Dr. Muhammad Arif Zakaullah teaches in the Department of Economics, International Islamic University Malaysia. His research interests include Islamic Economics and Political Economy. In recent years his research and publications have focused on the political economy of the United States. Recently he has published a book entitled The Cross and The Crescent: The Rise of American Evangelicalism and the Future of Muslims. He believes that an objective understanding of the US and the European Union is essential in order for the Muslim world to cultivate a healthy and constructive relationship between the Islamic and the Western civilizations.
Over the years he has received numerous honors for his outstanding services, the latest being the Excellence in Teaching (Economics) Award, 2001; and the Special Contribution Award, 2003 from the International Islamic University Malaysia. Dr. Zakaullah earned his Ph.D. in Economics at Clark University, Worcester, MA.
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Islam means “peace,” and the Islamic concept of peace encompasses all spheres of life, including business. We are required to lead our lives in such a way that not only are we in peace, but we are also a source of peace to others.
Islam recognizes that the real source of peace in this world is human dignity for which human rights are necessary but not sufficient, as only those who believe in and practice justice will grant human rights. Hence in Islam, justice is not only a fundamental human right but also a guiding principle of morality, including business morality.
The Virtue of Work
Islam advocates productive work and efficiency, and regards them as virtues. It encourages the physically capable to work and earn their living by being productive members of the society. In order to motivate the people to work hard and enjoy the fruits of their labor, Islam recognizes the profit motive, private ownership and the market. But the pursuit of wealth is subject to moral and ethical standards as it is guided by the criteria of Halal (permissible) and Haram (prohibited). What is beneficial and just, is permissible and what is harmful and unjust is prohibited. These criteria are drawn from Islamic Law (Shariah), which includes the Qur’an, Sunnah (the practice of Prophet Muhammad), and further opinions and deductions and logically applied principles from Islamic experts and adherents to the faith. Thus Shariah is at the root of Islamic business ethics.
Islamic business ethics recognizes profit as a motive for production, but production and profit making are not the end, but rather a means to achieve the objectives of Islamic law. The Shariah aims at achieving society’s well being as defined by Maslahah (public interest). Public interest in Islam is regarded as seeking or promoting something which is useful, or removing something which is harmful. The objective of Islamic law is to protect and promote public interest by ensuring the preservation of the following five things: religion, life, reason, descendants, and property. If the nature of a business activity, product or service is such that it harms any of the above five, then it is considered to be harmful and unjust and is therefore prohibited, while a product, service or activity which protects and preserves the above five is permissible. Thus Islamic business ethics evaluates all the business decisions and activities on the criteria of public interest.
Distinction Between Ends and Means
The commitment of Islamic business ethics to the criteria of public interest and justice leads to the distinction between the ends and the means. In a market economy where the invisible hand is sovereign, the pursuit of profit maximization knows no bounds and may even lead the business to undertake economic activities that are harmful to public interest. On the other hand, in an Islamic economy, where the invisible hand is guided by the objectives of Shariah, the market will channel the business to pursue profit-maximization through only those economic activities that are in line with public interest. Thus Islamic business ethics accepts the profit motive as the goal of the producer but rejects all those means (to achieve this goal) that may harm the public interest in any way. The protection and promotion of public interest as the criteria of economic activities elevates the business entities from being (potentially) reckless profit-seekers to socially responsible profit-seekers. This transformation contributes to peace and harmony in the society, which is the main purpose of Islam.
Hence, Islamic business ethics holds that it is not enough to have good goals; the means adopted to achieve those goals must also be right (i.e. permissible). If the means adopted to achieve noble goals are not permissible, then the project will not be implemented. On the other hand, if both the goals and means to achieve them are permissible, then the effort spent to achieve those goals in its importance and usefulness, is ranked next only to the duty of worship. In Islam, the importance of earning a living through Halal means goes to the extent that acceptance of one’s prayers is conditional upon Halal earnings.
