Author: Dr. Maszlee Malik, Institute for Democracy and Economic Affairs & Istanbul Network for Liberty
* This case study has been published in the 2016 International Property Rights Index.
Amongst the cardinal principles of “free market” is the individual’s right to own private properties. There will be no freedom if individuals do not have a property to sell or exchange. Similarly, it is the right of individuals to own, use, sell or dispose their private properties in any way they wish. Rationally, without private property rights, there will be little motivation for individuals to work, produce, or invest. In the same spirit, Islam emphasizes heavily on the right of individuals to a private ownership. This principle has been clearly enumerated in the epistemological sources of Islam, i.e. the al-Qur’an and Prophet Muhammad’s traditions. Similarly, the appreciation of private property and its protection in Muslims’ life has been mentioned as an imperative in the sources, as well as it can be obviously seen in the life of Prophet Muhammad himself, and in the practice of Muslims throughout Islamic history. This article will analytically examine the issue of private property from an Islamic perspective by inductively investigating the Islamic epistemological sources related to private property within the framework of the Maqasid al-Shari’ah (the highest objectives of Shari’ah).
“When incentive to acquire and obtain property is gone, people no longer make efforts to acquire any… Those who infringe upon property rights commit an injustice… If this occurs repeatedly, all incentives to cultural enterprise are destroyed and they cease utterly to make an effort. This leads to destruction and ruin of civilization….”
(Ibn Khaldun, al-Muqaddimah)
A “Free market” as an alternative economic system has been developed initially by Classical liberal thinkers and economists among whom were Adam Smith, David Hume, John Locke, David Ricardo, J. Stuart Mill and was further developed by F. V. Hayek. The very ideals of free market economy are based mainly on certain principles such as: ‘The sanctity of individuals represented by the rights to own private property, the freedom of choice and entrepreneurship, fair competition, free trade without any interference by authority or any other power, which can only be crystallized through Limited government’ (Tomasi, 2012). Rationally, there cannot be a “free market” when individuals do not have a property to sell or exchange. Hence, it is the right of individuals to own, use, sell or dispose their private property in any other way they wish. Essentially, without private property rights, there will be little motivation for the individuals to work, produce, or invest. Furthermore, no third party, especially the authority, has the right to interfere on individuals’ property and ownership (Butler, 2015: 77-78).
Following the ideals of private property rights, individuals too, must have the freedom to use their money freely on any goods and services they desire. No party can force them to spend money on anything they have no desire for. Correspondingly, they also have the right to invest their resources, financial or otherwise, in those sectors they would like to invest. Nobody can force them to produce a commodity they do not wish, or invest in an industry in which they have no interest in. Individuals, producers, merchants or sellers have the right to buy and sell goods and services freely. The price of a commodity is not pre-set or fixed; but it is determined through bargaining or negotiation. Market price, which is determined by the interaction and negotiation of the buyer and seller, is the ‘just,’ and fair price (Tomasi, 2012).
Surprisingly, the earliest free-market ideals have been discussed long before the Liberal forefathers, by a Muslim scholar, also known as the father of modern sociology, Ibn Khaldun from North Africa. In emphasizing about the sacredness of private property in Islam, Ibn Khaldun, in his magnum opus, al-Muqaddimah (the Prolegomena) insisted that ‘oppression is to seize one’s property, to cut a worker’s wage etc, and it does not matter whoever does this whether it is a government or a private person’ (Ibn Khaldun,  1967: 80). Ibn Khaldun’s position is not strange in Islam since the ideals of individuals’ rights on private property have long been the position adopted by Islam evidenced through its epistemological sources, namely al-Qur’an and Prophet Muhammad traditions (Sunnah or Hadith) that will be explored further in this research.
Islam, as believed by Muslims, is a religion and guidance sent to human beings in their path to God. Although Islam is not a socio‐economic system, however, the comprehensive teaching of Islam does have doctrines on certain economic, social and political aspects (Yayla, 1977: 4). But these values, principles and guidance do not amount to a strictly structured, unchangeable system unlike the creed, moral, ritual and spiritual aspects of Islamic teaching. Islam presents or introduces certain principles in guiding Muslims to do good and abstain from evil, in return obtaining the pleasure of God. Therefore, essentially, in the fields of politics and economy, Islam only provides principles and guidelines for Muslim to further develop and explore their own way in dealing with the reality through a means that Muslim scholars has termed as ‘ijtihad’ (reasoning). Muslim jurists and scholars have classified this territory as the field of ‘Mu’amalat’ (humanly affairs) (Malik, 2011: 132-37).
In these fields, Islam sets the principle of permissibility (or what has been called as Ibahat al-Asliyyah in Islamic jurisprudence terminology) to comprise of all actions except if they contradict Islamic principles, moral conducts or if they are leading towards injustice and sinful actions (Nyazee, 2000: 237). Similarly, Islam does not dictate or ordain a particular political and economic system either in al-Qur’an or in the traditions of Prophet Muhammad (Sunnah). Rather, Islam introduces certain principles, such as justice, piety, righteousness, integrity, generosity, dignity, equality, trust, and consultancy in both the primary sources, which mainly can be summarized within the framework of Maqasid al-Shari’ah (the highest objectives of Shari’ah) (Malik, 2011: 132-37). It was from these principles that Muslim jurists build their own ijtihad to response to certain contexts and issues raised during their lifetime. Principally, there are no eternal or unchangeable systems in any of these fields. In fact, Muslims experienced different systems in politics and economy throughout the centuries.
The ensuing paragraphs will descriptively explain the theory of Maqasid al-Shari’ah that governs Muslims’ way of thinking in dealing with their worldly life. It is important to note that within this research, the theory of Maqasid al-Shari’ah will be positioned on the property rights in Islam based on the aforementioned framework. The discussions will start with the normative statement on the sacredness of property rights from a distinctive ‘Khilafah’ (vicegerency) worldview pertaining to the relation between property ownership and Muslim individuals. This ontological conviction sets the foundation of an Islamic parameter for Muslims in dealing with property rights. The topic will be followed by another supportive argument on how Islam encourages Muslims to acquire and invest their private property for the purpose of their worldly life, and followed by on how Islam safeguards the property rights through contracts and rule of law through a minimal state size. The final discussion of this research will be wrapped up by mentioning the Islamic guidance on moral responsibilities/obligations upon Muslims towards wealth accumulation that governs their conduct of private property.
