Mohammad Hadi.

“THE ROLE OF THE STATE IN ISLAMIC ECONOMICS LAW IN THE LIGHT OF ABBAS
MIRAKHOR'S THOUGHTS.” Jurnal Hukum dan Kenotariatan Vol 7 Issue 1 (2023): 2655-7789 DOI:
10.33474/hukeno.v7i1.19626

Jurnal HUKUM dan KENOTARIATAN

Volume 10 Issue 1, 2024
P-ISSN: 2549-3361, E-ISSN: 2655-7789
This work is licensed under a Creative Commons Attribution 4.0 International License

THE ROLE OF THE STATE IN ISLAMIC ECONOMICS LAW IN THE

LIGHT OF ABBAS MIRAKHOR'S THOUGHTS
Mohammad Hadi1

1
Master of Notarial Universitas Islam Malang
Email : [email protected]

Abstract:Islamic economics is a progressive and dynamic economy. Various new theories have been raised as an
offer for the development of Islamic economics law, one of which is done by Abbas Mirakhor. This article
discusses role of the state to the main principles of the Islamic economics system. To find out more about the
Islamic economic thought offered by Abbas Mirakhor, from the main principles of the economic system to the
role of the state in the economy. This article uses a qualitative type of research using literature research. The
results of this study show that Abbas is a reputable practitioner of Islamic economics and finance in the world,
both Islamic and Western, and is highly respected in the Islamic world. Mirakhor is considered a reformer in
Islamic economics law, and is part of the Iqtishad school. In the field of Islamic economic system, Mirakhor
argues that the main principle of Islamic economic system requires distribution in two mechanisms, namely
freedom, and justice, without which prosperity will not be achieved. Therefore, there is a need for a
hermeneutical approach to answer various problems that occur in the Islamic economic system. In the context of
the state, according to Mirakhor, the state has a very significant role in the welfare of society, especially through
productive policies. The state must also be present in realising justice in society. There is a need for a
hermeneutical approach to answer various problems that occur in the Islamic economic system. In the context of
the state, according to Mirakhor, the state has a significant role in the welfare of society, especially in productive
policies. The state plays a very significant role in the welfare of society, especially through its productive policies.
The state must also be present in realising justice in society. There is a need for A hermeneutical approach to
answer various problems that occur in the Islamic economic law. In the context of the state, according to
Mirakhor, the state has a very significant role in the welfare of society, especially through productive policies.
The state must also be present in realising justice in society.
Keywords: Abbas Mirakhor, Islamic Economics Law, Role of the State

1. INTRODUCTION
1.1.Background
Islamic economics is one of the world's economic systems. Its existence is
parallel to other world economies such as capitalist and socialist economies. Although
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there are many fundamental differences in them. With its maslahah and falah
orientation, Islamic economics is at the forefront in offering various economic
concepts that are non-discriminatory, harmful and exploitative. At this point, Islamic
economics is ahead of and more advanced than the two existing economic systems.
Since its inception, Islamic economics law has been widely doubted, even
considered unfounded and not based on scientific facts and methodologies, especially
among Western scientists and economists. They do not believe in the ability of Islamic
economics to answer various problems that arise in the economic field. Therefore, it is
not surprising that the contributions of economic thought are ignored by Western
scientists and economists, especially in the world's economic textbooks.
But when viewed from a historical aspect, Islamic economics has been
discussed and practised in everyday life. Even since the time of the Prophet
Muhammad and his companions. However, the development of Islamic economics
stalled, due to the dichotomy between religion and science that was born due to
dogmatisation that occurred in the dark ages.) In addition, the strong dominance of
capitalist and socialist economics as a means of socialising the economy. the politics of
Imperialism and Colonialism contributed to the neglect and marginalisation of the
Islamic economy (Aravik, 2017).
Islamic economics began to be a serious study in the 1930s with the birth of
progressive and dynamic Islamic economic thought that was able to answer various
fundamental problems in the economic field. One of the important figures in the field
of economic studies is Abbas Mirakhor, who offers many concepts of Islamic
economics ranging from the main principles of the Islamic economic system to the role
of the state in realising people's welfare.
2. Method
This research method was compiled using empirical juridical research types.
Empirical juridical research is a problem approach regarding matters that are juridical
in nature and the existing facts regarding matters that are juridical in nature.
