4 lessons in economic theory from Prophet Mohammad ?

Almost everyone, knows the prophet Mohammad ?, in fact, It is very likely that you know a person called Mohammad, as it is the most widespread name in the world. What is common knowledge about the prophet peace be upon him is the message of Islam and how in a very short time he managed to turn a group of fighting tribes in the desert of Arabia into a nation that now is more than 2 billion people and has, over history, contributed significantly to the establishment of human civilization

Many people though, do not know the entrepreneurial and financial side of prophet Mohammad’s ? journey and teachings, and how he 1400 years ago established some of what we today consider very sophisticated economical theories.

 Given that yesterday marked the day of Mawlid ( the birthday of the prophet ?), I will use this paper to go over some of the highlights of the business side of the prophet’s doctrines, in hopes of spreading the knowledge and awareness about some of the unmentioned fundamentals of Islam and the Message of Mohammad PBUH.

1-   Advocating for women leadership in the workplace: Prophet Mohammad was a merchant in his early days, what is worthy of mentioning is that the prophet worked for his, later on, wife Khadijah. This not only stands to show the rooted respect for women in business but also a normalization and encouragement of women leading in a work environment. Today all over the world, women suffer from gender-based discrimination in the corporate world, Mohammad ? was living advocacy for what a woman should be in a business environment.

2-   Principals: Mohammad ? was known by the names of Al Sadiq ( the truthful) and Al Amin ( the trustworthy), those two principals are the foundation of any commercial interaction in Islam, whereby a seller is forced to give the buyer a complete understanding of the sold goods or services and no hide or misrepresent it in any way which in Islam is considered “ Ghash” ( cheating) and one of the famous sayings of the Prophet is “ Whoever cheats is not from my following” otherwise the transaction would become “ haram” and thus void as per Islamic law. I think we can all appreciate the applications of such principals in today's world, where we have people working day and night at building businesses that revolve around twisting and misrepresenting buyer and seller deals.

3-   Prohibiting Adhesion contracts: one of the most widespread practices in today's business world is adhesion contracts, the odds are is that you have signed one at some point in your life, it is the boilerplate “ terms and conditions” that companies such as telecom, utilities, app stores, etc make you sign, those are contracts that you can not negotiate and have no option but to accept only to find yourself treated unfairly or forced by the contract later on. In Islam, the rule is there is no commercial dealing except by mutual uninfluenced acceptance by both the buyer and the seller where both have a fair chance of negotiating mutually acceptable terms.

4-   Prohibiting interest: the most widespread banking practice in today’s world is interest, whether it is making interest or taking an interest, today we have whole economies and whole banking systems built around interest, and there have been countless economical arguments against the validity of interest and how it shits the balance of the economy and exploits people, in the USA alone there are millions of people who lost their homes mainly because of credit card debts and interest rates, that along with many examples that I will not preview here, in 2001 Dean Baker, had this to say Over the past decade alone, there have been countless self-explanatory examples to support the validity of my view in relation to the evils of an interest-based economic system; most notably perhaps, the cost of unemployment in developed economies such as Germany and Japan. At the time of writing, the sub-prime crisis in the U.S. housing market is spreading to other sectors and threatening the very foundations of the capitalist system. In Islam interest is referred to as Riba, and it was common practice before Islam came, the prophet fought this practice and Islam declares all sorts of Riba as unlawful and haram.

There are many other examples of financial and entrepreneurial guidance that came with the doctrine of the prophet, things like having asset-backed economies, not dealing in uncertainties and unbacked currencies, all the way to the details of paper currency and how to deal around it, those are all things the world is discussing today and are building up to share the way we think about the basic economic theories. I thought it is of importance for Muslims and non-Muslims to familiarize themselves and start exploring this rarely mentioned part of the prophet ? teachings and doctrines.

Wishing you all the blessings of the Mawlid

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