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Introduction
Business ethics is a field of study that analyzes all the moral and ethical principles that govern the conduct of all the involved parties in commercial relations. This basically implies that business ethics is normative and it requires the formulation and application of certain standards which establish ways of deciding between right and wrong. This essay seeks to analyze the concept of business ethics in the Islamic religion as an indication of how decency, morality and fairness have been reflected in Islamic commercial transactions. An evaluation of what is allowed and what is disallowed in the religion will be conducted as a way of explaining why business transactions involving Muslims have to be conducted with certain levels of specificity. Most of the research will be guided by studies of different forms of literature. However, most of the consultations will be from the Quran and the Teachings of the Prophets.
Ethics in Islam
Islam is one of the religions that greatly emphasize ethical values in all elements of living. Moral codes and ethical codes are entrenched in all elements of a practitioners life, and these are substantiated by scriptural presence in verses of the Islamic Holy book, the Quran. From Islamic teachings, individuals are encouraged to be conscious of how they carry themselves both in private and public as this will determine the nature of their relationship with fellow human beings. There are rules governing personal life, other social dealings. When it comes to business relations Islam has a categorical value-based system that dictates how individuals on either side of the transaction will behave in order for fairness to be attained as well as for the relation to be genuinely ethical. The tenets of Islam as a religion outline specific principles that have to be maintained in regards to business transactions. These elements have been explained below:
Freedom of Enterprise
Muslims are allowed to choose make their own decisions when it comes to economic enterprise. Every practitioner of the faith is subject to the freedom of earning a livelihood and this, as spelt by the requirements of the religion can be attained through entrepreneurship or employment. However, each and every undertaking that an individual involves him/herself in must reflect a sense of responsibility. Persons are allowed to take up any career or business as long as works in tandem with the code of conduct outlined by the specific profession that the individual chooses. This basically implies that the individual chooses to do things that are allowed by law and stays away from those things that are considered illegal as per provisions of the law. The Quran and the teachings of the Prophet are used to establish the parameters that distinguish what is allowed and what is illegal whenever it comes to distinguish means of earning livelihoods. These stipulations also ban everything that is by average social standards considered illegal or unacceptable.
The religion disapproves everything that harms both traders and consumers in a market. This makes the element of a free market prevalent such that individuals are able to earn decent livelihoods without the governments involvement. The tenets of the religion also set the boundaries needed to ensure that incidents of injustice and malpractice are well punished. To a great extent, Islam tries to avoid any ties with states and regulations established by politically/religiously established governments. Individuals are left to take guidance from the Quran in matters related to business and it is only when they fail to abide by its teachings that Islamic states take measures to structure the market transactions based on Islamic principles. In this regard, freedom of enterprise in Islamic markets is modulated by teachings found in the Holy Quran as well as by the precincts of the temporal authority. In the early days of the Islamic religion, the aspect of market control was fundamentally carried out by the institution of the Muhasbah (Ayub 2009). The setup of the Muhasbah bore various functions with the topmost role being maintaining an eye on negative deeds that prevailed the market and society, as well as assessing the incidence of unfairness and other malpractices in the market.
Tenets relating to commercial transactions
Islam as a religion has established a framework that modulates the conduct of both producers and consumers of economic products. A typical Islamic market has rules and regulations that address the securities of both the purchaser and the seller. In addition, there are various norms of ethical discipline in commercial transactions involving practitioners of Islam, without which any business undertakings will be viewed as imperfect in the light of ethical excellence. The section below describes some of these tenets:
Earning Legitimately
Islam emphasizes the code of legal and illegal in business relationships. Some of the verses in the Quran that indicate the religions rejection of the unlawful acquisition of property include:
Do not devour one anothers property wrongfully, nor throw it before the judges in order to devour a portion of others property sinfully and knowingly , (Quran 2:188). Another verse that supports the same is, Do not devour anothers property wrongfully unless it be by trade based on mutual consent , (Quran 4:29). The two verses above indicate Islams ban against the illegal acquisition of property. This code was emphasized by Prophet Mohamed who when queried about the best way to attain prosperity answered, a mans work with his hands, and every legitimate sale (Ahmad No: 1576). The Prophets teachings also advice individuals to steer clear of paths that may appear uncertain (Tirmidhi No: 2442). One of the business practices that are extremely condemned in Islam is the charging of interest for lent money. Teachings from the Quran see interest as a form of exploitation and oppression, and strictly forbid it.
Mutual Consent
In Islam, for a business transaction to be considered valid, all of the involved parties must consent to the deal. As such, any transaction that is sealed as a result of coercion is considered unlawful. The practice of taking advantage of another persons despair and overcharging them is regarded as exploitation and is strictly forbidden.