The Higher Objectives of Shari’ah (Maqasid al-Shari’ah)
In harmonizing rationale and revelation, thus avoiding a literal textual approach to the revelation, Muslim scholars have engaged with both the Qur’an’s and the Sunnah’s implicit messages through varied methods. Those methods were applied to deduct the universal meaning to understand the hidden objectives God tried to convey to human beings. Such meaning prevails in the words of a classical jurist, Al-Izz bin Abdul Salam (Abdul Salam, n.d.: 1/9) who claims that “the greatest of all the objectives of the Qur’an is to facilitate benefits (masalih) and the means that secure them and that the realization of benefit also included the prevention of harm”. What can be comprehended from his word is that all the obligations of the Shari’ah were predicated on securing benefits for people in this world and the next, and it is the duty of Muslims to discover them and thus observing those objectives in their life and in the implementation of those duties (Humaidan, 2008).
These objectives were later expounded by al-Ghazali (1993) who maintains that the objective of Shari’ah is to preserve or protect the masalih (singular: maslahah), exemplified by five main essentials of human beings: faith (din), life (nafs), intellectual (‘aql), property (mal) and lineage (nasl). Al-Ghazali suggests that: “In its essential meaning, it (maslahah) is an expression for seeking something useful (manfa’ah) or removing something harmful (madarrah). But this is not what we mean, because seeking utility and removing harm are the purposes (maqasid) at which the creation (khalq) aims and the goodness (salah) of creation consists in realizing their goals (Maqasid). What we mean by Maslahah is the preservation of the Maqasid (objective) of the Shari’ah law, which consists of five things: preservation of religion, of life, of reason, of descendants and of property. What assures the preservation of these five principles (usul) is Maslahah and whatever fails to preserve them is mafsadah and its removal is Maslahah” (al-Ghazali, 1993: 1/286-7).
Al-Ghazali also insists that the major purpose of Shari’ah law is to ‘safeguard’ or preserve those essentials, which eventually bring benefit for human life. Due to such rationale, al-Tufi (1989: 239) concludes that the preservation of these objectives consists in both “attracting utility” (jadhb al-naf’) and “repelling harm” (raf’ al- darar), and should be used as the major source of law after the Qur’an and the Sunnah. He adds furthermore that in some cases of mu’amalat (contracts and transactions), maqasid would supersede some minor rulings in the Qur’an and the Sunnah to achieve the highest objectives. However, in the issues of ‘ibadat (rituals or spiritual duties) which is the direct interactions with God, and considered as God’s rights, the human mind cannot and should not attempt to discern the reasons behind the textual injunctions unlike the mu’amalat, where God delegated to humanity the right and duty to set up just rules and regulations in accordance with the public interest (maslahah).
In this study, the question of ‘private property from an Islamic perspective’ is the central issue that will be answered. It is indeed true that there are relative differences of opinion among Islamic scholars on certain details of the theoretical aspect of the issue, however, most, if not all Muslim scholars agree on several principles that are espoused in Islamic epistemological sources (namely al-Qur’an, Prophetic tradition (Sunnah) and Maqasid al-Shari’ah (highest objectives of Shari’ah)). These sources address certain issues relating to private property such as the importance of property, the necessity of competition, the responsibility of property’s owner towards himself, his/her family and the society, the legitimacy of one defending one’s properties from being acquired by others, the moral responsibility towards wealth and the role of authority in dealing with individuals’ property. These issues will be explained further in the following paragraphs.
Private property is sacred in Islam
The word property was mentioned 86 times in Qur’an in different places covering wide range of issues and topics. The repetition of the word, espoused the importance of a property in a Muslim life, the responsibility that a Muslim has upon others and highlights the need to be grateful to God among many others. Essentially, there is no disagreement among Islamic scholars as well as contemporary Islamic economists, on the very fundamental premise regarding property and its relation to Muslims, that the ownership of property ultimately belongs to God. (Siddiqi, 1981, p. 7). The Qur’an is explicitly clear about God’s ownership:
“Unto Allah (belongeth) whatsoever is in heavens and whatsoever is in earth.” (Chapter Hud (11): verse 284)
Similar verses are seen repeated elsewhere in the Qur’an. Yet, the right of an individual to hold property is accepted and respected. The notion of private ownership and individual rights are deemed gifts from God in Islam, while the notions of creative labor, inheritance, contract, and other lawful means of acquiring property or of entitlement to rights are only channels of God’s bounty and goodness to man. With regard this situation, the Qur’an emphasizes that:
“Verily, the land belongs to Allah, He makes whomsoever He willeth of His servants inherit it . . . .” (Chapter al-A’raf (7): verse 128)
Nevertheless, the dichotomy of God-Man ownership is reconciled by the notion of trusteeship of Man and Man’s accountability to God, or what is normally coined as ‘Khilafah’ or vicegerency (Siddiqi, 1981: 7 and Naqvi, 1981: 77). This concept is clearly articulated as the status of human beings from an Islamic perspective where it was deliberately elucidated in the Qur’an through the story of human creation, and accepted as ‘a priori’ in Muslims’ faith. The purpose of the human race creation has been described in the Qur’an a few times through a dialogue between God and the angels. There, God expressed His will to the angels the creation of a new being who would be the best of all of His creatures and hence would be assigned the status of His vicegerent (Khalifah). As a vicegerent, a man is responsible not only for himself, but also for everything in the universe including the animal kingdom and nature. In order for a man to understand his responsibility and status, God frequently demands him to observe, ponder and use his rationality. The ability of a man to rationalize is simply based on his possession of reason (‘aql), physical and intellectual capabilities, knowledge and other resources. This endowment by God in a way, is the raison d’être of human superiority upon other creatures (al-‘Alim, 1991: 485-87).
