The Morality of Profit is difficult to define. Profits based on customer satisfaction are generally ethical but those made by black marketing or by exploiting the need of people in distress are definitely unethical and in many countries illegal.

 

It is not only the investment content. The time and effort spent on research and planning many products such as medicines, computer programs. new electronic appliances etc. need to be compensated over a short

duration in initial years of marketing. The same is true of services of doctors, lawyers, artists and other experts. and their ability to satisfy the demands of consumer and customer. 

 

For routine business operations for ordinary consumable items, a profit  of more or less 10% on sales would not be grudged. Remember the shopkeepers have to incur overhead expenses on electricity, rent,

repairs and staff salary etc. That needs to be taken into consideration for pricing. But if you create artificial crisis of sugar or flour shortage and make huge profits it is certainly un-ethical.

 

Many traders are tipped by the ministry of finance officials about  changes in taxes and duty rates and they hoard goods by purchasing at lower prices and double and triple their profits.

 

It is really lamentable that despite the fact that profiteering is prohibited in Bible and Quran, our traders and industrialists resort to un-ethical practices for profiteering.

 

Arif Khan

    

Naeem-ud-din Khalid <dosama_isb@...> wrote:

The economists provoke that "interest/profit" in an economical activity should possibally be remain less or equal to 10%   of principal invested amount in a year.

If it exceeds by 20% or 40% then economical activities become in-stable?

"interest/profit" is the important factor of an economical activity you may term it actually  "the Head" of an invested wealth.

 

Now  if we for a moment calculate the %tage of head in a body which is an average 10%, (in rare case will  exceed by 10%, and most of the cases it is less than 10%).

 

Do you agree with above mentioned explaination? 

Khan Arif <ank2000pk@...> wrote:

In response to your latest email, I submit:
-
In verse 4.161 the words "devoured men's substance wrongfully" indicate exploitation.

004.161: That they took usury, though they were forbidden; and that  they devoured men's substance wrongfully;- we have prepared for those among them who reject faith a grievous punishment. 

In verse 2.279 the words 'Deal not unjustly' refer to exploitation.

002.278: O ye who believe! Fear Allah, and give up what remains of your demand for usury, if ye are indeed believers.
002.279: If ye do it not, Take notice of war from Allah and His Messenger: But if ye turn back, ye shall have your capital sums: Deal not unjustly, and ye shall not be dealt with unjustly. 

In verse Verse 3.130 the words doubled and quadrupling are important in arriving at the definition of Riba. Does it mean that the until the riba reaches the level of double and manifold it can be taken? Probably
not but it does indicate excessive charge. 

003.130
YUSUFALI: O ye who believe! Devour not usury, doubled and multiplied; but fear Allah; that ye may (really) prosper.
PICKTHAL: O ye who believe! Devour not usury, doubling and quadrupling (the sum lent). Observe your duty to Allah, that ye may be successful.
SHAKIR: O you who believe! do not devour usury, making it double and redouble, and be careful of (your duty to) Allah, that you may be successful. 

The hadith that are quoted in support of treating riba as interest instead of usury do not give sufficient details to arrive at logical conclusion.

For instance:
Volume 3, Book 34, Number 379: (Sahih Bukhari)
Narrated Ibn 'Umar:
The Prophet said, "The selling of wheat for wheat is Riba (usury) except if it is handed from hand to hand and equal in amount. Similarly the selling of barley for barley, is Riba except if it is from hand to hand and equal in amount, and dates for dates is usury except if it is from hand to hand and equal in amount.

Such hadiths do not give sufficient details about the occassion and why the necessity of selling wheat for wheat arose or was it a loan in kind and how the differences in quality were to be met. Thus many fatwas
based on such hadiths tend to be based on conjecture rather the commandments of Quran or correct interpretation Sunnah!

Profit and Trading:

Selling of item purchased at whole sale price of say RS. 1000 per piece for RS. 1200 or even RS. 1500 is permissible trading. You can even sell it in 12 monthly instalment of RS. 150 per month fetching RS. 1800,
which is also permissible. But obtaining a loan from a bank for say 10% interest for cash purchase of RS. 1000 is misconstrued as Riba even when it would mean paying it back with only RS. 100 interest after one
year. Thus charging RS. 100 is haram but instead of that paying or devouring profit of RS. 200 or RS. 500 is halal! I dont think so! 

I agree that the profession of money lending as was practised in the past must not be allowed and only commercial banks sould be allowed to do that according to the rates regulated by the Government. The
practice of pawnbroking is ancient, as is recognition of the danger it involves of oppressing the poor.

In the old days the money lenders used to charge such excessive amount as RS. 200 per month or so for a loan of RS. 1000/- and that Biyaj (rent on money) was payable until the principal was cleared in lumps
usm and rent on money was compounded in case of non-payment, whereas the principal sum of debt remain intact. Such usurious practices have been made illegal in most countries just as they were prohibited in
Bible and Quran. 

The Role of Credit in Industrial and Economic Growth

In the industrial and economic growth credit has played a vital role. Without the incentive of interest so many methods of credits cannot work as existing. Micro credit schemes in poor countries like Bangladesh are helping in alleviation of poverty enabling un-employed to stand on their own feet paying nominal interest instead sharing the higher profit. 

