{"id":4037,"date":"2015-09-13T21:04:44","date_gmt":"2015-09-14T01:04:44","guid":{"rendered":"https:\/\/www.fiqhulislam.com\/?p=4037"},"modified":"2015-09-13T21:04:44","modified_gmt":"2015-09-14T01:04:44","slug":"modern-economic-systems-islamic-economics","status":"publish","type":"post","link":"https:\/\/www.fiqhulislam.com\/?p=4037","title":{"rendered":"Isl\u0101m & Modern Economic Theories"},"content":{"rendered":"

\u00a0A Translation of Justice Muf\u1e6d\u012b \u1e6caq\u012b Uthm\u0101n\u012b\u2019s\u00a0<\/span>Prolegomena to Ki\u1e6d\u0101b al-Buy\u016b<\/em><\/strong><\/span>\u00b8<\/sup><\/span> in \u1e6cakmilah Fa\u1e6d\u1e25 al-Mulhim
\n<\/em><\/span><\/strong>
\nMajority of the authors in the [field of] fiqh<\/em> and \u1e25ad\u012bth<\/em> will normally mention business after marriage and divorce. The reason for this is that they would start with acts that are purely forms of worship, so they would mention \u1e63al\u0101h<\/em>, \u1e93ak\u0101h<\/em>, and \u1e25ajj<\/em>, then move on to those acts which are a mixture of worship and social dealings (e.g. marriage). Thereafter they would mention those laws connected to it such as divorce or li<\/em><\/span>\u1d9c<\/sup><\/span><\/em>\u0101n<\/em>, and similar acts like manumission. Afterwards they would mention acts that are purely social, and [of those] they would start with business since it is the most prevalent social dealing and the one with the greatest benefit.<\/span><\/p>\n

Now, in the chapter of business we move to a massive topic (i.e. the chapter of social dealings) amongst the various topics of the religion. Before we delve into [this topic] it is necessary that we succinctly explain some of the economic principles laid out by the shari\u1d9c<\/sup><\/span><\/em>ah<\/em> that are the foundation of [the Economic Teachings of Isl\u0101m], because negligence in this regard sometimes leads to enormous conceptual errors, especially in our time which has made livelihood and economics its biggest worry, the extent of its knowledge, and the end of all its aspirations. [Things have reached to such a level] that the issue of economics has become a violent debate and field of battle between the contemporary theories of capitalism and socialism.<\/span>
\n1-The Topic\u00a0of Economics in Isl\u0101m:<\/span>
\nBefore delving into the problem of livelihood and economics it is essential to note a subtle point that distinguishes [the Economic Teachings of Isl\u0101m] from other forms of economic theory. Even though Isl\u0101m opposes monasticism\u2019s abandonment of worldly associations and dislike for involvement in seeking a living, and considers humanities activities in the economic domain to be permissible, and even laudable or incumbent at times, it does not view economics as the primary problem of humanity, just as it does not consider economic advancement to be the purpose of human existence.<\/span><\/p>\n

From here the massive difference between [the Economic Teachings of Isl\u0101m] and materialistic economics will become clear. Materialistic economics considers livelihood to be the main objective of humanity, and believes affluence and luxury to be the goal and basic aim pursued by all of humanity\u2019s activities in this world, there being no objective for [a human being] beyond providing a luxurious life for oneself or others.<\/span><\/p>\n

Conversely, [the Economic Teachings of Isl\u0101m], on the one hand, acknowledge that seeking and earning a living are things that a human being is dependent on but, on the other hand, it does not give free rein by making livelihood the greatest worry, extent of knowledge, or acme of ones aspirations. This is why we see that the Noble Qur\u0101n criticizes monasticism, orders [humanity] to seek the bounty of All\u0101h and designates trade as \u2018seeking All\u0101h\u2019s bounty\u2019; wealth as \u2018goodness\u2019<\/span>; food as \u2018the pure things of sustenance\u2019<\/span>; clothing as \u2018the adornment of All\u0101h\u2019<\/span>; and [one\u2019s] dwelling as \u2018abode\u2019<\/span>. Nonetheless, it also designates this worldly life as \u2018chattels of deception\u2019<\/span> and in many verses criticizes the world.<\/span>
\nThis is not a contradiction nor an inconsistency. The secret behind this is that the Qur\u0101n views\u00a0the means of livelihood as a conveyance which the human being utilizes to traverse their path and reach to their destination that they are aspiring to. [That destination being] those excellent characteristics that facilitate [acquiring] the pleasure of All\u0101h and eternal bliss in the Hereafter.
\nWithout a doubt, the real problem for humanity and their ultimate aspiration is being freed up [so that they can] achieve that prosperity. In view of the fact that one cannot succeed without passing down\u00a0the difficult paths of the world, it is essential to acquire everything one needs [to live in this world].
\nAs long as the means of livelihood occupy the place of a bridge that is used to move to one\u2019s true lodging it will be synonymous with \u2018the bounty of All\u0101h\u2019, \u2018goodness\u2019, \u2018the adornment of All\u0101h\u2019, and \u2018abode\u2019. However, when the human being loses their path, becomes captivated by the adornment of this life, falls prey to dreams and illusions, takes the means as an end, and forgets their ultimate goal then these means become \u2018chattels of deception\u2019, a \u2018temptation\u2019, and \u2019enemy\u2019<\/span>\u00a0like the Qur\u0101n mentioned.
\n<\/span><\/p>\n

