The following is a transcript of a speech given by Shaykh Abdal Hakim Murad at the National Zakat Foundation’s fifth year anniversary event, “The Power of Zakat in Transforming our Community.”
I would like to say a few words about the way the Zakat might function creatively and successfully in the rather peculiar context of the 21st century financial system. The question is, like most things Islamic, a notably topical one. One of the most famous features of Islam is its resolute stability, even immobility: which other world religion has maintained not just core doctrines, but the details of its practice, intact from the time of its foundation? Like the prayer, Ramadan and Hajj, the pillar of Zakat seems strongly to partake of the Shari‘a’s timelessness. These are rules which are not made to be broken, ever.
Yet the Zakat, while required to remain faithful to the founder’s inaugural vision, is rather different to the other Pillars. If the prayer is about worshipping God, the fast about self-denial, and the Hajj about our reconnection with our sacred past and our sacred centre, the pillar of Zakat concerns our connection to society, in its indispensable financial dimension. Religion, a term which springs from a Latin word meaning to ‘bind’, does not only bind us to heaven, but to our fellow-men: religion is eminently a social thing. And because the world around us has changed in such extreme and disorienting ways, not least in the way it recycles our wealth, this Pillar of Islam finds itself confronted by greater challenges than those which currently face our other fundamental obligations.
Put differently, one could say that Zakat has an inward and also an outward-looking dimension. Inwardly, it has the evident effect of purifying us of elements of our greed, avarice, and indifference to others. It is cathartic, a palpable tithe which renders the remainder of our worldly goods spiritually and morally available to us. It is a healing of our personal economies, a kind of fiscal hijama. But as well as conferring this blessing, the Zakat connects us to all other human beings, to whom we are tied through our financial and legal dealings. The Shari‘a regulates and purifies those dealings in a myriad other ways. But the foundation of our financial social interactivity is to be this levy on our wealth. So important is economic justice to the Qur’an’s vision of society that this social pillar of the religion is not about family, or neighbour, or Jihad; but relates to how money is stored, taxed, and exchanged.
Of course, it is in no sense an alternative to other forms of social action. The rules of Zakat incorporate principles of preferring family, neighbour, and those who risk their lives in the defence of the community. Still, the principle remains: Zakat is our third pillar, and not, for instance, silat al-rahim, family cohesion. So the whole social vision of a believing and just Muslim society is characteristically focussed on economic justice. ‘Were poverty to be a man I would slay him,’ as the Holy Prophet remarked. And some of the very first verses of the scripture to be revealed were dire warnings against avarice and the neglect of the financial wellbeing of the disadvantaged sections of Meccan society.
‘Your Lord enjoins justice’, says the Book of Islam. And without economic justice there can be little justice of any kind. Hence, one may surmise, the titanic importance of this cardinal duty of our religion. The Muslims are, very characteristically, a people who are to value economic fairness.
In medieval times the Zakat institution, which often supported and was supported by a vast infrastructure of waqf endowments across the huge Islamic world, contributed immensely to the alleviation of poverty and other kinds of want. From today’s perspective, those societies were nevertheless characterised by limited levels of sophistication. Although medieval Islam invented some complex financial systems – remember that words like cheque and tariff are actually of Arabic origin – the theory of classical Zakat referred to a society infinitely less complex and centrally-managed than our own world of runaway turbo-capitalism. The jurists today increasingly furrow their brows at the proliferation of complex and often frankly parasitic financial instruments: long-short funds, macros, futures, derivatives, and real estate investment trusts. Whole corporations are dedicated exclusively to trading financial products which bet on currency or commodity movements at various points in the unstable future. Computers trade on rapid market shifts in intervals of a thousandth of a second. And most fundamentally of all, money itself has become an abstraction whose value and availability are defined by the fiat of central banks.
