1. Report Overview
This report compares and contrasts the Islamic Framework of Business Ethics with that of other Major Religions. First of all, Ethics and its types are discussed. Then basic differences between Islam and other religions are discussed, which lead to the differences in actual frameworks of Business Ethics. Some examples of daily life Business Ethics problems are also discussed to illustrate the extent of these differences, and to demonstrate the reason of mentioning Islam in a course of Business Ethics.
2. Ethics and its Types
Ethics are a set of rules, principles, or standards that decide what is morally right or wrong (htt). They govern a person’s behavior (htt1). In other words, these rules tell a person how he/she ought to behave in a certain situation.
If we talk specifically about Business Ethics, then extending the same definition, Business Ethics are set of rules that decide how a business shall be conducted in context of Ethics.
Since different thought processes and beliefs can lead to different definitions of right and wrong, as this discussion unfolds, we’ll see the same contrasts when it comes to conducting a business.
2.2. Types of Ethics
Broadly, there are two types of Ethics. One is Created Ethics (Philosophical Ethics) and the other is Found Ethics (Religious Ethics).
Both take into consideration issues like suffering, the well-being of others, the common good of all human kind, what makes moral character, individual responsibility, and consequences and circumstances. Yet there is a huge difference between the two:
‘Created Ethics bases behavior on Reason and Evidence while Found Ethics bases behavior on God’s Will.’
2.2.1. Created Ethics
Since created ethics is based on Reason and Evidence, so considering the diversity of human thought process, it is no surprise that different frameworks are accepted and followed by different people. Some of the major Ethical System in this category are as follows:
a. Relativism: Morality is relative to cultures, groups, and individuals, so Ethical decisions are made on basis of self-interest and needs.
b. Utilitarianism: An action is ethical if it results in greater benefit for the largest number of people.
c. Fairness or Justice: People should be treated the same way unless there are morally relevant differences between them.
d. Rights: An action is ethical if it advances moral rights.
e. Virtue: What is ethical is what develops moral virtue.
Individuals might follow any one of the frameworks, but when it comes to interaction between them, then there has to be a normative statements and standards to mediate the interactions.
So Created Ethics has to use Descriptivism (what majority is doing is right) to mediate the interactions. So however much emphasis can be made on personal freedom in ethical selections, at the end all the rules of Created Ethics are based on Descriptivism.
But the problem with Descriptivism is that: What if people are collectively doing the wrong thing? Is it then right for me to do that? For example, if majority is doing corruption, is it ethical for me to do corruption?
Descriptivism will indirectly say ‘yes’! Hence the idea of Created Ethics is intrinsically flawed. This leads us to the second major category of Ethics: Found Ethics.
2.2.2. Found Ethics
Found Ethics is based on the belief that God is the ultimate authority Who has provided humans with codes of conduct, and it is on humans to strive and understand God’s Will through sources provided by the Lord Himself.
Major sources of law in Found Ethics are Prophet and Book of God. And since major religions have differences in beliefs related to these two sources, the Framework of Business Ethics is different in each of them.
To understand the differences in frameworks, let’s us first discuss the main differences in beliefs that have led to the differences in frameworks.
3. Basic Differences Between Islam and Other Religions
Following are some of the major differences between Islam and other major religions, which have led to differences in frameworks of Ethics in general, and Business Ethics in particular.
3.1. Concept of God
The concept of God in Islam can be understood from Surah Al-Ikhlas: Say, ‘He is Allah, who is One, Allah, the Eternal Refuge. He neither begets nor is born, Nor is there to Him any equivalent.’ (Quran 112)
Apart from this, Islam clearly mentions 99 names of Allah, and elaborates on the characteristics, so that humans can understand their Lord better.
Some of the most relevant characteristics (in context of derivation of Business Ethical framework) are: Allah is Guide, Just, and Loving.
If we compare Christian and Hindu faith with the definition of Oneness of God as per Islam, then these religions essentially believe in multiple gods. Also, in Christianity, it is believed that humans are (God Forbid) children of God. As a result, they are (a) Focused more towards the Merciful and Loving Character of God (hence more relaxation) (b) Give their religious leaders (Popes) authority to forgive on behalf of God.
On the other hand, the concept of God in Judaism is more close to Islam, but the major separation is Judaism’s distorted definition of ‘Just’ characteristic of God. Jews believe that they are the chosen ones, and God will protect them owing to a covenant. As a result, they have different Ethical definitions for Jews, as compared to for Non-Jews (elaborated further in topic of Riba). But this special treatment itself is against the Just characteristic of Allah as defined by Islam: No one is superior to one another except on the basis of Taqwa (Righteousness).
