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Makkah Tower Prophet Alhamdulillaah Muharram Muharram 2 Muharram 3 Ashura 12 Months Good Advice Sincerity 5

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All praise is due to Allah, Lord of all the worlds. May peace and blessings be upon the Messenger, his household and Companions.

Free trade is an important pillar of free market economy. In a free market economy, individuals, producers, merchants or sellers have the right to buy and sell goods and services freely. The price of a commodity is not pre-set or fixed; but it is determined through bargaining or negotiation. Trade (as well as production and investment) is done for profit in a market economy. In other words, doing business for profit or making money is perfectly normal, legitimate, and acceptable. Pursuance of profit is quite legitimate; it is not bad, not illegitimate, or not “socially unacceptable.” In fact, market price, which is determined by the interaction and negotiation of the buyer and the seller is the “just,” and fair price.

In Islam, trading is to be free and permitted to respond to the natural law of demand and supply. It is evident through examination of several Islamic principles that the ideology of Islam is, in fact, congruent with that of the Free Trade. The legislative wisdoms behind the institution of free trade in Islam is as result of encouraging Muslims to participate in markets with a consciousness of God in mind. While the legislative wisdoms behind free trade include freeing of market to respond to the forces of supply and demand and natural competition. This means that price controls, tariffs, and any other barriers should be removed so that trade can be free and fair. In the exchange of commodities in Mecca during the time of the Prophet Muhammad (peace be upon him), prices fluctuated according to market conditions. If price controls compel people to sell their goods at a price that is not acceptable to them or denies them the reasonable profit permitted by Allah, it is haraam (not permitted). Thus, when prices became high during  Prophet Muhammad’s (peace be upon him) time and people asked him to fix prices for them, he replied: “Allah is the One Who fixes prices, Who withholds, Who gives lavishly, and Who provides, and I hope that when I meet Him none of you will have a claim against me for any injustice with regard to blood or property.” (Reported by Ahmad, Abu Daoud, al-Tirmidhi, Ibn Majah, al-Dari and Abu Y'ala.)


This saying implies that unnecessary interference in the freedom of individuals is injustice and that one should meet Allah free of blame for such action.


The legislative wisdom behind the institution of free trade in Islam include transparent management and relations that aim to promote fairness and respect between trading partners, Islam holds these as well and within the context of free Trade model Muslims can help to expand this into even more markets than the ones currently available. Free trade is a means of developing nations to enter into markets and raise their standard of living through free opportunities which are fully compatible with Islam, thus affirming the congruency of both.


However, there is an important exception to the general policy of support of free trade. If any artificial forces, such as hoarding and the manipulation of prices by certain merchants interfere in the operation of the free market, then public interest takes precedence over the freedom of individuals. In such circumstances, price controls do become permissible in order to meet the needs of the society and to protect it from exploitation and injustice. The aforementioned saying of the prophet Muhammad does not imply that price control is prohibited regardless of the circumstances, even if it removes harm and prevents obvious injustice.



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