Gift Exchange as Commercial Insurance: Reviving the Charitable Endowment in Muslim South Asia

Recent ventures into the economic history of Islam have focused on indigenous economic institutions that were allegedly responsible for ‘retarding’ growth in the Muslim world. One institution that figures prominently in these retrospective discourses is the waqf or charitable endowment. By alienating property from market operations and entrusting it as a gift in the service of God, it is claimed that the waqf put valuable land resources to inefficient charitable purposes. Ethnological history lends further credence to this narrative by demarcating traditional societies founded on gift-exchange from capitalist societies governed by market rationality. This paper challenges growth-centered narratives of economic history focusing on mutations in the legal structure of the family waqf in South Asia—from its abolishment in late colonial India to its resuscitation in contemporary Pakistan.

In pre-colonial Muslim South Asia, donating one’s property as a waqf for the benefit of one’s family was a recognized form of gift-giving. In modern Islamic finance, however, the family waqf has been revived on the model of a commercial insurance corporation. ‘Islamic’ insurance or Takaful substitutes insurance premiums paid to an insurance provider with charitable donations made to an endowment in exchange for financial protection. These donations function as a collective safety net that is used to cover indemnity claims. Unlike privatized gift exchange, however, Takaful mandates reciprocal generosity amongst its members by contractual agreement. The question of Takaful’s religious validity has been the subject of a major discursive battle between Muslim jurists from the Deobandi tradition. Reading through their internal contestations, the paper examines the forms of discursive authorization that lead to a reconfiguration of Islamic practices of gift-giving into a market-based governance of financial obligations. Finally, it challenges an economics-centric view of the waqf as a static institution by showcasing its capacity for legal innovation.