The Role of the State

The Islamic approach to economics and finance fundamentally differs from the conventional approach in forming theories. Conventional economics and finance aim to frame observations within theories. Unlike the conventional approach, the Islamic approach to economics and finance is based on Taqwa (to-dos and not-to-dos). In this regard, the Islamic perspective on the subject necessitates state observance of divine guidance with the list of to-dos and not-to-dos. This chapter provides a comprehensive list of to-dos and not-to-dos for food security, affordable housing, and poverty alleviation as the outcome of reflections from previous chapters. The state’s role in Islam is clearly defined within the concept of Hisbah. The role is confined to law enforcement, regulation, and supervision. The Islamic understanding of the state differs from the traditional or contemporary understanding. For instance, the state in Islam would not provide social security and social and economic infrastructure. The social safety net in Islam is assured by wealth redistribution with Zakat, while the Waqf business model provides social infrastructure such as health and education. There is no recourse to tax revenues of the public budget but social solidarity between the rich and the poor. The state's role is to establish platforms to regulate and supervise the systems and enforce the law in Islam to ensure harmony in society.