Islam and Universal Basic Income

By: Mohammad H. Fadel

September 1, 2020

Responding to: Economic Justice and Universal Basic Income: Ethical and Religious Perspectives

Islam and Universal Basic Income

Universal basic income (UBI) is an idea whose time appears to have come, more by the chance of COVID-19 than by design, we now live in an economy—at least in North America—where a large percentage of the population is receiving substantial income transfers regularly from the government. UBI has a mixed reputation among economists, with both unexpected supporters—such as the libertarian economist Milton Friedman—and unexpected detractors—such as the liberal economist Paul Krugman.

Whether UBI is sound economic policy, though, is beyond the scope of this short essay, which is instead concerned with outlining an Islamic perspective on UBI. It is always dangerous to assume that there is a unitary Islamic approach to a particular problem, particularly something as thorny as economic policy and the distribution of income. Nevertheless, it is possible to identify general trends in Islamic economic thinking that find their roots in the Quran. There are three verses in the Quran that are especially important for Muslim thinking on issues of distributive justice. These verses identify who are the legitimate beneficiaries of public revenues. The first of these three verses, al-Tawba, 9:60, specifies who are the legitimate recipients of sadaqat—also known as zakat, the second pillar of Islam. The verse limits those who can receive these funds to eight categories: the poor, the bereft, zakat administrators, those whose hearts are to be reconciled to Islam, slaves, the debt-ridden, those working for the sake of God, and the wayfarer. 

Zakat is sometimes understood as charity, but in Islamic law, it is an obligatory payment that those with means owe to the state, which then has the duty to distribute it to those entitled to receive it. Indeed, the Quran describes it as a right the poor hold against those with means, and the state could enforce its obligatory character against those who refused to pay it. It was assessed against cash savings that exceeded a certain minimum amount, staple crops that exceeded a certain minimum, and herds of livestock of a minimum size. Muslim jurists disagreed whether the ruler was obliged to give some portion of the zakat collections to every category identified in the verse, or whether he was obliged to distribute the zakat collections in accordance with his considered judgment among some or all of the legitimate recipients using his considered discretion. In either case, however, it is obvious that the relief of poverty was a crucial goal of this Quranic legislation. The same concern about poverty relief can be found in the other two Quranic verses dealing with how to distribute public resources, al-Hashr, 59:7, and al-Anfal, 8:41, each of which mention the poor and other marginalized groups as deserving recipients of public property. 

As a general matter, then, one can point to Islamic principles of distributive justice that encourage transfers of public resources to the least advantaged members of society. While that is not an endorsement of UBI as such, Islamic principles of distributive justice are clearly consistent with a policy intended to alleviate the disadvantages to individuals arising out of poverty, and to that extent, seem to support the policy goals of UBI. More significantly, Islamic law did not condition receipt of public assistance on anything other than the objective need of the claimant. Moreover, the definition of “poor” was quite broad. The Maliki school of law—one that predominated in Muslim North Africa, Spain, and Sub-Saharan Africa—defined as poor anyone who did not have enough property to enable him to live for a year. This means poverty is not defined solely as a function of income, but includes savings: Anyone whose savings are not sufficient to last him or her a year was eligible to receive public assistance. A shockingly high percentage of American households—40%—lack sufficient savings to get them through an unexpected payment of as little as $400. COVID-19 has laid bare for all to see the profound savings crisis facing American families and the economic precariousness that large sections of the United States face. In such a situation, Islamic law’s definition of “poor” offers strong support for a universal basic income in the United States insofar as it would guarantee cash or in-kind payments of necessities for the very broad swathe of Americans who lack meaningful savings. 

Some suggest that such a broad entitlements program will undermine incentive to work, and reduce substantially the incentive for people to work. That seems doubtful. The Islamic conception of zakat, transformed into a template for UBI, is intended only to function as a kind of income insurance and is not so generous as to deter the average person from seeking to improve her lot in life in accordance with her God-given abilities. But what it does do—and I believe this is another reason to support UBI—is change the decision set facing individuals who sell their labor in order to survive. UBI gives laborers the choice to work only in jobs that respect their basic dignity. By depriving employers of the right to exploit workers’ desperation, UBI has the potential to transform the workplace radically by forcing employers to structure their workplace in a fashion that takes into account a much broader range of variables than only cash compensation. 

UBI may or may not have a detrimental impact on productivity, but it would almost certainly improve the working conditions of the vast majority of U.S. workers, and that is something I have no doubt Islamic ethics would heartily endorse.

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