is institutionalized in accordance with the rule prescribed by Allah (swt) (Quran 3:159; 42:38; 2:233). Similarly, all other rules of behavior prescribed in the Quran are institutionalized with sufficiently strong incentive structure to enforce rule compliance. The objective is the establishment of social justice in society.
Implications of the Agent-Trustee Relationship
Faculties such as áql (intelligence of the heart), human dignity, walayahh and fitrah (the primordial nature of humankind), gifted to humankind by their Creator, were to be employed in cognition, remembrance, and fidelity to the primordial covenant (mithaq). The crucial importance of fidelity to this covenant drives the necessity of remaining faithful to all covenants, contracts, and promises, as long as they are permissible, which often is emphasized in the Quran (e.g., 5:1). The commitment to remain faithful to the terms and conditions of the primordial covenant (to bear witness to Divine Existence and His Unity), equipped with the gifts of their Creator (the resources of the earth), humans were then assigned the role of trustee-agent (khalifah, or viceroy) of the Divine on earth (Quran 2:30). This mission consisted of, inter alia, developing the earth (Quran 11:61); establishing social justice through the exercise of love toward their kind and the rest of creation, as a reflection of the love of the Creator; and removing the obstacles from the path of others of their kind toward Allah (swt) (i.e., their passage from the darkness of personality traits unworthy of the human state toward the light of nearness to their Creator). Once again, it is the compliance with the rules of behavior prescribed by the Creator that makes treading the path feasible.
This agent-trustee position is a divine trust that is bestowed on humans. It is by virtue of this trust and the responsibilities associated with it that humans have been invested with domination over what has been created for them. Many verses in the Quran affirm this subjugation of resources to humans. The entire human population has the collective responsibility to ensure that every human being has the opportunity to tap his or her dormant potentialities and possibilities and convert them to actualities. This collective view of humans evokes the matter of unity of humankind, which in turn reflects the recognition of Allah's (swt) Oneness and Unity, that is, Tawheed. The link between responsible living in this world and accountability in the next provides a means for an infinite planning horizon for human beings.
The agent-trustee office bestowed on humans requires the activation of the nonmaterial gifts from the Creator that empower humans to perform their responsibility of agent-trustee. To this end, a self-cleansing and purification process is required. Believing in Islam is not a sterile, static, superficial, and passive verbal-physical expression and pretension to Islamicity. A process instituted by the Creator serves to energize the ascending movement and progress of the self toward its perfection.
Significance of Rule Compliance
A verse in the Quran contains the necessary and sufficient condition for the existence of an ideal society and economy: “If the members of the collectivity were to be rule-compliant and ever-conscious surely We should have opened for them blessings from the sky and from the earth. But they rejected [the Divine messages] therefore we seized them on account of their [noncompliant] deeds” (Quran 7:96). The necessary condition for an ideal economy is being rule compliant. The sufficient condition of taqwa (i.e., the inner torch of consciousness of the ever-presence of the Creator) requires that there be no occasional lapse in rule compliance whatsoever. That is the ideal society and the economy is one in which humans, individually and collectively, are fully rule compliant. In such a society, the members and their collectivity comply with rules specified for all in the society and other rules relating to behavior in particular circumstances, such as those relating to economic behavior. The first include, inter alia, the rules of enjoining the good and forbidding evil behavior; of consultation, cooperation, and avoiding harm to others; and of establishing social justice. Of these, by far, the first is the most crucial. It is an imperative without which compliance with all other rules, general and specific, will be weak or avoided altogether without impunity. It is a foundational rule that empowers all other decreed rules of behavior compliance that allow humans to tread the absolutely desirable path of closeness to Allah (swt) commanding us and others to rule compliance that derives directly from cognizance and acknowledgment of the love bond (walayahh) between the Creator and humankind as well as its derivative love bond among humans.
When we say that Islam is a rules-based system, we mean that the rules are prescribed by the Lawgiver, who monitors compliance, and there are rewards for compliance and sanctions for noncompliance. Accordingly, the prescriptions ordained by the Lawgiver and explained and implemented by His Messenger are rules. The most crucial and central to Islam's concept of development is the progress humans make in developing the self. Without this, balanced and appropriate progress in the other two dimensions of development is not possible; any forward movement in them without self-development leads to harmful distortions. Compliance with the rules prescribed by the Lawgiver prevents distortions. The rules constitute a network that regulates all dimensions of the human experience, individually and collectively, on this plane of existence.
The rules in Islam go beyond those considered important by economists for economic growth – property rights protection, the enforcement of contracts, and good governance. In Islam, these are the rules of seeking knowledge through education; avoiding waste, harm, or injury; pursuing hard work; and not engaging in fraud, cheating, or abuse of property. The internalization of the rules of conduct governing market participation and compliance with them ensures that the market will be an efficient mechanism to create a balance within an economy. Because fairness and justice are ensured by rule compliance, the price that emerges will be a fair price. Rules regarding the fair treatment of others ensure that those who participate in the act of production receive just payment for their efforts. Thus, market-based distribution guided by the price mechanism would also be fair. Rules governing income redistribution ensure that the rights of others to access resources are preserved before income becomes disposable. All economic transactions are governed by rules requiring strict faithfulness to the terms and conditions of contracts and promises. Hence, the probability of asymmetric information and moral hazard, and their negative consequences, is minimized. Rules governing consumption ensure that there is no opulent or wasteful consumption. Since consumers internalize these rules before entering the market, the rules also shape consumer preferences and thus demand, moderating excessive wants. Rules governing the use of disposable income and wealth (i.e., income and wealth after they have been cleansed of the rights of others) ensure that wealth is not hoarded and that it is made available in the form of investment and expenditures in the way of Allah (swt). Prohibition of interest ensures the direct participation of wealth holders in sharing risk associated with investment.
The internalization of rules of behavior by individuals and their institutionalization, along with the incentive structure and enforcement mechanism, reduces uncertainty and ambiguity in decision-action choices confronting the individual and the society. The problems associated with coordination are resolved through compliance with the rule of cooperation. Moreover, a binding rule from the archetype model resolves the negative aspects of the collective action problem. Not only cooperation is ordained as a rule-based feature of society's institutional structure; the rule of negation of harmful externalities and reciprocation of one harmful act by another (i.e., the rule of not harming third parties by one's action and the right not to be harmed by anyone's action without reciprocation) mitigates the risk of the emergence of collective action problems.25
Impact of Scarcity
The agent-trustee duty of humans is central in the Islamic economic vision for a number of intertwined reasons. Conventional economics doctrines focused on scarcity and unlimited human wants as the central reason for the study of economics. Economic growth is presumed to create wealth and thus relax the scarcity constraints. While scarcity is a serious constraint in a world of unlimited wants, it is not so in Islamic vision. The Creator has provided humankind with sufficient resources at the global level to satisfy all human needs if humans follow His rules. The creation of the earth was not a random event. Allah (swt) created the earth by incorporating human needs and creating conditions (as a test) that require humans to share.
In Islam, scarcity takes on three different