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Umr Ryad I Money and Wealth. An Islamic Perspective.


Money and Wealth: An Islamic Perspective

Islam is often perceived to be an obstruction to business, with the economies of most Muslim states underdeveloped. Islamist political movements are usually negatively viewed as antagonists to business, and a danger to security and a source of instability. In Islam, nevertheless, as in the other monotheistic religions, there are detailed ethical concerns over income and wealth distribution. It is agreed among many modern Muslim Qur’ân exegetes that in order to understand the socio-economic aspects of the Qur’ân, one should first of all resort to the social circumstances of the sixth-century Arabian Peninsula. The Bedouin existence was the main feature of the society, which shaped their thinking and determined their way of life. Historians almost agree that several features characterized the life, personality and the economic behavior of the Bedouin: namely, endurance, individualism, clanism, hospitality, fortitude, enthusiasm for conflict. The sense of individualism would thus suggest that the society bore one of the early signs of the spirit of capitalism. The sense of individuality and the loyalty to the clan shaped the economic structure of pre-Islamic Arabians. Representing the clan, as a whole in a community that lived on common economic recourses, the head of the clan would have to draw the line between what was regarded as private interest and that was of common concern. In that sense, wealth in the Qur’ān is sometimes used to refer to the herds of nomadic desert-dwellers.

It is not often clear, however, whether or to what extent the references to wealth in the Qur’ān have to do with moveable or immoveable property. There is no formal, legal concept of property in the Qur’ān. These references to property are broad, flexible and grounded in Arabian custom and common usage. But money is barely attested as measure of value or medium of exchange. The language of the Qur’ān reflects generally the monetary situation of the Hijāz (Arabian Peninsula) of the early seventh century. Coinage circulated in small quantities from the neighboring lands of Syria and Iran but played a very minor role in its commerce. Classical lexicographers and exegetes commonly define the word māl (which refers in modern use to money), as ‘whatever men possess of gold, or silver, or wheat, bread, or beasts, or garments or pieces of cloth, or weapons or other things.’ In short, “anything one possesses”. Wealth, on the other hand, occurs often in the Qūr’an as referring to worldly possessions and property. Wealth is considered permissible and even desirable under certain conditions but a dangerous thing overall.

To begin with, God is ghanī, which means both ‘wealthy’ and ‘able to dispense with’ something or someone. He has no need of creation and the world. Human beings, however, need at least a bare minimum of the goods of this world, which can only come from God. God combines his wealth with mercy, providing humans with property to satisfy their needs. In a great many verses, worldly wealth is paired with children, together constituting a vain enticement or temptation away from God. Similarly, greed is a form of ingratitude (74:11-15). Man, though created for toil and struggle, still boasts, ‘I have squandered abundant wealth’ (90:4-6). Muslims held their religion as comprising a set of principles and doctrines that regulate his relationship with God and with his society. Islam is not only a divine service, but also includes a code of conduct of both spiritual and material life. The Muslim understanding of wealth emanates from the belief that God is the creator and owner of wealth and people are the vicegerent of God. It is a divine duty to work. Social justice is the result of productive labour and equal opportunities such that everyone can use all their abilities in work and gain just reward from that work effort. Justice and equality in Islam means that people should have equal opportunity and does not imply that they should be equal in poverty or in riches.

The basic principles of an Islamic financial system include among others, 1) prohibition of interest or usury in order that borrowers and lenders share rewards as well as losses in an equitable fashion and that the process of wealth accumulation and distribution in the economy be fair and representative of true productivity. 2) Risk sharing. Because interest is prohibited, suppliers of funds become investors instead of creditors. 3) Money as “potential” capital. Islam recognizes the time value of money, but only when it acts as capital, not when it is “potential” capital. 4) Prohibition of speculative behavior Islam discourages hoarding and prohibits transactions featuring extreme uncertainties. 5) Sanctity of contracts. Islam upholds contractual obligations and the disclosure of information as a sacred duty. The eleventh-century Muslim scholar al-Ghazâlî (d. 1111) divided all precious things into three groups: a) what is sought for its own intrinsic value, b) what is sought as means to an end, and c) what is sought for both. What is sought as a means to an end is gold and silver which are pieces of metal having no value of their own. If God had not made them instruments of purchasing things, their values would have been equal to other stones. He explained that a man who has got food, but has got no camel and another who has got a camel but no food. Between them, therefore, there is a necessity in their exchange to fix the value of things. But value of these things is not equal.

