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Direct
Public Investment
One
of the significant public policies of the Islamic government is to
make direct public investment where there is a market failure. This
could be in an area of social welfare such as health and education
as well as in a commercial area. No specific Shari`ah injunction may
be cited for or against this policy except the general principle of
maslahah that guides all public policies. A situation may arise in
which the private sector may be reluctant to invest in a certain
area although people need investment in it. The Islamic government
could take the initiative to invest in this area. The converse of
this is true as well. In a business opportunity in which the
required investment is low, risks are negligible, and profits high,
such as a mineral deposit on the surface of land, the government
could decide not to allow such a resource to any individual as it
would lead to extravagant profits for very few people and thus cause
the unfair distribution of income.
Privatization
There
is a worldwide movement in favor of privatization and against public
enterprises. Of course, the record of public enterprises is not
enviable. But a blind rush to adopt privatization is also not
justified. The public sector may be inefficient, but the private
sector can fail. Privatization needs to be considered in the overall
context of the maslahah of the Ummah. Some of the considerations
are as follows:
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Privatization should not lead to monopolies in the private sector;
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The transfer of ownership should encourage a wider ownership base
and preferably involve the workers in the takeover;
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If the maslahah of the Ummah so requires, the government should
conceive some system of regulating the output and price structure in
the private sector;
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After privatization, a mechanism should be set up to monitor and
evaluate the performance of the private sector to see that the
objectives of change have been realized to a reasonable extent;
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The private sector should undertake development of human resources
after the takeover so that the society as a whole does not suffer
from a shortage of technically qualified staff; and
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Private companies that take over public enterprises should commit
themselves to the moral and spiritual development of their working
people
Income
Redistribution Program of the Islamic State
Guarantee of a Minimum Standard of Living
The
Islamic government guarantees a minimum standard of living to all of
its citizens irrespective of age, sex, race, color, language, caste,
or religion. The only criterion for receiving assistance is need.
However, the primary responsibility for meeting the need lies with
the person himself, then with his family and community, and then
with the government. Thus, the government provides a guarantee and
acts as the provider of last resort. The primary sources of Islam
provide extensive support for this obligation of the government.(13
)Some jurists are of the opinion that the provision of basic
needs to a needy individual is such an important obligation of the
government that an individual may even go to court and claim it as a
right.(14) The needs to be
fulfilled are food, clothing, shelter, health, and, in large cities,
transportation. Some jurists have also included marriage allowance
and redeeming of past debts incurred as legitimate needs.(15)
The standard at which these needs will be provided depends on the
economic conditions of a particular society in each age.
Subsidies
Generally,
Muslim scholars have not supported subsidies on goods and services
because they tend to distort income distribution. Subsidies are
usually availed of by the rich, and the poor remain deprived. A
better scheme to help the poor is to transfer payments and income
supplements from Zakah. Then the poor will be able to buy the
required goods and services from the market according to their need.(16)
Empowering
the Poor
One
of the mandates of the Islamic government is to empower poor. This
is possible either by programs of income redistribution or by giving
economic power to the poor. We shall just mention some of the
programs for empowering the poor by restructuring the economy.
Land
reforms: The Islamic government should undertake land reforms to
enable landless laborers in the rural areas to obtain some assets
for their sustenance. For this purpose it can put a limit on the
size of land holdings for individuals and their families. It can
take over surplus land after paying compensation to the owners. The
government can also decide to sell state land among the rural poor
for a fair price to be realized over a period of time. Land reforms
should also accompany support programs that provide machinery, seed,
pesticides, and fertilizer on interest-free credit.(17)
Terms
of tenancy: The Islamic government has the primary
responsibility of enforcing justice. In most of the Muslim
countries, the existing land tenancy arrangements leave much to be
desired. The Islamic government should review the tenancy practices
and reform them according to principles of justice and fair play.
Labor
reforms: Chief reforms in this area are the education, training,
and moral upliftment of the working class. The government should
encourage skills-training programs in the private as well as in the
public sector. Other reforms include providing the legal framework
for worker profit sharing and enabling workers to obtain stocks of
the companies in which they are working. Gradually, they should move
from being mere workers to being owners of the industrial and
commercial concerns. Encouraging small and micro-enterprises: The
government should encourage the establishment of small-scale private
enterprises. For this purpose it needs to remove all barriers to
market entry, provide interest-free financing to small
entrepreneurs, give fiscal incentives to small firms, and provide
market information and other supplementary services to them at
subsidized rates.
Wider
ownership of corporations: The Islamic government should break
the control that a few families have on large corporations. This can
be done by encouraging worker ownership of part of the capital
stock, not making available interest-bearing capital, limiting the
size of capital held by an individual in one corporation, and
limiting the number of companies someone may serve as director of.
The Islamic government may also legislate to buy a certain
percentage of shares out of Zakah funds in the name of specified
beneficiaries of Zakah. These individuals can be made the owners of
these shares through Zakah trusts that manage the Zakah funds on
behalf of the poor beneficiaries. Gradually, these beneficiaries
would start earning dividends and also have an asset base in their
own name. Also, the government may legislate that, in the future, a
certain percentage of shares of all public corporations be reserved
for people of low means, such as workers or government servants.
Making
education and training accessible to the poor: It is the
responsibility of the government to devise educational and training
programs that benefit the poor, especially those living in far-off
rural areas. In the absence of such a policy, education serves to
enrich the already rich.
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