All\u0101h, Pure is He, has clearly mentioned this in His statement: \u201cAnd seek the abode of the Hereafter with that which All\u0101h has given you, and do not forget your portion of the world.\u201d<\/span>1<\/sup><\/a><\/p>\n

2-The Reality of Wealth and Ownership<\/span>
\nThe second basic matter that carries grave importance in [the Economic Teachings of Isl\u0101m] is that wealth, whatever form it may take, is solely a creation of Allah and belongs to Him. That which the human being possesses is a gift from All\u0101h, who, Pure is He, states: \u201cAnd give them from All\u0101h\u2019s wealth which He has bestowed on you all.\u201d<\/span>2<\/sup><\/a>
\nThe Noble Qur\u0101n has indicated the underlying logic in another place. Namely, in the production of anything, the human being is not capable of doing more than exerting their efforts to remove obstacles. The result of their efforts and the creation of effects is only possible by All\u0101h\u2019s command, since the only thing within the capacity of a human being is the scattering of seeds, and the removal of rocks and other obstructions. Causing the seed to grow and transforming it from a sapling to a tree is only possible by the power of All\u0101h, Pure is He.
\n<\/span><\/p>\n

All\u0101h, Pure and Exalted is He, says: \u201cHave you not looked at that which you cultivate? Are you the one who causes it to grow, or are We the one who causes it to grow?\u201d<\/span>3<\/sup><\/a>, and, \u201cDidn\u2019t they see that We created for them, with Our hands, cattle; then they became its owners<\/span>.\u201d4<\/sup><\/a><\/p>\n

These verses cast light upon the foundational issue concerning the reality of wealth and its possession, which is that wealth, no matter its form, is only possessed by All\u0101h, Pure and exalted is He, and He is the one who provides the human being with it. In view of the fact that wealth is the [sole] property of All\u0101h, humanity is only granted possession by specific modes which the Isl\u0101mic Shari\u2019ah has instituted, and keeping in mind that All\u0101h, Pure is He, is the One who grants human beings the right of utilizing it, it is essential that humanity should submit to the laws of All\u0101h concerning its usage.
\nConsequently, even though humans have ownership of things and utilize them, they do not possess absolute freedom in its disposal and usage rather they must submit to All\u0101h\u2019s ruling and order, stopping by His boundaries and following His regulations. Thus, they mustn’t spend except on those things All\u0101h has commanded [to be spent on] and should refrain from that which He has prohibited.
\nAll\u0101h, Pure is He, has clarified this with His statement: \u201cAnd seek the abode of the Hereafter with that which All\u0101h has given you, and do not forget your portion of the world; be kind just as All\u0101h has been kind to you, and do not seek corruption in the earth.\u201d5<\/sup><\/a><\/p>\n

This verse explains the philosophy of ownership in Isl\u0101m, and the following laws can be summarized from it:<\/span><\/p>\n

1)<\/span> All of the wealth which is with a human being is only a gift from All\u0101h.<\/span>
\n2)<\/span> It is essential that a human being should not forget their objective (i.e. the Hereafter) while utilizing [their wealth].<\/span>
\n3)<\/span> Bearing in mind the fact that wealth is something which All\u0101h grants, it should be utilized in accordance with the commands of All\u0101h which fall into two categories:<\/span>
\nI:<\/span> All\u0101h has commanded them to give their wealth to others. It is w\u0101jib<\/em> to comply with this command because All\u0101h magnanimously granted them ownership of His wealth so He has a right to order [human\u2019s] to be kind to others.<\/span>
\nII:<\/span> He has prohibited them from [unlimited] disposal of that wealth. That is, He has not given them permission to utilize wealth in certain ways due to it being a means of\u00a0 <\/span>corrupting the social setting or the earth.<\/span>
\nThese are the distinctive features of ownership in Isl\u0101m that distinguish it from capitalism and socialism.
\nIt is well known that the basis of capitalism is founded on materialism for all practical intents and purposes. It believes that human beings are autocrats with their money and wealth, having no other power sharing in [its] disposal and utilization, and that they have every right to do whatever they wish with it. The Noble Qur\u0101n has criticized this mentality when it makes reference to the [statement of] Shu\u1d9caib\u2019s [Peace be upon him] people to him: \u201cDoes your prayer tell you that we should abandon that which our forefathers worshiped or that we shouldn\u2019t dispose of our wealth as we wish.\u201d6<\/sup><\/a>
\nSince they believed that the wealth was truly their property without there existing One who provided it for them, they used the statement \u2018our wealth\u2019; and by their declaration \u2018we dispose of our wealth as we wish\u2019 they claimed absolute disposal and dominion, which is the definitive consequence of this mentality.
\nThis notion which the people of our master, Shu\u1d9caib (Peace be upon him), displayed is, in reality, the fundamental spirit of capitalism. The Qur\u0101n has demolished this capitalist notion by substituting the mentality which attributes wealth to the human being for the mentality proclaiming that wealth belongs to All\u0101h, which is why it followed up with His statement: \u201c\u2026which He gave you all,\u201d7<\/a>\u00a0<\/sup>thus, [also] striking at the very roots of socialism which rejects individual ownership and does not acknowledge it at all.<\/p>\n