The literature on business ethics in Islam covers a vast array of topics discussed by Islamic scholars. Here are a selection of topics and their implications for business decision making and the society at large.
Truthfulness: Both Qur’an and Sunnah give a very high priority to truthfulness as the basic code of Islamic ethics. For example, if the seller violates the Islamic ethics of truthfulness and uses misleading descriptions of his low quality product or service through aggressive advertising, then he has violated the truthfulness principle of Islamic business ethics and has hurt the public interest.
Trust: To earn and maintain the trust of others is the duty of everyone in the fulfillment of his/her responsibilities. An employee who fails to achieve the target assigned to him by his employer, or a producer selling his low quality product with misleading advertising and other similar actions, violate the trust component of Islamic business ethics and compromise the public interest of the society. In the short term, they may gain through such tactics, but in the long term it is they themselves who will be the greatest losers as the relevant parties (crucial to their success) will either try to avoid dealing with them, or will impose stringent conditions on them, hence weakening the violators’ bargaining power.
Justice (Al ‘Adl): Justice is one of the fundamental human rights in Islam as according to the Qur’an, it is one of God’s attributes. Islamic ethics requires justice to be an essential ingredient of a Muslim’s personality and character and it must be exhibited in all his relationships and dealings and it is therefore an essential component of Islamic business ethics. Ibn Taimiyyah, a 13th century (CE) Islamic jurist was interested in just wages. He established the labor market principle of Islamic business ethics that wages should be determined within the market framework through negotiations and bargaining between the employers and the workers, and the role of the government is to create a conducive environment to facilitate these negotiations with an aim to achieve just wages in the society.
The Public Sector: There is a vast range of areas and activities where the public sector is also required to comply with the demands of Islamic business ethics. One example is in the realization of social justice. As Islam believes in private ownership and the market economy, there is a chance that it may lead to an increasing disparity between the haves and the have nots in the society, and if not checked immediately, this imbalance may lead to other socio-economic problems. Although Islam has its own system of Zakat (compulsory wealth tax, the revenue from which goes only to the qualified poor and needy), it is possible that despite the Zakat system poverty may still exist and if allowed to persist, may lead to other problems in the long term. Hence in the 11th century (CE), it was Ibn Hazm of Andalusia who advocated the idea that for those whose incomes are below a certain minimum level such that they are unable to fulfill their basic needs (i.e. food, water, clothing and shelter) it is the state’s responsibility to provide them a subsistence level of basic needs, and if necessary, the state could even use taxes to generate revenue for this purpose.
Reality Doesn’t Always Uphold Tradition
The above discussion shows a healthy tradition of business ethics both in theory and practice in the Islamic civilization historically. Thus the principles of Islamic business ethics are not the result of a reaction to external problems; rather they are rooted in the teachings of the Qur’an and the practice of Prophet Muhammad and are a natural component of the Muslim way of thinking and intellect. Islamic business rationality, rooted in the Shariah, is committed to the preservation and promotion of public interest, and is a ‘mature rationality’ under the Shariah guided market paradigm.
However, the fact cannot be denied that the current state of business under unbridled capitalism in the majority of cases in the Muslim world remains far from the Islamic ideal. This gap between the ideal and the reality is widening rapidly and has become a threat not only to the well being of the masses but also to the very peace and stability of Muslim societies. Unfortunately this gap, coupled with widespread injustice due to a lack of democracy, has caused discontent among the Muslim masses which has been exploited by the extremists in the contemporary Muslim world-hence, the confusion, chaos, violence and militancy.
The intellectuals of other great religions are realizing that this unbridled capitalism is violating their religious ideals of business ethics as well, resulting in a dilution of those values that are the very core of the peace and stability of their societies. These concerns are common across the contemporary civilizations, and there is an urgent need for the concerned citizens of these civilizations to cooperate with each other for common causes. Otherwise, growing commercialism will cause the rapid deterioration of our environment, values and moral institutions and inflict irreparable damage that future generations will have to bear.