13 – The Limits of Economic Freedom in Islam

The Limits of Economic Freedom in Islam

و انفقوا فی سبیل الله و لا تلقوا بایدیکم الی التّهلکة و احسنوا انّ الله یحبّ المحسنین

“Spend in the way of Allah, and do not cast yourselves with your own hands into destruction; and be virtuous. Indeed Allah loves the virtuous”… (Surah al-Baqara, 195)

The current topic is a continuation of the previous discussion regarding economic freedoms in an Islamic society. Economic freedom is one of the numerous dimensions and issues regarding the Islamic economy [that can be discussed]. We do not want to discuss the general issues of the Islamic economy, as there are certainly a variety of topics on the Islamic economy which are not necessary to be discussed here. However, this discussion is essential considering that we are talking about various freedoms in an Islamic environment and society, especially when the topis is on the particular aspect that I discussed in the previous session (freedom of economic activity). This is entirely relevant to current issues and the general duties of people and the government. Hopefully, this discussion will be useful.

In the last session, I mentioned five points regarding economic freedom in Islam. I want to list those five points again so that a summary of it remains fresh in the mind. Thereafter, I will add a few more points that are of importance. The first point was that if we believe that freedom of economic activity for all people exists in Islam, it should not be mistaken with the freedom in the capitalist West; this freedom is one thing, and that is another. The extent of the difference between Islam’s view with the current view of the capitalist system in the West is probably the same as the amount of difference between Islam’s view and the communist and socialist system. The second point was that economic freedom in an Islamic society would be guaranteed for everyone only when laws are created and enacted that would enable people to use natural resources and public God-given bounties. That is, all people can use the lands, the forests, the seas, the mines, the anfāl, and everything that is part of the public wealth and resources. It should not be that only a few can benefit from these natural and God-given resources while others do not even have the potential to benefit from these resources. Hence, such laws are necessary for society. The third point was that supervision and control of free economic activities are essential for preventing corruption, aristocracy, an economically elite class in the community – which is repeatedly mentioned in the Qur’an – and all types of financial crimes. And this control must be exercised by the Islamic government. The Islamic ruler has the right to preserve his control and supervise how wealth and capital are being used and consumed. This is a duty of the Islamic state, and it should perform this duty in the interests of the common people, particularly those belonging to the weaker sections of society. The fourth point was that when we believe in the freedom of economic activities in Islamic society, based on Islam’s perspective, such freedom should not reach a point where those who obtain a large amount of wealth gain social and political control and interfere and infiltrate in the political destiny of a society. Today, this problem exists in Western countries. In Western civilisation, as I mentioned earlier, the capitalists decide the policies and bring politicians to power or oust them. This is not acceptable in an Islamic society. The influence of the wealthy and capitalists should not grow to this extent. Wealth should not attain such a power in a society that some super-rich and arrogant interfere in the political issues of society by bringing representatives, ousting representatives, bringing the powerful into politics, selecting the president, replacing politicians, dictating policies, and imposing which laws are to be passed on the legislative body. This way is not acceptable at all in an Islamic society, and anything that results in this is considered a danger and prohibited. The fifth and last point that was mentioned previously was that people should compensate for the financial and economic shortcomings of the society; seeing as they are free to perform economic activities in Islamic society and are not the employees of government, they can work, put in efforts, and earn for themselves. This compensating for the needs of society is called infāq. Infāq, whose mention you see several times in the Qur’an, is the result of free economic activity in a society. When people are earning their income, they should also fulfil the needs of society and fill the gaps. Infāq means to fill these gaps. These were the five points which were discussed in the previous session. Now, I am going to mention a few additional points on the same subject.

The first point I want to mention is that although economic activity is free in an Islamic society, it is not unconditionally free; it has limits. These boundaries – of course it is natural that any free movement and action has to have certain limitations – are specified in Islam. In socialist societies, there are limitations to acquiring wealth as well, but these boundaries are different from Islamic boundaries. In an Islamic society, the prohibited (harām) ways of earning and appropriation of wealth are the limits of free economic activity. These are specified in the books of jurisprudence. Transactions involving interest (riba) are prohibited. Transactions arising from concealment and ignorance are forbidden. A transaction that involves deceiving someone is not permitted, and a deal causing a loss for others is not allowed. Business with religiously-deemed illicit money, hoarding that results in only a few becoming rich, and transactions that come from such actions are not allowed. These and other similar rulings that are mentioned in the Islamic corpus of laws are the limitations of financial dealings and free economic activity in an Islamic society. Some goods are forbidden to trade. For example, wine or things that are harām and najis – except in some cases – are prohibited in certain conditions. Or carrying out a transaction on a property that is not indivdually owned and belongs to the Islamic state, such as anfāl, is forbidden for individuals and the private sector except in specific cases. There are clear rulings in Islamic jurisprudence (fiqh) about the extent to which this free activity is permitted or prohibited, and even where the governmental authority may not prohibit it.

