- Islam looks at wealth as life sustaining, to be used efficiently. God says:
- Private ownership is affirmed but viewed as a trust:
- Islam encourages enterprise, efforts to create wealth, which has been characterized as God’s bounty:
- Muslims are obligated to fulfill contracts and keep their promises:
“…And be true to every promise, for, verily, (on judgment day) you will be called to account for every promise you made”. (Quran, 17:34)
- All exchange should be with willing consent of the parties concerned:
- Use of wealth and exercise of freedom of enterprise is constrained by the obligation not to harm others. The Prophet ruled:
These clear texts provide a sound basis for a positive attitude towards wealth creation and economic activity. Clear and secure individual ownership rights, one’s right to the fruits of one’s efforts and contracts enforceable through a social authority, strengthen that attitude and provide a wide arena for it.
Limits of Freedom
Having put production and exchange of wealth on a firm basis, Islam proceeds to define a framework for these activities so that justice and fairness is ensured for all concerned. This comprises do’s as well as don’ts. I focus on the don’ts, as they are more relevant to our discussion. The following are prohibited:
- Riba, i.e. interest on loans and exchange of unequal quantities of similar fungibles. Gold or silver or a particular paper currency must be exchanged in equal quantities. When gold or silver or different paper currencies are exchanged with one another, the quantities can be unequal but the exchange must be simultaneous. Prohibition of interest on loans is clearly implied by the text of the Quran:
As we shall note later on, this and the prohibition of gambling which is next on the list, target justice in distribution. Islamic law does not distinguish between high rates of interest characterized as usury and lower rates characterized as interest. Any excess over and above the sum lent is disallowed. There have been some modern scholars taking a different view but classical jurists as well as overwhelming majority of modern scholars take the stand reported above. It is this view which is reflected in Islamic banking and finance.
- Maysir,i.e. gambling, bets and wager. The essence of gambling is taking a risk deliberately created or invited, which is not necessary in economic activity, to gain thereby. This is unlike the risks taken by other economic agents, entrepreneurs, speculators, insurers, which are there as an inalienable aspect of reality.
- Ghabn,i.e. fraud and deception.
- Ikrah,i.e. coercion, e.g. imposing a contract, or a condition therein, on an unwilling party.
- Bay’ al -mudtarr,i.e. exploitation of need, e.g. by charging an exorbitantly high price.
- Ihtikar,i.e. withholding supplies of essential goods and services with a view to raising prices.
- Najsh,i.e. raising prices by manipulating false bids.
- Gharar,i.e. hazard or uncertainty surrounding a commodity, its price, time of payment, time of delivery, quantity,.. etc. makes the deal invalid. But some little gharar can be ignored as it may be humanly impossible to eliminate it.
- Jahl mufdi ila al-niza’,i.e. such lack of information about a commodity, its quantity, price, etc. as may lead to dispute.
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