IRAN: EXPERIMENTING WITH THE ISLAMIC ECONOMY
Abstract
There is the opinion that Iran has been engaged in applying Islamic principles to its economy or, rather, to its financial sector, more consistently than other Muslim countries.1
The facts, however, do not completely confirm the above. The people brought to power by the 1978-1979 Islamic Revolution had no clear ideas about economic reforms. The concept of so-called touhid2 economics proved ill-suited to the profound Islamic-style economic reforms, something that certain clerics insisted on. Eghtesad-Tohidi (Touhid Economics) by Abolhassan Banisadr,3 which
predated the Islamic Revolution4 by several weeks, put the term into daily use. His popularity made the book well known across the country; it came to be regarded as a twin volume to Khomeini’s classical work Hokumat-e eslami (Islamic Government).5
His book described the ideal Islamic society as a model of touhid economics, in which all and everyone are owners of the means of production. Such ownership is limited to the potential of personal labor rather than capital, while high incomes produced outside personal labor are regarded as illegal. All property not based on personal labor should belong to the Islamic state.
The author described the model of Islamic society as a world of effluence which is free from state borders and in which knowledge is cherished as the highest value, and he was convinced that twelve generations could achieve the ideal. In other words, the book offered an ideal model rather than analyzed realities.
His book bears easily detected traces of the ideas of utopian socialists, Proudhon in the first place. Banisadr, a Western-educated intellectual who spent many years in the West, was very familiar with his works.
V. Tsukanov, a Russian expert in Islam, has identified the following features of the touhid model:
(1) touhid economics described the uneven distribution of wealth as one of the main problems.
It, and Islamic economics as a whole, concentrates on distribution, exchange, and consumption rather than on production. Exploitation results from the wrong way surplus product and surplus value are used, not from uncompensated appropriation.
(2) It denies that there is a connection between growing private property and the commoditymoney nature of production.
(3) It looks at autarchy as a means of liberating the country from its economic and political dependence on other countries. The changes carried out ignored similar processes in other countries (Pakistan, Sudan, Malaysia). Since the Islamic revolution’s victory, Iran has failed to formulate a single program of economic Islamization.6
The above suggests that the autonomous nature of the Iranian touhid model notwithstanding, its general postulates completely coincide with the postulates of the Islamic economic theory as a whole.
The term “touhid economics” is directly related to Banisadr: in 1981, upon his removal from the post of president and Imam Khomeini’s advisor, it dropped out of use, at least inside the country.
Banisadr and Peyman were not the only ones in Iran who wrote about Islamic economics. Earlier, Mahmud Talegani (1911-1979) was one of the first: his “Islam and Property” appeared in 1951. He never suggested any detailed conception of the Islamic economic order. Like many of his Islamic colleagues, Ayatollah Talegani never paid adequate attention to the problem of regulating production relations—he concentrated on the issue of wealth distribution in the Shari‘a context. He believed that property should be limited in the interests of society and according to Muslim law.
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References
See: A. Ziauddin, “Islamic Banking: State of the Art,” Islamic Economic Studies, 1415 (1994), Rajab, Vol. 2,No. 1, p. 21; V.Ia. Belokrenitskiy, “Poslevoennaia modernizatsia v stranakh Zapadnoy Azii. Obshchie tendentsii i raskho-diashchiesia traektorii razvitia,” in: Osobennosti modernizatsii na musul’manskom Vostoke. Opyt Turtsii, Irana, Afganistana,Pakistana, Moscow, 1997, p. 40, etc.
From the Arab “tauhid”—monotheism. Touhid economics looks at economic relations as an inalienable part of the Islamic lifestyle.
Abolhassan Banisadr (b. 1933) became the first president of Iran in September 1980; he was Khomeini’s advisor;was defeated by the supporters of Ayatollah Beheshti. By his decree, Khomeini removed Banisadr from the post of Supreme Commander of the country’s armed forces; the Supreme Court initiated proceedings on excess of powers. The Majlis dis-cussed his political incompetence and his non-conformity to the post. On 21 June, 1981, the Majlis removed him from his post, the decision being confirmed by the rahbar (Khomeini). Persecutions of his supporters forced him to go into hiding;today he lives in France.
See: A. Banisadr, Eghtesad tohidi (in Persian), available at [http://www.banisadr.com.fr/Books/EGHTESAD-TOHID I/html/EGHTESAD-TOHIDI.html].
In 1981, Habibullah Peyman replaced Banisadr as the main unofficial economic ideologist.
See: V. Tsukanov, “Kontseptsia ‘touhidnoy ekonomiki’ v IRI,” Spetsial’nyi biulleten’ IV AN SSSR, Moscow, 1981,pp. 129-131. The list can be completed with the policy of encouraging petty producers.
See: V.G. Malushkov, Filosofskie i obshchestvenno-politicheskie vzgliady Ali Shariati, Author’s Summary, Mos-cow, 1987; Islamskaia intellektualnaia initsiativa v XX veke, ed. by G.D. Djemal, Moscow, 2005.
Foreign economic activity continued to be carried out on an interest-based system.
In the first-post-revolutionary years, banks paid hajj for their clients as an incentive.
