Property

While the individual's right to property affirms the natural tendency in man to possess—particularly something resulting from his own creative labor—the concomitant private property obligations, from the point of view of justice, are designed to give effect to the interdependence of members of the community, with a view to recognizing explicitly that they cannot live in isolation. The private property obligations, therefore, reject the notion that a person does no harm to members of his group if as a result of his effort he is better off and others are no worse off than they would otherwise be. These obligations write the principle of sharing into the delineation of interests in property and consider private ownership to be subject to a trust, or duty, in order to effect sharing. Hence, private initiative, choice, and reward are recognized in Islam's conception of property rights, but such recognition is not allowed to subvert the principle of sharing or to lead to violations of the rights of the community. If, as a result of the growth of society, division of labor, or increasing complexities of markets, either the obligation to share is shirked or the rights of the society and the cohesion of the community are undermined, an intervention by the legitimate authority to take corrective measures would be deemed justified.

The word “property” is defined as a bundle of rights, duties, powers, and liabilities with respect to an asset. In the Western concept, it is considered the right of an individual to use and dispose of a private property, along with the right to exclude others from the use of that property. Even in the evolution of Western economies, this is a rather new conception of property that is thought to have accompanied the emergence of the market economy. Before that, however, a grant of the property rights in land and other assets included the right to use and enjoy the asset, but it did not include the right to dispose of it or exclude others from its use. For example, the right to use the revenues from a parcel of land, a corporate charter, or a monopoly granted by the state did not carry the right of disposing of the property. It is thought that the development of the market economy necessitated a revision of this conception of property since the right not to be excluded from the use of assets owned by another individual was not marketable; it was deemed impossible to reconcile this particular right with a market economy. Hence, of the two earlier property rights principles—the right to exclude others and the right not to be excluded by others—the latter was abandoned, and the new conception of property rights was narrowed to cover only the right to exclude others. In Islam, however, this right is retained without diminishing the role of the market as a mechanism for resource allocation and impulse transmission.

There are eight key principles of Islamic property rights:

1. Acknowledge the permanent, constant, and invariant ownership of all property by Allah (swt). The Supreme Creator is the ultimate owner of all properties and assets. In order that humans become materially able to perform duties and obligations prescribed by the Lawgiver, they have been granted a conditional right of possession of property. This right is granted to the collectivity of humans.
2. Acknowledge transfer by Allah (swt) of the right of possession to all of humankind, which establishes the right of collectivity to the created resources.
3. Provide equal opportunity of access by all to the natural resources provided by the Creator, to be combined with their labor to produce goods and services.
4. Individuals appropriate the products resulting from the combination of their labor with these resources, without the collectivity losing its original rights either to the resources or to the goods and services by individuals.
5. Recognize only two ways in which individuals accrue rights to property:
   1. Through their own creative labor; and/or
   2. Through transfers—via exchange, contracts, grants, or inheritance—from others who have gained title to a property or an asset through their labor.

      Fundamentally, therefore, work is the basis of acquisition of rights to property. However, work is performed not only for the purpose of satisfaction of wants or needs but is considered a duty and obligation required of everyone. This rule forbids gaining instantaneous property rights without working to earn them. The exception is lawful transfer. This rule also prohibits property rights gained through gambling, theft, earning interest on money lent, bribery, or generally from sources considered unlawful. Just as work is a right and obligation of all humans, access to and use of natural-physical resources provided by the Creator for producing goods and services are also every human's right and obligation. All humans are ordained to apply their creative labor to these resources to produce what society needs. If an individual, for whatever reason, lacks the ability to work, it does not deprive him or her of the original right to resources granted to every human by the Creator.

6. Sanctify, through the “immutability of property rights,” the duty of sharing by transferring it into the principles of property rights and obligations. Before any work is performed on natural-physical resources, all humans have an equal right and opportunity to access these resources. When individuals apply their creative labor to resources, they gain a right to priority in the possession, use, and exchange of the resulting product without nullifying the original property rights of the Creator or the rights He granted to all humans in the final product or the proceeds from its sale.