Empirical juridical research of knowledge is based on facts obtained from the results
of research and observation. The type of approach applied in this writing is using the
fact approach. The fact approach is an approach used to examine facts in the field
that occur and are related to the legal issues under study.
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3. Main Heading Of The First Analysis Or Discussion

A. Biography of Abbas Mirakhor
Mirakhor is a reputable practitioner of Islamic economics and finance in the
world, both Islamic and Western, even considered as one of the world's Islamic
economic reformers, who is credible and consistent in building the scientific
discourse of Islamic economics. With the Qur'an and As-Sunnah and fiqh sources as
his analytical tools. Markhor formulated the concept of an ideal Islamic economy.
From there, Mirakhor found that Islam as a religion of rahmatan lil alamin, never
separated between the profane and the sacred. With Tawhid as the foundation of
economic and financial activities, Mirakhor believes that Islamic economics is the
solution to many contemporary economic problems.
Born in Iran. Earned his Master's degree and Ph.D. degree in economics at
Kansas State University in the United States. In 1968, Mirakhor started his academic
career at the University of Alabama, USA. In 1984, he joined the IMF in Washington
DC as an economist. He spent 24 years with the IMF, serving as the organisation's
Executive Director and Dean of the Executive Board, stepping down in 2008. From
2010 to present he is associated with INCEIF (International Centre for Education in
Islamic Finance Malaysia).
Mirakhor is one of the important figures of the Iqtishaduna school pioneered
by Muhammad Baqir Al-Sadr, the author of Iqtishaduna. This school argues that
studying economics should be seen from two aspects, namely the philosophy of
economics or normative economics and positive economics. An example of positive
economics is studying the theory of consumption and demand which is a common
phenomenon and can be accepted by anyone without being influenced by ideology.
Meanwhile, from the aspect of economic philosophy which is the result of human
thought, it will be found that each group of people has a different ideology,
perspective. For example, regarding the discussion of 'justice'.
According to the concept of classical capitalism, what is meant by "fair" is that
you get what you deserve, meaning "you get what you have worked for". Meanwhile,
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classical socialism translates the meaning of "fair" as no one has the privilege of
getting more than the other, meaning that no one has the facility to get more than
the other, in other words that everyone gets equality. However, Islam has its own
meaning of 'fair', which is laatadhlimuuna wa laa tudhlamuuna which means not
judging each other (Aravik, 2017).
So according to the Iqtishaduna School of thought, there is a difference in
principle between economics and Islamic ideology so that there will be no meeting
point between Islam and economics. So economics cannot work in harmony with
Islam. Economics remains economics, and Islam remains Islam. These two things
cannot be reconciled because they come from different understandings and
philosophies. One is not Muslim (do not believe in God) and one is Muslim (God).
This difference in understanding and philosophy will have an impact on the different
perspectives used in looking at an economic problem, including the analytical tools
used.
In addition, this school argues that problems in the economy arise because of
unequal and unfair distribution as a result of an economic system that justifies the
exploitation of a group of weak parties by a group of strong parties, where the strong
will be able to control existing resources while on the other hand, the weak do not
have access to these resources. So that economic problems arise not because of
limited resources, but because of unlimited human greed. In addition, in Islam it has
been affirmed that Allah SWT has created the creatures in this world including
humans with sufficient economic resources as affirmed in His word "And He has
created everything and He determined its size as neatly as possible" (QS. al- Furqan
[25]: 2). Thus, Allah Swt. has created everything that can be measured perfectly. This
means that Allah Swt. has provided sufficient resources for humans. So in this case
the concept of scarcity cannot be accepted (Aravik, 2020).
This school also rejects the notion that human needs are unlimited. Because,
in certain needs such as eating and drinking when the stomach is full, then he is
satisfied because his needs have been fulfilled. So the conclusion is that human
needs are unlimited as explained in the concept of the law of diminishing marginal
utility that the more goods consumed, at some point will cause additional
satisfaction from each additional amount of goods consumed will decrease. With the
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various problems above, the term Islamic economics according to this madzhab is an
inappropriate and misleading term, so the term Islamic economics must be stopped
and eliminated. Instead, to explain the economic system with Islamic principles,
offered a new term derived from Islamic philosophy, namely Iqtisad. Iqtishad
according to this school is not just a translation of economics. Iqtishad comes from
the Arabic qasd which means a state of balance or equal, balanced or between. All
conventional economic theories are rejected and discarded, and replaced by new
theories based on the texts of the Qur'an and Sunnah. Therefore, compiling and
reconstructing economics separate from the Qur'an and Sunnah is a must (Aravik,
2017).
