TRADE, COMMERCE, MONEY AND MARKET
IN THE ISLAMIC EXPERIENCE: A BRIEF OVERVIEW1
Adi Setia
This brief overview focuses on the meanings of trade and commerce (tijārah) in Islam and related terms such as kasb, iktisāb (earning), wealth (māl), work (ʿamal), money (naqd) and market (sūq) as these have been expressed in some salient aspects of early Madīnan and later Islamic practice, and in their exposition by the classical ulama in their many authoritative works on the fiqh and adab of kasb (legal and ethico-moral aspects of earning a livelihood).
Keywords: Trade, commerce, money, kasb, earning, market, Islamic Gift Economy
“O believers! Give provisions out of the good things you have earned.”
(al-Baqarah, 2: 267)
Wealth decreases not through charity,
just as it increases not through perfidy.”
(al-Ghazālī, Iḥyāʾ: Ādāb al-Kasb)
Preamble
Perhaps we may begin by citing this ḥadīth:
A man from among the Helpers (Al-Anṣār) came to the Messenger of Allāh, may Allāh bless him and give him peace, asking him for a handout. The Prophet, may Allāh bless him and give him peace, said to him, “Do you not have anything in your house?” He said, “Yes, O Messenger of Allāh, a saddle blanket (ḥils)—i.e., a garment (kisāʾ)2 —we wear part of it and spread out part of it, and a bowl we drink from.” He said, “Bring both of them to me,” and so he brought them. The Messenger of Allāh, may Allāh bless him and give him peace, took the two things in his hands and said, “Who will buy these two?” A man said, “I’ll take them for one dirham,3 O Messenger of Allāh.” The Messenger of Allāh, may Allāh bless him and give him peace, said (again), “Who will pay two or three times more than a dirham?” Another man said, “I’ll take them for two dirhams, O Messenger of Allāh,” and so he gave the items to him. The Prophet, may Allāh bless him and give him peace, took the two dirhams and gave them to the Helper, and said, “Buy food with one of these and hand it over to your family, and with the other buy an adz (qaddūm) and bring it to me.” He brought it to him and the Messenger of Allāh, may Allāh bless him and give him peace, fixed to it a cane with his own hands and then he said, “Go and gather firewood and sell it, and I shall not see you for fifteen days.” He did accordingly and then came back to him having acquired ten dirhams. With some of it he bought food and with some of it he bought clothes. The Messenger of Allāh, may Allāh bless him and give him peace, said to him, “This is better for you than having (the habit of) beggary scarring your face on the Day of Resurrection.”4
This ḥadīth provides one with much food for thought respecting Islam’s general attitude towards working for a living (kasb). The poor are not to resort to beggary (suʾāl)5 so long as they are physically fit and able to work for their livelihoods by pursuing a craft, trading, farming, hunting, foraging, working for a wage, and so on. Instead of giving handouts to the poor, one is to first ascertain their capacity to work and advise them accordingly, for they may not be really poor but only conditioned into thinking they are poor. Thus we find in this hadith the Prophet, Allah bless him and give him peace, giving what we may now call “business advice” to a young man finding his way in the world.
The general idea here is trade not aid, industry not charity. My personal experience is that the poor are generally able to help themselves out of demeaning poverty and beggary into dignified self-reliance if they are given even half a chance to engage in wholesome earning and right livelihood (kasb ṭayyib). The verse in the Qurʾān cited in the epigraph above shows quite clearly that provisioning (infāq) for ourselves and the community in general is by way of earning (kasb, iktisāb, ʿamal), and not by way of beggary (suʾāl).
Any doubt about the priority of earning over beggary is dispelled when we see the Migrants (muhājirūn) refusing charity from the Helpers (anṣār) but rather opting to work and earn, even though many of the former had become destitute after having been compelled to leave their property and wealth behind in Makkah when they emigrated to Madīnah.
Originally, after the Migrants had arrived in Madinah, the Helpers asked the Prophet (pbuh) to divide the date-palm trees between them and their brethren from Makkah, which he nevertheless disapproved of. Then they all concurred that the Helpers divide their properties with the Migrants on the condition that the latter would give half the fruit from the orchards every year, and they would recompense the Helpers by working with them and putting in labor. This situation continued for several years and was as good as over subsequent [sic] to the conquest of Khaybar in the seventh year when all the Migrants economically became virtually self-sufficient.6
