Business Ethics in Islam
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Business Ethics in Islam

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Item Code: NAI417
Author: Mushtaq Ahmad
Publisher: Kitab Bhavan
Language: English
Edition: 2009
ISBN: 9788171512645
Pages: 225
Cover: Paperback
Other Details: 9.0 inch X 6.0 inch
Weight 320 gm
About the Book

The present work attempts to answer the question: what characterises a Muslim’s behaviour in business life? The author answers by saying that the Qur’an lays down a set of principles to provide guidance for the conduct of a Muslim businessman. This guidance consists not merely of 'laws’, but also of ethical norms. Thus a Muslim is urged not only to give others their due; rather to give even more than what one legally owes them so as to fulfil the requirements of benevolence and magnanimity. Likewise, he is expected not only to shun all that is prohibited, but also to abstain from actions about which his conscience does not feel fully at rest. The author emphatically argues that the Islamic world-view, with its emphasis on the Hereafter, fosters an outlook which significantly differs from that prevalent in the present times. Moreover, it is God’s will as revealed of God’s Prophets rather than the frail reason of human beings to which one ought to primarily turn for guidance. In sum, the business ethics of Islam has a distinct entity both in terms of its underlying spirit and its content.



The present work is an edited version of Dr. Mushtaq Ahmad’s thesis which he wrote under the supervision of the late Professor Isma‘il al-Faruqi and submitted to Temple University in partial fulfillment of the requirements for Ph.D under the title “Business Ethics in the Qur’an”. In 1994, Dr. Ahmad entered into an agreement with the International Institute of Islamic Thought for the publication of his work. He was fully conscious, as were we, that in order to make a Ph. D. dissertation meaningful for a wide and less specialized readership it should better be thoroughly edited before it is sent to the press. The manuscript was still in process of editing when, to the shock of Dr. Ahmad’s friends and admirers, he suffered a severe heart attack in February 1995 and breathed his last. “To Allah do all of us belong, and to Him shall all of return”.

In the present work the author attempts to answer a vital question: what characterises Muslim’s behavior in business life? He answers the question by saying that the Qur’an lays down a whole set of norms which provide a fairly comprehensive guidance for the conduct of a Muslim businessman. The author, however, rather, than confining himself merely to an exposition of Islamic ‘laws’, attempts to highlight Islamic business ‘ethics’. The choice of the term ‘ethics’ was a happy one, and the work brings into sharp relief a rich reservoir of norms and values, including laws, that are embodied in the Islamic tradition and from which a business man can derive guidance for his conduct. The author emphasizes that from an Islamic perspective the basic consideration motivating a Muslim businessman’s behavior should neither be the fear of governmental punishment nor the desire to amass riches. He should rather be prompted by his God-fearing conscience to act in a manner that would please God. Thus, the ideal is not merely to give others their due; it is rather to give more than what one legally owes. One is not just required to adhere to the requirements of justice; rather one ought to go beyond that so as to fulfil the requirements of benevolence and magnanimity. Likewise, a pious Muslim is expected not only to shun all that is prohibited, but also to stay away from the grey area, from actions about which his conscience does not feel fully at rest. In short, man’s conduct should be characterized by a propriety of conduct and sublimity of intent worthy of him as an exalted species of God’s creation, as one in whom God has breathed “out of His spirit” (Qur’an 38:72).

The author also emphatically argues that the Islamic world-view, with its emphasis on the Hereafter, fosters an outlook which vitally differs from the outlook of those who either deny, are oblivious of, or tend to belittle the importance of the Hereafter. The hallmark of a Muslim is that he takes into account the consequences of his actions not only in this life, but also in the Life to Come. Moreover, it is God’s will as revealed to God’s Prophets rather than the frail reason of man to which one ought to primarily turn for guidance. Consistent with this approach, the author expounds in considerable detail the principles which Muslims are required to follow in the sphere of business. In so doing, he has based himself primarily on the Qur’an, but has also had frequent authoritatively elaborate the Qur’anic principles. Also, in interpreting the teachings of the Qur’an and the Sunnah relating to business life, the author freely draws on the works of Muslim scholars of the past as well as the present. In this exercise, the ecumenical spirit and broad-mindedness of the author are fully evident.

