- Basic Tenets of Islamic Economics
- Islamic Economic system in the light of Quran and Sunnah
Economics as a major field of study is always debated , when it comes to different schools of thought some favor Capitalism as the fair system in their country whilst some go for communism and only limited number of people ( I suppose) know and willing to know about Islamic Economics. However, this essay tries to ease the understandings of some students and academicians about Islamic Economics, which have not come across it yet, or is a new topic for them.
To explain an Islamic Economic system: A system of Economy which encourages every individual to abide by the principles given by Allah swt ( Subhanahu Wa Tala, glorified and exalted be he) and they work collectively (suppressing the selfish SELF) to reach falah (salvation). This word falah has many meanings i.e. to live to please the Almighty Allah by obeying, loving and knowing him. Falah can be even understood as if one is working to find provision for his/her family. Giving charity, taking care of poor and needy ones, not harming fellow humans etc. they all lie in the path of falah.
Islamic Economics is very different from other major schools of economics in the sense that its core principles are directly descended from a divine source, which is Allah swt. Leaving no space for any man-made rules/principles to attribute itself to what Allah the most high has presented, which is the Sharia (Islamic guidance). Therefore, Islamic Economic is the only school among all other schools, which is peculiar, and different in its essence (claiming to be unique ontologically and epistemologically)
Islamic Economics is claiming its uniqueness ontologically and epistemologically among all other schools of thoughts. Ontology is, to put it in simple words, the study of a thing and where does it come from while epistemology is how things work and by which method we can understand them.
Islamic Economics (its principles) come from Allah Almighty (accepting the fact that Islam is the only religion enjoined by the Exalted Allah) giving it a unique spiritual form and not a mere materialistic, purposeless and lifeless one. Thus, accepting the fact, that Allah swt is transcendent then his guidance i.e religion of Islam is pure and flawless. Islamic Economics emanates from the Islamic doctrines (which is Quran and Sunnah). Therefore, it is distinguished from the rest schools of thought in the sense that it is not theorized or established by any human being rather claiming to be from Almighty Allah and Muslims concur with that objectively without distorting any of its principles (meaning they do not perceive that subjectively). The second part of the argument declares that Islamic Economics is different from the rest in epistemology. This shall be explained in the second part of the article (basic tenets of Islamic Economics). Because it will explain how Islamic Economics perceives the world from its lenses and what methods, it uses to address the current crisis and catastrophes i.e. inequality, capitalism, poverty, corruption etc.
Basic tenets of Islamic Economics
- Humans must have finite needs and should limit their desires (Need vs. Want)
Every human is inclined towards wanting too much from this world while neglecting the fact of difference between Needs and wants. The basic question, which any of us needs to ask ourselves, is how much do I need to survive?
- The dispersion of wealth through zakah, charity, inheritance, Waqf
- It encourages trade and free market without monopolizing or squandering of resources
- Prohibition of interest, it expands the income inequality and the gap between rich and poor people of society
- Desires are driven by profit motives at the same time by spiritual motives as well. For instance we seek profits not just to feed our selfish Nafs( the self) rather to help or feed the needy ones too
- Focuses on distribution, production takes care of itself. if there is less supply, suppliers will increase supply ( since they are driven by profit)
- Condemns the current approach towards consumerism leaving behind excessive wastes.
- prohibits gambling ,it exploits the poor , when the poverty strikes poor people incline towards gambling and it impoverishes them more
- Money is not considered as a commodity unlike, contemporary economic that put its price as interest
- It promotes an egalitarian society, where in a society everyone receives equal rights and treatments
- Inflation and employment are twin problems. Avoid them with abolition of interest, encouraging zakat, well consumer behavior. Since Interest causes unemployment it reduces investment
- It has multi-dimensional moral principles
Islamic Economics system in the light of Quran & Sunnah
Quran as the divine speech of Almighty Allah miraculously reveals itself as a guidance for Humanity. Sunnah/Hadith of Prophet Muhammad pbuh (peace be upon him) are the sayings of him, which are recorded in books of hadiths. Since Prophets of Allah made no mistake in conveying the religion to fellow men, therefore every authentic narration from Prophet Muhammad pbuh written in reliable books are inspired by his lord leaving no space for objection.
