Islamic Rules of Economy12 min read

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Islamic Rules of Economy

Islamic Rules of Economy

 

After a brief introduction to capitalism and communism, what is the Islamic view of the four basic problems of the economy that were described? It should be clear from the first step that Islam is not an economic system. Rather it is a religion whose rules are related to every aspect of life. This includes the economy, so the Qur’an and the Hadith did not present any economic philosophy or theory in the known sense, which could be interpreted in the economic terms of the present day. Therefore, there is no direct debate in the Qur’an and Sunnah or Islamic jurisprudence on the topic of determining priorities, allocation of resources, and distribution of income, but like other areas of life, Islam has also given some rules about the economy. From the overall study of the rulings, what is the point of view of Islam in relation to the above four problems? And the result of this study and conclusion is that;

A consideration of the economic laws and teachings of Islam makes it clear that Islam recognizes the market forces, i.e. the laws of supply and demand, and is in full support of their use to solve status problems. So the Qur’an says

نَحْنُ قَسَمْنَا بَيْنَهُم مَّعِيشَتَهُمْ فِى ٱلْحَيَوٰةِ ٱلدُّنْيَا ۚ وَرَفَعْنَا بَعْضَهُمْ فَوْقَ بَعْضٍۢ دَرَجَـٰتٍۢ لِّيَتَّخِذَ بَعْضُهُم بَعْضًۭا سُخْرِيًّۭا ۗ وَرَحْمَتُ رَبِّكَ خَيْرٌۭ مِّمَّا يَجْمَعُونَ

We have allocated among them their livelihood in the worldly life, and have raised some of them over others in ranks, so that some of them may put some others to work. And the mercy of your Lord is much better than what they accumulate. (43:32)

Obviously, work will be taken from each other in such a way that the work taker is the demand for work, and the work giver is the supply of work. A balanced economy comes into existence through mutual conflict and a mutual combination of this supply and demand. Similarly, during the time of the Holy Prophet (), when a villager would bring his agricultural produce to the city for sale, some urban people would say to that villager, “Don’t take your goods and sell them in the city, but give them to me.” I will sell it at the right time so that its price is higher. The Holy Prophet (ﷺ) stopped the citizens from doing so and, at the same time, said this sentence;

وَعَنْ جَابِرٍ رَضِيَ اللَّهُ عَنْهُ قَالَ: قَالَ رَسُولُ اللَّهِ صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ: «لَا يبِعْ حَاضِرٌ لِبَادٍ دَعُوا النَّاسَ يَرْزُقُ اللَّهُ بَعْضَهُمْ من بعض» . رَوَاهُ مُسلم

Jabir reported God’s Messenger as saying, “A townsman must not sell for a man from the desert; if you leave people alone, God will give them provision from one another.”
Muslim transmitted it. (Mishkat al-Masabih)

In this way, the Holy Prophet (ﷺ) rejected the intervention of a third person between the seller and the buyer in order to establish a proper balance of supply and demand in the market. It is obvious that when a villager sells something directly in the market, he will sell it with a reasonable profit, but since he has to go back quickly, he needs more capacity to stock up and reach the market himself. In the case of supply and demand, there will be such a combination which will help in determining the right price. On the contrary, if a third man comes between the two and creates an artificial scarcity of goods by hoarding them, he will create a distortion in the natural system of supply and demand. Therefore, it is also known from this hadith that the Holy Prophet (ﷺ) recognized the natural system of supply and demand and tried to maintain it. If the prices of the items to be sold were to be determined officially, on this occasion, too, the Holy Prophet (ﷺ) said these words;

حَدَّثَنَا عُثْمَانُ بْنُ أَبِي شَيْبَةَ، حَدَّثَنَا عَفَّانُ، حَدَّثَنَا حَمَّادُ بْنُ سَلَمَةَ، أَخْبَرَنَا ثَابِتٌ، عَنْ أَنَسٍ، وَقَتَادَةُ، وَحُمَيْدٌ، عَنْ أَنَسٍ، قَالَ قَالَ النَّاسُ يَا رَسُولَ اللَّهِ غَلاَ السِّعْرُ فَسَعِّرْ لَنَا ‏.‏ فَقَالَ رَسُولُ اللَّهِ صلى الله عليه وسلم ‏ “‏ إِنَّ اللَّهَ هُوَ الْمُسَعِّرُ الْقَابِضُ الْبَاسِطُ الرَّازِقُ وَإِنِّي لأَرْجُو أَنْ أَلْقَى اللَّهَ وَلَيْسَ أَحَدٌ مِنْكُمْ يُطَالِبُنِي بِمَظْلَمَةٍ فِي دَمٍ وَلاَ مَالٍ ‏”‏ ‏.‏

Narrated Anas ibn Malik:

The people said: Messenger of Allah , prices have shot up, so fix prices for us. Thereupon the Messenger of Allah (ﷺ) said: Allah is the one Who fixes prices, Who withholds, gives lavishly and provides, and I hope that when I meet Allah, none of you will have any claim on me for an injustice regarding blood or property. (Sunan Abi Dawud)

In the context of this hadith, the clear meaning of declaring Allah as the setter of prices is that Allah Almighty, has set the natural rules of supply and demand, by which prices are determined naturally, and this natural system Excluding self-pricing is not preferred.