The work has been written from the vantage-point of a scholar of Islamics, and the author makes no other claims. One might agree or disagree with the author, but one can hardly deny the great pains he has taken to bring together and organize a vast body of material regarding business ethics from a wide variety of Islamic sources. This material would hopefully be of interest and assistance of an assortment of people who would otherwise have scarcely had access to it and who are likely to benefit from it in their quest for guidance in the field of business.

Professor Shariful Mujahid, a well-known scholar, a skilled editor, and a personal friend of Dr. Mushtaq Ahmad, kindly acceded to our request to edit the work. We owe him a debt of gratitude for his able editing. Out of deference to this writer Professor Mujahid left several matters undecided in order that I may use my discretion. This led me, in effect, to become an active partner of Professor Shariful Mujahid in the editing of the work. In the completion of this task I was assisted by two of my friends, imran Ahsan Nyazee and Khurshid Ahmad Nadeem, who cheerfully shared a part of my burden. I am thankful to both of them for their might still persist, the responsibility for them is mine since I did the final editing of the text.

As we have said above, Dr. Mushtaq Ahmad died before the editing of his work was completed. We were thus deprived of his assistance in finalizing the manuscript in the manner we would have desire. Had he been alive we would have tried, with his assistance, to bring the work into greater conformity with the more rigorous standards of academic writing in matters as documentation, referencing, etc. with Dr. Ahmad’s assistance it would have been possible without much difficulty to refer to the original works while citing , e.g. ahadith, rather than cite them on the basis of their reference in secondary works as he had done in his dissertation. Since the work is very heavily reference, had we decided to re-check the references and tried to consistently refer to the original sources, this would have considerably delayed the publication of the book.

There are also substantive issues which have been raised in this work which we would have requested the author to reconsider. For instance, the author has discussed questions pertaining to taxation and price-fixation.(see pp.123 f.). These are very complex question and several scholars of Islamic Law, especially scholars of the present times, have examined them in depth and shown due recognition of their complexity. A mature judgement on these issues requires not only a profound grasp of the relevant texts of the Qur’an and the Sunnah, but also a comprehension of the significance of the different interpretations of those texts by Muslim scholars, let alone an understanding of the political and economic context underlying the opinions expressed by those scholars and the political and economic realities of the present times. The opinions expressed by the author on these and a few other issues seemed deserving of reconsideration. Alas, at the time when we had begun to carefully examine the contents of the text, the author had reached a world that is beyond the access of all human beings. It was obviously beyond our jurisdiction to do anything about substantive issues. We considered our task to be strictly confined to improving t the text, as far as possible, by tightening up the draft, by adding a few words here and there to increase its cohesiveness and obviate some of the obscurities in the text; in short, to enhancing the readability of the work. Again, to out remorse, it was not possible for us to obtain the author’s final approval for the specific changes that have been made in the text although he had given us a go-ahead to edit it according to our discretion.

One important change made by use needs to be mentioned. In view of the fact that a great deal of the argument in the work is based on traditions from the Prophet (peace be on him), and the writings of Muslim jurists and scholars, we thought it appropriate to change the title of the work to read as “Business Ethics in Islam” rather than as “Business Ethics in the Qur’an: A Synthetic Exposition of the Qur’anic Teachings Pertaining to Business” which was the original title of the dissertation. We have no doubt that had he been alive, Dr. Mushtaq Ahmad would have gladly approved of this change for it reflects the content of the book more faithfully.

It is a matter of both pleasure and privilege for us to publish this work jointly with the International Institute of Islamic Economics, International Islamic University, Islamabad- a premier institution in the field of Islamic Economics. This is in keeping with the tradition and policy of this Institute-to collaborate with other academic institutions that share our concern to work out the implications of Islamic principles for the intellectual and practical problems of mankind.

