KINGDOM OF SAUDI ARABIA
Ministry of Higher Education
King Abdulaziz University
Centre for Research in Islamic Economics
THE ECONOMIC RELEVANCE OF THE SHARIA MAXIMS (al Qawaid al Fiqhiyah)
S.M. Hasanuzzaman
Scientific Publishing Centre
King Abdulaziz University
P.O. Box 1540, Jeddah 21441
Jeddah, Saudi Arabia
Contents
Acknowledgement
A b s t r a c t
Introduction
Legal Maxims On:
- Claim and Practice
- Doubt and Certainty
- Eliminating Detriment
- The Rules of Relaxation
- Give and Take
- The Rules About Benefit Versus Liability
- Public Welfare vis-à-vis the Discretion of the Government
- The Role of Custom and Usage
- Penalty for Evasion
- Limitations:
(i) As to analogy
(ii) As to tricky device
ACKNOWLEDGEMENT
In finalizing the paper I am grateful to Shaykh Husain Hamid Hassan, Rector, International Islamic University, Islamabad, Dr. Justice Tanzilur Rahman, Chief Justice, Federal Shariat Court, Mr. Khalid M. Ishaq, Advocate, and Dr. Mahmood Ghazi, for their valuable comments. In particular I am indebted to Mr. Justice Mufti Muhammad Taqi Usmani, Judge, Sharia Appellete Bench, Supreme Court of Pakistan and my brother Dr. Zafar Ishaq Ansari, Director General, Institute of Islamic Research, Islamabad, for a thorough review of the paper, in addition to useful explanations and guidance given to me by Mufti Muhammad Rafi Usmani of Darnl Ulum, Karachi, the errors still left are my own.
S.M. Hasanuzzaman
S.M. Hasanuzzaman
FOREWORD
al Qawaid (maxims) enjoy an important place in Islamic jurisprudence. They encapsulate concepts and precepts that can help one understand details of Law as it stands. More important than that, they are capable of helping one in arriving at the appropriate ruling where no explicit law exists.
Islamic economists are frequently called upon to look into situations not covered by existing rules. They also need guide posts when charting the vast expanse of rules that are already there. They are, like all students of Islamic Law, in need of “maxims”.
The Centre was pleased to endorse Dr. S.M. Hasanuzzaman’s proposal of a study dealing exclusively with maxims relevant for economic issues. It is still more pleased to present the fruits of Dr. Hasanuzzaman’s labour to scholars. Credit goes to the author, for this is the first-ever work on this subject in English. However, it is only a beginning. In all humility it is being published to invite further deliberation and discussion. We are especially keen to discover more instances of modem applicability of these and other maxim.
Any contribution to the subject will be welcome.
Dr. Mohamed A. EIgari
Director
Islamic economists are frequently called upon to look into situations not covered by existing rules. They also need guide posts when charting the vast expanse of rules that are already there. They are, like all students of Islamic Law, in need of “maxims”.
The Centre was pleased to endorse Dr. S.M. Hasanuzzaman’s proposal of a study dealing exclusively with maxims relevant for economic issues. It is still more pleased to present the fruits of Dr. Hasanuzzaman’s labour to scholars. Credit goes to the author, for this is the first-ever work on this subject in English. However, it is only a beginning. In all humility it is being published to invite further deliberation and discussion. We are especially keen to discover more instances of modem applicability of these and other maxim.
Any contribution to the subject will be welcome.
Dr. Mohamed A. EIgari
Director
A B S T R A C T
The rules of the Sharia signify the set of principles determined with precision and their subordinate legal maxims which the great Muslim jurists have derived from the Quran and the Sunna to determine the Islamicity of any act, institution and policy. They are the systematic exposition of the spirit of the text which coincide and guide man towards different situations in human society throughout the ages. This study is an attempt at selecting the largely accepted rules (legal maxims) that are relevant to economic life of individuals and society, and applying them to contemporary situations. These maxims, if broadly classified, relate to claim and practice, doubt and certainty, eliminating detriment, the rules, of relaxation, give and take, benefit versus liability, public welfare vis-a-vis the discretion of the government, the role of custom and usage, and penalty for evasions. The study begins with a statement of limitations to restrict their liberal application.
The subject has been discussed in all major works of jurisprudence including some works dealing only with legal maxims. But it will be found that in almost all these works the scholars have confined themselves to applying these maxims either on rituals or on citing the precedents of the few economic activities which were prevalent in the medieval period. This study, while retaining this latter part, is an attempt at applying the maxims to contemporary economic activities, institutions and policies. Being perhaps the first attempt of its kind, the study does not include all the maxims that may possibly be applied on economic matters nor those which are controversial as judged by the majority of jurists.
The subject has been discussed in all major works of jurisprudence including some works dealing only with legal maxims. But it will be found that in almost all these works the scholars have confined themselves to applying these maxims either on rituals or on citing the precedents of the few economic activities which were prevalent in the medieval period. This study, while retaining this latter part, is an attempt at applying the maxims to contemporary economic activities, institutions and policies. Being perhaps the first attempt of its kind, the study does not include all the maxims that may possibly be applied on economic matters nor those which are controversial as judged by the majority of jurists.