   This principle regards private property ownership rights as a trust held to affect sharing. Before any work is performed in conjunction with natural resources, all members of society have an equal right and opportunity to access these resources. When individuals apply their creative labor to resources, they gain a right of priority in the possession, use, or market exchange of the resulting product without nullifying the rights of the needy to the proceeds of the sale of the product. To ensure the property rights of all members of society, property rights over natural resources (such as mines) were placed in trust of the state, to be used for the benefit of all, or in the hands of society at large as commons (e.g., surface and underground water).⁹ A clear distinction was made between the right of ownership and the right of possession, particularly in the case of land. Any individual could combine labor, capital, and available land to produce a commodity over which the person would have full property rights. The land would remain in the person's possession as long as the land was in production. However, if the land was not used for continuous production (for a designated period, such as three consecutive years), the person would lose the right of possession, and another producer would have the right to take possession of the land to use labor and capital to produce a commodity.

7. Acknowledge the duty of sharing the product or the income and wealth proceeding from its sale, which relates to property ownership rights as a trust. This rule is made operational through the ordained duties imposed on income and wealth, which must be paid to cleanse income and wealth from the rights of others. This is perhaps the reason the Quran refers to these duties as zakah, from the root word meaning “cleansing and purification.” These duties are likened to tree pruning, which simultaneously rids the tree of its undesirable parts and allows its further growth. Although the Quran acknowledges that in His wisdom the Lord has created humans with differences, it also emphasizes that these differences are only minor and that all humans are essentially the same. The real difference between them, the one that ultimately counts, is the degree of awareness of Allah (swt) conscious. No other difference matters.

   In a society in which there is poverty amid plenty, the roots of inequality must be traced to distortions in the pattern of resource endowments, in the workings of the exchange and/or distribution mechanisms, and/or in the redistributive framework. The most fundamental among these is the pattern of resource endowment. When one is granted the mental-physical capacity by the Creator to access more of these resources, it means others less able or unable to use these resources are in fact one's partners, whose rights in the final postproduction, postmarket proceeds must be redeemed. The Quran affirms that because these are rights to be redeemed rather than charity, extreme care must be taken of the recipient's human dignity.

8. Acknowledge the limitations on the right of disposing of property—a right that is absolute in the Western concept of property rights. In Islam, individuals have an obligation not to waste, squander, or destroy property, or to use property for opulence or unlawful purposes. Once the specified property obligations are appropriately discharged, including that of sharing in the prescribed amount and manner, property rights on the remaining part of income, wealth, and assets are held sacred and inviolate, and no one can force their appropriation or expropriation.

While these rules strongly affirm humankind's natural tendency to possess—particularly products resulting from individual labor—the concomitant property obligations promote interdependence and cohesion among the members of society. Private initiative, choice, and reward are recognized as legitimate and protected but are not allowed to subvert the obligation of sharing.

Islam recognizes that the Divine Providence has endowed individuals with unique and unequal abilities and that some individuals have greater mental and/or physical capacities. Consequently, they are capable of obtaining title to a larger amount of property and assets. But this only means that the responsibilities and obligations of such individuals are greater than those of others. Once these individuals have discharged their duties of sharing, in the prescribed manner and in the prescribed amount, and provided they are not in violation of the rules of Shariah, their rights to their possessions are held inviolate, and no one has any right to force appropriation (or expropriation) of that person's property to anyone else. This right is held so sacred that even when rules had to be developed for emergency cases of expropriation for projects of public utility, they were called “legitimate violation” (ikrah hukmi). Even then, such actions could be taken only after adequate compensation was paid to the owner of the property. To violate the legitimate property rights of a person is considered to be oppression and exploitation, just as there is discord and corruption on earth when individuals do not discharge their private property obligations.

While these principles strongly affirm people's natural tendency to possess, the concomitant obligations give rise to the interdependence of members of society. Private initiative, choice, and reward are recognized but not allowed to subvert the obligation of sharing. The inviolability of appropriately acquired private property rights in Islam deserves emphasis. As one legal expert observed, given the divine origin of Islam:

Its institutions, such as individual ownership, private rights, and contractual obligations, share its sacredness. To the authority of law, as it is understood in the West, is added the great weight of religion. Infringement of the property and rights of another person is not only a trespass against the law; it is also a sin against the religion and its God. Private ownership and individual rights are gifts from God, and creative labor, inheritance, contract, and other lawful means of acquiring property or entitlement to rights are only channels of God's bounty and goodness to man.…All Muslim schools teach that private property and rights are inviolable in relations between individuals as well as in relations with the state.…It is not only by their divine origin that the Muslim institutions of private ownership and right differ from their counterpart in the Western system of law; their content and range of application are more far-reaching.…If absolutes can be compared, it can be safely said that the right of ownership in Muslim law is more absolute than it is in modern system of law.…The Muslim concept of property and right is less restricted than is the modern concept of these institutions.¹⁰

Shariah outlines the obligations concomitant with property rights. Among the obligations is, first, the responsibility of sharing the proceeds or the use of property—and, second, the obligation not to waste, destroy, squander, or use the property for purposes not permitted by Shariah. To do so would be to transgress the limits set on one's rights and an encroachment on the rights of the collectivity. This position of Shariah is in conformity with the Islamic conception of justice and the rights and responsibilities of the individual and the community.

