Quran and Hadith on Economics

Environmental Ethics in Quran and Hadith

If we want clean air, fresh water and proper sanitation for ourselves, then we must also like these things for others living in the present age as well as those who are to come in this world in the next generations. Prophet Muhammad (PBUH) said that a Muslim is one who avoids harming Muslims with his tongue and hands. (Sahih al-Bukhari, Vol 1, Book 2, Hadith No. 9).

The realization of the enormous value of nature and environment even if it is in no one’s private ownership is vital for fostering a culture of care and responsibility towards the environment. Qur’an refers to nature as ‘Ayat’ (signs). Affirmative actions towards preserving and conserving environment are needed as a culture for achieving environmental sustainability. Islamic philosophy of life provides the necessary impetus and deterministic rewards for affirmative action towards promoting positive externalities in the environment. Prophet Muhammad (PBUH) said: “Whoever plants trees, God will give him reward to the extent of their fruit.” (Musnad, Vol 5, Hadith No. 415).

Climate change and environmental degradation is a slow and cumulative process. To protect environment, the efforts also need to be cumulative and consistent. A self-centric secular worldview encourages the self-centric use of private property resources. However, even small things done collectively and consistently can have a larger effect. The two-worldly view of life in Islam encourages socially responsible behaviour as one of the prime determinants of salvage in the life hereafter. Prophet Muhammad (PBUH) said: “If the Resurrection were established upon one of you while he has in his hand a sapling, then let him plant it.” (Musnad Ahmad, Hadith No. 12491).

Qur’an informs that other species also praise and thank the Creator for the blessings. Qur’an says: “Do you not see that to Allah bow down in worship all things that are in the heavens and on earth – the sun, the moon, the stars; the hills, the trees, the animals; and a great number among mankind?” (Al-Qur’an, Al-Hajj:18). The single source of creation as encapsulated in the concept of Tawheed undermines the tendency to feel ‘fittest survivors’. It brings humility, congeniality and peaceful co-existence with other life in the environment. Prophet Muhammad (PBUH) said: “A good deed done to a beast is as good as doing good to a human being; while an act of cruelty to a beast is as bad as an act of cruelty to human beings”, and that: “Kindness to animals was promised rewards in life hereafter.” (Mishkat al-Masabih; Book 6; Chapter 7, 8:178).

In another narrative, the Prophet (PBUH) was asked whether acts of charity even to the animals were rewarded by Allah or not. He replied: ‘yes, there is a reward for acts of charity to every beast alive.’ (Sahih Muslim, Book 26; Hadith No. 5577).

Killing animals for fun or mere sport is strictly disallowed in Islam. In order to protect land, forests and wildlife, the Prophet Muhammad (PBUH) created inviolable zones known as himā and haram, in which resources were to be left untouched. Himā applies particularly to wildlife and forestry and usually designates an area of land where grazing and woodcutting are restricted, or where certain animal species are protected.

Almost half of the food goes wasted while on the other hand, one out of every nine people in the world suffers from hunger, according to the Food and Agriculture Organization. Islamic principles discourage conspicuous consumption on luxuries. The Qur’an says: “But waste not by excess: for Allah loveth not the wasters.” (Al-Qur’an, Al-An’am:141) When Prophet Muhammad (PBUH) saw Sa’d performing wudu, He (PBUH) said: “What is this? You are wasting water.” Sa’d replied: “Can there be wastefulness while performing ablution?” Prophet Muhammad (PBUH) replied: “Yes even if you perform it in a flowing river.” (Ibn-e-Maja, VI, Hadith No. 425).

Even with finite resources, we can still do much better in reducing hunger, malnourishment, child mortality and deaths from easily curable diseases. This requires a transformation of self-centric self-interest view of life into self-cum social-centric one. Prophet Muhammad (PBUH) said: “Among the three types of people with whom God, on the Day of Resurrection, will exchange neither words nor look at is the one who possesses an excess of water but withholds it from others. God will say to him: Today, I shall withhold from you my grace as you withheld from others, the excess of what you had, but which you did not create.” (Sahih Al-Bukhari, Vol 3, Book 40, Hadith No. 557).

