80 chapter two
Economic Resources: Role of the State
In addition to what had been mentioned above, in relation to the
type of ownership of economic resources and the role of the state
in income distribution and economic and social justice, the follow-
ing can be added to highlight the role of the state in organizing
market forces. To begin with, the state has no role in influencing
market forces through price fixation or similar devices providing that
the market is operating normally. To put it another way, the term
market equilibrium may be borrowed to emphasise this point fur-
ther in ascertaining that as long as the market is in a state of equi-
librium, the information is flowing without being distorted, supply is
continuing without being interrupted and demand is meeting the
supply without being hindered, the state has no legitimate right to
interfere, or intervene. Market forces, guided by the ethical values
in the belief of Muslims, should be let to operate freely without being
influenced by exogenous forces such as those of the state. This has
implications for three main issues: the state as an entrepreneur, mar-
ket structure and state finance.
First: the state as an entrepreneur
Basically, the role of the state is a surveillance role: the state is to
watch, plan and organise so as to provide the right environment for
the free economic forces to operate. Nevertheless, the role of the
state was widened during the Orthodox caliphate to include respon-
sibilities and to cover tasks beyond that which existed at the time
of the Prophet.
For example, the second Caliph Umar ibn-al-Khattàb had diverted
from the practice before him in preference of the state having con-
trol over conquered land as a major economic resource. Furthermore,
the efficient use of economic resources represented by land in par-
ticular seemed to have occupied the attention of Caliph Umar, so
much so that he instructed those who had land beyond their means
of cultivation to return to the state what they could not utilise, even
if the land was given to them on the authority of the Prophet as a
head of state (Al- ̨abarì).
Land management took a new turn when the state allowed itself
to own and manage lands, which became known as sawàfìland or
Crown Estate. Gradually Crown estates were transferred to individ-
uals, which led to the development of feudalism that manifested itself
clearly during the Umayyad and Abbasìd caliphate.