Islamic Business Ethics Chapter 4 PDF

Chapter 4 Islamic Business Ethics 4.1 Origin of Islamic ethics 4.2 Islamic Worldviews and Ethical Systems 4.3 Axioms of Islamic Ethical Philosophy 4.1 Origin of Islamic ethics There are two primary sources of Islamic ethics – the Quran and Sunnah, which provide comp...

Chapter 4 Islamic Business Ethics 4.1 Origin of Islamic ethics 4.2 Islamic Worldviews and Ethical Systems 4.3 Axioms of Islamic Ethical Philosophy 4.1 Origin of Islamic ethics There are two primary sources of Islamic ethics – the Quran and Sunnah, which provide complete guidance for Muslims to lives their lives. In this section, we shall examine the meanings of the Quran and Sunnah and their relationships with Islamic ethics. In living their lives, Muslims must rely on the teachings of Islam as exemplified in the Quran and Sunnah. Whenever they are in doubt or dispute, they must refer to these two sources for guidance. The Quran and Sunnah are timeless. They are valid in any situation at any time or era. The teachings are universal. 4.1.2 The Holy Quran The Quran is a divine book of revelation that compromises the verbatim and unalterable words of Allah revealed to the Prophet Muhammad (PBUH) over a period of 22 years and dictated word-for-word by Archangel Gabriel. The Quran represents the will of Allah that must be carried out. It does not only lay the foundation for the beliefs and religious practices of Muslims but also provides ethical guidelines and standards for Muslims. The Quran is the primary point of reference in evaluating ethical behaviour. It prescribes the permissible and forbidden in the lives of Muslims. The teachings of Islam comprise rules and guidelines for governing one’s life, commercial and economic transactions as well as social interactions. The teachings of Islam are usually referred to as Shari’ah or the sacred law of Islam. The objective of Shari’ah for the good of humankind is universal in its scope and application. It is meant to protect man from evil and to benefit in all aspects of life. Next, we shall look at some examples of ethical standards prescribed in the Quran. First, let us be clear that the Quran provides a code of ethics for all Muslims. Adherence 1 to the code of ethics is part of Islamic faith while the acts of kindness, generosity or charity, righteousness, forgiveness, justice, equality, truth, piety and patience are considered goodness and acts of worship to Allah. Goodness or good behaviour contributes to the formation of good character of a Muslim. Allah describes that people who attain success as those: ‘… inviting to all that is good, enjoining what is right and forbidding what is wrong …’ (Surah Al-Imran, 3:104) ‘Those who spend (freely), whether in prosperity, or in adversity; who restrain anger, and pardon (all) human; - for Allah loves those who do good.’ (Surah Al-A’raf, 7:56) The Quran strictly prohibits unethical conduct to the extent that abetting the acts of wrongdoing is the same as committing the act itself. Thus, Muslim must not only refrain from unethical conduct, but also distance themselves from them and help to prevent them. The Quran clearly specified unethical conduct such as fasad (corruption), cheating and betrayal of trust. These acts lead to harm and injustice to others. The following verses describe the requirements to refrain from committing such unethical acts. ‘Do not mischief on the earth, after it hath been set in order, but call on Him with fear and longing (in your hearts): for the Mercy of Allah is (always) near to those who do good.’ (Surah Al-A’raf, 7:56) ‘If any person is false, He shall, on the Day of Judgement, restore what he is misappropriated; then shall every soul receives its due, - whatever it earned, and none shall be dealt with unjustly.’ (Surah Al-Imran, 3:161) 2 Islam supports business activities but they must be done within some boundaries as prescribed in the Quran, which states: ‘… but Allah has permitted trade and has forbidden interest.’ (Surah Al-Baqarah, 2:275) The following verses emphasize the need to observe honesty in business dealings. The second verse highlights the warning given to those who violate this injunction. ‘… give full measure when you measure and weight with an even (honest) balance. That is good and the better at the end.’ (Surah Al-Israa, 17:35) ‘Woe to those that deal in fraud those who when they have receive by measure from humans exact full measure, but when they have to give by measure or weight to humans give less than due. Do they not think that they will be called to account?’ (Surah Al-Mutaffifin, 83:1-4) The Quran enjoins Muslims to make business decisions based on their faith in Islam. Businesspeople must only engage in halal (law/legitimate) transactions and avoid haram (illegitimate/prohibited) ones. The Quran and Sunnah clearly specify the prohibitions in business activities. Lawful business activities are also moral and they bring benefits to the people. The illegitimate ones, on the other hand, are also immoral and they bring harm to the people. For example, the Quran prohibits the production and selling of wines or other intoxicants as well as any activity that is related to gambling and prostitution. The motivation for Muslims to adhere to the Islamic code of ethics in business dealings lies in the following words of Allah: ‘In whatever business you may be, and whatever portion you may be reciting from the Quran – and whatever deed you (mankind) may be doing-We are witness thereof when you are deeply engrossed therein …’ (Surah Yunus, 10:61) 3 ‘Deal not unjustly, and you shall not be dealt with unjustly.’ (Surah Al-Baqarah, 2:279) This first verse indicates that Allah bears witness to all transactions of mankind. The second verse states that all transactions including those related to business and economic activities must be based on justice. There is no compromise or exception to these requirements because all conduct or behaviour will certainly be judged. Any unlawful conduct will not escape the wrath of Allah. The Sunnah The second source of Islamic ethics is the Sunnah. The knowledge of the Sunnah comes from hadiths or reports about the recorded sayings, personal teachings, character, deeds, actions and practices of the Prophet Muhammad (PBUH) in personal and public life that exemplify the teachings of Islam. In the Quran, Allah described the Prophet Muhammad (PBUH) as a Prophet of good ethics and considered al ihsan al kamil (the ideal man) who had a superior standard of character. Allah stated: ‘And most certainly you are on sublime morality (exalted standard of character).’ (Surah Al-Qalam, 68:4) However, this notion of an ideal man should not be mistaken as divine or someone to be worshipped. Rather, he is the model par excellence for all Muslims as to how they should conduct themselves. Muslim only worship the one and only Allah. The Prophet Muhammad (PBUH) was a Messenger of Allah. He is the final Prophet who dictated the Quran, the eternal and unalterable words of Allah to his followers. The hadiths were initially passed down verbally to those who knew the Prophet Muhammad (PBUH) personally and were closed to him during his life, In the 18th century , Islamic scholars codified the hadiths in written form and authenticated them. Henceforth, Muslims refer to the authenticated hadiths only to guide them. 4 The Prophet Muhammad (PBUH) is the ultimate role model for Muslims in terms of how they should conduct themselves. Al-Bukhari narrated in a hadiths that the Prophet Muhammad (PBUH) once said: ‘I was not sent except to perfect the qualities of good character (akhlaq).’ There are numerous hadiths that explicitly reinforced the virtues of ethical conduct. A few of them are outlined below. ‘If you guarantee me six things on your part I shall guarantee you paradise. Speak the truth when you talk, keep a promise when you make it, when you are trusted with something fulfil your trust, avoid sexual immorality, lower you eyes and restraint your hand from injustice.’ (Abu Hurairah) ‘Truthfulness leads to righteousness and righteousness leads to a paradise. A man continued to tell the truth until he becomes a truthful person. Falsehood leads to evil- doing and it leads to the (Hell) fire, and a man may continue to tell lies till he is written before Allah, a liar.’ (Abu Hurairah) ‘The most beloved to me (The Prophet Muhammad) amongst you is the one who has best character and manners.’ (Al Bukhari) ‘Kindness is not to be found in anything but that it adds to its beauty and it is not withdrawn from anything but it makes it defective.’ (Muslim) ‘Among the Muslims the most perfect with regard to his faith is the one whose character is excellent and the best among you are those who treat their wives well.’ (‘al-Tharmidhi) 5 ‘The best servants of Allah are those who, when they are seen, cause Allah to be remembered. The worst servants of Allah are those who go about slandering, who separate friends and seek to distress the upright.’ (‘al-Tharmidhi) ‘There is nothing heavier (in weight) on the scale (on the Day of Judgment) than good character.’ (Abu Dawud) In summary, Muslims must rely on the principles of ethics and morality embedded in the Quran and Sunnah to guide them in their daily lives and any business or economic endeavours. Islamic ethics prescribe what one should do or abstain from doing, These prescriptions and injunctions are valid at all times and places. It is important to note that there is no segregation between ethics and law in Islam. 4.2 Islamic Worldview And Ethical System Chapra (1992) states that worldview is a ‘set of implicit and explicit assumptions about the origin of the universe and the nature of human life’. This concept relates to how man perceives and explains the reality or the truth regarding the existence of the universe and their role in it, A worldview consists of a collection of one’s beliefs, ideas or values about God, the world, and the relationship with God and the world. This worldview influences not only the way one thinks and behaves, but also the norms and values that govern his or her life. Our worldview can be influenced by our religion, science, the things that we read, people that we associate with and the society that we belong to. Hence, it is highly that the worldview can be different from person to person. For example, those who believe in a secular worldview separate religious affairs from worldly affairs while Muslims who believe in the Islamic worldview take a dual perspective that is concerned with the universe (world), the Hereafter and the Day of Judgment. 