It is interesting to note that the majority of scholars have titled their works as Kitab al Amwal (Book of Wealth), Kitab al Kharaj (Book of Land Tax) and Al-ahkam al-sultaniyah (Book of Governance). There are at least six well-known books with the title Kitab al-kharaj. Similarly, there are twenty-three books with the title Kitab al-amwal, and two works with the title Al-ahkam al sultaniyah. The books entitled Kitab al-kharaj mainly focus on fiscal issues related to land taxation, leaving out other sources of revenue. On the other hand, works entitled Kitab al-amwal cover all forms of revenue and hence are more comprehensive in their coverage and scope. (4)

Abu Yusuf (d.798 AD) was the chief justice of Baghdad during the reign of Caliph Al-Mahdi and continued in that office till the end of Caliph Harun Al-Rashid' s reign. He authored a major work on land taxation, entitled Kitab al Kharaj. It was written in response to the caliph's queries on religious precepts related to taxation problems, revenue administration and public expenditure.

Abu Yusuf tried to analyze fiscal issues. His contribution lies in demonstrating the superiority of proportional taxation over the system of fixed levy on land. Much before Adam Smith, who is generally regarded as the father of modern economics, Abu Yusuf enunciated the principles of taxation, such as ability to pay, convenience and certainty. He also dwelt on tax administration and stressed the need for strict supervision of tax collectors in order to prevent corrupt and oppressive practices. Abu Yusuf outlined the economic responsibilities of the state. He emphasized the establishment and maintenance of public amenities such as irrigation facilities and highways. He also urged upon the state to ensure the development of agriculture.

Yahya bin Adam al Qarashi (d.818 AD) was a contemporary of Abu Yusuf. His work is also known as Kitab al Kharaj. The importance of this work lies in the fact that he culled more than six hundred Traditions of the Prophet pertaining to matters of revenue administration.

Abu Ubayd (d.858 AD) authored a book entitled Kitab al Amwal. It can be regarded as the most systematic and comprehensive work on public finance. He gathered more than two thousand Traditions of the Prophet which pertain to finance and fiscal affairs.

Ibn abi al-Rabi (d.885 AD) wrote a brief treatise entitled Suluk al Mamalik fi Tadbir al-Mamalik (Conduct of the Ruler in the Management of Kingdoms). In the context of the responsibilities of the ruler, he writes that the state should arrange for water supply for personal requirements as well as for irrigation. The ruler should take appropriate action to ease the hardships of farmers in order to stop them from abandoning their farms in favour of other professions. He should collect taxes in accordance with the norms of justice and the principles of Shariah in order to avoid the possibility of any injustice and tyranny. Al-Rabi emphasized that the supply of necessary goods and services should be maintained and that people should feel protected.

Al-Mawardi's (d.1058 AD) work Al-Ahkam al-Sultaniyah [Rules of Governance] is an outstanding work. Al-Mawardi enumerated the responsibilities of the ruling class and emphasized that the ruler should arrange for the collection of kharaj (land tax) and zakat in accordance with the laws of shariah and in the light of the interpretations of jurists without indulging in coercion or extortion. Likewise, the ruler should make available the allowances and stipends from the state treasury to those who are entitled to them. The purpose of these functions is to ensure the requirements of social security.

Another work with the same title is by Abu Ya'la al- Farra (d.1065). The author discusses in detail about imposing additional taxes and the acceptability of public borrowing. The works of Al-Mawardi and al-Farra fundamentally deal with the art of governance. Yet where necessary, the two deal with taxation and public expenditure as well.

The welfare-oriented role of the Islamic state is more explicit in the writings of al-Ghazzali (d.1112 AD). In his works, particularly in Ihya ulum al-Din (The Revival of the Sciences of Religion), al-Ghazzali dwelt at length on the provision of protection by the state, long before classical economists had discussed the issue. In the opinion of al-Ghazzali, the state should protect people's faith, life, intellect, wealth and property. Thus, whatever ensures the protection of these needs serves the public interest and every thing that violates public interest needs to be curbed. Al-Ghazzali is of the view that economic activities are mandated by the Shariah because they are linked to the very survival of human beings.

Nasiruddin Tusi (d.1274 AD), popularly known as Nizam ul Mulk, authored one of the most valuable and interesting works in Persian, entitled Siyast Nama (The Book of Politics). He discussed revenue and expenditure of household budgets and those of the states. He emphasized saving and warned against extravagance in expenditure. He opposed expenditure on assets such as jewelry and uncultivable land. He accorded prime importance to agriculture and secondary importance to trade and vocations. He disapproves certain taxes that have no sanction in Islam.

