The economy, in an Islamic prospective

Posted on April 24, 2011


For the most part, modern civilization has decided to turn its back on Divine Guidance and have attempted to construct their own economic systems, political systems, international laws and so on.

When doing so, though, they have to admit that they are attempting something that is beyond their means. The social sciences are very different from the physical sciences. There are no labs in which humans can be entered to determine what may be the best results under different scenarios.

In the realm of economics, the first thing that may come to mind is the collapse of the theories of socialism and communism. One should, though, also take a closer look at capitalism and how far its reality is from what it is supposed to be.

The early capitalist theorists envisioned a theory that would lead to “the best of all possible worlds.” However, their theories were based on assumptions that never were and will never be fulfilled. They assumed perfect competition, perfect knowledge, free trade and so forth.

Once these assumptions are violated, which they inevitably are, they do not lead to the “best of all possible worlds.” Instead, they easily lead to a world of exploitation, wherein the rich get richer and the poor get poorer.

One of the driving forces behind this system is the institutionalization of interest.

God has blessed humans with the guidance of the Quran – a book that has been minutely preserved since its revelation. In this book God absolutely prohibits and condemns interest in the strongest fashion. God says: O you who believe! Be afraid of Allah and give up what remains (due to you) from (usury), if you are (really) believers. And if you do not do it, then take a notice of war from Allah and His Messenger but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly. And if the debtor is in a hard time (has no money), then grant him time till it is easy for him to repay, but if you remit it by way of charity, that is better for you if you did but know. And be afraid of the Day when you shall be brought back to Allah. Then every person shall be paid what he earned, and they shall not be dealt with unjustly. (2:278-282)

The Islamic solution to the issue of interest rests upon two basic principles:

1. If an individual wishes to lend money to another in order to help the latter, this act must be based on “brotherly principles” and it is absolutely unacceptable to charge any interest in such a case

2. If an individual wishes to use his money to make more money, then he must be willing to put his money at risk. In other words, he cannot guarantee for himself a fixed return (whose amount keeps growing over time) regardless of the result of the investment that his money is used for. If he puts his money at risk, he is deserving of some share of the profits. However, this also means that he must accept losses if losses occur. This is a system that is based on justice.

About the writer:
Dr. Muhammad Salah is one of the well-know scholars in US
He lead the Islamic Center of Victoria, Texas and founded two Islamic and Arabic schools, Namely Iman Stems and the Muslim Generation.
He is a persistent host of Ask Huda, one of the most well-known Fatawa programs broadcast at Huda TV. He works as the religious supervisor of Huda TV. He is an Instructor at Shari’a Academy.
Dr. Salah had 400 live broadcasting hours in Egyptian Arabic, and American television stations. He teaches at Maghrib Institute and London Collage. He speaks Arabic and English fluently. He memorizes the Qur’an and recites it in a melodious voice.
He obtained his BA in Shari‘ah and Islamic Law from the University of Al-Azhar.
He obtained a four-year diploma in Muslim arts and Arabic calligraphy
He obtained the pre-master diploma from the American Open University.

Posted in: Allah, Economics, Human, Islam, Life