Ibn Taimiyyah (1263-1328)contributed greatly during the Thirteenth Century to a wide range of intellectual and political issues of political economy confronting the Muslims during the tumultuous period of Mongol destruction of Muslim lands. Among these important areas were his conception of the Islamic political economy as derived from the essential roots of Islamic knowledge, Qur'an and Sunnah. further fortified by analogy (Qiyas) and consensus (Ijma). Ibn Taimiyyah took justice and orderliness as the central functions of social life. He argued that these can be attained for the benefit of the Muslim society by organizing it in a dual system, with a keen sense of participation between the private sector (enterpreneurs) and between the private sector and governments. Hence, participation of various kinds was encouraged to be the medium of enterprise in the Islamic society. The concept of justice to Ibn Taimiyyah meant not simply a juristic concept but also a moral concept. Hence, the nature of goods, technology and ownership in the midst of these were also considered as part of the elements that can produce social justice and bring about economic well-being. Ibn Taimiyyah's discussion of market mechanism is well known in this regard. See for example A.A. Islahi, Economic Concepts of Ibn Taimiyah, 1988). Even without invoking the terms such as perfect competition, economic rationality, perfect information and other assumptions well-known for a perfect competition, Ibn Taimiyyah argued that if monopolistic control was not allowed and there was free interaction between buyers and sellers, then markets would clear at prices that did not have to be state-controlled. Here Ibn Taimiyyah followed the ahadith of the Prophet which rules against any kind of control of market-driven prices, for benefits and losses, costs and profits in the free play of the God-given conditions of market forces arise simply due to the untrammelled action of the Divine Laws. However, when irregularities of ownership, exchange, production, consumption and distribution existed, then Ibn Taimiyyah used yet other ahadith and injunction of the Qur'an, that to deliver humanity from such market oppression, it became to regulate prices and put the market in order. For now therefore, the Islamic political economic thinkers avoided theorizing around imperfect economic competition, although the implications of such distortions were well-known to them.

Just prices to Ibn Taimiyyah were thus coated both by the essence of free market exchange as well as by the need for market regulation in the interest of social and distributive justice. But Ibn Taimiyyah also considered the concept of just profits, which were not surpluses as we known them in modern economic theory following Marx's analysis. But at the same time, such profits were not normal profits that both Aquinas and the classicists thought would be the case in perfect competition. Ibn Taimiyyah's profits had to be economic profits (not normal profits) because markets were seen as systems of visible contracts in the form of Mudarabah, Musharakah, combinations of these and other forms of partnerships. All of these involved both justice, externalization of contracted share and perfect distribution of shares at the end of every contract. Thus, the invisible hands principle was non-existent and the presence of institutional intervention was prominent in Ibn Taimiyyah's market process. One could say that Ibn Taimiyyah's concept of markets was a system of social contracts rather than the atomistic interactions among indefinitely large number of buyers and sellers that entered economic theorizing with Adam Smith imitating the power-benignity and equilibrium, steady state concepts of Newtonian mechanics.

Consequently, Ibn Taimiyyah's concept of the economic variables, such as employment, money, monetary policy, taxes and fiscal policy, ownership and distribution were all quite different from those of the latter days economists in the microeconomic and macroeconomic folds. For instance, Ibn Taimiyyah's enterprises paid a combination of wages and profit-shares. Hence, the factor demand and supply curves (labour and capitalist) had to be forward shifting under capitalist-labour cooperative contracts. The Marxist and classical kinds of labour-capital antigonism was non-existent in Ibn Taimiyyah's analysis of factor markets. Now with elastic forms of factor demand and supply curves, the productivity curve had to shift upwards. The ideas of economic efficiency, productivity and growth enabling profits, wealth and economic distribution to occur, were determined from the demand-driven side of the market order. This demand-driven side, when guided by responsible behaviour of agents in concert with good overseeing power of the Islamic state, meant conformity between the basic needs types of development menus and the underlying production, ownership and exchange mechanisms. Supply was subsequently determined as a demand response, otherwise, the predominance of imperfect competition would be felt.