B. ABBAS MIRAKHOR ECONOMIC THOUGHT
Abbas Mirakhor is one of the important figures in the Iqtishad school outside
Baqir al- Sadr, Ali Shariati, and Kadim As-Sadr. As of 2017, Abbas Mirakhor has written
19 books, 17 journals, and 7 papers. Thoughts on Islamic economics law can be found
in his works such as Introduction to Islamic Economics: Theory and Applications
(2014), Risk Sharing in Finance: An Alternative to Islamic Finance (2011), Introduction
to Islamic Finance: Theory and Practice (2011), Islamic Financial Stability: Creating a
Resilient Financial Environment for a Secure Future (2010), Globalisation & Islamic
Finance: Convergence, Prospects & Challenges (2009), New Issues in Islamic Finance
and Economics: Progress and Challenges (2009), Introduction to Islamic Finance:
Theory and Practice (2006), Theoretical Studies in Islamic Banking and Finance
(2005), and Theoretical Studies in Islamic Banking and Finance (1988). Here are some
of Abbas Mirakhor's economic thoughts that have greatly contributed to the thinking
and development of global Islamic economics and finance:
1. Key Principles of Islamic Economics Law
The Islamic economic system is a collection of institutions, i.e. formal and
informal codes of conduct and their enforcement features, designed by the shahibut
tasyri' i.e. Allah Swt. Through various regulations described in the Qur'an,
operationalised by the Sunnah of Prophet Muhammad and extended tonew
situations by ijtihad, to deal with the allocation of limited resources, production,
exchange of goods and services, and distribution of income and wealth (Iqbal, Zamir;
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Mirakhor, 2011). Islamic economic system requires that in terms of distribution it
must be based on two aspects, namely freedom, and justice. Freedom here is
freedom framed by values-values of tawhid and justice, in contrast to the capitalist
understanding which states as an act of freeing humans to act and act without
interference from any party, balance between individuals and society as well as
between individuals an society one community with another community (Zakiyah,
2017).
To provide a comprehensive understanding of the Islamic economic system,
Mirakhor suggests that the approach in Islamic economic studies also uses a
hermeneutical approach. This approach is different from interpretation because the
hermeneutical nature is the process of extracting economic meaning from first-order
interpretations. With this approach, it is estimated that Islamic economics law in the
future will be rich with economic theories that are truly based on the Quran and
Sunnah (Mirakhor, 2007). So as to achieve the purpose of Islam as a religion of
rahatan lil alamin (QS. Al-Baqarah [2]: 107), where it fosters every Muslim to live a
good life (QS. Al-Nahl [16]: 97) and live prosperously (QS. al-Hajj [22]: 77), providing
convenience and poverty alleviation (QS. al- Baqarah [2]: 185), creating shared
prosperity (QS. al-A'Ra'd [13]: 28) (Borhan & Sa'ari, 2002).
Methodologically, Islam has provided general guidelines and principles so that
economic activities run along humanitarian corridors (Haneef, 2005).
Epistemologically, Islam does not separate economics from the value system. Islamic
teachings are a category of moral imperatives to control human economic behaviour
(Wilber, 2003). The main principles of the Islamic economic law are as follows:
a) Property rights
The first basic principle of ownership in Islam states that Allah alone is the true
owner of the original owner. In order for man to materially fulfil his duties and
obligations, he is given the right to own. Hence, the second principle of
ownership establishes collective rights over the resources that a person owns. A
person can acquire ownership rights over property through his creative work,
and/or by transfer by exchange, contract, loan, or inheritance.
b) Ownership obligations
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The individual's responsibility for ownership is the responsibility of sharing the

income and not wasting, destroying, squandering, or using these goods for
purposes that are not allowed by sharia. If the individual has discharged hi
obligation to share, in the manner and amount prescribed by sharia, and has not
violated the rules of sharia, then the property rights of the individual are
inviolable and no one has the right to forcibly demand (or expropriate) that
person's property for others (Iqbal, Zamir; Mirakhor, 2011).
c) Contract
The concept of contract in Islam is not only important in the legal aspect of
exchange, as a necessary institution for the legitimate fulfilment of human
needs, but also as an underlying concept of sharia. A Muslim is constantly
reminded of the importance of contractual agreements, and the believer must
honour the agreement them with their Lord. One of the reasons why the Islamic
system of muamalah (transactions) is so clearly based on the principle of firm
contracts and is also based on the rights and obligations of each party to the
contract.