Equally, the Qur’an also speaks of a covenant between man and God in which man recognized God’s position as his Creator. In other words, this covenant implies that the ability to perceive the existence of the Supreme Being is inborn in human nature. By highlighting the rights and obligations of God over man, and man over man, the Qur’an establishes the point that man serves God mainly by serving humanity and other creatures. By comparison to the ‘secular materialistic’ worldview, the khilafah (vicegerency) position and the covenant taken by the human race to execute their responsibility, is to worship God by living according to His guidance (‘ibadah) and to develop and administrate this world in a harmonious way for the benefit of all creatures (‘imarah). Such a responsibility or trust has been rejected by all the other creatures, but accepted by human beings: hence, they are living in this worldly life in a state of being tested. (Malik, 2011: 130-32)
As a prerequisite of being tested, man was also endowed with freedom or ikhtiyar to choose. Such freedom, which made man different from the angels, gives man a determining power to deliver his responsibility, thus, making him accountable before God. For every decision or choice an individual takes, he is accountable as mentioned in the Qur’an. It is based on this responsibility-accountability paradigm that the Qur’an points out that the worldly human life is connected to the Hereafter (Malik, 2011: 130-32). Therefore, God has delegated the proprietary rights to mankind under specified terms i.e. trusteeship and man is therefore subject to the terms of that trust and must not forget that the real owner is God and man’s ownership is granted by Him (al-‘Alim, 1991: 485-87). This Islamic concept of ownership is part of this general view of trusteeship (amanah). It was stated in al-Qur’an that:
“Hast thou not seen how Allah hath made all that is in the earth subservient unto you?” (Chapter al-Hajj (22):65);
“Believe in Allah and his messenger, , and spend of that whereof He had made you trustee.” (Chapter al-Hadid (57): verse 7);
“And do not eat up your property among yourselves for vanities nor use it as bait for the judges with intent that ye may eat up wrongfully and knowingly a little of (other) people’s property” (Chapter al-Baqarah (2): verse 188).
Similarly, Prophet Muhammad was quoted in his farewell pilgrimage as stressing the sanctity of individuals’ property by saying:
“O Men, your lives and your property shall be inviolate until you meet your Lord. The safety of your lives and of your property shall be as inviolate as this holy day and holy month.” (Narrated by Ahmad (2000: 38/474))
Owing to its heavenly origin, concepts such as individual ownership, private rights, and contractual obligations are henceforth in their sacredness. 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 God. Therefore, encroachment on the property and rights of another person is, according to the terminology of Muslim jurist-theologians, is legally and religiously prohibited or ‘Haram’ (Abu Zahrah, no date: 78-79). Consequently, according to the commandments of the Qur’an, severe punishments will be inflicted upon those who transgress others’ property. Highway robbery and theft are two of the crimes that are addressed in the Qur’an deserving severe punishment due to their nature of violating others’ properties. The penalty for the former is death, while those who commit the latter are punished by an amputation of the right hand (Abu Zahrah, no date: 78-81). Muslim jurists therefore concluded that amongst the highest objectives of Shari’ah (Maqasid al-Shari’ah) is to preserve property (mal), and to promote the effort to accumulate it. However they must be done through rightful means and with great emphasis on one’s moral responsibility that will be discussed subsequently.
In the same token, in Islam, due to the Maqasid al-Shari’ah doctrine of hifz al-mal (protection or preservation of property), private property has immunity and is to be protected and defended by the owner. No one is allowed to capture the property of others without the permission of the owner. Since wealth is one of the necessities that Islam aimed to preserve under the doctrine of Maqasid al-Shari’ah, hence, it is a duty on everyone to protect their property (al-‘Alim, 1991: 548). Prophet Muhammad is reported to have said:
“Whoever is killed over his wealth, then he is martyr.” (Narrated by al-Bukhari, no. 2313)
This is quite similar to the fact that in some states of the US a person is excusable if he/she kills the intruder. This ancient tradition of placing property under divine protection is discernible in many deeds of trust left by pious Muslims. Similarly, Ancient law, like the Muslim law, often inflicted capital punishment on the thief, because theft was, in the words of Fustel de Coulanges, un attentat contre la religion de la propriete (a crime against the religious character of ownership). (Habachy, 1962: 453). In many verses, the Qur’an warns the believers not to get, obtain, or eat wealth in illegal and unjust ways. Amongst them is the verse 188 from the chapter al-Baqarah (2):
“Do not eat your property among yourself unlawfully; do not give them to judges (as bribe) to knowingly committing sin and eat some of the property of people”
In the same meaning, the Prophet said in his last address (khutbah) to his ummah:
“Your blood and your property are sacrosanct until you meet your Lord, as this day and this month are holy…”. (Guillame, 2007:651)
In another tradition (hadith) it is said that:
“Violation of a muslim’s life, property and dignity are forbidden for another Muslim”. (Narrated by Muslim, no. 6487)
As aforementioned, property rights in Islam are sacred; hence whatever that follows them are considered sacred as well. Al-Qur’an taught Muslims to neither use their private property wastefully nor in a way that will deprive others of their justly acquired property as clearly stated in verse 188, chapter al-Baqarah (2). Similarly, when one holds the property of others in trust, for example, that of orphans (as stated in al-Qur’an), it is illegitimate for one to divert it to one’s own personal benefit due to the sacredness of legal ownership” as emphasized in the Qur’an (see chapter al-Nisaa (4), verse 10). However, if the owner (i.e. the orphan) is incapable of managing it, others should assist him/her by looking after his/her property until he/she reaches the age of maturity in which he/she is capable of managing his/her own property (Chapter al-Nisaa (4), verse 5-6). Meanwhile, property rights for women, a concept in which most nations deprived their women population of at the time of the revelation of al-Qur’an, is highly respected and is equally sacred as men’s in Islam(Chapter al-Nisaa (4), verse 24 and 32). Women too were included in the share of inheritance to also acknowledge their rights to own properties (see chapter al-Nisaa (4): verse 7). Al-Qur’an clearly spells that:
“And in no wise covet those things in which God hath bestowed his gifts more freely on some of you than on others; to men is allotted what they earn and to women what they earn, but ask God of His bounty…” (Chapter al-Nisaa (4): verse 32)
The fact is, al-Qur’an has guaranteed women rights of property and contract, and even a share in inheritance many centuries before some states in the United States granted married women right to property at all (el-Moussaoui, 2012: 6). Furthermore, the sanctity of private ownership in Islam could also be seen in the Islamic history where a debtor’s person rather than his assets is to be answered for his debts according to the custom and jurists’ decrees practised in Muslim lands. In any case of a recalcitrant debtor, a Muslim judge could only order seizure and imprisonment of the debtor to force him to pay his debts, but not ordering foreclosure of his proprietary right or other rights of monetary value to satisfy his unpaid creditors (Habachy, 1962: 456).
