Concept of Ownership

As for ownership, one has to dispose of his wealth rationally or stand the chance of it being expropriated by the society (either by individual action by the owner’s relatives through the courts, or by state action).

Wealth can also come into the possession of any individual through his work - inheritance and grants can also bring wealth to an individual but they originally were the results of work. All forms of activities that allow an individual to acquire wealth in a ‘Haram’ way are strictly prohibited, these include;

• Monopoly in all forms
• Hoarding (especially with food stuffs which are not allowed to stay in traders’ hands for more than 40 days).
• Gambling and betting in all forms.
• Cheating in quality, quantity, weight or any specifications of the goods and services traded or acquired or disposed of.
• All trade malpractices (e.g. cornering the market, creating artificial scarcity etc).
• Speculation in all forms that might be used to scoop windfall profits, not justified by the real value of the assets traded or being developed. These might include modem practices of closed deals in forward sale of currencies, commodities, shares etc., spot sales or open deals subject to risk are another matter.
• All types of fraudulant sale or sale taken as a trick to charge interest (simultaneous sale and purchase to obtain a margin for the seller). One notable exception of a permissable forward sale is that of Salam sale to be dealt with later.
• Lastly of course, interest in all forms, and levels is strictly prohibited in Islam. So is the simultaneous trading in precious metals (gold and silver) which can be used to gain interest in a back doorway. The ban on interest is crucial to the preceding prohibitions because it can be used as a justification and means to gain financial ‘assets’ —the premium on capital —in most of the cases e.g. currency speculation, forward sales.

Fiqh, the jurisprudence part of Shari’a, is very detailed and specific in outlining the ways to prohibit these Haram practices. The legal system and economic organisation of an Islamic state should always reflect these prohibitions regardless of time or type of social-political organisation adopted.

As for the way ownership comes to individuals, Islam has clear moral persuasions (i.e. not to make accumulation of wealth the sole aim in life - dispose of wealth in a rational way, not miserly or extravagantly etc.) but the legal, economic and administrative systems devised by the Islamic state should organise the way wealth comes to individuals so as to comply with the above mentioned prohibitions.

Source: Islamic Banking, Abdur Rahim Hamdi. Republished with permission.