Private Ownership in Islam

Private Ownership in Islam
01/10/2009

Economic freedom in Islam
The limits of private ownership in Islam
Charitable donation in the Islamic economic system
Using the private sector in labor and production
Supervising and channeling economic freedom
Free economy and the political fate of society
The meaning of capitalism in current orthodoxy of the world
Economic freedom in western capitalism
Economics in socialist countries

Private Ownership in Islam

Economic freedom in Islam

In Islamic communities, people are free to engage in economic activities, but not in the absolute sense of the word. There are limits and restrictions. After all, any free activity is somehow confined. These restrictions and limits have been defined in a particular way in Islam. Similarly, in socialist societies there are certain restrictions on ownership of wealth and possessions, which are different from Islamic restrictions. It would be appropriate to suggest that Islam’s view of economic freedom is as inconsistent with the communist and Marxist view of economic freedom as it is with the school of capitalism which is currently the dominant paradigm in the west. What is being practiced in the west is not acceptable in Islam. Capitalism, in the western sense of the word, is by no means endorsed by Islam. On the contrary, confronting capitalism is a recurring theme in numerous Islamic rulings. The paradigm of Islamic economics cannot be found in western capitalism and the existing types of capitalism in the world. In Islamic communities, the limits on free economic activities are the same restrictions which have been specified for haraam business and appropriation in fiqh books – that is, business activities that involve usury and cheating, result from ignorance and speculation, and are based on unlawful earnings. Such rules have been specified in Islam. These are the restrictions on business deals and free economic activities in Islamic societies.

It is haraam to trade in certain goods. For example, it is haraam to trade in wine and other such items that have been declared haraam and unclean, except in rare cases specified in Islam. Similarly, except in rare cases, it is haraam for individuals and the private sector to trade in goods that are not subject to private ownership and belong to the Islamic government – such as the booty obtained from infidels. There are other such rules clearly explained in Islamic fiqh that have specified whether and to what extent a certain economic activity is lawful or unlawful, even when state laws and supervision do not restrict the activity.

Economic freedom in an Islamic society necessities that the Islamic government adopt policies and pass laws that enable all members of the Islamic society to engage in free economic activities. This is one of the characteristics that distinguish the Islamic economic system from western economic systems. In order to create genuine economic freedom in society, the monopoly of capitalism has to be prevented. The ground should be prepared for the majority of the people or all individuals capable of economic activities to benefit from the available natural resources.

The Commander of the Faithful said, “I have never seen bountiful wealth anywhere without trampled rights beside it.” This tradition has a precise and sublime meaning. Some people falsely think this tradition means that bountiful wealth is the result of stealing from other people and appropriating what belongs to them, and that there are always some poor people around a wealthy usurper. They argue that the tradition is problematic. They reason that they know some wealthy people who have not obtained their wealth through stealing and usurping what belongs to other people. They reason that the wealthy people they know have gained their wealth through their own efforts.

That is rooted in a misunderstanding of the tradition. The tradition means that wherever there is bountiful wealth, there will be great wealth and facilities. Wealth give their owners the opportunity to obtain more wealth, thereby taking this opportunity away from other people. Those who have a large capital in society are more capable of generating wealth. Such people are better able than poor people to take advantage of the dormant wealth that belongs to all members of their society. Therefore, those who enjoy bountiful wealth, have more opportunities, have more access to facilities, and are free to engage in economic activities. The laws are formulated with the interests of these wealthy people in mind. As a result, the majority of the people – that is, those who do not have any wealth – lose the opportunity to generate wealth.

The meaning of the tradition is right, regardless of whether or not it was really said by Imam Ali (a.s.). Therefore, giving economic freedom only to those who have the wealth to make use of their freedom is not an appropriate way to promote free economic activities in an Islamic society. Rather, in addition to allowing financially capable individuals to engage in economic activities, the laws and conditions of an Islamic society and the quality of its interactions must be such that all people – that is to say, all those who are capable of engaging in economic activities – are enabled to engage in free economic activities and benefit from their activities.

The limits of private ownership in Islam

Private ownership is respected in Islam, but it has also been restricted. Restrictions do not mean that private ownership has been specified in rials, dollars, dinars, or derhams. The value of these currencies does not remain the same. Private ownership is limited in order to stop it from causing losses. According to the law, if private ownership causes losses for the Islamic Ummah or a group of Muslims, this ownership will have to be prevented to the extent that it does not cause any losses.

Private ownership is respected in Islam as long as it does not lead to speculation, exploitation, discrimination, disrespect to humans, and extremism on the part of the rich. Private ownership is respected as long as it does not cause the rich to feel superior. It is the negative results of private ownership that are considered to be bad, not private ownership itself. Therefore, these are the factors that define the limits. Islam has prevented these side effects. It has condemned lavish people and has rejected wastefulness. It has allowed rulers of Islamic communities to prevent wastefulness, exploitation, discrimination, speculation, and extremism. Therefore, the rulers of Islamic communities and the heads of Islamic governments have been given the opportunity to prevent extremism through their decrees.