It was reported that during the Second World War, a housing crisis existed in Jeddah. Along with the boom produced by the spectacular found and development of Arab oil, rents began soaring, thus inflicting great hardships on salaried employees in government departments and in business. A law placing a ceiling on rents was proposed, but it was not enacted because prominent Saudi scholars objected the idea fearing that it constitutes an unlawful restriction of the right of the owners to enjoy the income they could derive from their property (Habachy, 1962: 457). The scholars mainly referred to a Prophetic tradition that denies the power of the state to fix prices of commodities under normal conditions. It is reported that in the time of the Prophet, prices became very high, and he was asked whether he intended to regulate them. “It is God,” answered the Prophet, “Who denies, and it is God who gives and dispenses. I hope someday to meet Him, and I do not want a man to bring me to account for an injustice I committed against his person or his property.” (Narrated by Ahmad (no. 15181); and Abu Yusuf, 1880: 49)
In sum, Habachy (1962: 456) insisted that the right of ownership in Muslim law is more absolute than in the modern systems of law. Ownership has been defined by the Muslim jurist Ibn Arafa as ‘the right of complete and absolute disposal’ (Kamal At-Tasarruf al Mutlaq). It is clear from these expressions that the Muslim concept of property and right is less restricted than in the modern concept of these institutions. With such a provision, Islam’s approach to private property rights is deduced by Nouwaihi, as “there is nothing in the classical works of Islamic jurisdiction to countenance (the) limitation (on property rights).” (Nowaihi, 1980: 74) Moreover, the existence of “law of inheritance” (Faraidh) by itself is a proof that Islam values private property. The law as mainly espoused in the al-Qur’an indicates that wealth should be inherited by close family members and not to be given to the authority, or to be confiscated by other parties (Afzal-ur-Rahman, 1990: 1/54).
Wealth gets broken down through the Islamic inheritance system that ensures all of the children receive an immediate entitlement on the death of a parent, rather than all of the estates passed to the spouse as is the case with most Western’s inheritance provisions, where children may possibly suffer if there is a remarriage (Wilson, 2006: 116). The Qur’an is explicit on how an estate should be redistributed, with a wife receiving a sixth of the estate on the death of her husband with the understanding being that the children will also take care of their mother. But if the widow is childless, then she will receive one-third of the estate and the remainder will be going to the husband’s relatives. In any case, the widow is entitled to reside in the family home for at least a year and to have a year’s maintenance allowance. Of course, inheritance primarily brings about redistribution of wealth within families rather than more widely outside the family, but bequests to the poor in wills are praised, and beneficiaries of wills may wish to help those less fortunate than themselves (for further details see: I. Doi, 1984: 295-314)
Inheritance is important as it is mainly aimed to keep the sustainability of the family, thus preventing them from begging others for their welfare. This has been confirmed by a Prophetic tradition narrated by Sa`d bin Abu Waqqas:
“The Prophet came visiting me while I was (sick) in Mecca, (‘Amir the sub‐narrator said, and he disliked dying in the land, whence he had already migrated). He (i.e. the Prophet) said, “May Allah bestow His Mercy on Ibn Afra (Sa`d bin Khaula).” I said, “O Allah’s Messenger! May I will all my property (in charity)?” He said, “No.” I said, “Then may I will half of it?” He said, “No”. I said, “One third?” He said: “Yes, one third, yet even one third is too much. It is better for you to leave your inheritors wealthy than to leave them poor begging others, and whatever you spend for Allah’s sake will be considered as a charitable deed even the handful of food you put in your wife’s mouth. Allah may lengthen your age so that some people may benefit by you, and some others be harmed by you.” At that time Sa`d had only one daughter. (Narrated by Muslim, no. 1628)
Islam encourages people to work hard, to trade and obtain wealth
In principle, as part of an Islamic doctrine motivating Muslims in the accumulation and ownership of wealth, Islam encourages Muslim to gain wealth through labour, work and legal profit making activities. In many places in the Qur’an, it is made clear that work has been given a special emphasis, and is considered as an act of worship in and of itself. Islam teaches that the gain which anyone may make in life depends on his work. Nobody has a right to live on the labour of others without performing any useful work himself. Likewise, ownership is the fruit of labour, in which a man applies his labour to natural resources and they consequently become his property. Hence, working is key in utilizing the natural resources, which have been described by the Qur’an as the treasures of Allah’s mercy.
Accordingly, Islam orders its followers to be a part and parcel of a working and productive society as it is stated in the Qur’an (Chapter al-Jum’ah (62): verse 10):
“And when the prayer is finished, then you may disperse through the land, and seek of the bounty of Allah: and remember Allah frequently that you may prosper”.
Meanwhile in Chapter al-Nisaa (4): verse 32, it was mentioned that:
“And in no wise covet those things in which God hath bestowed his gifts more freely on some of you than on others: to men is allotted what they earn and to women what they earn, but ask God of His bounty . . .”
Similarly, Islam highly recognises the individual freedom to choose according to their preferences in regards to their worldly life, as it is espoused by the Qur’an:
“But seek the abode of the Hereafter in that, which Allah has given you, and do not neglect your portion of worldly life, and be kind even as Allah has been kind to you, and seek not corruption in the earth. Verily, Allah likes not the Mufsidun (those who are mischief-makers)” (Chapter al-Qasas (28): verse 77).