d) Confidence
Islam emphasises trustworthiness as an obligatory trait for everyone. The root
of the word faith is the same as the root of the word trust. Fulfilling the terms of
contracts and always keeping promises with other members of society is a
concept based on the obligation to be faithful to the original and primordial
covenant between man and Allah SWT. (QS. Al-A'raf [7]: 172), keeping promises
and trustworthiness are characteristics of believers (QS. Al-Mu'minun [23]: 1-8),
the command to keep promises for believers and there is accountability in the
hereafter (QS. Saba [34]: 17), and trustworthiness as the main characteristic of
prophets and messengers (QS. Ash-Shura [42]: 107, 125, 143, 162, 178, and
193) and treason will be cursed (QS. Saba [34]: 17). Al- Anfal [8]: 58, Yusuf [12]:
52) (Iqbal, Zamir; Mirakhor, 2011).
e) individual obligations
The obligations, rights and restrictions set by sharia must be adhered to if an
individual or system is to have an Islamic identity. Individuals have been
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guaranteed their natural rights, including the right of individuals to pursue their
economic interests. This potential right remains even if the individual is unable
to actualise it. Conversely, if the person is capable but does not fulfil his
obligations, then the right is also nullified. In the context of self-interest, sharia
justifies individual self-interest, provided that self-interest is in line with
spiritual, temporal and eternal interests.
f) Work
Work is often referred to asal-Amal and al-fi'il. The Qur'an upholds work and
places it on the level of worship, and considers it an integral dimension of faith
On the contrary, laziness or spending time on unproductive and useless work is
considered a sign of lack of faith and a trait of a person who has no faith. who
do not believe. Since Islam does not teach class distinction, any type of work
that does not contradict sharia is not a lowly job (Iqbal, Zamir; Mirakhor, 2011).
g) Wealth
Islam views wealth as the lifeblood of a society which must be proceed to
rotate. Hence, the practice of hoarding wealth is prohibited. The implication is
that wealth can be legitimately invested to improve welfare. The expenditure of
wealth is an obligation governed by sharia. Once the obligation is fulfilled, the
remaining wealth belongs to the owner but must be utilised according to the
provisions of sharia. In addition, Islam regulates wealth to minimise conflict
between the rich and the poor, through equitable distribution of wealth
(Rahman, 2017).
h) Grace
An important factor in the Islamic incentive system is the concept of blessings
which serves as a material inducement for individuals to follow justified
behaviour. The concept of blessing states that righteous behaviour, i.e.
behaviour that is approved by Allah SWT, will be rewarded manifold. The better
the behaviour, the greater the presence of blessings. This concept emphasises
that a person who spends his wealth for the sake of Allah, will not cause his
wealth to decrease but instead increase. This kind of action will result in many
rewards for the doer. This concept creates a positive correlation between
behaviour and system welfare (Iqbal, Zamir; Mirakhor, 2011).
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i) Risk Sharing
This is based on the principle of liability, which states that profits are justified
based on the responsibility taken by a person, and it is even possible that each
party is also responsible for losses and consequences that may arise. Tenth,
competition and co-operation. The Islamic economic system does not make
humans only a tool in achieving economic or state goals. Islam seeks to guide
people towards direct and responsible individual action and participation in
economic matters using solidarity and co-operation which will result in
economic dynamics and growth.
Therefore, Islam uses cooperation and competition in organising an ideal
society through harmonisation and reconciliation between two opposing camps. The
Qur'an and As-Sunnah clearly state the nature of competition and co-operation, i.e.
humans can co-operate and compete for good and bad. The Qur'an and Sunnah
emphasise that competition and cooperation should be used in piety and
righteousness, not evil (QS. Al-Baqarah [2]: 5) (Iqbal, Zamir; Mirakhor, 2011).
