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Economic freedom in Islam

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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.

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