In Public Expenditure in an Islamic State, Dr. Muhammed Nejatullah Siddiqi provides a detailed overview of the functions of an Islamic state.
Broadly speaking, an Islamic state has three types of functions: those assigned by the Shari'a on a permanent basis, those derived from the Shari'a to respond to current circumstances, and those assigned to it by the people through consultation.
Siddiqi lists eight permanent functions:
i) Defence ii) Law and Order ii) Justice iv) Need fulfilment v) Da'wah i.e., communicating the message of Allah to mankind. vi) Enjoining right conduct and forbidding wrong (al-amr bi al-maruf wa al-nahy an al-munkar). vii) Civil administration. viii) Fulfilment of such socially obligatory duties (furud kifayah) as the private sector fails to fulfil.He goes on to explain each of these in more detail. For instance he defines "need fulfillment" as providing food, water, clothing, shelter, education and transport. Siddiqi identifies six functions that are necessary in the current circumstances:
i) Protection of the environment. ii) Supply of necessary public goods other than those included in the first list. iii) Scientific research. iv) Capital formation and economic development. v) Subsidies for priority private activities. vi) Expenditure necessitated by stabilization policies.After explaining his reasoning for each of these items, he goes on to look at historical precedents to support his views. He sets out a theory of public expenditure based on the above. He looks at how the people can be encouraged to save and to work if they are receiving public funds. Finally, he looks at the limits on public expenditure, and what the priorities are if not all needs can be met.