The paradigm of the Islamic economic law challenges conventional economic
thinking in several areas, including a). Justice and equality are the most important
priorities of Islam and its teachings in the field of economics. The idea of justice and
equality from production to distribution is rooted in the system. Social justice in Islam
implies efforts to create and provide equal opportunities and remove various
obstacles to equality for every member of society. b) The Islamic paradigm includes a
framework ofspiritual and moral which emphasises the value of human relationships
over material possessions. c) the Islamic system creates a balanced relationship
between the individual and society. individual self-interest and wealth are not
prohibited but are regulated for the betterment of the greater collectivity. d)
individual. The pursuit of maximum profit in enterprise and maximum satisfaction in
consumption are not the sole objectives of society and wasteful consumption is
discouraged. e) The recognition and protection of the property rights of all members
of society is the basis of a shareholder-oriented society, protecting the rights of all
people, and reminding them of their responsibilities (Iqbal, Zamir; Mirakhor, 2011).
2. Economic Justice
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Allah SWT. has created and designed His creation including the universe and its
natur, as well as humans in equal proportions. If there is a deviation from this
balance, then theentire system of being can collapse or not function properly,
including in economic activities carried out by humans (Adnan Abd Rasyid & Arifin
Mamat, 2013). Islam states that justice is a universal goal to be achieved in perfect
balance (Zakiyah, 2017). Meanwhile, the main goal of Muslims is the creation of
economic justice, which is part of a just, healthy and moral society. Islam expects the
creation of energetic human beings, a directed, prosperous, and equitable economy
in which each member of society gets the rewards to which he is entitled.
Components of justice the economy in Islamic society is: freedom and equal
opportunity for all members of society to utilise theavailable, abundant, and
unlimited natural resources (Baqir al-Hasani Abbas Mirakhor, 1998).
a. Freedom means that people are not restricted by other people to combine thei
creative work with resources designed to be utilised by individual members of
society following the rules of sharia. Opportunity is a meaningful situation that
allows individuals to try everything. The success or failure ofone's endeavours
depends on one's andabilities. Equality of opportunity must be maintained
collectively. Equality of access to resources and equality of opportunity in Islam is
based on theview that the resources natureare not created by man but given by
Allah Swt. to all members of society, and therefore, the freedom and
opportunityto use these should bedistributed equally to all people (Iqbal, Zamir;
Mirakhor, 2011).
Since Islam recognises that individual are rational actors, in Islam the main causes
poverty are viewed differently. Scarcity is not considered important in explaining
poverty in Islam. The main cause of poverty is injustice created by corruption,
maldistribution of wealth and opinions, and the wastefulness that accompanies it
(Aska)
b. fairness in transactions. Islam conceptualises that market-based rules of conduct
include regulating the sources of supply and demand for sharia-compliant
facts and products before they enter the market, sharia-based rules of conduct
for buyers and sellers, and the price bidding process, whichis free from various
factors prohibited by sharia. The rules relating to supply and demand do not only
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regulate the permissibility of supply and demand products to be requested and

bid on, but also investigate in depth this phenomenon. Not all requests for
products are considered legitimate, and not all acts of supplying products to the
market are permitted . Rules of behaviour for individuals in the market are
designed to ensure fair transactions. Behaviours such as fraud, manipulation,
practices monopoly, coalition, sellers and buyers, selling products at substandard
prices, dumping, hoarding, and bidding without the intent to buy, are prohibited.
Any form of behaviour that leads to ownership rights without going through the
correct working process is prohibited (Iqbal, Zamir; Mirakhor, 2011).
Distributive justice is the mechanism by which freedom and equality are
reconciled without violating each other. Islam views that poverty and inequality
are not caused by scarcity or shortage of resources, or by unsynchronised modes
of production and distribution, but rather by waste, extravagance, extravagance,
and neglect of payments that are belongs to the community. Islam does not
hesitate to assume that all individuals are connected to a certain standard of
living; thus fulfilling the rights of the poor is a matter of equality and justice, not a
matter of mere generosity (Iqbal, Zamir; Mirakhor, 2011).
4. Main Heading Of The Second Analysis Or Discussion
1. The Concept of Riba and Gharar in Islam Law
The term usury is closely related to muamalah activities (Sofhian, 2015). The
term riba refers to excess, addiction, and excess, and the verbs associated with this
word mean, to add, multiply, exaggerate, take more than is due, opractice the
lending of money at high interest. By focusing on usury on financial transactions,
according to Shariah, it technically refers to the premium that borrowers have to pay
to those who lend along with the principal amount of the debt as a condition for
borrowing or extending the term of the loan (Iqbal, Zamir; Mirakhor, 2011).