As we send this work to the press, we fervently pray to Almighty Allah to show His infinite mercy to the late Dr. Mushtaq Ahmad and to his teacher, Professor Isma ‘il R. al-Faruqi, under whose supervision this work was completed.



The importance of business can never be over-emphasised. Business has always played a vital role in the economic and social life of people throughout the ages. This is equally true of our contemporary world. Since economic strength has become synonymous with political power, the importance of business extends to all levels- individual, societal, regional, national and international. No wonder, millions of Muslims are today engage in some kind of business activity or the other.

The involvement of Muslims in business is not a recent phenomenon. In fact it dates back fourteen centuries. This is not surprising because Islam encourages business activity. The Prophet (peace be on him) was himself involved in such an activity for a considerable period of time.

The cotemporary Muslims, however, find themselves confronted with a serious dilemma. Despite their active participation in business they are not sure whether some of their business practices are valid from an Islamic viewpoint. It is not business perse that has confused them; they know that business as such is perfectly legitimate and permissible. It is the new forms, institutions, methods and techniques of business –some of which were never heard of before- that have caused this problem. In spite of their newness, these forms of business have gained such currency and popularity that they have become an integral part of the contemporary economic system since the Muslims are not sure whether some of these modern business institutions and practices are compatible with the teachings of the Qur’an, they follow the system, in most cases, with a guilty conscience simply because they see no way out.

Whether the problem mentioned above is real or illusory, resulting from a lack of proper knowledge needs to be investigated. There is also a crying need to work out a clearly formulated theory of Islamic business ethics, which should , generally speaking, have the capability of serving as a touchstone for ascertaining the validity of any business practice.

To our knowledge, there exist no work dealing exclusively with the problem of Qur’anic business ethics. However, as is evident from the appended bibliography, the literature on Islamic economics in general is in abundance. The exegeses of the Qur’an also throw some light on the problem of Islamic business ethics. The books on Islamic law and jurisprudence also contain some basic principles regarding the transaction of business. As far as Western literature is concerned, we find only general works on the history and sociology of Islam. Books such as The Commercial-Theological Terms in the Koran by C.C. Torrey and The Structure of the Ethical Terms in the Koran by Toshihiko Izutsu deal with the commercial terminology and semantics of the ethical terms rather than the problem of business ethics. The field, therefore, is almost virgin and any work in it would be a definite contribution to the extant body of knowledge. It is in this sense that the present study is expected to be a contribution towards constructing a theory of Islamic business ethics.

The Qur’an asserts, and the Muslims sincerely believe, that this Heavenly Book is meant to b e a perfect and everlasting guide for all mankind. If so, it should also contain the fundamental principles and guidelines in which answers could be sought and found for any new problems, including those pertaining to the sphere of business.

This dissertation is an attempt to explore, analyse and synthesise the relevant injunctions of the Qur’an in order to construct the requisite theory. The author is fully conscious of the magnitude of the task on the one hand of his limitations on the other. No claim, therefore, is made to the effect that this work would provide a final answer to the problem. It is, nevertheless, a step towards the goal. The findings of this work may serve as a groundwork for the eventual formulation of a cogent theory, applicable to all situations, present as well as future.

Undoubtedly, the legality of business is duly acknowledged by the Qur’an (a point elaborated in some detail in chapter 2). However, the Qur’an has not confined itself to the pronouncement of such legality alone. There are, for instance, a number of explicit and implicit imperatives and prohibitions regarding business transactions just as there are unequivocal statements regarding the distribution of wealth in society. These, as well as other relevant injunctions, would have to be taken into consideration to construct a theory of business ethics which should, of course, be based on an appropriate synthesis of all such injunctions.