A companion ‘Abd al-Rahman b. ‘Awf has shed some light on the nature of the developments which the new Muslim community was putting up in Madinah in the wake of the Hijrah. He said: “When we came to Madinah as emigrants, the Prophet (pbuh) established a bond of brotherhood between me and Saʿd b.al-Rabiʿ. Saʿd b. al-Rabiʿ said to me: “I am the richest among the Helpers, so I will give you half of my wealth and you may look at my two wives and whichever of the two you may choose I will divorce her, and when she has completed her prescribed period (before marriage) you may marry her.” ‘Abd al-Rahman replied: “I am not in need of all that. Is there a market-place where trade is practiced?” Saʿd replied: “The market of Banu Qaynuqa’ (the Jewish tribe).” ‘Abd al-Rahman went to the market the following day. He continued going there regularly, and few days later he came having traces of yellow (scent) on his body. The Prophet (pbuh) asked him whether he had got married and ‘Abd al- Rahman replied in affirmative. Then the Prophet (pbuh) asked him to give a wedding banquet (walimah) even if with one sheep. ‘Abd al-Rahman b. ‘Awf ultimately emerged as one of the wealthiest Prophet’s companions dubbed alongside such as were like him [sic] as Khuzzan Allah (Allah’s treasurers).7
The Market of the Prophet
This brings us to look deeper into the socio-economic significance of the market of the Prophet’ (sūq al-nabiyy). It is well known that among the first ‘things that the Prophet, Allāh’s blessing and peace be on him, did upon his arrival in Madinah was the establishment of the communal mosque and the communal market for the Muslims. There was already at the time the market of the Banū Qaynuqāʿ, but it seemed that the Prophet, Allāh’s blessing and peace be on him, wanted a separate, independent market for the nascent Muslim community based on the principle of “al-sūq ṣadaqah” = “the market is charity,” i.e., a charitable endowment for the public good of the Muslim community as a whole wherein no taxes were to be imposed, hence: sūq al- muslimīna ka muṣallā al-muṣallīna, man sabaqa ilā shayʾin fa huwa lahū yawmahu ḥattā yadaʿahū = “the market of the Muslims is like the place of worship of the worshippers; whosoever proceeds to a spot [in it] it is his for the day until he departs from it.”8
Obviously, if the market is, ethically and morally speaking, an extension of the mosque, just as muʿāmalah or tijārah (commercial transaction) an extension of ʿibādah (devotion),9 then it is of religious necessity that the market of the Muslims must be one in which the proprieties of commerce and livelihood (ādab al-kasb wa al-maʿāsh) are applied. This in turn entails the establishment of an autonomous Islamic market and economy in which usurious, monopolistic and perfidious practices are all proscribed and justice, benevolence and fairness prevails, and thereby the duty of enjoining right and forbidding wrong fulfilled. Just as Muslims needed in the past to have their own public places of spiritual devotion to Allāh (i.e., the congregational masājid), so likewise, they needed also to have their own public places (aswāq) for commercial transactions amongst themselves; they needed to have their own markets, and by extension, their own economies—and they need the same today.
Hence, just as the mosque was seen as the devotional commons, the market was seen as the transactional commons. Just as the mosque was open for access to all without any restriction, so the market was open for access to all without retriction. The idea was that anyone, especially the poor and destitute, can go to the open, common or communal market anytime for free without having to pay entrance fees, and do a little work or a little trading, and thereby earn himself out of destitution and provide for himself and his dependents, and, if he has surplus, to provide out of that for the public good of the community, i.e., to reinvest his surplus into his community. This has been called (in the case of the later Ottoman economy) the market-welfare economy (most encapsulated in the institution of waqf or ḥabs = charitable endowments), in which the ‘market’ and the ‘welfare’ aspects of the economy are seamlessly integrated as a single, organic economy.10
So, the mosque and the market are the twin pillars of the Islamic community, for we can’t allow our dīn and ourselves to be fragmented, practicing one set of ethics in the mosque (in ʿibādah) but a totally contrarian set of ethics in the market (in muʿāmalah), for we have to uphold taqwā (mindfulness of the Creator) wherever we are: ittaqūLlāha ḥaythu kuntum.
Therefore we find our classical scholars writing volumious works on aḥkām al-masājid (the rules of the mosques)11 as well as aḥkām al-sūq (rules of the marketplace).12
There are also many works on the role and duty of the market inspectors (muḥtasib)13 to ensure that all the protocols and parameters of fair exchange, honesty and integrity are adhered to by all participants in the market.
ʿUmar—Allāh be pleased with him—the second caliph of Islam was reported to have made it his habit to make the rounds of the market and beaten some of the traders with his leather whip, saying, “None trades in our market14 except those who understand the rules of transactions, lest they should partake of usurious gain, wittingly or unwittingly (lā yabīʿu fī sūqinā illā man yafqahu, wa illā akala al-ribā shāʾa am abā).”15
Dīn, Madīnah and the Commercial Enterprise
Imam Muḥāmmad al-Shaybānī16 has said to the effect that the relation between ʿibādah and muʿāmalah is like the relation between ṣalāt and ṭahārah, the one cannot do without the other.17 So, on the one hand, the dīn or religion pertains to one’s personal devotional relation to and with the Creator (khāliq), and, on the other hand, to one’s interpersonal relation to and with people (and by extension, the rest of creation = al-khalq).