The Islamic Republic does not prohibit private ownership or economic efforts and activities of individuals. In the mean time, society gradually progresses towards the welfare of the needy. In free Islamic economics, economic freedom requires that the people bear the burden of economic responsibilities of society.

Charitable donation in the Islamic economic system

In an Islamic country, people are entitled to engage in free economic activities and they are not considered government employees. All people are allowed to work for themselves and make money. As a result, it is the people who remedy the financial and economic shortcomings of an Islamic society. That is what charitable donation means. The Quranic term charitable donation is the result of this kind of economic activities in society. If it is the people who make money, then they should be the ones who should remedy the shortcomings. Charitable donation is the eliminating of these shortcomings.

Charitable donation is an Islamic principle. Charitable donation and managing the economic affairs of society lie on the shoulders of the people, and it is the people who are directly responsible for eliminating the economic shortcomings. If something happens in an Islamic society and the government suddenly confronts a financial problem, this financial need has to be addressed by the people. If a war or epidemic breaks out in society or when an emergency comes up, according to Islam, the people must make as much contribution as they can to address the problems. Of course since all people are not at the same level, those who are better-off should take on a greater portion of the responsibility.

From an Islamic point of view, accumulation of wealth and avoiding charitable donation goes against the values and is considered a sin, and maybe a major sin. Just because a person is working with halal capital does not give him the permission to accumulate wealth through legitimate activities and refuse to spend it for the sake of God and public interests while other people in his society are in need of his wealth. Charitable donation is a principle in Islam. People must spend their money for the sake of God. It is not forbidden to engage in business deals and accumulate wealth. On the contrary, people are encouraged to generate wealth, but they are also required to spend it for the sake of God. Islam teaches people to use what they earn to live an ordinary, or even somewhat comfortable, life. But they should spend their excess money to promote public interests of their society. Islam has expressed its contempt for those who earn a lot of money and then spend all of it in an extravagant way to buy expensive meals, clothes, cars, and houses or simply accumulate wealth without spending it. From an Islamic point of view, avoiding charitable donation is a hideous act, and if it is accompanied by accumulation of wealth, that wealth is haraam.

Allah says in the Quran, “Surely Allah loves not those who are proud and boastful, who are miserly, and who bid people to be misers.” This stinginess does not mean that they refuse to give away what they are required to donate according to the rules of sharia. Rather, it means that they should donate more than what has been specified in sharia. If the Muslim community is in need of their wealth, they should donate more than what has been specified in Islamic sharia.

Some people have obtained their wealth by using public funds of society, through legitimate ways. It is not acceptable if these people keep their wealth for themselves, while society is in need of their wealth. Such an action cannot be justified from an Islamic point of view. On the contrary, what Islam stipulates is the polar opposite of this. There is a Quranic verse which says, “And those who hoard up gold and silver and spend it not in Allah’s way, announce to them a painful chastisement.” Maybe gold and silver have been mentioned as examples. Maybe the chastisement that applies to “those who hoard up silver and gold” applies equally to those who hoard up their money, wealth, and capital and fail to donate their money for the sake of Allah while their society is in desperate need of their wealth. The verse continues saying, “Announce to them a painful chastisement.” If hoarding up silver and gold is not a major sin, why do they have to suffer from a painful chastisement? The Quran tells them to wait for a painful chastisement. This chastisement could be the natural result of their bad actions in this world, which will not of course afflict them alone and will harm all members of their society. This chastisement could also be an affliction in the hereafter. Probably, the chastisement is a combination of both types of affliction – that is to say, their action will result in painful chastisement both in this world and in the hereafter. Therefore, donation is necessary and obligatory.

Using the private sector in labor and production

The private sector must be encouraged to step into the arena of labor and production. A large proportion of the production companies of the country are owned by the government. Of course some of the organizations that have been specified in the Constitution should remain under the control of the government. Nevertheless, these organizations are few in number. The concentration of organizations in the public sector is due to mismanagement. The private sector must be the pioneer of labor and production in the country – except in the case of particular organizations specified in the Constitution that have to be managed by the government. Of course it should be clear that privatization does not mean transferring the functions of the public sector to the private sector without paying attention to the price, the policies, the interests of the country, and how this transfer will be carried out. Rather, investors have to be encouraged to step into the arena, and the resources have to be distributed in a way that the private sector is encouraged to invest. This process has to be carried out carefully. The organizations that are going to be privatized should be selected appropriately. And they should investigate whether a particular organization is appropriate for privatization or whether it is capable of increasing its production after being privatized. If the organization has the capacity for privatization, it should be given the necessary means. Therefore, selection should be based on qualifications, not on friendship or political connections. If these factors are taken into account, the private sector will undoubtedly be emboldened and will step into the arena.