To make things easy for us, we will now distinguish Isl\u0101m from capitalism and socialism, and specify the distinctions of each of the three:<\/span><\/p>\n

Capitalism makes individual ownership free of every restriction and boundary.
\nSocialism rejects individual ownership (concerning the means of production at the very least) and does not affirm it at all.
\nIsl\u0101m acknowledges individual ownership but does not turn it loose, unrestrained by restrictions and boundaries, nor does it slacken its reins so that it becomes a source of corruption in the land.
\nA Basic Comparison between the Modern System of Economics and Isl\u0101m:<\/span>
\n<\/span>After introducing these two positions we need to clarify the essential difference between Isl\u0101m and modern economic theories, and explain the basic principles of this system [i.e. modern economics], as well as the extent of its errors according to Isl\u0101m.<\/span>
\nBear in mind that the basic issues which every economic system must solve, which economists [express by the] terms \u2018preference\u2019, \u2018resource exploitation\u2019, ‘distribution of wealth\u2019, and \u2018economic prosperity\u2019.
\nBy preference is meant the sequencing of desired products commensurate with the necessities of human society and the degree of their need [for that particular product]. Every country possesses lands for agriculture that is suitable for various types of crops, and a certain amount of natural resources which can be exploited [to provide] a variety of products.
\nThus, each country must favor certain products over others in accordance with its own necessities and needs for a particular product so that it uses its land and factories [to acquire] the requisite crops and products. For example, one country may be capable of producing wheat and rice, as well as coffee and tobacco, so it has to consider the sequencing of these things, giving preference to some over others in accordance with its needs [in a way] that will bring the greatest benefit to society.
\nBy resource exploitation they intend the division of resources to produce desired items in suitable amounts. When a country wants luxuries it must utilize these resources in a manner conducive to the dictates of its preferences, and distribute its resources [so that] it will produce various products in a manner that will be the most beneficial and will accrue the greatest profit for society.<\/p>\n

Therefore they must specify how much land is suitable for use to produce wheat. How much is fit to be used for cultivating rice. How much for sugar cane. How many factories are necessary to support the manufacture of clothing? How many for the production of sugar, and how many for [various] utensils, etc. It is necessary that this should be in accordance with societal needs and those preferences which they have decided on so that they do not waste resources producing things that are not needed.<\/span><\/p>\n

By distribution of wealth they mean that after exploiting natural resources, when we acquire [a certain] amount of material riches how should we divide those riches among the citizens, and what is the yardstick for distribution amongst them.
\nAs for economic prosperity, what is meant is that every society needs its production to be devoid of limits, rather it must continue increasing until it is able to invent new items and advantageous methodologies in every field of industry.\u00a0 <\/span>Hence, it is essential that a self sustaining system exist in every country that will incite progress and encourage innovation.
\nThese are the four components of every economic system. Modern theories differ concerning the methodology of solving these problems. Presently, we will speak about these four issues with respect to [specific] economic systems.
\n
\nThe Capitalist Theory:<\/span>
\nCapitalism claims,\u201cThe only way of [establishing an] economic system is by giving every single individual in society total freedom to earn a living, so that they might exert their efforts to acquire as much profit and wealth as possible. When we do this those four problems will naturally solve themselves, and an economic system will automatically come into form.\u201d<\/span>
\nTo elaborate, in accordance with what the capitalist\u2019s have determined, there are two natural forces upon which an economic system is founded: supply and demand. Supply is the merchant carrying his product to the market to be sold, and demand is the purchaser coming to the market to buy it. One of the well known economic rules is that whenever supply outstrips demand the price drops and whenever supply falls short of demand the price raises.
\nNow, if there are a thousand clothes of one kind in the market, for example, and you can only find seven hundred buyers, then of course the price of the cloth will lower because the supply is enormous and the demand is scarce. However, if the consumers are more than a thousand the price of the cloth will naturally raise due to the demand being more than the supply.
\nThus, whenever a human being is given complete freedom to earn a living only that which is most in demand will be supplied to the market so that they will achieve the maximum [amount of] profit, because if they supply the market with such goods, the need and demand for which is scarce, it will not be possible for them to sell it at a high price and consequently their profit will dwindle. This is why every person is compelled to produce things that society needs and to refrain [from providing] that which they have no need of. [All of this] is due to the natural force of supply and demand.<\/p>\n

The capitalists claim that these two forces regulate all economic activities, and solve the issue of preference and resource exploitation. So, when an issue of preference arises, for example, a man who has complete freedom to acquire as much profit as possible will only give preference to producing those things that are in high demand and the need for which is excessive. When it comes to the issue of resource exploitation this individual will only exploit his resources to produce that which has the greatest profit, [which is dictated by overwhelming demand, which in turn is dictated by the needs of society].<\/span><\/p>\n