Which of the thousands of new forms of money is liable to which forms of zakat is a question which I leave in the capable hands of the National Zakat Foundation. But the fiqh of Shari‘a-compliant operation in the new financial hall of mirrors is not my concern in this little talk. Instead I want to explore the way in which the principle of Zakat itself, in its broad and hopefully timeless architecture, might bring a significant new force to bear in the odd and alarmingly unstable world of modern casino capitalism.
Let us reflect for a few minutes on the current oddness of the global economy. In its volatility and strangeness it seems to mirror so many other modern sources of worry and uncertainty, such as climate change, terrorism, the flux in social forms and relationships, religious confusion, and the domination of global culture by powerful media corporations. In some ways it is connected to all of those other headaches. But in its inherent strangeness it seems to stand in a class of its own.
This oddity, and the precariousness which it veils, is not sufficiently known to the general public. In little more than a generation, financial laws and processes which underpinned the world for centuries have been abolished or allowed to mutate strangely. Vast bubbles grow, thanks to a thousand new forms of credit, and credit upon credit. But the British reader and viewer reads the financial columns and assumes that despite all this commotion, business is as usual. But it isn’t.
Why are we so ignorant, in an age of mass communication, when in a few effortless clicks we can access the deregulated Stock Exchange, and even trade shares for ourselves? When the local bank manager seems unnecessary because we can operate our accounts online, and create and structure our own assets and borrowing? Thanks to the internet revolution we can step right inside the financial institutions. Endless leaks even allow us to read private emails to top tax consultants at Mossack Fonseca. The system seems reassuringly transparent. And yet we do not see the fire in the forest, thanks to all the young trees.
The reason is that the information revolution has coincided with the mushrooming of what Benjamin DeMott calls ‘junk politics’. This is the politics of the zippy soundbite, indispensable to us in our world of whatsapp and texting. We need a quicker and quicker thought from the politicians. A considered parliamentary speech on justice is nobody’s news; a leaked killer quote is. So are the vulgar secrets of a politician’s private life. And the increasing HD quality of visual media directs our senses to the two-dimensional: do people think more of Boris Johnson’s investment on the Jubilee Line, or do they remember him more for his hairstyle and his alarming unsteadiness on a bicycle?
Like modern art, politics increasingly finds itself more accessible when it replaces truth with style. What is cool is what is new and interesting. Junk politics cannot direct us to reflect in a measured way on social inequities, or the real reasons for Palestinian anger, or for climate change. Like us, the politicians do not want to look long in the face of such deep and complex issues. Instead, they know our indulgent, distracted habits: our attention spans are short, and shortening. So successful junk politicians make everything personal. The Obama presidency was a case in point. What was really new about his policies? Did he actually close Guantanamo, tackle income disparity, or unemployment? And Tony Blair inaugurated the same age for ourselves. What he stood for was a susurration of newly-spun emotive and faux-sincere soundbites measured to the current atmosphere. His successors, despite the ongoing older British distrust of charismatic politicians, have been little better. They know that most of us glance only at headlines, and images, and need emotional reassurance, and fear analysis. The main argument against Sadiq Khan was not policy related at all, but comprised a vague and weak insinuation about alleged Islamist connections. This is the new normal in British politics.
DeMott says that in this novel world of junk politics, there is ‘zero interruption in the processes and practices that strengthen existing, interlocking systems of socioeconomic advantage.’ It ‘miniaturizes large, complex problems at home while maximizing threats from abroad. It’s also given to abrupt unexplained reversals of its own public stances.’
So we have, on the world stage, an accelerating Islamophobia, riding on our fears about terrorism, allowing the British state to adopt an increasingly illiberal and inquisitorial stance towards Muslim citizens, without there being time to think calmly about the longer-term consequences for social integration. And the income disparities continue to grow. Now that there is no Socialism, everyone who wishes to use his or her vote must choose parties who trade on our panic about the moment, rather than those with a long term vision of equitable human flourishing. While we scan the headlines anxiously, the corporate structures distract us with news of natural disasters, celebrity divorces and terrorist dirty bombs. In a culture immersed in profitable entertainment, news must be diverting, preferably as an erotic or horror spectacle; it can no longer afford regularly to instruct or reflect.
