CH7 : THE ROLE OF STATE IN ECONOMY (Function of welfare state (Poverty…
CH7 : THE ROLE OF STATE IN ECONOMY
State can be termed as the culmination of human desire to live peacefully and to progress at numerical and intellectual levels.
It is a state in which the government assumes responsibility for minimum standards of living for every citizen
A welfare state is a government that provides for the welfare, or the well-being, of its citizens completely. Such a government is involved in citizens’ lives at every level. It provides for physical, material, and social needs rather than the people providing for their own.
Purpose of welfare state
to create economic and social equality or to assure equitable standards of living for all
provides education, housing, sustenance, healthcare, pensions, unemployment insurance, sick leave or time off due to injury, supplemental income in some cases, and equal wages through price and wage controls.
It also provides for public transportation, childcare, social amenities such as public parks and libraries, as well as many other goods and services.
Some of these items are paid for via government
insurance programs while others are paid for by taxes.
Characteristic of welfare state.
Sovereignty, according to Islam, vests in God – it is only His Will that should prevail in this world.
Man as vicegerent of God on earth can neither make nor abrogate the Divine Law.
Hence, once the sovereignty of God is recognised, the authority for its establishment is vested in the whole ummah and is to be exercised in the light of the Qur’an and sunnah through the democratic process of consultation.
All institutions including the state should reflect the characteristics of merciful blessings to cater the welfare of the people.This is in line with the basic objective of shari’ah which to cater the welfare of the people and reliving them from hardships.
Need to emphasis that the concept of welfare state is agreed by a number of Islamic scholars. Amongst others are Mawardi, Ibn Khaldun, al-Ghazali, al-Qayyim and Ibn Tamiyyah.
Strategy of welfare
The concept of welfare in Islam can be neither exclusively “other-worldly” nor purely “this-worldly”.There should be balance between material and spiritual.
According to Islam, negligence of either two aspects of life will prevent mankind from achieving true welfare.
Hence, the welfare of individuals in an Islamic society may be realised if there is a proper environment for:-
fuller realisation of Islamic spiritual values in the individual as well as in society adequate fulfillment of all basic needs of life
Three major role of the state in uplifting spiritual aspects are:-
it should foster conducive conditions for the creation of homes which would inculcate respects and adherence of Islamic teaching.
it must cast educational system in the mould of Islam to produce societies that imbued with the ideals of Islam.
it should enforce those norms and values of Islam through legal enforcement and impose penalty on violators
Adequate fulfillment of basic material needs is a priority and necessary in Islam.
Resources are for all mankind for eradicating poverty and fulfilling the basic material needs such as food, clothing, shelter, education, transport and etc.
Need to emphasis that it is moral responsibility of the individual to cater for his own needs through his own effort and expected to do his best on every job.
However, the blind operation of market forces may not always reward him optimally for his socially-productive efforts.Therefore, the state should play a positive role in guiding and regulating the economy to ensure that the objectives of the shari’ah are fulfilled.
Function of welfare state
Poverty eradication, full employment and optimum rate of growth
As a trustee of the God-given resources , it is moral obligation of the state to use these resources efficiently.
Hence, the state is expected to imply the following:-eradicate poverty and fulfill of all basic human needs provide full and efficient employment to attain an optimum rate of economic growth and improve the standard of living of all people avoiding of conditions generating deficient or excess demand and leading to unemployment - In order to achieve the above mentioned function, the state should play positive role through:-
rational planning.building the necessary physical and social infra-structure
To promote stability in the real value of money
Islamic state must resort to healthy monetary, fiscal and income policies and appropriate direct control when necessary.
For instance, direct control (wage-price control) and minimize erosion in money value (managed floating in the currency exchange rate)
To maintain law and order
It is the prime determinant of growth and stability of an economy as well as bring inner happiness of individual.
Hence, it is the duty of state to safeguard the life and property of individual as the Prophet s.a.w says:-“Whatever a Muslim possess is unlawful for another Muslim his wealth, property and his life”.
