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What is the Islamic solution to the concentration of capital?

Full question

What is the reason for capital concentration and how does capital contentration affect the system? Diagnosis The causes, in order of weight: (1) policy and legal rules that favour returns to capital over wages (deregulation, tax cuts, weaker labour bargaining power); (2) public backstops, meaning bailouts and cheap money, that leave losses with the public and gains with private owners; (3) historical and colonial patterns of ownership that still persist. Concentration then feeds back into the system: it captures regulators, makes the financial system more fragile, and spreads the costs downward and outward to poorer countries. The sources say capital concentrates mainly because of rules, not merit. Since the 1970s, tax, financial and labour policy has favoured returns to capital over wages, and public backstops leave losses with the public while gains stay private. In turn, concentration lets wealthy interests capture regulators and makes finance more prone to crises. It also pushes costs onto wage earners and, through the dollar, onto weaker economies. Islamic Solution?

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Conclusion

The sources give no full programme against capital concentration, but they set principles that point to a remedy. Wealth must not "circulate only between the rich", riba (interest) is forbidden so that money cannot earn a guaranteed return without sharing the risk of trade, and withholding necessities to raise their price is a sin. The sources do not discuss bailouts, regulatory capture, colonial ownership or the dollar. Linking these principles to those modern causes is an inference from the principles, not something the texts state.

Remedy

  1. Ban riba (interest) in lending and limit a lender to his principal, so capital earns only by sharing the risk of trade, not by fixed returns paid by others. Q3Q4
  2. Fund growth through equity and partnership instead of interest-bearing debt, so firms are not loaded with debt for the benefit of investors. N2
  3. Direct public revenues to the needy, orphans and wayfarers, so wealth does not circulate only among the rich. Q1T1
  4. Forbid hoarding and market-cornering of necessities, and compel sale when people are in need, so owners cannot profit from engineered scarcity. H4C1
  5. Keep essentials such as water, pasture and fire as shared resources, so basic needs cannot be monopolised. H5

Reflection & guidance

  1. Meaning

    Fai' comes from a root meaning 'to return': wealth taken from those who rebel against Allah returns to its real Owner and is spent on the weak. T1

  2. Guidance from the Qur'an

    The verses call the reader to treat wealth as something that must keep moving: given to those in need, not piled up, and never grown through riba. Q1Q2Q4

  3. Guidance from the Sunnah

    The Prophet condemned anyone who holds back what people live on in order to raise its price. H4

  4. Guidance from the scholars

    Al-Nawawi teaches that the public's need comes before the owner's profit, to the point of forcing a sale. Al-Khattabi, quoted by al-Azimabadi, reads the narrators' own stockholding as a permitted kind, since they would not openly contradict what they narrated. C1C2

Sources

Qur'an & Tafsir

Summary

The Qur'an states that public wealth is distributed so that it does not "circulate only between the rich among you". It forbids riba (interest), limiting a lender to his principal, and threatens those who pile up gold and silver without spending it in the way of Allah. Q1Q4Q2

Key points

  • Fai' (public wealth taken without fighting, such as kharaj (land tax), jizyah or trade duties) goes to the kinsmen, orphans, needy and wayfarers rather than to the fighters. The stated purpose is to keep wealth from circulating only among the rich. Q1T1
  • A creditor who gives up riba keeps his principal only: "Neither wrong, nor be wronged." Maarif-ul-Quran notes that no sin except disbelief carries a warning as severe as the declaration of war against riba. Q4T4
  • The warning in 9:34 is aimed at those who accumulate gold and silver and do not spend it in Allah's way. Q2

References

  • Q1Al-Hashr 59:7 · The Exile
  • Q2At-Tawbah 9:34 · The Repentance
  • Q4Al-Baqarah 2:279 · The Cow
  • T1Maarif-ul-Quran on 59:7
  • T4Maarif-ul-Quran on 2:279

Sunnah

Summary

Sahih hadith call anyone who withholds goods until their price rises a sinner. Another hadith makes water, pasture and fire shared among Muslims. H4H5

Key points

  • In the report under H4, Ahmad ibn Hanbal defines hoarding (hukrah) as withholding "that on which people live". Al-Awza'i defines the hoarder as one who withholds the supply of goods in the market. H4
  • "The Muslims are partners in three things: water, pasture and fire, and their price is unlawful." Al-Albani grades it sahih, but Zubair Ali Zai grades it da'if (weak). H5