If, for instance, more shoes than demanded are manufactured its price will drop, and may even drop below the cost of production. When such a state is reached some of the manufacturers will halt production due to which supply will dwindle and the price will begin to rise. If a large number of manufacturers suspend production the price may raise to such an exorbitant level that it compels some manufacturers outside of this industry to enter into a second field. This type of experience will continue until a period of balance is achieved where the supply of shoes in the market is only to the extent of demand, which is what is desired.<\/span>
\n[With respect] to the issue of the distribution of wealth, the twin forces of supply and demand also regulate this distribution, according to the capitalists. That is, only elements of production such as: land, money, labor, and investment deserve wealth, because land can be leased, money can acquire interest, labor deserves wages, and a profitable investment merits financial gain.
\nThe rate of leasing, interest, wages, and profit are only fixed by the forces of supply and demand. If the demand for land is more than its supply the rent will increase, but when the demand lessens the rent will [also] decrease. Likewise if the demand for money is more than its supply the amount of interest will raise, and when things are the other way around the amount will drop. Analogous conclusions are drawn from this for labor as well, thus if the demand for labor, by which we mean the demand for wages, is more than the number or employees present wages will increase, and if it decreases the wages will drop.
\nThis is how the forces of supply and demand regulate the distribution of wealth.
\nIn the case of economic prosperity, it is solved in this way that when every human being is free to achieve as much profit and wealth as possible, they will make all out effort to invent new items and tools so that the desire for [these things] will increase and its price will raise. [In this manner] the objective of economic prosperity will be achieved.
\nThis is the basic philosophy of capitalism. If you wish to summarize the principles of this philosophy it will become clear that it is founded on the following basis:
\n1-<\/span> Freedom to own property:<\/strong><\/span> That is, individuals own all commercial articles and commodities whether they be that of production or consumption free of any obligation or coercion.
\n<\/span><\/p>\n

2-<\/span> Economic freedom: <\/strong><\/span>Thus people establish their own laws and benefit from their wealth without state interference. The market, then, is the factor which regulates and rules. Competition between the forces of production and its components on one side and consumers trying to acquire commodities which they want on the other is, apparently, the distinguishing factor of free economics, which at the present time is responsible for structuring the market and fulfilling the needs of human society.<\/span><\/p>\n

3-<\/span> Freedom [to earn] profit:<\/strong><\/span> In capitalism, profit is the just reward of the employer and entrepreneur in the face of their efforts and planning, hence it is impossible to restrict this freedom by the government. Due to this, capitalism deems the system of cost and the twin forces of supply and demand to be like sovereign agents who direct the economic activities automatically, there being, therefore, no need for government intrusion.<\/span>
\nThe Theory of Socialism:
\n<\/span><\/span>Socialism has taken the opposite stance, claiming, \u201cIt is unbefitting to entrust the economic structure to the forces of supply and demand which possess no intellect nor discernment. They are blind forces, through which we will only achieve a period of balance after economic crises and abundant harm. These two forces do not have in their hands an electronic button which will stop production or begin it anew when it is pressed. Indeed, changing the manner of production is such an activity that will take a long time, during which resources will be wasted in things that are not needed.
\nTherefore, if we want to arrange the economy in a manner consistent with society, we must not allow any single individual to be in control of the means of production. these should only be in the hands of the state which will use economic planning to establish the needs of society and the extent to which those needs exist, then it will regulate the means of production to stop up those [areas] of need.\u201d
\nAll activities of production will, then, be in accordance with this plan. The state will be the one to decide preference. It, [alone], will regulate resources and fix the wages of workers, because when all the resources are controlled by the government the only [thing] that remains with the people is their effort.
\n[Thus] they are given wages\u00a0commensurate<\/span> with their efforts, and there is no need for profit, interest, and leasing. Wealth is distributed among the people in the form of wages. Profit, interest, and leasing are unlawful according to the philosophy of socialism since the price of a commodity, in their eyes, is solely that of labor. As for the excess which sellers and employers in capitalist markets seek beyond the value of labor in the form of profit, interest, or leases, they term this \u2018surplus value\u2019 and it is utter oppression according to them.<\/p>\n

Criticism of Socialism from the Standpoint of Isl\u0101m:
\n<\/span><\/span>At the outset of its cogitation socialism has erred. Social issues like these are not solved by the planning of governments, and entrusting them to government plans is outside the realm of human nature. The choice of an individual in any field of economics is something which is attached to his natural affinity and connection, which, if we placed it under the sway of governments, would become artificial and foreign to his natural disposition and character.<\/p>\n

[This is similar to how] we see in every country large numbers of young men and women between whom marriage occurs in accordance with their natural suitability and the connection some have with others. At times we see that this automatic arrangement of marriages causes disputes between [these youth]. However, no sane person would imagine that [the means of] blocking these disputes would be planning by the government, so that the government specifies that so-and-so young man should only marry so-and-so young women, [and vice-versa]. If the government did that it would be alien to the natural disposition of humanity. This system only operates on the basis of appropriateness and affection [in which] there is no room for the government nor outside planning.
\nThe organization of economics, essentially, should be conducted in a similar manner, and shouldn\u2019t be subordinate to outside planning because that would be the cause of a great deal of corruption:
\nFirstly:<\/span> That would necessitate that all means of production should be in the hands of [a] government which is not made up of angels, nor [even] infallible humans. It is merely a small group of people who have the same sympathies, desires, and goals which are found in other humans. Thus, if this small group wanted to use those abundant resources to pursue its own desires and stopped considering what was best for the people massive corruption would appear in the land.<\/span>
\nSecondly<\/span>:<\/span> This [type of] planning, no matter how minute and innovative its procedures and methods, will never be able to ensure [that] the actual needs of human society [are met]. [Those] needs change day by day, and planning will only occur once or twice a year, therefore, how will this planning guarantee the fulfillment of those needs which pop up during the remainder of the year? Knowledge of these fluctuating needs and acting in accordance with them will also require a large [quantum of] time, thus the very objection socialism has with capitalism rebounds [on itself].<\/span>
\nThirdly:<\/span> This type of regulated planning cannot, and will not be able to, progress without the most extreme governmental coercion since it may entail an individual imposing unpleasantness on the individual, and forcing him [or her] to perform a service which they are not suited to. Due to this, a battle between the interests of the individual and that of the plan will arise.<\/span><\/p>\n

