Shah Waliullah

Hujjat Ullah Al-Balighah is one of the most important books written by Shah Waliullah of Delhi, an important Muslim thinker of pre-modern South Asia. Shah Waliullah was one of the greatest Muslim scholars of eighteenth century, who made an immense contribution to the intellectual, economic, social, political and religious lives of the Muslims in India, the effects of which persist to the present day.

Shah Waliullah in Hujjat Allah Ul Balighah discusses division of labour, specialization, problems in barter trade, types of economic exchange and comparative advantage round about the same time as Smith and Ricardo. He also discussed why commodities became money and what qualities in gold and silver encouraged people to use them as money.

Shah Waliullah in Hujjat Allah Ul Balighah writes that exchange is of different kinds. Goods for goods or goods for services. There are people with surplus funds and some with deficiency of funds. This requires transfer of resources for need fulfillment without counter value as in Zakat and Sadaqat.

For intertemporal transfers where there is exchange of goods and money in different time periods, division of labour, specialization, Mudarabah, Musharakah and Qard are used. Qard enables people with deficiency of funds to access funds from someone who has surplus funds.

Mudarabah and Musharakah attempt to reduce tension between labour and capital by attributing their compensation to the real economic activities. Labour without capital can also get return from the real economic enterprise as Mudarib.

The noted author discusses that to enforce intertemporal exchange and contracts, documentary and human testimony starts to be used as people can renege on their responsibility. He also reasons that exchange becomes more and more complex as society and economy progresses.

Embracing Industrial Revolution 4.0, we can see how the civilizational growth dynamics explained by Shah Waliullah match with reality centuries later.

Providing a positive explanation of how economy works, Shah Waliullah in Hujjat Allah Ul Balighah talks about why specialization is necessary for smooth functioning of metropolis and the state. He is against security state and only favors spending on security at a bare minimum. We can see how important this idea is by looking at the budget on military spending by only USA and China alone. Both spend more money than what is required to fill the global poverty gap of all the nations of the world combined!

He also talks about public goods, infrastructure and positive externalities which is conducive for innovation, higher standard of living and growth. This in essence is an eloquent reasoning of endogenous growth theory much earlier than Paul Romer.

He also favors pursuit of pure sciences and what is now called STEM education fully knowing the increasing returns to scale of ideas for innovation. In essence, he provided the similar concept of growth that is now given Nobel Prize “Endogenous Growth Theory”, but with a wider perspective of society and economy.

Shah Waliullah being the most recent philosopher having seen the ruthlessness of capitalism also sheds light on the fact that peaceful, just and orderly society depends on economic justice. If the economic system is exploitative and favour a certain class, then it will result in deprivation, underdevelopment, inequities and eventually social unrest.

In economic policymaking, he favors utilitarian approach (adopting what is beneficial) in economic policy and decisions, but also talks about respecting ethics and morality. Ethical concerns should reign supreme and in addition to that, the social objectives (Maslaha) and norms need to be respected as well.

In consumer behavior, he is not skeptical of engaging in economic enterprise and instead living a life of seclusion. He describes that Allah loves regular acts of virtue as they exhibit purity, sincerity and deeper commitment. He explains that a giving hand is better than a receiving hand. Thus, efforts to become self-independent and having an opportunity to act generously is also a virtuous state of being.

In macroeconomic fiscal management, he explains that Islamic system of Zakat is quite balanced and light on its impact on the Zakat payer. Zakat is not to be paid very frequently. The rate of charge is also not exorbitant so as to burden the Zakat payer. The wealth which is subject to Zakat is also the part of wealth which has potential for growth.

He describes that human nature may get affected by greed, avarice and miserliness. Humans may have higher yearning for wealth if they do not practice charitable spending. Thus, it is important to develop positive attitude towards charitable giving so that love of wealth does not overwhelm their personality, spirituality and relationship with Allah.

At the same time, the author cautions that a person should strive to fulfill one‟s needs through seeking economic enterprise rather than depending on others. He explains why Islam prohibits interest and gambling and encourages seeking income from providing labour and putting money in entrepreneurial pursuits.

In political economy, the author emphasizes the need for central authority to ensure rule of law and maintaining law and order. To have an orderly society and economy, it is important to have division of labour and curbing practices and acts which lead to corrupting minds and society.

In governance, the author emphasizes the need for public goods, healthy business and investment climate and patronizing research, scholarship and innovation. He cautions against heavy taxes and spending unnecessarily on defense.

For rulers, the noted author writes that they must have knowledge, wisdom, confidence in public, mandate of people and capable advisors who are honest and fit for the task. The ruler should avoid nepotism and laxity in choosing incapable advisors.