Thursday, April 13, 2017

Article about Notions of Free Market and Social Welfare in Islamic Economics

Notions of Free Market and Social Welfare in Islamic Economics

                     Sajid Puthenpeedikayil
                       Jamia Millia Islamia, New Delhi, India


Islam as a guide to human development. It is always suppression economic enterprise and transactions emanating out of hard work to earn more and more through halal (permissible) channels. Prophet Muhammad (PBUH) himself has engaged in different wage-earning professions like rearing of sheep, agent of trade and business, Etc. The Prophet was once one of Hejaz's richest businessmen, one of the most trusted trade agents including his wife Khadeja bint Khuwailid. After Shimira (immigration) and the Prophet's reconciliation of his followers in Madeena, they established the prophets of the market (according to the prophets of the guidelines)

                Social welfare in Islamic economics
slam emphasizes cooperation and harmony, as well as spending money and material for achieving this goal (Zaman, 2008). In the capital market, morality is to constrain people's behavior, thus restraining the economy. But in the Islamic economy, philosophy, morality and the pursuit of virtue is the ultimate goal, the enterprise is engaged in this goal. Support charity, engage in welfare activities, enhance the company's reputation, the Islamic market is the pursuit of the interests of society as a whole rather than the interests of some individuals. The basic idea of ​​Islam is to promote all positive values ​​and maximize the existence of each individual and social life. Therefore, in the context of the Islamic market, "profit optimization" will be more than the capitalist profits to maximize the market demand, but also better protect the interests of citizens. The concept of profit optimization can best be explained by doing business with Islamic rules, strictly observing and gaining more and more profits to adhere to social and economic equality. Even in the free market, Islam also instructs to overcome the love of wealth by pursuing demand and abandoning demand to pursue modest consumption and giving others, especially the poor (Zaman, 2013). To sum up, there is a market mechanism in the Islamic economy, which simultaneously increases and maintains social wealth. It delineates the line between good and evil (or legal and illegal), improves the operation of the market in the right way, rather than system intervention to curb market freedom. The provisions of Islam are some form of prohibition in the form of certain market norms. Islam provides the main norms for maintaining market areas: Islam (Islamic Judges), production specifications, pricing, promotion and advertising, and customer satisfaction. On the other hand, Islam strictly prohibits certain immoral market activities like riba, Gharar, Maisir and Qimar, Najash, Ghabalah, and Ihtikar. In different verses of Quran (23:51, 2:68, 2:72, 7:60), it has been demanded from the people to consume "reliable quality" and "halal" goods. In another verse (6: 115) God orders his slave to be straightforward and do justice in all transactionsIt can be analyzed  market share from these verses. Islam revolves around three basic characteristics: "reliable quality", "honest", "frank". Because these three are the basis of justice in the Islamic market
As mentioned above, the quality of the production process is critical in the Islamic ethics of the Qur'an consumption of quality goods and services. The production process of the Islamic market is guided by the principles of legality, purity, existence, disposability and precise determination. First, the product should be legal and will not lead to any form of boring mind, leading to pollution or immorality; second, the product must be owned by the owner; third, the product must be deliverable, because if the product sales can not Such as the sale of birds flying in the sky or out of control animals; fourthly, the sale of goods must determine the quantity quality; fifth, the object should not be najas or unclean (Saeed et al., 2001). About these specification.

                  Prohibitions of Islamic Market
The Islamic market forbids the development of some commercial evils. So that all people in this market can enjoy a fair competitive environment.
Riba: In Islamic perspective, this law has been introduced to prevent the accumulation of the wealth in few hands Stands against the concentration of wealth in few hands and needs "to to allowed it (the money) to circulate Among Q "(Quran 59: 7). Of, different from the regular market, the transactions of Islamic market, Especially the capital-free mechanism of sharing profit and risk between the Provider of the finance and the beneficiary of the service.
Gharar: This is due to the lack of clarity of the subject or price caused by the uncertainty or harm in the contract or exchange. Islam prohibits any commercial contract market involving elements of Gharar. In the definition of "Fiqh", Gharar is selling goods that are not in the hands or sell goods Aqibah (consequences) do not know or sell unsold goods.
Maisir and Qimar: Maisir is the occasional acquisition of wealth, and not engaged in any business whether or not at the expense of other people's rights. On the basis of this definition, the modern Islamic market space does not allow lottery gambling. Qimar is also another type of opportunity game at the expense of someone else at the expense of others. As Islamic law strictly prohibits the Islamic market space from all the chance of the game. The game of opportunity makes mankind more free and greedy. It creates a habit of making money without taking any risk or doing any work. The same human mind is also able to lead to the creation of an idle society and a luxury lifestyle in all the hula means. Money is valuable to be achieved by working hard or taking risks.
Najash .: This is a kind of interference in the market that artificially creates price increases. The price of the tender goods is not intended to deliver the goods, is not allowed, The prophet said: "If somebody interferes in the market to create artificial rise in the prices, Allah Has right to cast his face down in the hell ".
Ghabalah. The quality of the goods is too high and the hidden misleading promotion is misleading. Since it includes the nature of deceiving customers,it is prohibited in Islam. It is seen In the traditions of Prophet PBUH that: "Refrain from swearing much while selling or doing business, for it May increase business (in the beginning) but beverage destruction (ultimate) "
Ihtikar. Is another way to raise the market price by creating artificial scarcity. If traders, whether wholesale or retail, are protected by the stock secretly create the scarcity of necessities, Islamic law prohibits the practice of the market.  Yahya narrates that: Sa’id bn Al Musayyab said that Ma’mar reported Allha’s messenger as saying: “One who hoards is a sinner. It was said to Sa’id: ‘You also hoard’. Sa’id said: ‘Ma’mar who narrated this badith also hoarded’”. It can be analyzed from this Hadees that hoarding which is sin has a specific definition. According to the scholars of jurisprudence, hoarder is condemned as a sinner who withholds goods in the market from a genuine consumer for the purpose of creating artificial scarcity and then takes undue advantage of the helpless situation of the people (Khan, 2009).


Zaman, A. (2008). Islamic economics: A survey of the literature. Birmingham: University of Birmingham.
Saeed, M., Ahmed, Z. U., & Mukhtar, S. M. (2001). International marketing ethics from an Islamic perspective: A value-maximization approach. Journal of Business Ethics, 32(2), 127-142.
Zaman, A. (2013). Islam versus economics. In K. Hassan, & M. Lewis, (Eds.), Oxford university handbook on Islam and the economy. London: Oxford University Press.
Khan, M. A. (2009). Economic teachings of Prophet Muhammad (may peace be upon him): A select anthology of Hadith literature on economics. New Delhi: Adam Publishers.

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