Such a synthetic exposition of the Qur’anic teachings pertaining to business would, hopefully, help us delineate the fundamental principles of the Qur’anic business ethic. Adherence to these principles would guarantee the requisite justice and equilibrium in the realm of business and would keep commercial activity on the right track. In order to achieve the aforesaid objective, we have tried to dig deep into the pages of the Qur’an so as to cover each and every injunction or suggestion that has any bearing on the subject. Only the authentic translations and interpretations of the relevant verses have been taken into consideration in for mulating a statement. Such statements have been synthesized in a systematic way to obtain a holistic view of the entire spectrum.

To begin with, we have concentrated on the attitude of the Qur’an towards work in general, and business in particular. This, in our opinion, must be clearly understood before proceeding further. We have dealt with this aspect in chapter 2, which is followed by a detailed statement about the nature and attributes of God and the considerations and wisdom underlying His acts vis-à-vis the universe and man. Since the attributes of God provide guiding principles for the conduct of man, a Muslim is obligated to know about God, about His Attributes and the considerations underlying His acts vis-à-vis the universe and man, as described by the Qur’an. Chapter 3 is, therefore, devoted to this extremely important dimension of Islamic ethics.

In chapter 4, we have tried to focus on the uniqueness and comprehensives of the Qur’anic concept of business. The Qur’an has presented a concept of business which might sound somewhat strange to quite a few people. Nevertheless, it is in conformity with the Qur’anic Weltanschauung (world-view). It is essential to know what is ‘gain’ as opposed to what is a ‘loss’ in business from the Qur’anic viewpoint in order to comprehend the Qur’anic concept of business. The concept of halal (permissible) and haram (prohibited) introduced by the Qur’an are as much applicable to the ralm of business as to any other sphere of life. The consequences of one’s conduct in business are not limited to this worldly life; they stretch well beyond it to the everlasting life of the Hereafter. Herein lies the major distinction or uniqueness of the business ethics derived from the Qur’an. A Muslim businessman is supposed to be conscious not only of the profit or loss resulting in this world, but also of the final stock-taking on the Day of Judgement on which would depend the ‘profit’ or ‘loss’ of an infinite nature.

A business transaction presupposes the concept of ownership. In other words, there could be no valid buying and selling unless the ownership of the parties concerned is duly acknowledged. Like the Qur’anic concept of business, its attitude to amwal (wealth and property of all kinds) is also unique and requires elaboration to be properly understood. Hence chapter 5 is devoted to crystallizing the Qur’anic standpoint regarding wealth and property.

Equitable distribution of wealth in a society plays, undoubtedly, a decisive role in the enhancement of its business activity. Has the Qur’an provided for this vital factor in it s system? An adequate answer to this question is sought in chapter 6 wherein the methods and institutions of equitable distribution adopted by the Qur’an are discussed in some detail. The effects of such distribution are also considered in some detail. The effects of such distribution are also considered and evaluated.

Thus, the aforementioned five chapters (i.e., 2-6) seek to provide the conceptual and practical groundwork for a discussion of business conduct in the subsequent two chapters. The Quar'nic injunctions contained in them provide not only a solid foundation but also guarantee the viability and smooth running of the system described in the subsequent chapters.

Chapter 7 and 8 deal directly with the conduct of business. They seek to delineate the approved and disapproved conduct and thus form the very core of this work. For the Qur'an, freedom and justice form the foundation of approved conduct. The prescribed manner and the approved forms are discussed in chapter 7. Riba (interest) and fraud, on the other hand, lie at the basis of disapproved conduct. All such practices that contravene freedom and justice are declared wrong and, hence, prohibited. Any transaction in which riba or fraud are involved is condemned outright .Major disapproved practices have been listed and discussed in chapter 8.

After having discussed the Qur'anic injunctions regarding the essential preliminaries and pre-requisites, and its prescriptions regarding actual business conduct, the stage is set for the ultimate question as to whether there exists any provision for their implementation. The answer is 'yes'. The Qur'an has provided for a comprehensive and effective system in order to make sure that its injunctions are properly carried out. This aspect of implementation is explained in chapter 9, where the three agencies responsible for implementing the said injunctions namely, the State, the Hisbah and the Community, are discussed and their role defined in detail. Chapter 10 comprises the conclusion embodying the main findings of the study.