Islamic Economics is backed and resourced by Quran and Sunnah, thus its principles are emanating from these two reliable resources in academia. Nevertheless, bellow some of the Quranic verses and prophetic narrations are mentioned which give insights about fundamentals of a fair and a just economic system.
- Quran Encourages us to spend on poor, orphans, our own families ,relatives and needy ones
“Righteousness is not in turning your faces towards the east or the west. Rather, the righteous are those who believe in Allah, the Last Day, the angels, the Books, and the prophets; who give charity out of their cherished wealth to relatives, orphans, the poor, ˹needy˺ travellers, beggars, and for freeing captives; who establish prayer, pay alms-tax, and keep the pledges they make; and who are patient in times of suffering, adversity, and in ˹the heat of˺ battle. It is they who are true ˹in faith˺, and it is they who are mindful ˹of Allah” (2:177
“Have you seen the one who denies the ˹final˺ Judgment?, That is the one who repulses the orphan, and does not encourage the feeding of the poor”. (107:1-30)
“They ask you ˹O Prophet in˺ what ˹way˺ they should donate. Say, “Whatever donations you give are for parents, relatives, orphans, the poor, and ˹needy˺ travelers. Whatever good you do is certainly well known to Allah.” (2: 215)
“Alms-tax is only for the poor and the needy, for those employed to administer it, for those whose hearts are attracted ˹to the faith˺, for ˹freeing˺ slaves, for those in debt, for Allah’s cause, and for ˹needy˺ travelers. ˹This is˺ an obligation from Allah. And Allah is All-Knowing, All-Wise” (9: 60)
“So give your close relatives their due, as well as the poor and the ˹needy˺ traveller. That is best for those who seek the pleasure of Allah, and it is they who will be successful”. (30: 38)
“And from their properties was [given] the right of the [needy] petitioner and the deprived”. (51: 19)
“and give food—despite their desire for it—to the poor, the orphan, and the captive,
˹saying to themselves,˺ “We feed you only for the sake of Allah, seeking neither reward nor thanks from you”. (76:8-9)
- Zakat(Donation & Charity) : The Antithesis of interest & Wealth concentration
“And whenever they make a donation, small or large, or cross a valley ˹in Allah’s cause˺—it is written to their credit, so that Allah may grant them the best reward for what they used to do”. (9: 121)
“Surely those who recite the Book of Allah, establish prayer, and donate from what We have provided for them—secretly and openly—˹can˺ hope for an exchange that will never fail”, (35: 29)
“Believe in Allah and His Messenger, and donate from what He has entrusted you with. So those of you who believe and donate will have a mighty reward” . (57: 7)
“Indeed, those men and women who give in charity and lend to Allah a good loan will have it multiplied for them, and they will have an honorable reward”. (57:18)
- Corruption in market
“Woe to the defrauders! , Those who take full measure ˹when they buy˺ from people, but give less when they measure or weigh for buyers, Do such people not think that they will be resurrected” (83:1-4)
“O my people! Give full measure and weigh with justice. Do not defraud people of their property, nor go about spreading corruption in the land.” (11:85)
“Give in full when you measure, and weigh with an even balance. That is fairest and best in the end” (17:35)
- Prohibition of Wealth concentration among riches
“O believers! Indeed, many rabbis and monks consume people’s wealth wrongfully and hinder ˹others˺ from the Way of Allah. Give good news of a painful torment to those who hoard gold and silver and do not spend it in Allah’s cause” (9: 34)
- Moderation in Consumption and prohibition of extravagance
“They are˺ those who spend neither wastefully nor stingily, but moderately in between”. (25- 67)
“Do not be so tight-fisted, for you will be blameworthy; nor so open-handed, for you will end up in povert” (17:29)
“Indeed, the wasteful are brothers of the devils, and ever has Satan been to his lord ungrateful”. (17:27)
- Abolition of Exercise in Monopoly
“Competition for more ˹gains˺ diverts you ˹from Allah˺, until you end up in your˺ graves”. (102:1- 2)
- Insincerity in donation (showing off)
“O believers! Do not waste your charity with reminders ˹of your generosity˺ or hurtful words, like those who donate their wealth just to show off and do not believe in Allah or the Last Day. Their example is that of a hard barren rock covered with a thin layer of soil hit by a strong rain—leaving it just a bare stone. Such people are unable to preserve the reward of their charity. Allah does not guide ˹such˺ disbelieving people”. (2: 264)
