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Muslim Economic Thinking and Institutions in the 10Th AH/ 16Th CE Century

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Muslim Economic Thinking and Institutions in the 10Th AH/ 16Th CE Century Munich Personal RePEc Archive Muslim Economic Thinking and Institutions in the 10th AH/ 16th CE Century Islahi, Abdul Azim Islamic Economics Research Center, KAU, Jeddah, KSA 2009 Online at https://mpra.ub.uni-muenchen.de/75375/ MPRA Paper No. 75375, posted 03 Dec 2016 07:31 UTC MUSLIM ECONOMIC THINKING AND INSTITUTIONS IN THE th th 10 AH/ 16 CE CENTURY Abdul Azim Islahi Professor Islamic Economics Research Center King Abdulaziz University Scientific Publising Centre King Abdulaziz University Jeddah, Saudi Arabia 1430 A.H. / 2009 A.D. FOREWORD The state of Muslim economic thinking in the tenth century Hijrah corresponding to sixteenth century CE has been an un-researched subject. It is a matter of great satisfaction for Islamic Economic Research Center to present a pioneering work in this area. There are many lessons to be learnt from the economic ideas of the great lights of the period. I am sure that the readers will find some of the chapters highly interesting and thought provoking. The present study underscores the thesis that mercantilism was a reaction against Muslim powers and investigates the factors that promoted mercantilism in the Christian West and the reasons why it did not find favor in the Muslim East. It informs us of many interesting examples of financial innovations adopted in this period in order to protect awqaf properties. It also tells us how those innovations were misused and corrective legal measures were imposed and bypassed subsequently. It deals with the legal issues in contracts and their settlements that arose due to unstable currency values and monetary mismanagement. It highlights issues with respect to kharaji lands and looks at land prices in the perspective of the purposes of land sale. This gives us insight into the level of understanding about price formation based on expectations. It also underlines new thinking on preserving the incentives and maintenance of awqaf by resorting to financial innovation of ‘ijaratayn’ (combination of long- and short-term leases) and ‘istibdal’ (asset swap) as well as institutional innovation of cash waqf that provided flexibility and efficiency in its maintenance. It calls attention to fresh thinking on reclassification of sources of state revenues and adding left-over property as an explicit funding source for bayt al-mal as it had assumed significant proportions. In addition, the book provides detailed information about works on public finance, Shar`iyah governance and market supervision that have been depositary v of economic ideas of Muslim scholars. A detailed bibliography comprising the literature on Muslim economic thinking of the period has been provided. The present study by Dr. Abdul Azim Islahi is first of its kind that systematically studies Islamic economic thought during the tenth/sixteenth century. The book is selective rather than exhaustive and makes no pretense of presenting a complete history of economic thought. We hope that the present work will be a significant addition to the existing literature on the subject. It is expected to provide a major fillip to future research in the area of Islamic economic thought. May Almighty Allah accept our humble endeavor and grant us His favor. Wa bi’llah al-tawfiq Dr. Abdullah Qurban Turkistani Director Islamic Economics Research Center King Abdulaziz University vi vi PREFACE More than seventy-five years have passed since writing on Islamic economic thought began in the modern period. But these works do not cover the period after the 9th AH/15th CE century. In the present work an effort has been made to investigate the state of Muslim economic thinking in the tenth century Hijrah corresponding sixteenth century CE. This period occupies great significance in the world history. In the sixteenth century the Ottomans consolidated their rule in parts of Europe and took over the custodianship of the Holy lands of Islam by abolishing the two and half a century old Mamluk Sultanate of Egypt. The beginning of century also saw the establishment of a new dynasty – Safawids – in Iran and the Mughal dynasty in India. In Europe it marked the 'first phase' of early modern era. It was a time when renaissance was already in full swing and social reform, scientific inquiry and economic thinking and institutions were taking new shapes. This situation brought both challenges and opportunities to Muslim world. However, the balance of economic potential and technological scope moved progressively in Europe's favour. To provide background knowledge of the situation in Muslim countries at that time, an overview of the history of Muslim governments, intellectual and literary situation and economic condition have been presented at the very outset. As far Muslim economic thinking is concerned, the present study seeks to examine it in five major areas: market and pricing, mercantilism, money, kharaj and land proprietary right, and endowment and cash waqf controversy. It also presents an analytical