Salam Alaykum and Hello to you if you are non-Muslim.

I am sure the tendency is for many non-Muslims to roll their eyes and/or yawn when we Muslims say Islam is a total package in terms of how humans beings should live their individual lives and function as a society. This is probably because we Muslims have not done enough to actually show this totality of concept in our daily lives or because there is too much of negative press about Islam and Muslims for which Muslims cannot be totally exempted from blame. The essence of this thread is to present to you the Islamic framework on Business Ethics. As a Management person myself, I understand that Business Ethics is a very wide and controversial area of study and application. Hence, you should find this presentation interesting.

Note: I am only presenting information from a website but in a format I hope will be more useful to Nairalanders.

I. ROLE AND NATURE OF ETHICS IN ISLAM

It was indicated earlier that Islam is more than a “religion” in the common restricted sense. It is rather a complete way of living. As such, ethics is not one of its “compartments”, but something at its very core. This may explain why Prophet Muhammad summed up his mission in the following words:
“ I was not sent except to perfect moral characters”.

The Qur’an does not speak of Iman [faith] as an abstract concept or a quality that is independent of action. It ties between “faith” and righteous deeds as inseparable components of what constitutes a true believer. Prophet Muhammad was even more explicit when he negated the quality of faith from a dishonest person even if he/she claims to be a “believer”.

“ There is no faith for one who lacks honesty”

Conversely, he tied faith to acts of kindness to others.
“ Whoever believes in Allah and the [life] hereafter, let him be hospitable to his guest, and whoever believes in Allah and the [life] hereafter, let him not hurt his neighbor, and whoever believes in Allah and the [life] hereafter, let him say something beneficial or remain quite”.

While acts of pure worship, constitute essential pillars of Islam, both primary sources of Islam, the Qur’an and Hadeeth indicate that that they are not always meant for themselves as mere rituals. The five daily mandatory prayers are described in the Qur’an as acts to help restraint the believer from immorality and wrongdoing [29:45].
Zakah [charity] as a means of purification; of the giver from greed, stinginess, ungratefulness and apathy; of the receiver from envy and hate of the uncaring well-to –do persons; and of society from injustice, oppression and social instability [9:103]. Fasting is described as a means of attaining righteousness [2:183]. Even the highly structured rituals of pilgrimage to Makkah are tied to good moral behavior [2:197]. In fact, the restrictions on the pilgrim not to hunt an animal for food or even pluck a tree leaf is a form of training on how to live in harmony with all the creation of Allah.

This may explain why Prophet Muhammad [p] said:
“ There may someone who gains nothing from his fasting except for hunger and there may be someone who gains nothing from his night prayers except for staying up late, “

“Anyone who does not desist from falsehood in words and deeds, Allah has no need for him/her to abstain from food and drink”

Such explanation of the nature and purpose of the essential acts of worship in Islam might have led the noted scholar Muhammad Al-Ghazali to describe acts of worship as “practical drills” on moral behavior.

As the broader Islamic ethics are anchored in the Islamic worldview, they are also the foundation of specific applications in the economic sphere of life. These applications are examined in the framework that is familiar to most readers, especially those with background in economics and business; production, consumption and distribution.

II. ISLAMIC ETHICS IN PRODUCTION
It was previously indicated that the Qur’an clearly and explicitly stimulates research, development and improvement of the quality of life through the wise use and harnessing of the resources which Allah created for the benefit and comfort of the humankind. Harnessing these resources, however, requires labor as a primary factor of production. The Qur’an exhort people to “go about in the spacious sides of the earth and to eat of His provision” [67:15]. It affirms that Allah has established the human race on earth and for him/her means of livelihood [7:10]. Devotional acts are not meant to restrict one’s pursuit of livelihood. Even on Fridays, when a mid-day mandatory congregational prayer is performed, the Muslim may “disperse in the land and seek of the bounties of Allah” [62:10].

Work is worship
Labor is a potential act of “worship”. In fact, all legitimate activities and efforts exerted with pure intentions are potential acts of “worship” in the broader Islamic meaning. They are seen as part of the fulfillment of one’s role as a trustee of Allah on earth. That role, in turn, is called “worship” in the Qur’an [51:56]. It follows that work is not only a means of survival, but also a rewardable act of worship. Properly understood, this concept can be instrumental in motivating productivity as the time scale, the reward expected, and the Ultimate One to please by productive work are far beyond any finite concept or person.

