The economic dimension of the waqf
It would be appropriate to briefly emphasize the relevance of the waqf system for the modern Islamic economy. Indeed, economists studying the waqf system might be perplexed by the fact that several essential services such as health, education, municipalities, etc., have been provided to the government at no cost. Therefore, assuming that efficiency problems are solved, the waqf system can make a significant contribution to achieving the ultimate goal of all modern economists: massive reduction of public spending, thus reducing the budget deficit, Which reduces the government’s need for borrowing thus curbing the “crowding-out effect” and leading to a reduction in the interest rate thus limiting a lack of private investment and growth.
From the point of view of the Islamic economy, the most important element in the agenda mentioned above is, obviously, the reduction of the interest rate. Waqf can reduce the interest rate by providing the most essential social services at no cost to the government. This important contribution of the waqf system to the progressive elimination of the ribah  is not yet recognized by Islamic economists. It will be proposed here that it should be. In other words, the restoration and revitalization of the waqf system should be seen as an essential step in the struggle to eliminate the ribah. It can be argued that, since it is prohibited by law, Islam requires an immediate and non-progressive elimination of interest. This is certainly true, but it is utopian. No country has ever managed to eliminate interest abruptly by law. There is evidence that even classical Islam could not quite get rid of interest. In modern times, even the recent Islamization of the banking system has not helped to the extent that the Islamic bank insists on Murabahah rather than Mudarabah or Musharakah, a simple hidden but not eliminated interest. In view of the foregoing, it will be proposed here that the elimination or gradual reduction of interest through the waqf system should be seriously considered.
 The ribah is an Islamic banking concept referring to interest. The religious regulation of Islam forbids it because it is seen as abusive.
 A form of credit that allows the customer to make a purchase without having to incur an interest bearing loan. The bank buys a property and then sells it to the customer for a delay.
 Funding technique used by Islamic banks. It is an investment partnership where the bank plays the role of the investor (Rab el Mal), committing to fully finance the project. In return, the contractor (Moudarib) has to manage the project. Remuneration is based on a pre-allocation key as a percentage of the contractor’s profits. Any losses must be borne by the lender alone. The entrepreneur renounces a variable remuneration for his work.
 This contract works like the mudarabah with the difference that there are several contributors of funds and that the entrepreneur also makes a contribution of capital. Profits and losses are shared in proportion to the contributions of each party.
The waqf could fulfill these functions by voluntary donations made by the good to be done. Thus, private accumulated capital can be voluntarily endowed to finance all kinds of social services. At this stage, another extremely important function of waqf becomes evident: not only does it help to reduce public spending and hence the interest rate but it also achieves another modern economic objective; A better distribution of income in the economy.
Moreover, the waqf definitively solves the problem of the sub-supply of public goods, so often observed in classical economies. This point needs to be detailed. In this context, we must first of all note that the services offered by a large number constitute public goods, whose consumption is non-rivalry and the provision is non-exclusive.
As is well known, standard economic theory predicts that, as rational individuals, consumers of public goods tend to benefit from it free of charge, they fail to contribute to the costs of creating these products. Therefore, under conditions of rational behavior, public goods would tend to be by-products in conventional economies. As far as the Islamic world is concerned, there is much evidence to the contrary that the omnipresence of public goods provided by the waqf leads to an over-supply of public goods rather than to their scarcity. It has been hypothesized here that in an Islamic economy this excess of supply, and not of shortage, may appear to be the fundamental problem. It should be emphasized at this stage that this observation is not limited to the historical dimension but is valid for all times. Indeed, there is no justification for the hypothesis that modern Muslims would be less pious than their ancestors. This is attested by the fact that, given good conditions, modern Muslims would be just as inclined as their ancestors to establish the waqf.
All this has very important ramifications in the present state of the Islamic economy. Nearly all of the most well-known Muslim economists have assigned a crucial role to the state in a future Islamic economy and advocated that the state should redistribute income to the poor, should intervene in markets where necessary, Commodities, and even, according to one economist, massive land reforms.
Recent research in Ottoman economic history has revealed that in the Ottoman Empire, one of the largest Islamic empires, the state has done almost everything that these economists have proposed – with disastrous consequences. The State gave priority to the redistribution of income to the detriment of the accumulation of capital. Harming the markets, taxing excessively, far exceeding zakat, enforcing a ceiling on profits, controlling all factors of production and physical capital, exerting firm control over factor prices, even applying a massive food supply policy For the people, the state ended up deliberately hindering the private sector by encouraging the public sector, thus creating what has been called the “proto-pseudo-socialist Ottoman system.” Not surprisingly, this “proto-pseudo- Socialist “, had the honor of succumbing, before the Soviet Union, to more effective Western capitalism.
Given what has been seen above, it will be proposed here that in an Islamic economy of the future, redistribution of capital should not be allowed to overwhelm the accumulation of capital. Moreover, redistribution must be left to the Muslims themselves. In other words, the redistribution of wealth should be achieved primarily through Zakat and the Waqf system.
Also, most of the debate between the researchers concerned centered on the question: “Is the state allowed to collect taxes, in addition to Zakat? “And how to legitimize these collections. All scholars seem to assume that the state needs additional revenue. The possibility that the Qur’an, by specifically mentioning Zakat, may have conveyed a deliberate message of limiting the size of the state, does not appear to anyone.
This unique (and modest) tax implies modest incomes, which implies, ceteris paribus, a small state. The modernity of the Koran in this period of global efforts to reduce the size of the public sector is indeed striking. The Quran’s message is very clear: in a future ideal Islamic economy, the size of the public sector should be limited to what it collects through Zakat. This also implies that the state will essentially limit itself to defense with all other services financed by the only other instrument mentioned in the Quran: Sadaqa, alms. The importance of the waqf system lies precisely here because it is the very institution that transforms alms into a myriad of services in perpetuity.