In Arabic, usury is used in the sense of adding, expanding, fattening, fattening
and having fun, and so on (Ahmed, 2013). Usury in English is called usury which
means taking excessive interest on borrowed money, so it tends to lead to
exploitation or extortion (Umam, 2018). While interest is an additional amount
paid/received from the principal amount according to the agreement with the
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attached time period (A. Ahmad & Humayoun, 2011). Thus usury or interest is in
principle the same.
Islam strictly prohibits usury (QS al-Rum [30]: 39, an-Nisa' [4]: 160-161, Al-
Baqarah [2]: 278-279) (AUF Ahmad & Hassan, 2014) because Islam opposes any form
of exploitation and supports an economic system to secure economic justice. Even
dealing with usury-based transactions means declaring war with Allah Swt. and His
Messenger (QS. Al-Baqarah [2]: 279) (A. Ahmad & Humayoun, 2011). For this reason,
Islam condemns all forms of exploitation, especially injustice, where the lender is
guaranteed a positive return without considering the risks with the borrower, or in
other words, the borrower bears all kinds of risks. With the consideration that the
property owned by an individual is a trust from Allah SWT, as is the life of the
individual. For a person, the trust of wealth is sacred. So if the property is taken
inappropriately, there is an injustice that tarnishes human sanctity (Iqbal, Zamir;
Mirakhor, 2011).
The term usury is closely related to muamalah activities (Sofhian, 2015). The
term riba refers to excess, addiction, and excess, and the verbs associated with this
word mean, to add, multiply, exaggerate, take more than is due, opractice the lending
of money at high interest. By focusing on usury on financial transactions, according to
Shariah, it technically refers to the premium that borrowers have to pay to those who
lend along with the principal amount of the debt as a condition for borrowing or
extending the term of the loan (Iqbal, Zamir; Mirakhor, 2011).
In Arabic, usury is used in the sense of adding, expanding, fattening, fattening
and having fun, and so on (Ahmed, 2013). Usury in English is called usury which
means taking excessive interest on borrowed money, so it tends to lead to
exploitation or extortion (Umam, 2018). While interest is an additional amount
paid/received from the principal amount according to the agreement with the
attached time period (A. Ahmad & Humayoun, 2011). Thus usury or interest is in
principle the same.
Islam strictly prohibits usury (QS al-Rum [30]: 39, an-Nisa' [4]: 160-161, Al-
Baqarah [2]: 278-279) (AUF Ahmad & Hassan, 2014) because Islam opposes any form
of exploitation and supports an economic system to secure economic justice. Even
dealing with usury-based transactions means declaring war with Allah Swt. and His
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Messenger (QS. Al-Baqarah [2]: 279) (A. Ahmad & Humayoun, 2011). For this reason,
Islam condemns all forms of exploitation, especially injustice, where the lender is
guaranteed a positive return without considering the risks with the borrower, or in
other words, the borrower bears all kinds of risks. With the consideration that the
property owned by an individual is a trust from Allah SWT, as is the life of the
individual.
For a person, the trust of wealth is sacred. So if the property is taken
inappropriately, there is an injustice that tarnishes human sanctity (Iqbal, Zamir;
Mirakhor, 2011). acquisition of another's property by improper means (Surat Al-
Baqarah [2]: 188, An-Nisa [4]: 29, An-Nisa [4]: 161 and At- Taubah [9]: 34). Interest
aan investable resource is inefficient as it is allocated not according to productivity
but according to the creditworthiness of the borrower. So the concept of usury is
more than just a prohibition of charging interest, it is also prohibited from making
more than what is given (Rahman, 2017).
In modern times, by the mid-1980s, economic and financial theory had shown
that there were flaws in interest-based banking contracts. Among them:
a. These contracts or agreements create inefficient defaults on financial
liabilities or assets.
b. Due to asymmetric information, money agreements contain moral hazard
effects and adverse selection effects.
c. Fixed fee agreements create a fundamental conflict between the interests
of lenders and borrowers.
d. Social sectors with low profitability will not be financed, new
entrepreneurs with good projects may not be financed receive funds
because it does not have the necessary securities (Iqbal, Zamir; Mirakhor,
2011).
So interest has become the dominant economic feature of western
civilisation, whereas Islamic civilisation in its heyday functioned on the basis of
profit-sharing and trade credit. The rejection of interest is an important step
towards the economic revival of Muslims (Rahman, 2017). Many Muslim scholars
claim that Islam's prohibition against usury has two dimensions; the first
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dimension is to present business and commercial contracts with an equal share of
risk, and the second, to regard the act of lending as an act of benevolence on the
grounds of helping someone in need. If someone needs capital for commercial
purposes, it should be provided on a risk-sharing basis and if someone needs
funds to cover a short-term need, that need should not be exploited and the
borrower should not be burdened with onerous conditions.