So the global financial system, itself grounded in the illusion that it is trading with measures of real intrinsic value, is veiled by the illusion machine of the media networks. This is certainly one key reason for the volatility of the markets: most equity and commodity fluctuations are caused by irrational herd impulses, or what is more politely called ‘market sentiment’, rather than by anything real. The FTSE is very vulnerable to politicians who abbreviate and abbreviate their feelings about Brexit. But nobody actually knows anything at all. What would really happen to markets? Nobody knows.
The philosopher Slavoj Zizek recently gave a lecture in London with the title ‘The Buddhist Ethic and the Spirit of Global Capitalism’. He reflected on the fact that the most common form of religious practice in the City of London is now Buddhism, often in quite radical forms. The bond traders on sixteen hour shifts need to wind down and decompress, and hence mindfulness, Zen, or various holistic meditative therapies, have become the spirituality of choice. The Wren churches, meanwhile, bustle with lunchtime concerts and parties of Chinese tourists, but Evensong among the glass spires is sparsely attended. The reason? Theravada Buddhism holds that all is a void, nothing is intrinsic; values, life, soul, self, the body, money, bonds, the Nasdaq: all are unreal, humming in a state of endless playful flux, green figures dancing forever across a void. Sunyata! What more perfect model could there be for the modern numbers game?
We borrow pounds that don’t yet exist, and then trade on their future movements; with the profits, we trade again. Money bursts from this cornucopia of consensual illusion: everyone seems to gain, and there is plenty more paper, so who will speak out?
Washington and London insiders are hardly oblivious to the dizzy precariousness of this situation. However any last-minute escape from the jaws of a new credit crunch that would make 2008 look like a fairy picnic would demand decisions that elected politicians, addicted as usual to the short-termism endemic in the election cycle, could not take without courting electoral annihilation.
And yet, this may not go round and round forever. Ponder, if you will, the remarks made by Donald Trump only a few days ago. In an interview with CNBC the Republican front-runner staggered viewers by letting something slip. He speculated about a possible need to force holders of US debt to, as the jargon goes, take a haircut, rather as Greek savings account holders have done. They would lose maybe ten or fifteen percent of their bond balances in a sudden and irreversible raid by the Fed.
This scary prophecy is not the kind of thing politicians usually divulge or promise.
The reaction of the establishment media, which is largely committed to the print-money-forever philosophy, was to hit the panic button. The Washington Post called the speech ‘reckless’. In effect, it continued, the US government would be in a state of default. The collapse of confidence in the world’s banker of last resort, the Federal Reserve, and in the worth of Treasury bonds, would cause a global economic meltdown, with a massive shift away from bonds into equities, hedge funds, property and precious metals. The dollar would weaken as a global reserve currency, perhaps to be replaced by the euro or even the renminbi.
Even a ten percent haircut would, it seems, precipitate this yawm al-hisab in the financial markets. 2008 and the 2000 dot-com bubble would be serene memories by comparison.
The trouble is that everyone, even The Hilary, knows that the alternative is likely to be more apocalyptic still. Here is what Trump actually said:
We’re paying very low interest rates. What happens if that interest rate goes two, three, four points up? We don’t have a country. If you look at the numbers, they’re staggering.
Trump, coming from left field, not a Beltway insider, has mentioned the unmentionable.
Servicing the US national debt this year is projected to exceed 260 billion dollars, even with the historically bizarre nil interest rates effectively decreed by the Federal Reserve. What if rates moved up to their historic post-war average of 4.7%? Any resumption of these traditionally normal levels would result in the interest repayments jumping to over one trillion dollars, more than a quarter of the federal budget.
What would happen, if this happened? The White House would be forced to borrow more money to cope with this enhanced level of debt servicing, and a vicious circle would ensue, capsizing the entire American economy and, therefore, government, within five years. Military spending, currently 54% of America’s GDP, would need to be slashed. And that would slash the American empire.
