12 - Unshackled States, Shallow Economic Governance

Summary

Paths to a liberal order are not limited to those followed by Western countries. A possible Middle Eastern starting point was zakat, Islam’s only “pillar” with an explicitly economic function. Zakat appears in the Quran as a system that finances designated state expenses through a tax on wealth and income. The rates were low by the standards of Antiquity, and they were fixed. Besides, the payment of zakat legitimated the underlying wealth or income. Hence, it could have served as the foundation for political checks and balances based on secure private ownership. Yet zakat’s specifics were suited specifically to Arabia; it left out major sources of income and wealth in the broader Middle East. For these reasons alone, rulers imposed extra-Islamic taxes. Having set precedents for arbitrary taxation, they then essentially stopped enforcing zakat. A Quran-based Islamic institution for empowering the individual against the state thus turned into a minor device for local poor relief. The waqf’s emergence in the 700s as a core Islamic institution was a creative response to zakat’s abandonment as a state-enforced transfer system. Its unintended effects, such as the persistent weakness of civil society, are rooted, then, in zakat’s loss of relevance to Islamic governance.