Islamic economic system based upon the fundamental principles of Islam, ensures social and economic justice, human goodwill, equitable distribution of wealth and individual freedom related to social welfare. On the contrary, under Capitalism or Socialism, neither social and economic justice nor equitable distribution of income is fully achieved. According to Islam, Source of income and earning Halal (lawful) livelihood is essential. It is Permissible to earn whatever one can but by fair means. In addition, he has to pay “Zakat” and Sadaqaat to the needy people, performing Hajj when becomes due and spend money on Jihad and for the welfare of the poor people. In this way, Islam ensures equitable distribution of wealth.
Basic Principles of Financial Matters
The transactions prohibited by Shariah, are in fact harmful for people, on the other hand the matters permitted by Islam are beneficial for people, provided the goods should be in possession of the person. There are the following two principles for permissibility of these matters: 1) It should not involve Riba; 2) It should not involve Gharrar (Uncertainty). Moreover, while buying and selling a product, Loan may not be included in the contract. In addition, buying a commodity or product on the condition of giving or taking loan is also prohibited.
Trade in Islam:
In Islam, Trade is permissible. Quran says, “Woe unto the defrauders! They are such that, when they have to get, they take in full measure and when they have to give they defraud. Do they not realize that they shall be brought back, raised a new, on the great day, the day when all mankind shall stand before the Lord of the worlds” (83:1-3).In this Verse, it has been emphasized that they must be honest while buying and selling. Similarly, in another Verse, it has been said that, “Give full measure and correct weigh men, do not cheat and do not spread evil in the land after it has been set on the right way”. (7:84). Hadith (Traditions of the Holy Prophet (S.A.W) relating to Trade, are given below: 1) Abu Huraira (R.A) reported that the Holy Prophet (S.A.W) said, Allah is Righteous and accepts right things. He has directed the Muslims to do that, He has directed to His Messengers (Muslim). 2) As per another Hadith, Rafio bin Khadij (R.A) when asked the Holy Prophet that which job is superior, he said that what has been earned by a man with his physical labour and every trade Free from unfair means and lies (Ahmed). 3) As per Jabir Ibn-E-Abdullah (R.A), the Holy Prophet (S.A.W) said, may Allah be kind to the person who facilitates the people in buying and selling (Bukhari).
Islamic Economics: Environment and Requirement:
Islamic Economics has been defined as the study of human falah (Welfare) to be achieved through managing the resources of earth. According to the Holy Quran, it has been asked to decide falah, at the spiritual, economic, cultural and political level. The second aspect of the definition needs to consider the means of making proper use of the resources of earth for achieve in falah. The Holy Quran says, Allah has created the resources, which are enough for His creatures. (41:10). But proper utilization of these resources is a problem, man is responsible for his deeds to Allah on the Day of The Resurrection.
Precise of Property:
According to the Holy Quran, everything including wealth, belongs to Allah, and Allah the Al mighty delegates the right of property to man. In this context, the Holy Quran says, “Give to them from the property of Allah which He has bestowed upon you:”.(24:33) From the above-quoted verses of the Holy Quran, it is clear that wealth is the property of Allah, who has given the same in the subordination of the man with some restrictions given below:
1. Man must convey a specified portion to others,
2. Use of wealth as per Commandment of Allah, to avoid spreading disorder on the earth.
3. Use of wealth as per Commandment of Allah, to avoid spreading ills and disordering on the earth.
Islamic Economics and Trade:
Industry and Trade are essential for human life. In this regard, there are clear directives in Quran and Sunnah; of which the beneficial and lawful commodities are permissible and the harmful and unlawful ones have been prohibited. In this context, the Holy Quran says, “And Allah has permitted the Trade and prohibited Riba”. (2:275). It has further been directed that, “And do not misappropriate what belong to others, nor may you give presents to those in authority with a view to gain an opportunity to snatch unjustly that which is rightfully a part of that which belongs to others”.(2:188). Furthermore, the Holy Quran says, O Believers! do not appropriate one another’s goods illegally. Indeed, you should undertake transactions by agreement”.(4:29). This prohibits all kinds of unlawful business. Any kind of trade or business, which is not against the directions, or objectives of Shariah, is permissible. In this connection, there are the following Traditions of the Holy Prophet (S.A.W), which clarify the matters related to trade and business: “Woe to those that deal in fraud, those who, when they have to receive by measure from men, exact full measure, but when they have to give by measure or weight to men, give less than due. Do they not think that they will be called to account?” [Al-Mutaffifin: 1-4]. Keeping the commodities of general use in possession and not supplying them in the market for the sake of increasing the price is prohibited [Ahmed-Bin-Hanbal: 19802]. Prophet Muhammad (pbuh) said: “No one hoards but the traitors (i.e. the sinners).” (Abu Da’ud, No. 2990) Prophet Muhammad (pbuh) said: “The importer [of an essential commodity] into the town will be fed [by Allah], and the hoarder will have [Allah’s] curse upon him.” (Ibn Majah, No: 2144) Trying to buy commodities before they reach market is prohibited because market will decide the price [Muslim: 1517].
Futures & Forward Trading:
Islamic View Ibn Abbas (May Allah be pleased with Him) reported Allah’s Messenger (pbuh) as saying: “He who buys food grain should not sell it until he has taken possession of it.” [Muslim]. Prophet Muhammad (pbuh) has said that Almighty Allah proclaims: “I am a one third partner of a two man partnership until one of them acts dishonestly to his partner, and, in such an event, I then leave them.” [Abu Daud]. “Those who spend their wealth in the way of Allah and do not follow up their spending by stressing their benevolence and causing hurt, will find their reward secure with their Lord, They have no cause for fear and grief”.
Reducing the impact of harmful products and practices:
Since the unlawful activities and transactions like interest, gambling, speculation, cloning and Weapons of mass destruction are prohibited by Shariah, such practices are avoided by the Muslims. This reduces the impact of harmful products and practices.
Striving for greater stability:
As the people understand that the Conventional financial system has failed to deliver, especially in the days of economic crises, there is need for the positive change, they want the system, which would be responsible and transparent. It should only be favourable for the rich people but also help poor people, creating employment opportunities, promoting real products and economic activities.
The author of this article is studying at the University of Dhaka.