References

  • H4Sunan Abu Dawud 3447 · Wages (Kitab Al-Ijarah)
    Authenticity
    • Sahih Al-Albani
    • Sahih Muhammad Muhyi Al-Din Abdul Hamid
    • Sahih Shuaib Al Arnaut
    • Sahih Muslim (1605) Zubair Ali Zai
  • H5Sunan Ibn Majah 2472 · The Chapters on Pawning
    Authenticity
    • Sahih Al-Albani
    • Sahih Muhammad Fouad Abd al-Baqi
    • Sahih Lighairihi Shuaib Al Arnaut
    • Daif Zubair Ali Zai

Hadith Commentaries

Summary

Al-Nawawi explains the ban on hoarding as a way of removing harm from the general public. Al-Azimabadi reports that the scholars differ on how far the ban reaches. C1C2

Key points

  • Al-Nawawi says the hikmah (wisdom) of the ban is to remove harm from people at large. He reports scholarly consensus that a person holding food that people desperately need, with no other supply, is compelled to sell it. C1
  • Al-Azimabadi quotes al-Nihaya: hoarding is buying food and holding it back so that it becomes scarce and its price rises. C2

References

  • C1al-Minhaj Sharh Sahih Muslim on Sahih Muslim 1605 · al-Nawawi, vol. 11 p. 42
  • C2Awn al-Ma'bud on Sunan Abi Dawud 3447 · al-Azimabadi, vol. 9 p. 224

Expert Opinions

Summary

Expert Opinions argue that Muslim businesses should grow through equity (shared ownership) rather than interest-bearing debt. They say debt-driven buyouts extract value, as with Toys R Us and ASDA, while equity builds it. N2N1

Key points

  • Expert Opinions report that Curate, a fund run by IFG (an Islamic finance firm), has invested over £30m in more than 40 pharmacies without interest-bearing debt. They argue that growth through equity would meet sharia debt-ratio rules naturally. N2
  • Expert Opinions name hifz al-mal (protection of wealth) as one of the five essential objectives of Islamic law. They treat lawfully earned wealth as a blessing, not a sin. N1

References

  • N1Protection of wealth · Wealth & Economics
  • N2Islamic Economics · Wealth & Economics

Give a 90 days action plan for the Remedy on a macro-economic international level and national and local level.

Conclusion

The sources do not give a 90-day plan or any timetable. They give principles: wealth must circulate beyond the rich, riba (interest) is forbidden, zakat moves from rich to poor, and holding back necessities to raise their price is a sin. The steps below apply those principles at local, national and international level. Their order — local first, national next, international last — is an editorial sequence, not something the sources prescribe.

Remedy

  1. Local (roughly days 1–30): move community savings and business finance out of interest-bearing products into interest-free loans and equity partnerships, so money earns only by sharing the risk of trade. H12N4
  2. Local (roughly days 1–30): organise the collection of zakat and give it out to the poor of the same area, so surplus wealth flows down instead of piling up. H8C3
  3. National (roughly days 31–60): watch stocks of staple goods and require hoarders to sell when people are in need, so withholding cannot push up the price of necessities. C1H4
  4. National (roughly days 31–60): give public revenue a set share for orphans, the needy and travellers, so that wealth does not circulate only among the rich. Q1T1
  5. International (roughly days 61–90): Expert Opinions propose commodity trade and most-favoured-nation agreements among Muslim states, plus equity-led cross-border investment, to reduce dependence on debt and the dollar. N1N4

Reflection & guidance

  1. Guidance from the Qur'an

    The verses ask that wealth be made to circulate and reach the weak, and that riba be dropped through repentance in a way that wrongs neither the lender nor the borrower. Q1Q4

  2. Guidance from the Sunnah

    The Prophet set up a standing transfer from rich to poor through zakat and condemned both sides of interest and the withholding of goods to push up prices. H8H12H4

  3. Guidance from the scholars

    Al-Nawawi gives the aim of the hoarding ban as protecting the general public from harm, and reports agreement that authorities may force sale in times of need. Al-Khattabi, as reported by al-Azimabadi, held that only certain kinds of holding back are forbidden. C1C2

  4. Lesson for the reader

    Start with what is in your own hands — your savings, your zakat and your trade — before asking states to act. Q4H8