It is in Madīnah that these two integral dimensions of the dīn were fully realised and manisfested, for the very etymology of the word ‘madīnah’ refers to the place where the dīn is lived and practiced, both in the private and in the public spheres of life—dīn as one’s way of being in the world, in private and in public. Hence, as Professor al-Attas puts it, “The City of the Prophet signified the Place where true dīn was enacted under his authority and jurisdiction.... the City became, for the Community, the epitome of the socio-political order of Islam,”18 and:
....the concept dīn reflects the idea of a kingdom—a cosmopolis. Commerce and trade are the life blood of the cosmopolis....it is no wonder then that in the Holy Qur’an worldly life is depicted so persistently in the apt metaphors of commercial enterprise....Man is inexorably engaged in the trade: al-tijārah, in which he is himself the subject as well as object of his trade. He is his own capital, and his loss and gain depend on his own sense of responsibility and exercise of freedom. He carries out the trust of buying and selling, of bayʿah, and bartering: ishtarā, and it is his self that he buys or sells or barters; and depending upon his own inclination towards the exercise of his will and deeds his trade will either prosper...or suffer loss.19
This understanding of the concept of the ‘city’ in Islam, as encapsulated in the word ‘madīnah’ brings us to the meaning of ‘community’ (jamāʿah, mujtamaʿ, ummah). A community is only a community of people as opposed to a mere gathering or crowd when the individuals constituting it adhere to a common ethics (ādāb) and laws (fiqh) of formal and informal exchange amongst themselves. Just as they believe in and adhere to the same set of proprieties and rules pertaining to their collective devotion to their Creator in the mosque, so likewise in their collective transactions in the marketplace. As a matter of fact, the classical scholars from the earliest times have written profusely on the ethics and rules of earning, trade, commerce and livelihood in order to render explicit the common ground on which believers are to interact and transact (muʿāmalah) with one another.20
Without this shared, common ethics and laws of what is right or wrong, or proper or improper, in interpersonal relationships we don’t have an integrated community (jamāʿāt al-waḥdah) founded on transcendent conscience but only a disparate multitude (jamaʿat al-kasrah) who just so happen to find themselves in the same locality at a particular point in time due to some accidental emporal convenience and expedience, with no true idea of, and hence, no real commitment to the common good (maṣlaḥah ʿāmmah).21
This is why trade and commerce founded on transcendent conscience and not mere individualistic or egoistic convenience is considered an aspect of farḍ al-kifāyah, which is namely the duty of provisioning what suffices the community. Through lawful, wholesome and meaningful trade, commerce and work (kasb) one is helping in the provisioning (infāq) of the community through the very act of provisioning for oneself. Hence the verse, “O believers, give provisions from out of the good things you have earned.”22
This shows that economics and the economy in Islam has nothing to do with current secular, nihilistic notions of scarcity chasing after unlimited wants, but everything to do with the earning of right livelihood and provisioning thereby for the common good. Since, in this vision the individual is never disembedded from the communal, then ensuring the common good is also ensuring individual good—the two goods are like the two sides of the same coin and constituting it. In fact, economics in Islam, or ‘Islamic economics’, if we admit of such a thing, is properly defined as, “The science of earning and provisioning for the common good,” or simply, the science of earning and provisioning = ʿilm al-iktisāb wa al-infāq.
We may extend and expand on this reflection to come to the necessary insight that observing personal, individual worship (ʿibadāt) is not sufficient in order for a person to live a fully Islāmic life—or to realise Islām as a complete way of life—unless at the same time he takes care to cultivate the interpersonal transactional relationship (muʿāmalāt) required to support it; thus the inextricable linkage between farḍu ʿayn (individual duty) and farḍu kifāyah (communal duty), and between personal devotion and social relation, so nicely alluded to by Imam Muḥammad al-Shaybānī in his statements, “In earning a livelihood there is the meaning of cooperation in acts of devotion (fī al-kasb maʿnā al-muʿāwanah ʿalā al-qurab),” and “Permissible earning is in the category of cooperation in acts of devotion and obedience (al-kasb al-ḥalāl min bāb al-muʿāwanah ʿalā al-qurab wa al-ṭāʿāt).”23
Hence, in order to observe ʿibādah, we need to cultivate an appropriate muʿāmalah to support and nurture it; the one simply cannot do without the other. Similarly, Imam al-Ghazālī, in his Kitāb Ādāb al-kasb wa al-Maʿāsh, says:
The second matter is to intend, through one’s craft, commerce, or work, the discharge of one of the obligations of sufficiencies (furūḍ al-kifāyāt). Were the crafts and the businesses to be abandoned, the livelihoods of people would be disrupted, and most people would perish [as a consequence]. Therefore the well-ordering of the affairs of all is realized through the cooperation of all (intiẓām amr al-kull bi-taʿāwun al-kull), while each group assumes an occupation. If all of them were to be devoted to a single vocation (ṣināʿah), then the rest of the vocations would be left unattended and people would be destroyed. It is in the light of this reality that some of the scholars have interpreted the saying of the Prophet—Allāh bless him and give him peace—”The diversity of my Community is a mercy (ikhtilāf ummatī raḥmatun),” as referring to the diversity of their occupations in the various crafts and vocations. And of the crafts, there are those which are important, and there are those which can be done without because these have to do with the seeking of comforts (al-niʿam) and embellishment (al-tazayyun) in this world. Hence, one should be occupied with an important vocation so that by practicing it he takes care of something of concern in the religion for the Muslims.24
Trade and the Meaning and Role of Money
Because of the emphasis on justice (ʿadl) and fair exchange (mumāthalah, tarāḍin), a lot of attention was given to the precept of ‘sound money’ and the avoidance and preemption of anything that would compromise or dilute that precept, for since money is a medium of exchange as well as a measure of value (and thereby, a store of value), the notion of money (naqd) is tight closely to the notion of measure (miqdār, miʿyar) and to the notion of value and price (qīmah and thaman). Here, it is pertinent to cite in full the view of Jaʿfar al-Dimashqī (a merchant-scholar of the 6th /12th century) on money, which encapsulates the classical view on the matter:
Now human beings are dependent on one another as mentioned earlier, but the time of need of a person does not often coincide with the time of need of another person, as in the case of a carpenter who may be in need of an ironsmith but could not find one (at that particular time). It may also happen that there is no equivalence between the respective quantities (maqādīr mutasāwiyah) of what each need from the other, and there is no way of knowing the (relative) value of each item of each kind of goods, and of knowing the rate of exchange (miqdār al-ʿiwaḍ) between one item and another item of a part of the merchandise among all the parts of the rest of the merchandise, nor the relative value of each of the different crafts. Hence there is a need for something by which all goods can be priced (yuthamman bihī), and by which the value of each thing can be defined ( yuʿarraf bihā) in relation to every other thing. So when a person requires something which is for sale or for use, he pays the value of that thing with that substance (al-jawhar) by which all things are priced. If such a convention was not adopted, then it would not be possible for the exchange of one thing for another to take place, as in the case of a person who has something such as olive oil (al-zayt), wheat (al-qamḥ) or other similar products, whereas his counterpart has other goods such that the need of each party for what the other possesses does not concur at the same time. It can also happen that although the mutual need of each party for what the other possesses coincides, there may not be mutual agreement (ittifāq) on the equitable value of the amount each should give in exchange for what the other owns, such that there occurs neither excess nor deficiency (lā yazīdu wa lā yanquṣu) in what each exchanges with the other. For example, the owner of wheat may require a riṭl of olive oil, whereas the owner of cooking oil may require a two camel-loads (ḥimlay) of wheat, or the wheat seller may require a large quantity of oil whereas the oil seller a small quantity of wheat, in which case disagreement ( al-ikhtilāf) may occur between the two parties (on an equitable way to exchange one quantity for the other). (To solve such a problem) the ancients (al-awāʾil) searched for something by which to price all things. They looked into all the things in the possession of man, whether plants, animals or minerals. They excluded both plants and animals from this function (rutbah, of pricing) due to their being transformable (mustaḥīl) and quickly perishable (yusriʿu ilayhi al-fasādu). As for the minerals, they chose from among them those metallic ores which are hard and can be melted (al-aḥjār al-dhāʾibah al-jāmidah). They then excluded from these iron, copper and lead. As for iron, it was rejected due to its susceptibility to rust (al-ṣadaʾ), and copper too was rejected for the same reason. As for lead, it was rejected due to its dullness (taswīd) and its excessive softness (līn) which leads to transformation in the shapes of its form (ashkāl ṣūratihī). Likewise some people rejected copper due to its susceptibility to verdigris (al-zinjār). However, some people mint (ṭabaʿa) coins out of it like dirhams (al-dirham), for they use them (copper coins) as small change (fulūsan) in their transactions. All people are agreed on the preferment (tafḍīl) of gold (dhahab) and silver ( al-fiḍḍah) due to their being readily suited (surʿat al-muwātā) for casting (al-sabk), forging (al-ṭarq), combining (al-jamʿ), separating (al-tafriqa) and shaping (al-tashkīl) into any form required. Gold and silver also have a beautiful luster (ḥusnu al- rawnaq), with no unpleasant odor (al-rawāʾiḥ) or taste (al-ṭuʿūm), and they endure when buried. They are both also receptive to being marked with marks (al-ʿalamāt) that preserve them; and the permanence of their features (thabāt al-simāt) protects them from debasement (al-ghashsh) and counterfeiting (al-tadlīs). Therefore the ancients minted coins from gold and silver, and by these coins they priced all things. They saw that gold was greater in status (ajallu qadran) with respect to its beautiful luster, the compactness of its parts (talazzuz al-ajzāʾ), its durability when buried for a long period of time, and its conduciveness to repeated castings in fire. They then determined each piece of gold as being equivalent to several pieces of silver, and they made both the price (thamanan) for all other things. Thus they came to an accord on this arrangement (iṣṭalaḥū ʿalā dhālika) in order that people might purchase their needs at the time they wanted them, and so that whosoever obtained these two metals (al-jawharān) it would be as if all kinds of goods were brought together in his presence whenever he desired. Therefore the need in livelihood for inarticulate wealth became imperative. Some men of letters (al-udabāʾ) have said:
al-ʿaynu li al-ʿayni qurratun wa li al-ẓahri quwwatun wa man malaka al-ṣafrāʾa ibyaḍḍa wajhuhū wa ikhḍarra ʿayshahū
Gold is a delight to the eyes, and a support for the spine; and whosoever owns the yellow thing luminous becomes his countenance and verdant the pasture of his life.25
In short, money is a measure by which the values of tangible goods and intangible services can be compared and brought into a balanced relationship (mīzān) with one another in order to facilitate fair, equitable exchange andpreempt witting or unwitting exploitation by one party of the other in the transaction. Hence a measure must be physically and quantitatively well defined, and once defined it must remain so, in order that is can thereby serve as a reliable measure of relative values. This also means that the form of money chosen has to be one that provides its own backing by virtue of its intrinsic physical value without the need for it to be backed by or pegged to some other, external forms of money or guarantors of value.
In fact, money’s role as a medium of exchange is an integral function of its more foundational role as a measure of value.26 For example, the dinar has been defined since classical times as equivalent to one mithqāl of gold, and a mithqāl was equivalent to qirāṭ or carats of gold.27 As noted by Heck, “All mint operations were precisely regulated, and a very elaborate system of glass weights soon evolved to maintain precise standards in coinage production as well.”28
Overview of Some Empirical Aspects of Early Madinan Trade and Commerce
Contrary to the view of Patricia Crone29 and other like-minded orientalists, the Ḥijāz before and at the advent of Islam was a locus of active intra-regional and inter-regional trade between Syria in the north and Yemen in the south,30 and through them, areas beyond the immediate confines of the Arabian peninsular. When the Prophet, Allāh’s peace and blessings be on him, arrived and settled in Madīnaḥ, the Muhājirūn who emigrated with him were generally merchants and traders while the indigenous Anṣār were primarily agriculturists. As for the Jewish tribes of Madīnah, they engaged in both farming and trading and they basically controlled Madinan economy, but that quickly changed when the market of the Muslims was established by the Prophet, Allāh’s blessings and peace be on him.31