survey of works produced during the period under study on public finance, al-hisbah and al-siyasah al-shar`iyah – most important source material of Muslim economic thinking in the past. Occasionally this study also attempts a preliminary evaluation and comparison of the economic thinking of the Muslim scholars of the period with that of their predecessors as well as their contemporary Western thinkers. vii However, due to certain limitations, the main focus of research has been, with a few exceptions, works available in Arabic language and economic institutions that existed in territories of the government that controlled the heartland of Islam. It also takes the note of some Western economic institutions and ideas for purpose of comparison. At occasions the reader may feel that there is a mixture of history of economic thought and economic history. The present writer has been aware of this kind of unavoidable overlapping. This was due to the nature of the research. The two disciplines are intimately related. Dependence on details of economic history becomes a necessity when information about economic thought is not sufficiently available. We hope that the historical details will be useful to understand and appreciate Muslim economic thinking of the period. Although only a sketch of the state of economic thinking in the 10th/16th century, we hope that this study fill a gap, to some extent, in the literature on history of Islamic economic thought. It is a pleasant duty to express my gratitude to Professor Muhammad Nejatullah Siddiqi and Professor Ishtiaq Ahmad Zilli who have read and commented on portions of the manuscript. I am also thankful to Professor Zafarul Islam and Dr. Mohammed Obaidullah who have provided me with valuable feedback and suggestions for improvement. None of them, however, should be held accountable for any deficiencies which remain. I would like to express my deep gratitude to the Deanship of Scientific Research, King Abdulaziz University, for a generous funding of this project. I am also grateful to our former Director Dr. Muhammad Najeeb Ghazali Khayat as well as to the present Director Dr. Abdullah Qurban Turkistani and to all my colleagues at the Islamic Economics Research Centre for being a constant source of inspiration and encouragement in this endeavor. Thanks are also due to the two anonymous reviewers of this project report at various stages of preparation. I would like to put on record my special thanks and appreciation for Br. Syed Anwer Mahmood for providing secretarial assistant to the project. Wa’l-hamdu lillahi awwalan wa akhira. Abdul Azim Islahi Jeddah viii CONTENTS Page FOREWORD v PREFACE vii CHAPTER ONE: INTRODUCTION: LITERATURE REVIEW AND IMPORTANCE OF THE 1 PERIOD 1.1 Literature Review 2 1.2 Sixteenth Century: A Turning Point in the World History 4 1.3 Something about the Source Material 7 Endnotes 8 CHAPTER TWO: AN OVERVIEW OF THE HISTORY 11 2.1 Mamluks 11 2.2 Ottomans 12 2.3 Safawid Dynasty 17 The Mughals – The Third Great Muslim Empire in the 2.4 19 Sixteenth Century 2.5 Other Muslim States 20 2.6 The Triangle Diplomacy 23 2.7 Rule of Shari`ah and Development of Qanunnamah 26 2.8 The Ottoman Administration 27 2.9 Justice 28 2.10 Divisional Administration 28 Ahl al-Dhimmah (People of the Pledge, Christians and 2.11 29 Jews) Endnotes 30 ix Page CHAPTER THREE: THE SIXTEENTH CENTURY INTELLECTUAL AND ACADEMIC 33 ATMOSPHERE 3.1 Traditional Education 33 3.2 Importance of Arabic Language 34 3.3 Rational Sciences 34 3.4 Some Eminent Scholars of the Period 37 3.5 An Age of Imitation, Commentary and Repetition 39 3.6 Opposition to Printing Press 39 3.7 Emphasis on Poetry, Art and Historiography 40 3.8 Intellectual Interaction with Europe 41 3.9 Intellectual and Cultural Relations with Iran and India 42 Endnotes 43 CHAPTER FOUR: ECONOMIC INSTITUTIONS AND 45 PRACTICES 4.1 Institution of Iqta` 45 4.2 Institution of Guild and Industrial Relations 48 4.3 Money 51 4.4 Institution of Ihtisab or Market Supervision 54 4.5 Institution of Commenda or Partnership Venture 56 4.6 Institution of Bayt al-Mal 61 4.7 Waqf 64 Institution of Zakah and Measures for Removal of 4.8 66 Poverty 4.9 A Note on Economic Conditions in Iran and India 68 Endnotes 70 CHAPTER FIVE: PERCEPTION OF MARKET AND 73 PRICING 5.1 Prior to Sixteenth Century 74 5.2 Understanding of Price Fluctuations and Market Forces 74 5.3 Administrative Price Fixation 76 5.4 Examples from the Sixteenth Century 78 x x Page 5.5 A Word on the Just Price 80 Endnotes 81 CHAPTER SIX: MERCANTILISM AND MUSLIMS OF 83 THE SIXTEENTH CENTURY 6.1 Mercantilism in the Sixteenth Century 83 6.2 Essence of Mercantilism 84 6.3 An Amoral, Restrictive, Unjust, and Exploitative System 86 Mercantilism: A Reaction Against Muslim Powers: 6.4 87 Revisited 6.5 Crusading Movement Transformed 90 6.6 Kārimī Merchants 91 Factors that Promoted Mercantilism in the Christian West 6.7 and the Reasons why it did not find favor in the Muslim 92 East 6.8 Impact 95 Endnotes 96 CHAPTER SEVEN: MONETARY THOUGHT 99 7.1 Monetary Thought of Early Muslim Scholars 99 7.2 Western Monetary Thought of the Period 100 7.3 Quantity Theory of Money and Muslim Scholars.
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