THE ECONOMIC LAW OF ISLAM (Part 1/2)
The economic law of Islam is based on the Quranic philosophy of creation: the Almighty has created this world as a trial and test for man; every person has, therefore, been made to depend on others for his living. No one in this world can live independently as regards his needs and requirements. People of the highest rank must turn to the most ordinary to fulfil them. In other words, every single person has an important role to play without which this world cannot continue. This role depends upon his abilities, intelligence, inclinations as well as his means and resources, which vary from person to person. In fact, it is because of this variation that a society comes into being. Consequently, labourers and workers, artisans and craftsmen, tillers and peasants are as indispensable as scholars and thinkers, savants and sages, leaders and rulers. Every individual is an integral component of the society and contributes to its formation according to his abilities. The Quran says:
"We have apportioned among them their livlihood in this world [in such a manner that] We have exalted some in ranks above others so that they can mutually serve each other. And better is thy Lord's mercy than what they are amassing." (43:32)
By creating various classes of people, the Almighty is testing whether the big and the small, the high and the low create a society based on mutual co-operation and respect or create disorder in the world by disregarding the role each man has been ordained to play. The latter attitude would, of course, lead them to humiliation in this world and to a grievous doom in the Hereafter. The Quran says:
"We are trying you by giving you happiness and sorrow, to test you, and unto Us ye will be returned." (21:35)
Consequently, it is necessary for everyone to acknowledge that scholars and savants, workers and labourers, all are indispensable components of a society. No doubt, the role played by each and the services performed by each are different, but no one can be regarded as petty or ignored in establishing a healthy society. Everyone deserves to be given respect and honour and all the necessary means to prosper. A healthy and a sound society cannot be created by eliminating the various classes, but by acknowledging their existence and providing equal opportunities and ready justice to all.
BASIC PRINCIPLE
It is for the creation of a healthy society that the Almighty has revealed this economic law. The basic principle of this economic law is founded on two premises:
First, the well being and stability of an economy is not based on saving money but on `infaaq'.
Second, for this well being and stability all forms of interest must be completely abolished.
`Infaaq' is a special term of the Quran. It means that a person who has been blessed by wealth and riches in this world by the Almighty should spend them in the way of Allah and on his fellow beings just as he spends them on himself. The Quran regards `infaaq' the most important deed after prayers and an obligatory directive for all Muslims, as has been stressed in many places. To quote Surah Baqarah:
"O ye who believe! spend out of [the bounties] We have provided for you, before the Day arrives when there shall be no bargaining, nor will friendship be of any use and nor will intercession be of any avail. The disbelievers of this Day are, in fact, the wrongdoers." (2:254)
The Quran requires of its believers to generously spend whatever remains, after fulfilling their personal and business requirements of the present and future, on the needy as well as on other enterprises of national and religious interest. Consequently, the Quran has made it clear that if a person while remaining indifferent to these needs of the society keeps even a penny with himself then this would be hoarding wealth---something which shall lead him to the raging fire of Hell in the Hereafter:
"Give glad tidings of a grievous doom to those who hoard up gold and silver and spend it not in the way of Allah. On the Day when their gold and silver shall be smelted in the flames of Hell and their foreheads, their flanks and their backs will be branded with them. These are the riches which you hoarded. Now taste of what you used to hoard." (9:34-35)
The Quran, on the basis of its above mentioned concept of infaaq, unequivocally states that in certain situations like an enemy invasion and jihaad, if the need arises people should wholeheartedly give whatever they have after fulfilling their essential needs. The Quran says:
"They inquire from you that how much should be spent [for this purpose]. Say: whatever is left over [after your needs have been fulfilled]." (2:254)
It is self-evident that `interest' is the direct opposite of `infaaq'. The Quran, therefore has explicity forbidden it. The spirit of infaaq creates high qualities like sympathy, courage and seflessness while the incentive of interest creates such condemnable qualities as cowardice, selfishness and cruelty. The Quran has used the word ribaa for it. It implies a fixed increase which a lender demands from the borrower just because he has given him the permission to use his money for a certain period. The Quran has vehemently prohibited it:
"Those who devour interest shall rise up on the Day of Judgement like the man whom Satan has driven to madness by his touch because they claim that trading is like interest and [how strange it is that] Allah has permitted trading and forbidden interest. Consequently, he who received this warning from the Almighty and desisted [in obedience thereto] then whatever he has taken in the past belongs to him and his fate is in the hands of Allah. And those who repeat [the offence] shall be companions of the Fire and will abide therein forever." (2:275)
"That which ye give in ribaa in order that it may increase on [other] people's wealth has no increase with Allah; but that which you give as zakat, seeking Allah's countenance, it is these people who will get manifold [in the Hereafter] of what they gave." (30:39)
This severity is evident in many traditions as well. Jabir (rta) narrates:
"The Prophet has severely condemned the devourer of interest and the one who pays interest and those who write an agreement [for such lending] and the two who are the witnesses over this document and has said: All of them are equal." (Muslim, Kitab-ul-Buyoo`)
The Prophet (sws) has emphatically directed to refrain from the slightest possible trace of interest while borrowing in barter as well*:
"If you lend gold then take back the same type and the same amount of gold and if you lend silver then take back the same type and the same amount of silver; for he who desires more, then this is what is interest." (Muslim: Kitab-ul-Buyoo`)
"If you lend gold in exchange for silver then there is a possibility of interest in this. Similarly for wheat in exchange for another type of wheat, barley in exchange for another type of barley, date for another type of date. Indeed if the exchange is done on the spot, there is no harm." (Muslim: Kitab-ul-Buyoo`)
It should be borne in mind that whether a loan is acquired for personal use or for business or welfare purposes, the real meaning of ribaa is not ascertained on these bases. It is an indisputable fact that in the Arabic language the word ribaa, irrespective of the aim of the lender and the condition of the borrower, just implies the fixed increase acquired on a loan. The Quran itself has clarified this in the following verse:
"If the debtor is in difficulty grant him respite until it is easy for him to repay and if you write off [the debt], it is better for you, if you only knew." (2:280)
My mentor Imaam Amin Ahsan Islahi comments on this verse in the following words:
"Today some naive people claim that the type of interest which prevailed in Arabia before the advent of Islam was usury. The poor and the destitute had to borrow money from a few rich money-lenders to fulfill their personal needs. These money-lenders exploited the poor and used to lend them money at high interest rates. It is only this type of interest which the Quran has termed as ribaa and forbidden. As far as commercial interest is concerned, it neither existed at that time nor did the Quran prohibit it.
This verse categorically refutes this `allegation'. When the Quran says that if the debtor is in difficulty he should be given respite until he is able to pay back his debt, it clearly points out that in those times even the rich used to acquire loans. In fact, if the style and stress of the verse are correctly understood, it becomes clear that it was mostly the rich who used to procure loans. Indeed, there was a strong chance that the debtor would find himself in difficulty even to pay the original amount. The money-lender, therefore, is directed to give him more time and if he forgoes the original amount it would be better for him. The words of this verse strongly indicate this meaning. The actual Arabic words of the verse are: wa in kaana zoo `usratin fa naziratun ilaa maisarah. The particle of condition in (if) is not used for general circumstances, but, in fact, is used for rare and unusual circumstances. For general circumstances the particle izaa is used. In the light of this, it is clear that the debtors in those times were generally affluent (zoo maisarah) but in some cases they were poor or had become poor after acquiring the loan and in that case, the Quran has directed the money-lenders to give them a time rebate." ("Tadabbur-i-Quran", Vol 1, Pgs 638-639)
He has concluded this discussion by saying:
"Obviously, the affluent would have turned to the money-lenders not to fulfil their personal needs, but, of course, their business needs. So what is the difference between these loans and the commercial loans of today?" ("Tadabbur-i-Quran", Vol I, Pg 639)
Since the prohibition of interest totally elimates any incentive of profit in lending money, therefore, as an obvious outcome, no institution which provides capital on loan can be established. In other words, this prohibtion actually shields an Islamic society from the evils of a capitalist economy. Consequently, in our opinion, interest-free banking and other similar projects through which commercial loans are provided, are totally against the objective for which the Quran has forbidden interest.
There is no doubt that this prohibition of interest entails that people from their own wealth and from the wealth of those who trust them can pool their money on the basis of profit and loss sharing and invest it in business projects, but they should not have the facility to acquire loans which, in the present banking system, they are able to obtain thereby giving rise to the evils which originate on account of concentration of wealth in few hands.