And this, remember, if rates only go up to their historical average. A return to the double-digit rates of the 1980s would pull the apocalypse lever much much sooner.
Here in the UK we are just as exposed. On May 12 the Bank of England directors voted unanimously to maintain the base rate of half a percent, the lowest for three centuries, a level which has been held for an astonishing seven years. At such levels, our 1.63 trillion national debt is just manageable. But even Mark Carney has warned of an uplift in rates following a possible Brexit. This, or any entirely unforeseen Black Swan event, could push rates back towards their historical norms. The national budget, already cut by Osborne to the bone, would have to take a further swingeing hit, perhaps with a downlift of a third or more. The NHS, state pensions, and many social services, already struggling, certainly could not survive in their present form.
That is the scenario for the national debt. The implications of massive mortgage default among houseowners and buy-to-let landlords would be even more calamitous. An unprecedented political and social emergency would be hard to avoid.
It is almost universally agreed that, like a corpse, the economy has been blowing bubbles. Cheap money, quantitative easing, and a regulatory structure that despite the 2008 debacle remains permissive, have allowed debt to mushroom. All this during a period of so-called recovery which by most traditional indices has not been much of a recovery at all. The so-called ‘equilibrium rate of interest’, in which investment and savings correspond with full employment in a moderately inflationary environment is now extremely low, thanks to an almost nonexistent rate of inflation. The equilibrium rate is looking unprecedentedly faint and flat. Neo-Keynesians are talking of a radical and stubbornly persistent form of ‘secular stagnation.’
The same Neo-Keynesians argue that the economy needs more stimulus in the traditional form of further credit injection. But again, the religion of economics is a broad church. Others, including pundits of the so-called Austrian School, have published a number of papers to defend the somewhat self-evident point that a surge in cheap money causes, rather than resolves, a financial crisis.
The Austrian School economists have only one solution: raise interest rates. They are convinced that the world is experiencing real interest rates below zero, despite low levels of inflation. Lending money helps to store it and push it around, but makes a loss, not a profit. Already some European central banks are offering bonds with a negative interest rate, even before inflation is taken into account. So on this view, we need higher rates to re-establish the equilibrium rate, so that investment and savings once more exist in a coherent and balanced relationship.
The ongoing boom-and-bust fairground ride of the new imperial capitalism is taking us to an unguessable destination. And we cannot tell at what point to get off. Are we looking at cycles, or at a structural depression? Nobody can tell us: the theorists can’t agree; the situation is without precedent.
Whereas in premodern states, and certainly in the Islamic political model, central government’s functions were limited essentially to matters of security and the regulation of the mint, the modern state has become a monster whose tentacles stretch into every horizon of the citizen’s life. Our education, justice, health, and other key dimensions of our existence are subject to meticulous state regulation and control. And money itself, the key indicant of value, is valued and created by the state’s central bank. Money does not come from mines in God’s solid earth, but is pieces of paper whose value is determined by central policy, rooted in economic theories on which there is no consensus at all.
Here again, Islamic values insist on personal freedom. A private currency whose worth is largely outside the power of central banks to determine is to be the essential measure of exchange. Unlike the bitcoin, whose claimed libertarian advantages have not convincingly outweighed the dire problem of its volatility, gold and silver, the naqdayn, allow private individuals considerable freedom from manipulation by states and corporate interests. The naqdayn also provide insurance against unexpected haircuts, levies, and other state-imposed interferences with personal wealth. And when the ATMs finally stop doling out cash, the naqdayn will come into their own.
All this is perhaps of more relevance to Islamic banks than to Islamic charity. But perhaps we can begin to make the point that if we, as conscientious and believing human beings, who abhor the relativism of modern values and the human suffering which results from our modern hall of illusions, we will find it tricky to create a fully shari‘a compliant banking system. It is true that the Islamic banks represent a vastly preferable alternative to conventional usury finance. Not only because they try to invest ethically, avoiding investment in alcohol and other narcotics, for instance. But also because they tend to be comparatively well-capitalised and to avoid some of the more esoteric and parasitic financial instruments which make banks vulnerable in times of sudden recession. During the 2008 crisis the Islamic banks generally fared fairly well, although there were some embarrassing exceptions.