Both the gold denarius of the Romans and the silver drachma of the Persians, as well as indigenously produced gold and silver bullion were widely used in trading and commerce. There were large-scale Hijāzī gold and silver mining operations producing liquid capital (gold and silver) by which trade was facilitated. As the economic historian Gene. W. Heck puts it:
The combination of source documentation and residual onsite physical evidence makes readily apparent that one cannot begin to comprehend the functioning of the early Hijazi economy without first perceiving the indispensable role of precious metals.32
According to classical historians like al-Balādhurī and al-Maqrizī, there were attempts by the early caliphs (AbūBakr, ʿUmar, ʿUthmān, ʿAlī) to produce indigenous Islamic currency (coinage) based on Byzantine and Sasanid prototypes. These early Madinan efforts culminated in the comprehensive monetary reforms of the Umayyad caliph ʿAbd al-Mālik between 73-79/692- 698, for he understood very well that the political integrity of the caliphate went hand-in-hand with monetary unity, and this in turn was the foundation of the economic prosperity and resilience of the empire.33
Though the Ḥijāz was generally barren, it was dotted with fertile oases of thriving agricultural production throughout the Madinan and nearby regions at Ṭaʾif, Nakhlah, Khaybar, Fadak, Yanbuʿ, Wādī al-Qurā, al-Suwarqiyyah, Wādī al-ʿAqīq, and elsewhere. Wheat, barley, sorghum, alfalfa, vegetables, citrus, grapes, olives, dates and pomegranates were cultivated. The Prophet, Allāh’s peace and blessings be on him, as well as many of his companions were known to have interests or invested heavily in these farms and gardens. Livestock was also important. The third caliph, ʿUthmān ibn ʿAffān, was reported to have contributed 950 camels and 50 horses to the Islamic army. Both documentary and archaelogical evidence attests clearly to the commercial importance of farming and agriculture. Clearly it must be recognized that some degree of internal economic prosperity based on both production and trade underpinned the success of the Muslim expansion beyond the Arabian peninsular.34
According to Heck, who has based his very informative research on early classical sources,
.as quite diverse—ranging from mining to hunting, fishing...the non-agricultural industrial base of early medieval Hijaz to construction and manufacturing and other productive undertakings....35
As meticulously documented by Heck, important industries included jewelry smithing, blacksmithing, tanning and leather-making, textile production and weaving, and perfumeries.
Heck has also highligted some salient structural elements in the flourishing of early Madinan trade, namely:
...capital, labor, fiducial instruments to meld the two; and a
structured operating environment amenable to the conduct of
productive business operations.36
Here we would like to draw attention to the important role played by fiducial instruments or commercial contracts for applying capital toward the mobilization of labor in the production of goods for the market places.
The principal contract of choice for structuring investment was the muḍārabah or qirāḍ contract (what we would now call venture capital or passive partnership), whereby one or a few investors (owners of capital) would capitalize a commercial, production or manufacturing venture undertaken by entrepreneurs (muḍārib) for a predetermined share of the net profit. This is in effect a contract of partnership between capital (gold and/or silver) and work (skill, labour).
The Prophet, Allāh’s peace and blessings be on him, and many of the companions were well known to have engaged in various forms of this contractual business partnership. Large, inter-regional trading caravans were financed by a mixture of macro- and micro-investments in this way. According to Imam al-Sarakhsī:
People of al-Madinah called this contract of muqaradah, and this is based on a certain tradition regarding Uthman who committed a sum of funds to a man in the form of a muqaradah.... This derives from al-qard, which means cutting. For in this contract, the investor cuts off disposal of this sum of money from his own use [and thereby put it at the disposal of his business agent = mudarib]....The possessor of capital may not always find it possible to engage in profitable trade activity, and those who can engage in it may not possess the capital. Yet profit cannot be obtained except by both capital and trading. Through this contract, both objectives are attained.37
So, contrary to the current view that business undertakings are not possible except through various forms of usurious debt-financing created by the profit maximization financial intermediation of impersonal and disembedded banks, the Islamic historical experience has shown that large scale intra- and inter-regional can be financed effectively and equitably through profit-and-risk-sharing, non-usurious business partnerhip contractual arrangements, as well as other direct people-to-people investment structures.
These structures today are called by various names, such as venture capital, community interest companies, crowd funding, impact investment, independent business networks, social enterprises, community supported agriculture, and so on and so forth, all of which can be again restructured within the ethico-legal framework of the various relevant muʿāmalah contractual forms.38
Conclusion
One major, intangible factor in the flourishing of trade and commerce in early Madīnah was the general climate of mutual trust that obtained between participants in commercial transactions. Usury and usurious contracts were prohibited while equitable business partnership contractual forms were encouraged in its place. The market of the Muslims established by the Prophet, Allāh’s peace and blessings be on him, was effectively (as Heck calls it) a “free-trade zone” where neither taxes nor price controls were imposed.
Monopoly, hoarding, bribery, perjury, fraud, deceit, counterfeiting and so on were all proscribed; and contracts were binding and were to be honoured. All these substantive ethical precepts and the irformal expressions in normative contractual instruments served to “maintain the integrity of market function” so as to ensure a socio-economic exchange that embeds personal interest into the larger context of communal interest, leading to the “provisioning of what suffices the community.”
Futher readings
Abū Ghuddah, ʿAbdul Fattāḥ, ed. Muḥammad ibn al-Ḥasan al-Shaybānī, Kitāb al-Kasb. Aleppo: Maktab al-Maṭbūʿāt al-Islāmiyyah, 1417/1997.
AbūGhuddah, ʿAbdul Fattāḥ, ed. al-Khallāl, AbūBakr Aḥmad ibn Muḥammad (d. 311 H). al-Ḥathth ʿalā al-Tijārah wa al-Ṣināʿah wa al-ʿAmal. Aleppo: Maktab al-Maṭbūʿāt al-Islāmiyyah, 1995.
Abū ʿUbayd, al-Qāsim ibn Sallām. Kitāb al-Amwāl. Trans. ʿImrān Aḥsan Khān Nyazee as The Book of Revenue. Reading: Garnet, 2003.
Allouche, Adel. Mamluk Economics. Salt Lake City: University of Utah Press, 1994.
