The Islāmic View of Economics:
Islām has adopted a path of economics that is balanced and free of this [one’s] excess and that [one’s] neglect. As these expressions ‘economic system’, ‘the power of supply and demand’, and ‘market cycle’ are new, we do not find them in the Noble Qurān nor the Prophetic Sunnah. However, from the lessons of the Qurān, Sunnah, and Fiqh it is [understood] that Islām [distances itself] from designing economic organizations, and instead believes that the organization of economics is something that Allah, Pure is He, has entrusted to certain natural forces. Thus Allah, Pure is He, states: “We distributed their livelihood between them in the life of this world, and elevated some of them above others by degrees so that some might employ others.”8
Allah, Pure is He, has attributed the distribution of livelihood to Himself, Glorious and Exalted is He. This is a proof that economic systems are solely under the control of Allah, Pure is He, and there are some natural forces which [are used to] regulate mankind’s livelihood. We [merely] express these natural forces [with the terms] supply and demand. In fact, Allāh is the One who binds the needs of some human beings with that of others. Thus, the seller is in need of a purchaser, and the purchaser that of a seller, neither one of them being independent of the other. Allāh, Pure is He, alludes to this with His statement: “So that some might employ others.”9
Likewise, we find support for this in the aḥādīth of the Messenger of Allāh (Peace and blessing of Allāh be upon him). It is narrated that Anas (May Allāh be pleased with him) said:
“People said,’O Messenger of Allah, the price has become exorbitant so set a price for us.’ The Messenger of Allah (Peace and blessings of Allāh be upon him) replied, ‘Indeed, Allāh is the one who constricts, expands, and provides sustenance; and I have hopes that I will meet Allāh in such a state that none of you will seek me out due to some oppression [connected] to blood and wealth.’”
Abū Dawūd, Ṭirmidhī, Ibn Mājah, and al-Dāramī have all extracted this ḥadīth in [the chapter] of business, and Ṭirmidhī has deemed it ṣaḥīḥ. Aḥmad has also extracted it in his Musnad10. In al-Ṭalkhiṣ11 Ḥāfidh [ibn Ḥajr] has stated: “Its chain of narrators fulfills the condition of [Imam] Muslim.”
In a narration on the authority of Abū Hurairah in Abū Dawūd’s chapter on setting prices, the following wording being his, [as well as] in the Musnad of Aḥmad12 [it is mentioned]:
“A man came and requested, ‘O Messenger of Allāh, set the price.’ He replied, ‘Rather, make dua [to Allāh to lower the prices].’ Then [another] man came and requested, ‘O Messenger of Allāh, set the price,’ and he replied, ‘Rather, Allāh is the one who lowers and raises; and I have hope that I will meet Allāh in such a state that none will have [a case against me].’”
The chain of narrators for this is ḥasan, as has been mentioned in Ḥafidh [Ibn Ḥajr’s] al-Ṭalkhīṣ13.
In a narration on the authority of Abū Saᶜīd al-Khudrī (May Allāh be pleased with him): “During the time of the Messenger of Allāh (Peace and blessings of Allāh be upon him) price[s] became exorbitant so they begged him, ‘If only you would fix our prices for us.’ He replied, ‘Indeed, Allāh is the One who arranges or the One who sets prices. Verily, I hope to separate from you all without anyone amongst you seeking me out due to some wrong with respect to wealth or [their] person.’”
Aḥmad has extracted it in his Musnad14 and its chain is ḥasan as Ḥāfidh has stated in al-Ṭalkhīṣ15.
In the narration related by al-Asbagh ibn Nabāṭah on the authority of ‘Alī (May Allāh be pleased with him): “Someone requested, ‘O Messenger of Allah, set a price for us.’ He responded, ‘The high level of prices and its inexpensiveness is in the hand of Allah. I want to meet my Lord without anyone searching for me due to some wrong I have done them.’”
al-Baẓẓār extracted it in his Musnad.16 al-Asbagh ibn Nabāṭah has been deemed thiqah by al-ᶜIjlī, but other a’immah [pl. of imām] have considered him weak.17 However, his ḥadīth has been corroborated by the previous ones.
In these aḥādīth the Messenger of Allāh (peace and blessings be upon him) has attributed the setting of prices to Allāh, Pure is He.
This is a proof that regulating the prices is not through governmental planning; it is something solely under the control of Allāh. It seems that what is meant by Allah fixing prices is that He is the one who creates this self-regulating natural system by means of which prices are set.
The ḥadīth indicates that Islām acknowledges a market which is regulated by the forces of supply and demand; that interference in the market opposes the natural course of these established principles by means of which Allāh has caused life to [revolve]; and that every interference of this type is considered oppression by Islām regardless of it coming from the government or merchants conducting business in the market.