In principal, individual acquisition of wealth has no limits in Islam. A person may own boundless treasures. Indeed he can, theoretically at least, ‘own’ as much as he/she desires. The moral limits according to Faruqi are that in his acquisition of wealth, man is not to lie, or cheat his neighbor . . . (must) uphold his promise and to fulfil his contract . . . not to steal . . . (or) exploit the destitution of his fellow men by subjecting them to work for him without full title to the fruits of their own work, as is usually the case with interest levied on borrowed capital. (Faruqi, 1980: xii). This commercial exploitation, in some extent, explains the motivation that propels Muslims’ involvement with commerce, industry, agriculture and other activities relating to trade throughout the Islamic history (El-Moussaoui, 2012: 3). Islam’s inclination towards works and wealth accumulation (with responsibility) has drawn a remark from Maxime Rodinson (1967) who once said:
“There are religions whose sacred texts discourage economic activity in general….[but] this is certainly not the case with Koran, which looks with favor upon commercial activity, confining itself to condemning fraudulent practices and requiring absention from trade during certain religious festivals.”
The efforts given in the accumulation of wealth for the welfare of family and to spend it for good purposes are considered ‘jihad’ in Islam. ‘Jihad’ should be interpreted as a striving with oneself, a struggle for self-improvement by believers, so that they can carry out God’s will more effectively Unfortunately, the term jihad, or struggle, is all too often equated with Islamic war or even terrorist activities because of a distorted interpretation of Islam by some politically motivated fringe groups. However, its application to business life is valued much more positively. (Wilson, 2006: 113). Prophet Muhammad himself encourages Muslims to earn his own living and provide for his family rather than relying upon the charity of others. He was quoted as saying:
“By him in whose hand is my soul, if one of you were to carry a bundle of firewood on his back and sell it, that would be better for him than begging a man who may or may not give him anything.” (Narrated by al-Bukhari, no.1401)
Meanwhile in another occasion, the companion of Prophet Muhammad, Anas ibn Malik reported that a man from the Ansar (People of Madinah) came to the Prophet, and begged from him. The Prophet in return said: “Go gather firewood and sell it, and do not let me see you for a fortnight.” The man went away and gathered firewood and sold it. When he had earned ten coins, he came to him and bought a garment with some of them and food with the others. The Prophet, then said:
“This is better for you than that begging should come as a spot on your face on the Day of Judgment. Begging is right only for three people: for one who is in grinding poverty, or for one who is in severe debt, or for a painful compensation for killing.” (Narrated by Abu Dawud, no. 1641)
Similarly, Islam has been favorable to the merchant class beginning with the Prophet Muhammad and many of his companions themselves, many of them merchants. Even in discussing spiritual matters, the Qur’an favors metaphors from the world of commerce, encouraging the believers to strike a profitable bargain with God (e.g.: Chapter al-Saff (61): verse 10; Chapter al-Tawbah (9): verse 111). Throughout most of its first eight hundred years of history, Muslim societies flourished due to a high respect and observance for these principles. Although Islamic dynasties throughout centuries often violated market principle by imposing excessive taxes and frequently interfering in commerce as historical facts shall demonstrate, nevertheless they would be seen to inevitably face decline and be replaced with other dynasties with values that are closer to the universal principles.
It is worth noting however, that despite Islam’s position towards work, labor and trade, Muslims must be guided by their faith or piety (iman), which in practice means following the rulings of Islamic laws, and engaging only in what is ‘halal’, or permitted, and avoiding that which is ‘haram’, or forbidden in doing works or engaging in trade. (Alawneh, 1998).
The Centrality of Contracts and the Rule of Law
Due to its importance and sacred position in an individual’s life, property rights need the protection of the rule of law in the effort to ensure its sustainability. Well-defined property rights, including procedures for recognition, alienation, inheritance, are basic elements for the protection. Islamic law in general is a framework in which individuals, elementary and intermediate institutions of society make contracts to govern their relations and actions, including their business enterprises. This is evidenced in the fulfilling of contracts being mentioned in the Qur’an immediately after prayer and charity in the list of what defines righteousness (Chapter al-Baqarah (2): verse 177). Furthermore, classical Muslim jurists wrote extensive volumes on specific contracts (such as sale (bay’), lease (Ijara), and hire (I’ara)) and systematic exposition of the principles governing contracts in general, which are mainly based on the principle of freedom of contract which makes any valid agreement binding according to the Islamic law.
The very basic framework of contracts in Islam is that any agreement in matters of civil and commercial dealing (Mu’amalat) that is not specifically prohibited by the texts (al-Qur’an and al-Sunnah) is considered valid and binding on the parties and could henceforth be enforced by the courts (al-Dharir, 1995: 30). This important principle makes it possible to give effect to contracts that are sui generis. This is the reason why a prominent Hanbali madhhab scholar, Ibn Taimiya expressed ardently the principles of freedom, validity, and binding effect of a contract, which are principally derived from a strong Qur’anic injunction ordering the believers to fulfill contracts. Ibn Taymiyah was quoted saying:
“If proper fulfillment of obligations and due respect for covenants are prescribed by the Lawgiver, it follows that the general rule is that contracts are lawful . . . since the Lawgiver recognizes the legality of their objectives.” (cited from al-Dharir, 1995: 30-31)
The concept of contract in Islam goes beyond the modern understanding of contracts as a legal institution necessary for the satisfaction of legitimate human needs. A contract in the Shari’ah law reflects a divine covenant based on a pact between God and a man. A contract in the Islamic law is bounded by the concepts of justice (adala) and faithfulness (amana), of reward and punishment, which are closely linked with fulfillment of contractual obligations. These concepts of justice and faithfulness must be emphasized with reference to them bearing on contracts, in which that it takes place before God, before the courts that enforce the Law, and that the parties involved in the contract are on a complete equal footing with one another (Habachy, 1962: 463-64). Once validly concluded, agreements become contracts of God, who commands in the Qur’an:
“Fulfil the covenant of Allah when ye [undertake or enter into a covenant] . . . and do not violate oaths after their confirmation, and you’re having set Allah as guarantor over you; assuredly Allah knoweth what ye do. . .”
