It is narrated in a Hadith that after Faraez (obligatory Ibadaat [prayers]) earning a living through Halal means is the second most important Farz (obligatory Ibadat) for a person.
Every person has to earn a living to survive in this world. That is why the right to earn a living has been deemed as one of the basic human rights in Islam and has been protected as such. Rasool Allah ﷺ has said that no one person can be allowed to shut the doors on earning a living for others using his own wealth.
The primary difference between economic teachings of Islam and Capitalism is that in Islam Freedom of Contract is not absolute, and it has been said that every contract that creates imbalance in society, or harms people economically, is Hara'am (impermissible). Rasool Allah SAW has said, "Let people be as Allah Ta'alah will grant sustenance to some through some others."
There are three kinds of restrictions that have been placed on Freedom of Contract in Islam, but before going into that detail there is one core principle that must be understood. Unlike Capitalism or Communism Islam is not just an economic theory or system. Islam is a whole way of life and a belief system that encompasses every walk of life. In Capitalism there is only one measure of success, and that is money. A person who earns a thousand dollars a month is more successful than one earning a hundred dollars a month, and a person earning hundred thousand dollars a month is way more successful than one earning a thousand dollars a month. But in Islam the true measure of success is how well a person used his wealth to make his Aakhirah (life after death) better. If a person dies in a state that Allah Ta'alah was happy with him, he was successful regardless of how poor he dies. If a person dies in a state that Allah Ta'alah was unhappy with him, he died a failure regardless of how much money there was in his bank account at the time of his death.
On the other hand Islam does not teach abstention from all worldly comforts. It allows people to live in this world, to enjoy its comforts, but also cautions that the worldly comforts should not become the total and exclusive focus of all our efforts and our energies, we must also remember that there is a life after this, and we must keep striving to make that eternal life better. Once we understand this core principle then we can understand better why Islam has placed certain types restrictions on Freedom of Contract.
Islam has placed three types of restrictions on Freedom of Contract.
1. A religious injunction or prohibition.
In Islam if two parties enter into a contract to earn a profit or an income it is generally respected and binding, but there are certain types of contracts which are absolutely forbidden in Islam even if both parties involved are willing to enter into that agreement.
Interest (usury) based transactions are a prime example of these kinds of contracts and there is a warning of a declaration of war from Allah Ta'alah and Rasool Allah SAW for those people who engage in such transactions. There are whole books written on this topic but the core principle is that in interest-based transactions one person's gain is guaranteed, and the other person's gain is uncertain who carries all the risk. In Islam the principle is that the profit or loss both should be shared between both parties.
Gambling is another such transaction that is absolutely forbidden regardless of whether both parties are willing to engage in it. The out come of gambling, in all its various forms, always is that one or a few persons make a lot of money, while a much larger number loses their money. Allah Ta'alah is so kind to His subjects that He has forbidden them to engage in activities where they are likely to incur a loss, even if they wish to do so.
Ihtikar (hoarding) is forbidden in Islam. Rasool Allah SAW has even forbidden middlemen from the cities to buy the produce from farmers and then sell it onwards. Hazrat Mufti Muhammad Taqi Usmani DB said that both of these activities drive prices upwards and make life more difficult for ordinary people, and that is why these have been forbidden.
Iktinaz (being so miserly about spending money that one doesn't even pay Zakat or fulfil financial Faraez like looking after one's family) has also been declared Hara'am in Shariah.
In all the activities mentioned above which have been declared Hara'am by Shariah even if its participants engage willingly in it, there is one common theme that is even though they may bring great financial benefit to one person or a few, but overall they are harmful for the masses, which is against the spirit of Islam.
2. Moral injunctions.
As mentioned above, the true measure of success in Islam is not who earned or saved the most money, but who made Allah Ta'alah most happy. That is why Islam encourages its followers to spend money in a lot of heads which while not obligatory and do not bring much financial benefit, but earn great rewards for the Aakhirah. And mostly it is related to brining relief to and satisfy needs of Allah's creations. For example a businessman estimates that if he installed a new factory he will earn a lot of profit, but if he built low cost housing for people who can't afford their own home otherwise, he may not earn as much but will earn a lot of Thawab because he will be providing relief to Allah's creations. If, in that instance, he then chooses to build low cost housing, even that it was not obligatory for him under Shariah to do so but was a moral imperative, InshaAllah it will earn him great rewards for his Aakhirah.
3. Legal injunctions
Islam has given the right to an Islamic government that at any time if it feels that it needs to make a specific law to change the direction in which the society is going, it can do so, and it is binding on people living under its rule.
