The Provision of Public Goods Under Islamic Law: Origins, Contributions, and Limitations of the Waqf System

Abstract:     
The Islamic waqf appears to have emerged as a credible commitment device to give property owners economic security in return for social services. Throughout the Middle East, it long served as a major instrument for delivering public goods in a decentralized manner. In principle, the manager of a waqf had to obey the stipulations of its founder to the letter. In practice, the founder's directives were often circumvented. An unintended consequence was an erosion of the waqf system's legitimacy. In any case, legally questionable adaptations proved no substitute for the legitimate options available to corporations. As it became increasingly clear that the waqf system lacked the flexibility necessary for efficient resource utilization, governments found it ever easier to confiscate their resources. In the nineteenth century, the founding of European-inspired municipalities marked a formal repudiation of the waqf system in favor of government-coordinated systems for delivering public goods.

Working Paper Series