The same expression can be found in chapter al-Fath (48), verses 10 and 18, where Muslims were told:
“Verily those who swear allegiance to thee, swear allegiance really to Allah, the hand of Allah is above their hands; so whoever breaks faith, to his own hurt he breaks it, and to those who fulfil what they have pledged to Allah, He will one day give a mighty reward . .. . Allah was satisfied with the believers, when they were swearing allegiance to thee under the tree, and knew what was in their hearts, so He hath sent down the Assurance upon them and hath recompensed them with a clearing-up near at hand …”
The fifth chapter of the Qur’an is sometimes called in the Muslim tradition as ‘Surah al-‘Uqd’ or is literally translated as the ‘Chapter of Contracts’ due to the initial strong command from God to the believers to fulfil their contracts. Yusuf Ali, the famous translator of the Qur’an to English with his translation work: ‘The Holy Qur’an’, pointed out that the chapter begins with an appeal ‘to fulfil the contracts’ to imply its sacredness and consequently constituting a Divine order that has to be observed by believers (Yusuf Ali, 1946: 237).
Consequentially, contractual freedom is a prerequisite of a valid contract in Islam. Not only it implies the ability of individuals to make free choice without undue influence, it also enhances the meaning of the sacredness of property ownership and the unalienable rights of the owner over his/her own property. Any party that ends up in a contract through deception or any undue influence is considered invalid in the Islamic Law. Contracts are essentially predicated on the free will of the parties and must manifest the authentic expression of their intent. This equitable principle guides any economic activity to insure against lack of fairness as a result of undue influence, eventually affecting the questions of competence, validity, rescission and damages. Contracts that are regulated in such a way will enhance fairness, produce equity, and protect the weak and the unwary, as well promoting social interests. Rationally, this will also prevent one to enrich oneself to the detriment of others (el-Moussaoui, 2012: 7).
Minimal State to guarantee Private Property
The government or ‘state’ is an institution to which citizens delegate the authority to rule. It is that delegation that gives state its power. But, arguable, the government or state is such a powerful institution that it can also easily become a dangerous one, especially when it coerces citizens into obedience, subverting the very people who bestowed upon them the authority to rule in the first place. According to Hayek ( 2007) in order to prevent such coercion, the powers of the government must be limited, usually through a written constitution that both enumerates and limits executive power with the notion of checks and balances. However, from an Islamic point of view, contemporary Islamic scholars differ relatively in their opinions on the size of the state in relation to business and economy. Nevertheless, most of them agreed that the theoretical aspect of state’s size is essentially based on the fundamental concepts of the sacredness of the property and the necessity of competition in a free market (Erdem, 2009).
This position is in some way close to the position of state in a classical Islamic tradition. A government or state is necessary according to Ibn Khaldun to ensure property rights for all subjects, so that they will be able to pursue market decisions without fear. Protection of private property and wealth of the people is necessary to allow them to carry out their economic duties, eventually contributing towards the growth of businesses, and subsequently the well-being of the society. Ibn Khaldun said:
“Attacks on people’s property remove the incentive to acquire and gain property…When attacks on (property) are extensive and general, affecting all means of making a livelihood, business inactivity, too, becomes general.” (Ibn Khaldun,  1967: 238).
Within this framework, it is understood that the main functions of the state in the Islamic tradition is to maintain justice, prevent unfairness, protect the security of individuals’ life and property as well as to protect the law and order, and provide a suitable environment for business ethics to be applied. Besides that, they also are responsible in putting the market mechanism into practice for the interests of all individuals, regulating the economic life and implementing rules within that environment (Erdem, 2009). According to Mannan (1989: 299), individuals do not exist for society and state, but that state and society exist for individuals in the life within societies. The individual shall exercise the rights of competition, cooperation and exchange within the framework of the most fundamental freedoms of enterprise given to him. The state, on the other hand, arranges the necessary legal, economic and moral regulations which allow for these freedoms to coincide with their social benefits.
Ibn Khaldun ( 1967: 80) ties the existence of Shari’ah law to the state, the existence of the state to the statesmen who will manage it, the existence of these civil servants and soldiers to possession and money, the existence of possession and money to the restructuring of the country, and finally, the existence of the restructuring of the country to justice. Justice is a measure set up among the creatures of Allah, and Allah has brought an administrator (statesman, government authority) as the head of this measure. This administrator (government) does not judge people’s private property and their private enterprises, because these properties are run more efficiently, create more employment and pay more taxes to the state in the hands of individuals (private sector). If the government confiscated these properties and gave them as gifts to its supporters, these properties can end up not being used appropriately, public improvements and care will not be respected (they do not renew their technological endowments), and taxes will not be paid regularly. This will inevitably result in huge economic inefficiency and a great extravagance of resources will be wastefully spewed out.
According to Ibn Khaldun, oppression is to seize one’s property, to cut a worker’s wage etc., and it does not matter whether it is done by a government or by a private person. In this sense, he ardently believes that those who collect unfair taxes, violate people’s property or confiscate others’ property are the oppressors. “Since all these activities cease the prosperity of the country, the loss and damages belong to the state. Because, if the state is a statue and a figure, these are the materials of that figure, and each of these oppressions decrease the job and working abilities and the power of the exposers. Know that, here is the reason and wisdom why the legislator forbids oppression. This stems from the fact that oppression removes the prosperity of the world and destroys the world.” (Ibn Khaldun,  1967: 80)
According to Ibn Khaldun, government should never oppress to collect tribute (Kharaj) from the taxpayers. Otherwise, these people (or firms) shall abandon their home country, and migrate to other countries. As a consequence, those places are ruined, the government’s sources of income decrease, and difficulties in public finance will flourish, and only allow other countries waiting eagerly for an opportunity to covet the territory of Islam. (Ibn Khaldun,  1967: 78). State too, as a result has no rights to control the market due to the position taken by many Muslim jurists following the footsteps of Prophet Muhammad who refused to control the price of goods in the market. In response to a request to control prices, Prophet Muhammad said:
“God is the Taker, the Disposer, the Succourer and the Controller of prices. I very much hope that when I meet God no-one will claim against me for an injury I have caused him for blood or property.” (Ibn Taymiya, 1992: 47)
It was based on this premise; that the role of the state in Islam is to be understood to safeguard the security of individual’s life and property as well as protecting the law and order. Apart from that, the state also has the responsibility of protecting private rights against infringement and private contracts against breach; a fortiori, it must give a good example of respecting the contractual rights it has validly granted to a foreigner. The maxim of the old French law, qui doit la garantie ne pentt evincer (the party who should guarantee cannot evict), is equally valid in the Islamic law. However, the state in accordance to this paradigm too, has no privileged legal position as a contracting party and no overriding right of sovereignty. (Habachy, 1962: 451).
