"May the Peace and Blessings of Allah be Upon You"
Praise be to Allaah, we seek His help and His forgiveness. We seek refuge with Allaah from the evil of our own souls and from our bad deeds. Whomsoever Allaah guides will never be led astray, and whomsoever Allaah leaves astray, no one can guide. I bear witness that there is no god but Allaah, and I bear witness that Muhammad is His slave and Messenger.
Bismillah Walhamdulillah Was Salaatu Was Salaam 'ala Rasulillah
As-Salaam Alaikum Wa-Rahmatullahi Wa-Barakatuhu
| An Islamic Approach to Business Ethics |
Dr Sabahuddin Azmi[1]
| What is Ethics ? Ethics may be defined as the set of moral principles that distinguish what is right from what is wrong. Ethics has a two fold objective: it evaluates human practices by calling upon moral standards; also it may give prescriptive advice on how to act morally in a given situation. Ethics, therefore, aims to study both moral and immoral behavior in order to make well-founded judgments and to arrive at adequate recommendations. Sometimes ethics is used synonymously with morality. An action, which is morally right, is also called an ethical one. Codes of morality are called ethical codes. Business ethics can also be defined as business morality. Business Ethics Business Ethics is the branch of ethics that examines ethical rules and principles within a commercial context; the various moral or ethical problems that can arise in a business setting; and any special duties or obligations that apply to persons engaged in commerce. Generally speaking, business ethics is a normative discipline, whereby particular ethical standards are formulated and then applied. It makes specific judgments about what is right or wrong, which is to say, it makes claims about what ought to be done or what ought not to be done. Ethics in Islam Islam places the highest emphasis on ethical values in all aspects of human life. In Islam, ethics governs all aspects of life. Ethical norms and moral codes discernible from the verses of the Holy Quran and the teachings of the Prophet (sws) are numerous, far reaching and comprehensive. Islamic teachings strongly stress the observance of ethical and moral code in human behavior. Moral principles and codes of ethics are repeatedly stressed throughout the Holy Quran. Besides, there are numerous teachings of the Prophet (sws) which cover the area of moral and ethical values and principles. You are the best nation that has been raised up for mankind; You enjoin right conduct, forbid evil and believe in Allah. (3:110) The Prophet (sws) also says: I have been sent for the purpose of perfecting good morals. (Ibn Hambal[1], No: 8595) This goes without saying that there is a general consensus among human beings about certain fundamental ethical values. However, the Islamic ethical system substantially differs from the so-called secular ethical systems as well as from the moral code advocated by other religions and societies. According to the Islamic teachings, Muslims have to jealously guard their behavior, deeds, words, thoughts, feelings and intentions. Islam asks its believers to observe certain norms and moral codes in their family affairs; in dealings with relatives, with neighbors and friends; in their business transactions; in their social affairs, nay in all spheres of private and public life. Islam has its own distinctive value-based ethical system for business dealings. It prescribes certain specific guidelines for governing business ethics. It (i) enumerates the general ethical rules of business conduct, (ii) identifies ethically desirable forms of business, and, (iii) specifies the undesirable modes of transactions. Freedom of Enterprise Islam gives complete freedom to economic enterprise. Each individual in an Islamic society enjoys complete freedom in the earning of his livelihood. He can start, manage and organize any kind of business enterprise within the limits set by the Islamic Shariah. However, freedom does not and must not operate without a sense of responsibility. An individual is free to pursue his economic activities provided he respects the code of conduct prescribed for the profession, which broadly means choosing things lawful and shunning matters unlawful. The dictates of the Holy Quran and the teachings of the Prophet (sws) serve to set a scale in everybodys mind to distinguish between the lawful and the unlawful means of earning, and to prohibit or disapprove of all things that are either morally wrong or socially unacceptable. Islam, as a matter of principle, prohibits all activities which may cause harm either to the traders or the consumers in the market. It encourages the prevalence of free market where everyone earns his sustenance without government intervention. However, it puts certain restraints in order to eliminate the incidence of injustice and check malpractices and unlawful operations. In all other respects market in Islam is free from any state intervention. However, if the people fail to take guidance from the Holy Quran in matters