Since a cooperative economy was predominant in this order as Ibn Taimiyyah argued that cooperation rather than competition was the essence of the human world, unlike Hobbes, therefore, marginalist analysis neither occurred to nor can it be deduced from Ibn Taimiyyah's factor pricing. Instead, average productivity analysis can be thought of as a proper substitute, but here too, the moral injunctions and the constant formation of knowledge among the private sector, governments, cooperating agents in the light of Qur'an and Sunnah with Ijma in it, make the average productivity measures to be `technologicall' induced by such other parameters. In this way, the extent to which productivity could be gained, thus economic efficiency and profits can be obtained, were functions of the morally qualifying parameters. Now just profits to Ibn Taimiyyah must always be positive in value under the impact of such other moral parameters and the presence of cooperation among private sector agents, between government and the private sector within a market mechanism being pronounced in such a dual economy. Besides, profits could not be zero as in the case of long-run normal profits under perfect competition, because output was not exhausted within the wage-rental dichotomy, as labour could be both an owner and worker at the same time and this contract could change periodically. Consequently, the total output had to be in excess of its exhaustion in wage bill and capital cost, in order for profit- sharing to be possible and to reflect the conspicuous effects of the moral parameters in the production and cost functions.

Government was important to Ibn Timiyyah for the supervision of the Islamic political economy. Thus came about the very important concept of Al-Hisbah Fil Islam (social regulatory institution of markets) in Ibn Taimiyyah's politico-economic legacy. The moral goals in terms of justice, prices and distribution, consumption and production according to Shari'ah rules without unduly intervening in the market process, became the singularly most important purposes of the market order in Ibn Taimiyyah's dual market economy. With this picture in view, Ibn Taimiyyah promoted the importance of government revenues from Zakah, Kharaj (agricultural taxes), mineral taxes, war taxes and taxes on foreign businesses in Muslim lands. Yet the most important components of public finance were found to be Zakah, Fai (war booty) and Ushr (agricultural) and the bait al-mal (public treasury) was authorized to collect these and distribute them according to ways provided by the Shari'ah. These point to the fact that personal income taxes were not to be collected by the Islamic state. Only those assets were to be taxed that were not individual property but which all individuals enjoyed. Tax in this sense was a price for commons in avoidance of undue claim through access, excess and free-ridership. Nothing could be without a moral-material value in the Islamic world view of political economy and human goodness.

Ibn Taimiyyah thus considered (Islahi) transactions based on justice (`Adl) to be the foundation of partnership, contract and property rights. On the other hand, Ibn Taimiyyah seemed to have considered transactions due to generosity (Islah) to remain outside market mechanism. Also he considered pure market exchange to be undisturbed by the relations of transactions based on justice. There could be two reasons for this. First, Ibn Taimiyyah's political economy was a dual economy in which pure market exchange was impossible. Second, gifts had no returns to them and hence there was no exchange to capture the value. Besides, goodwill, which was an individual trait, was seen to be a quality different from justice, which was a social requirement.

Many problems of economic thought and new dimensions of political economy can be derived from the above kinds of transactions. For a few reflections here, the question of complementarity between justice (`Adl) and generosity (Islah) in the framework of the moral-material worth of all transactions in the Islamic economy, would put an intrinsic value of transactions in generosity as a grants economy. In that case, the transactions due to generosity are not without an exchange value, when it enters the cycle of the national income production and distribution. A considerable amount of social goods, commons and knowledge-induced goods are so generated. The preservations of commons and the intertemporal alllocation of inter-generational goods are examples of such goods with intrinsic value. The value of such goods morally and materially increases in the presence of deepening institutional interface with the market order. On the other side, there is no such concept as a sheer market economy. Rather there can only be a political economy in the kind of relations that Ibn Taimiyyah considered.