Contracts and Contractual Obligations

The next set of rules to be understood and internalized by individuals is those governing contracts. In any economic system, individuals not only make choices for themselves, but they also interact with other members of the society through transactions facilitated by explicit and implicit contracts entered into within the bounds specified by the institutional setting of the society. A contract is a time-bound instrument with an objective that stipulates the obligations that each party is expected to fulfill in order to achieve the objectives of the contract.

The concept of contracts in Islam is not only important in the legal aspect of exchange, as an institution necessary for the satisfaction of legitimate human needs, but it is also a concept upon which Shariah is based. The whole fabric of the Divine Law is contractual in its conception, content, and application. Its very foundation is the primordial covenant between Allah (swt) and humans—the meethaq. That covenant imposes on humans the duty of remaining faithful to the affirmation of humanity: Humans recognize the Supreme Creator as their Cherished Lord and their wali (protector/guardian). That recognition, in turn, is an affirmation of the duty of rule compliance, which serves the best interests of humans and is a contractual obligation linking humans to their Creator and to one another. Justice demands rule compliance as a demonstration of faithfulness to the terms of the primordial covenant.

The contractual foundation of the law in human behavior is with respect not only to the Creator but also toward other humans. Performance will be judged not only in the carrying out of contractual obligations but also in the essential attributes of intending with which a party enters into a contract. These attributes are sincerity, truthfulness, and the strength and rigor of the loyalty of the fulfillment of obligations a person is intending to take on by entering into the contractual relationship. The foundation of Shariah is the covenant between Allah (swt) and man, which imposes on man the duty of being faithful to his word. The Quran reiterates, “Allah (swt) will not fail in His Promise.”

As Habachy suggests, Islam's strong emphasis on the strictly binding nature of contracts covers private and public law contracts as well as international treaties. Moreover, “every public office in Islam, even the Imamate (temporal and spiritual leadership) is regarded as a contract, an agreement (áqd) that defines the rights and obligations of the parties. Every contract entered into by the faithful must include a forthright intention to remain loyal to performing the obligations specified by the terms of contract.”¹¹ The highest office of the leadership of the society, imamate or khilafat, is inaugurated by mubayaá (from the word bay'ah), which is a contract between the ruler and the community stating that the leader will be rule compliant in discharging the duties of the office. This provides a strong accountable basis for governance.¹²

Throughout the legal and intellectual history of Islam, a body of rules constituting a general theory of contracts—with explicit emphasis on specific contracts, such as sales, lease, hire, and partnerships—was formulated on the basis of Shariah. Contracts are considered binding, and Shariah protects their terms, no less securely than the institution of property. This body of rules established the principle that, in matters of civil and economic dealings, any agreement not specifically prohibited by Shariah is valid and binding on the parties and can be enforced by the courts, which treat the parties to a contract as complete equals.

Trust

Trust is considered the most important element of social capital in Islam and the cornerstone of the relationship of individuals with Allah (swt) and with others in society. Islam places a strong emphasis on trust and considers being trustworthy as an obligatory personality trait. The root of the word for “trust” (amanah) is the same as that for “belief” (iman). The Quran insists that a strong signal of true belief is faithfulness to contracts and promises. It makes clear that performing contractual obligations or promises is an important and mandatory characteristic of a true believer.¹³

In short, Islam has made trust and trustworthiness obligatory and has rendered them inviolable, except in the event of an explicitly permissible justification. The life of the Prophet (sawa) is a shining illustration of the implementation of the guidance of Allah (swt) in maintaining trust and remaining trustworthy. Regarded as eminently trustworthy even before His divine appointment (the community conferred upon him the title of Al-Ameen—“Trustworthy”), the Prophet (sawa) expended a great deal of effort in modifying when possible and changing when necessary the behavior of the community in respect to trustworthiness. Numerous statements, actions, and circumstances are attributed to Him in which trust was the preeminent concern.¹⁴