Truthfulness
Islam teaches its faithful to always be truthful in any business transaction that they are involved in. Any trader that conducts himself in a truthful manner is highly regarded and is held in the same esteem as martyrs. From teachings in the Quran it is said that Allah only approves business transactions where both the buyer and seller maintain truthfulness to each other (El-Gamal 2006). Wholesome lies and omission of certain truths to gain business advantage results in automatic loss of divine blessing.
Trustworthiness
Trustworthiness is among the fundamental principles of ethical conduct in business transactions involving individuals of the Islamic faith (Morris and Salam 2008, 87). Trust is considered as a prima moral virtue and is expected of all Muslims in all their endeavors. Individuals are expected to be sincere in the dispensation of their duties and at the same time maintain clean intentions. Persons are encouraged to avoid fraud and deception as means of acquiring wealth. The seller of a product is expected to reveal both the strengths and weaknesses of a product to the buyer, so that the latter can make informed consent when purchasing the item.
Generosity and mercy
According to the Islamic faith individuals are expected to be lenient and generous in commercial relationships. Persons claiming debts are expected to do so in ways that will not embarrass the debtor. In this regard, the debtor is supposed to be polite and generous when asking for his money. The debtor on his part is required to pay back all debts on time, as well as show appreciation to the creditor for allowing him time to repay the debt.
Fulfilment of business obligations
Islam gives a lot of prominence to fulfilling of promises and contractual agreements. Muslims are expected to maintain their business transactions truth, honesty and integrity. The Quran teaches that all persons have a moral responsibility to fulfill all their undertakings. One of the verse that clearly emphasizes this message states, If he makes a promise, he breaks it, and if he makes a compact, he acts treacherously, (Bukhari, No: 32). For the interests of both parties in a business transaction to be well safeguarded, all the pertinent details of a deal need to be well spelt out including the quantity and quality of deliverables, as well as the timeframes of contractual fulfillment. Therefore, the buyer must have the commodity for sale with him and an exchange should occur with the buyer without any disputes.
Prohibited business
Aside from stipulating the basic ethical practices governing fair trade, there are a number of items that are outlawed in both the Quran and prophetic teachings. These are briefly explained below:
Sale and purchase of prohibited items
There are certain things such as carrion, pig meat and any other animal or bird that either died of natural causes or was not properly slaughtered are listed as prohibited items and individuals are banned from trading in them (Visser and Visser 2009). Stolen items are also considered as illegal and persons who sell or purchase them are seen to act in unethical behaviour.
Sale of items bearing high risk potential
In Islam, individuals are only expected to sell only commodities that are present at hand. In the same way, traders are forbidden from selling items whose consequence is not clear or those whose purchase is considered risky (Hassan and Lewis 2007). For instance, the sale of fruits before they fully mature or ripen, or fish that have not yet been caught is disallowed.
Fixing of prices
In Islam, traders are allowed to make profits to certain justifiable amounts. It therefore goes that taking advantage of monopoly in the market, or the shortage of certain commodities in order to increase ones profits is considered illegal. Public authorities are allowed to intervene in markets that have been infiltrated with traders involved in unfair practices.
Hoarding of food items
The storage of foodstuffs while waiting to sell it when prices rise so that one gets the maximum level of profit is disallowed in Islam and anyone involved in such practices is seen to be involved in unjust financial conduct, hence contravening the code of ethics (Hassan and Lewis 2007).
Conclusion
Each and every society has a number of ethical and moral standards determining how individuals relate with each other when conducting business transactions. However, Islamic societies are more humane and less utilitarian than those of most secular states. The rules guiding commercial transactions for Muslims have remained unchanged since the prehistoric times and they are bound to be in operational for all time. This paper has analyzed the rules governing business transactions in Islam. To this end, various items that have been recommended by the religion and those that have been illegalized in Islam have been given a critical mention.
Reference List
Ahmad, Teachings of the prophets, n.d, in Hadith Encyclopaedia Version 2.1, Dubai: College of Islamic Banking, World Al-Lootah University.
Ayub, Mohammed, 2009, Understanding Islamic Finance, John Wiley and Sons El-Gamal, Mahmoud A., 2006. Islamic finance: law, economics, and practice. Oxford: Cambridge University Press.
Hassan, Kabir and Lewis, Mervyn K., 2007. Islamic finance. Massachusetts: Edward Elgar Publishing.
Morris, Virginia B. and Salam, Monem. 2008. A Muslims guide to investing & personal finance. New York: Lightbulb Press, Inc. Quran 2:188; 4:29.
Tirmidhi, Teachings of the prophets, n.d, in Azmi, Sabahuddin(Ed) Hadith Encyclopaedia Version 2.1, Dubai: College of Islamic Banking, World Al-Lootah University.
Visser, Hans and Visser, Herschel, 2009. Islamic finance: principles and practice, Massachusetts: Edward Elgar Publishing.
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