ʿĀshūr, al-Sayyid Muḥammad, Dirāsatu fī al-Fikri al-Iqtiṣādī al-ʿArabī: Abū al-Faḍl Jaʿfar ibn ʿAli al-Dimashqī. Cairo: Dār al-Ittiḥād al-ʿArabī li al-Ṭibāʿah, 1973.
Badrān, Aḥmad Jābir, ed. Imam Muḥammad al-Shaybānī, Kitāb al-Kasb: al-Iktisāb fī Rizq al-Mustaṭāb. Cairo: Markaz al-Dirāsāt al-Fiqhiyyah wa al-Iqtiṣādiyyah, 2004.
Bonner, Michael. “The Kitāb al-Kasb attributed to al-Shaybānī: Poverty, Surplus, and the Circulation of Wealth.” Journal of the American Oriental Society, vol. 121, no. 3 (Jul.—Sep. 2001), pp. 410—427.
Bonner, Michael. “Poverty and Charity in the Rise of Islam.” Michael Bonner, Amy Singer and Mine Ener, eds. Poverty and Charity in Middle Eastern Contexts. New York: SUNY, 2003, pp. 13—30.
Bonner, Michael. “Poverty and Economics in the Qur’an.” Journal of Interdisciplinary History, vol. 35, no. 3 (Winter 2005), pp. 391—406.
Cizakca, Murat. A History of Philanthropic Foundations: The Islamic World from the Seventh Century to the Present. Istanul: Bogazici University Press, 2000.
Cizakca, Murat. A Comparative Evolution of Business Partnerships : The Islamic World and Europe, with Specific Reference to the Ottoman Archives. Leiden: Brill, 1996.
al-Dimashqī, Abū Faḍl Jaʿfar ibn ʿAlī, al-Ishāratu ilā Maḥāsini al-Tijārati. Ed. al-Bishrī al-Shūrabjī. Cairo: Maktabat al-Kulliyyāt al-Azhariyyah, 1977.
al-Ghazālī, Iḥyāʾ ʿUlūm al-Dīn. Ed. Abū Ḥafṣ Sayyid ibn Ibrāhīm ibn Ṣādiq ibn ʿImrān, 4 vols. Cairo: Dār al-Ḥadīth, 1992.
Hassan, Abdullah Alwi. Sales and Contracts in Early Islamic Commercial Law. Kuala Lumpur: The Other Press, 2007.
Heck, Gene W. Islam, Inc.: An Early Business History. Riyadh: King Faisal Center for Research and Islamic Studies, 2004.
Heck, Gene W. Charlemagne, Muhammad and the Arab Roots of Capitalism. Berlin: Walter de Gruyter, 2006.
Heck, Gene W. Medieval Muslim Money: The Cornerstone of a Commercial Empire. Riyadh: King Faisal Center for Research and Islamic Studies, 2004.
Ibn Abī Dunyā, Abū Bakr. Iṣlāḥ al-Māl. Ed. Muṣṭafā al-Quḍāh. Cairo: Dār al-Wafāʾ, 1990.
Ibrahim, Mahmood. Merchant Capital and Islam. Austin: University of Texas Press, 1990.
al-Jāḥiẓ,AbūʿUthmānʿAmruibnBaḥr,al-Tabṣṣur bi al-Tijārah.Cairo:Maktabat al-Khāniji, 1994.
al-Khallāl, Abū Bakr Aḥmad ibn Muḥammad (d. 311 H). al-Ḥathth ʿalā al-Tijārah wa al-Ṣināʿah wa al-ʿAmal. Ed. ʿAbdul Fattāḥ Abū Ghuddah. Aleppo: Maktab al-Maṭbuʿāt al-Islāmiyyah, 1995.
al-Khallāl, Abū Bakr Aḥmad ibn Muḥammad (d. 311 H). al-Ḥathth ʿalā al-Tijārah wa al-Ṣināʿah wa al-ʿAmal. Ed. Abū ʿAbdillāh Maḥmūd ibn Muḥammad al-Ḥaddād. Riyāḍ: Dār al-ʿĀṣimah, 1404H?
Kister, M. J. “The Market of the Prophet.” Journal of the Economic and Social History of the Orient, CIII (1965).
Lambton, A. K. S. “The Merchant in Medieval Islam.” Locust’s Leg: Studies in Honor of S. H. Taquizadeh. London, 1962.
Lewis, Bernard. “The Islamic Guilds,” Economic History Review, VII (1937).
Marcinkowski, M. Ismail. Measures and Weights in the Islamic World: An English Translation of Walther Hinz’s Handbook Islamische MaBe und Gewichte. Kuala Lumpur: ISTAC, 2003.
al-Muḥāsibi, ʿAbdullāh al-Ḥārith ibn Asad, al-Makāsib wa al-Waraʿ, ed. Muḥammad ʿUthman al-Khist. Cairo: Maktabat al-Qurʾān, 1983.
Naji, A. J. and Y. N. Ali. “The Sūqs of Basrah: Commercial Organization and Activity in Medieval Islamic Society.” Journal of the Economic and Social Histoty of the Orient, XXIV (1981).
Nyazee, Imran Ahsan Khan. Islamic Law of Business Organizations: Partnerships. Kuala Lumpur: Other Press, 2002.
Omer, Spahic. The Prophet Muhammad (pbuh) and Urbanization of Madinah. Kuala Lumpur: IIUM, 2013.
al-Sarakhsī, Abu Bakr Muḥammad b. Aḥmad b. Abū Sahl. al-Mabsūṭ, 30 vols. Ed. Abi Abdillah Muḥammad ʿḤasan al-Shāfiʿī’. Beirut: Dār al-Kutub al-ʿIlmiyyah, 2001.