In Shariah, the concepts of justice, faithfulness, reward, and punishment are linked with the fulfillment of obligations incurred under the stipulations of the contract. Justice links man to Allah (swt) and to his fellow men. It is this bond that forms the contractual foundation of Shariah, which judges the virtue of justice in man not only by his material performance but also by the essential attribute of the intention (niyyah) with which he enters into every contract. This intention consists of sincerity, truthfulness, and insistence on rigorous and loyal fulfillment of what he has consented to do (or not to do). This faithfulness to contractual obligations is so central to Islamic belief that the Prophet (sawa) defined a believer as “a person in whom the people can trust their person and possessions.” He is also reported to have said that “a person without trustworthiness is a person without religion.” So basic is the notion of contracts in Islam that every public office is regarded primarily as a contract and an agreement that defines the rights and obligations of the parties. The highest temporal office, that of khalifa, is inaugurated by mubayaá, which is a contract between the ruler and the community that ensures the ruler will be faithful in discharging his duties.

Trustworthiness and remaining faithful to promises and contracts are absolute, regardless of the costs involved or whether the other party is a friend or a foe (see Quran 9:4). There is also a network of micro-level rules that ensure transparency and the unhindered flow of information. This includes, inter alia, the requirement incumbent upon sellers that they must inform buyers of goods the prices, quantities, and qualities of what they are buying; a body of rules governing the consumer's option to, under various circumstances, annul a transaction; the rule of noninterference with market supplies; the rule against hoarding; and the rule against collusion among market participants.¹⁵

It should be noted that there is a strong interdependence between contract and trust; without trust, contracts become difficult to negotiate and conclude and costly to monitor and enforce. When and where trust is weak, complex and expensive administrative devices are needed to enforce contracts. Moreover, it is generally recognized that unambiguous contracts—ones that foresee all contingencies—do not exist, as not all contingencies can be foreseen. As McMillan suggests, trust is an important element of a well-designed market. “For a market to function well, you must be able to trust most of the people most of the time.…Your trust in your trading partner rests on both the formal devices of the law and the informal device of reputation.”¹⁶ When and where property rights are poorly defined and protected, the cost of gathering and analyzing information is high, and trust is weak, it is difficult to clearly specify the terms of contracts and enforce them. In these cases, transaction costs—that is, search and information costs, bargaining and decision costs, contract negotiation and enforcement costs—are high. Where and when transaction costs are high, there is less trade, fewer market participants, less long-term investment, lower productivity, and slower economic growth. As North has pointed out, when and where there is rule compliance and enforcement, there is an increase in the likelihood that property rights will be protected and contracts honored.¹⁷ Under such conditions, individuals are more willing to specialize, invest in long-term projects, undertake complex transactions, and accumulate and share technical knowledge.

Markets: The Code of Conduct

In the realm of conventional economics, reliance on markets is an ideology to some economists; this is not so in Islam. This is because markets and competition do not by themselves guarantee that social and economic justices will be served. In Islam, markets are seen as affording the best signaling mechanism to producers and consumers and thus the most efficient intermediary for resource allocation, economic production, distribution and consumption. Therefore, markets are encouraged. Even then, markets must have rules that are just and ensure their proper operation, and they must be supervised to guarantee that rules are followed and enforced. While these rules and their supervision and enforcement are seen as sufficient in the workings of the conventional market system, it is not so in Islam. In Islam, market participants, both buyers and sellers, must embrace a code of morality before they enter the market. Under such a system, the price that emerges from markets can be considered “just” in the sense that it is the result of proper functioning markets that are based on just rules that are followed and enforced and with market participants who are moral in their behavior. In the absence of morality and moral behavior by all market participants, markets can result in allocations that are socially unjust and even perverse—gross income inequities, opulence alongside poverty, excessive consumption and little savings, hoarding, and the like. Thus, markets left alone may not fulfill human material needs and are also not equipped to address human spiritual needs.

The market's institutional structure is built around five pillars:

1. Property rights
2. Free flow of information
3. Trust
4. Contract
5. The right not to be harmed by others and the obligation not to harm anyone

Together, these pillars serve to reduce uncertainty and transaction costs and to enable cooperation and collective action to proceed unhindered.

