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Ethical Business System

The Quran provides a balanced view of human motivation; desire for wealth and propensity for greed and selfishness in humans are recognized. However, since business has to be conducted within a social context, Islam introduces rules to control these desires, as well as guide the behavior of all parties involved. Accordingly, business success is judged not in material terms, but rather by the degree to which the Muslim is able to comply with God’s rules.

Muslims prove their worth to God by behaving ethically in the midst of the tests of this worldly life. These tests could take two forms.

Temptations, such as making profit through ungodly ways like lending money with interest, or promoting a product that doesn’t fulfill as much as possible of the condition of total purity – all that is involved in the production, delivery, and consumption of that product must not cause harm to God’s creation. By not surrendering to the temptation of making gains at the expanse of the larger community the company will be fulfilling one of the most important guidelines in Islam: ‘There should be neither harming nor reciprocating harm’ (Prophet Mohammed), ‘all harm, whether affecting an individual or a group of people, must be removed’ (Rashid Rida cited in Leaman 1995). In reference to intoxicating drinks and gambling, God says: ‘There is great harm in both although they have some benefit for people, their harm is far greater than their benefit’ (Quran 2:219). These two temptations, although beneficial in part, fail the test of total purity and as such become forbidden.

Financial Hardships, such as lack of Shariah-compliant funds to support one’s business. A business owner in this case must abstain from resorting to the use of conventional interest-based finance and resort, instead, to more hard work or to more innovative ways such as the possibility of pooling resources within the community or with other shareholders to run and support the business.

Principles Governing Islamic Ethics

In general, Islamic ethics are governed by the following principles, each of which has significant business implications.

Unity. God is the sole creator of the universe, and his people should cooperate in carrying out His will (Rice 1999). The implication for businesses is: One God, then one constitution, the divine constitution. This constitution is detailed in the Quran, the teachings of Prophet Mohammad (SAW), and the example set by his companions. The constitution, e.g., prohibits all forms of discrimination among employees, suppliers, buyers, or any other stakeholder on the basis of race, color, sex, or religion. More specifically, since we all are part of the same human-hood and spiritually equal before God, even if not materially equal on earth(Bassiouni 1993), honesty, trust, and a relationship between employers and employees that reflects this human-hood need to be developed and encouraged (Wilson 2006). In other words, people are equal partners and each person is a brother or sister to the other (Rice 1999).

Faith. In Islam, faith, or iman, is the basic motivating factor for believers, and it is this that determines conscience. Hence, business decisions are guided by iman, which in practice means following Shariah law, and engaging in what is Halal, or permitted, and avoiding that which is Haram, or forbidden (Alawneh 1998). The business decision-maker has free choice, but religious principles provide a framework for the appropriate exercise of that choice (Ali and Gibbs 1998).

Trusteeship. People are God’s trustees on the earth. Although this does not mean denial of private property, it does have important implications. For instance, resources, which are God-given and for the benefit of all, must be acquired lawfully and redistributed in the best interest of everyone (A-Faruqi 1976). No one is authorized to harm (destroy or waste) these resources. These God-given resources (everything in creation is God-given) are not seen as a free good, to be plundered at the free will of any nation, any generation, or any individual (Rice 1999). The rich and the powerful are not the real owners of wealth; they are only trustees. They must spend it in accordance with the terms of the trust, one of the most important of which is fulfilling the needs of the poor.

Balance. Islam teaches Muslims to be moderate in all of their affairs. Chapra (1992) notes that Islam recognizes the contribution of individual self-interest through profit and private property to individual initiative, drive, efficiency, and enterprise. However, profit is not the chief motive (Siddiqi 1981). Since Islam places a greater emphasis on duties than on rights, social good, or the benefit of the society as a whole, not profit, should guide Muslim entrepreneurs in their decisions. The argument underlying this stand is that if duties are fulfilled by everyone, then the individual self-interest is automatically controlled and the rights of all are protected (Chapra 1992).

Justice. Justice is a central theme in Islam and is required from all parties in all cases. ‘O ye who believe! Stand out firmly for justice, as witnesses to Allah, even as against yourselves, or your parents, or your kin, and whether it be (against) rich or poor: for Allah can best protect both. Follow not the lusts (of your hearts), lest ye swerve, and if ye distort (justice) or decline to do justice, verily Allah is well-acquainted with all that ye do’ (Quran 4:135). Exploiting employees, abusing power, or using a monopoly to overcharge consumers are all condemned (Wilson 2006). However, businesses cannot be forced to sell at a loss or without a profit under the accusation that they are monopolies. On the other hand, employees are responsible for their own actions and cannot simply blame management indiscriminately or claim that which is not rightfully theirs: ‘man can have nothing but what he strives for…’ (Quran 53:39). In addition to its clear objective of eradicating injustice, inequity, exploitation, and oppression from society, Islam instructs people not to lie or cheat, to uphold promises, and to fulfill contracts. Usurious dealings are prohibited, all wealth should be productive and people may not stop the circulation of wealth after they have acquired it, nor reduce the momentum of circulation (Chapra 1992). The commitment of Islam to justice and brotherhood demands that the Muslim society takes care of the basic needs of the poor. Individuals are religiously obliged and encouraged to earn a living and only when this is impossible does the state intervene; Islam greatly values work and clearly discourages dependence on a state or on others.

Free will (people have the free will to guide their own lives as God’s trustees on earth). This free will though is directly linked to accountability; the more freedom a person has the more accountable a person becomes. According to Islam, although people can fully exercise this free will in making decisions, including business decisions, it is a religious imperative to exercise responsibility to those they deal with and, ultimately, to God by observing His rules on earth (Naqvi 1994).

By implementing God’s rules, identity will not lose their trueness, but they become more motivated to serve the wider public.

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