Trading with “Taqwa”
Trading with ‘Taqwa’
by Shiban Akbar OBE
Summer 2014
The world media took note of the calamitous event on 24 April 2013, when Rana Plaza, a garment factory building in Bangladesh, collapsed. Despite the tireless efforts of rescue workers and volunteers, the salvage operation continued for 20 days. Over 1,125 bodies were recovered and many were unidentifiable. Of those rescued – over 2,400 – some have since succumbed to their injuries, many others are disabled for life and most are likely to have mental health problems. The building in question had violated construction regulations.
Bangladesh is the world’s second-largest clothing exporter after China, with 60 percent of clothes going to Europe and 23 percent to the United States yet multiple fatalities of garment factory workers is a regular feature within the industry. Poor working conditions, structurally unsound buildings, an absence of fire exits and sprinkler systems, and insufficient monitoring of safety measures have all made their contribution. It is believed by many that the collapse of Rana Plaza was not an accident but the worst form of structural violence. Economic exploitation and social domination are among the common forms of structural violence carried out by social institutions and existing social structures in any country. The garment industry of Bangladesh is one example where workers’ lives are progressively and inexorably trapped into a malevolent global market and living environment.
Against this backdrop, we need to consider faith-based trading. Bangladesh is a Muslim majority country, but how much of the country is aware of, or practice, Islamic precepts of ethical commerce? Although there is a sizeable Muslim population in Bangladesh, Islamic values have not had a good breeding ground to flourish because both constitutionally, and institutionally, it is a secular country, and the political party that had a religious brand was more focussed to advance their political agenda than anything else. The secular norms have systematically eroded accurate Islamic foundations and in the absence of a secular alternative to moral and virtue education, a just society is yet to be forged. Individually, Muslims who practice religion do so within their private spheres and Islamic scholars are mostly visible on once-aweekly TV religious discussion shows that attract only the interested few. The society in Bangladesh therefore by most standards is very different from the examples set by the Muslim merchants of olden times as described by Rice [1999]:
“When Muslim merchants travelled to distant lands, the inhabitants of those lands were impressed by the traders’ social and business conduct and so became curious about their beliefs. Many of these inhabitants subsequently became Muslims.”
Therefore, to look at the ethics of business and consumerism conducted in the country from an Islamic standpoint may not be wholly appropriate. Nevertheless, the guidelines of Islamic business principles are there for the open-minded and anyone who believes in a fair society. Islam teaches us that Allah, the Lord of the Universe, has entrusted humanity with stewardship where our actions and even intentions matter. Our primary goal is to earn His pleasure and how we think and what we do must be fashioned to ‘ihsan’ – meaning ‘doing what is beautiful’ over and above self-interest and personal gains. This is not to say we cannot enjoy the fruits of our labour, or think of making profit, but profit alone must not be our objective. Islam does encourage trade and commerce, so much so that honest trading during pilgrimage is permissible, if necessary. The manner in which we conduct our business is crucial; we must not lose sight that someone, somewhere down the commercial chain, may be adversely affected by our actions, or those of other involved stakeholders. The public, and common good, must be at the forefront of our business dealings. Sanctity of actions based on a spiritual or human connection with products and consumers can safeguard the common good. Such actions would include transparency, accountability, fair wages and good living conditions for employees, environment friendly, responsible and reliable modus operandi.
Islam is a religion embodying a way of life complete with manners and morals. Ethical commerce is integral to the code of behaviour that is necessary for Muslims to follow in order to be honest brokers in their personal and public lives. Measuring the corporate process by ethical and moral yardsticks comes within the scope of ‘the Shariah’ – Islam’s own body of law that governs all aspects of a Muslim’s life – individual, collective, civil and criminal.1 Therefore, the prescribed etiquette and rules include guidelines for ethical practices in commerce and business operation just as in ordinary life. The different players involved in the business activity or operation range from producers and their suppliers, workers and consumers who are both buyers and end users; and their contractual, reciprocal and shared relationship come within the scope of the Shariah. Interdisciplinary in nature, Islamic finance and Islamic economics combines religion, law, sociology and area studies. The Qur’an, the Hadith and Fiqh or Jurisprudence are the Islamic sources from where we derive guidance and the sources of Islamic business ethics are no different. So what do the established sources say?
The Qur’an [verse 17: 34 & 35] states,
“Honour your pledges: you will be questioned about your pledges. Give full measure when you measure, and weigh with accurate scales: that is better and fairer in the end”.
The verbs, nouns and adjectives forming the key concepts in the verse quoted above are about commitment and accountability and direct a profoundly honourable world order covering all aspects of social or business commerce, dealing, transaction, appraisal or adjudication that we are commanded to execute with integrity, equanimity, consideration and justice. The verse further states that such conduct will be proper and beneficial in the end, the end being either a worldly purpose or a spiritual determination. In a similar verse The Qur’an [26:181-3] underscores the need for fair distribution of wealth, ownership right of others and warns against what is unlawful:
“Give full measure: do not sell others short. Weigh with correct scales: do not deprive people of what is theirs. Do not spread corruption on earth.”