Before the advent of Islam, trade had been the most important economic activity of the Arabian Peninsula. A number of thriving markets had developed throughout the area. Upon his arrival in Medina, the Prophet organized a market that was structured and governed by rules based on the Quran. He implemented a number of policies to encourage the expansion of trade and the market. The Prophet (sawa) prohibited the imposition of taxes on individual merchants as well as on transactions. He also implemented policies to encourage trade among Muslims and non-Muslims by creating incentives for non-Muslim merchants in and outside of Medina. After the conquest of Mecca and the rest of Arabia, these and other market rules were institutionalized and generalized to all markets. These rules included, in addition to the five pillars previously mentioned:

• No restrictions on international or interregional trade (including no taxation of imports and exports).
• Free spatial movement of resources, goods, and services from one market to another.
• No barriers to market entry and exit.
• Free and transparent information regarding the price, quality, and quantity of goods, particularly in the case of spot trade.
• Specification of the exact date for the completion of trade in instances when trade was to take place over time.
• Specification of the property and other rights of all participants in every contract.
• Guaranteed contract enforcement by the state and its legal apparatus.
• The prohibition against hoarding commodities and productive resources for the purpose of pushing up their price.
• Prohibition on price controls.
• A ban on sellers or buyers harming the interests of other market participants by, for example, allowing a third party to interrupt negotiations between two parties in order to influence the negotiations to the benefit of one of the parties.
• A ban on the shortchanging of buyers by, for example, not giving full weight and measure.

Moreover, sellers and buyers were given the right of annulment of a business agreement in these seven instances:

1. Before leaving the location in which it was taking place.
2. In the case of a buyer who had not seen the commodity and after seeing it found it unacceptable.
3. If either the seller or the buyer discovered that the product had either been sold for less than or bought for higher than it was worth.
4. If the buyer discovered that the quality of the product was not as expected.
5. If side conditions were specified during the negotiations that were left unfulfilled.
6. If a delivery period was specified but the product was not delivered on time.
7. If the subject of the negotiations was pack animals, the buyer had the right to return the animals up to three days after the deal was finalized.

The moral-ethical foundation of market behavior prescribed by the Quran and implemented by the Prophet (sawa) ensured the minimization of risk and of uncertainty for market participants and increased the efficiency of exchange. Its aim was to reduce transaction costs. Moreover, rules specified in the Quran regarding faith to the terms of contracts and the knowledge of their enforcement increased certainty and reduced transaction costs. Another important rule promulgated by the Prophet (sawa) was the prohibition of interference with supply before entrance into the market. From the earliest period of operation of the Medina market, the Prophet (sawa) appointed market supervisors, whose job was to ensure rule compliance, which in turn would result in markets that were just. The Prophet (sawa) advised the participants to go beyond mere rule compliance and to treat their fellow humans with beneficence. The Prophet (sawa) strongly encouraged market participants to accept the duty of “commanding the good and forbidding evil” by engaging in self-regulation.

Rules governing market conduct relate to appropriate behavior on the part of all participants in the market. The Quran acknowledges the need for markets and affirms their existence, placing emphasis on contracts of exchange (bay') and trade (tijarah). As a rule, it emphasizes market transactions based on mutual consent; that is, based on freedom of choice and freedom of contract, which, in turn, requires acknowledgment and affirmation of private property rights. The archetype model, discussed earlier, operationalized the concept of exchange and trade as well as the use of the market as the mechanism for this purpose. A market supervisor is appointed to ensure compliance with the rules of conduct in the marketplace, rules that are internalized by participants before their entrance into the market. Compliance with the rules of market behavior ensures prices that are fair and just. So long as market participants comply, no direct interference with the price mechanism is permitted, even though the legitimate authority is responsible for supervising market operations.

Risk Sharing

Another core principle of Islamic economics is the notion of risk sharing. This is based on the principle of liability, which states that profit is justified on the basis of taking responsibility, possibly even becoming responsible for a loss and its consequences. This legal maxim, said to be derived from a saying of the Prophet (sawa) that “profit comes with liability,” implies that Shariah distinguishes lawful profit from all other forms of gain and that entitlement to profit arises only when there is also the liability, or risk, of loss.