This is also proven by another ḥadīth that is narrated by Jābir (May Allāh be pleased with him):
“The Messenger of Allāh (Peace and blessings of Allāh be upon him) said, ‘A city dweller should not trade on behalf of those living in the desert. Leave the people [ in such a state that] Allāh, Most High, is providing the sustenance of some people by means of others (i.e. He sustains the seller by means of the buyer, and the buyer by means of the seller).’”
Thus, it is impermissible for anyone to interfere in this divine system by arbitrarily fixing prices. This ḥadīth indicates that the structure of the market is an organic one which it is impermissible to [tamper with].
So, the first ḥadīth (i.e. the ḥadīth of setting prices) prohibits government interference, and the second (i.e. the ḥadīth of Jābir) prohibits individuals from interfering in the market in ways that will alter its natural composition. Thus, both [kinds of interference] are forbidden.
It appears that Islām only wants the market to move in an organic manner without the manifestation of such things that will impede it.
Nonetheless, this organic movement is not possible if we leave the wealthy free to do whatever they wish. This absolute freedom will give rise to monopolies that will corrupt the structure of the market, as we mentioned. [This natural movement] is only possible when the traders are restricted by boundaries and conditions.
Islām has placed these boundaries and conditions so that the freedom of an individual will not harm the precious and valuable freedom of the market and society, as has occurred in capitalism. It makes the individual subordinate to laws that safeguard the freedom of the market and society.
Among these laws are the prohibition of interest, gambling, and speculation. All of these methods lead to the stockpiling of wealth in the hands of the rich alone. History bears witness that the tyranny of capitalism has only arisen by these means, since they gain control of massive amounts of wealth through it and rule the market by paralyzing its natural forces.
Another law is the prohibition of monopolies, traders going out to meet incoming goods and purchasing them before they reach the market, city dwellers selling on behalf of desert dwellers, and all other types of corrupt and invalid business transactions, since they incline towards the disfigurement of the market’s structure, paralyze the forces of supply and demand, and [allow] a specific group to control prices.
Baẓẓār, Aḥmad, Abū Ya’lā, and Tabrānī have extracted [a narration related from] Ibn ‘Umar [in which] the Prophet (May peace and blessings of Allāh be upon him) [is reported to have] said, “Whoever hoards food, then, indeed, [they] are free of Allāh and Allāh is free of them.” He [also] said, “Any people of [a house] amongst whom a Muslim lives [in such a state that they are] starving (i.e. hungry) then the protection of Allāh is lifted from them.”18
The prohibition of economic collusion by businessmen is another law. This collusion also places the arrangement of prices in the hands of oligopolies and upsets the natural order. The fuqahā clearly state that businessmen will not be left to enter into partnerships amongst themselves so that they can control prices. See the chapter of division in al-Hidāyah.
Whenever these [individuals] control prices it will be permissible for the Islāmic government to intervene in the market by fixing prices until it returns to its original [state]. [This is] mentioned by the fuqahā in their books.
Other laws are that of ẓakāh, charity, udhiyah, the expiations, maintenance [of those in ones responsibility], and inheritance. [By means of the aforementioned] excess riches are directed away from the rich towards the destitute in society. This is how the door of stockpiling and monopoly are blocked in Islām, while the doors of spending are opened. Its wisdom has been indicated to in the Noble Qurān when it states, “So that wealth does not exist solely amongst the rich.”19
In general, Islām respects the freedom of the individual up to a certain limit, however it gives preference to the freedom of society. It wants the natural force of supply and demand to be operative. It wants to make the market free to follow its natural course, and [stands as] an obstacle in the way of monopolies which place the reins of the market in the hands of a special class and cancel the effectiveness of supply and demand. For this reason, it has enacted laws such as the prohibition of various commercial activities and permitted the Islāmic government to intervene in the market whenever it sees monopolies appearing.
It is possible to encapsulate the Islāmic view of economics [in the following manner]: It does not make the freedom to earn absolute as we find in capitalism, and only allows three types interventions in economic activities:
1- Dīnī intervention: It is not permissible for anyone earning [a living] to acquire wealth in an illegal manner (i.e. interest, gambling, speculation, and all other business and commercial activities which are corrupt or invalid).
2- Government intervention: Islām does not allow the government to interfere in the market when it is flowing naturally as was already mentioned in the ḥadīth concerning fixing prices. However, if someone wants to take control and dominate the market, it is permissible for the government to interfere at that time. This is established in the fiqh and is due to the narration of Maᶜqal ibn Yasār [reporting] from the Prophet (May peace and blessings of Allāh be upon him) who said, “Whoever interferes in the prices of the Muslims so that [they] make it exorbitant, Allāh [ will definitely] throw [them] in the main part of Hell[…]” [This] has been extracted by Ḥākim, Baihaqī, Tabrānī, Aḥmad, and others.20
Once, ‘Umar (May Allāh be pleased with him) commanded Ḥātib ibn Abī Balṭa’ah to raise his price and told him, “Either you raise the price or you will be removed from our market.” Mālik, ‘Abd ibn Ḥumaid, and Baihaqi have extracted it.21
This proves the permissibility of governmental interference when it sees something corrupting the market’s proper arrangement.