6  The Islamic perception of the world is founded on the fact that Islam is not only a religion but also a way of life, an all-embracing social, political and legal system that makes is a unique worldview (Izetbegovic, 1984), that distinguishes itself from other worldviews (Ahmad, 1976). The dual perspective of this world is derived from the Quran. One’s worldview may also change over the course of his or her life. However, a Muslim must hold on to the Islamic worldview steadfastly across all times in order to attain success in life and the Hereafter. Mawdudi (1998) outlined the Quran’s view of reality as follows: ▪ Allah is the one and only Creator and Sovereign of the entire universe. He is living, eternal and self-subsisting. Man must accept the reality that He exists. The most basic aspect of Allah is His oneness or Unity (tawhid). ▪ Allah created man as the best creation and gave him cognitive and reflective abilities as well as intelligence (‘aql) and heart (qalb) to distinguish between good and evil. He gave man the freedom of choice and desire to be exercised solely based on Allah’s will, i.e Islamic framework. He appointed man as His vicegerent on earth. ▪ Man must not consider himself independent from Allah-he must believe that Allah is the absolute Lord, Sovereign and the unshared Divine authority. Hence, he must worship and obey Allah, who is the cause and end of everything. ▪ The life of this world is temporary whereby the whole universe will come to an end one day. Humans should aim for the everlasting life after death. The world is a place to test their faith in Allah and the trust He placed on them. ▪ Man is accountable to Allah for which He will judge him based on his actions in life. If man obeys Allah and follows the right path as prescribed in the Quran and hadiths, the reward is a place in Paradise, where he will enjoy eternal bliss and happiness. ▪ Disobedience will result in corruption and disorder in the world for which man will be punished with eternal grief and suffering in Hell in the Hereafter. Allah is most forgiving. Thus, if man commits sinful acts or wrongdoing, he must seek forgiveness and repent to Him directly. ▪ Allah has chosen a few humans as Prophets (peace be upon him) to show humans the right path to live in the world. The first Prophet was Adam (PBUH) and the last one was Prophet Muhammad (PBUH). 7 ▪ Some of these Prophets received Allah’s commandments in the form of scriptures (e.g Torahs, Psalms and the Evangel) while others received them in the form of scrolls (e.g. Abraham and Moses (PBUH). All of them carried the same message-that is to worship only Allah and to obey his commandments revealed through the Prophets. Allah had sent Prophets to various parts of the world before the Prophet Muhammad (PBUH). The Prophet Muhammad (PBUH) was the only one that Allah commanded to lead the entire humanity. He was last of all Prophets. He received Allah’s commandments through revelation in the last scripture known as the Quran, which shall last until the Day of Judgment. The Quran contains the most comprehensive guide for all aspects of human life. How does the Islamic worldview relate to the Islamic ethical system? The Islamic worldview sets the foundation for four vital principles in the Islamic ethical system-tawhid, taqwa, Khalifah, and ‘abd (servant/worship) of Allah. Tawhid or monotheism or unity of God is the key concept that infuses all aspects of life in Islam. In fact, the first and foremost requirements to embrace an Islamic faith is to believe in the Oneness of Allah (Surah Al- Ikhlas, 2:1-4) and His perpetual presence in one’s life. There are six pillars of Islamic faith. Allah is the source of all laws, values, and norms of all Muslims. He is not only one but unique and incomparable to any of His creatures. This concept requires a total submission to Allah as indicted in Surah Adh-Dhariyat (51:56): ‘And I have not created JInns and humankind except to worship (serve) me.’ This element is said to be the cornerstone of Islam. Beekun and Badawi (1999) defined taqwa as ‘all-encompassing, inner consciousness of one’s duty towards Allah (the most exalted) and the awareness of one’s accountability toward Him’. Taqwa is a quality of human beings that is related to the state of the heart, which manifests in the behaviour that complies with the will of Allah. According to the hadith narrated by Al-Bukhari and Muslim: ‘There is a piece in the human body; if it is good condition, the whole body will be well and if it is corrupted the whole body will be corrupted as well this piece is the heart.’ Individuals who practice taqwa are called muttaqeen (pious individuals). 