Economics During the Islamic Golden Age
Whenever the Islamic Golden Age is mentioned, so many are quick to think of mathematics, medicine, and astronomy. What many do not even realize is that Muslims of that era also left very important influences and contributions in the field of economics. From the 9th to 14th centuries, Muslim scholars came up with very sophisticated concepts, strategies, and applications in all aspects of economics.
From systems of taxation to finance to investment to economic development, production, and many more, the Muslims were all over. One of the most important concepts that Muslims entrenched in that period was the hawala, a system for value transfer. But that was not all, Muslims also developed a system of Islamic trusts and it was called waqf. This system of contracts was so good that traders, merchants, and all kinds of business people relied on the system for their transactions.
As Muslims, these scholars took great care to adhere to the principles of Islam while they were developing the concepts of economics. These include the incorporation of zakat (Islamic charity and one of the Five Pillars of the faith which ensures charity for the needy) and avoidance of all kinds of riba (usury or interest). They also made copious references to the Quran, hadith, and works of Islamic scholars before finalising and implementing an economic concept.
No discussion of economics during the Islamic Golden Age can be complete without talking of Islamic scholars like Al-Ghazali. A genius in all ramifications, it was Al-Ghazali who classified economics as one of the sciences that are linked with ethics, religion, metaphysics, and psychology. For Al-Ghazali, economic activities were very crucial in this life and for him, economic models must not just be beneficial to humanity but must also be one that is best for spirituality and salvation in this life and the Hereafter. This was the thinking that early Muslim thinkers applied to the development of economic principles.
Ibn Khaldun is another great Islamic economist who transformed the Islamic Golden Age with groundbreaking economic principles. Born in what is now modern-day Tunisia, Ibn Khaldun changed the face of economics forever. He is considered to be the father of modern economics. He was able to do this as a result of his long-standing contributions to the field of economics. He wrote the unbeatable book on political and economic theory named Muqaddimah (translated as Prolegomena).
For Ibn Khaldun, economic growth is directly proportional to social cohesion. He also brilliantly described the link between human capital development, population growth, and the effects of technology on economic advancement. On taxation, he came up with what is now known as the Khaldun-Laffer Curve. This concept showed the link between tax revenue and tax rates and it was also Ibn Khaldun who came up with the idea of labour theory of value.
Glory be to Allah (SWT), the principles of economics that Muslim scholars invented in the Islamic Golden Age are still very valid and relevant till today. What this tells us is that as long as Muslims remain firm on the path of Islam, our existence on this planet will be with ease. May Allah (SWT) guide all our steps, aameen.