The central proposition of Islamic finance is risk sharing and the prohibition of interest-based transactions in which a rent (interest) is collected as a percentage of the principal loaned without the full transfer of the property rights to the lender. One result of this type of transaction is that the risk associated with the transaction is borne by the borrower. Rather, Islam proposes a mutual exchange (al-bay') in which one bundle of property rights is exchanged for another, thus allowing both parties to share the risks of the transaction—something that is sanctioned. The emphasis on risk sharing is evident from one of the most important verses in the Quran with respect to economic relations. The verse states: “They say that indeed an exchange transaction (al-bay') is like an al-riba (interest-based) transaction. But Allah has permitted exchange transactions and forbidden interest-based transactions” (2:275). The nature of property rights inherent in these two transactions hints at one of their crucial differences. Al-bay' is a contract of exchange of one commodity for another where the property rights over one commodity are exchanged for those over the other. In the case of an al-riba transaction, a sum of money is loaned today for a larger sum in the future without the transfer of the property rights over the principal from the lender to the borrower. Not only does the lender retain rights over the sum lent, but property rights over the additional sum to be paid as interest are transferred from the borrower to the lender at the time the contract of al-riba is entered into. Arguably, the last verse renders exchange and trade of commodities and/or assets the foundation of economic activity in the Islamic paradigm.

From this, important implications follow: Exchange requires freedom for parties to contract. This in turn implies freedom to produce, which calls for clear and well-protected property rights to permit production to proceed. To be able to exchange freely and conveniently, the parties need markets. To operate successfully, markets need rules of behavior and enforcement mechanisms to reduce uncertainty in transactions and ensure the free flow of information. They also need trust to be established among participants; competition among sellers, on one hand, and buyers, on the other; reduced transaction costs; and mitigation of the risk to third parties in having to bear externalized costs of two-party transactions.

Wealth Accumulation and Utilization

Islam encourages the human to utilize, to the fullest extent possible, all the resources that Allah (swt) has created and entrusted to humankind for his use. The nonutilization of these resources for humankind's benefit, and for that of the society, is tantamount to ungratefulness to Allah (swt) for the provision of these resources. Wealth is considered an important means by which humans can pave the way for the attainment of their ultimate objective of establishing a rule-compliant community. Islam refers to wealth as “good,” an object of delight and pleasure, and a support for the community. Conversely, involuntary poverty is considered to be undesirable and a basis of unbelief. This particular conception of wealth, however, is qualified by the means employed in its earning, possession, and disposal.

Its “earning” is qualified by emphasis on the fact that wealth is only a means for the achievement of man's ultimate objective, not an end in itself. It must be earned through “good,” “productive,” and “beneficial” work, as defined in Shariah, which also outlines the methods of lawfully earning wealth. Not only are lawful methods of earning wealth specified, but the types of economic activity that may lead to unlawfully acquired wealth that are prohibited are discussed. Shariah specifies nonpermissible professions, trade, and economic activity that may lead to unlawfully acquired wealth. Even within each profession, Shariah specifies proper and improper practices. Just as wealth, rightfully earned and purposefully disposed of, is considered a blessing, wealth acquired or accumulated unlawfully for its own sake is condemned as “corruption” and retrogression to the basest of all human negative qualities—greed.

Islam regards wealth as the lifeblood of the community, which must be constantly in circulation; therefore, its possession excludes the right of hoarding (Quran 9:34). The implication is that wealth, lawfully earned, must be invested within the community to improve its economic well-being. Investing wealth is measured not only by the monetary gain associated with it but also by the benefits that accrue to society, a point that must be borne in mind at all times by the owners of wealth.

The disposal of wealth is also subject to the rules of Shariah. The first and foremost among these rules is the recognition of the rights of others in this wealth resulting from the principle of invariant claim to ownership. These rules include levies whose amounts are specified and others whose amounts are left to be determined by the wealth owner. These levies fall due when wealth exceeds a specific minimum amount (nisab). After these obligations are met, the remainder belongs to the owner, but it must be used in accordance with the rules of Shariah, which forbid extravagance, opulence, waste, or general abuse of wealth. It cannot be used to harm others or to acquire political power or to corrupt the polity.

While Islam treats wealth, lawfully acquired, possessed, and disposed of, as sacred and subject to the protection of Shariah, it regards the wealth owner as a trustee who holds the wealth as a trust on behalf of Allah (swt) and the community. Hence, a person's inability to use wealth properly provides the basis for the forfeiture of rights to that wealth. Extravagance, waste, and general abuse of wealth are the basis on which the community can consider the wealth owner a safih, a person of weak understanding, one in possession of “weak intellect,” and one who, along with his or her own financial and moral loss, is damaging the interests of the community. According to the principle of hajr, such a person's wealth can be made the ward of the community or of its legitimate representatives, who may limit the wealth owner's right to the use of only a part of the property to meet basic needs.