8 They are wary of Allah and understand their role in this world is to manage and develop the world in accordance with the Shari’ah. Pious individuals have a state of the heart that is always conscious of Allah’s presence, hoping for His acceptance, fearing His punishment, and hesitating to commit any wrongdoing that might bring His wrath (Ghazali-hanbali, 1995). They are always in the state of a constant remembrance of Allah. Further, they will strive to protect themselves from forbidden activities by refraining from committing such acts because they will be made accountable for their actions on the Day of Judgment. The ned result of Taqwa is the conduct that is in line with the will of Allah and His reward for having such quality. Pious individuals have unwavering faith in the Oneness of Allah and the finality of the Prophethood of Muhammad (PBUH) as indicated in the declaration of shahadah (Islamic profession of faith). They also diligently perform their ibadat (rituals) sucha s obligatory daily prayers, fasting in the month of Ramadhan, Hajj (pilgrimage to Makkah) and paying zakat (Islamic tax). These are known as the five pillars of Islam. Further, pious individuals always seek Allah’s forgiveness and repent from doing sinful acts. They will not be persistent in disobeying Allah. Further, they also fulfil their responsibilities to themselves, to other human beings and to nature at large (Mohsen, 2007; Kamil 2012), which is consistent with their role as vicegerents in this world. The Shahadah reads, ‘I bear witness that there is no deity worthy to be worshipped but Allah, and I bear witness that Prophet Muhammad (PBUH) is His servant and messenger.’ It is considered as an acceptance of Allah as the One and Only Almighty Creator and His last messenger Prophet Muhammad (PBUH). Shahadah is the first five pillars of Islam. Now, let us move on to the principle of Khalifah (vicegerency) or leader, which has an important implication to the Islamic ethical system. Allah created humans as His best creations of all creations so that they can be His Khalifah to carry out His divine will in this world. He accorded humans the highest degree of free will and intellect but they must exercise them within the Islamic framework. The following verses describe the role of humans as Khalifah and their special position in the eyes of Allah. 9 ‘Behold thy Lord said to the angels: ”I will create a vicegerent on earth…” (Surah Al-Baqarah, 1:30) ‘…But He fashioned him in due proportion, and breathed into him something of his Spirit.’ (Surah As-Sajadah, 32:9) ‘We have indeed created man in the best of moulds.’ (Surah At-Tin, 95:4) ‘We have honoured the children of Adam, provided them with transport on land and sea, given them sustenance things good and pure and conferred on them special favours above a great of Our creation.’ (Surah Al-Isra, 17:70) Allah accorded special status to humans of all other creations so that they worship Him through leading a fair and prosperous life on earth. Worshipping Allah does not only mean that individuals only have to perform the religious rituals. Rather, they also have to perform any activities within the limit prescribed by Allah. Most importantly, their actions and activities must be done with good intentions or motives. In other words, good intentions must be followed by conduct that is in accordance with the Shari’ah. Good intentions cannot make immoral behaviour acceptable or ethical. Similarly, actions that bring good outcomes are not necessarily ethical because Islam rejects utilitarianism or consequentialism ethics. For example, one cannot steal from other people in order to help the poor because stealing is a forbidden act that cannot be justified or compromised. The principle of Khalifah also implies that the nature, universe and other creations are entrusted to man for his use to facilitate and improve his life in the world. In other words, mankind holds these bounties (resources) in trust (al-amanah) and must only manage and utilize them in accordance with the will of Allah. The trust from Allah places some restrictions on the behaviour and use of economic or natural resources because He owns everything in the universe. 10 Hence, humans must refrain from causing destruction to the environment. They must make the earth a prosperous place to live by all, including other creatures of Allah. As Khalifah, humans must strive to do the right things and avoid doing harm. Abdalati (1994) stated that Khalifah implies trust, responsibility, authority, duty and service. Humans are responsible for all their actions and will not escape from being judged on their role and commitment as Khalifah in this world. The following verses illustrate the role of Khalifah in this world. ‘Let there arise out of you a band of people inviting to all that is good, enjoining what is right, and forbidding what is wrong: They are the ones to attain felicity.’ (Surah Ali Imran, 3:104) ‘Do ye not see that Allah has subjected to your (use) all things in the heavens and on earth, and has made his bounties flow to you in exceeding measure, (both) seen and unseen?... (Surah Luqman, 31:20) In short, we can say Allah commanded that humans be the vicegerents, stewards or guardians who will manage themselves and the natural resources for the benefit of mankind. As guardians of the earth, humans have an ethical duty to improve the quality of life and prosper in this world. According to Saeed et al. (2001), there are four categories of responsibilities expected of a Khalifah, as listed below. 