The Criticism of Capitalism:<\/span>
\nEven though it is correct in its fundamental principle, its has erred in its application of that principle. This foundational principle is that the economic system does not exist by means of planning, rather it is only due to the natural forces of supply and demand. This is something innate which we do not reject, however the application of this principle by giving the individual absolute freedom to acquire as much profit or wealth as they can without conditions or restrictions, while [simultaneously] ignoring the fact that this freedom is ultimately [under the] limitations of supply and demand, has led to the perversion of the natural order which they affirm as their basic principle.<\/span><\/p>\n

To elaborate, if every individual is completely free to acquire as much profit and wealth as they can, [it will be] permissible for them [to engage in] interest, gambling, monopolizing [commodities], speculation, and every methodology leading to the most profit. Thus, it will be possible for the rich to control the market and the prices [therein]. Consequently, there will be no price except the one these wealthy individuals consent to, nor any wage for the workers, save the one they fix, because they will be the monarchs and arbitrators of the market on the basis of their riches and will render the forces of supply and demand a semi-paralyzed [mess].
\nThese two forces only operate in a free market where the merchants compete with utter freedom, the consumer having a choice between purchasing these goods or those. When a single individual or corporation dominates the market the consumer can [not avoid him\/her\/it], and [they] will arbitrarily [fix] prices in such a manner that will cause the forces of supply and demand to be superfluous.
\nThat will only occur due to absolute freedom, the flag of which, capitalism proudly raises. In this sort of free [environment] a person may earn tremendous [amounts] of wealth by whatever [means] they wish, whether it be interest, gambling, monopolizing, or speculation, and on the basis of these massive riches they will acquire enormous factories and workshops through which [they] will seize the market.
\n[Furthermore] they will not allow any of the smaller merchants to reach [their level], and if anyone else does they will make a business agreement with them so that the businessmen of a particular product will only have one voice. [That being the case] no [power] will remain for the buyer and consumer to use demand as a tool to [influence] prices. So where is the free market in the capitalist system? Where is supply and demand? In the capitalist theory, these have become mere words consigned to the pages with no practical effects being seen or heard.
\nHence, it is clear that capitalism has actually applied its foundational principle in such a manner that annihilates this very principle, and makes supply and demand so paralyzed and weak that it only has a small sphere of influence. This causes the following problems:
\nFirstly:<\/span> A modicum of humans will become the sovereigns in the circulating wealth. This small quantity of people will not remain restricted to their [own] locality, they will move to become a worldwide force whose stocks will flow from foreign banks and international corporations. By means of these corporations and the monetary power which they possess, this minority will interfere in the administration of the state, just as they have assumed authority over the various media resources and supported their financial tyranny by affecting intellectual trends and promoting the interests of capitalism.<\/span>
\nSecondly:<\/span> Individual freedom in this system has become a right of the employers alone, and the poor can do nothing but humbly submit to the laws of these employers.<\/span>
\nThirdly:<\/span> Production in this system is not directed towards the greater good of society, but rather it is solely directed towards that which will acquire massive profit. Therefore, if great profit existed in building theaters and ballrooms preference in the utilization of resources would be given to that, irrespective of whether some indispensable needs were neglected [as a result].
\n<\/span>
\n <\/p>\n

The Isl\u0101mic View of Economics:<\/span>
\nIsl\u0101m has adopted a path of economics that is balanced and free of this [one\u2019s] excess and that [one\u2019s] neglect. As these expressions \u2018economic system\u2019, \u2018the power of supply and demand\u2019, and \u2018market cycle\u2019 are new, we do not find them in the Noble Qur\u0101n nor the Prophetic Sunnah. However, from the lessons of the Qur\u0101n, Sunnah<\/em>, and Fiqh<\/em> it is [understood] that Isl\u0101m [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: \u201cWe 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.\u201d<\/span>8<\/sup><\/a><\/p>\n

