Principles and Foundations of the Islamic Economy

Khutbah from the Islamic Religious Council of Singapore (MUIS)
Originally published: 24 February 2012


Principles and Foundations of the Islamic Economy from the Perspective of Al-Quran and Sunnah of Rasulullah

Dear blessed congregation,

Let us strengthen our faith by performing what Allah has ordained and refraining from what He has prohibited. Let us stay true to the practices and guidance of Rasulullah (saw). May this bring us closer to the right path that is blessed by Allah (swt).

My beloved brothers,

In the past few weeks, much has been said on Rasulullah (saw) as a blessing to mankind. We reflect on this from the Sunnah of the Prophet which has transformed lives and spread exemplary character through good moral values.

On this note, let us ponder upon a hadith narrated by Abu Hurairah (ra):

“I have only been sent to perfect good manners.” Narrated by Imam Al-Bazzar.

Here, an exemplary manner or character encompasses man’s relationship with Allah (swt), with nature and towards ourselves, in the social, spiritual and even economic aspects.

It is no surprise that Islam emphasizes on morals and good character as a key element to overcome challenges in life. Moreover, the laws that Allah (swt) ordained are rooted in principles that we cannot defy – and this includes areas related to economics.

In the sirah of the Prophet, we can see how he held on strongly to moral principles and exemplary character, and it was not abandoned in Rasulullah’s economics transactions and trading activities within the community.

This is illustrated when the Prophet (saw) undertook trading deals on behalf of Sayyidatina Khadijah Binti Khuwailid (ra), where Rasulullah (saw) brought in large profits for the mission. This success was due to none other than the exemplary character of Rasulullah (saw) and his determination in doing trade.

Among the important principles in Islam that Rasulullah (saw) portrayed is being honest in everything that we do, including in economic engagements. Reiterating this, Rasulullah (saw) said:

“Allah blesses those who are charitable in their trade.” Narrated by Imam Bukhari.

That said, my dear brothers, we must know that the emphasis on morality does not mean that we have to reject the idea of a profitable business, or the potential benefits of such transactions to the economy in general.

In fact, this is the benefit of economic activity that Islam acknowledges. It lies in the balance between moral responsibility and material gains. We must bear in mind that, if morals are removed from economics, social balance will be threatened and eventually break down.

This will lead to unhealthy competition and feelings of distrust, when in fact the economic engagements and human interactions within should be on the basis of harmony, cooperation and compassion between one another. Therefore, Allah (swt) reminds us in Surah Al-Takaathur verse 1-2:

“The mutual rivalry (for piling up of worldly things) diverts you, until you visit the graves (until you die).”

My dear brothers,

Allah has created and preserved an economic system to His will, and the Al-Quran and Sunnah gives assurance to man including those who are associated in aspects of trading and the economy.

While Allah (swt) has commanded man to strive for his sustenance and wealth, let us be reminded that He is the All-Provider. Allah (swt) said in Surah Hud verse 6:

“And no (moving) living creature is there on earth but its provision is due from Allah. And He knows its dwelling place and its deposit. All is in a Clear Book – the Luh Mahfuz.”

This assurance by Allah does not at all mean that we should leave everything to fate without effort. Rather, it serves to instill a sense of confidence and peace, as well as faith in destiny when the prosperity we are hoping for does not materialize.

With this, man will not panic nor be demoralized, or even lose hope when their plan fails. Similarly, it reminds us to remember Allah and keep our arrogance in check, when provisions are bestowed upon us. This guarantee of provision by Allah should further motivate us to keep on trying despite multiple failures.

In emulating the exemplary character as propagated in Al-Quran and the Sunnah of Rasulullah (saw), let us pray for success in all that we do, as we seek His pleasure. Amin.