Sharia regards borrowers as duty-free contracts, encourages Muslims to offer
Loans (qard al hasan), and condemns wealth accumulation for the sake of wealth
accumulation. Giving a loan without usury is considered a generous act worthy of
blessings; on the other hand, lending money with usury has very long consequences
(QS. Al- Hadid [57]: 11 and al- Taghaabun [64]: 17). Even Surah al-Rum [30]: 39 offers
an interesting proposition that charity including interest-free lending is more valuable
in the eyes of Allah, compared to wealth through usur (interest).
According to an existing tradition, the Prophet said; Riba is beautiful but the
result is scarcity and quarrels. On another occasion, the Prophet said: boasting with
usury brings destruction to a people (HR Imam Ahmad) (Iqbal & Mirakhor, 2012).
From these various verses, the Qur'an has clear instructions regarding business and
trade activities because income from trade (Bai) is a legal activity but based on
interest (Riba) is illegal. Banking activities are part of economic activities and Islam
only allows usury-free banking (A. Ahmad & Humayoun, 2011).
As an alternative to the interest system in the conventional economy, the Islamic
economy offers a profit-sharing system when the owner of capital (surplus spending
unit) cooperates with the entrepreneur (deficit spending unit) to conduct business
activities. if the business activity generates profits, the profits are shared and if the
business activity suffers losses, the losses are also shared. This profit-sharing system
can take the form of mudharabah or musyarakah with various variations (Budiantoro
et al., 2018). Meanwhile, gharar is the most important element in financial contracts.
In simple terms, gharar comes from problems related to information and refers to the
uncertainty created by the lack of information and knowledge about the outcome of
the contract or the nature and quality of the subject matter or the lack of control in
the contract (Uddin, 2015). Gharar is considered to be the neglect of important
elements in a transaction, such as the exact selling price or the willingness of the
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seller to provide what is being sold, and so on. The presence of gharar in a contract
makes the contract null and void (Iqbal, Zamir; Mirakhor, 2011).
Gharar is defined as a situation where one party to a contract has no
information about the terms of the contract held by the other party, and/or the
terms of the contract are something that cannot be controlled by either party. For
example, the sale of birds or fish that have not yet been caught, calves that are still
in their mother's stomach, and animals that have escaped and not yet been
caught, and so on. All these cases involve the sale of items whose existence is
possible. Another example is when the subject of the sale is not owned by any of
the parties and there is uncertainty of its future ownership (Iqbal, Zamir; Mirakhor
2011). The prohibition of gharar refers to surah al- Baqarah [2]: 188, an-Nisa [4]:
29, al-Baqarah [2]: 219 and al-Maidah [5]: 93) (Uddin, 2015).
Gharar is any uncertainty in the quantity, quality, returnability, or existence of
the goods that are the subject of the contract, all of which are contrary to sharia
(Aravik, 2020). By viewing gharar as excessive uncertainty, one can negotiate
gharar with an element of risk. The prohibition of gharar will force the parties to
avoid uninformed contracts, and this prohibition will make the transacting parties
more responsible and accountable. However, being gharar as a risk has a
consequence, which is the prohibition of trading in gharar. The prohibition of
gharar trading is considered a risk prohibition or prohibition of derivative
instruments in today's financial markets, which are designed to transfer risk from
one party to another. One of the implications of the prohibition of gharar is the
prohibition of pure speculation and gambling activities, which contain asymmetric
information, excessive uncertainty, extreme risk, and lack of control (Iqbal, Zamir;
Mirakhor, 2011). In conventional insurance, it is uncertain, thus making
conventional insurance feasible from the perspective of Islamic law (Uddin, 2015).
2. The Role of the State in Islamic Economics Law
Islam views economic relationships and behaviour as a way to integrate
society into a higher level of reality. To this end, one is required to see his economic
achievements as a means, not an end. All rules of behaviour relating to economic
matters are addressed to individuals and groups. These groups are organised in a
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form of government, represented by the state. The state is regarded as the basic
institution that must exist to organise social life, create material and spiritual well-
being, and maintain and spread faith (Iqbal, Zamir; Mirakhor, 2011).