Islamic Teachings Related to Economic Enterprise

Qur’an urges Muslims to show kindness, generosity and benevolence to their fellow human beings. Allah says in Qur’an: “… Do good to parents, kinsfolk, orphans, Al-Masakin (the poor), the neighbour who is near to kin, the neighbour who is a stranger, the companion by your side and the wayfarer (you meet) …” (Al-Qur’an, Al-Nisa: 36). Qur’an says in another place: “So give to the kindred his due, and to Al-Miskin (the poor) and to the wayfarer…” (Al-Qur’an, Ar-Rum: 38). Feeding orphans and poor is regarded as highly virtuous acts (Al-Qur’an, Al-Balad: 12-16) in Qur’an. Qur’an exhorts Muslim to look after orphans and treat them with kindness and generosity (Al-Qur’an, Al-Fajr: 17-20), work honestly in their property (Al-Qur’an, Al-Baqarah: 220) and avoid oppressive treatment (Al-Qur’an, Al-Dhuha: 9) as well as refrain from harsh behaviour (Al-Qur’an, Al-Maoon: 2). Qur’an strictly prohibits usurping the endowments of orphans (Al-Qur’an, Al-Nisa: 2).

Prophet Muhammad (pbuh) declared that the best charity is to spend (in charity) while you are healthy, aspiring, hoping to survive, and fearing poverty, and not delaying until death comes to you (Sunan Abu Daud, Book of Wills, Vol 3, Hadith No. 2865). Allah wants the believers to avoid miserliness (Al-Qur’an, Al-Nisa: 37). Instead of enjoining miserliness, Islam urges Muslims to help one another in good acts and endeavours (Al-Qur’an, Al-Maida: 2).

Since Islam only accepts pure altruism, it promises numerous incentives for it in its two-worldly view of life. Several verses in Qur’an promise due reward for pure altruism (Al-Qur’an, Al-Tauba: 121; Al-Qur’an, Fatir: 29; Al-Qur’an, Al-Hadid: 7). In several other verses, spending in charitable ways for the sake of Allah is compared to a good loan which Allah will repay with a manifold increase (Al-Qur’an, Al-Hadid: 11; Al-Qur’an, Al-Hadid 18; Al-Qur’an, Al-Taghabun: 17; Al-Qur’an, Al-Muzzammil: 20). In several Ahadith also, Muslims are encouraged to spend so that Allah also spends on them with His blessings (Al-Bukhari, Book of Commentary, Vol 6, Hadith No. 4684).

The Islamic teachings encourage striving for Halāl means of earning as long as the other duties, such as worship to Allah are performed (Al-Qur’an, Al-Jumuah: 10) and impermissible means and ways of earning are avoided, such as interest (Al-Qur’an, Al-Baqarah: 276), bribery (Al-Qur’an, Al-Baqarah: 188), fraud (Al-Qur’an, Al-Mutaffifeen: 1-4), gambling (Al-Qur’an, Al-Maida: 90), theft (Al-Qur’an, Al-Maida: 38), business of intoxicants (Al-Qur’an, Al-Maida: 90) and prostitution (Al-Qur’an, Al-Nur:19), for instance. In general, barring the above exceptions, the Qur’an allows mutually beneficial and consensual exchange (Al-Qur’an, Al-Nisa: 29). As per Islamic texts, endowments bestowed by Allah are to be used for material goods as well as for societal causes to earn Falah (well-being in both worlds). Prophet (pbuh) said: “The truthful and trustworthy businessman will be in the company of Prophets, saints and martyrs on the Day of Judgment.” (Jami-al-Tirmizi, Vol 3, Chapter on Business, Hadith Number 1209).

