Islamic socialism is a term coined by various Muslim leaders to describe a more spiritual form of socialism. Muslim socialists believe that the teachings of the Quran and Muhammad—especially the zakat—are compatible with principles of economic and social equality. They draw inspiration from the early Medinan welfare state established by Muhammad. Muslim socialists found their roots in anti-imperialism. Muslim socialist leaders believe in the derivation of legitimacy from the public.
Abū Dharr al-Ghifārī, a companion of Muhammad, is credited by some scholars, like Muhammad Sharqawi and Sami Ayad Hanna, as a principal antecedent of Islamic socialism. He protested against the accumulation of wealth by the ruling class during Uthman's caliphate and urged the equitable redistribution of wealth. The first Muslim Caliph Abu Bakr introduced a guaranteed minimum standard of income, granting each man, woman and child ten dirhams annually—this was later increased to twenty dirhams.
The first experimental Islamic commune was established during the Russian Revolution of 1917 as part of the Wäisi movement, an early supporter of the Soviet government. The Muslim Socialist Committee of Kazan was also active at this time.
In the modern era, Islamic socialism can be divided into two: a left-wing and a right-wing form. The left wing (Siad Barre, Haji Misbach, Ali Shariati, Yasser Arafat, and Jalal Al-e Ahmad) advocated secular proletarian internationalism and encouraged Muslims to join or collaborate with international socialist or Marxist movements. Right-wing socialists (Mohammed Iqbal, Agus Salim, Jamal ad-Din Asad-Abadi, Musa al-Sadr, and Mahmud Shaltut) are ideologically closer to third positionism, supporting not just social justice, egalitarian society and universal equality, but also Islamic revivalism and implementation of Sharia. They also reject a full adoption of a class struggle and keep a distance from other socialist movements.
Revolutionary activity along the Soviet Union's southern border and Soviet decision makers recognized would draw the attention of capitalist powers and invite them to intervene. It was this understanding which prompted the Russian representation at the Baku Congress in September 1920 to reject the arguments of the national communists as impractical and counterproductive to the revolution in general, without elaborating their fear that the safety of Russia lay in the balance. It was this understanding, coupled with the Russian Bolsheviks' displeasure at seeing another revolutionary center proposed in their own domain revolutionary, that galvanized them into action against the national communists.
Muhammed Nakhshab is credited with the first synthesis between Shi'ism and European socialism. Nakhshab's movement was based on the tenet that Islam and socialism were not incompatible since both sought to accomplish social equality and justice. His theories had been expressed in his B.A. thesis on the laws of ethics. In 1943, Nakhshab founded the Movement of God-Worshipping Socialists, one of six original member organizations of the National Front. The organization was founded through the merger of two groupings, Nakhshab's circle of high school students at Dar al-Fanoun and Jalaleddin Ashtiyani's circle of about 25 students at the Faculty of Engineering at Tehran University. The organization was initially known as League of Patriotic Muslims. It combined religious sentiments, nationalism and socialist thoughts.