With the given types of revenues and distributions in the national income and expenditure accounting, fiscal policies were combined with developmental policies and not expenditure policies. When we interpret the role of such expenditures principally in human upliftment (war expenditure being occasional and extraordinary), the government spending becomes human resource or incomes policies, creating supply-side inducement in the production function. Consequently, national incomes are found to be positively affected by such government spending through the activities of the social sector that converts transfers into productive gains rather than treating spending simply as transfers. One would then see the full impact of such spending on income multipliers, productivity gains, and from what we have argued above, these would cause economic efficiency to be realized in the sense of the moral- material complementarity effects of the moral parameters.For these reasons, there was no source either for debt formation or for debt financing. Taxes were not used for this purpose and governments were not to undertake spending for these purposes. The dual economy gave all the possibilties for the private sector to absorb the responsibility of the social sector under the able guidance of the Islamic government in accordance with Shari'ah. Here all kinds of speculation had to be avoided. But it is surprising that Ibn Taimiyyah's theory of fiscal balance may contradict his partial acceptance of speculative ventures. But my reading of Ibn Taimiyyah tends to point to the fact that what he meant by speculation was not extreme kinds of random undertakings for which there are no obvious benefits/outputs for the venturists. Rather, speculation to Ibn Taimiyyah may have meant risky undertakings for which there is a scope of estimating the gains to an extent. In modern parlance, speculative returns to Ibn Taimiyyah meant expected returns given measurable probabilities of occurrence. Byt speculation is of the nature that gambles are involved without measurable probabilties. That is speculative probabilities abound to lure venturists to stake their money in such gambles. In Shari'ah there is nothing against the undertaking of ventures with measurable risks. There is everything against undertaking ventures with speculative probabilities in them. Many ahadith of the Prophet Muhammad testify to these facts. Hence with debts and insolvency being minimized in the Islamic political economy, Ibn Taimiyyah's theory of fiscal balance means limited function of the government (hence of the bait al-mal) in the market order. Fiscal policies cannot then result in wasteful expenditure, erosion of the otherwise taxpayers real earnings, a consequent lessening of spending propensity. Hence, in such kinds of dual economy situation with a restrictive function of government, inflationary pressures cannot be pronounced.

The last point on Ibn Taimiyyah to discuss here is his monetary ideas. The idea of money meant currency. There was no concept of promissory notes to signify the quantity of money. It was stated that money as currency could be exchanged for a dissimilar thing. In case money was exhanged for money, this had to be instant. Ibn Taimiyyah in accordance with the ahadith of the Prophet and the strict injunctions of the Qur'an was perfectly aware of the abominable consequences of interest rate and that interest rate was the product of both speculation and of waiting in time. Hence exchange had top be prompt. Only payments after delivery of goods was legitimate. Loans could not be at an interest rate. Rather loans can be subsequently converted as investments if the occasion allowed. Otherwise, the interest foregone are to be seen as injections into the total output through the grants economy enabled by the moral parameters. In all of these, a high level of moral transformation of the individuals and groups was required. Hence the Islamic state being importantly effective in motivating such preference changes.

Money thus loses its meaning of exchange but retains its usage as a store of value. However, Ibn Taimiyyah retained of these attributes for money. But it is to be noted that to Ibn Taimiyyah the use of money as a medium of exchange meant that money as currency was a contravention to enable exchange of goods and services. The meaning of exchange here did not mean exchange of money for money as is the case with promissory notes, where a demand for loanable funds is converted into a supply of notes to transact a good that is realized not immediately, but over a delay in time. Interest rate cannot be the logical consequences of a transaction demand and supply concept of money as currency. Interest rate must always exist, speculation must always abound and social consequences of depravation (Keynes `animal spirits' and pathological behaviour of money makers) would always be there in the monetary economy with promissory notes.

In the currency form of the monetary system, the currency numeraire is a selected metal, which during the time of Ibn Taimiyyah was silver used by the Mamluke Government and was gold, silver or other metals during the Prophet's times. Since Ibn Taimiyyah following the injunction of Shari'ah, the ahadith of the Prophet, showed that currency value must be safe from debasement, therefore, a strict demand-supply measure of the quantity of currency was to be maintained. These were logical consequences of good economic theory. It showed that since money as currency had only store of value and was used for promoting exchange of transactions, therefore, the value of money must reflect the spending in the economy. For a dual economy of the type construed by Ibn Taimiyyah, market clearance occurred under the moral parameters. Thereby, the demand and supply of money as currency denoting the spending and receipts in the economy, must reflect the true value of such transactions. There was no independent value of money. The value of money was simply the linear function of the prices of transactions for which money was used in the aggregate. See my chapter on money in this series of lectures.

Consequently, we find that just as fiscal policies were restricted to the functions of Zakah, Fai, Ushr and Kharaj, so also now monetary policy was restricted to the control of currency in lieu of market exchange. Only transaction demand was served. The marginalization of fiscal and monetary policies in these senses, means the importance that was placed on the private sector in the social economy and the importance of interface of the government along with its institutions (central bank and bait al-mal) that was necessary to guide the economy. Hence was the institution of Ibn Taimiyyah's Hisbah and his theory of moral political economy.