Islam discourages idleness, dependency and unnecessary exit from the labor force. Prophet Muhammad (pbuh) said: “For one of you to go out early to gather firewood and carry it on his back so that he can give charity from it and be free of need from the people, is better for him than to ask a man who may give that to him or refuse. Indeed, the upper hand (giving) is more virtuous than the lower hand (receiving), and begin with (those who are) your dependants.” (Jami-at-Tirmidhi, Vol 2, Chapters on Zakāt, Hadith Number 680). In another Hadith, Prophet Muhammad (pbuh) explained: “The upper hand is better than the lower hand, and the upper hand is the one that spends, and the lower hand is the one that asks.” (Sunan Abu Daud, Vol 2, Book of Zakāt, Hadith Number 1648). Prophet Muhammad (pbuh) said that begging is not lawful for the rich and physically fit except for the one who is severely poor or in perilous debt (Jami-at-Tirmidhi, Vol 2, Chapters on Zakāt, Hadith Number 653).

Islamic teachings make a distinction between permissible and impermissible goods. Qur’an says “… Eat of that which is lawful and good on the earth…” (Al-Qur’an, Al-Baqarah: 168). For instance, Islam forbids intoxicants (Al-Qur’an, Al-Baqarah: 219), the meat of dead animals, blood and flesh of swine (Al-Qur’an, Al-Baqarah: 173). In financial services, Islam forbids interest (Al-Qur’an, Al-Baqarah: 276) and gambling (Al-Qur’an, Al-Maida: 90), for instance.

In the Islamic jurisprudence, we also come across a hierarchy of needs. Imam Al-Shatibi has categorized human needs into three groups; i) Dharuriyah (necessities), ii) Hajiyah (conveniences) and iii) Tahsiniyah (refinements). In the hierarchical structure of needs given by Al-Shatibi, necessities include such activities and things that are essential to protect i) Imān (faith), ii) Nafs (life), iii) Māl (wealth), iv) Aqal (intellect) and v) Nasl (progeny). Thus, Islam recognizes physiological as well as aesthetic needs but requires moderation in consumption.

Endowment inequality and relative abundance of one or the other type of resource in this world among people does not provide any basis of superiority in Islamic social framework. It is only meant to test thankfulness, patience and fairness in interpersonal and socio-economic relations. Qur’an says: “Is it they who would portion out the Mercy of your Lord? It is We Who portion out between them their livelihood in this world, and We raised some of them above others in ranks, so that some may employ others in their work. But the Mercy (Paradise) of your Lord (O Muhammad – PBUH) is better than the (wealth of this world) which they amass.” (Al-Qur’an, Al Zukhruf: 32)

Qur’an says: “And strain not your eyes in longing for the things We have given for enjoyment to various groups of them, the splendour of the life of this world that We may test them thereby. But the provision (good reward in the Hereafter) of your Lord is better and more lasting.” (Al-Qur’an, Taha: 131).

Islam allows trade, but cautions against unfairness, exploitation and deceit. Qur’an says: “Do not devour one another’s property wrongfully, nor throw it before the judges in order to devour a portion of other’s property sinfully and knowingly.” (Al-Qur’an, Al-Baqarah: 1880. In another place, Qur’an says: “Do not devour another’s property wrongfully – unless it be by trade based on mutual consent.” (Al-Qur’an, Al-Nisa: 29)

Islamic teachings related to commerce also strongly recommend fairness in trade dealings. Qur’an says: “And measure full when you measure. And weigh with an even balance. This is better and its end is good.” (Al-Qur’an, Al-Bani-Israel: 35). In another place, Qur’an says: “Woe to those that deal in fraud, those who, when they have to receive by measure from men, exact full measure, but, when they have to give by measure or weight to men, give less than due. Do they not think that they will be called to account?” (Al-Qur’an, Al-Mutaffifin: 1-4). Furthermore, Islam also emphasizes on fulfilling contractual obligations in mutual exchange. Qur’an says: “O you who believe! Fulfil [your] obligations”. (Al-Qur’an, Al-Maida: 1)

Islam allows profit motive and using the profits for consumption and further investment. However, it discourages accumulation for the purpose of hoarding. Qur’an says: “They who hoard up gold and silver and spend it not in the way of Allah, unto them give tidings (O Muhammad) of a painful doom.” (Al-Qur’an, Al-Tauba: 34).