“The economy of the Islamic Republic of Iran, with its objectives of achieving the economic independence of society, uprooting poverty and deprivation, and fulfilling human needs in the process of development, while preserving human liberty, is based on the following criteria: 2) ensuring conditions and opportunities for employment for everyone, with a view to attaining full employment; placing the means of work at the disposal of anyone who is able to work but lacks the means, in the form of cooperatives, through granting interest-free loans or recourse to any other legitimate means that nei-ther results in the concentration or circulation of wealth in the hands of a few individuals or groups, nor turns the govern-ment into a major absolute employer. These steps must be taken with due regard for the requirements governing the gen-eral economic planning of the country at each stage of its growth; 3) the plan for the national economy must be structured in such a manner that the form, content, and hours of work of every individual will allow him sufficient leisure and ener-gy to engage, beyond his professional endeavor, in intellectual, political, and social activities leading to all-round develop-ment of his self, to take active part in managing the affairs of the country, to improve his skills, and to make full use of his creativity.”
See: S.A.A. Hedayati, “Some Theoretical and Philosophical Aspects of Islamic Banking: a Dimension of Islamic Economics,” Paper presented at the Third International Course in Islamic Banking, Tehran (quoted from: A. Ziauddin,op. cit.).
Ibidem.
See, for example: N.M. Mamedova, “Islamskie fondy i predprinimatel’skaia deiatel’nost’ iranskogo dukhovenst-va,” Mirovaia ekonomika i mezhdunarodnye otnosheniia, No. 7, 1997, pp. 108-112. At the same time, classical waqufs have survived in Iran and are still functioning. The largest of them, Astane Kods Razawi dating from the 16th century, includes hundreds of thousands of hectares of land.
By 2004, the Foundation owned over 400 companies (see: N.Iu. Ulchenko, N.M. Mamedova, Osobennosti ekonom-icheskogo razvitia sovremennykh musul’manskikh gosudarstv (na primere Turtsii i Irana), Moscow, 2006, p. 205).
See: The Economist, 21 July, 2001, p. 56 (quoted from: N.Iu. Ulchenko, N.M. Mamedova, op. cit., p. 137).
At the same time, it is hard to agree with Russian Orientalist S.M. Kudaev who insisted that the wartime distribu-tive nature of Iranian economy was, in a certain sense, more Islamic than Hashemi Rafsanjani’s liberal reforms. At no time did Islam object to the free market if it observed the basic Islamic values and principles.
See: V.P. Tsukanov, “Gosudarstvennoe ekonomicheskoe regulirovanie v Irane: otkhod ot islamskikh printsipov?”in: Islam i obshchestvennoe razvitie v nachale XXI veka, Moscow, 2005, p. 427.
The IRI constitution speaks about “prevention of foreign economic domination over the country’s economy”
Art 43.8).
For more detail, see: V.P. Tsukanov, “Gosudarstvennoe ekonomicheskoe regulirovanie v Irane…,” p. 430.
See: N.M. Mamedova, “Islam i razvitie Irana v nachale XXI veka,” in: Islam i obshchestvennoe razvitie v nach-ale XXI veka, p. 49.
See: N.M. Mamedova doubts that the law will be annulled any time soon.
For more detail, see: Z. Iqbal, A. Mirakhor, Islamic Banking, Washington, 1987, p. 24.
See: A.Iu. Zhuravlev, “Printsipy funktsionirovania islamskikh bankov,” in: Islamskie finansy v sovremennom mire:
konomicheskie i pravovye aspekty, ed. by R.I. Bekkin, Moscow, 2004, p. 106.
See: N.Iu. Ulchenko, N.M. Mamedova, “Ekonomicheskoe razvitie i ‘islamskaia ekonomika’ (opyt Turtsii i Irana),”in: Islam i obshchestvennot razvitie v nachale XXI veka, p. 32.
Khums (Arab.—“the fifth part,” syn. “khumus”)—originally one-fifth of the spoils of war (ganima) earmarked for the Prophet Muhammad and his relatives. It could be used for state (social) needs. There is the opinion that khums was introduced by the Prophet’s grandfather ‘Abd al-Muttalib, who discovered treasure buried at the Zamzam well. The legend says that he sacrificed one-fifth to the Almighty and appropriated four-fifths. Later, the khums conception included sever-al taxes and dues (such as tax on extracted natural resources, dues paid by a Muslim who sold his land to a non-Muslim,etc.). According to most Shi‘a lawyers, during the “concealment” of the imam, part of the khums can be paid to the most educated and faithful mujtahids or transferred to any person of their choice.
Mujtahid (Pers. Mujtehid)—a theologian who on the strength of his knowledge and experience can pass decisions on important Muslim legal issues. Perfect knowledge of the Arabic is expected of him, together with knowledge of the Quran and its tafsirs (interpretations) by heart, as well as at least 3,000 hadiths with complete commentaries. The mujtahid is the highest spiritual authority in the Imamite (Shi‘a) school; it is his honorary duty to lead the community during the time of “concealment” of the imam. For this reason, they are highly respected and, thanks to their knowledge, can offer their opinions and pass judgment not only on legal issues, but also on the religious dogmas and the Shari‘a principles.
See: S. Behdad, The Revolutionary Surge and the Quiet Demise of Islamic Economics in Iran, available at [www.usc.edu].
According to the post-revolutionary classification, the Muslim community is divided into the dispossessed (mustaz’afin), prosperous (mustaqbarin), and devil’s servants (taghuti).
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