Adapted from the talk "Islam and Human Rights" by Mufti Muhammad Taqi Usmani DB
Every person has to earn a living to survive in this world. That is why the right to earn a living has been deemed as one of the basic human rights in Islam and has been protected as such. Rasool Allah ﷺ has said that no one person can be allowed to shut the doors on earning a living for others using his own wealth.
The primary difference between economic teachings of Islam and Capitalism is that in Islam Freedom of Contract is not absolute, and it has been said that every contract that creates imbalance in society, or harms people economically, is Hara'am (impermissible). Rasool Allah SAW has said, "Let people be as Allah Ta'alah will grant sustenance to some through some others."
There are three kinds of restrictions that have been placed on Freedom of Contract in Islam, but before going into that detail there is one core principle that must be understood. Unlike Capitalism or Communism Islam is not just an economic theory or system. Islam is a whole way of life and a belief system that encompasses every walk of life. In Capitalism there is only one measure of success, and that is money. A person who earns a thousand dollars a month is more successful than one earning a hundred dollars a month, and a person earning hundred thousand dollars a month is way more successful than one earning a thousand dollars a month. But in Islam the true measure of success is how well a person used his wealth to make his Aakhirah (life after death) better. If a person dies in a state that Allah Ta'alah was happy with him, he was successful regardless of how poor he dies. If a person dies in a state that Allah Ta'alah was unhappy with him, he died a failure regardless of how much money there was in his bank account at the time of his death.
On the other hand Islam does not teach abstention from all worldly comforts. It allows people to live in this world, to enjoy its comforts, but also cautions that the worldly comforts should not become the total and exclusive focus of all our efforts and our energies, we must also remember that there is a life after this, and we must keep striving to make that eternal life better. Once we understand this core principle then we can understand better why Islam has placed certain types restrictions on Freedom of Contract.
Islam has placed three types of restrictions on Freedom of Contract.
1. A religious injunction or prohibition.
In Islam if two parties enter into a contract to earn a profit or an income it is generally respected and binding, but there are certain types of contracts which are absolutely forbidden in Islam even if both parties involved are willing to enter into that agreement.
Interest (usury) based transactions are a prime example of these kinds of contracts and there is a warning of a declaration of war from Allah Ta'alah and Rasool Allah SAW for those people who engage in such transactions. There are whole books written on this topic but the core principle is that in interest-based transactions one person's gain is guaranteed, and the other person's gain is uncertain who carries all the risk. In Islam the principle is that the profit or loss both should be shared between both parties.
Gambling is another such transaction that is absolutely forbidden regardless of whether both parties are willing to engage in it. The out come of gambling, in all its various forms, always is that one or a few persons make a lot of money, while a much larger number loses their money. Allah Ta'alah is so kind to His subjects that He has forbidden them to engage in activities where they are likely to incur a loss, even if they wish to do so.
Ihtikar (hoarding) is forbidden in Islam. Rasool Allah SAW has even forbidden middlemen from the cities to buy the produce from farmers and then sell it onwards. Hazrat Mufti Muhammad Taqi Usmani DB said that both of these activities drive prices upwards and make life more difficult for ordinary people, and that is why these have been forbidden.
Iktinaz (being so miserly about spending money that one doesn't even pay Zakat or fulfil financial Faraez like looking after one's family) has also been declared Hara'am in Shariah.
In all the activities mentioned above which have been declared Hara'am by Shariah even if its participants engage willingly in it, there is one common theme that is even though they may bring great financial benefit to one person or a few, but overall they are harmful for the masses, which is against the spirit of Islam.
2. Moral injunctions.
As mentioned above, the true measure of success in Islam is not who earned or saved the most money, but who made Allah Ta'alah most happy. That is why Islam encourages its followers to spend money in a lot of heads which while not obligatory and do not bring much financial benefit, but earn great rewards for the Aakhirah. And mostly it is related to brining relief to and satisfy needs of Allah's creations. For example a businessman estimates that if he installed a new factory he will earn a lot of profit, but if he built low cost housing for people who can't afford their own home otherwise, he may not earn as much but will earn a lot of Thawab because he will be providing relief to Allah's creations. If, in that instance, he then chooses to build low cost housing, even that it was not obligatory for him under Shariah to do so but was a moral imperative, InshaAllah it will earn him great rewards for his Aakhirah.
3. Legal injunctions
Islam has given the right to an Islamic government that at any time if it feels that it needs to make a specific law to change the direction in which the society is going, it can do so, and it is binding on people living under its rule.
Adapted from the talk "Islam and Human Rights" by Mufti Muhammad Taqi Usmani DB
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