Islamic teachings related to commerce denounce taking oaths for deceiving others. Qur’an says: “You resort to oaths as instruments of mutual deceit, so that a person might take greater advantage than another; although, Allah puts you to the test through this. Surely, on the Day of Resurrection, He will make clear the truth concerning the matters over which you differed.” (Al-Qur’an, Al-Nahl: 92).

In commercial undertakings, Islam encourages documenting the terms of the agreement to mitigate the risk of moral hazard. Qur’an says: “O Believers! Whenever you lend money for a particular period, write and someone among you must write it justly. And the one who can write must not refuse.” (Al-Qur’an, Al-Baqarah: 282).

Islamic principles of trade allow credit transactions and debts but condemn defaulting on loans. Prophet Muhammad (pbuh) said: “Any who takes out a loan, having resolved not to pay it back, will meet Allah as a thief.” (Sunan Ibn-e-Maja, Vol 3, Chapters on Charity, Hadith Number 2410).

Islamic principles of trade allow mutual bargaining to achieve the best result for oneself but recommend gentleness and softness in executing deals so as to avoid the zero-sum game and undue advantage. Prophet Muhammad (pbuh) said: “May Allah’s mercy be on him who is lenient in his buying, selling, and in demanding back his money [or debts].” (Sahih Bukhari, Vol 3, Book of Sales, Hadith Number 2076).

In selling goods, it is highly recommended that deceit is avoided in making and selling or products. Prophet Muhammad (pbuh) said: “It is not permissible for a Muslim to sell his brother goods in which there is a defect without pointing that out to him.” (Sunan Ibn-e-Maja, Vol 3, Chapter on Business Transactions, Hadith Number 2246).

In another Hadith, Prophet Muhammad (pbuh) said: “The seller and the buyer have the right to keep or return the goods as long as they have not parted or till they part; and if both the parties spoke the truth and described the defects and qualities [of the goods], then they would be blessed in their transaction, and if they told lies or hid something, then the blessings of their transaction would be lost.” (Sahih Bukhari, Vol 3, Book of Sales, Hadith Number 2079).

Deceit in contracts to get an unfair advantage is strongly condemned in Islam. Prophet Muhammad (pbuh) said: “Whoever takes a false oath to deprive somebody of his property will meet Allah while He will be angry with him.” (Sahih Bukhari, Vol 3, Book of Watering, Hadith Number 2356).

Islam encourages the price discovery process to be natural and without any frictions and hindrances. To ensure that price is determined competitively without information asymmetries, Prophet Muhammad (pbuh) forbade a town dweller to sell on behalf of a Bedouin and to artificially inflate prices (Sahih Muslim, Vol 4, Book of Marriage, Hadith Number 3459). Prophet Muhammad (pbuh) forbade intercepting traders until they reach the markets with their goods. (Sahih Muslim, Vol 4, Book of Financial Transactions, Hadith Number 3821). Furthermore, in bidding for goods, assets or businesses, overbidding without having a genuine intention to buy (Al-Najash) is prohibited.

Speculative trades inflate prices and lead to artificial price bubbles and crises when these bubbles burst. To foster genuineness of trades and diminish the speculative motives, Prophet Muhammad (pbuh) said: “He who buys food grain should not sell it until he has taken possession of it.” (Sahih Muslim, Vol 4, Book of Financial Transactions, Hadith Number 3836)

In contemporary production processes, often labor is employed to produce the goods. In labor management and relations, Islam, unlike capitalism, gives due protection and credit to labour. To highlight the importance of fair treatment of labor, Prophet Muhammad (pbuh) said: “I will be a foe to three persons on the Last Day: one of them being the one who, when he employs a person that has accomplished his duty, does not give him his due.” (Sahih Bukhari, Vol 3, Book of Hiring, Hadith Number 2270). On timely remuneration to labor, Prophet Muhammad (pbuh) said: “Give the labor his wage before his sweat dries”. (Sunan Ibn-e-Maja, Vol 3, Book of Pawning, Hadith Number 2443)