With the basic function as stated by Ibn Khaldun, which makes everyone
follow sharia in their lives (Mulyana, 2017). The state must be present in the form of
running an ideal justice system as an implementation of duties and responsibilities in
the way of Allah, without discriminating even against itself and its people (Adnan Abd
Rashid & Arifin Mamat, 2013). Because the state is the party authorised to lay the
foundations of regulations that support and protec economic growth and activity
(Hidayatullah, 2015). Meanwhile, the ultimate goal of a well-established state is to
provide benefits to all its people without exception.
Maslahah must beable to deliver all members of society to the welfare of
the world and the hereafter (Mahtum, 2019). The most important role of the state
is closely related to Islamic political economy (Zakiyah, 2017). In addition, the role
of the state is a derivation of the concept of khilafah and the consequent
collective obligation (fardhu al-kifayah) to realise falah. The state is the holder of
the mandate of Allah and His Messenger and the mandate of the community to
carry out the collective task of creating prosperity and (al adl wah ihsan) for all
people. In general, the role of the state will be related to realising an Islamic
market concept and realising the overall objectives of Islamic economics
(Sulistyowati, 2017).
According to Abbas Mirakhor, the role of the state in Islamic economics
law is: first, to ensure that all people have equal access to natural resources and
means of earning a living. Second, to ensure that every individual has equal
opportunities to obtain education, skills, and technology as well as the
opportunity to utilise all these resources. Third, to ensure that the market is
properly monitored so that fairness in exchange can be achieved. Like the
Prophet's habit, he often inspected the market to check prices and market
mechanisms so that there were no actions that were contrary to sharia values.
Fourth, ensuring the transfer of wealth from the rich to the poor following sharia
rules. Fifth, ensuring equitable distribution of the next generation through the
application of inheritance rules.
 Jurnal Hukum dan Kenotariatan 10(1): 1-20

To maximise this role, the state is given the right to design certain
economic policies to achieve all these objectives. To finance the expenditures
necessary to carry out its duties, the state through sharia regulations is
authorised to control, use and manage some natural resources, such as mining.
Shariah also allows the state to levy taxes if there is a gap between revenue
from resources and government expenditure. It is even permissible for the state
to go into debt, as long as it does not involve interest and there is an emergency
arena (Iqbal, Zamir; Mirakhor, 2011).
Thus, the state has the highest authority and role to eliminate inequality
and disparity in society caused by various unhealthy economic practices such as
hoarding, monopoly, oligopoly, and fraud. As expected by Ibn Khaldun, the role
of the state as a facilitator of development and human welfare (Zakiyah, 2017).
Therefore, weak state intervention in the liberal-capitalist economy has brought
several negative accesses and consequences. Starting from unequal income
levels, increasing poverty, and widening social gaps. This happens, the market
that works optimally makes competition inevitable, entrepreneurs with large
capital overpower and displace small entrepreneurs. Capital and wealth only
revolve around a few people.
In contrast, in a socialist system, inequality, poverty and income
distribution can be addressed. However, as competition is prohibited, the drive
for achievement and productivity improvement tends to be absent. As a result,
this system fails to foster significant economic growth. So in the perspective of
Islamic economics law, the role of the state should contribute to ensuring the
creation of conditions that support the economic mechanism of activities to run
fairly, and encourage the birth of morality adorned with the attitude of honesty,
openness, and justice to produce healthy competition, not as a liberal-capitalist
or socialist-communist concept.
5. Conclusion.
From the above discussion of the issues raised, it can be concluded that
Abbas Mirakhor is one of the important figures in Islamic economics law, including
a reformer in Islamic economics law and a follower of the Iqtishad School. Abbas
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Mirakhor's offer in Islamic economics law is seen in the use of the hermeneutic
approach as a solution in research and comprehensive studies of the Islamic
economic system.
In the context of the role of the state, Mirakhor demands that the state be
present in the form of implementing an ideal justice system. Because the role of
the state is closely related to Islamic political economy. Therefore, the state must
ensure that all people have equal access to natural resources and earn a living, the
state must ensure that every individual has equality in all respects, the state must
ensure a market that is free from manipulation and control, and ensure that all
people have equal access to natural resources transfer of wealth from th rich to.
6. Acknowledgments
Thanks to God Almighty, I also express my infinite gratitude to all those who have
helped, contributed, provided encouragement and prayed, especially the Notary
Masters Study Program, Faculty of Law, Islamic University of Malang.

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