relating to business transactions, an Islamic state will strive to organize the market transactions on sound Islamic principles. Freedom of enterprise in an Islamic market will, therefore, be regulated by the (i) dictates of the Holy Quran and the teachings of the Prophet Muhammad (sws) and (ii) the directives of the temporal authority. During the early centuries of Islam, this function was mainly performed by the institution of Muhasbah (headed by a Muhtasib or market inspector). The institution of Muhasbah was an important institution whose functions were broad-based and multifarious, chief among them being keeping a watch on the harmful practices prevalent in the market and the society and checking the incidence of injustice and malpractices in the market. Islamic Tenets Concerning Business Transactions Islam demands a certain type of behavior from the economic agents – the consumers and the producers. The behavior prescribed for the economic units of the society are so devised as to lead to a happy state of affairs, which is the ultimate goal of Islam. An Islamic market is characterized by certain norms that take care of the interests of both the buyer and the seller. There are a number of rules of ethical discipline in Islamic commercial transactions without which business contract would be regarded as lacking perfection in the light of the code of good manners, decency and ethical excellence. Some of these tenets are as follows: Keenness to Earn Legitimate (Halal) Earnings Islam places great emphasis on the code of lawful and unlawful in business transactions. Many Quranic verses disapprove the wrongful taking of the property. Do not devour one anothers property wrongfully, nor throw it before the judges in order to devour a portion of others property sinfully and knowingly. (2:188) Do not devour anothers property wrongfully – unless it be by trade based on mutual consent. (4:29) The above verses prohibit the believers in no uncertain terms to devour the property of others by illegal means. The Prophet (sws) endorsed the importance of legitimate ways of earning in the following words: Asked "what form of gain is the best ?" [the Prophet] said, "A man's work with his hands, and every legitimate sale". (Ahmad, No: 1576) From the above it is clear that a Muslim trader must be determined to earn only through legitimate means. He should not only avoid illegitimate means in earning his provisions and livelihood but also distance himself from matters dubious and doubtful. The Prophet (sws) is also reported to have said: Leave what makes you doubt for things that do not make you doubt. (Tirmidhi, No: 2442) Things legitimate and illegitimate are clearly defined in Islam and, in between them, are doubtful things, which should be avoided. A true Muslim businessman should be wary of the doubtful things in order to keep himself clear in regard to his faith and his honor because one who falls into doubtful matters is sure to fall into that which is unlawful (Haram). A tradition of the Prophet (sws) states: A time will come upon the people when one will not care as to how he gets his money whether legally or illegally. (Bukhari, No: 1941) Foremost among the unacceptable business practices strongly condemned in Islam is Riba. Riba (interest), by definition, is the extra sum the moneylender charges from the borrower for deferred payment. Islam has forbidden all forms of Riba since it involves both oppression and exploitation. Islam strictly forbids this form of tyrannical dealings and condemns it in severe terms. Allah has permitted trading and forbidden Riba (usury). (2:275) Devour not Riba doubled and re-doubled. (3:130) It further states: O you who believe! fear Allah and give up what remains of your demand for usury if you are indeed believers. If you do it not, take notice of WAR from Allah and his Apostle: but if you turn back you shall have your capital sums; deal not unjustly and you shall not be dealt with unjustly. (2:278) The Sunnah[2] is equally emphatic in denouncing Riba. The Prophet (sws) is reported to have said: May Allah send down His curse on the one who devours Riba and the one who pays it and on the two witnesses and on the person writing it. (Ahmad, No: 624) These and many other verses of the Quran and traditions of the Prophet (sws) clearly demonstrate that all those business transactions which involve interest in one form or other, are unlawful in the sight of Islam. According to the Quranic teachings there is a clear distinction between genuine business profits and interest; while the former is recommended and desirable, the latter is hated and undesirable. to be contd.... |
[1]. Dr. Sabahuddin Azmi, Ph. D. (Economics), Lecturer, College of Islamic Banking, World Al-Lootah University (Internet), Dubai.
2. The Prophetic Traditions are taken from Hadith Encyclopaedia Version 2.1 of Harf Information Technology.
[2]. The author uses the word Sunnah to mean Ahadith (i.e. traditions of the Holy Prophet (sws)).
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