No one can deny the fact that the whole framework of a capitalist economy rests on the pillar of banking. The Quran, therefore, by prohibiting interest, does not merely prohibit a type of fiscal transaction, it actually razes down this pillar of capitalism---which can only be left intact if the spirit of the law which prohibits interest is violated without actually violating the law1.
REGULATIONS FOR AN ECONOMIC FRAMEWORK
In concordance with the above stated basic principle, the following regulations have been formulated in the Quran and Sunnah for the development and systematization of the economy of an Islamic State.
RIGHT OF OWNERSHIP
According to this first regulation, the rightfully owned wealth of a person cannot be usurped nor tampered with in any way, except if on account of some violation by him the Shariah endorses so. The Quran says:
"If they repent [from all un-Islamic beliefs], establish regular prayers and pay zakat, leave them alone." (9:5)
It follows from the words: `leave them alone' (fa khalloo sabeelahum) of the above verse that once a person acquires the citizenship of an Islamic State after fulfilling the conditions stated in the verse, just as the state cannot tamper with his life, honour and freedom of expression, it also cannot tamper with his wealth and property. If he refrains from what is prohibited, establishes regular prayers and pays zakat, the Almighty bids the state to leave him alone and not to demand a single penny from him once he has paid zakat. The Prophet (sws), while explaining this directive, has said:
"I have been ordained to fight2 with these people until they testify to the oneness of Allah and the Prophethood of Mohammad, establish regular prayers and pay zakat. If they accept these conditions, their lives shall be given protection except if they are deprived of this protection on the grounds of some offence they may commit3. As far as their account is concernred, it rests with Allah." (Muslim, Kitab-ul-Imaan)
In the sermon of the Last Haj, the Prophet (sws) has rephrased this in the following words:
"Indeed, your blood and your wealth are as sacred and inviolable as this day4 of yours, this month5 of yours in this city6 of yours7." (Muslim, Kitab-al-Haj)
COLLECTIVE SHARING
The second regulation is that everything which is not, or cannot be owned by an individual shall, on the basis of the principle of collective sharing, be regarded as state owned. The Quran says:
"They ask you about the spoils of war. Say: The spoils belong to Allah and the Prophet8." (8:1)
The Prophet (sws) has explained this principle thus9:
"There are three things in which every Muslim has an equal share: water, grass and fire10, and it is illegal [for any person] to sell them [by taking them in his ownership]." [Ibni Maajah, Kitab-ur-Ruhoon]
Keeping in view the welfare and expedience of its citizens, a state has the right to decide about the usage of such collectively shared11 items. Consequently, the Almighty, taking into consideration the specific circumstances of that period relating to the spoils of war in the verse quoted above, ordained that a fifth of them should be spent on collective needs while the remaining amount should be distributed among the Mujaahideen, though actually all of them belong to the state. The Quran says:
"[You should] know that a fifth of the spoils you get hold of are for Allah and the Prophet and the near relatives and the orphans and the needy and the wayfarers." (8:41)
MORAL MISCONDUCT
The third regulation is that every economic activity which leads to moral misconduct in a person should be prohibited. This regulation is based on the following Quranic verse:
"O ye who believe: this liquor and gambling, idols and these divining arrows are abominations devised by Satan. Avoid them that you may succeed. Satan seeks to stir up enmity and hatred among you by means of liquor and gambling and to keep you from the remembrance of Allah and from prayers. Will you not then abstain from them?" (5:90-91)