Therefore, silver and gold work as judges for all things, for the fixation of value, and for getting the things through their medium. He draws analogy between the two metals and a mirror which has no value in its own, but derives its value because it is able to reflect images and pictures. As a medium of exchange, it is not allowed in Islam to hoard them as oppressing the purpose for which God had made them. Another eleventh-century scholar, Ibn Mufdal al-Râghib al-Asfhânî (d. 1108) divided human needs into main categories: physiological and spiritual. Among the first one are food, clothing, shelter and marriage. These needs have to be fulfilled with the Islamic legal scope and according to God’s laws. Obedience to God’s rules, he went on, by fulfilling religious duties and worship will have its direct influence on the second type of needs. And among these non-physiological needs is the need to acquire knowledge, secular or religious. This classification of human needs would have various implications when determining the role of individual, community, religious groups, and above all the state in relation to meeting these needs. Al-Shaybânî, another thirteenth-century scholar, is reported to have said: ‘seeking to earn money is an obligation for every Muslim, just as seeking knowledge is an obligation’. The prophets, he went on, including Jesus and Muhammad, practiced trades, as did other great figures of the Islamic past. In his view, there is no reward for wealth in itself, but one must only be thankful for it. A rich man argues with a poor man, saying that God borrows from the rich but the poor man was convinced that when God borrows from the rich, it is for the sake of the poor: ‘And one may seek loans from a person one loves or from a person one does not love, but loans are only sought for the sake of a person whom one loves.’ The rich need the poor, whereas the poor, appearances to the contrary, do not need the rich. The poor could all agree not to receive, and if they did so they would only be praised; but the rich, who must acquit themselves of the duty of almsgiving, would then be in a sorry plight.

Against the background of the literature of their ancestors, contemporary Muslim thinkers, started to develop, what has been known since the late 1940s, and especially since the mid-1960s, as ‘Islamic economics’, as the blueprint of an economic system consonant with the original sources of Islam. The self-designated Islamic economists go to great lengths, like other social scientists, to buttress their case with logic, scientific theory, and empirical evidences from Islamic history. The key principle governing their philosophy is that of the unity of God, His universe, and His people. The First International Conference on Islamic Economics was held at Mecca in 1976. The most salient features of the system are: the significance of zakat, a tax considered the basis of Islamic fiscal policy, Islamic norms, and the prohibition of interest, viewed as the centerpiece of Islamic monetary policy. Most of the contemporary writings of ‘Islamic economists’ are far from being antagonistic to business. There is respect for private property rights, which are an essential prerequisite for the shariah law on inheritance to be applied, and most Islamic economists view markets as the normal vehicle for conducting transactions. The modern Shi’i scholar and political activist Mohammad Baqir Al-Sadr (executed in 1980) defined Islamic economics as 'the way Islam prefers to follow in the pursuit of its economic life and in the solution of its practical economic problems in line with its concept of justice.’ In his understanding of the Islamic sense of wealth he saw an ethical synthesis in Islamic traditional texts. Material wealth and its growth is depicted as the best help to attain progress in the hereafter. Increase of wealth is an important objective, but is an objective of means not an objective of end. Wealth is not the main objective which heaven placed before man on the faith of the earth but as means of a Muslim to discharge his role in life. There is no good in the man who does not strive for it. He does not belong to the fold of Islam that wants the Muslim to strive for its increase in order to get mastery over it.

We have seen in short a few examples of Islamic views concerning wealth and money. To conclude with what we have mentioned in the very beginning, the gathering tendency within political and popular discourse to construe Islamic ‘fundamentalism’ as a threat to the world order, and therefore to demonize all things Muslim. For this reason, it is as important to disentangle underlying principles from their often distorted manifestations as it is to separate fact from prejudice.

The Islamic notions of economics are more complex, and sophisticated than one at the first sight would think. It should be studied more seriously within the scope of Islam as an idea. If Islamic economics is very useful in the sense we have discussed, what went wrong in Muslim societies? It is difficult to ascertain any formulation of business ethics across Muslim world with its ethnical diversity and with countries of different stages of development. However, I tend to agree with the Pakistani neo-modernist Muslim thinker Fazul al-Rahman who made a distinction between the intellectual task of relating moral imperatives of Islam to the economic problems of Muslim societies by stressing that it has to be borne in mind that for centuries, Muslim society has been working and is still working on the basis of what he calls ‘the minimal Islam’ (confined to rituals and symbols without handling social problems) and so-called fundamentalist ‘negative Islam’.

// September 2007
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