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\u2019s livelihood. We [merely] express these natural forces [with the terms] supply and demand. In fact, All\u0101h 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. All\u0101h, Pure is He, alludes to this with His statement: \u201cSo that some might employ others.\u201d9<\/sup><\/a>
\nLikewise, we find support for this in the a\u1e25\u0101d\u012bth<\/em> of the Messenger of All\u0101h (Peace and blessing of All\u0101h be upon him). It is narrated that Anas (May All\u0101h be pleased with him) said:
\n\u201cPeople said,\u2019O Messenger of Allah,\u00a0 <\/span>the price has become exorbitant so set a price for us.\u2019 The Messenger of Allah (Peace and blessings of All\u0101h be upon him) replied, \u2018Indeed, All\u0101h is the one who constricts, expands, and provides sustenance; and I have hopes that I will meet All\u0101h in such a state that none of you will seek me out due to some oppression [connected] to blood and wealth.\u2019\u201d
\nAb\u016b Daw\u016bd, \u1e6cirmidh\u012b, Ibn M\u0101jah, and al-D\u0101ram\u012b have all extracted this \u1e25ad\u012bth in [the chapter] of business, and \u1e6cirmidh\u012b has deemed it \u1e63a\u1e25\u012b\u1e25<\/em>. A\u1e25mad has also extracted it in his Musnad10<\/sup><\/a>. In al-\u1e6calkhi\u1e63<\/em>11<\/a>\u00a0<\/sup>\u1e24\u0101fidh [ibn \u1e24ajr] has stated: \u201cIts chain of narrators fulfills the condition of [Imam] Muslim.\u201d
\nIn a narration on the authority of Ab\u016b Hurairah in Ab\u016b Daw\u016bd\u2019s chapter on setting prices, the following wording being his, [as well as] in the Musnad<\/em> of A\u1e25mad12<\/a>\u00a0<\/sup>[it is mentioned]:
\n\u201cA man came and requested, \u2018O Messenger of All\u0101h, set the price.\u2019 He replied, \u2018Rather,\u00a0 <\/span>make dua [to All\u0101h to lower the prices].\u2019 Then [another] man came and requested, \u2018O Messenger of All\u0101h, set the price,\u2019 and he replied, \u2018Rather, All\u0101h is the one who lowers and raises; and I have hope that I will meet All\u0101h in such a state that none will have [a case against me].\u2019\u201d
\nThe chain of narrators for this is \u1e25asan<\/em>, as has been mentioned in \u1e24afidh [Ibn \u1e24ajr\u2019s] al-\u1e6calkh\u012b\u1e63<\/em>13<\/a><\/sup>.<\/span>
\nIn a narration on the authority of Ab\u016b Sa\u1d9c\u012bd al-Khudr\u012b (May All\u0101h be pleased with him): \u201cDuring the time of the Messenger of All\u0101h (Peace and blessings of All\u0101h be upon him) price[s] became exorbitant so they begged him, \u2018If only you would fix our prices for us.\u2019 He replied, \u2018Indeed, All\u0101h 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.\u2019\u201d
\nA\u1e25mad has extracted it in his Musnad<\/em>14<\/a>\u00a0<\/sup>and its chain is \u1e25asan<\/em> as \u1e24\u0101fidh has stated in al-\u1e6calkh\u012b\u1e63<\/em>15<\/sup><\/a>.
\nIn the narration related by al-Asbagh ibn Nab\u0101\u1e6dah on the authority of \u2018Al\u012b (May All\u0101h be pleased with him): \u201cSomeone requested, \u2018O Messenger of Allah, set a price for us.\u2019 He responded, \u2018The 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.\u2019\u201d
\nal-Ba\u1e93\u1e93\u0101r extracted it in his Musnad.16<\/a>\u00a0<\/sup>al-Asbagh ibn Nab\u0101\u1e6dah has been deemed thiqah by al-\u1d9cIjl\u012b, but other a\u2019immah<\/em> [pl. of im\u0101m<\/em>] have considered him weak.17<\/a>\u00a0<\/sup>However, his \u1e25ad\u012bth<\/em> has been corroborated by the previous ones.
\nIn these a\u1e25\u0101d\u012bth<\/em> the Messenger of All\u0101h (peace and blessings be upon him) has attributed the setting of prices to All\u0101h, Pure is He.
\nThis is a proof that regulating the prices is not through governmental planning; it is something solely under the control of All\u0101h. 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.
\nThe \u1e25ad\u012bth<\/em> indicates that Isl\u0101m 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 All\u0101h has caused life to [revolve]; and that every interference of this type is considered oppression by Isl\u0101m regardless of it coming from the government or merchants conducting business in the market.
\nThis is also proven by another \u1e25ad\u012bth<\/em> that is narrated by J\u0101bir (May All\u0101h be pleased with him):
\n\u201cThe Messenger of All\u0101h (Peace and blessings of All\u0101h be upon him) said, \u2018A city dweller should not trade on behalf of those living in the desert. Leave the people [ in such a state that] All\u0101h, 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).\u2019\u201d
\nThus, it is impermissible for anyone to interfere in this divine system by arbitrarily fixing prices. This \u1e25ad\u012bth<\/em> indicates that the structure of the market is an organic one which it is impermissible to [tamper with].<\/p>\n

So, the first \u1e25ad\u012bth<\/em> (i.e. the \u1e25ad\u012bth<\/em> of setting prices) prohibits government interference, and the second (i.e. the \u1e25ad\u012bth<\/em> of J\u0101bir) prohibits individuals from interfering in the market in ways that will alter its natural composition. Thus, both [kinds of interference] are forbidden.<\/span><\/p>\n