The basis for forbidding liquor, idols and divination of arrows, together with gambling is that they are filthy and impure works of Satan. It is clear that gambling has been regarded as an impure work of Satan because it gives rise to moral misconduct in a person which gradually encompasses his personality. The reason is that if an economic activity is based on rights and services and rational decisions, it produces a high moral character and if an economic activity is based on chance, fortune and fortuity, it produces an attitude which is based on avoidance of hardwork and service. This gives rise to such mean qualities as cowardice and faint-heartedness which subsequently eliminate the innate qualities of honour, sincerity and self-respect. As a result, the remembrance of the Almighty finds no place in a person's heart and he has nothing left but enmity and hatred for his fellow beings. Gambling, on this basis, is a condemned handiwork of Satan, and it is clear from the Quranic directive which prohibits it that if any other economic activity produces a similar moral misconduct in a person, then it should also be prohibited in an Islamic State. Consequently, on this particular basis, other things which have been prohibited by the Quran and Sunnah are the following:
1. Excessive spending and squandering of wealth:ie, a person instead of spending in the way of Allah and adopting a balanced attitude towards his needs and desires, spends lavishly and wastefully so that his pets live regally whilst his neighbours may have nothing to eat. The Quran says:
"Eat the fruits of these orchards when they ripen and give away the share of Allah on the harvest day and waste not: for Allah does not like those who spend wastefully." (6:141)
"Give to the near of the kin their due and also to the destitute and the wayfarer, and squander not in extravagance. Verily, such squanderers are brothers of Satan and Satan is very ungrateful to His Lord." (17:26-27)
The Prophet is said to have said:
"Eat, drink and spend in the way of Allah and clothe yourself guarding against wastefulness and vanity." (Ibni Maajah, Kitab-ul-Libaas)
If the various ways of squandering wealth which have been explicity forbidden in the Quran and Sunnah are kept in consideration, then no one among the believers can:
(i) waste his wealth in gambling. (5:90-91)
(ii) throw away his money in drinking, adultery and other similar acts of wantonness. (5:90), (17:32)
(iii) make clothes, rugs, pillows and pack-saddles from silk, tissue and other types of expensive cloth and hides:
"He who wore silk in this world, shall never wear it in the Hereafter." (Bukhari, Kitab-ul-Libaas)
"The Prophet has forbidden us to wear silk and tissue and to sit on bedclothes made out of them." (Bukhari, Kitab-ul-Libaas)
"He who wore a dress for show and fame in this world, the Almighty shall make him wear the dress of ignominy in the Hereafter and then ignite fire in it." (Ibni Maajah, Kitab-ul-Libaas)
(iv) use jewellery and utensils of gold and silver12 or use other expensive items:
"The Prophet has prohibited us from eating and drinking in utensils of gold and silver." (Bukhari, Kitab-ul-Libaas)
"The Prophet has forbidden us to ride on a pack-saddle made from cheetah's skin and to wear [ornaments of] gold except if a few pieces are stitched in an attire." (Abu Daud, Kitab-ul-Khaatim)
"The Prophet has prohibited seven things for us: 1. gold rings 2. silk 3. brocade 4. tissue 5. red silk or an expensive hide as cover for pack-saddles 6. silk-mixed clothes 7. utensils of silver."13 (Bukhari, Kitab-ul-Libaas)
2. Transactions of prohibited items: ie, those items whom the Almighty has prohibited because of an intrinsic or extrinsic tendency in them to lead to immorality; a person instead of informing others of this immorality and urging them to refrain from them, makes
them his means of livlihood or sells them to make profit:
"The Prophet has prohibited the fee of a soothsayer and a prostitute." (Bukhari, Kitab-ul-Buyoo`)
"The Prophet has said: Do not buy and sell songstresses nor give them the training to sing. There is no good for you in their trade and to sell them is totally forbidden." (Tirmazi, Kitab-ul-Buyoo`)
"The Prophet has said: The Almighty has severely condemned liquor, he who provides it, he who sells it, he who buys it, and he who makes an essence out of it, and for whom the essence is made, and the one who brings it, and for whom it is brought." (Abu Daud, Kitab-ul-Ashribah)
"It is narrated by Jaber (rta) that on the occasion of the conquest of Mecca he heard the Prophet saying: Indeed, the Almighty has prohibited the selling of liquor, dead meat, pigs and idols." (Bukhari, Kitab-ul-Buyoo`)
"The Prophet has said: God cusre the Jews. When the Almighty forbade them to [eat] the fat of animals, they sold it and devoured the money." (Bukhari, Kitab-ul-Buyoo`)
3. Hoarding: ie, when commodities of general use are stored to create a shortage and thereby increase their prices in the market. The Prophet (sws) is said to have said:
"He who hoarded edibles for forty days should know that he has no relationship with the Almighty nor does the Almighty has any relationship with him." (Musnad Ahmad Bin Hambal, Vol 2, Pg 33)