3- Moral interference: Moral laws in Islām are not separate from economics. Consequently, earning as much profit and wealth as one can is not the basic goal of the human being as we have stated previously, and therefore Islām cultivates in the souls of the Muslims [the notion] that they should have good social dealings with others; should prefer others above themselves even if they are destitute; and [inculcates in them a spirit of] competition in spending, not in acquiring profit and riches. Laws of this kind are abundant in the Qurān and Sunnah, but this is not the place to explore them.
[In conclusion], whenever Islām establishes all of its laws and teachings none of the evil traits of capitalism will remain in society. There will be no need for the system of socialism or communism, and the economy will tread its path in a balanced manner free of oppression, cruelty, and egotism. And Allāh, Pure is He, is the one who gives ṭawfīq.
Translator’s Note: Readers of the original text in Ṭakmilah Faṭḥ al-Mulhim will notice that Mufṭī Muhammad Ṭaqī Uthmani (May Allāh preserve him) referenced the āyāṭ and aḥādīth that he quoted. I have changed the Qurānic references that were inside of brackets in the original to footnotes. In the case of the āḥādīth and quotations from Ṭalkhīs which where in brackets, I searched for those in the books I had available to me and included their references in the footnotes with a ‘T’ before it since, in many cases, they differ from the ones provided by Mufṭī due to printing and editorial differences. If errors are found kindly mention them so they may be corrected.
References:
[1] Sūrah Qaṣaṣ, Āyah: 77
[2] Sūrah al-Nūr, Āyah: 33
[3] Sūrah al-Wāqiyah, Āyah: 64
[4] Sūrah Yāsīn, Āyah: 71
[5] Sūrah Qaṣaṣ, Āyah: 77
[6] Sūrah Hūd, Āyah: 87
[7] Sūrah al-Nūr, Āyah: 33
[8] Sūrah al-Ẓukhraf, Āyah: 32
[9] Sūrah al-Ẓukhraf, Āyah: 32
[10] [T]: Musnad al-Imām al-Ḥāfidh Abī ᶜAbdullāh Aḥmad ibn Ḥanbal. Bait al-Afkār al-Dowlah. Page: 888, #:12619 & Page: 984, #14103
[11] [T]: Ṭalkhīṣ al-Ḥabīr Fī Ṭakhrīj Aḥādīth al-Rafᶜ al-Kabīr. Muassas Qurtbah. 1st Edition. 3:31, #:1160
[12] [T]: Musnad al-Imām al-Ḥāfidh Abī ᶜAbdullāh Aḥmad ibn Ḥanbal. Bait al-Afkār al-Dowlah. Page: 624, #:8429 & Page:649, #8839
[13] [T]: Ṭalkhīṣ al-Ḥabīr Fī Ṭakhrīj Aḥādīth al-Rafᶜ al-Kabīr. Muassas Qurtbah. 1st Edition. 3:31, #:1160
[14] [T]: Musnad al-Imām al-Ḥāfidh Abī ᶜAbdullāh Aḥmad ibn Ḥanbal. Bait al-Afkār al-Dowlah. Page: 836, #:11829
[15] [T]: Ṭalkhīṣ al-Ḥabīr Fī Ṭakhrīj Aḥādīth al-Rafᶜ al-Kabīr. Muassas Qurtbah. 1st Edition. 3:31, #:1160
[16] [T]: Kashf al-Asṭār ‘An Ẓawāid al-Baẓẓār ᶜAlā al-Kuṭub al-Siṭṭah. Muassas al-Risālah. 1st Edition. 2:85, #: 1263
[17] [T]: Baghyah al-Rāid Fī Ṭaḥqīq Majmaᶜ al-Ẓawāid Wa Manba’ al-Fawāid. Dār al-Fikr. 4:179, #:6470
[18] [T]: Kashf al-Asṭār. Muassas al-Risālah. 1st Edition. 2:106, #:1311; Baghyah al-Rāid. Dār al-Fikr. 4:180, #:6476
[19] Sūrah al-Ḥashr, Āyah: 7
[20] [T]: Kanẓ al-ᶜUmmāl Fī Sunan al-Afᶜāl wa al-Aqwāl. Muassas al-Risālah. 5th Edition. 4:101, #9737
[21] [T]: Kanẓ al-ᶜUmmāl. Muassas al-Risālah. 5th Edition. 4:183, #10075