“Those who spend their wealth in the cause of Allah and do not follow their charity with reminders of their generosity or hurtful words—they will get their reward from their Lord, and there will be no fear for them, nor will they grieve”. (2:262)
“So woe to those ˹hypocrites˺ who pray ,yet are unmindful of their prayers; those who ˹only˺ show off, and refuse to give ˹even the simplest˺ aid.(107: 4-7)
Kind words and forgiveness are better than charity followed by injury. And Allah is Self-Sufficient, Most Forbearing”. (2:263)
- Righteousness is when you donate from what you love
“You will never achieve righteousness until you donate some of what you cherish. And whatever you give is certainly well known to Allah”. (3: 92)
“And donate from what We have provided for you before death comes to one of you, and you say, “My Lord! If only You delayed me for a short while, I would give in charity and be one of the righteous.” (63: 10)
- Prohibition of interest
“Allah has made interest fruitless and charity fruitful. And Allah does not like any ungrateful evildoer”. (2: 276)
“O believers! Do not consume interest, multiplying it many times over. And be mindful of Allah, so you may prosper”. (3:130)
“Whatever loans you give, ˹only˺ seeking interest at the expense of people’s wealth will not increase with Allah. But whatever charity you give, ˹only˺ seeking the pleasure of Allah—it is they whose reward will be multiplied”. (30:39)
- Consuming others’ property unjustly
“Do not devour one another’s property wrongfully, nor throw it before the judges in order to devour a portion of other’s property sinfully and knowingly”. (2: 188)
“taking interest despite its prohibition, and consuming people’s wealth unjustly. We have prepared for the disbelievers among them a painful punishment” .(4:161)
“O my people! Give full measure and weigh with justice. Do not defraud people of their property, nor go about spreading corruption in the land.”(11:85)
“O believers! Do not devour one another’s wealth illegally, but rather trade by mutual consent. And do not kill ˹each other or˺ yourselves. Surely Allah is ever Merciful to you”. (4:29)
- Necessity of writing the transactions that take effect later on
“O believers! When you contract a loan for a fixed period of time, commit it to writing. Let the scribe maintain justice between the parties. The scribe should not refuse to write as Allah has taught them to write. They will write what the debtor dictates, bearing Allah in mind and not defrauding the debt. If the debtor is incompetent, weak, or unable to dictate, let their guardian dictate for them with justice. Call upon two of your men to witness. If two men cannot be found, then one man and two women of your choice will witness—so if one of the women forgets the other may remind her. The witnesses must not refuse when they are summoned. You must not be against writing ˹contracts˺ for a fixed period—whether the sum is small or great. This is more just ˹for you˺ in the sight of Allah, and more convenient to establish evidence and remove doubts. However, if you conduct an immediate transaction among yourselves, then there is no need for you to record it, but call upon witnesses when a deal is finalized. Let no harm come to the scribe or witnesses. If you do, then you have gravely exceeded ˹your limits˺. Be mindful of Allah, for Allah ˹is the One Who˺ teaches you. And Allah has ˹perfect˺ knowledge of all things”. (2:282)
- Emphasis on Justice
“O believers! Stand firm for Allah and bear true testimony. Do not let the hatred of a people lead you to injustice. Be just! That is closer to righteousness. And be mindful of Allah. Surely Allah is All-Aware of what you do”. (5:8)
- Mutual benefit and guardianship in society
“The believers, both men and women, are guardians of one another. They encourage good and forbid evil, establish prayer and pay alms-tax, and obey Allah and His Messenger. It is they who will be shown Allah’s mercy. Surely Allah is Almighty, All-Wise”. (9:71)
- Preservation of trusts and promises
˹The faithful are˺ also those who are true to their trusts and covenants” (70:32)
“Indeed, Allah commands you to return trusts to their rightful owners; and when you judge between people, judge with fairness. What a noble commandment from Allah to you! Surely Allah is All-Hearing, All-Seeing”. (4:58)
- Prohibition of Gambling
“O believers! Intoxicants, gambling, idols, and drawing lots for decisions are all evil of Satan’s handiwork. So shun them so you may be successful”. (5:90)
Humans are generally hasty (17: 11), miserly and greedy (17: 100) (47:38), impatient (70: 19) and are greedy for wealth (Al-Qur’an, Al-Aadiyat: 8).