This may be illustrated by the instructions of Prophet Muhammad (P) that if the Day of Judgment begins while one is planting a tree, he should complete his task first. One may wonder as to what is the point of planting something that cannot immediately benefit the planter, and why plant a tree whose "fruits" may never be reaped? It is probably the inculcation of the attitude of working on the basis of a longer scale of time, consideration of future generations, and above all the anticipation of Divine reward. It is the same spirit that the Prophet also taught that if one plants a tree of which a human, and animal or bird eats, he/she will get a reward for all who benefit from it. Likewise, one's attitudes toward ecology are the prudent use of the infinite time scale and the loftiest objective, to reach for Allah. This results in greater sensitivity to the needs of the future generations. An example of this was the prophet's critical reaction to a companion who was using an excessive amount of water to make his ablution for prayers. When the companion responded "is there excess in the use of water?" the Prophet replied, "Yes, even if you're (making ablution) from a running river.”

Islam teaches one's responsibility before Allah and the belief in resurrection and eternal life, whose nature depends upon one's actions while on earth. Tawheed also means belief in the absolute perfection of Divine Attributes, one of which is perfect knowledge, even of the most secret thoughts of the heart. The result of such belief is that self-policing becomes the primary motive to avoid "evil" or "wrong", more so than mere social controls which are incapable of policing everything. Properly implemented, one's sense of responsibility before Allah avoids the attitudes of "get away with whatever you can so long as you don't get caught", or even the attitude of taking advantage of legal or administrative gaps or flaws to maximize one's utility at the expense of society. The sense of fairness in the social contract are greatly enhanced both by the infinite time scale and by the keen sense of Taqwa (being Allah-conscious) realizing that nothing can be hidden from Allah, who will hold each person responsible for his/her deeds.

The Qur’an affirms also the entitlement of reward that is commensurate with effort [7:170; 3:136; 99:7 and 46:19]. This rule applies to the immediate reward in this life as well as the deferred reward in the hereafter. The pursuit of excellence in work is not motivated, not only by material reward, but also by the pursuit of Allah’s pleasure.

The Qur’an promises:
“…Indeed, Allah will not allow to be lost the reward of any who does a good work” [18:30]
Performance evaluation of one’s work is not only done and rewarded by other humans, but is also done, appreciated and rewarded by Allah. “and say, do [as you will], for Allah will see your deeds, and [so will] His Messenger and the believers. And you will be returned to the knower of the unseen and the witnessed, and He will inform you of what you used to do” [9:105].

Prophet Muhammad [p] taught:
“ Allah has ordained excellence in everything….”

“Allah loves, when one of you is doing something, that he/she do it in the most
excellent manner”

The Arabic term for “excellence” used here is Ihsan, which was defined in another saying of the Prophet as “worshipping Allah as if you see Him, but if you can’t see Him [you realize that] He sees you.”

III. QUESTION OF WELFARE

While Islamic law recognizes the right of the weak, young and poor for a minimum level of decent life, it discourages abuse of welfare systems or exploit people’s kindness when the person is able to seek work and earn his living. The following are illustrations from Hadeeth to illustrate this aspect of work ethics.
“Charity is not permissible for [someone who is] rich [i.e. has enough to get by, decently] or to [someone who is] able-bodied”
“It is better for one of you to take his rope, go to the forest and bring some firewood to sell so as to safeguard his face [i.e. dignity] than asking people [for charity], whether they give him or decline to do so.”

IV. RESTRICTIONS ON THE PRODUCTION PROCESS
As production of goods and services or any "value added" is part of one's
trusteeship role, it has to abide by the conditions of that trust. Hence, production is restricted by the following conditions:

1. The product or service must be lawful and does not involve "trespassing the limits of Allah" [Qur’an, 2:229]. For example, the production of wines or other intoxicants is prohibited in Islam, wines are not regarded as a commodity of value. Likewise, any activity connected with gambling, prostitution or other "indecencies" is restricted.

2. The method of production should not cause an undue and excessive harm to Allah-given resources and bounties for the benefit of all mankind. The Qur'an speaks repeatedly against spreading mischief or corruption in the land. [2:60,2:205,5:46,7:56]. Prophet Muhammad [p] spoke of the punishment of anyone who kills a sparrow without a legitimate reason[e.g. for food], or one who cuts a tree for no good reason

3. Productive resources are not to be left idle in the name of private ownership, especially resources that are crucial to the lives of people. The following Hadeeth provides an illustration of this concept:
"If one of you possesses a piece of [cultivable] land, let him cultivate it. And if he is not able to cultivate by himself, let him give it to his brother."

Whatever arrangement made with one's "brother", the message of this Hadeeth is clear; do not leave productive assets idle. This makes ownership of resources a social function, rather than an absolute right.

4. the production process should not cause harm to others [e.g. building a noisy factory in the middle of a residential area] as restricted currently by zoning regulations. This is based on the instruction of the Prophet :
" one should not harm himself or others."