Setia, Adi. “Muʿāmalah and the Revival of the Islāmic Gift Economy.” Islām and Science (Summer 2011), pp. 67—88.
Setia, Adi. “Jaʿfar ibn ʿAlī al-Dimashqī on Community, Money and Prudent Management in Trading and Spending: Four Excerpts from His Kitāb al-Ishārah ilā Maḥāsin al-Tijārah.” Islām and Science (Summer 2011), pp. 11—32.
Setia, Adi, trans. The Indicator to the Virtues of Commerce. Kuala Lumpur: IBFIM, 2011.
Setia, Adi, “Reviving an Economics for the Common Good: The Science of Earning in al-Shaybānī, al-Ghazālī and al-Dimashqī,” in Islam and Science (Winter 2011).
al-Shaybānī, al-Imām Muḥammad ibn al-Ḥasan. Kitāb al-Kasb. Ed. ʿAbd al-Fattāḥ Abū Ghuddah. Aleppo: Maktab al-Maṭbūʿāt al-Islāmiyyah, 1417H.
al-Shūrabjī, al-Bishrī, ed. al-Ishāratu ilā Maḥāsini al-Tijārati. Cairo: Maktabat al-Kulliyyāt al-Azhariyyah, 1977.
Udovitch, Abraham L. “The ‘Law Merchant’ in the Medieval Islamic World.” Logic in Classical Islamic Culture. Ed. G. H. von Grunebaum. Undena Publications, 1971.
Udovitch, Abraham L. Partnership and Profit in Medieval Islam. Princeton: Princeton University Press, 1970
Adi Setia is Associate Professor, Center for Advanced Studies in Islam, Science and Civilization (CASIS), Malaysia. Email address: This email address is being protected from spambots. You need JavaScript enabled to view it..
1. This paper was originally prepared for the One-Day Intensive Certificate Course on “The Adab and Fiqh of the Islamic Market,” organized by UNRIBA and CASIS, Kuala Lumpur, Malaysia, October 11, 2014.
2. Probably a saddle blanket that also served as a garment.
3. A silver coin or silver piece of between 3 to 4 grams of silver; the weight of the dirham was standardized later during the Umayyad caliphate to 2.97 grams of silver; see M. Ismail Marcinkowski, Measures and Weights in the Islamic World (Kuala Lumpur: ISTAC, 2003), 2.
4. Narrated by Imam Abū Dāwūd, ḥadīth no. 1641, cited in Imām ʿAlāʾ al-Dīn ibn al-Lubūdī (circa 900/1500), Faḍl al-Iktisāb wa Aḥkām al-Kasb wa Ādāb al-Maʿīshah, ed., Suhayl Zakkār (Beirut: Dār al-Fikr, 1997), bound together with his edition of Imam Muḥammad al-Shaybānī’s Kitāb al-Kasb; trans. Adi Setia and Mahdi Lock, The Virtue of Working for a Living (Kuala Lumpur: IBFIM, 2012), 10-11.
5. Modern day beggary comes in many forms, euphemised as donation, grant, aid, subsidy, charity, scholarship, welfare and so on; a separate article will be written to analyse this sorry phenomenon, inshāʾ Allāh.
6. Muslim, Ṣaḥīḥ Muslim, “Kitāb al-Jihād wa al-Siyar,” Ḥadīth No. 4375; and Ṣaḥīḥ al-Bukhārī, “Kitāb al-Hibah,” Ḥadīth No. 799, cited in Spahic Omer, “Madinah Market during the Prophet’s Time (Part 1),” published online at http://www.medinanet.org/index.php/islamic-issues/172-madinah-market-during-the-prophets-time-part-1, footnote 14; see also Spahic Omer, The Prophet Muhammad (pbuh) and Urbanization of Madinah (Kuala Lumpur: IIUM, 2013), especially Chapter 6 on “The Significance and Role of the Madinah Market.”
7. Al-Kattānī, al-Tarātib al-Idāriyyah, vol.2 p. 403, cited in Spahic Omer, Part 1, footnote 22.
8. al-Hindī, Kanz al-ʿUmmāl, 5: 488, no. 2688, cited in M. J. Kister, “The Market of the Prophet,” in Journal of the Economic and Social History of the Orient, vol. 8 no. 3 (December 1965), 272-276, on 276n2. (http://www.kister.huji.ac.il/content/market-prophet). For more details, see also the informative, well documented article by Dr. Spahic Omer, “Madinah Market during the Prophet’s Time, ”(Part 1 & 2), ”published online at http://www.medinanet.org/index.php/islamic-issues/172- madinah-market-during-the-prophets-time-part-1; and at http:// www.medinanet.org/index.php/islamic-issues/171-madinah-market- during-the-prophets-time-part-2; see also Spahic Omer, The Prophet Muhammad (pbuh) and Urbanization of Madinah (Kuala Lumpur: IIUM, 2013), especially Chapter 6 on “The Significance and Role of the Madinah Market.”
9. Adi Setia, trans. (of Imām Muḥammad ibn al-Ḥasan al-Shaybānī, Kitāb al-Kasb), The Book of Earning a Livelihhod (Kuala Lumpur: IBFIM, 2011), 56-57 and 83-84.
10. Relli Shechter, “Market Welfare in the Early-Modern Ottoman Economy: A Histographic Overview with Many Questions,” in Journal of the Economic and Social History of the Orient (JESHO), 48: 2 (2005), 253-276.
11. For example, Abū Bakr ibn Zayd al-Jurāʿī al-Ḥanbalī (d. 883H), Tuhfat al-Rāki ʿwaal-Sājid bi Aḥkāmal-Masājid (Kuwait: Ministry of Endowments and Islamic Affairs, 2004).