- The similitude of believers in regard to mutual love, affection, fellow feeling is that of one body; when any limb of it aches, the whole body aches, because of sleeplessness and fever. (Sahih Muslim, Book 45, Hadith 84)
- A man is not a believer who fills his stomach while his neighbour is hungry. (Al-Adab Al-Mufrad, Book 6,Hadith 12)
- On the authority of Abu Hurayrah (may Allah be pleased with him), who said that the Messenger of Allah (ﷺ) said: Allah (mighty and sublime be He) will say on the Day of Resurrection: O son of Adam, I fell ill and you visited Me not. He will say: O Lord, and how should I visit You when You are the Lord of the worlds? He will say: Did you not know that My servant So-and-so had fallen ill and you visited him not? Did you not know that had you visited him you would have found Me with him? O son of Adam, I asked you for food and you fed Me not. He will say: O Lord, and how should I feed You when You are the Lord of the worlds? He will say: Did you not know that My servant So-and-so asked you for food and you fed him not? Did you not know that had you fed him you would surely have found that (the reward for doing so) with Me? O son of Adam, I asked you to give Me to drink and you gave Me not to drink. He will say: O Lord, how should I give You to drink when You are the Lord of the worlds? He will say: My servant So-and-so asked you to give him to drink and you gave him not to drink. Had you given him to drink you would have surely found that with Me. (Qudsi,Hadith 18)
- Zubair bin ‘Awwam (May Allah be pleased with him) reported:
Messenger of Allah (ﷺ) said, “It is far better for you to take your rope, go to the mountain, (cut some firewood) carry it on your back, and sell it and thereby save your face than begging from people whether they give you or refuse.( Al-Bukhari , Book 1, Hadith 5390
- Narrated ‘Abdullah bin ‘Amr:
A man asked the Prophet (ﷺ) , “What sort of deeds or (what qualities of) Islam are good?” The Prophet (ﷺ) replied, ‘To feed (the poor) and greet those whom you know and those whom you do not Know .(Sahih al-Bukhari: Book 2, Hadith 5)
- Narrated Abu Huraira:
A man asked the Prophet, “O Allah’s Messenger (ﷺ)! What kind of charity is the best?” He replied. “To give in charity when you are healthy and greedy hoping to be wealthy and afraid of becoming poor. Don’t delay giving in charity till the time when you are on the death bed when you say, ‘Give so much to soand- so and so much to so-and so,’ and at that time the property is not yours but it belongs to so-and-so (i.e. your inheritors. (sahih bukhari, book 55,hadith 11)
- The truthful and trustworthy businessman will be in the company of Prophets, saints and martyrs on the Day of Judgment.” (Jami-al-Tirmizi, Vol 3, Chapter on Business, Hadith Number 1209)
- For one of you to go out early to gather firewood and carry it on his back so that he can give charity from it and be free of need from the people, is better for him than to ask a man who may give that to him or refuse. Indeed, the upper hand (giving) is more virtuous than the lower hand (receiving), and begin with (those who are) your dependents.” (Jami-at-Tirmidhi, Vol 2, Chapters on Zakāt, Hadith Number 680)
- May Allah’s mercy be on him who is lenient in his buying, selling, and in demanding back his money [or debts].” (Sahih Bukhari Book 34, Hadith Number 29).
- It was narrated that ‘Uqbah bin ‘Amir said:
“I heard the Messenger of Allah (ﷺ) say: ‘The Muslim is the brother of another Muslim, and it is not permissible for a Muslim to sell his brother goods in which there is a defect, without pointing that out to him.”‘(Sunan-Ibn Majah, book 12, hadith 2331)
- Prophet Muhammad (pbuh) said: “The seller and the buyer have the right to keep or return the goods as long as they have not parted or till they part; and if both the parties spoke the truth and described the defects and qualities [of the goods], then they would be blessed in their transaction, and if they told lies or hid something, then the blessings of their transaction would be lost.” (Sahih Bukhari, Vol 3, Book of Sales, Hadith Number 2079).