However the money in which they hold their deposits is not the naqdayn, but euros and greenbacks. Hence they are inextricably part of the global net of fiduciary money, and as such they cannot really escape its volatility. Or, if the system goes down, its collapse.
This is not to say that the experiment has been bogus, as claimed by some purists. In our strange global environment one is always looking for the least bad option. Shari‘a compliance is a matter of degree these days; let us remember our religion’s traditional realism.
Still, let us also consider that the Islamic economic vision is not limited to the provision of banking services. As we mentioned at the beginning of this talk, the Third Pillar, which relates to justice, is not about banking at all, but about Zakat, a statutory purgation of our fiscal bloodstream. So perhaps the creation of institutions such as the National Zakat Foundation, benefiting from London’s stringent charity and financial regulatory environment, represents a more interesting area in which to develop our campaign to offer an ethical and also realistic alternative to the current destructive economic paradigm. Let’s hold that thought for a while.
Islamic banks often, unfortunately, recycle assets among wealthy investors. Much of London’s fancy new skyline is the result of Middle Eastern and Malaysian speculation. The Olympic Village was one example; the makeover of Battersea Power Station is another. There is One Hyde Park, Harrods, and Chelsea Barracks. And look at the Shard, for instance, which was partly financed by shari‘a-compliant instruments. Walk through the dismal and depressed streets around it, and it is by no means clear that the ethical imperatives of Islamic banking have in practice delivered to the streets of Southwark. It may even be the case that the influx of Gulf money to the safe-haven of the London property market has helped to drive up house prices in the capital, with grave consequences for the poor. The Islamic banks tend to invest in Mayfair property portfolios, not in affordable housing. This is hardly very Islamic.
A zakat initiative, however, would by definition make a difference to those streets.
Let’s consider for a moment how much tithe-able money is floating around in this city. Some is indeterminate, thanks to the shell-within-a-shell tax avoidance stunts recently revealed in the Mossack Fonseca revelations, of which, incidentally, more are to come.
London is home to more ultra-high-net-worth individuals than any other city in the world. This is the category of people with at least twenty million pounds at their disposal over and above the price of their residence. There may be five thousand of them here in London. And quite a few of them are Muslims, including some storied Russian oligarchs, friends or foes of Putin and his sprawling global estate. The Sunday Times Rich List this year names over fifteen Muslims. And the effects of their gilded lives are everywhere to be seen. Luxury clothes shops schedule culturally-specific appointments for Gulf ladies. The most spiffy hotels, such as the Dorchester and the Savoy, provide female butlers, prayer rooms, and halal chefs.
Super rich people like these account for an ever-growing share of global wealth. A recurrent feature of our age is capital concentration in their hands. According to Forbes magazine the world’s 66 richest people own more than the poorest half of the earth’s population; and that number 66 is being steadily pressed downwards. At the opposite end of the spectrum, an increasing number of people are obliged to manage on the minimum wage, or to work as unpaid interns. The middle classes are squeezed, as less health care is available for free, and as they are obliged to support their children well into their twenties and even beyond. As Danny Dorling puts it in his book Inequality and the 1%, we are all being turned into service workers in a world that seems to exist for only a few individuals.
London’s ultra-high-net-worth scene is largely made up of foreign expatriates. Of these it is not clear how many are being approached to discharge their zakat obligations, although some are visibly generous to secular charities. There is surely mileage in the idea that they should be called upon to support, say, anti-extremism initiatives in the Muslim community, far from the bungling of Whitehall or the provocations of the Prevent agenda. After all, the Gulf states, or most of them, are mainly responsible for the funding of global fundamentalism, the potash which fertilises al-Qaida and Daish. Why should they not also fund charities and mosques which try to challenge the extremists? As yet, they have not begun to do this. They are like Exxon, trying as hard as they can to avoid clearing up their own oil spillage. Their own petrodollars have supported global fundamentalism; let them now spend some money on mainstream Islam.