Supervising and channeling economic freedom

All types of freedom in an Islamic society must be channeled and supervised by the ruler of the Islamic community. What is the purpose of this supervision? This supervision is to ensure that economic freedom will not lead to corruption and will not restrict others’ freedom. It is the same with freedom of expression, political freedom, and cultural freedom. Undoubtedly, from an Islamic point of view, it is not right to interpret economic freedom as freedom for those who are capable of economic activities to produce what they want and deliver, sell, or consume their products with no restraints. Islam has determined that economic freedom and private ownership – which it has bestowed on all members the Islamic community as a right – should be accompanied by close governmental supervision over all economic activities. That is to say, the government must be careful so that some people do not misuse this economic freedom.

Even when consuming a product, one should take care not to be wasteful. Of course limited extravagance is just a personal sin. If something is used wastefully in a house, this constitutes a sin and it is haraam. But it is the Islamic government’s responsibility to stand up to this extravagance if this haraam action is so serious that it threatens the economic system of the Islamic society, increases poverty, prepares the ground for the deprivation of a large proportion of the society, and destroys the products that have been produced with a lot of efforts.

Of course this Islamic view is not confined by the borders of the Islamic community. It applies to the world at large. The countries that are currently suffering from extravagance in foodstuffs should be stopped if the global economic system is fair and if there are powerful international organizations. Some wealthy countries consume nearly 70 percent of the world’s foodstuff while their people constitute only 35 or 36 percent of the world population. They have to be stopped if there are some organizations and moral governments in the world that want to use their power to benefit humanity and nations across the world.

Therefore, free economic activities and personal ownership in Islam do not mean that people are entitled to spend as much as they like even if their extravagance causes some people to become ill or starve to death or if their extravagance deprives other people of the necessities of life. This is not acceptable from an Islamic point of view, and it is forbidden.

Free economy and the political fate of society

In Islam, free economic activities are never allowed to transgress on the political fate of society or disrupt the political structure of society. Capitalism is currently in full swing in western countries. Major capitalists are in fact the managers of the political systems of advanced countries and the ones acting behind the scenes. Of course some of these capitalists make their way into the government as well. The current systems of the world – like the American system as well as other systems – are a case in point. Some politicians in the government are themselves capitalists. Some of them are the major stakeholders of big oil and non-oil companies. Or they may not be in the government, but they control the elections behind the scenes. Presidents are determined with their help. They have control over the promotion or demotion of political figures in political arenas. The laws that are passed are in line with their interests and opinions. The western world should be described as the world of capitocracy. Capitalism may not be an exact description of their system. Capitocracy and domination of companies and capitalists over social affairs are the distinctive characteristics of the western capitalist world. This is unacceptable from an Islamic point of view, and anything that may lead to this state of affairs should be prevented.

The meaning of capitalism in current orthodoxy of the world

Capitalism means using the capital which has been accumulated through exploiting people. That is to say, capital is the means of exploitation. Capital only enables its owner to exploit other people. Exploiting other people is a kind of oppression, and oppression is haraam. Therefore, this type of capitalism has no place in Islam. That is the meaning of capitalism in current orthodoxy of the world. If private ownership causes corruption, oppression, and discrimination, state ownership may also lead to the same results. Even in the countries where ownership is the government’s prerogative, there is another type of corruption, oppression, and discrimination among another group of people.

Economic freedom in western capitalism

In western economic systems, although people are free to engage in economic activities, at least according to their laws or claims, this freedom does not in fact belong to all people. Their natural resources are not easily accessible to people from different social backgrounds. Not everyone can benefit from these natural resources when they focus their efforts on using them. Rather, those who are truly free are the ones who have great amounts of wealth and who have control over the economic and political policies of society. And these people made it difficult for the entire society to make use of these resources. Therefore, like most of the third world countries, in capitalist societies – both advanced and backward capitalist societies – the majority of the people are living in abject poverty. While large groups of people are suffering from abject poverty, unemployment, deprivation, and housing shortages, a limited number of people freely engage in economic activities and accumulate wealth. These few people increase the number of their mines, companies, and properties. All natural resources are in fact exploited by a small portion of society. Other people, including retailers and laborers, only use a negligible part of their vast wealth. These retailers and laborers do not have the opportunity to engage in production, constructive work, and genuine production of wealth.

Economics in socialist countries

In socialism and schools of thought originating from Marxism, there are some restrictions on private ownership, but those restrictions are different from Islamic limits. For example, it is forbidden there to own any means of production. That is to say, no one is allowed to own such things as land and companies that can be used to produce something. In Marxism and socialist economics, trading is prohibited and is considered to go against the values. In these schools of thought, it is forbidden to buy something for oneself or for someone who has a capital, no matter whether the capital is small or substantial. In Marxism, buying and selling are considered a kind of unpleasant and unacceptable brokerage.

In socialist countries and in counties where the government is in charge of everything – that is, all means of generating wealth, all companies, and all land – and where the people are the employees of the government, we should not expect anything from the people in case of war or other emergencies.

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