Wednesday, May 05, 2010

Philosophy of Islamic Economics - 5 May 2010

AlhamdulilLah, Sheikh discusssed Riba (Usury), Gharar (Doubtful or uncertain risk) and Maisir (Gambling) with the class. He started with Al-Amr bi al-Ma’ruf wa al-Nahy ‘An al-Munkar (inviting to all that is good, enjoining what is right and forbidding what is wrong) and this particular duty is profusely mentioned in the al-Quran and al-Sunnah. Among the verses is when Allah says (translated as):

“And the believers, men and women, are protectors one of another: They enjoin what is good, and forbid what is evil; they observe regular prayers, practice regular charity, and obey Allah and His Messenger. On them will Allah pour His Mercy: for Allah is Exalted In power and Most Wise.” (Surah al-Taubah: 71)

In terms of Halal and Haram in Economics, he demonstrated by way of Surah An-Nisa: 29 - "O you who believe! Eat not up your property among yourselves in vanities: but let there be amongst you traffic and trade by mutual good-will: nor kill (or destroy) yourselves: for verily Allah hath been to you Most Merciful."

In terms of Riba' in the Quran, Surah Ar-Rum: 39 - "That which you lay out for increase through the property of (other) people, will have no increase with Allah: but that which you give for charity, seeking the Countenance of Allah (will increase): it is these who will get a recompense multiplied."

Many other evidences in the Quran rejects Riba' (usury) such as Surah Ale Imran: 130, Surah Al-Baqarah: 275 - 281. Reflecting on these and a hadith narrated by Ibn Majah - "RasululLah SAW cursed the one who receives, pays, witnesses and the one who documents Riba'" (Narrated by al-Darimi), I could not fathom how the Ummah can cooperate or participate in a system that propagates this and incur the curse of our beloved Prophet SAW? Anyway, read this article for details on Riba (I just learned that there is 70 segments of Riba', subhan Allah).

Gharar (doubtful or uncertain risk), in essence, happens when a party has no control over whether he can deliver what he is selling, when there is inadequate or inaccurate information, when there is undue complexity of the contract, and/or when the terms of contract is unclear. This article covers the permissible gharar and this article covers Business Financing in Islam.

Maisir (gambling) is a zero sum game as reflected by Surah al Maeda: 90-91 - "O you who believe! Intoxicants and gambling, (dedication of) stones, and (divination by) arrows, are an abomination― of Satan's handiwork: eschew such (abomination), that you may prosper. Satan's plan is (but) to excite enmity and hatred between you, with intoxicants and gambling, and hinder you from the remembrance of Allah, and from prayer: will you not then abstain?". Critics may claim that Maisir (gambling) is different from speculation. Read this article to find out the truth.

Afternote: Islam is truly a religion that advocates Social Justice, encouraging its Ummah to transact real value vs. perceived value so as to avoid creating liability for any party. I'm constantly reminded that the Ummah's aim on earth is to create wealth, not to accumulate wealth, subhan Allah. Indeed, what is the point of circumventing the law when Allah SWT is All-Knowing of what is planted in one's heart?

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