To ensure social & economic justice
Therefore, fixation of minimum wages, maximum working hours, creation of appropriate working conditions, enforcement of precautionary measures against industrial hazards, and adoption of technological innovations to reduce hardships would be fully in conformity with the spirit of Islamic teaching
To arrange social security and foster equitable distribution of income and wealth
Islam emphasis on distributive justice and incorporates redistribution of income and wealth to guarantee every individual a standard of living that is humane and respectable.
In doing so, Islam emphasis the following five elements:
arrangement for training and finding gainful employment for the unemployed
enforce a just remuneration system
compulsory arrangements for insurance i.e. occupational hazard and pension/retirement scheme
assistance to the disables, handicaps, orphans and abandoned old folks collecting and distributing zakat and enforcing Islamic law of inheritance
Need to emphasis that Islam allow higher wages for those who are qualified as a reward of his skills and capabilities – the concept of equality.
International relations and ensure national defence
Islamic state should try to make contribution as it can towards spiritual and material uplift of mankind.
This is in line with the principle: to be one, to co-operate in all matters contributing to “righteousness” and “piety” and refrain from co-operating in “aggression” and “sin”.Islam also encourage any constructive move towards peace.
Planning & development in Islam
Islamic planning must take into consideration the following aspects:-
the whole picture of development and all aspects of life
in the light of moral values
balance between material and spiritual
CENTRAL PLANING OF ECONOMY
Central planning economy is a economic system in which the government owns and operates the factors of production
It’s a centralized economic planning and public ownership of resources
Example in practice of this system are Cuba, China & Laos
PRINCIPLES OF CENTRAL PLANING OF ECONOMY
The government own all wealth or properties
The stability of socio economy
Controlled by government
In this system, the government makes decisions about how products and services are distributed
It’s also same with the socialism economy and communism economy
PROBLEMS OF CENTRAL PLANNING ECONOMY
A limited of individual freedom
Contrast with the human character
-Lack of moral education and religious
Increase a racism or group among societies
Islamic concept of development
Development refers to the process whereby people of a country utilize the resources available to bring sustained increase in production of goods and services.
Economic development is a series of economic activities causing an increase in productivity, average worker and ratio income to total population.
It is a looked upon as a dynamic process and involves structural changes in economic, political, religion, social, cultural and style of living.
Islam emphasis on the human development with the result that economic development remains an integrated and indivisible element of the moral and socio-economic development of human society.
Tawhid God’s unity and sovereignty.It lays the rules of God-man andman-man relationship.
Rububiyyah Divine arrangement fo rnourishment, sustenance and directing things towards their perfection.God’s power to arrange all the universe.
Khilafah Man’s status, role, responsibilities as God vicegerent on earth.
TazkiyahPurification plus growth.It purify man, natural environment, society and state.
Comprehensive character including moral, spiritual and material
The aims is to seek welfare in the world and hereafter.Development is devoted to the optimization of human well-being in all dimension.
The focus of development in Islam is MAN – development of man and his physical and socio-cultural environment.
Hence, it maximize participation of the people at all levels of decision-making and plan-implementation.
Involve cooperation between public and private sector.Islam seeks to establish a balance between the different factors and forces.
It involves quantitative and qualitative changes.
Example (quantitative): the poverty rate, unemployment, inflation, rate, gross domestic product (GDP) etc.
Example (qualitative): quality of life, minimum wage, safety of the society, ethics and moral application etc.
Goals of development
Improvement of the quality of life- Effort should be made towards improving of the standard of living and achievement of people moral, economic and social welfare.
Balanced development- Balanced and harmonious development of different regions within a country of the different sectors of society and the economy.
New technology - Focus in human development to knowledge
enrichment and creation of new technologies by the local people.
Reduction of national dependency on the outside world and greater integration within the Muslim world- Dependence upon the non-Muslim world in all essentials must be changed to a state of economic independence, self-respect and gradual building-up of strength and power.
Expansion of useful production
Continuous and sustained increase in the national produce.
Production of useful goods and services in the efficient manner.
Priorities of production:-abundant production and supply of food and basic items of necessity at reasonably cheap prices defence requirements of the Muslim worldself-sufficiency in the production of basic capital goods