Moral responsibility of private property
Despite the encouragement by the Qur’an to accumulate wealth and the sacredness of private property, the Qur’an strictly prohibits fraud, hoarding, an exercise of riba, and uncertainty, alongside other vice and harmful means in an effort to accumulate wealth due to their immoral natures (Afzal-ur-Rahman, 1990: 74). The possession of wealth in Islam will only be recognised if it is within the parameter of value and morality. Rationally, according to an Islamic understanding, the ultimate ownership by God sets the general constraints on private property rights. These constraints are further specified by the Shari’a law in the prohibition of hoarding and riba (excessive gain). One may not leave consumption wealth or productive capacity unused. Al-Qur’an clearly states:
“That which they hoard will be their collar on the Day of Resurrection.” (Chapter Al Imran(3): verse 180)
The prohibition of hoarding, beyond discouraging abstinence in consumption of wealth and ‘excessive’ personal accumulation, has been limited to two principal cases in the prophetic tradition. One is the case of hoarding by merchants as a way of cornering the market, in which the authority may force the hoarder to sell the hoards at a ‘fair value’ to ensure fair competition (Ibn Taymiya, 1992: 32-33; Mannan, 1986: 153-155). The other and the more controversial case is the hoarding of land by leaving it unused. Some Islamic economists have, however, attempted to extend the prohibition of hoarding by considering any unused capacity of production as hoarding.
On the other hand, ‘Riba’ or usury, has been explicitly condemned by the Qur’an:
“Those who swallow riba cannot rise up save as he ariseth whom the devil hath prostrated by (his) touch.” (Chapter Hud (11): verse 275).
And in contrast, God praises trading and puts a clear demarcation between trading and riba (usury):
“Allah permitted trading and forbade riba” (Chapter al-Baqarah (2): verse 275)
Likewise, Prophet Muhammad also frequently praised merchants (he was also one himself) and trading as well as pointing to the indisputable legitimacy of profit in Islam, but at the same time echoing the Qur’anic verses in condemning riba. What distinguishes profit from riba is that profit is a return on capital where such return is not fixed in rate and is subject to risk. The clearest case of riba is usury, but it may be extended, and it has been, to include other forms of transaction that bring a party anything beyond the ‘fair exchange’ value. (Abu Sulayman,1980: 22-23). The concept of fair exchange value may appear similar to Aquinas’ ‘just price’ (See Friedman, 1980: 234-42). Fair exchange value in Islam is, however, neither socially determined nor administratively regulated. Fair exchange value, therefore, cannot mean other than the market return to labour and capital.
As mentioned earlier, the very basic understanding of the relation between Muslims and wealth in Islam is that Muslims as owners of wealth are khalifah (vicegerents) who are accountable to the Almighty for their actions. Here, the concept runs parallels with the Christian concept of stewardship (Wilson, 1997: 74–76, 208–209). Ultimately, all wealth is owned by God, but that does not undermine the control of resources through private property rights as discussed earlier. Rationally, it is through the exercise of these rights that a just economy can be created for the benefit of society as a whole. And consequentially, if these responsibilities are ignored, naturally, corruption and wrongdoing will ensue, hence, leading to a corruption of the society.
Although Islam is not against wealth accumulation and, indeed, views socioeconomic inequalities as inevitable, but those who are entrusted with wealth have a duty to God to manage them well for the benefit of society as a whole as part of the Maqasid al-Shari’ah’s doctrine of hifz al-mal (protection of wealth). Muslims can exercise their free will (ikhtiyar) in accumulating wealth and spending them, but it is an Islamic moral imperative for them to exercise their responsibility, both to those they deal with and, ultimately, to God by being His dutiful representative on earth (Naqvi, 1994: 29–34). And amongst the moral responsibilities upon those who possess wealth is to respond to the plight of the poor. While stressing the virtue of altruism, the Qur’an tells:
“And those in whose wealth are a recognized right for the needy who asks and him who is prevented for some reason from asking.” (Chapter al-Shura (70): verses 24–25).
“Those who (in charity) spend of their goods by day and night, in secret and in public, have their reward with their Lord: on them shall be no fear, nor shall they grieve.” (Chapter al-Baqarah (2):274)
It is narrated that Ali, a follower of the Prophet, cited him as saying:
“Allah has levied upon the rich among Muslims, in their wealth, an amount that would suffice for the poor amongst them. If the poor starve or go unclad it is because of what the rich are doing.” (Siddiqi, 1988: 255)
The Prophet was also quoted as saying:
“So his wealth is whatever he spends (in Allah’s Cause) during his life (for helping the poor) while the wealth of his heirs is whatever he leaves after his death.” (Narrated by al-Bukhari, no. 449).
