Voices of Islam (171 page)

1. 214
   Voices of Life: Family, Home, and Society
   

   Possession (Qabd)
   

   Wealth, in every conceivable form, is created by God and is thus His prop- erty. This view is derived from the following Qur’anic verses: ‘‘Give to them from the property of Allah which He has bestowed upon you’’ (Qur’an 24:33); ‘‘Have they not seen that, among the things made by our own hands, We have created cattle for them, and thus they acquired the right of property over them?’’ (Qur’an 36:71). Clearly, the rights we hold over ‘‘our’’ prop- erty are subject to divine injunction and guidance.
   64
   The punishment for those who take property unlawfully is significant: ‘‘He who wrongly takes a span of land will be made to wear it around his neck
   .. .
   on the Day of Judgment.’’
   65
   From verses and traditions such as these, it is reasonable to conclude that the possession of private property is permissible in Islam.
   

   Ibn ‘Abbas reported that the Prophet Muhammad said, ‘‘He who buys food grain should not sell it, until he has weighed it [and then taken possession of it].’’ Ibn ‘Umar reported that the Prophet said, ‘‘He who buys food grain should not sell it until he has taken full possession of it.’’
   66
   Thus, the provenance of things to be sold must be made clear, as should the specific disclosure of the contract’s objects.
   

   Shari‘a scholars defi two forms of possession: physical (
   haqiqi
   ) and constructive (
   hukmi
   ). The former is self-evident and means that an object is within the physical control of a party with all the attendant rights and liabilities.
   67
   Possession, whether physical or constructive, means that one is able to deliver a good as contracted. Historically, Islamic courts have been willing to vouch for contracts of sale, no matter the distance required for delivery, so long as the provenance of the object and the capacity of the seller to deliver the object could be validated.
   68
   Although most traditional scholars were of the opinion that possession requires the existence of the object to be contracted, the Hanbali scholar Ibn al-Qayyim al-Jawziyya pointed out that the prohibition of the sale of nonexistent objects was meant to be a prohibition only of those things that are subject to excessive or nontrivial forms of deception (
   gharar
   ).
   69
   The exception from this rule of other forms of
   gharar
   facilitates forms of commerce that meet public need without entering into types of transactions that are repugnant to the Shari‘a.
   

   Accountability
   

   According to Shaykh Yusuf al-Qaradawi, ‘‘The market, its prices and sales, should be left free to respond to internal economic forces and natural compe- tition without manipulation.’’ This juridical opinion is based on the follow- ing hadith of the Prophet Muhammad: ‘‘If people are left alone, God will give them provision from one another.’’
   70
   This point leads us to understand
   

   Islam and Business
   215
   

   that merchants are to be accountable in Islam and that governments have the responsibility to oversee markets as fair and level fields of competition. This is an important point because many types of contracts are either explicitly forbidden according to their form or are centered on a forbidden object or purpose. Often, merchants seek to disguise such activities. For example, many Muslims engage in fictitious sales that emulate a loan of money at inter- est. Such sales are known as
   hila
   (‘‘legal fictions’’) and entail a buyer selling an object to another person and then buying it back at a different price. The difference is the amount of interest that would have been accrued in an interest-based transaction. Such deceptive contracts are meant to disguise a forbidden transaction as if it were permissible. Although the merchant who contracts a
   hila
   is accountable to God, the historical view of Muslim scholars has been that governments should prevent such deceptions to the best of their ability.
   

   IJTIHAD
   UNDER MODERN CONDITIONS OF COMMERCE
   

   According to the hadith that states, ‘‘Everything that is not prohibited is permissible,’’ much of what we transact in modern commerce is permissible in Islam, with the caveat that we must not engage in
   riba
   or
   gharar.
   On the one hand, this rule means that one must study modern commercial and fi cial arrangements carefully to determine their validity and consistency with Islamic principles. On the other hand, contemporary society has some new needs, new customs, and many blends of cultures and rules. As a result, once the analysis of contemporary commercial and financial arrangements is complete, modern Muslims need to construct authentic Islamic alternatives, not
   hiyal
   that circumvent the purposes of the Shari‘a. For such a purpose
   ijti- had
   is required. The context for
   ijtihad
   is that ‘‘the door is wide-open for the adoption of anything of utility, of whatever origin, so long as it does not go against the texts of the Qur’an and the Sunna.’’
   71
   The great classical jurist Ibn al-Qayyim al-Jawziyya established three rules for
   ijtihad:
   (1) it may be applied in the absence of specifi guidance in the Qur’an and the Sunna;
   

2. it should not contravene the Shari‘a; (3) it should not lead to such a complicated expression that people either lose their attachment to the Shari‘a or become confused about its established principles.
   72
   

As a practical matter, the outcome of modern innovation in the financial markets is a corpus of
fatawa
(the plural of
fatwa
), legalistic rulings by contemporary Muslim scholars that enable financial institutions, invest- ors, and consumers to engage in commercial transactions. These
fatawa
are examples of
ijtihad
and are executed by scholars on the basis of their analysis of authentic sources, the facts of a proposed financial or commercial instrument or transaction, and prior precedents.
73
One hadith

216
Voices of Life: Family, Home, and Society

is particularly helpful in tempering the use of
ijtihad:
‘‘Do not permit an error of opinion to become a tradition for the community.’’
74
To this end, we are reminded that the Qur’an itself warns us that even inspired judges are subject to error.
75

The culture of Islamic business relies on a close interaction between the legal and spiritual aspects of religion. For complex reasons, Muslims have allowed themselves to become less proactive in the modernization of commerce than they have been in other areas of modern endeavor, such as technology. This inactivity has included less engagement in the problems of fi and commerce by Islamic scholars and thinkers. As a result, the modern Muslim businessperson faces unique challenges when operating in the modern marketplace. What should one do, for example, if one’s business model is valid according to Shari‘a principles, but the market generates risks of interacting with businesses that are not Shari‘a compliant? How does one engage in fi if Shari‘a rules governing finance are unknown in the market and, perhaps, alien to regional customs? Muslim communities have dealt with similar challenges in the past. The outcome of their struggles has been documented in the works of the leading schools of Islamic jurispru- dence. The results of these endeavors are now being revisited and adapted to modern circumstances. The majority of these developments have been invisible to the greater public, but some are infl encing business practices around the world as Islamic investing is providing new alternatives in the ethical investing market. For emerging markets that are deeply in need of reform, there is a clear advantage in reviving the Prophet Muhammad’s model of honesty or integrity.

NOTES

(Ed.) following a note signifies that the note was added by the general editor of this set.

1. Sahih al-Bukhari,
   trans. Dr. Muhammad Muhsin Khan (Beirut: Dar al-‘Ara- biyya, n.d.), vol. 3, 151–152.
   

2. Mohammad Adam El-Sheikh, ‘‘The Applicability of Islamic Penal Law (
   Qisas
   and
   Diyah
   ) in the Sudan’’ (Philadelphia, Pennsylvania: Temple University unpublished Ph.D. dissertation, Department of Religion, 1986), xviii.
   

3. Muhammad Taqi Usmani, ‘‘The Principle of Limited Liability,’’ in Muham- mad Imran Ashraf Usmani,
   Meezan Bank Guide to Islamic Banking
   (Karachi, Pakistan: Darul Ishaat, 2002), 223–232. Although predisposed to the concept, Justice Usmani has not finalized his view.
   

4. Abdur Rahman Doi,
   Shariah: The Islamic Law
   (London, U.K.: Ta Ha Publishers, 1984), 449.
   

5. Mohammad Hashim Kamali,
   Islamic Commercial Law: An Analysis of Futures and Options
   (Selangor, Malaysia: Ilmiah Publishers, 2002), 73.
   

6. El-Sheikh, ‘‘Islamic Penal Law,’’ 15–18.
   

   Islam and Business
   217
   

7. This is independent from the separate theological argument that property is not owned by the individual, but is held by human beings in trust for God, who is the actual owner; thus, human beings are merely the caretakers of this world and its contents.
   

8. Kamali,
   Islamic Commercial Law,
   67; Kamali deduces from this that it is not sufficient to presume that a contract is forbidden if its type or terms are not explicitly forbidden.
   

9. Ibid., 69.

1. Lakhdar O’Barrett, ‘‘Towards a Green Planet: Why Islam Holds the Keys to a Sustainable World,’’
   Al Jumuah
   16, no. 12, Dhu al-Hijja 1425 (March 2005), 34.
   

2. John L. Esposito and John O. Voll, ‘‘Khurshid Ahmad: Muslim Activist- Economist,’’ in
   Islamic Resurgence
   , ed. Ibrahim M. Abu-Rabi (Islamabad: Institute of Policy Studies, 2000), 50. For an exhaustive discussion of
   Zakat,
   see Yusuf al- Qaradawi,
   Zakat
   (London, U.K.: Dar Al Taqwa, 1996). Another outlet for wealth that is used to help others is the charitable trust (
   waqf
   ), which is not discussed in detail in this article. A useful resource on
   waqf
   is Dahi Al-Fadhli and Abdulkader Thomas,
   Characteristics of the Historical Formation of Awqaf
   (April 16, 2005), accessed at www.ajif.org.
   

3. Rodney Wilson, ‘‘Parallels between Islamic and Ethical Banking,’’
   Review of Islamic Economics,
   no. 11 (2002): 51–62.
   

4. Said Ramadan,
   Islamic Law: Its Scope and Equity
   (Kuala Lumpur: Muslim Youth Movement of Malaysia, 1992), 43. Ramadan indicates that there are ten specifi economic and financial injunctions in the Qur’an, which I have reduced to three primary categories.
   

5. Ibn Maja,
   Sunan Ibn Maja
   (Cairo: Issa Al Halabi Press, 1952), 42–43. Often, this hadith is cited as proof that Islam is against any form of innovation. In fact, the specific reference is to innovation in the defined beliefs and practices (
   ‘aqida
   ) of Islam. Muslims have historically understood that the prohibition of innovation relates to matters of belief and worship, but not to science and commerce.
   

6. El-Sheikh, ‘‘Islamic Penal Law,’’ 41–42; see also, Harald Motzki,
   The Origins of Islamic Jurisprudence: Meccan Fiqh before the Classical Period,
   (Leiden and New York: E.J. Brill, 2002).
   

7. El-Sheikh, ‘‘Islamic Penal Law,’’ 1.
   

8. Seyyed Hossein Nasr,
   Islamic Life and Thought
   (London, U.K.: George Allen
   

   & Unwin, 1981), 26.
   

9. Fathi Osman,
   Sharia in Contemporary Society: The Dynamics of Change in the Islamic Law
   (Los Angeles, California: Multimedia Vera International, 1994), 19.
   

10. Ramadan,
    Islamic Law
    , 33; Ramadan believes, unlike Nasr, that the traditional order is not immutable. The root of
    ijtihad
    is
    j-h-d
    , which means, ‘‘to strive or make a strenuous effort.’’
    Ijtihad
    is the eighth form intensifi
    

    of this root, which also gives us the third form term
    jihad
    or ‘‘defensive effort.’’
    

11. Classically, following the
    Risala
    of Imam al-Shafi‘i (d. 820
    CE
    ), the four sources of Islamic law are listed as Qur’an, Sunna,
    ijma‘
    , and
    qiyas.
    

    218
    Voices of Life: Family, Home, and Society
    

12. Fuad Al-Omar and Munawar Iqbal, ‘‘Some Strategic Suggestions for Islamic Banking in the 21
    st
    Century,’’ in
    Review of Islamic Economics
    , 9, 2000, 49.
    

13. See Kamali,
    Islamic Commercial Law
    , 99.
    

14. Besim S. Hakim, ‘‘The Role of
    ‘Urf
    in Shaping the Traditional Islamic City,’’ in
    Islam and Public Law,
    ed. Chibli Mallat (London, U.K.: Graham & Trotman, 1993), 141; Hakim sees
    ‘urf
    as a subset of
    ‘ada
    (habitual practice), which was the basis for not overturning local customary practices in the opinions of the early Muslim jurists (144). See also, Kamali,
    Islamic Commercial Law
    , 79–81.
    

15. Yusuf DeLorenzo, ‘‘Shariah Boards and Modern Islamic Finance: From the Jurisprudence of Revival and Recovery to the Jurisprudence of Transformation and Adaptation’’ (paper presented to the International Islamic Financial Standards Board, London, U.K., May 2004).
    

16. This applies almost in equal measure to the political Rejectionists of our time in the Al Qaeda movement and some young Western educated Islamic reformists as well as some traditionalists residing in the West.
    

17. ‘Umar S. Al-Ashqar,
    al-Qiyas
    (Kuwait: Dar al-Salafiyya, 1979), 44–5.
    

18. DeLorenzo, ‘‘Shariah Boards and Modern Islamic Finance.’’
    

19. El-Sheikh, ‘‘Islamic Penal Law,’’ 28; however, as we shall see below,
    ijtihad
    requires significant training, and established religious authorities have been at pains to point out that modern rejectionist groups like Al Qaeda’s Egyptian predecessor
    al-Jama‘a al-Islamiyya
    have no right to apply
    ijtihad
    on the basis of their relatively limited learning and their narrow political aims. See Bernard Botiveau ‘‘Contempo- rary Reinterpretations of Islamic Law: The Case of Egypt’’ in
    Islam and Public Law,
    ed. Mallat, 274.
    

20. Osman,
    Shari‘a in Contemporary Society,
    23. Osman goes on to propose that the role of
    ijtihad
    may result in distinct rulings applicable in Muslim majority societies as compared to Muslim minority communities in the West, p. 26.
    

21. El-Sheikh, ‘‘Islamic Penal Law,’’ 49.
    

22. See Motzki,
    The Origins of Islamic Jurisprudence,
    in which Motzki aligns the
    

    usul al-fiqh
    approach to Imam Shafi‘i in the second century of the Hijra.
    

23. DeLorenzo, ‘‘Shariah Boards and Modern Islamic Finance.
    

24. Sahih Muslim bi-sharh an-Nawawi,
    (Cairo: 1924), 830; see also,
    Sahih al- Bukhari,
    trans. Dr. Muhammad Muhsin Khan, 233–236 and 241.
    

25. Muhammad Elgari, unpublished interview with Omar Fisher for
    The American Journal of Islamic Finance
    (January 24, 1997).
    

26. Munawar Iqbal, ‘‘Wealth Creation: An Islamic Perspective’’ (presented at the ‘‘Seminar on Wealth Creation,’’ Durham University, Durham, United Kingdom, July 2003).
    

27. Usmani, ‘‘The Principle of Limited Liability,’’ 211–212.
    

28. Ibid., 214–215; See also, Introduction by Muhammed Imran Usmani, 208–209.
    

29. Barber Johansen, ‘‘Legal Literature and the Problem of Change: the Case of Land Rent,’’ in
    Islam and Public Law,
    ed. Mallat, 35.
    

30. David S. Powers, ‘‘Legal Consultation (
    Futya
    ) in Medieval Spain and North Africa,’’ in
    Islam and Public Law,
    ed. Mallat, 89, citing Abu al-‘Abbas Ahmad b.
    

    Islam and Business
    219
    

    Yahya al Wansharisi (d. 1508
    CE
    )
    al Mi‘yar al-Mughrib wa jami‘ al-mu‘rib ‘an fatawa ahl Ifriqiyya wa al-Andalus wa al-Maghrib
    (Rabat: Ministry of Endowments and Islamic Affairs, 1981–1983), vol. 10, 31.
    

31. Houcine Chouat, ‘‘Guidelines for Marking up Goods for Profit,’’
    Al Jumuah
    

    17, no. 3 (July 2005): 20.
    

32. The idea that Islam is a system or order (
    nizam
    ) in which the social, eco- nomic, and political sciences are interrelated developed among Muslim reformist thinkers in British India around the time of the Second World War. In 1943, Mawlana Hamid al-Ansari Ghazi described Islam as an integrated political system. In 1942, Abu al-‘Ala al-Mawdudi (d. 1979) used the Urdu term
    Islami nizam
    (‘‘Islamic order’’) in a speech about Islamic ideology. The Egyptian Muslim Brotherhood ideologist Seyyid Qutb (d. 1966) derived the concept of the Islamic System from Mawdudi. In his infl manifesto
    Ma‘alim fi al-Tariq
    (Milestones), written in 1964, Qutb warns Muslim youths to avoid Western theories about ‘‘the interpreta- tion of human endeavor
    .. .
    the explanation of the origin of the universe, [and] the ori- gin of the life of man.’’ This concern led to the development of an intellectual movement known as the ‘‘Islamization of Knowledge.’’ First set out in Chapter 8 of
    Ma‘alim fi al-Tariq
    (‘‘The Islamic Concept and Culture’’ [
    al-Tasawwur al-Islami wa al-thaqafa
    ]), the Islamization of Knowledge was promoted in greater detail by Ismail Faruqi in the United States and Muhammad Naquib al-Attas in Malaysia. See Seyyid Qutb,
    Milestones
    (Damascus: Dar al-‘Ilm, n.d.), 109–110, and the Arabic edition of this work, idem.,
    Ma‘alim fi al-Tariq
    (Beirut: Dar al-Shuruq, 2000), 139. On the origin of the concept of the Islamic System, see Wilfred Cantwell Smith,
    The Meaning and End of Religion
    (1962; repr., Minneapolis, Minnesota: Fortress Press, 1991), 274 n. 10. (Ed.)
    

33. On the subject of
    riba,
    see Abdulkader Thomas, ed.,
    Interest in Islamic Economics: Understanding Riba
    (London and New York: Routledge, 2006). This book provides a detailed analysis from legal, economic, and historical perspectives about the concept of
    riba
    and why it is forbidden. A key conclusion of the book is that interest on a loan of money is clearly
    riba.
    

34. See Abdulkader Thomas with Stella Cox and Bryan Kraty,
    Structuring Islamic Finance Transactions
    (London, U.K.: Euromoney, forthcoming). Islamic banking has developed at a growth rate of approximately 17 percent per year in the Arabian Gulf region. The growth rate has been less robust, but strong nonetheless, in other parts of the Muslim world, such as South and Southeast Asia. Although the field of Islamic banking has developed rapidly over the last two decades, most Muslims around the world continue to use commercial banks as people do in the West. In addition, some countries, such as Iran, make a distinction between internal banking practices, which operate on Islamic principles, and international banking, which operates on commer- cial banking principles. (Ed.)
    

35. Usmani, ‘‘The Principle of Limited Liability,’’ 39–44.