In another Hadith, Prophet Muhammad (pbuh) said: “Those are your brothers [workers under you] who are around you; Allah has placed them under you. So, if anyone of you has someone under him, he should feed him out of what he himself eats, clothe him like what he himself puts on, and let him not put so much burden on him that he is not able to bear, [and if that be the case], then lend your help to him.” (Sahih Bukhari, Vol 3, Book of Manumission, Hadith Number 2545).

Islamic Teachings Related to Consumption and Spending

In describing human’s nature, Qur’an mentions that humans are generally hasty (Al-Qur’an, Al-Isra: 11), miserly (Al-Qur’an, Al-Isra: 100), impatient (Al-Qur’an, Al-Ma’arij: 19) and have a love of wealth (Al-Qur’an, Al-Aadiyat: 8). Humans have desire to consume positional goods and indulging in conspicuous consumption (Al-Qur’an, Al-Takaathur: 1-2). According to Islamic texts, human instinct prefers goods which serve survival needs as well as other wants which serve non-survival needs (Al-Qur’an, Aal’-Imran: 14). The story of Jews asking Moses (pbuh) for a variety of food (Al-Qur’an, Al-Baqarah: 61) also hints at the desire for variety in consumption bundles and diminishing marginal utility. In a Hadith, Prophet Muhammad (pbuh) said: “If Adam’s son had a valley full of gold, he would like to have two valleys, for nothing fills his mouth except dust (of the grave)…” (Al-Bukhari, Book of Ar-Riqaq, Vol 8, Hadith No. 6436). This also hints at the instinctive desire of humans for non-satiated preferences. Prophet Muhammad (pbuh) said: “The heart of an old man remains young with regards to two things: Love of life and wealth.” (Al-Muslim, Book of Zakat, Vol 3, Hadith No. 2410).

However, we shall see how Islamic teachings prescribe guidelines for moderating these instincts and inculcating empathy in conduct and behaviour.

Islamic teachings make a distinction between permissible and impermissible goods. Qur’an says “… Eat of that which is lawful and good on the earth…” (Al-Qur’an, Al-Baqarah: 168). Islam forbids intoxicants (Al-Qur’an, Al-Baqarah: 219), the meat of dead animals, blood and flesh of swine (Al-Qur’an, Al-Baqarah: 173). In financial services, Islam forbids interest (Al-Qur’an, Al-Baqarah: 276) and gambling (Al-Qur’an, Al-Maida: 90), for instance. On some occasions, even lawful goods become impermissible, such as during the time of fasting (Al-Qur’an, Al-Baqarah: 183). Fasting in Islam is prescribed for Muslims to make them become God-fearing by restraining their desires and achieving moral consciousness. Nevertheless, Islam does not approve monasticism (Al-Qur’an, Al-Hadid: 27).

Instead of being miser and spendthrift, Islam wants Muslims to have moderation in their consumption, both with respect to contemporaneous consumption as well as inter-temporal consumption. Allah in Qur’an says: “And let not your hand be tied (like a miser) to your neck, nor stretch it forth to its utmost reach (like a spendthrift), so that you become blameworthy and in severe poverty” (Al-Qur’an, Al-Isra: 29). In another verse, Qur’an says: “And those, who, when they spend, are neither extravagant nor niggardly, but hold a medium (way) between those (extremes).” (Al-Qur’an, Al-Furqan: 67). In a Hadith, Prophet Muhammad (pbuh) said: “Spend according to your means; and do not hoard, for Allah will withhold from you.” (Al-Muslim, Book of Zakah, Vol 3, Hadith No. 2378). Islam expects Muslims to avoid being spendthrift and extravagant. Allah in Qur’an says: “… Waste not by extravagance. Verily, He likes not those who waste” (Al-Qur’an, Al-An’am: 141). In another verse, Allah in Qur’an says “…Spend not wastefully (your wealth) in the manner of a spendthrift.” (Al-Qur’an, Al-Isra: 26).