After the Qur’an, the important source of knowledge is the life (Sunnah) and utterances (Hadith) of our Noble Prophet, the most important role model for believing Muslims. An important Hadith is to make prompt payment for services rendered before the sweat of the worker dries. The instruction read literally may reflect the conditions of desert heat of Arabia where the Prophet lived, and where the same environment exists in other sultry climates. Read figuratively, the instruction of the Hadith reminds us of the obligation of an employer to safeguard the right of an employee, and warns against employer negligence. The payment however can be in the form of a regular salary or a contractual fee where both parties have agreed to the terms of payment. The Sunnah and Hadith for practical trading include standardization of weights and measures; even-handedness; contracted transaction; the seller steering clear of cheating, making false claims or pulling the wool over consumers’ eyes; polite communication and considerate behaviour during decision-making and trading.
Islam’s approach to corporate social responsibility is holistic and integral because we must meaningfully engage with our fellowmen and our surroundings.The purpose is to follow a unifying principle for social harmony and to strengthen the foundation of the community. Here akhlaq or in other words morality and ethics play a vital role. To give an example, while I have the rights to have wealth, I have to make sure that I do not infringe on the rights of society to acquire and enjoy it. Therefore, Islam prohibits a Muslim from being a ‘self-centred utility-maximizing economic agent’2. Islamic corporate social responsibility directs at upholding dignity of all concerned, showing solidarity with the rest of the human race and demonstrating respect for the freedom and equality of others. Therefore individual freedom must be regulated by social constraints that would act as a check and balance from arbitrary human activities. Stewardship or trusteeship means, we have to consolidate collaboration and partnership, trust, equity and social justice among all social players – values that are vital components in any commerce or transaction.
Corporate governance concerns itself with the three essential principles of transparency, accountability, and adequate disclosure required for a business to fulfil its responsibilities to shareholders and other stakeholders. While as a term ‘corporate governance’ is an early twentieth century concept, what it features is not alien to Islam. The characteristic of an Islamic business ethics is that every business operation and transaction must be principled and morally sound. It prohibits all forms of exploitation in business dealings and urges the practice of fair play, honesty, accountability, transparency, adequate disclosure and impartiality between all parties whether majority or minority shareholders, very similar to the principles of secular corporate governance. The Qur’an urges us to be accountable and fulfil our contracts:
“You who believe, fulfil your obligations.” [5:1] and “You who believe, do not wrongfully consume each other’s wealth but trade by mutual consent.” [4;29]
Decision-making is an important principle of corporate governance. The Qur’an commands consultation with stakeholders prior to decision-making in order to seek consensus and to invoke God’s blessing by putting our trust in Him:
“… Consult with them about matters, then, when you have decided on a course of action, put your trust in God …” [3:159] and “… conduct their affairs by mutual consultation; give to others out of what We have provided for them “ [42:38]
The Qur’an commands disclosure and transparency as good practice by recording and reporting stages of the transaction:
“… Have witnesses present whenever you trade with one another, and let no harm be done to either scribe or witness, for if you did cause them harm, it would be a crime on your part …” [2:282]; “If you are on a journey, and cannot find a scribe, something should be handed over as security … Do not conceal evidence …” [2:283] and Do not give short measure nor short weight… in fairness, give full measure and weight. Do not withhold from people things that are rightly theirs …” [11:84-5]
Islamic economic principles are equally applicable all over the world. Zakah and the prohibition of Riba are dominant factors that shape the nature of Islamic corporate governance. Zakah, one of the five pillars of Islam is an annual compulsory payment on savings of two and a half percent owed to the less fortunate and a calculation based on our surplus cash, gold and silver. In Bangladesh regular Zakah contribution collectively, can go a long way towards rehabilitating victims of the garments factory disaster. Riba or usury is a sin because it is an unjust business gain based on exploitation. In Islam, it is the responsibility of the state not only to curb unlawful behaviour such as dishonesty, fraudulence and unfair play by ensuring the execution of contracts and protecting property rights but also to facilitate desired economic behaviour by putting in place necessary economic as well as educational, socio-political and legal reforms for proper institutions to be relevant.
The concept of ihsan that I have mentioned earlier originates from taqwa or God-consciousness, and is fundamental to protecting the social fabric by committing oneself to fulfil the entrusted roles [of stewardship] that make up our life. The totality of a Muslim’s life must be subservient to the prescribed faith of Islam to meet with the standards of wholesomeness, purity, social justice and shared responsibility. We must regulate our economic behaviour by an awareness that we will return to God.
- The Shari`ah is primarily based on the Qur’an and the Hadith. The Islamic way of life; Islamic intellectual tradition; Aqidah or faith; Akhlaq or morality & ethics; Fiqh or the knowledge of the legal rulings all are part of the Shariah.
- Chapra, 1992