ECONOMIC ACTIVITIES:

The fifth principle of Islamic Economics relates to the economic activities. The economic activities include the production,
distribution and consumption. First, there should not be exploitation of the weak and the poor in the activity of production.
In a Hadith the Prophet Muhammad (Peace be upon Him) said: “The wages of a labourer must be paid to them before the sweat
dries upon their body”- (Ibn Majah, No: 2434). One cannot produce the goods and services that are prohibited in Islam and are
harmful to the society. The commodities and services to be produced are categorized into necessities, comforts and luxuries. The
first preference in the production process shall be given to necessities, then comforts and then followed by luxuries.
Second, towards distribution, whatever is being produced should be divided among those involved in the production, according to
their share, without any deception. In the process of distribution too, it is mandatory to follow the Islamic guidelines and laws
provided in the Quran and Sunnah. The surplus wealth that remains after the distribution of the share of all the parties can once
again be reinvested in the business and trade in the light of the same Islamic principles.
Third, towards consumption, those who are provided with the bounties of wealth are not expected to live as they wish and consume
in a manner they desire. It is neither allowed to squander nor to hoard wealth in a few hands. In the Quran Allah says: “What Allah
gave as booty (Fai’) to His Messenger (Muhammad) from the people of the townships - it is for Allah, His Messenger (Muhammad),
the kindred (of Messenger Muhammad), the orphans, Al-Masakin (the poor), and the wayfarer, in order that it may not become a
fortune used by the rich among you. And whatsoever the Messenger (Muhammad) gives you, take it; and whatsoever he forbids you,
abstain (from it). And fear Allah; verily, Allah is Severe in punishment” (Al Quran 59:07).
Moderation and self-control are rather expected. Extravagance and wastage in consumption are prohibited. In the Quran Allah says:
“...And those who, when they spend, are neither extravagant nor niggardly, but hold a medium (way) between those (extremes)...”-
(Al Quran 25:67). Islam does not discourage an individual to lead a comfortable life, but in fact encourages it, provided the purpose
behind the acquisition of comforts is to appreciate the bounties of Allah and not to pomp or show.
TRADE AND BUSINESS:
The sixth principle of Islamic Economics relates to trade and business, which plays a pivotal role in economics. Therefore Allah has
permitted the trade.
In the Quran Allah says:
“...they say: “Trading is only like Riba (usury),” whereas Allah has permitted trading and forbidden Riba (usury)...”- (Al Quran
02:275). The Prophet Muhammad (Peace be upon Him) too preferred trade and always encouraged business. In a Hadith the
Prophet Muhammad (Peace be upon Him) said: “A truthful businessman will be under the shade of the throne of Allah Ta’ala on
the Day of Resurrection”-(Al-Isbihani). In another Hadith the Prophet Muhammad (Peace be upon Him) said: “The truthful
merchant [is rewarded by being ranked] on the Day of Resurrection with prophets, veracious souls, martyrs and pious people”-
(Tirmidhi, No: 1130). But to prevent the oppression or aggression, a few basic conditions are advanced to regulate the trade and to
safeguard the interest of all those involved in it.
Trade is allowed by mutual consent without harming one another. In the Quran Allah says:
“O you who believe! Eat not up your property among yourselves unjustly except it be a trade amongst you, by mutual consent. And
do not kill yourselves (nor kill one another). Surely, Allah is Most Merciful to you...”- (Al Quran 04:29).
It is mandatory to have ‘transparency’ in trade and business. In a Hadith the Prophet Muhammad (Peace be upon Him) said: “Do
not sell what you do not have”- (Tirmidhi, Buyu’, Book 12, chapter 19, hadith 1232). One cannot trade in the commodities that
are prohibited and clearly mentioned in Quran and Ahadith and that are not in the collective interest of the society. One is not
allowed to adopt the means and ways in trade that involves uncertainty.
ROLE AND NATURE OF MONEY:
The seventh principle of Islamic Economics relates to the role and nature of money. Islam views ‘money’ as only a medium of
exchange and a measure of value. The rationale behind this principle is that, every human being needs a large number of commodities
for survival. The transaction of exchange is inevitable among people who have the commodities and those who need such
commodities. But there must be a measure on the basis of which price can be determined, because the exchanged commodities are
neither of the same type, nor of the same measure which can determine how much quantity of one commodity is a just price for
another. Therefore, all these commodities need a medium to measure their exact it cannot be utilized in direct fulfillment of human
needs. Hence, ‘money’ is invented as the medium to measure all the commodities, services, assets or wealth as a whole. Money is a
tool to measure the value of all commodities and it is not a commodity in itself. Money has no intrinsic value; it can only be used
for acquiring some goods or services. A commodity, on the other hand, has intrinsic utility and can be utilized directly without
exchanging it for some other thing. The commodities can be of different qualities, while money has no quality except that it is a
measure of value or a medium of exchange. Therefore, all units of money of the same denomination are a hundred percent equal to
each other.