Ibn Taimiyah (d.1328 AD) has written extensively on different aspects of Islamic Shariah. His major works include al-Siyasah al-Shariah (The Policy of Shariah), Risalah al-Halal wal-Haram (Treatise on the Legitimate and the Illegitimate), and al-Hisbash fil Islam (Inspection of Public Morality in Islam). In his fatawa (legal edicts) he dealt with several economic issues, including price control, market regulation, fair market practices, state intervention and provision of basic needs, and private ownership and its control under certain circumstances.

Ibn Khaldun (d. 1406 AD) has rightly been hailed as one of the greatest philosophers, historians, sociologists and economist of all times. His celebrated work on world history is spread over twelve volumes, of which the first volume, the Muqaddimah, forms by itself an invaluable treatise. Ibn Khaldun discussed a wide range of economic issues, including division of labour, price system, the law of supply and demand, consumption, money, capital formation, population growth, public finance, and trade cycles. He discussed the various stages through which societies pass in respect of economic development.

Ibn Khaldun is of the view that there are three types of states, namely, monarchic, democratic and Islamic. The monarchic state functions according to a set of values that centre round the will of the monarch. A democratic state, on the other, functions on the basis of human reasoning without being guided by divine revelation. In contrast to the above, the Islamic state functions on the basis of human reasoning and at the same time draws inspiration from divine revelations in respect of values as well as methodology.

Ibn Khaldun warns that extravagant expenditure on the part of the state leads to the disintegration of mighty empires. In his writings one comes across the basic idea embodied in the backward bending supply curve of labour. According to Ibn Khaldun, taxes have a point of diminishing returns and pump priming is important to keep the business running smoothly. He also warned against state intervention and believed that a free market ensured proper distribution. Boulakia has rightly observed: "Ibn Khaldun discovered a great number of fundamental economic notions a few centuries before their official birth. He discovered the virtue and necessity of division of labour before Smith and principle of labour value before Ricardo. He elaborated a theory of population before Malthus and insisted on the role of the state in the economy before Keynes…….His name should figure among the fathers of economic science" [Boulkia 1971].

It is not surprising to note that Ibn Khaldun has been hailed as "supply-sider". Arthur Laffer, the distinguished American economist who served as an advisor to the US President Ronald Reagan in the early 1980s, was inspired in the drawing of his famous "Laffer Curve" by Ibn Khaldun. He shot to fame on account of his famous Laffer curve. The idea is rather simple: At both extremes of taxation-zero percent and one-hundred percent, the government collects no revenue. At one extreme, a 0% tax rate means the government's revenue is, of course, zero. At the other, where there is a 100% tax rate, the government collects zero revenue because (in a "Rational" economic model) taxpayers have no incentive to work or they avoid taxes, and the government collects 100% of nothing. Somewhere between 0% and 100%, therefore, lies a tax rate that will maximize revenue. This is illustrated with the help of a curve popularly known as the Laffer curve:

T* represents the optimum tax rate where the maximum amount of tax revenue can be collected. Laffer and other right-wing economists used the curve to argue that taxes were currently too high and should therefore be reduced to encourage incentives and harder work (a supply-side policy. Others argue that we are already well to the left of T*. It justifies tax cuts and intends to show that government can maximize revenue by setting a tax rate at the peak of this curve.

Laffer reportedly sketched the curve on a napkin to illustrate the concept, which immediately caught the imagination of people. Laffer himself professes no recollection of this napkin, but writes, "I used the so-called Laffer Curve all the time in my classes and with anyone else who would listen to me" [www.bized.ac.uk]. It is significant to note that Laffer did not claim to have invented the concept but attributed it to Ibn Khaldun.

IV

Unfortunately, there is no mention of the contributions of any of the afore-mentioned thinkers and scholars in any standard work on the history of economic thought. The highly important and seminal contributions of these scholars need to be acknowledged and recognized. The observation of Joseph Schumpeter and others of his kind who have spoken about a "great gap" and "discontinuity" in the history of economic thought was born out of sheer ignorance and is short-sighted, to say the least.

Muslim thinkers and scholars articulated and developed their economic theories long before the birth of the science of economics. As Professor M. N. Siddiqui has rightly pointed out, "From Abu Yusuf in the second century to Tusi and Waliullah we get a continuity of serious discussions on taxation, government expenditure, home economics, money and exchange, division of labour, monopoly, price control, etc Unfortunately, no serious attention has been paid to this heritage by centers of academic research in Economics" [Siddiqui 1984].