It is clear from these sayings of the Qur’an and Sunnah that Islam has accepted the laws of supply and demand as well as the motivation of personal profit, but the difference is that in the capitalist system, This trigger was left completely free, resulting in the various errors mentioned later. Islam, while maintaining the motive of personal profit and recognizing the laws of supply and demand, imposed certain restrictions on commercial and economic activities that, if implemented, the motive of personal profit cannot go in such a wrong direction. Unbalance the economy or cause other moral or social ills. The restrictions imposed by Islam on the motivation of personal profit can be divided into three categories;

1- Divine restriction

First of all, Islam has imposed certain eternal restrictions of halal and haram on economic activities, which are valid at all times and everywhere. For example, interest, gambling, hoarding, hoarding, and all other useless things are completely prohibited because these things usually become a means of establishing monopolies, and they create inequalities in the economy. In the same way, it prohibited the production and sale of all those things from which the society suffers from any immorality and in which the gratification of people’s lustful feelings is created as a way to earn income in a legitimate way. It should be clear here that these divine restrictions have been imposed by the Qur’an and the Sunnah; Islam has not left them to the personal intellect of man to impose this restriction if his intellect deems it appropriate, and if it does not deem it appropriate, then impose it. Could you not do it? The reason for this is that sometimes there is difference and disagreement in the minds of human beings to decide the good or bad of something. One man’s intellect can consider one thing as good and another man’s intellect as bad, so if these restrictions were left to mere human intellect, people would consider these restrictions inappropriate in the light of their intellect. They would have freed society from them. And since in the knowledge of Allah Ta’ala, these restrictions were necessary for every time and every place. Therefore they were given an eternal status through revelation so that people could get rid of them with the help of their rational interpretations and prevent the economy and society from being uneven. I could not suffer. From here, it is clear that these divine restrictions imposed by the Qur’an and the Sunnah are obligatory, regardless of whether a person understands their rational wisdom or not.
As stated earlier, most capitalist countries in the present age also impose some restrictions on the motivation of personal profit, but since those restrictions do not benefit from divine revelation, more is needed to establish a balanced economy. There are not. Therefore, in these capitalist countries, no ban has been imposed on usury, gambling and gambling, etc., which are major causes of economic inequalities.

2- State restrictions

The aforementioned divine restrictions were of an eternal nature; along with them, the Islamic Shari’ah has also given the authority to the government of the time that it can also impose a ban on something and such an act under general expediency, which in itself is not haram but is prohibited. It falls within the scope of, but it requires a collective error. This restriction is not of an eternal nature which is in force at all times and everywhere, but rather it is a temporary command which is subject to the expediency of time. A simple example of this is that the jurists have written that when there is an outbreak of cholera, the government has the authority to ban the buying and selling of melons, as long as this restriction remains on the part of the government, eating melons and Selling it will also become illegal. Similarly, there is a chapter in Usul Fiqh called sources, which means that if a work is permissible per se, but its abundance is causing some mischief, then it is permissible for the government to restrict this permissible work—also banned.

Under this principle, the government can monitor all economic activities and impose appropriate restrictions on those activities which are suspected of creating imbalances in the economy. It is narrated in Kunz al-Umal that Hazrat Farooq Azam (رضي الله عنه) once came to the market and saw a person selling something at a price much lower than its known price. He said to him:

وَحَدَّثَنِي عَنْ مَالِكٍ، عَنْ يُونُسَ بْنِ يُوسُفَ، عَنْ سَعِيدِ بْنِ الْمُسَيَّبِ، أَنَّ عُمَرَ بْنَ الْخَطَّابِ، مَرَّ بِحَاطِبِ بْنِ أَبِي بَلْتَعَةَ وَهُوَ يَبِيعُ زَبِيبًا لَهُ بِالسُّوقِ فَقَالَ لَهُ عُمَرُ بْنُ الْخَطَّابِ إِمَّا أَنْ تَزِيدَ فِي السِّعْرِ وَإِمَّا أَنْ تُرْفَعَ مِنْ سُوقِنَا ‏.‏

Yahya related to me from Malik from Yunus ibn Yusuf from Said ibn al-Musayyab that Umar ibn al-Khattab passed by Hatab ibn Abi Baltaa who was underselling some of his raisins in the market. Umar ibn al- Khattab said to him, “Either increase the price or leave our market.” (Muwatta Malik)