Islamic principles recognize consumption externalities and counter them by explicitly cautioning against envy, egoism and pride. Instead of consuming positional goods and indulging in conspicuous consumption, Islam wants Muslims to observe humbleness and shun pride (Al-Qur’an, Al-Isra: 37; Al-Qur’an, Luqman 18). Qur’an says that Allah does not like prideful boasters (Al-Qur’an, Al-Hadid: 23).

Islam also does not approve of envious behaviour. Qur’an says: “The desire for piling up of worldly things diverts you until you reach the graves.” (Al-Qur’an, Al-Takaathur: 1-2). Instead, Qur’an prescribes “… Do not covet the bounties which God has bestowed more abundantly on some of you than others…” (Al-Qur’an, Al-Nisa: 32).

Prophet Muhammad (pbuh) said: “Envy consumes good deeds just as fire consumes wood, and charity extinguishes bad deeds just as water extinguishes the fire.” (Sunan Ibn-e-Maja, Chapters on Asceticism, Vol 5, Hadith No. 4210). Prophet Muhammad (pbuh) educated Muslims to be like none except the one who is given the knowledge of Qur’an and the one who spends in charity (Al-Bukhari, Book of Virtues of the Qur’an, Vol 6, Hadith No. 5025). Prophet Muhammad (pbuh) advised: “Look at the one who is at a lower level than you, and do not look at the one who is above you, for that may keep you from scorning the blessings of Allah.” (Al-Muslim, Book of Asceticism, Vol 7, Hadith No. 7430)

Qur’an educates Muslims that wealth will not last forever (Al-Qur’an, Al-Humazah: 1-3). Wealth and children are only a trial (Al-Qur’an, Al-Taghabun: 15). The temporary nature of this worldly life and material dispensation is eloquently summed up by Qur’an as follows:

“Know that the life of this world is only play and amusement, pomp and mutual boasting among you, and rivalry in respect of wealth and children, as the likeness of vegetation after rain, thereof the growth is pleasing to the tiller; afterwards it dries up and you see it turning yellow; then it becomes straw…” (Al-Qur’an, Al-Hadid: 20). In one Hadith, Prophet Muhammad (pbuh) said: “Richness is not in having many possessions, but richness is being content with oneself.” (Jamai-at-Tirmidhi, Chapters on Zuhd, Vol 4, Hadith No. 2373).

Islam does not recognize impure altruism to satisfy ego and to achieve fame and recognition (Al-Qur’an, Al-Baqarah: 264; Al-Qur’an, Al-Maoon: 6). Prophet Muhammad (pbuh) advised anonymity and secrecy in charitable giving such that the right hand does not know what the left hand is giving (Al-Muslim, Book of Zakat, Vol 3, Hadith No. 2380). Allah says of the ideal believers in Qur’an: “And they give food, in spite of their love for it to Miskin (poor), the orphan, and the captive. (Saying): ‘We feed you seeking Allah’s countenance only. We wish for no reward, nor thanks from you’.” (Al-Qur’an, Al-Insaan: 8-9). Qur’an urges believers to spend what they love in order to achieve righteousness (Aal’-Imran: 92), spend throughout their lives (Al-Qur’an, Al-Munafiqun: 10) and the ideal is to spend whatever is beyond their needs (Al-Qur’an, Al-Baqarah: 219).

36 Responses to Quran and Hadith on Economics

  1. Uzma says:

    Nice effort I must say. Keep it up.
    I need to know what Quran and Hadith says about the personalization efforts done by marketers in online behavioral advertisement. I tried to find but could not find anything related to this.

    Thank you


  2. Haruna Mohammed Aliero says:

    Asalamu alaikum,
    Let me first appreciate your effort towards promoting the Deen. this work is not a small one may Allah (swt) reward you with Jannatul -firdaus. I hope you will also gather all Quranic and ahadiths talking about money specifically.


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