Supplementary Notes

By Professor A. R. Momin

(1) A distinctive feature of the contribution of Muslim scholars to economic thought is that they discussed economic institutions, processes and issues not in isolation or in themselves but in relation to cultural values, the wider society, political institutions and psychological propensities. Similarly, they looked at economic issues and problems in a dynamic framework, as subject to processes of change and transformation.

Karl Polanyi has pointed out that one major pitfall of classical and neoclassical economic theory is that it regards the economy as an autonomous, self-regulating domain. In actual practice, however, economic processes are always regulated by moral values and social relations. Islam takes due cognizance of this reality and subjects economic activities to a system of moral checks and balances. In Islamic perspective, ethics and economics are indissociable. It is note-worthy that the bearing of ethical norms on economic activities and economic behaviour is now increasingly recognized by eminent economists such as the Nobel Laureate Amartya Sen.

(2) The earliest comprehensive treatise dealing with economic processes and issues within an Islamic framework is Kitab al-Kasb (The Book of Livelihood) by the distinguished scholar and jurist Imam Muhammad ibn Hasan al-Shaybani (d. 189 AH). The book discusses a wide range of economic issues, including variations in means of livelihood, the distinction between legitimate and illicit means of livelihood, trade and commerce, ownership of property, renting out property, industry, purchase and sale, gifts, and agriculture. He examines these issues in the light of Quranic injunctions, the Traditions of the Prophet, and the opinions and precepts of the Companions and Followers.

The eminent jurist Shams al-Aimma al-Sarakhsi (d. 483 AH) wrote a commentary on Kitab al-Kasb. The book, together with al-Sarakhsi's commentary, was edited and published by the late Shaykh Abul Fattah Abu Ghuddah in 1997.

(3) A discussion of economic processes and issues in the wider context of Islamic polity can be found in Al-Siyar al-Kabir by Imam al-Shaybani, I'lam al-Muwaqqi'in, by Ibn al-Qayyim, Ara ahl al-madinah al-fadilah, by al-Farabi, Al-I'tisam and Al-Muafiqat by al-Shatibi, Al-Imamah was-Siyasah by Ibn Qutaybah, and Al-Mabsut by al-Sarakhsi.

(4) A detailed list of these works, along with an indication of their present status (whether published, or in manuscript, or extinct) can be found in Carl Brockelmann's Geschichte der Arabischen Litteratur (Leiden, 1943-49) and in Geschichte des Arabisches Schrifttum by Fuat Sezgin. The latter work is also available in Arabic translation, Tarikh Turath al-Arabi.

Bibliography

Ahmed, Khursheed (ed.) First International Conference on Islamic Economics: Selected Papers, Amar Prakashan, Delhi, 1984.
Azmi, Sabahuddin., Islamic Economics, Goodword Books, New Delhi, 2002.
Boulakia Jean David C., "Ibn Khuldun: A Fourteenth Century Economist", Journal of Political Economy, September-October, 1971.
Ghazanfar S.M., "History of Economic Thought: The Schumpeterian Great Gap, the Lost Arab Islamic Legacy and t he Literature Gap", Journal of Islamic Studies, Oxford, Vol. 6, No.2, 1995.
Hasan uz Zaman S.M., The Economic Functions of the Early Islamic State, International Islamic Publishers, Karachi, 1981.
Islahi, Abdul Azeem., History of Islamic Thought in Islam, Indian Association of Islamic Economics, Aligarh, 1996.
Khan, Muhammad Akram., Economic Teachings of Prophet Muhammad: A Select Anthology of Hadith Literature on Economics, Orient Publications, Delhi, 1992.
Lewis, Bernard., What Went Wrong? The Clash Between Islam and Modernity in the Middle East, Weidenfeld and Nicolson, 2002.
Pathan, Rafeeq Ahmad., A Study of Economic Ideas of the Prophet of Islam, unpublished Ph.D. dissertation, Karnataka University, Dharwad, 2003.
Peerzade Sayed Afzal., Islamic Public Finance and Policy, Idarah-i Adbiyat-i Delli, Delhi, 2004, Siddiqui, Muhammad Nejatullh., "Muslims Economic Thinking: A Survey of Contemporary Literature" in Khursheed Ahmed (ed.) First International Conference on Islamic Economics: Selected Papers, Amar Prakashan, Delhi, 1984.
------------------------, Islamic Public Economics, Idarah-i Adbiyat-i Delli, Delhi, 2001.
Sikand, Yoginder., Bastions of the Believers: Madrasas and Islamic Education in India, Penguin Books India, New Delhi,2005, especially 1st Chapter, pp.1-31.
Wazir, Akhtar., Economics in Islamic Law., Kitab Bhavan , New Delhi 1992.p.18 www.bized.ac.uk/economy/virtuallibrary