Wealth Distribution and Redistribution

Believers must remain fully conscious of the human partnership throughout the process of wealth creation and of the fact that they must redeem the rights of others in the created income and wealth. Being unable to access resources to which they have the right does not negate the fact that the poor are to share in the income and wealth of the more able.

One of the most important economic institutions or practices that operationalizes the objective of achieving social justice is the distribution/redistribution rule of the Islamic economic paradigm. As mentioned earlier, a crucial mission of all messengers and prophets is the establishment of social justice. In practical terms, the Quran makes clear that this means creating a balanced society that avoids the extremes of wealth and poverty, a society in which all understand that wealth is a blessing provided by the Creator for the sole purpose of providing support for the lives of all. The Islamic view holds that it is not possible to have many rich and wealthy people who continue to focus all their efforts on accumulating wealth without simultaneously creating a mass of economically deprived and destitute people. The rich consume opulently while the poor suffer from deprivation because their rights to the wealth of the rich and powerful are not redeemed.

To avoid this, Islam prohibits the accumulation of wealth and imposes limits on consumption through its rules prohibiting waste (itlaf), overspending, and ostentatious and opulent spending (israf). It then ordains that the net surplus, after moderate spending necessary to maintain a modest living standard, must be returned to those members of the community who, for a variety of reasons, are unable to work and whose share of their Allah-given resources have been utilized by the more able. The Quran considers the more able as trustee agents in using these resources on behalf of the less able. In this view, property is not a means of exclusion but inclusion, in which the rights of those less able are redeemed in the income and wealth of the more able. The result would be a balanced economy without extremes of wealth and poverty. The operational mechanism by which the right of the less able is redeemed is the network of mandatory and voluntary payments, such as zakat (2.5% on wealth), khums (20% of income), and payments referred to as sadaqat. Distribution takes place after production and sale, when all factors of production are given what is due to them commensurate with their contribution to the production, exchange, and sale of goods and services.

“Redistribution” refers to the postdistribution phase when the charge due to the less able are levied. These expenditures are essentially repatriation and redemption of the rights of others in one's income and wealth. Redeeming these rights is a manifestation of belief in the oneness of the Creator and its corollary, the unity of the creation in general and of humankind in particular. It is the recognition and affirmation that Allah (swt) has created the resources for all of humankind who must have unhindered access to them. Even the abilities that make access to resources possible are due to the Creator. This means that those who are less able or unable to use these resources are partners of the more able. The expenditures intended for redeeming these rights are referred to in the Quran as sadaqat, which is the plural of the term sadaqa, a derivative of the root meaning “truthfulness and sincerity”; their payments indicate the strength of the sincerity of a person's belief (2:26,272). The Quran insists that these are rights of the poor to the income and wealth of the rich; they are not charity (2:177; 19:51; 38:30; 70:25; 917:26). Therefore, the Quran asks that extreme care be taken to acknowledge the recipients' human dignity, dignity of which the recipients themselves are fully aware and conscious to the point that they are reluctant to reveal their poverty. The Quran consequently recommends that payment to the poor be done in secret (2:271–273). Moreover, it strictly forbids that these payments be made reproachfully or accompanied by ill treatment of recipients or with annoyance displayed by the person making the payment (2:262–265).

Work and Work Ethics

The concept of work in Islam (al-amal) is far broader, and has different characteristics and objectives, than the concept as it is understood in the Western economic tradition. In Islam, the work ethic is defined by the Quran itself, which stresses the need for work and action by human beings. It is because of this emphasis on work that Islam is considered a religion of action. The Quran exalts work and raises it to the level of worship, considering work as an inseparable dimension of faith itself. Conversely, it considers idleness—or the squandering of time in pursuit of unproductive and nonbeneficial work—as the manifestation of lack of faith and of unbelief.

Man is called on to utilize time in pursuit of work by declaring that Allah (swt) has made the day as a means of seeking sustenance. A person who, through hard work, seeks the “bounty” of Allah (swt)—which includes all appropriate means of earning one's livelihood—is most highly praised. All able-bodied persons are exhorted to work in order to earn their living. No one who is physically and mentally able is allowed to become a liability to his family or to the state through idleness and voluntary unemployment. The work that everyone is required to perform must be “good” or “beneficial” (a'mal salih), but no work is considered inconsequential in relation to its rewards or punishments in this world and in the next. One will have to reap whatever rewards or retributions are due as a result of one's work.