  Foreword v
  Acknowledgements ix
One Introduction 1
Two The Qur'an and 'Amal 7
A Amal 7
1 Importance of 'Amal 7
2 Exhortation to 'Amal 12
B Tijarah 14
1 Importance of Tijarah 14
2 Appreciation and Exhortaion to Business Activity 16
Three Islamic Concept of God 19
A The Attributes of Allah 21
1 Al-Asma' al-husna 22
2 The Divine Attributes in General 23
B Principles Ordained by Allah 24
1 This World 24
2 The Hereafter 26
C Coclusion 28
Four The Qur'anic Concept of Business 29
A Gainful Business 31
1 Best Investment 31
2 Sound Judgement 33
3 Right Conduct 34
B The Losing Business 35
1 The Worst Investment 35
2 Unsound Judgement 36
3 The Evil Conduct 36
C Maintenance of Records: Reward and Punishment 37
1 Maintenance of Records 37
2 Reward and Punishment 38
D Conclusion 38
Five The Qur'anic View of Wealth 41
A General Appreciation 42
B Ownership 44
1 True and Absolute Ownership 45
2 Delegated and Restricted Ownership 45
3 Implications 46
C The Concept of Halal and Haram 47
D The Concept of Barakah 49
E Conclusion 51
Six Distribution of Wealth and its Effect on Society 53
A Emphasis on Infaq: Condemnation of Avarice, Stinginess and Hoarding 55
1 Emphasis on Infaq 55
2 Condemnation of Avarice, Stingness and Hoarding 56
B Distribution : Methods and Institutions 58
1 Streamlining of Acquisitions and Desposition 58
2 Obligatory Institutions 60
3 Voluntary Institutions 64
C Equitable Distribution and its Effects 66
1 Social Security through Cooperation 66
2 Eradiction of Poverty 68
3 Boost in Business Acativity 70
D Conclusion 72
Seven The Approved Business Conduct 75
A Freedom of Economic Pursuit 78
1 Recognition of and Regard for Personal Property 78
2 Legality of Trade 78
3 Mutual Consent 79
B Justice / Equity 82
1 The Imperatives 82
2 The Safeguards 87
C Manners: Commanded and Commended 90
1 Leniency 90
2 Service Motive 92
3 Consciousness of Allah and of His Prescribed Priorities 94
D The Forms of Transactions 95
1 Transactions in General 96
2 Sharikah(Partnership) 98
3 Mutual Consent 79
E Conclusion 100
Eight Disapproved Business Conduct 101
A Riba 104
1 Explanation of Riba 104
2 Prohibition of Riba 106
3 Evils of Riba 109
B Fraud 112
1 Tatfif (Engaging in Fraud) 113
2 Dishonesty 114
3 Falsehood and Breach of Pacts/Promises 114
4 Miscellaneous Fraudulent Transactions 116
C Other Disapproved Practices 117
1 Unjustified Appropriation / Consumption of Other ' Wealth 118
2 Disregard for Merit 118
3 Dealing in Prohibited Commodities 119
4 Invalid Partnership 120
5 Delinquency in payment of wages and Debts 120
6 Hoarding 121
7 Price Fixation 122
8 Protectionism 122
9 Hima and Monopoly Protectionism 123
10 Measures causing Price -hike 123
11 Infliction of Harm 124
12 Coercion 125
D Conclusion 126
Nine Implementation of Qur'anic Principles in Business Life 127
A The State 131
1 Duties of the Islamic State 131
2 Justification of State Interference 133
3 Limits of State- Interference 135
B Hisbah 136
1 What is Hisbah 136
2 Evidence for Hisbah 137
3 Duties of Muhtasib 137
C The Ummah (The Muslim Community) 139
D Conclusion 141
Ten Conclusion 143
  Notes 149
  Bibliography 189
  Index 202


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