Unfortunately, many Middle Eastern expatriates in London appear resistant to the idea that if they fast in Ramadan, and pray in the Dorchester mosque, they are also equally liable for zakat. Salat rhymes with zakat; those verses don’t work well with only one of the pair. Their Islam is unbalanced; it is an Islam which doesn’t rhyme. And the impact on their souls is often evident in their faces.
Wealth often hardens the heart. Take, as a depressing reminder of this, a recent Princeton University study of student responses to poverty and suffering. The students were shown pictures of alcoholics and homeless people, while lying in an MRI scanner. The brains of students from wealthy backgrounds, who did not need to work or take student loans, tended to respond very distinctively, often showing activity in areas of the brain associated with disgust. The reaction to seeing the images was often indistinguishable from their reaction to images of piles of uncollected garbage. It seems that wealth and privilege tend not only to harden the heart, they can also rewire the brain.
Zakat, therefore, presents itself as a moral and economic remedy of a radical kind. Income taxes have failed to limit the accelerating gulf between rich and poor; social services and health care continue to be cut. Here revelation proposes a different kind of solution.
Zakat is effectively a net wealth tax. True, there are exemptions: one’s own private home, for instance. But the one-pound-in-every-forty annual tithe remains immensely promising. Consider the amount which could be raised from Britain’s Muslim millionaires. According to the Muslim Council of Britain, there are more than ten thousand of them, worth almost four billion pounds. That’s a hundred million pounds a year for charity right there. And what about the fourteen thousand Muslim-owned businesses in London? Over a third of small to medium enterprises in London are now Muslim-owned. What is the zakat liability there?
Already, according to the Charity Commissioners, Muslims are per capita the most generous charitable givers in the UK. A full operationalising of a national zakat system could build this substantially and even spectacularly higher.
But zakat is not simply about charity. There is also sadaqa, which is different. Zakat has not only a charitable object, but a larger redistributive function.
This forms part of the wider philosophy intrinsic to Islam’s social vision. While mercantile activity is encouraged and praised, the long-term accumulation of capital is obstructed by several Shari‘a principles. One of them is our system of inheritance tax. Marx’s analysis of the evolution of capital in Europe should make little headway in observant Muslim societies, since there is no principle of primogeniture. An English duke’s estate is inherited by the eldest son; the others make their way in the world as best they can. But the Muslim inheritance system divides an estate multiply: all children inherit, and often further relations as well. And a third has to go to others outside this family circle; often this will be willed to awqaf of various types. So in Istanbul, for instance, a century ago, where a European city would be largely divided among aristocratic and banking families, a third of the city’s land was owned by awqaf, whose revenues could only be used for charitable ends.
Speaking of one type of charity, the Qur’an determines that recipients will be ‘relations, orphans, paupers and wayfarers’, adding ‘so that this wealth should not be circulated among the wealthy among you’ kay la yakuna dulatan bayn al-aghniya’i minkum. Wealth must be ploughed back, into lower and disadvantaged segments of society: the homeless, the familyless, the refugee, the asylum seeker. These are all timeless categories of human need, which have a right, haqq, over the assets of the fortunate.
The advantages of a tax on wealth, rather than simply on income, are not only set forth in the Qur’an. In 2014 a literary sensation ensued when French economist Thomas Piketty published his Capital in the Twenty-First Century. Piketty’s concern is with income disparity. He points out that when dividends on capital exceed the economic growth rate, the rich get richer. This will, ultimately, threaten the entire global system. The solution is not an income or sales tax, but a tax on wealth.