"He who interferred in any way to increase the rates in the markets of the Muslims, the Almighty has the right to make his abode in a great fire on the Day of Judgement." (Musnad Ahmad Bin Hambal, Vol 5, Pg 27)
4. Aklul-Amwaalil-Baatil: ie, to eat up other people's wealth and property against all norms of justice and fairness. The Quran says:
"Do not devour one another's wealth by unjust means." (2:188)
In this regard, the foremost thing which the Almighty has forbidden is bribery:
"Do not devour one another's wealth by unjust means and do not use it as a means to reach the authorities in order that you may wrongly and knowingly devour other people's wealth." (2:188)
To quote Abu Daud:
"The Prophet has severely condemned the person who gives bribes and the one who accepts bribes." (Kitab-ul-Aqdhiah)
Similarly, theft, usurpation, misrepresentation, co-operation with evil, embezzlement, misappropriation, fraudulent weighing and consuming unclaimed items without publicizing them, all are various forms of aklul-amwaalil-baatil. According to the Quran this is a major sin. Consequently, about a similar sin the Quran says:
"Indeed, those who are unjustly devouring the wealth of the orphans, they do not but swallow fire into their bellies; they shall certainly be flung into the raging Fire of Hell." (4:10)
Similarly dealings which lead to deceit and damage for the parties involved, is also a class, which come under this directive. Following are the traditions in which the Prophet (sws) has explained them:
[Sale and Purchase]
"The Prophet has prohibited the deal which is based on deceit." (Musnad Ahmad Bin Hambal, Vol 1, Pg 302)
"The Prophet has said: He who deceives others [should know] that he is not of us." (Muslim, Kitab-ul-Imaan)
"The Prophet has said: As long as a fish is in water do not sell or buy it because there is a chance of deception in this deal." (Musnad Ahmad Bin Hambal, Vol 1, Pg 388)
"The Prophet has forbidden the sale and purchase of offspring of an animal prior to their birth and the selling of milk while it is in an animal's udders except if its quantity is ascertained, and the sale or purchase of run-away slaves, and the sale or purchase of the spoils of war before they are distributed, and the sale or purchase of charity before it is given to the recipients and a deal in which a sea-diver is told that whatever he shall obtain in a dive shall be bought for so much money14." (Musnad Ahmad Bin Hambal, Vol 3, Pg 42)
"The Prophet has said: the person who buys grain should not sell it unless he takes it into his possession." (Bukhari, Kitab-ul-Buyoo`)
"The Prophet has forbidden a person to rent out a bull for breeding." (Bukhari, Kitab-ul-Ijaraah)
"It has been narrated by Abdullah Ibni Umar (rta) that he said: I observed that in the time of the Prophet, when people bought grain in mounds, and before bringing it to their places sold it out then they were punished for this." (Bukhari, Kitab-ul-Buyoo`)
"The Prophet has said that no city dweller should sell and buy for a villager and [has further] said: Do not increase your bid [at an auction] only to deceive [others], and no one among you should make a deal when your brother is bargaining." (Bukhari, Kitab-ul-Buyoo`)
"The Prophet has forbidden people to exploit others in sale and purchase." (Musnad Ahmad Bin Hambal, Vol 1, Pg 116)
"The Prophet has forbidden a person to sell his crop when it is still in spikes, and to sell a date tree in exchange for dates15, and to sell the fruits of an orchard for many years, and to adopt the methods of crop division in which the profit of the landlord has been fixed, and to leave an unspecified exception in a bargain16." (Muslim, Kitab-ul-Buyoo`)
"The Prophet has prohibited the deal of pebbles17." (Muslim, Kitab-ul-Buyoo`)
"The Prophet has prohibited the deal of pre-Islamic times in which every person without thinking just touched the other person's cloth and a bargain would take place in this manner." (Muslim, Kitab-ul-Buyoo`)
"Abdullah (rta) narrates that the Prophet has prohibited the deal in which people used to sell camels [by saying that]: whatever offspring this camel gives birth to and when that offspring gets pregnant, whatever it gives birth to, then the [last] offspring is bought." (Bukhari, Kitab-us-Silm)
"The Prophet has forbidden the deal of pre-Islamic times in which people would throw something towards one another and, in such a way, a bargain would take place." (Bukhari, Kitab-ul-Buyoo`)
"The Prophet has forbidden the sale of fruits of a tree if their nature has not become evident." (Muslim, Kitab-ul-Buyoo`)