- Narrated `Abdullah (bin Mas`ud):
The Prophet (ﷺ) said: “Whoever takes a false oath to deprive somebody of his property will meet Allah while He will be angry with him.” (Sahih Bukhari, Book 42, Hadith 6).
- It was narrated from ‘Abdullah that:
the Messenger of Allah forbade artificially inflating prices, meeting traders on the way, and for a town-dweller to sell for a desert-dweller(Book 44, Hadith 49)
- Narrated Tawus:
Ibn `Abbas said, “Allah’s Messenger (ﷺ) said, ‘Do not go to meet the caravans on the way (for buying their goods without letting them know the market price); a town dweller should not sell the goods of a desert dweller on behalf of the latter.’ I asked Ibn `Abbas, ‘What does he mean by not selling the goods of a desert dweller by a town dweller?’ He said, ‘He should not become his broker. (Sahih al-Bukhari 2158)
- Those are your brothers [workers under you] who are around you; Allah has placed them under you. So, if anyone of you has someone under him, he should feed him out of what he himself eats, clothe him like what he himself puts on, and let him not put so much burden on him that he is not able to bear, [and if that be the case], then lend your help to him.” (Sahih Bukhari, Vol 3, Book of Manumission, Hadith Number 2545).
- Look at the one who is at a lower level than you, and do not look at the one who is above you, for that may keep you from scorning the blessings of Allah.” (Al-Muslim, Book of Asceticism, Vol 7, Hadith No. 7430)
- Richness is not in having many possessions, but richness is being content with oneself.” (Jamai-at-Tirmidhi, Chapters on Zuhd, Vol 4, Hadith No. 2373).
- Narrated Anas bin Malik:
The Prophet (ﷺ) forbade the sale of fruits till their benefit is evident; and the sale of date palms till the dates are almost ripe. He was asked what ‘are almost ripe’ meant. He replied, “Got red and yellow.”(Sahih al-Bukhari 2197
- Narrated ‘Abdullah bin ‘Umar:
The Messenger of Allah (ﷺ) as saying: None of you must buy in opposition to one another ; and do not go out to meet the merchandise, (but one must wait) till it is brought down to the market.(Sunan Abi Dawud 3436)
- It was narrated from ‘Abdullah bin ‘Umar that the Messenger of Allah (ﷺ) said:
“Give the worker his wages before his sweat dries.” Sunan Ibn-Majah Vol. 3, Book 16, Hadith 244A
- Muslim must not offer a price above that offered by another Muslim( Bulugh al-Maram Book 7, Hadith 809)
This article focused mainly on some tenets of Islamic Economics in the light of Quranic verses and prophetic traditions. Although it is, a brief explanation of Islamic Economics which shed some light upon its main themes. Each verse and every hadith mentioned above has comprehensive meanings and wide implications. However, anyone interested to find more about them I strongly recommend to refer to the Quranic exegesis of the verses above for a better understanding.
Islamic Economics doctrines shall never be distorted since its principles are claimed to have come from a divine revelation. Since it is proven to have come from God then it will never be applicable to current Economic systems because Islamic Economics has a sense of spirituality far beyond what contemporary Economy offers us, which is a materialistic, purposeless and nihilistic system. Thus, it leaves us to the point that we need to Change the mindset of people about what objective moral principles are. And how to understand the Islamic scriptures? Then will come to the point of studying Islamic Economics only that time it will be implementable. Otherwise, a cold, irrational, and subjective Economic system, which is made by fallible human beings, will never take us to a planet without income inequality, poverty, waste of resources, corruption and injustice. We need to remove hurdles faced in the implementing of an economic system, which is best explained, by Islam. These hurdles can be summarized in: Existence of interest in the economy, exercise of monopoly, exploit of poor by rich class of society, income inequality, injustice, failed consumerism and so on.
Disclaimer: Everything except the referenced information are from the writings of the Author , solely belongs to him
Artilce written by Mohammad Abid Bahrami
Mohammad Abid Bahrmi is an Economic Analyst and junior researcher whose main focus is on : Economics, Politics, Philosophy, History and Religion
M. Sc. Economics