In socialism and the schools that have risen from Marxist thought, limitations on private ownership exist, but they are different from these Islamic limits. They, for instance, do not permit owning the means of manufacturing. That means no one can own any instrument required for manufacturing such as land, factory and their like. In Islam, this limitation is not the same or so general. There is no problem in owning the instrument of production per the conditions mentioned in Islamic jurisprudence (fiqh) as pointed out earlier. In some cases, owning land is problematic, and in other cases, there is no objection to it. Hence, the boundaries mentioned by Islam for ownership and doing economic activity should not be mistaken for the limitations put forth by other schools of thought. At times, when some perceive that there are limitations on economic activities in Islam, their mind instantly goes to the Marxist and socialist restrictions, imagining that similar things exist here in Islam as well. No, such thinking is flawed and arises from an unsound understanding, arising from inattention to the laws and jurisprudence of Islam. In the Marxist schools, those socialist schools of thought that are prevalent in the world today in the form of the government of socialist countries, despite having differences with each other, they all view financial dealings through buying, selling and trading to be unethical. This is not the case in Islam. In Islam, buying, selling, trading, and working with investments is not forbidden. Whereas in those schools of thought, any buying and selling for the invididual, for the one who has capital – be it large or small, is restricted. Of course, let us overlook the revisions some of these big countries run by these schools of thought were compelled to make in their economic systems when they made some sectors available for free economic activities. However, this was out of a necessity that got imposed on them. However, in Marxist thought, buying, selling and financial dealings are considered distasteful and undesirable; unlike Islam. In Islam we have: Allah has allowed trade and forbidden usury.[1] Buying, selling, trading, and business per Islamic regulations are not forbidden. There is no objection when it does not involve underselling, interest, and goods that are forbidden for business. Being called a businessman is not an insult, as some tend to think when someone is called that. No, this is an extremism that has become prevalent in the language of some, who often have no useful purpose and are unaware of Islamic teachings. From the beginning of the Revolution, we have seen that communist groups were the first to start talking in this manner. Bazārī[2] became an abuse; aj Bazaari[3] became an insult. Statements like, “Leave him, he is a Bazārī!” and “You only repeat what these aj Bazārī’s say!”, became affrontive and insulting. No, this should not be the case. “aj Bazārī” are of two types. There is a aj Bazārī who is a believer, religious, righteous, and concerned revolutionary, while another merchant and bazārī is corrupt and unfit. Being a bazārī is not a crime; However, according to Marxist thought, being a businessman, to trade and to buy and sell with personal capital, is a sin, a crime, a brokering to raise prices, a betrayal of the oppressed classes. In Islam’s view, this is not the case. When in principle, trading and business are not forbidden, only then can we talk about its boundaries! However, as I previously mentioned, some have abused the freedom of business and trade – the very freedom of economic activities given by Islam, and filled their pockets literally by plundering and stealing. This is prohibited in Islam. But doing business itself, selling, buying, shipping goods from one place to another, or procuring goods and selling them to a customer is entirely allowed in Islam.

I want to remind some who are unaware of Islamic teachings, so as to correct their mentality, that they should not imagine that being a bazaari is an act of offence, a crime and immoral. No, it is not. Even during the Revolution, at its culmination and at its beginning, we observed that bazārī’s massively supported the Revolution. Read the history of the Revolution if you were not present, and if you were present, try to remember. You will see that from the beginning these small merchants, who had shops in the marketplaces and on the streets, have helped the revolutionary movement. However, there was a group of very wealthy, big traders, who saw no limits for their economic activities and did not belong to the ordinary merchant class but rather belonged to a different class. Many of them were liberals who returned from Europe, educated from there, and by using their cunningness and knowhow, they registered companies, created factories, and took unfair loans from the banks. They had enormous wealth and no belief in God or religion. They have caused the most significant blow to the economy of the nation. Today as well, these cunning, disbelieving, unreligious, and in fact anti-revolutionary, are present, and definitely they must be confronted. But business and trading itself being an offence and unethical is an entirely different matter. Such a principle does not exist in Islam. So, to summarise this last point, the boundaries set forth by Islam for free business activities are different from the restrictions specified by Marxism, and we should differentiate between these two boundaries.