Sources

Qur'an & Tafsir

Summary

Public wealth is to go to the kin, orphans, the needy and the wayfarer "so that it may not circulate only between the rich". Riba (interest) must be given up, and lenders keep only their principal. Wealth piled up and not spent in Allah's way is threatened with punishment. Q1Q4Q5

Key points

  • Moving away from riba (interest) does not wipe out debts: lenders keep their principal, "neither wrong, nor be wronged". Q4
  • Maarif-ul-Quran explains that fai' (wealth reaching the state without fighting) includes taxes and trade duties, and the Prophet was given full authority over spending it. T1

References

  • Q1Al-Hashr 59:7 · The Exile
  • Q4Al-Baqarah 2:279 · The Cow
  • Q5At-Tawbah 9:34 · The Repentance
  • T1Maarif-ul-Quran on 59:7

Sunnah

Summary

The Prophet cursed everyone in a riba deal: the one who takes it, the one who pays it, the witnesses and the one who writes it down (hasan sahih). He sent zakat (obligatory charity) to be "taken from the rich and given to the poor". He called the one who holds back goods until their price rises a sinner (sahih). H12H8H4

Key points

  • Ahmad ibn Hanbal defined hukrah (hoarding) as holding back "that on which people live". Al-Awza'i defined the hoarder as one who holds back supply from the market. H4
  • Because the curse covers the payer, the witness and the scribe, the whole riba arrangement is condemned, not only the lender. H12

References

  • H4Sunan Abu Dawud 3447 · Wages (Kitab Al-Ijarah)
    Authenticity
    • Sahih Al-Albani
    • Sahih Muhammad Muhyi Al-Din Abdul Hamid
    • Sahih Shuaib Al Arnaut
    • Sahih Muslim (1605) Zubair Ali Zai
  • H8Sahih al Bukhari 1458 · Obligatory Charity Tax (Zakat)
    Authenticity
    • Sahih — the whole collection is accepted as authentic (Sahih al-Bukhari)
  • H12Jami At Tirmidhi 1206 · The Book on Business
    Authenticity
    • Sahih Ahmad Muhammad Shakir
    • Sahih Al-Albani
    • Hasan Sahih Bashar Awad Maarouf
    • Isnaad Hasan Zubair Ali Zai

Hadith Commentaries

Summary

Al-Nawawi says the hoarding that is forbidden is buying staple food when prices are high and holding it back so the price climbs further. Scholars give the wisdom behind the ban as removing harm from the general public. He reports that scholars agree a person holding food that desperate people need can be forced to sell it. C1

Key points

  • Al-Azimabadi reports differences over scope: Malik banned hoarding linen, wool, oil and anything that harms the market; Ahmad limited it to food. Al-Hasan and al-Awza'i said that bringing goods in from another town and holding them is not hoarding. C2
  • Al-Sindi notes that the zakat hadith can be read in two ways: zakat stays in the town it is collected from, or it may go to Muslims who are poor wherever they are. C3

References

  • C1al-Minhaj Sharh Sahih Muslim on Sahih Muslim 1605 · al-Nawawi, vol. 11 p. 42
  • C2Awn al-Ma'bud on Sunan Abi Dawud 3447 · al-Azimabadi, vol. 9 p. 224
  • C3Hashiyat al-Sindi on al-Nasa'i on Sunan an-Nasa'i 2435 · al-Sindi, vol. 4 p. 223

Expert Opinions

Summary

Expert Opinions argue for growing Muslim businesses with equity rather than interest-bearing debt. They also argue for an economic bloc of Muslim states that trade commodities and grant each other most-favoured-nation terms, instead of copying the EU's single market. They warn that quick, forceful fixes to a system backfire and that small, well-placed changes work better. N4N1N3

Key points

  • Expert Opinions cite debt-funded buyouts of Toys R Us and ASDA as harmful. They contrast these with an equity fund that invested over £30m in more than 40 pharmacies without interest-bearing debt. N4
  • Expert Opinions (Mariam Khan) point to the EU's creditor-debtor imbalance and its dependence on the US dollar as things a Muslim bloc should avoid. N1

References

  • N1Unity & Political Body · Politics & Governance
  • N3Systems Thinking · Society & Culture
  • N4Islamic Economics · Wealth & Economics
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