In situation s where some harm is inevitable, a careful weighting of relative harms and benefits should be made. Furthermore, a party that may be harmed must be compensated, based on the cardinal rule in Islamic Law that harm must be removed [or compensated if inevitable].

V. ISLAMIC ETHICS IN CONSUMPTION
The basic rule in consumption is that everything is deemed lawful, unless there is evidence to the contrary.
“O mankind, eat from whatever is on earth [that is] lawful and good and do not follow the footsteps of Satan. Indeed, he is to you a clear enemy”.[Qur’an, 2:168]

It is noted that the above passage places lawfulness ahead of goodness. This signifies that it is Allah-determined lawfulness that defines what is “good” or wholesome. For example, intoxicants do not fall within the scope of “goods” as an economist would consider them. In other words, definition and value of “goods” in Islam is not determined exclusively by market forces such as supply and demand. There is supposed to be no “supply” produced in the first place, nor is there supposed to be “demand” either in a community that accept such injunctions. Failure to observe the divinely-defined lawfulness means “following the steps of Satan”.

As it is forbidden to consume the unlawful, it is also forbidden to restrict the consumption of the lawful without a valid reason.“Say, ‘who has forbidden the adornment of Allah which He produced for His servants and the good [lawful] things…” [Qur’an, 7:32]

In order to partake the lawful, spending [Infaaq] is a must. The Qur’an encourages spending [as opposed to hoarding], whether for one’s own needs, those of his dependents, close relatives and for charity at large. Prophet Muhammad [p] included several categories of spending in one Hadeeth; spending in the Way of Allah [for the defense and security of the community], to help set a slave free, to give to the needy and to support one’s own family. In fact, failure to spend to support one’s family is regarded as sin “Suffice as sin for anyone is to be unsupportive to one’s dependents”.

Both consumption and spending are qualified, however, by the ethical rule of moderation and avoidance of extravagance.“…and eat and drink, but be not excessive. Indeed, He [Allah] likes not those who commit excesses” [Qur’an, 7:31].

“ O believers, do not prohibit the good things that Allah has made lawful to you and do not transgress. Indeed, Allah does not like transgressors.”[Qur’an, 5:87]

Describing true believers, the Qur’an states:
“ And those who, when they spend, they do so not excessively or sparingly but are ever, between that, [justly] moderate” [ Qur’an, 25:67].

This ethic of spending has economic implications. Moderate spending is necessary to generate jobs and contribute to economic activities and development. That moderation allows for some savings which, in turn, can be invested and hence contribute further to development. Capital investment is likely to be more productive than extravagant spending, particularly in the long term. Aside from reducing wasteful use of resources, it may help rationalize the use of scarce resources to cater to the needs of society at large, especially crucial needs. The issue here is not the permissibility of production of luxury items, which is not unlawful. The real issue pertains to the macro-economics implications of the manner of utilizing resources in the context of a given prioritized social and economic needs.

Another issue relating to consumption, is credit financing, particularly the modern system of charge cards. It is not unlawful in Islam to “borrow” so long as no interest is involved. This is hardly the case in credit financing, whether for the purposes of production or consumption. It is lawful, in the opinion of many contemporary Muslim scholars to use “charge Cards”, it is conditional on the payment of the entire balance by the due date so as to avoid the payment of any interest. Commonly, however, credit cards are used as a form of “borrowing” with interest added to the principal. The problem is not only with interest, but also the violation of the Prophet’s exhortation to avoid unnecessary debt. He used to “seek refuge in Allah” from the burden of debt.

V1. ISLAMIC ETHICS IN THE AREA OF DISTRIBUTION

A link between production and consumption is distribution. Ethics of distribution may be summarized in the following:

1. Permissibility of lawful trade : The Qur’an explicitly states that trade in itself is permissible
“… but Allah has permitted trade and has forbidden interest”.[Qur’an, 2:275]

2. Prohibition of trading in “unlawful” items
One basic rule in Islamic Law is that if an item is lawful, then buying or selling that item is also unlawful. Examples of that include trading in intoxicants, living off prostitution or other “ immoral” activities, also trading in stolen goods.

“ Allah has made wine and its price unlawful, and made the dead animal and its price unlawful and made the swine and its price unlawful”.

3. Refraining from hiding any known defect in an item offered for sale. The buyer should be informed about such defect [s] and it is up to him/her to accept to buy it or not and at what price. The Prophet taught:
“The buyer and the seller have the option [to cancel or confirm the bargain. And if they spoke the truth and made clear [the defects of the goods], then they would be blessed in their bargain. And if they told lies and hid some defects, their bargain would be deprived of Allah's blessing".