Piketty almost seems to be echoing classical Islamic thinking when he goes on to suggest that a shift away from income taxes to a wealth tax would not only reduce wealth differentials, but would energise the economy. Money left idle would be subject to an annual haircut, forcing assetholders to invest in profitable enterprises. These would in turn generate a higher revenue, since income taxes would be proportionately lower. Parasitical investment would be replaced by a more active investment strategy that focussed on real asset growth rather than the circulation of funds among passive investment vehicles. The result, Piketty predicts, would be an end to our era of secular stagnation and the return of a more healthy economic model based on tax as a negative reinforcer. Passive assets would suffer, while economic activity would be rewarded, with positive consequences for employment, investment, company dividends, and global trade.
Piketty’s thesis is not likely to be implemented. Even in the world’s largest economy, the United States, Donald Trump’s suggestion for a national haircut which would pay off the national debt in a single year, would, as the outraged critics note, precipitate massive capital flight into other asset classes and overseas markets, although this would be mitigated by the fact that America operates a global tax regime, taxing citizens wherever they and their assets are domiciled. Piketty’s context is France, which actually has a wealth tax. Anyone with total assets over 1.3 million euros is subject to an annual levy of up to 1.5%. However the net result has been capital flight, particularly to London, now home to over a hundred thousand French tax exiles.
This is the usual argument used against the idea of a wealth tax. But it does not apply to zakat, which is global and universal. A Muslim believer is obligated whether his money is sitting in the TSB, or in a shell company in the Cayman Islands. It makes no difference at all.
Let us remember a further interesting and sadly-neglected fact. We tend to think of the zakat level as a flat rate of 2.5%. However the Shari’a raises this on certain asset classes. Notably, the category known as rikaz, essentially meaning wealth with no previous owner which exists underground. Here, although the madhhabs diverge somewhat, we find generally that mineral wealth, on extraction, attracts a 10% or even 20% zakat charge, the zakat al-rikaz.
In 2008, al-Azhar’s Institute of Islamic Research issued a fatwa about this. Oil wealth, like other mined mineral wealth, is to be considered rikaz, and hence the mufti called on oil-rich Gulf states to pay a flat rate of 20% on all oil assets, once these are removed from the ground. The revenues would be used to uplift the economies of poorer Muslim countries, and to relieve the sufferings of the poor and refugees.
It would not be right to say that this thought met with an ecstatic reception in the Gulf area. However the higher-rate zakat asset classes are there in the classical Shari’a manuals. The timeless relevance of those texts is very conspicuously shown when we consider how enormous would be the impact of such an annual levy, if applied virtuously and efficiently to relieve countries like Bangladesh and Mali, where a single dirham goes a long way. The hoarding of assets in London property portfolios, and the speculative purchase of modern art, football clubs, and shares in Apple and Fox News, would be dented, returning asset prices to something more recognisably normal. The global economy would benefit, as the new import demand in the countries being developed by rikaz financing would support base industries and stimulate trade, particularly within the OIC countries.
Note another neglected consequence of the zakat al-rikaz. It specifically taxes mineral wealth, including fossil fuels. An effective hike of 20% in oil, coal and gas extraction costs would represent an effective subsidy in the same value to sustainable alternatives. There is no zakat al-rikaz on hydroelectric dams, wind farms, and solar arrays. Where these are private investments, they will be liable to the ordinary 2.5% zakat rate.
More, much more, could be said. Whether we like it or not, we live in interesting and also very precarious times. The future is hard to guess, and sensible experts have mostly stopped trying. Even The Donald may have to take a haircut – he could probably do with one. But it is reasonable to foretell the ongoing significance of London, and the United Kingdom, as a centre for global and Muslim wealth. As the nations of the Middle East implode, their elites are increasingly likely to move to our shores. This is an opportunity too good to miss. London is set to be the world capital of Muslim wealth, and probably of Islamic banking as well. And now, with the National Zakat Foundation located right here, it is set fair to be a hub of authentic and transformative Islamic benevolence and wealth-sharing. Let us hope and pray for its continued thriving, wisdom, and compliance with heaven’s law.