Provision for the poor and needy comes through zakat, a self-assessed tax on one’s wealth whose proceeds are earmarked for social expenditures. This can be regarded as a form of almsgiving, with the liability calculated annually as one-fortieth of the value of financial assets (al-Qardawi, 1999: 65–100). Zakat occupies a distinctive position in the Islam. It is even considered as one of the pillars of Islam. The Qur’ān states:
“Take alms of their wealth, wherewith thou mayst purify them and mayst make them grow…” (Chapter al-Tawbah (9): verse 103)
The very ideal of zakat in Islam is, the payment of zakat purifies one’s soul from greed, selfishness and ego, as well as leads to increase in material welfare in this world and prosperous life in the Hereafter. Due to its voluntary basis, those who fail to discharge this obligation are not going to be punished by any worldly punishment, but been warned of severe chastisement in the Hereafter. Therefore, the property owner is regarded responsible for the payment of zakat when his/her property reaches the necessary limit of the minimum quantity of an asset, which makes it liable to zakat called ‘nisab’, and has been in his ownership and possession for one full year (hawl) (al-Qaradawi, 1999: 65-100). It is indeed recognized that the proceeds from zakat may be insufficient to alleviate poverty, and that it is a complement rather than a substitute for social commitment (Sirageldin, 2002, pp. 43–44).
Essentially, by becoming closer to God, believers do not lose their individuality; instead they are believed to become less selfish and are more motivated to serve good to the wider public. In Islam, social obligations are a central focus, but it must be exercised voluntarily and not to be forced by other parties. Islamic approach to wealth and moral responsibility is best summarized by Faruqi:
“Islam teaches the greatest possible individualism…. This individualism knows no bonds except those imposed by the moral law. But when no moral violation is in evidence, Islam teaches that man may and should amass the greatest fortune he can, and these are his and his natural or adopted heirs to have, to keep and to enjoy. . . . Charity will take care of ‘poverty and destitution’ and zakat (a wealth tax) serves to ‘sweeten’ or ‘make innocent’ …. man’s enjoyment of wealth.” (Faruqi, 1980: xiii)
In essence, Islam does recognise and protect private property, and the Islamic law has consequently been acknowledged by many researchers for its recognition of private property rights. However, the Qur’an spoke of no real precision on the rulings related to an individual property, apart from giving a theoretical foundation on the notion of ownership and the ontological dimension of wealth possession which is represented by the doctrine of ‘Khilafah’ and trusteeship. The details of the rulings and any scholarly guidance on individual property are mainly derived from the Sunna, and the understanding of the classical jurists on both the Qur’an and the Sunnah. Thus, it is acknowledged, on the basis of these sacred texts, that the protection of property is very marked in Islamic law.
Private property too is highly recognized and promoted in Islam through the doctrine of Maqasid al-Shari’ah. The Islamic law, within the framework of Maqasid al-Shari’ah not only protects and preserves wealth of individuals through certain rulings stated in the Qur’an and Sunnah, but also actively promotes the ownership of property. Moreover, in acquiring property, Muslims are encouraged to work and obtain wealth only through lawful and legitimate means. Private property in essence too, is considered a trust from God to Muslims, and they will have to answer before God on how it was accumulated, how it was used, and what was it used for in helping others on the Day of Judgment. As part of the trust entrusted to individuals, they are born with freedom of access to wealth. Nonetheless, religious principles provide a framework for the appropriate exercise of that inborn freedom. Similarly, Islam also encourages its follower to work, labour and trade as part of their effort to accumulate wealth.
However, the ownership of wealth in Islam comes with a set of moral obligations and responsibilities. But, it must be noted that, the exercise of moral responsibility in Islam is merely voluntary, and should not be forced unto the individuals. And it is based on the guidance of the Qur’an and the Prophetic traditions, that Muslims are invoked to fulfill their moral responsibilities. Similarly, another important element of the preservation of private property is that Islam grants full right to owners over their property, and no authority or administrative power have any legitimate right to confiscate the ownership, nor to deny it. In a more simplified term, Islamic doctrine of private property equally requires a limited state to protect the sanctity of the ideal. Nevertheless, despite all of the above discussion about private property in Islam, perhaps a present dilemma worth to be discussed is, “Why are Muslims of today are lagging behind others in development, wealth ownership and businesses?”, or maybe a more challenging question to beg is “Why does the free-market economy not fully embraced by Muslim countries, should the teaching of Islam itself preserves and promotes private property rights?”
 He is Abdul Rahman bin Muhammad Ibn Khaldun al-Hadrami al-Ishbili (Ibn Khaldun for short) (1332 – 1406). Born on 732 AD in the northern coast of the Mediterranean Sea, Tunis, Ibn Khaldun is the most important figure in the field of history and sociology throughout Islamic history alongside his juristic and theological background. This is all due to his infamous magnum opus, al-Muqaddimah which deals mainly with the field of socio-history (Ibn Khaldun,  1967).
 The full title of the book reads ‘Kitab al-’Ibar wa Diwan al-Mubtada´ wa al-Khabar fi Ayyam al-’Arab wa al-’Ajam wa al-Barbar wa Man ‘Asarahum min Dhawi al-Sultan al-Akbar’. Rosenthal translates the book as the ‘Book of lessons and archive of early and subsequent history, dealing with the political events concerning the Arabs, Non-Arabs and Berbers, and the supreme rulers who were contemporary with them (Ibn Khaldun,  1967:1, 13). Arnold Toynbee, described Ibn Khaldun’s book, The al-Muqaddimah, or Prolegomena as ‘undoubtedly the greatest work of its kind that has ever yet been created by any mind in any time or any place’ (quoted by Rosenthal in Ibn Khaldun,  1967: xxxv).
 For example, see: Chapter Hud (11): 255, Chapter al-Masad (111): verse 129.
 See: Chapter al-Baqarah (2): verses 30-39; Chapter al-Hijr (15): verses 28-44; Chapter Saad (38): verses 69-74.
 Chapter al-A’raf (7): verse 172.
 Chapter al-Ahzab (33): verse 72.
 Chapter al-Dhariyaat (51): verse 56.
 Chapter al-An’am (6): verse 165; Chapter al-Jathiyah (45): verse 13.
 Chapter al-An’am (6): verse 165.
 Chapter al-Mukminun (23): verse 115; Chapter al-Qiyamah (75): verse 36; Chapter al-Insaan (76): verse 2.
 Chapter al-Nisaa (4): verses 11–12.
 Chapter al-Baqarah (2): verse 240.
 Chapter al-Nisaa (4): verses 8–9.
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