1 Responsibility to Allah – to have unwavering faith in the Unity of Allah and His divine commandments as well as to vigorously perform the role of Khalifah and trustee of this world for the benefit of mankind. 2 Responsibility to himself – to make ourselves good by making the right choices on the Shari’ah and the intelligence accorded by Allah. 3 Responsibility to society – to help others do good and strive to maintain peace and harmony. 11 4 Responsibility to the environment (physical world) – to make the earth an inhabitable place and to use natural resources for the benefit of mankind without causing damage to the environment. Finally, let us explore the principle of worship. Humans are servants of Allah. The do not have any independent authority or absolute rights or total freedom to choose their way of life. Humans have to follow the will of Allah because they live to serve Allah. They must obey His rules in all their dealings. In fact, life is one of worship (ibadah) as stated in Surah Al-An’am (6:162): ‘Said (O Muhammad pbuh): Verily, my prayers, my devotion, my life and my death are for Allah, the Lord of the worlds.’ According to Nasr (1990), a Khalifah who do not consider himself as an ‘abd of Allah is the most dangerous creature on earth. Humans are requested to reflect on the existence of nature (including plants and animals) as evidence of the existence of Allah, to be used in accordance with His will as opposed to their whims and fancies. These two concepts clearly depict the relationship between humans and Allah and between humans and nature. 4.3 Axioms of Islamic Ethical Philosophy Naqvi (1981) in his scholarly work of Islamic economy theory, presented four ethical axioms that serve as the philosophical foundations of Islamic ethical and economic systems. He explained that the axiom of unity is derived from the belief in one God. Equilibrium refers to a sense of balance in various aspects of human life to achieve social ideals and justice. Free will relates to individual freedom of choice. Responsibility is the duty of individuals to obey the will of Allah, duty to oneself and the society at large. The fifth axiom is benevolence, which simply means an act of kindness to others. It is an important characteristic of a pious individual. 12 Axioms of Islamic ethical philosophy represent the core values accepted as being true to guide the day-to-day conduct of a Muslim. They are derived from the Quran and Sunnah. A holistic Islamic ethical framework comprises the Islamic worldview from which we derived the principles of tawhid, taqwa, Khalifah and ‘abd of Allah and the five axioms. The five axioms of Islamic ethical philosophy. Axioms Descriptions Unity (tawhid) The foundation of Islamic faith and ethical system. It reflects man’s submissive relation to Allah. Everything on earth and the universe belong to Allah. All other principles and axioms originate from tawhid. The faith in Allah is a strong moral filter for Muslims because they will be held accountable for their actions. They should be wary of Allah’s divine justice only and avoid disobeying His will and rules. Muslims should not allow others to coerce them into committing forbidden acts. The entire political and socioeconomic system is based on this axiom. Allah created resources (bounties) for mankind to utilize them equitably in accordance with the maqasid al-Shari’ah. Equilibrium (‘adl) Relates to the sense of harmony and balance that Allah created in this world. So humans must strive to strike a balance in various aspects of their life so as to produce the best social order, i.e social equilibrium. All actions should be guided by this axiom so that justice and social harmony will prevail. As such, Islam forbids any act of destruction and extremism. Free will (ikhtiyar) This axiom relates to an individual freedom to live their life as Khalifah and servants of Allah and they make own choice between good and evil. However, this freedom must be exercised with intellect and within the bounds of the Shari’ah. In Islam, there is no such thing as absolute freedom because it comes with responsibility as reflected in the principles of Khalifah. One must 13  not act selfishly at the expense of others as it will disrupt the sense of equilibrium in the society. Responsibility This axioms ties with the expectations of unity, equilibrium and (fard) free will. In Islam, unlimited freedom is absurd because it implies no responsibility or accountability. Consistent with the axiom of tawhid, humans are responsible for their actions for which they will be called to account (hisab) on the Day of Judgment. The ultimate reward is an eternal stay in heaven. Allah’s punishment in severe when one could end up in hell for their transgressions in life. Howevre, Allah is most forgiving, so one must always seek His forgiveness and repent. Benevolence Refers to acts of kindness, which can be defined as behaviours that (ihsaan) bring benefits to other individuals. One should do it voluntarily and without expecting any return except to attain the pleasure of Allah. 14 15