"The Prophet has forbidden the selling of dates before they catch colour, and the selling of spikes before they turn white and become safe from calamities." (Muslim, Kitab-ul-Buyoo`)
"The Prophet has forbidden the sale and purchase of fruit before their nature has become evident, and the sale of wool as well when it is still on an animal's body, and that of butter oil when it is in milk, and that of milk when it is still in the udders." (Behqi, Kitab-ul-Buyoo`)
"The Prophet has said: losses caused by calamities should be compensated for." (Muslim, Kitab-ul-Buyoo`)
"Uqbah Bin Amir narrates that he heard the Prophet saying that no believer should sell a commodity to his brother which is defective, except when he has informed him about these defects." (Ibni Maajah, Kitab-ut-Tijaraat)
"It is narrated that the Prophet has said: do not hold the milk of camels and goats in their udders before selling it." (Bukhari, Kitab-ul-Buyoo`)
"The Prophet has forbidden people to intercept tradesmen and buy their merchandise before they reach the markets." (Muslim, Kitab-ul-Buyoo`)
"The Prophet has forbidden the deal in which money given in advance becomes the right of the buyer if the deal does not ultimately take place." (Ibni Maajah, Kitab-ut-Tijaraat)
"The Prophet has said: The person, who makes a deal by giving money in advance such that he shall obtain the item after it is ready, should carry out this transaction for a fixed measure, a specified weight and a definite period of time ." (Bukhari, Kitab-us-Silm)
[Muzaara`at]
"Raafai` bin Khudaij narrates that he says: we had most of the agrarian lands among the people of Medina. We used to divide the produce in such a manner that the produce of a certain part of the land called the landlord's part would be ours. Sometimes the produce of that part would be defective while the rest of the produce would be secure and sometimes the produce of the landlord's part would be secure while the rest of the produce would be defective. Consequently, we were forbidden from such a division of crop." (Bukhari, Kitab-ul-Harth)
"Zaid Bin Thaabit (rta) says: This only happened when two people among the Ansaar, who had a quarrel, came to the Prophet and the Prophet said: If this is the result, then do not rent out your lands18." (Abu Daud, Kitab-ul-Buyoo`)
[Pre-emption]
"The Prophet has decreed for all properties which have not yet been divided that they should not be sold without giving the sharers a chance to buy them. But if the boundaries have been determined and the paths have been separated then this is not necessary." (Bukhari, Kitab-us-Shuf'ah)
"The Prophet has said: the neighbour is more entitled to be given the chance to buy a property when it is put up for sale. If he is not present, his arrival should be awaited; But this only necessary when both have the same pathway." (Tirmazee, Kitab-ul-Ahkaam)
Since all the above directives are based on moral misconduct, the directive of prohibition shall be dissolved in circumstances in which this basis no longer exists, just as if as a result of evolution of societies this basis emerges in a new economic activity, then those charged with authority can prohibit the activity and it shall no longer be allowed.
5. Pettiness: ie, a person adopts a mean attitude in his dealings and transactions or adopts a means of livlihood which is much below his status as a human being. Abu Hajeefah narrates:
"The Prophet has prohibited the price of blood and that of dogs19." (Bukhari, Kitab-ul-Buyoo`)
The Prophet has said:
"The person who starts begging from people without having any need should know that this habit shall become a stigma on his face on the Day of Judgement." (Daarmi, Kitab-uz-Zakaat)
It is on this basis that the Quran has prohibited the pledging of securities against acquired loans except in a journey when it is not possible to write down such transactions and in this regard has further directed the believers to return this security to the borrower as soon as written documentation is possible20. The Quran says:
"If you are on a journey and a scribe cannot be found, then a pledge with possession [should serve the purpose]. Then if a situation of mutual trust arises, then the person who has been entrusted with the [security] should return this trust and let him fear Allah, His Lord." (2:283)
6. Bai`-`indat-taa`aat: ie, instead of responding to the call for prayers during the time of worship, a person remains involved in his business. The Quran says:
"O ye who believe! when the call for prayers is sounded on Friday, hasten earnestly to the remembrance of Allah and cease your trading. This is better for you, if you but know." (62:9)