12. Yaḥyā ibn ʿUmar al-Andalusī al-Kinānī (213-289H), Kitāb al-Naẓar wa al-Aḥkām fī Jāmīʿ Aḥwāl al-Sūq (Tunis, 1975); see also the article on him by Faruk Bal, “Hisbah Literature as a Source of Islamic Economics: Yahya Omar al-Andalusi’s al-Ahkam [sic] al-Suq,” in Turkish Studies, vol. 8, no. 12 (Fall 2013), 133-149 (); and also the informative article by, Abdul Azim Islahi, “Perception of Market and Pricing among the Sixteenteh Century Muslim Scholars,” in Thoughts on Economics, volume 18, number 1, pp. 33-41; also accessible online at: http://www.ierbbd.org/wpcontent/uploads/2010/03/journals/Journal%20Vol%20 18%20No%201/PERCEPTION%20OF%20MARKETAbdul%20 Azim%20Islahi.doc.
13. ʿAbd Al-Raḥmān b. Naṣr Al-Shayzarī, Nihāyat Al-Rutbah fī Ṭalab al-Ḥisbah (The Utmost Authority in the Pursuit of Hisbah). Trans., R. P. Buckley, The Book of the Islamic Market Inspector (Oxford: Oxford University Press, 1999); M. Izzi Dien, The Theory and the Practice of Market Law in Medieval Islam: A Study of Kitāb Nisāb al-Iḥtisāb of Umar b.Muḥammad al-Sunamī (Wiltshire: E. J. W Gibb Memorial Trust, 1997). See also the paper by Abdul Azim Islahi, Islahi, Abdul Azim, “Works on market supervision and sharʿiyah governance (al-hisbah wa al-siyasah al-sharʿiyah) by the sixteenth century scholars,” in Quarterly Journal of the Pakistan Historical Society , vol. 54, no. 3 (July 2008), pp. 7-20.
14. i.e., the market places of the Muslims.
15. Imām al-Ghazālī, Kitāb Ādāb al-Kasb wa al-Maʿāsh, trans. Adi Setia, The Book of the Proprieties of Earning and Living (Kuala Lumpur: IBFIM, 2013), 20.
16. Student of Imām Abū Ḥanīfah and Imām Mālik, and teacher of Imām al-Shāfiʿī.
17. Al-Shaybānī, The Book of Earning a Livelihood, trans. Adi Setia (Kuala Lumpur: IBFIM, 2012), 8-9, 56-57.
18. Syed Muhammad Naquib al-Attas, “Islam: the Concept of Religion and the Foundation of Ethics and Morality,” in Prolegomena to the Metaphysics of Islam: an Exposition of the Fundamental Elements of the Worldview of Islam (Kuala Lumpur: ISTAC), 43n3.
19. Idem, 56-57.
20. See the articles in this book and the relevant references in the footnotes therein.
21. Cf. the “naturalistic” analysis of ‘community’ in Tony Lawson, “Ontology and the Study of Social Reality: Emergence, Organisation, Community, Power, Social Relations, Corporations, Artefacts and Money,” in Cambridge Journal of Economics, 36 (2012), 345-385.
22. al-Baqarah, 2: 267.
23. The Book of Earning a Livelihood, 56-57, and 83-84.
24. The Book of the Proprieties of Earning and Living, 100-101.
25. Jaʿfar al-Dimashqī (circa 6th century H), al-Ishārah ilā Mahāsin al-Tijārah, trans. Adi Setia, The Indicator to the Virtues of Commerce (Kuala Lumpur: IBFIM, 2011), 11-15.
26. This will be elaborated in a separate paper, “The Concept of Money in Islam,” inshāʾ Allāh.
27. The classical gold dinar of one mithqal in weight is equivalent to 4.233 grams of gold; in the Arabian peninsular, Syria and Egypt, one mithqal was equal to 24 qirats, hence one qirat is 0.176 grams; see M. Ismail Marcinkowski, Measures and Weights in the Islamic World (Kuala Lumpur: ISTAC, 2003), 2-3. In any case, we need to revive—in vision and in action—the classical Islamic science and fiqh of weights and measures in contemporary terms.
28. Gene W. Heck, Medieval Muslim Money, The Cornerstone of A Commercial Empire: An Inquiry into the Evolution of Islam’s Monetary Policy as Shaped by the Precious Metals Indigenous to the Dar al-Islam (Riyadh: King Faisal Center for Research and Islamic Studies, 2004), 33.
29. Patricia Crone, Meccan Trade and the Rise of Islam (NJ: Princeton University Press, 1987); see the review of it in R. B. Serjeant, “Meccan Trade and the Rise of Islam: Misconceptions and Flawed Polemics”, Journal of the American Oriental Society, 1990, p.472.
30. As alluded to in the Qurʾānic verses, Quraysh: 1-4.
31. For more details of the early Madinan market, see Spahic Omer, The Prophet Muhammad (pbuh) and Urbanization of Madinah (Kuala Lumpur: IIUM, 2013), especially Chapter 6 on “The Significance and Role of the Madinah Market”; and more generally Gene W. Heck, Islam, Inc.: An Early Business History (Riyadh: King Faisal Center for Research and Islamic Studies, 2004).
32. Gene W. Heck, Medieval Muslim Money, xxii.
33. Gene W. Heck, Medieval Muslim Money, 23-33.
34. Heck, Islam, Inc., 35-78 passim.
35. Ibid., 55ff.
36. Ibid., 79ff.
37. Cited in Heck, Islam, Inc., 112.
38. To be elaborated in a separate paper, “Structuralization of Muʿāmalah Contractual Forms in the Modern World,” inshāʾAllāh.