4. Honesty in all dealing is an ethical requirement, including the fulfillment of all contracts, commitments and covenants.“And those who keep their trusts and promises” [Qur’an, 23:8]

One aspect of honesty is to give the full weight and measure
“ Give full measure and do not be of those who cause loss [to others]. And weigh with an even [honest] balance”.
[Qur’an 26:181-182]

“ And give full measure when you measure, and weigh with an even [honest] balance. That is good and the better at the end”. [Qur’an, 17:35]

The Qur’an warns those who violate this injunction:
“ Woe to those who give less [than due]. Who, when they take a measure from people [as buyers], they take in full. But if they give by measure or by weight [as sellers], they cause loss [to others by giving less than due]. Do they not think that they will be resurrected? For a momentous Day [the Day of Judgment]. The Day when mankind will stand before the Lord of the worlds?”[Qur’an, 83: 1-6]

The Prophet addressed the problem of cheating in more than one Hadeeth. Following is an example:
“Anyone who cheat us is not of us”

5. Refraining from the exploitation of the ignorance or desperate needs of others by giving them less than a fair price [or wage]
The Qur’an enjoins ”..and do not deprive people of their due” [Qur’an, 7:85]
One form of that exploitation which the prophet forbade is “Tanajush”. This refers to deceptive practices in auctions, where persons who do not intend to buy simply keep bidding the price upwards [often in conspiracy with the seller], so as to get others “stuck” in the deal.

6. Allowing the maximum possible “information” about the going prices of good to be disseminated so as to allow the seller to get the best and fairest price for his goods. At the time of the Prophet, some middlemen used to go to the outskirts of the town [where there is a frequented market] where they intercept out-of-town merchants or farmers who are bringing their products to sell in the market. These middlemen would then offer to buy such products at a given price which was commonly less than the going market price. The Prophet forbade that practice and instructed that the sellers should be allowed to get to the market first [i.e. to find out the going or offered price for their products] before an offer is made to them. From an economist’s perspective, it is a case of enhancing information among the buyers and sellers. This improves the competitive nature of the market and thus help determine the “equilibrium” fair price.

7. Prohibition of the sale of an item which is not available and whose delivery is doubtful [Bay’ul-gharar]. Examples of that include selling fish in the river or selling agricultural products before the plant becomes viable and takes roots. Exception to that are made for necessity, where fairness is ascertained.

8. Restriction of unfair monopoly: It may be argued that some “monopolies” may be more efficient and beneficial to society at large, such as the case of utilities, provided that proper controls and regulations are in place to prevent abuses. On the other hand, monopolies which are designed to create an artificially higher price or to create artificial shortages are forbidden. It is this type of monopolies that that the Prophet condemned, especially in respect to foodstuff “ He who monopolizes is sinful”

“Whoever monopolizes foodstuff for forty days, he has dissociated himself from Allah and Allah has dissociated Himself from him”.

The Prophet forbade also the practice where a town dweller withhold and store foodstuff that belongs to an desert dweller, wait until the price goes up [possibly due to this artificial shortage], then he sells that foodstuff [and thus get a higher commission] for his services.

9. Ethical competition: It is lawful for sellers to compete in order to attract buyers. However, attempting to “snatch” a customer who has already negotiated a deal with another seller is regarded as unethical, unless the earlier negotiation broke down or was cancelled for some other reason.

VII. ENFORCEMENT MECHANISM

Enforcement mechanisms of Islamic business ethics begin with the individual. It is the appeal to the person’s conscious, “fear” of Allah and the desire for His blessings in this life and in the life hereafter. This mechanism is founded on the person’s realization that Allah knows the manifest and the hidden and will hold all accountable for their deeds. This is perhaps the most powerful enforcement mechanism, more so than any government control. That sense of ultimate responsibility is exemplified in the following Qur’anic warning:
“And fear a Day when you will be returned to Allah. Then every soul will be compensated for what it earned, and they will not be wronged [i.e. treated unjustly]” [Qur’an, 2:281]

As individuals vary in the extent of their “fear of Allah” and their motivation for righteousness, other sanctions are necessary. One such mechanism is social values, norms and sanctions. Another inevitable enforcement mechanism in any organized society, composed of less than angels, is government controls, monitoring and policing powers. In normative Islam, however, government role is no excuse for totalitarianism.

The Prophet was once asked by his companions “Why don’t you set prices [of goods] for us?. His answer was “Allah is the One who sets prices”. He seems to be referring to the natural laws of supply and demand that Allah created, which, under normal circumstances should be more valid than decisions made by a given bureaucracy. This does not rule out, however, limited government intervention when necessary for the protection of public interest and within the Islamic process of Shura [Mutual consultation].

Source: http://www.fiqhcouncil.org/node/17

Quite voluminous but also very detailed and insightful. May Allah bless the efforts of the author(s)and reward them abundantly.