It needs to be clarified in the tradition why Hazrat Umar (رضي الله عنه) banned it, and it may be that he was closing the way for legitimate profit for other traders by charging a price far below the equilibrium price. Yes, and it is also possible that the reason for the restriction is that when it is provided at a low price, people are buying more than they need, which opens the door to extravagance or creates room for people to hoard. In any case, it is worth noting that the original Shariah ruling is that a person can sell his property at any price he wants, so selling at a low price was permissible for himself, but because of collective expediency, Hazrat Umar (رضي الله عنه) Anhu banned it. The source of the mandatory use of this type of state restriction is the statement of the Holy Quran:

يَـٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوٓا۟ أَطِيعُوا۟ ٱللَّهَ وَأَطِيعُوا۟ ٱلرَّسُولَ وَأُو۟لِى ٱلْأَمْرِ مِنكُمْ ۖ

O you who believe, obey Allah and obey the Messenger and those in authority among you. (4:59)

For there is an eternal life to come which has no end, and man’s real work is to make his worldly life a stepping-stone to the life hereafter and to care for his welfare there. So the real success of a man is not that he earns four paise more than others, but his success is that he manages maximum luxury in the eternal life of the hereafter, the way of which is the world. While living with me, he should do the work that will bring him the maximum reward and reward. When people develop this mindset, their economic decisions are influenced not only by which scenario will fill our coffers more but also often by which economic decisions they make. Will I get more benefits in the future? In this way, in many cases, the Shariat has not given any mandatory order, but it has described the final virtues of a particular thing, which are a source of great attraction for a believer, and through them, handle himself. It imposes many restrictions. Moral restrictions refer to such restrictions. A simple example of this is if a person has two options for investing, one is to invest his capital in a legitimate recreational but commercial venture in which he expects a high return. And the second is that he spends this capital on building and selling cheap houses for people without homes, from which he expects a relatively small profit. So a person with a secular mindset will definitely take the first route because it has more profit, but a person who is worried about the Hereafter will think on the contrary that even if the financial profit in the residential project is relatively low. Yes, but I can get more rewards and rewards for myself in the Hereafter by providing residential houses for poor people, so I should choose a residential plan instead of a recreational plan. Obey those in authority among you. In this verse, obedience to “Owli al-Amr” (persons in authority) has been mentioned separately from obedience to Allah and the Messenger, which means that among the things in which the Qur’an and Sunnah have not given any definite command, the first is The commandments are mandatory. It is important to be clear here that the power of the government to ban debates is not unlimited, but it also has some rules and regulations, which need to be more detailed here, but two things are particularly worth mentioning. One is that the order of the government must be obeyed, which does not conflict with any order of the Qur’an and Sunnah, and the other is that the government has the authority to impose this type of restriction only when a collective interest demands it. Therefore, in a famous jurisprudential rule, it has been interpreted as follows:

تصرف الامام بالرعية منوط بالمصلحة

The powers of government over the people are tied to expediency.

Therefore, if a government imposes any restriction without any collective interest, then this restriction is not permissible, and it can be cancelled by the court of Qazi.

3- Moral restrictions

As stated earlier, Islam is not the name of an economic system in the strict sense, but the name of a religion, the teachings and rules of this religion are definitely related to the economy, like other areas of life. But in the teachings of this religion, it has been clarified step by step that economic activities and the material benefits derived from them are not the ultimate goals of human life. The entire emphasis of the Qur’an and Sunnah is on the fact that worldly life is a limited and few-day life, and after that, although both paths were permissible from the point of view of Shariah, and there was no state restriction imposed on any of them, The moral restraint based on the belief in the Hereafter created an inner constraint in the heart of the person, which led to a better determination of priorities and better allocation of resources, considering the need of the people. This is a small example, but if indeed the belief of the Hereafter is fully awakened in the heart, it plays a tremendous role in improving economic decisions. I do not deny that there is a place for morality in non-Islamic societies, and sometimes the moral point of view influences economic decisions as well, but since these moral concepts do not have a strong belief in the Hereafter, they as No significant impact on the overall economy. On the contrary, if Islam is fully implemented with all its teachings, the effect of its moral teachings on the economy will be very significant, as, in the past, there have been numerous living examples. Therefore, this era of moral restrictions is not a weak factor in the context of the Islamic economy, but its importance is very high.

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Talha Siddiq

Talha Siddiq

I am an Islamic Scholar. I have expertise in Ahadith, Fiqh, Logics, and the Arabic language. I have a specialty in Islamic finance and Islamic study. To get started with me, Book Now one-to-one Session, or let us know what do you like in the contact form.

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