Zakat as Welfare System


With international welfare systems all but breaking down and with poverty and inequality rising, it is high time for economists to give serious thought to Islam’s Zakah system so that poverty, hunger and destitution may be removed throughout the world, writes SYED SUHAIL YAQOOB.


Islam was born in the sandy deserts of Arabia with profound implications for the world. Its impact is still felt around the globe due to its contact with other religions and communities.

Today, however, Islam is almost associated with terrorism which is nothing but the “manufactured perception” by media and some interested groups to control the resources of the Muslim world. The tag of terrorism to any Islamic country gives them an excuse to invade the country and destroy its history, culture and society. Some big multinational companies are involved in this process as well, as for the world it is necessary to control the markets and provide a readymade supply of raw materials.

By any standards, Islam is nothing but peace and it has come to world to establish a well-balanced and fair system. It just takes a rational man, without prejudices, to understand the implications of this system. Even European intellectuals have realized this fact. It is disastrous for the honour of the Muslims that they have to resort to writing off European intellectuals to justify good in Islam rather than simply relying on its tenets and principles.

This has been even though there is a sense of ‘Political Islam’ emerging, which has totally overshadowed the other sub-systems that are present in Islam – sub-systems which could relieve humanity from the burden of poverty, misery and destitution. The social welfare system of Islam, which is unique in all its manifestations, has almost completely receded into the background due to the political situation. Islamic social welfare should be provided a chance to remove poverty and destitution throughout the world.

Modern governments are based on the concept of welfare system. These take care of the health, education and other basic necessities and needs. The specific type of welfare system will be in keeping with the types of governments in each region – whether these be the capitalist, communist or the dictatorship type. There is some difference between these. However, all these systems aim at the promotion of peace and prosperity of their respective countries.

Having said that, we need to also consider the serious question as to whether, or not, these policies have worked. Globally, there are still more than one billion people who live in extreme conditions. There is this starvation limit beyond which people do not possess enough food to eat. Much of the world’s poverty, of this type, is concentrated in Asia and Africa.

To be sure, millions of dollars are spent on the welfare systems around the world; billions more are spent by NGOs towards the same purpose, but there is still no solution to the looming crisis that has engulfed humanity. The reason being that today’s welfare systems are based on political necessities and Machiavellian policies. The governments have billions to spend on weapons and wars but not to feed the starving mouths around the world.

It will take just fifteen percent of global spending on wars to feed the billions that die of starvation and to provide education to the illiterate. There will be more left to spend on scientific knowledge and for the progress of humanity.

Nevertheless, it seems crazy to believe that after spending so much, the welfare system of the world is unsustainable. It becomes even more unsustainable when there is depression and recession in the economy. The recession of the 1930s, the recession of 2008 and the Greek debt-crisis saw deep cuts in welfare expenditure around the world. It forced many millions to resort to violence on the streets.

However, the economy is to be seen in light of the ‘whole’ system. Governments in recession resort to tricky measures to cool flaring tempers by resorting to borrowing from banks and other entities. Very few realise that borrowing will cost them dearly in future. They will have to pay back the money and with due interest rates. It is no secret that millions of people are under debt even in developed countries. It is exactly what happened in Greece.

Similarly, in times of recession, the rich demand cuts in income taxes and other obligations to keep the economy afloat which, in turn, again impacts the welfare system. During recession, banks do not lend to the poor and to those who lost their jobs due to income credibility problems. If it lends, it lends these at higher charges. It ensnares them within the trap of the banking system which creates money out of nothing. The recession is the best opportunity for the banks to keep governments in check and to control economic resources. And when these institutions turn against these poor folks, they have no mercy.

The Islamic system of Zakah is significantly different from other welfare systems. The first principle of Zakah is that it is exclusively meant for the poor. This principle takes away the interference from political parties tampering with the welfare system. Irrespective of whether the fund generated is less or more, it has to be spent on the poor, and only on the poor. Granted this, since poverty is a relative term, the poverty-line can always be adjusted to keep spending on the poor in a country; and when everyone is wealthy enough, the same money can be given to other nations to feed their poor.

Islam does not make a difference between the poor residing in different countries. However, the welfare systems of today’s modern governments do make for this distinction. Zakah can be stored during prosperous times to meet basic necessities when the economy is in recession and when it is expected that the poverty ratio will increase.

Another important fact about the Zakah system is that it is provided to the poor free of interest and governments do not have to resort to borrowing it from the people. In Islam, it is a religious obligation on the rich to provide a certain amount of their wealth to the poor. This way, there will be no inter-generational debt problems.

The present consumption by the poor does not lead to an increase in income taxes for the next generation.  In fact, this is what all economies strive for. But, since there is a bias against Muslim institutions, these wise injunctions of Islam are not taken seriously.

One misconception about the Zakah system is that it will breed poverty in society, as people will choose to be poor, because, then the society will take care of them – or so they assume. So there is no incentive for hard work. However, human nature is against being at the bottom. There is a lot of evidence in economics that suggests that men, or women, if given enough space, will try to achieve a good life for them and their children.

Zakah has profound implication on the evils in society like theft, kidnapping etc., since Zakah will take care of the basic needs of the poor, and they are unlikely to indulge in social evils. It has a positive manifestation in society, since, with its implementation, social evils will come down rapidly. It strikes at the root of class war which Marx, the false prophet, proposed.

However, the Zakah system has to be seen as a sub-system of the Islamic economic system. Since the society will make resources available for the poor, the creation of better relations is a necessary – and, indeed, a natural – implication of Zakah. In fact, Zakah is a guarantee for peace and development, inasmuch as it enables growth, equality and distributive justice.

It is necessary that the prejudices against Islamic economic system must be removed. Its fundamentals will remove the defects of the present economic systems throughout the world. With international welfare systems all but breaking down and with poverty and inequality rising, it is high time for economists to give serious thought to Islam’s Zakah system so that poverty, hunger and destitution may be removed throughout the world.

 The author is pursuing PhD at Aligarh Muslim University at the Department of Economics. He receives his mail at