Work, therefore, is regarded not only as a right but also as a duty and an obligation. Hence, based on its notion of individual rights and responsibilities, Islam extends to individuals the right to choose the type of work they desire. Along with this freedom come the obligation to consider the needs of society and to select the type of work permitted by Shariah.

Since all class distinctions are negated by Islam, no line of work permissible by Shariah is considered demeaning by Islam, which countenances only diversification on the basis of natural talents, skills, and technology—which are considered to be a grace or blessing (fadl) from Allah (swt)—and which all Muslims are urged to acquire. Based on its concepts of justice and contracts, Islam makes it an obligation for workers to perform the tasks that they have contracted to the best of their abilities. But since individuals are endowed with different abilities and talents, this productivity will differ. Justice, however, demands that the return for every individual's work must be commensurate with his or her productivity, but not that all humans receive the same remuneration.

While Islam has, in no uncertain terms, decried laziness, idleness, and socially unproductive work, it maintains that those who are physically or mentally unable to work still retain a right to what the society, individually and collectively, produces. This conclusion is based on the principle of invariant claim to ownership, which maintains that all human beings have a right to the resources provided for humankind by Allah (swt). Since Allah (swt) is also the source of the physical and mental abilities that enable some members of society to possess more than others, the right of ownership to the original resources of those less able remains valid. This follows from the fact that Allah's (swt) original right of ownership of resources, which He has created, is not negated when those resources, along with the creative labor of individuals, are transformed into products, property, and wealth.

Competition and Cooperation

In the Islamic conception of humankind's ultimate goal, economic life plays a purely instrumental role. Even in this role, economic affairs are meant only to provide the institutions and mechanisms needed for satisfying man's economic needs, as man's essence as the supreme creature of Allah (swt) is allowed to be manifested in this world. Thus, the economic system designed in accordance with the fundamental principles of Islam ensures that humans can exercise their eminent dignity, freedom, responsibilities, and rights in the conduct of economic affairs. The economic system must be so ordered as not to assign to humans a purely instrumental role in achieving the goals of the economy or the state. Islam seeks to guide humans to direct individual action and responsible participation in economic affairs in a manner that commits them to community solidarity and cooperation, resulting in a dynamic and growing economy. Thus, individuals are made accountable for the moral effects of their social actions, including those in economic affairs, so that their own inner personal-spiritual transformation and growth is bound to the progress of the community.

Hence, Islam utilizes cooperation and competition in structuring the ideal society through harmonization and reconciliation between these two opposites and also between equally primeval and useful forces at every level of social organization. From this perspective, one can argue that one of the greatest distinguishing characteristics of Islam is its forceful emphasis on the integration of human society as a necessary consequence of the unity of Allah (swt). To this end, the personality of the Prophet (sawa) is inseparable from what the Quran considers as the optimal approach necessary for the emergence of solidarity in human society. Every dimension of the personality of the Prophet (sawa), manifested in his various social roles in the community, is directed toward maximum integration and harmony in society. Moreover, every rule of behavior, including those in the economic arena, is designed to aid the process of integration. Conversely, all prohibited practices are those that, one way or another, lead to social disintegration.

The Quran and the traditions of the Prophet (sawa) make clear references to the dual nature of competition and cooperation; that is, human beings can cooperate and compete for good or evil. It is this that leads to the integration or disintegration of society. The fundamental sources, however, emphasize that competition and cooperation must be utilized in probity and piety rather than in evil and enmity. Thus the Quran declares: “Cooperate with one another unto righteousness and piety. Do not cooperate with one another unto sin and enmity” (5:2). Similarly, Muslims are urged to compete with one another in beneficial and righteous deeds. These sources do not allow suppression of competition or cooperation in favor of the other when they are used within the Shariah framework. Rather, all of the regulatory and supervisory authority invested in the legitimate political authority is directed toward a balanced and constructive utilization of these forces. The Shariah rules regarding the structure of the market and the behavior of market participants are examples of such balance. Although the rules of Shariah regarding economic affairs demarcate limits and boundaries of desirable competitive and cooperative behavior necessary for the provision and preservation of the solidarity of society, the individual always remains the identifiable agent through whose action (and on whose behalf) all economic activity takes place.