Prophet Muhammad (saw) to Bilal Bin Al Harith because the latter did not make a productive use of it.

Ihya:

According to Shari’ah, Ihya of a dead land is a legal cause for acquiring its ownership. Jaber (ra) narrates that the Prophet (saw) said “he who revives a dead land, it becomes his.” The principle is also supported by unanimity of companions and of Fuqaha afterward. In order to preserve the right of ownership of a revived land, its new owner must continue using and/or dispose of it in such a way that keeps it productive and useful. If a land is abandoned after it has been revived, Fuqaha argue that it goes to public ownership of the state. The revived land becomes subject to dues and taxes as one of the conditions or terms of revivification.

Policy Implications:

1. The government may earmark special economic zones in the country where domestic and international investors may gain ownership of land through a minimum investment amount. In addition, the government may also benefit through levying taxes.
2. Ihya may be regulated by the government so that a lump-sum or periodical fee may be imposed.
3. The principle of Ihya should be incorporated in the land laws of the country to promote and encourage the private sector to take initiative in agricultural, residential and commercial development.
4. If Ihya is also extended to underground minerals, the government should have an adequate share.
5. The use of Ihya requires the adoption of a legal framework that organizes Ihya, regulates the rights and responsibilities of its beneficiaries and provides encouragement facilities, including banking facilities in addition to an Ihya’ promotion and documentation governmental body.

Redistribution of Land and Income-Generating Assets:

A major cause of poverty in which about half of the population of Muslim countries finds itself is the inequitable distribution of land and other income-generating assets. Redistribution measures are justified on two grounds: firstly, the existing distribution of land is mostly the result of unjust and non-Islamic practises in the past. Secondly, a reduction in inequality in the distribution of income and wealth is the desired goal of economic policy in Islam. It is insured by a more equitable distribution of income yielding assets in the long run. Such policies are recommended by eminent contemporary Islamic thinkers who have discussed the justification of doing so from the Shariah point of view.

Policy Implications:

1. A static redistribution of an existing stock of assets: Land reforms aimed at transforming tenant cultivators into owners of land is one example.
2. A dynamic approach aims at altering the patterns of asset accumulation over time: This involves measures such as transferring some shares of existing companies to people with very low incomes, essentially making them capital owners. The poor could be encouraged to do so by making some contribution out of their own savings while the rest of the price of these shares could be contributed by the state. Furthermore, projects to help the poor become owners of income-generating assets such as cars, machines, etc. can raise their income earning capacity.

Privatization through distribution of Zakah

One of the basic objectives of Zakah distribution is to enrich the poor and take them off the list of Zakah recipients by providing them with capital goods to help them establish their own business depending on their own training.

Policy Implications:

1. Categories of Zakah recipients who need life-time support such as handicapped and retirees may be provided with investment funds which allow them to derive annuities for the rest of their lives.
2. Zakah funds may be utilised for investment projects where the poor and the needy are made the owners of projects while the projects are professionally managed. A productive project may be constructed and made ready for operation by the Zakah organization, then its ownership is distributed to Zakah recipients, e.g., poor and needy, as equity shares.