It appears that Isl\u0101m only wants the market to move in an organic manner without the manifestation of such things that will impede it.
\nNonetheless, 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.
\nIsl\u0101m 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.
\nAmong 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.
\nAnother 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\u2019s structure, paralyze the forces of supply and demand, and [allow] a specific group to control prices.
\nBa\u1e93\u1e93\u0101r, A\u1e25mad, Ab\u016b Ya\u2019l\u0101, and Tabr\u0101n\u012b have extracted [a narration related from] Ibn \u2018Umar [in which] the Prophet (May peace and blessings of All\u0101h be upon him) [is reported to have] said, \u201cWhoever hoards food, then, indeed, [they] are free of All\u0101h and All\u0101h is free of them.\u201d He [also] said, \u201cAny people of [a house] amongst whom a Muslim lives [in such a state that they are] starving (i.e. hungry) then the protection of All\u0101h is lifted from them.\u201d18<\/sup><\/a>
\nThe prohibition of economic collusion by businessmen is another law. This collusion also places the arrangement of prices in the hands of\u00a0oligopolies\u00a0and upsets the natural order. The fuqah\u0101<\/em> 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-Hid\u0101yah<\/em>.
\nWhenever these [individuals] control prices it will be permissible for the Isl\u0101mic government to intervene in the market by fixing prices until it returns to its original [state]. [This is] mentioned by the fuqah\u0101<\/em> in their books.
\nOther laws are that of \u1e93ak\u0101h<\/em>, charity, udhiyah<\/em>, the expiations, maintenance [of those in ones responsibility], and inheritance. [By means of the\u00a0aforementioned] 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 Isl\u0101m, while the doors of spending are opened. Its wisdom has been indicated to in the Noble Qur\u0101n when it states, \u201cSo that wealth does not exist solely amongst the rich.\u201d19<\/sup><\/a>
\nIn general, Isl\u0101m 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 Isl\u0101mic government to intervene in the market whenever it sees monopolies appearing.
\nIt is possible to encapsulate the Isl\u0101mic 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:
\n1-<\/span>\u00a0D\u012bn\u012b<\/em> intervention:<\/strong><\/span> 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).<\/span>
\n2-<\/span> Government intervention:<\/strong><\/span> Isl\u0101m does not allow the government to interfere in the market when it is flowing naturally as was already mentioned in the \u1e25ad\u012bth 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 Ma\u1d9cqal ibn Yas\u0101r [reporting] from the Prophet (May peace and blessings of All\u0101h be upon him) who said, \u201cWhoever interferes in the prices of the Muslims so that [they] make it exorbitant, All\u0101h [ will definitely] throw [them] in the main part of Hell[\u2026]\u201d [This] has been extracted by \u1e24\u0101kim, Baihaq\u012b, Tabr\u0101n\u012b, A\u1e25mad, and others.<\/span>20<\/sup><\/a>
\nOnce, \u2018Umar (May All\u0101h be pleased with him) commanded \u1e24\u0101tib ibn Ab\u012b Bal\u1e6da\u2019ah to raise his price and told him, \u201cEither you raise the price or you will be removed from our market.\u201d M\u0101lik, \u2018Abd ibn \u1e24umaid, and Baihaqi have extracted it.21<\/sup><\/a>
\nThis proves the permissibility of governmental interference when it sees something corrupting the market\u2019s proper arrangement.
\n3-<\/span> Moral interference:<\/strong><\/span> Moral laws in Isl\u0101m 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 Isl\u0101m 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 Qur\u0101n and Sunnah, but this is not the place to explore them.<\/span>
\n[In conclusion], whenever Isl\u0101m 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 All\u0101h, Pure is He, is the one who gives \u1e6dawf\u012bq.<\/p>\n

\n

 
\nTranslator’s Note: Readers of the original text in \u1e6cakmilah Fa\u1e6d\u1e25 al-Mulhim<\/em> will notice that Muf\u1e6d\u012b Muhammad \u1e6caq\u012b Uthmani (May All\u0101h preserve him) referenced the \u0101y\u0101\u1e6d<\/em> and a\u1e25\u0101d\u012bth<\/em> that he quoted. I have changed the Qur\u0101nic references that were inside of brackets in the original to footnotes. In the case of the \u0101\u1e25\u0101d\u012bth<\/em> and quotations from \u1e6calkh\u012bs<\/em> 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\u00a0\u2018T\u2019 before it since, in many cases, they differ from the ones provided by Muf\u1e6d\u012b due to printing and editorial differences.\u00a0 If<\/span>\u00a0errors are found kindly mention them so they may be corrected.<\/span><\/p>\n