Credits allowed by IMF, World Bank, Asian Development Bank etc. are helping the developing countries in economic progress. Such assistance  would not be viable without the element of interest to cater for
administrative cost and maintenance of enough resources for granting credit.

The chief function of business credit is to facilitate the transference of capital items such as land, machines, plants, raw material, vehicles, cash etc. from those who own or produce it to those who need it for their business or industry, in the expectation that the profit from its use will exceed the interest payable on the loan. Thus business credit increases the productive power of the capital items and profits of the entrepreneur.

Consumer credit permits the purchase of retail commodities without the use of cash or with the use of relatively little cash. It is estimated that some 90% of all wholesalers� and manufacturers� sales, and more
than 30% of all retail sales are made on a credit basis. Credit facilities help acquire houses, vehicles etc. at lower cost than that sold under installment plans. Further, vendors of selling products on installemt schemes also need credit from different resources.

Poverty

I wish your words 'Once Riba or interest is finished, the poverty will automatically be finished." come true. But most economists agree that Poverty is an economic condition in which people lack sufficient income
to obtain the minimal levels of health care, food, housing, clothing, and education generally recognized as necessary to ensure an adequate standard of living. Further, accessibility to clean water, means of
transport and communications etc. make the difference between destitute and poor besides the quality of food, shelter and clothing. Even the upper middle class in most Muslim countries many Third world countries
lives much below the standards of living enjoyed by the poor in the West.

Much of the world's poverty is due to a low level of economic development, illiteracy and widespread unemployment and corruption and political instability. Negative attitude toward wok, lack of discipline
and apathy to teamwork and inability to harness and utilize natural resources can also be regarded as the reasons for lack of economic development.  Please read the article "Jihad against Poverty"
http://netvert.biz/paklink/articles/poverty.html

Let there be no illusion that Zakat and Sadqa are enough to help the poor on national level. Because in most Islamic countries like Afghanistan, Pakistan, Somalia etc. if the entire wealth of nation is distributed equally everybody would become poor. That can be seen by the GDP figures. Average Pakistanis, Indian live on less than a dollar a day and much greater amount is spent by the Westerners on feeding their pets. But the fact is that we are poor not only financially but also intellectually as seen by the list of modern inventors.

In Saudi Arabia interests in conventional form is banned and schemes of  profit and loss sharing have been developed by the bankers like some Muslim countries but such schemes are more exploitative than the
banking interest. The concept of Profit and Loss sharing on the money lent as recognized by Sharia scholars tends to curtail the reward of entrepreneurship as the share of profits often exceed the conventional banking interest. 

A fixed interest rate, majority of Islamic conservative scholars hold, is equivalent to usury or "riba" - the earning of money without doing any work for it. But the Islamic theological research committee of
Egypt's Al-Azhar institute - seen by many as the philosophical centre of the dominant Sunni strand of the faith - has voted 21-1 to approve fixed interest rates.
    
    "Religious jurisprudence means change, and it is illogical to remain frozen while the world changes around us," Sheikh Saber Talaab, head of the research committee secretariat, was quoted saying that and "So long as we do not go against what is written (in the Koran) or the Sunnah (Holy Prophet's tradition), we have a clear conscience."
    
But most of Pakistan's scholar including Mufti Taqi Usmani (Retd. Justice of Shariat Bench) donot agree and forcefully rejected and refuted the Al Azhar verdict.
 
It would be recalled that the judgment of Shariat Bench headed by Mufti Taqui Usmani to abolish the interest dealings in Pakistan was not allowed to be implemented by the Supreme Court of Pakistan and it was directed that first the problem of inflation and reduction in purchasing power money be found. Despite lapse over 5 years there is no solution and the inflation continues at the galloping rates.
    
See detail discssion and examples with verses and hadiths in my article
at http://www.netvert.biz/paklink/articles/riba2.html
    
The Indonesian scholar of Islam, Zuhairi Misrawi agreed with Al Azhar verdict. He opined that Fatwa should involve all elements of society. In the tradition of bahtsul masa�il (problem research used to be held in pesantren) that discusses about current matters (masa�il waqi�iyyah) performed by Nahdlatul Ulama (NU) for instance, the ulema were aware of their incompetence in the contemporary issues, therefore they asked the pinion of the experts (expert in medical field, etc) in formulating a atwa. Hence, they can  omprehend the object of fatwa well and ccurately. He goes on to write:

"Sheik Tantawi, for instance, consulted banking experts to study to  what extend bank interest provides both benefits to the client and to  the bank. Should bank interest be included in usury? During his time as
the head of the Fatwa Council of Egypt until he was being Sheik  al-Akbar al-Azhar, he has always insisted to issue the fatwa that bank  interest is allowed (halal), partly based on the consultation with banking experts.

Initially, many people opposed the fatwa by Sheik Tantawi since it ontradicted the views of other ulema. Currently, the Muslim world is ware of the importance of moderate, humanist and progressive fatwa to
keep the compatibility between religion and time and space (shalihun ikulli zaman wa makan). Furthermore, since radicalism and undamentalism in Muslim world are increasing, humanist fatwas offer an lternative to build civilization that honor both God and His reatures."


Arif Khan

Classified <ctsislamabad@...> wrote: