Trade Justice

Trade Justice

Islamic Business Ethics in Practice

By Sheikh Abdal Hakim Murad

Opening

Peace be upon you and the mercy of Allah and His blessings.

In the name of Allah, the Most Gracious, the Most Merciful.

Praise be to Allah, Lord of the worlds, and prayers and peace be upon the Messenger of Allah and upon his family and companions all together.

Opening Khutbah

Bismillah ar-Rahman ar-Rahim. As-salatu ala Sayyidina wa Mawlana wa Habibina Muhammad wa ala alihi wa ashabihi wa atba'ihi ajma'in.

In the name of Allah, the Most Compassionate, the Most Merciful. Peace and blessings upon our Master and our Beloved Muhammad and upon his family and companions and followers altogether.

Introduction

We're very honored tonight and very privileged and incredibly thankful to Sheikh Abdul Hakim Murad for being with us this evening. What I thought I would do would be to step with you into a time machine and to look at ways in which past ages, generations of Muslims have looked at this issue of a dimension of business ethics.

In an earlier age of human civilization, when Islam ruled the waves from the great city of Baghdad, when Islam was the civilization for several centuries, when Muslims presided over what was a very mercantile civilization. We need to remember this because often Muslims working in a contemporary, fast-moving, turbo-capitalistic workplace feel guilty and uncertain and think that perhaps they're selling out. In fact, ours is not a worldly religion, but a religion that teaches us to be at ease in the world.

And our founder, the Holy Prophet ﷺ, was in the world. He was not a monk or a nun. He was part of his society. He fully participated in the political and economical and social and marital life of his culture. He was an economic actor.

The Foundational Hadith

This is about issues that are eternal, issues of charity, issues of empathy, issues of justice. This is not a new innovation. What I want to do is to consider a hadith, a well-known saying of the Holy Prophet ﷺ.

Muslims still want to know this is narrated by Jabir bin Abdullah, and it's in the collection of Al-Bukhari.

Sahih al-Bukhari

So it's rigorously authenticated. And he says:

(Bukhari)

"May God have mercy upon a person who is easy in his buying and in his selling and in his taking of money in a loan and in his reclaiming of money that is owed to him."

And it's a prayer from the Prophet that God should have mercy on these people.

The Islamic Vision of Economic Life

This might trigger some kind of culture shock, because we do tend to assume nowadays, Muslims like everybody else, that religion, spirituality, personal transformation, the hotline to God, the things that happen in a beautiful sacred place, a little quiet backwater, perhaps a retreat center, perhaps a place we go to on Friday or Saturday or Sunday, and the real world is out there, where we accumulate all kinds of bad vibes, which we then purge at the place of worship.

The Muslim vision is that of a totality. That is to say, everything is to be incorporated in the fundamental human project, which has to be, for Islam, as for all other religions, turning away from the self towards the other.

The other with the big O, and also the other with the little O. Turning away from our lower selfishness and towards something that, in some strange but convincing way, persuades us that it is what we really are underneath. The fundamental turning, which the Quran calls tawbah. Tawbah, which we translate as repentance, means turning.

Turning away, and turning away from sin to righteousness, which is another way of expressing turning away from the rubbish within to what is beautiful that God has placed within the soul. So, when the Holy Prophet ﷺ is speaking about economic matters, matters of business ethics, this doesn't surprise us, because everywhere belongs to God, and everywhere is to be a place where God is celebrated, even the computer terminal in the estate agent or wherever it is that you work.

Imam al-Ghazali's Three Categories

Imam al-Ghazali, one of the great ethical thinkers of Islam, used to say, humanity basically exists in three categories:

"Number one is the person whose worldly concerns distract him from his otherworldly concerns, and he is of the lost."

"A man who is distracted by his otherworldly concerns from his worldly concerns, and he is, God willing, one of the successful."

"And a man whose worldly concerns help him in his otherworldly concerns, and he is of those who are brought close to God."

So we move close to God not by skirting the realities of the world, but rather going through them.

Imam al-Ghazali's Business Ethics

So Imam al-Ghazali has this text called Kitab al-Adab al-Kasb. It's one of the masterworks of Islamic business ethics, and it was written almost a thousand years ago.

He says, to turn your economic activity into a form of ihsan, that is to say, creating beauty. Ihsan is the word that we normally use for spirituality, but literally it means doing what is beautiful, making yourself beautiful, making others beautiful, making that which is around you beautiful, because beauty is a mirror of the divine presence.

Six Principles of Islamic Business Ethics

So he has this section on giving us advice on six particular ways in which we can overcome the ego in our membership of an economic community:

1. Avoiding Excessive Markup (Raban or Murabbanah)

The first of these, he says, is that we need to avoid what in Islamic law is called raban or murabbanah, which means an excessive markup. Taking advantage of the weakness of the purchaser by insisting on too large a margin.

This is not just a moral issue, it's also a technical issue. Many schools of Islamic law say you can't have a legal markup on your goods of more than a third. And a contract can be invalidated in certain schools of Islamic law if the markup that you're imposing is more than a third.

One of the famous early Muslims of the second generation was called Yunus bin Ubaid, whose path to God seemed to be through his little shop in the bazaar in Basra, in southern Iraq. One of the famous ones that you hear in sermons is that he basically was selling two kinds of things in his shop, two sorts of robes. One was for 400 dirhams, and the other was selling for 200.

He wanted to go to the mosque, so he told his brother, it's very simple, these cost 200, those cost 400. So he goes off to the mosque. On the way back from the mosque, he finds this guy, who's obviously from another part, he's probably a Bedouin, doesn't know what the prices should be, wearing one of his cheap robes, and he said, how much did you pay for that? And he said, I paid 400 dirhams at that shop.

And he becomes angry, and he forces the guy to come back with him, and says, you were charged too much. My brother overcharged you. And he said, in my country, we pay 500 or more for this. And he said, that's still not the way I do business. So he takes him back, and he invalidates the contract.

2. Accepting Higher Prices from the Poor (Ihtimal al-Ghaban)

The second is the kind of opposite, ihtimal al-ghaban, which is putting up with somebody else extracting a large markup. And here, it only applies to purchases from the poor. So in the context of the fair trade issue, this is particularly relevant.

It doesn't matter if you pay over the odds. If the chocolate costs twice as much, why should it cost twice as much? Maybe it could have been done cheaper, the same quality chocolate, but you pay over the odds for a charitable, for a benign, for a beneficent reason in order to spread this principle of ihsan, or beauty.

3. Easy Payment Collection (Istifa ith-Thaman)

Fistifa ith-thaman. Getting your money. Very often in Islamic law, it's possible to sell something, but the actual financial transaction happens later on. And debts, of course, often fall into this kind of category.

And there is a big issue, which is in the Quran itself, about letting people off debt or giving them more time to pay:

"If somebody is finding it hard to repay, then give him an additional period until it becomes easy for him to pay."

And the Holy Prophet ﷺ says:

(Source Name)

"Whoever gives somebody more time to pay, or lets him off the debt, God will call him to account on the Day of Judgment in a way that is easy."

So the debt that we have with God becomes easier if we're easy with people who are in a debt relationship with ourselves.

4. Respectful Debt Collection

Then he also has something about when others come to reclaim their money from you, you have certain obligations. You have to be polite, you have to be respectful, because after all they've done you a favor, you don't get angry, you don't get bad-tempered with these people.

And there's even a case in which the Holy Prophet ﷺ, who often was in debt, he died with a suit of armor pledged for a debt with a Jewish person in Medina. That somebody who the Prophet ﷺ came to him saying it's time to repay, and he starts to shout and insult the Prophet.

And the companions of the Prophet who love him are outraged by this. But the Prophet says to them:

"Leave him alone, for somebody who has a right over you has the right to express himself."

5. Right of Return (Al-Istiqalah)

Number five out of the six is what's called الاستقالة which in Islamic law, it relates to a category of contracts that can be annulled. For Imam al-Ghazali, classical Islamic ethics generally, it's very important, if you're selling things, that people have the right to change their mind.

That for instance, if they decided to buy a million barrels of oil from you at a particular price, and then their country's economy goes down the tubes, you have a moral responsibility to take that seriously and to allow that contract to be abrogated or annulled.

6. Charitable Sales (Naseer)

And the final issue, something called Naseer, a practice in classical Islamic piety from these, nowadays in our capitalist culture, almost unimaginable saints who went to the marketplace in order to find God, is that they would specifically sell things to the poor, saying, if you can pay me back, that's fine. If you can't, I don't mind.

And very often, in the traditional bazaars in Central Asia and Iraq, these particular commercial saints would have two defters or two registers for their dealings. One would be for people who they're willing to let off if they really can't pay. And the other is for people who are in a more solid financial situation.

The Three Categories of Character Assessment

So that Imam al-Ghazali says, if you see somebody who you observe as a good neighbor and you observe as a good traveling companion and you observe as somebody who you do business with in an honorable and responsible and honest way, then you should accept that person as being a decent human being.

Story of Sayyidina Umar

And there's a story, and this is my final point, of Sayyidina Umar II Caliph, who was once, he was a judge, and once a case was brought to him and somebody wanted to act as a witness. And Umar wanted to know that this witness was indeed an upright witness.

The criteria for testifying in court in the Sharia, in Islamic law, are actually quite strict. Not just anybody can do it. And so he asks about this person and says, is there anybody who can vouch for how he is as a neighbor? They said no. Can anybody vouch for how he is when he travels? They said no. Can anybody vouch for how he behaves in the marketplace? And they said no.

And he actually dismissed him. He regarded him as not being a valid bearer of testimony in a court case.

Conclusion

So these are some of the stories from the distant past of Islam that I just wanted to share with you to indicate that these are live issues, but they are kind of hardwired into the traditional ethos of Islam, which produced a great mercantile civilization, which isn't really a religion of monasticism, but is a religion of getting to God by going through the world that he has created, which imposes often very strict disciplines on our ethical conduct, particularly when we deal with the weak and the poor, often the categories of unfortunates who are, of course, still very much with us in today's world.

Closing

"I ask Allah to make us among those who listen to speech and follow the best of it."

"Our Lord, give us good in this world and good in the next world, and save us from the punishment of the Fire." Quran 2:201

"And the last of our prayer is that all praise belongs to Allah, Lord of all the worlds."

Peace be upon you and the mercy of Allah and His blessings.