DEBT IN ISLAM:
The eighth principle of Islamic Economics relates to the concept of debt in Islam. Generally, debt is created by two means. One is
when an asset or commodity is sold on deferred payment basis and the second is when someone seeks fund through financial loan.
In Islam, both types of debts are considered as an obligation. In Arabic the equivalent to debt is dayn. The linguistic meaning of the
word Dayn has to do with submission and humiliation. Islam takes the matter of debt very seriously and warns against it and urges
the individuals to avoid it as much as possible. Debt is generally discouraged in Islam except under conditions where it becomes a
necessity. And people engaging in debt based transactions should ensure they have the potential ability or capability to repay in
accordance with the terms and conditions of the debt arrangement. Contracting a debt and not repaying, or without intention to
repay is a grave sin. Certain verses in the Quran and sayings in the Hadith are clear about entering into a debt contract and
supplications for the repayment of debt.
In the Quran Allah says:
“O you who believe! When you contract a debt for a fixed period, write it down....”-(Al Quran 02:282).
In a Hadith the Prophet Muhammad (Peace be upon Him) prayed: “O Allah, I seek refuge with You from sin and heavy debt”-
(Dua). The Prophet Muhammad (Peace be upon Him) on many occasions has warned about the punishment for not repaying the
debt. Once he is reported to have offered obsequies or the funeral prayer for a deceased person who had an unsettled debt, only after
the debt was settled. Here is a Hadith for reference: “The Prophet (Peace be upon Him) refrained from offering the funeral prayer
for one who had died owing two dinars, until Abu Qataadah (may Allah be pleased with him) promised to pay it off for him. When
he saw him the following day and said, I have paid it off, the Prophet (peace and blessings of Allah be upon Him) said: “Now his
skin has become cool for him”-(Musnad Ahmad (3/629).
In addition, according to the findings of some studies, the spending behaviour of a person who raises funds on debt is different from
the one who spends his own money.
ZAKAT AND CHARITY:
Zakat and charity constitute the ninth principle of Islamic economics. The word Zakat, literally means growth in goodness or
increase, purifying or making pure. Therefore, the act of giving Zakat is purifying one’s wealth to gain Allah’s blessing to make it
grow in goodness. As discussed earlier, Islam encourages every individual to earn and acquire as much wealth as they can in a righteous
way. There is no restriction on the amount or value of wealth one can own. But, the basic principle is that from the surplus of the
wealth one owns, there is need to spend a portion or part in the way of Allah for the benefit of the individuals in the society who
are in need.
In the Quran Allah says:
“Believe in Allah and His Messenger (Muhammad), and spend of that whereof He has made you trustees. And such of you as believe
and spend (in Allah’s Way), theirs will be a great reward...”-(Al Quran 57:07).
This principle is derived from the fact that all wealth belongs to Allah, and people are only trustees for Allah’s wealth. It is Allah’s
invisible hand that turns the wheel of economic life. Hence, Allah has made it obligatory that a small portion (2.5 percent) of the
surplus wealth He entrusted to individuals to be paid annually in the form of Zakat as a way of purification of one’s wealth, and as
the share of the poor and the needy and those who are eligible to receive it.
In the Quran Allah says:
”And perform As-Salat (Iqamat-as-Salat), and give Zakat....”- (Al Quran 02:110).
Apart from legal obligations like Zakat, Islam also encourages an individual to spend for social welfare in informal ways like charity.
Technically speaking, Zakat is a determined amount of wealth that is paid annually from a person’s wealth in accordance with the
methods and rulings of Islam to those who have the right to receive it as specified in the Quran in order to attain Allah’s pleasure.
Charity, however, is an optional act of giving wealth to all needy persons in order to attain Allah’s pleasure. The worldly objective
of both Zakat and Sadaqah is the downward flow of wealth from those who have to those who need it. The principle of Zakat and
charity discourages the circulation and monopoly of wealth in a few hands.