INTRODUCTION
One of the proposed definitions of Islamic economics (Journal of Research in Islamic Economics, Vol. 1, No. 2) reads thus:
“Islamic economics is the knowledge and the application of the injunctions and the rules of the Sharia in regard to acquisition and disposal of the available resources for providing satisfaction to the individuals in order to enable them to perform their obligations to Allah’ and the society”
In this definition the word injunctions signifies the prescriptive and the prohibitive injunctions of the Qur’an and the Sunna. The rules of the Sharia used in the definition signify the set of principles determined with precision and their subordinate legal maxims which the great Muslim jurists have derived from the Do’s and Don’ts, to ensure and to determine the Islamicity of any act, institution or policy. These rules are the systematic exposition of the spirit of the legal text (nass) intended to guide man towards different situations in human society throughout the ages. They provide broad contours within which policy making can be pursued and its validity judged. The legal maxims, on the other hand, are amenable to trade-offs and substitutions.
Before reproducing these rules and applying them, as far as possible, to contemporary economic situations and problems it is necessary to take care of the following precautions that are necessary to protect one from fallacious analogy, misleading over-confidence and lapse:
(1) Recourse may be made to reasoning based on these rules only if the Qur’an and the Sunna do not provide guidance on an issue. Consensus of early jurists (Ijma) also commands priority over the legal maxims. Injunctions of the Qur’an and instructions of the holy Prophet are also to be taken as a whole. The method of deriving conclusions from them are known and should be followed. Legal decisions based on them are contained in the compilations made by great jurists and scholars.
Jurists have also recorded the judgements and the opinions that are based on the consensus (Ijma) of early ‘u/ama’. This leaves a large number of issues that require a decision keeping within the limits of the Sharia. For example, the legal opinion in regard to profit-sharing in a joint venture is that:
“Profit is to be distributed according to the agreement but loss is to be borne in proportion to capital contribution”.
In this rule the ratio of the distribution of profit according to agreement can be reviewed in light of business conditions. It may be left to the partners to decide the ratios of profit- sharing or otherwise an Islamic government or central bank may fix a range within which the partners should share profits. The government may even lay down that, like losses, profit-sharing would also follow the ratio of respective capital
contributions by different partners. The liability of loss, however, has to be borne strictly in proportion of capital contribution since this rule enjoys the consensus of the scholars. The government has no right to change this ratio nor can the business partners make an agreement that violates the rule. Similarly in Bay ‘sa/am advance payment of cash is a condition that has been laid down by consensus of ‘Ulama’.
Deferred payment or adjustment of price against loan is not permissible. It is the consensus of ‘Ulama’ that business partnerships/(Shirka and Mudaraba) are treated as legal forms of joint venture. Thus there can be disagreement about forming a joint stock limited liability company, a trust, a cartel, a syndicate or a corporation but the legality of Shirka and Mudaraba may not be doubted.
It has to be fully kept in mind that all the injunctions of the Sharia seek to benefit human beings and eliminate harm. But those benefits and harms are not entirely left to the judgement of man. In a large number of cases those benefits and harms have been specified in the Qur’an and Hadith and should be made the criteria of judgement. In cases where benefits and harms are not pointed out human intellect will judge the virtue or vice of any act. Thus intellect would be guided by sound reasoning, experience, prevalent practice and sound judgement of scholars who have well understood the spirit of the Sharia and are scrupulous. Whether or not state trading should be allowed depends largely on experience. Should there be a difference in the wages of different workers and in the pay-scales different categories of employees depends upon custom and prevalent practice. Should any industry be nationalized in the interest of the community depends upon sound judgement of competent persons. The Sharia prohibits those trades and activities that involve ignorance and
uncertainty since they may lead to disputes, strife and animosity.* It is sound judgement that will decide which forms of present day trades and activities should be prohibited and which should be allowed and protected by law.
(3) The exigencies of the situation sometimes require that a lawful act should be disallowed for preservance of public interest. Similarly there are situations under which an unlawful act has to be tolerated during a short period of contingency. But of the two situations, allowing an unlawful act is much more serious than banning a lawful act. The safe and preferable way is to retain the essential illegality of the act even when it is unavoidable to have recourse to it under compulsion of circumstances. A government, for instance, may be compelled to pay interest on credit purchases of military hardware. Despite this compulsion, however, it should not be disregarded that payment of interest is unlawful and that serious thought should be given to eliminate that situation as quickly as possible.
(4) We are attempting here to identify only a few of the vast number of rules that the great jurists have laid down. Interpretation and application of these rules require thorough knowledge of Islamic law and jurisprudence. Emphasis on a single rule ignoring the total perspective, its scope, qualifications and limitations may often lead to a blunder. Such is the case that Muslim economists are advised to ignore these rules unless they are guided by reliable experts of Sharia. Nevertheless, possibility of error in interpretation and application by the author cannot be ruled out. The readers who may like to apply them ought to discuss their problems with scholars of authoritative competence on the subject rather than building upon this discussion.
With the above precautions the rules that seem to be relevant to economic policies and institutions may be briefly reproduced in the following pages. The discussion mostly contains the examples that early jurists have adduced. In some cases, however, examples of contemporary situations have also been added.