\n

References:
\n[1]\u00a0S\u016brah Qa\u1e63a\u1e63<\/em>, \u0100yah<\/em>: 77<\/span>
\n[2]\u00a0S\u016brah al-N\u016br<\/em>, \u0100yah<\/em>: 33<\/span>
\n[3]\u00a0S\u016brah al-W\u0101qiyah<\/em>, \u0100yah<\/em>: 64<\/span>
\n[4]\u00a0S\u016brah Y\u0101s\u012bn<\/em>, \u0100yah<\/em>: 71<\/span>
\n[5]\u00a0S\u016brah Qa\u1e63a\u1e63<\/em>, \u0100yah<\/em>: 77<\/span>
\n[6]\u00a0S\u016brah H\u016bd<\/em>, \u0100yah<\/em>: 87<\/span>
\n[7]\u00a0S\u016brah al-N\u016br<\/em>, \u0100yah<\/em>: 33<\/span>
\n[8]\u00a0S\u016brah al-\u1e92ukhraf<\/em>, \u0100yah<\/em>: 32<\/span>
\n[9]\u00a0S\u016brah al-\u1e92ukhraf<\/em>, \u0100yah<\/em>: 32<\/span>
\n[10] [T]: Musnad al-Im\u0101m al-\u1e24\u0101fidh Ab\u012b <\/em><\/span>\u1d9c<\/span><\/em>Abdull\u0101h A\u1e25mad ibn \u1e24anbal<\/em>. Bait al-Afk\u0101r al-Dowlah<\/em>. Page: 888, #:12619 & Page: 984, #14103<\/span>
\n[11] [T]: \u1e6calkh\u012b\u1e63 al-\u1e24ab\u012br F\u012b \u1e6cakhr\u012bj A\u1e25\u0101d\u012bth al-Raf<\/em><\/span>\u1d9c<\/span><\/em> al-Kab\u012br<\/em>. Muassas Qurtbah<\/em>. 1st Edition. 3:31, #:1160<\/span>
\n[12] [T]:<\/span> Musnad al-Im\u0101m al-\u1e24\u0101fidh Ab\u012b <\/span>\u1d9c<\/span><\/em>Abdull\u0101h A\u1e25mad ibn \u1e24anbal<\/em>. Bait al-Afk\u0101r al-Dowlah<\/em>. Page: 624, #:8429 & Page:649, #8839<\/span>
\n[13] [T]: \u1e6calkh\u012b\u1e63 al-\u1e24ab\u012br F\u012b \u1e6cakhr\u012bj A\u1e25\u0101d\u012bth al-Raf<\/em><\/span>\u1d9c<\/span><\/em> al-Kab\u012br<\/em>. Muassas Qurtbah<\/em>. 1st Edition. 3:31, #:1160<\/span>
\n[14] [T]: Musnad al-Im\u0101m al-\u1e24\u0101fidh Ab\u012b <\/em><\/span>\u1d9c<\/span><\/em>Abdull\u0101h A\u1e25mad ibn \u1e24anbal<\/em>. Bait al-Afk\u0101r al-Dowlah<\/em>. Page: 836, #:11829<\/span>
\n[15] [T]: \u1e6calkh\u012b\u1e63 al-\u1e24ab\u012br F\u012b \u1e6cakhr\u012bj A\u1e25\u0101d\u012bth al-Raf<\/em><\/span>\u1d9c<\/span><\/em> al-Kab\u012br<\/em>. Muassas Qurtbah<\/em>. 1st Edition. 3:31, #:1160<\/span>
\n[16] [T]: Kashf al-As\u1e6d\u0101r \u2018An \u1e92aw\u0101id al-Ba\u1e93\u1e93\u0101r <\/em><\/span>\u1d9c<\/span><\/em>Al\u0101 al-Ku\u1e6dub al-Si\u1e6d\u1e6dah<\/em>. Muassas al-Ris\u0101lah<\/em>. 1st Edition. 2:85, #: 1263<\/span>
\n[17] [T]: Baghyah al-R\u0101id F\u012b \u1e6ca\u1e25q\u012bq Majma<\/em><\/span>\u1d9c<\/span><\/em> al-\u1e92aw\u0101id Wa Manba\u2019 al-Faw\u0101id<\/em>. D\u0101r al-Fikr<\/em>. 4:179, #:6470<\/span>
\n[18] [T]: Kashf al-As\u1e6d\u0101r<\/em>. Muassas al-Ris\u0101lah<\/em>. 1st Edition. 2:106, #:1311; Baghyah al-R\u0101id<\/em>. D\u0101r al-Fikr<\/em>. 4:180, #:6476<\/span>
\n[19]\u00a0S\u016brah al-\u1e24ashr<\/em>, \u0100yah<\/em>: 7<\/span>
\n[20] [T]: Kan\u1e93 al-\u1d9cUmm\u0101l F\u012b Sunan al-Af\u1d9c\u0101l wa al-Aqw\u0101l<\/em>. Muassas al-Ris\u0101lah<\/em>. 5th Edition. 4:101, #9737<\/span>
\n[21] [T]: Kan\u1e93 al-\u1d9cUmm\u0101l<\/em>. Muassas al-Ris\u0101lah<\/em>. 5th Edition. 4:183, #10075<\/span><\/p>\n

\n","protected":false},"excerpt":{"rendered":"

\u00a0A Translation of Justice Muf\u1e6d\u012b \u1e6caq\u012b Uthm\u0101n\u012b\u2019s\u00a0Prolegomena to Ki\u1e6d\u0101b al-Buy\u016b\u00b8 in \u1e6cakmilah Fa\u1e6d\u1e25 al-Mulhim Majority of the authors in the [field of] fiqh and \u1e25ad\u012bth…<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","footnotes":""},"categories":[43,3],"tags":[],"class_list":["post-4037","post","type-post","status-publish","format-standard","hentry","category-financial-transactions","category-fiqh","wpcat-43-id","wpcat-3-id"],"_links":{"self":[{"href":"https:\/\/www.fiqhulislam.com\/index.php?rest_route=\/wp\/v2\/posts\/4037","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fiqhulislam.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fiqhulislam.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fiqhulislam.com\/index.php?rest_route=\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fiqhulislam.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4037"}],"version-history":[{"count":0,"href":"https:\/\/www.fiqhulislam.com\/index.php?rest_route=\/wp\/v2\/posts\/4037\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.fiqhulislam.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4037"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fiqhulislam.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4037"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fiqhulislam.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4037"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}