------------------

Glossary:
Amin: Amen.
Hadith: Reports on the sayings and the traditions of Prophet Muhammad (saw) or what he witnessed and approved are called hadith (plural: ahadith). These are the real explanation, interpretation, and the living example of the Prophet (saw) for teachings of the Qur'an. His sayings are found in books called the hadith books. Some famous collectors of hadith are Imam Al-Bukhari, Imam Muslim, Imam An-Nasa'i, Imam Abu Dawood, Imam At-Tirmizi, and Imam Majah. There are many others.
Luh Mahfuz "Clear Record." "Human knowledge is subject to time, and is obliterated by time. Allah's knowledge is like a Record and endures forever. And His Record has a further quality which human records have not. The most permanent human record may be quite intelligible to those who make it but may be ambiguous to others and may become unintelligible with the progress of time, as happens almost invariably to the most enduring inscriptions from very anceint times: but in Allah's "Record" or knowledge there is no ambiguity, for it is independent of time, or place, or circumstances." Yusuf Ali, Footnote #1450 to verse 10:61.
(ra): Radiallhu Anhu, "May Allah be pleased with him." This phrase is commonly added after mentioning one of the companions of the Prophet (saw).
Rasulullah: The Prophet of God, Muhammad (saw).
(saw): These letters are abbreviations for the words “Salla Allahu ‘Alaihi Wa Sallam,” which means, “May the blessing and the peace of Allah be upon him.” When the name of Prophet Muhammad is mentioned, a Muslim is to respect him and invoke this statement of peace upon him.
Sirah: Biography; in this case, a biography of the Prophet Muhammad (saw).
Sunnah: In this context, the sayings and practices of the Prophet Muhammad (saw).
(swt): These letters are abbreviations for the words of “Subhanahu Wa Ta’ala.” When the name of Almighty Allah is pronounced, a Muslim is to show his respect to Him by reciting this. The meaning of this statement is that Allah is purified of having partners or a son.

The Islamic Perspective on Oaths

This post is in response to Aunt Arctic's diary, Have you ever taken an oath or a vow, and what d(does)id it mean to you? The notion that the French Acadians in Canada would refuse to swear an oath of allegiance before God because of the strong possibility of breaking the oath in the future is actually a very commonplace attitude in Islam. Oaths are taken very seriously among Muslims, and so we tend to be more conservative in making the type of decision that results in some sort of oath, vow or contract. In other words, we try not to bite off more than we can chew. This is one of the reasons why Muslims (both individuals and businesses) try to avoid debt: not only because of the prohibition against interest, but also to avoid breaking a contract in case of financial distress.

The Qur'an has several verses that relate to the making of oaths. Some of the more important verses are:

And make not God's (name) an excuse in your oaths against doing good, or acting rightly, or making peace between persons; for God is One Who heareth and knoweth all things. (2:224)

God will not call you to account for thoughtlessness in your oaths, but for the intention in your hearts; and He is Oft-forgiving, Most Forbearing. (2:225)

God will not call you to account for what is futile in your oaths, but He will call you to account for your deliberate oaths: for expiation, feed ten indigent persons, on a scale of the average for the food of your families; or clothe them; or give a slave his freedom. If that is beyond your means, fast for three days. That is the expiation for the oaths ye have sworn. But keep to your oaths. Thus doth God make clear to you His signs, that ye may be grateful. (5:92)

Fulfill the Covenant of God when ye have entered into it, and break not your oaths after ye have confirmed them; indeed ye have made God your surety; for God knoweth all that ye do. (16:91)

As you can see, in Islam, the breaking of oaths has strong consequences so the making of an oath is an important matter to think over. For example,

For those who take an oath for abstention from their wives, a waiting for four months is ordained; if then they return, God is Oft-forgiving, Most Merciful. (2:226)

Deciding to separate from one's spouse automatically requires a four month period for both the cooling off of emotions and also to determine if the wife may have conceived a child.

The strong consequences also occur in any aspect where some sort of contract is drawn up, such as a business transaction, or in a legal proceeding:

But if it gets known that these two were guilty of the sin (of perjury), let two others stand forth in their places,- nearest in kin from among those who claim a lawful right: let them swear by God: "We affirm that our witness is truer than that of those two, and that we have not trespassed (beyond the truth): if we did, behold! the wrong be upon us!"

That is most suitable: that they may give the evidence in its true nature and shape, or else they would fear that other oaths would be taken after their oaths. But fear God, and listen (to His counsel): for God guideth not a rebellious people: (5:110-11)

Likewise, a dispute between husband and wife requires the strongest of oaths and a very terrible consequence if one of the two is lying against the other:

And for those who launch a charge against their spouses, and have (in support) no evidence but their own,- their solitary evidence (can be received) if they bear witness four times (with an oath) by God that they are solemnly telling the truth;

And the fifth (oath) (should be) that they solemnly invoke the curse of God on themselves if they tell a lie.

But it would avert the punishment from the wife, if she bears witness four times (with an oath) By God, that (her husband) is telling a lie;

And the fifth (oath) should be that she solemnly invokes the wrath of God on herself if (her accuser) is telling the truth. (24:6-9)

Finally, the following verse sums up very well both the consequences to breaking one's oath and the potential rewards, insha'allah, for keeping one. (This verse has an historical background to it, but the general application remains applicable.)

Verily those who plight their fealty to thee do no less than plight their fealty to God: the Hand of God is over their hands: then any one who violates his oath, does so to the harm of his own soul, and any one who fulfills what he has covenanted with God,- God will soon grant him a great Reward. (48:10)

Cross posted at Street Prophets.