“Islamic economics is the knowledge and the application of the injunctions and the rules of the Sharia in regard to acquisition and disposal of the available resources for providing satisfaction to the individuals in order to enable them to perform their obligations to Allah’ and the society”
In this definition the word injunctions signifies the prescriptive and the prohibitive injunctions of the Qur’an and the Sunna. The rules of the Sharia used in the definition signify the set of principles determined with precision and their subordinate legal maxims which the great Muslim jurists have derived from the Do’s and Don’ts, to ensure and to determine the Islamicity of any act, institution or policy. These rules are the systematic exposition of the spirit of the legal text (nass) intended to guide man towards different situations in human society throughout the ages. They provide broad contours within which policy making can be pursued and its validity judged. The legal maxims, on the other hand, are amenable to trade-offs and substitutions.
Before reproducing these rules and applying them, as far as possible, to contemporary economic situations and problems it is necessary to take care of the following precautions that are necessary to protect one from fallacious analogy, misleading over-confidence and lapse:
(1) Recourse may be made to reasoning based on these rules only if the Qur’an and the Sunna do not provide guidance on an issue. Consensus of early jurists (Ijma) also commands priority over the legal maxims. Injunctions of the Qur’an and instructions of the holy Prophet are also to be taken as a whole. The method of deriving conclusions from them are known and should be followed. Legal decisions based on them are contained in the compilations made by great jurists and scholars.
Jurists have also recorded the judgements and the opinions that are based on the consensus (Ijma) of early ‘u/ama’. This leaves a large number of issues that require a decision keeping within the limits of the Sharia. For example, the legal opinion in regard to profit-sharing in a joint venture is that:
“Profit is to be distributed according to the agreement but loss is to be borne in proportion to capital contribution”.
In this rule the ratio of the distribution of profit according to agreement can be reviewed in light of business conditions. It may be left to the partners to decide the ratios of profit- sharing or otherwise an Islamic government or central bank may fix a range within which the partners should share profits. The government may even lay down that, like losses, profit-sharing would also follow the ratio of respective capital
contributions by different partners. The liability of loss, however, has to be borne strictly in proportion of capital contribution since this rule enjoys the consensus of the scholars. The government has no right to change this ratio nor can the business partners make an agreement that violates the rule. Similarly in Bay ‘sa/am advance payment of cash is a condition that has been laid down by consensus of ‘Ulama’.
Deferred payment or adjustment of price against loan is not permissible. It is the consensus of ‘Ulama’ that business partnerships/(Shirka and Mudaraba) are treated as legal forms of joint venture. Thus there can be disagreement about forming a joint stock limited liability company, a trust, a cartel, a syndicate or a corporation but the legality of Shirka and Mudaraba may not be doubted.
It has to be fully kept in mind that all the injunctions of the Sharia seek to benefit human beings and eliminate harm. But those benefits and harms are not entirely left to the judgement of man. In a large number of cases those benefits and harms have been specified in the Qur’an and Hadith and should be made the criteria of judgement. In cases where benefits and harms are not pointed out human intellect will judge the virtue or vice of any act. Thus intellect would be guided by sound reasoning, experience, prevalent practice and sound judgement of scholars who have well understood the spirit of the Sharia and are scrupulous. Whether or not state trading should be allowed depends largely on experience. Should there be a difference in the wages of different workers and in the pay-scales different categories of employees depends upon custom and prevalent practice. Should any industry be nationalized in the interest of the community depends upon sound judgement of competent persons. The Sharia prohibits those trades and activities that involve ignorance and
uncertainty since they may lead to disputes, strife and animosity.* It is sound judgement that will decide which forms of present day trades and activities should be prohibited and which should be allowed and protected by law.
(3) The exigencies of the situation sometimes require that a lawful act should be disallowed for preservance of public interest. Similarly there are situations under which an unlawful act has to be tolerated during a short period of contingency. But of the two situations, allowing an unlawful act is much more serious than banning a lawful act. The safe and preferable way is to retain the essential illegality of the act even when it is unavoidable to have recourse to it under compulsion of circumstances. A government, for instance, may be compelled to pay interest on credit purchases of military hardware. Despite this compulsion, however, it should not be disregarded that payment of interest is unlawful and that serious thought should be given to eliminate that situation as quickly as possible.
(4) We are attempting here to identify only a few of the vast number of rules that the great jurists have laid down. Interpretation and application of these rules require thorough knowledge of Islamic law and jurisprudence. Emphasis on a single rule ignoring the total perspective, its scope, qualifications and limitations may often lead to a blunder. Such is the case that Muslim economists are advised to ignore these rules unless they are guided by reliable experts of Sharia. Nevertheless, possibility of error in interpretation and application by the author cannot be ruled out. The readers who may like to apply them ought to discuss their problems with scholars of authoritative competence on the subject rather than building upon this discussion.
With the above precautions the rules that seem to be relevant to economic policies and institutions may be briefly reproduced in the following pages. The discussion mostly contains the examples that early jurists have adduced. In some cases, however, examples of contemporary situations have also been added.
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