The last point of this discussion is that accumulating wealth and not giving charity is unethical and a sin –  and in fact probably a greater sin – in the view of Islam. Since Islam considers free activity with capital permissible, it does not imply that one has a right to collect wealth – even through legitimate and lawful means – and accumulate it. If society is in dire need of a one’s wealth and the one with resources and assets is not spending it in society’s interests and in the way of God, then such a thing is not permissible. In Islam, charity is a principle: one must spend in the path of God. Islam does not say not to do business or earn money; rather, it asks for that money to be spent. Islam accustoms people to spend from what they earn on their needs – albeit average needs and not causing themselves undue hardship and even living along with some comfort and ease – and then to spend the remaining that is extra to fulfill the needs of society. If someone is earning wealth and spending it extravagantly, spending it all on extravagant food, clothing, car, or house or accumulating it all, this is condemned and detested by Islam. Not giving alms is indecent and deplorable in Islam, and if it this comes along with accumulating wealth, it is forbidden. There are many verses in the Qur’an – as well as many narrations – that indicate this matter, of which I will relate two. The first is in Surah al-Ḥadīd: and Allah does not like any swaggering braggart. Such as are (themselves) stingy and bid (other) people to be stingy.[4] They do not give in the way of Allah and they keep others away from the charity as well. Such stinginess isn’t just not paying the religious dues; it is beyond just what the Islamic corpus of laws specifies. If there is extra that remains after paying religious dues and society needs it, it should be given. There are situations where a jihād depends on the wealth of the rich. Or, building society’s important infrastructure requires the capital of the wealthy, without which public life would face issues and delays. Or, an Islamic government can not support that many poor that are living in a society. In such situations, would Islam approve that the poor keep living in poverty? Would it decide that war and jihād keep burdening the society, and at the same time, a few keep accumulating wealth which they acquired through public facilities? Let us assume that this accumulation was not through illegitimate means but by legal means – if it is even possible for such wealth to be acquired through legitimate means (if we believe that it can not be achieved through legal ways, then the issue is quite clear). While society is in dire need of wealth, some keep accumulating it for themselves. This is not acceptable at all in Islam. In fact, Islam says the opposite. The famous verse that says: Those who treasure up gold and silver, and do not spend it in the way of Allah, inform them of a painful punishment.[5] Here, it might not mean gold and silver. Those who accumulate money, wealth, and capital, and hoard it, all of them, are included in the group of  “Those who treasure up gold and silver”. Then the verse says to “inform them of a painful punishment”.  If this was not a sin, a greater sin, why would there be a punishment? Informing them of a punishment means let them expect a painful punishment. This punishment may be the outcome of their evil acts in this world which may not just affect themselves but also damage the whole of society. However, it may refer to a punishment in the hereafter. Most likely, both of them exist. That means a painful punishment resulting from this act in this world and in the next. And so, according to this, giving charity is an obligatory and necessary act. Consider this as a social duty. Giving charity is not limited to a few groups of people. I have previously mentioned that the middle class, and even lower classes and the poor, give charity to fulfil people’s needs, while the capitalists and rich who have accumulated wealth are less interested in giving in the way of God. According to Islam’s perspective, this is not acceptable in an Islamic society and government. If we suppose that someday society does not need anything – meaning that it has sufficient means of welfare, the government has abundant sources of income, and there is no need for extra money, then, in that case, maybe ther would not be an objection in keeping the wealth. Although, this matter needs more research and analysis. Let us suppose that society needs wealth, and we see that it is being spent on parties, on extravagant buying, or kept in personal safes or within banks, or spent on illegal and harmful dealings that spread corruption and immorality. This wealth could have been spent on a military unit, for a particular war front, and it could have changed the battlefield situation and proven effective. Or, if it were spent on development projects in the country, a large number of people would have benefitted from it, getting rid of poverty. How can we accept that they make a fortune and accumulate wealth without spending in the way of God? At the same time, people remain in an unacceptable and unhealthy state or a state of war and other disarrayed situations despite such wealth existing. How can these wealthy not be an instance of the verse that says to “inform them of a painful punishment”? Indeed, these people should be warned of the punishment from their Lord. Of course, this is not simply an ethical edict, rather the Islamic society, the Islamic State, and the Muslim nation should plan and structure based on this ruling. In the next session, I will elaborate more on issues regarding charity.


[1] Surah al-Baqarah, verse 275: احلّ اللّه البیع و حرّم الرّبا

[2] Belonging to merchant class or workers of bazaars, the traditional marketplaces of Iran.

[3] A title used to call a senior businessman in Iran.

[4] Surah al-Ḥadīd, verse 23-24: و اللّه لا یحبّ کلّ مختال فخور. الّذین یبخلون و یأمرون النّاس بالبخل

[5] Surah al-Tawbah, verse 34: الّذین یکنزون الذّهب و الفضّة و لا ینفقونها فی سبیل اللّه فبشّرهم بعذاب الیم

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