This is an extract from the book ‘The Islamic Khilafah: A Manifesto for Change’ by Hizb ut-Tahrir Britain. PART II: THE ECONOMY – Empowering Individuals, Business and Government KEY THEMES a. THE SHARI’AH FREES WEALTH BY ELIMINATING INTEREST (RIBA) Islam categorically prohibits riba at any interest rate in all its forms. And when one looks at the impact of interest based loans on the economy (as we do in the following subsections) then one can immediately see the damage it causes and the relief to the economy of removing it.
BY FARUQ IBN QAYSR Introductory Remarks In his tract on monetary reform, John Maynard Keynes referred to gold as a barbarous relic, whose rigidity had fettered the world from economic freedom and prosperity. He spoke at a time when the Occident were suffering from macroeconomic anaemia and were yearning for a solution. In sheer desperation, fiat money became the drug that gave growth-addicts what they craved for in the short-run. However, years after its introduction, the fiat system has induced far more volatility than it sought to resolve. In truth, Keynes failed to realise that barbarity was a trait not of gold but of fiat, insofar as it has plagued the world with monetary anarchy. In fact, the very system he consigned to history has never been more relevant than it is today.
Adam Smith, the 18th Century founder of modern economics whose picture is printed on the current UK £20 note, was exceedingly inspired by the Islamic method of governing. He proclaimed that:
The following article is based on the book Funds in the Khilafah State which is a translation of Al-Amwal fi Dowlat Al-Khilafah by Abdul-Qadeem Zalloom. Allah سبحانه وتعالى has revealed a comprehensive economic system that details all aspects of economic life including government revenues and taxation. In origin, the permanent sources of revenue for the Bait ul-Mal (State Treasury) should be sufficient to cover the obligatory expenditure of the Islamic State. These revenues that Shar’a (Islamic Law) has defined are: Fa’i, Jizya, Kharaj, Ushur, and income from Public properties.
The Caliphate’s currency is based on the gold and silver standards where the coins and notes in circulation are 100% backed by gold and silver. Islam did not leave any question unanswered, especially questions concerning the complexities of economic life. The Shari’ah has therefore defined the Islamic currency as gold dinars and silver dirhams along with their corresponding weights in gold or silver. The Shari’ah rules related to money such as zakat, blood money (diyah) and hoarding all specify values in gold and silver.
These cartoon notes and coins are for illustrative purposes only. They show the possible denominations of the dinars and dirhams in the Caliphate. The main article explaining the Caliphate’s currency in more detail is Currency of the Caliphate.