3.2. Prophet hood
In Islam, there is mention of 124,000 prophets, which include Moses (A.S) and Eisa (A.S), and Prophet Muhammad (S.A.W.W) is the final of all prophets. In Islamic faith, religion was completed upon Prophet Muhammad (S.A.W.W), so Sunnah of the Holy Prophet (S.A.W.W), which complements all previous teachings, is source of law.
On the other hand, Jews believe that Moses (A.S) is the source of law, while Christians believe that Eisa (A.S) is the source of law. Contrary to these, Hindus do not believe in Prophets at all. Rather, they believe that God comes to earth in form of Avatar when guidance is needed.
Similarly, while Islam acknowledges all previous books, but the book revealed to the Holy Prophet (S.A.W.W) is considered to be the ultimate source of law. And one aspect which hugely differentiates Quran from rest of books is that fact that it is completely free from distortions.
Alternatively, books of all other major religions have distortions which are acknowledged by the religions themselves. This makes a huge difference in the formulation of law, because in one case, the formulator knows that only extraction is required, while in the other case, the formulator will know that further fabrication would be required to adjust law as per need, since the text is already distorted.
3.4. Cultural Aspect
Islam and Judaism came with their own set of rules, regardless of what was being followed previously, while Hinduism and Christianity were primary subsets of prevalent cultures and empires. For example, faiths of Christianity were adjusted according to Roman Empire (dominant during the religion’s early stages). And as a contrary example, Islam came with its own set of rules that were quite opposite to what was prevalent in Arab’s culture like Status of Females.
3.5. Universality and Finality
Islam is the only religion that came with the label of universal religion, while all previous religions were either for certain nations or generations. As a result, the framework of Ethics in Islam is meant to be followed by every human being wherever in the world he or she might be.
Secondly, while other religions and their books themselves mention about future religions and their needs (for example Christianity has mentions of signs of final Prophet), Islam was meant to be the final religion. Hence the rulings cover all aspects of life, for human beings till the Day of Judgment.
Now these differences in beliefs again lead to differences in scope of issues covered in rulings.
3.6. Role of Scholar
In Islam, role of scholar is to understand the sources of Sharia provided by Allah, and to derive Sharia from them. Through them, Muslims can get to know the categories to which deeds belong to (Fard/Wajib, Mustahab, Mubah, Makruh, and Haram). But when it comes to connection between Allah and human, it is direct.
But there are certain religions like Christianity in which Pope doesn’t necessarily provide the frameworks for all deeds, and the connection between humans and God is believed to be indirect: through the pope. For example, Christians confess and ask for forgiveness from the pope, who can forgive on behalf of God. So there is more leniency and room for fabrication.
3.7. Religion and Politics
Further distinction of Islam is that since it is a complete way of life, it doesn’t separate itself from politics. Rather, it guides on how to conduct political affairs, and hence is an essential part of the political system. This political system was practically demonstrated in the State of Madina during the time of Holy Prophet (S.A.W.W). The state of Madina was termed as Islamic Welfare State, and all rulings were mediated as per principles of Islam.
On the other hand, all other religions keep politics separate from the religions themselves. In these religions, religion is only meant to be followed in personal lives, and political affairs are left on the judgment of humans. This is why we see all sorts of man-made political systems like Capitalism and Socialism. And there is only Islamic Sharia Law to challenge these systems.
During last sermon, Holy Prophet (S.A.W.W) said:
‘All mankind is from Adam and Eve, an Arab has no superiority over a non-Arab nor a non-Arab has any superiority over an Arab; also a white has no superiority over a black, nor does a black have any superiority over a white- except by piety and good action.’ (Al-Bukhari)
This summarizes the concept of race in Islam: All humans are considered equal except on the basis of Taqwa (piety).
Contrary to this, Hindu society is entirely based on Caste System, in which there are different rulings for people of different castes. Similarly, the Jews consider themselves to be ‘the chosen ones’ due to certain covenants with God, and hence have certain set of rules for themselves and certain other rules for the rest of humanity.
Hence when it comes to the goal of Ethical framework, these religions aim for prosperity of only certain races, instead of the whole of humanity.
3.9. The Balance
Islam guides to balance the life of this world with the hereafter. The Holy Prophet (S.A.W.W) said: “Work for the affairs of the world as if you were going to live forever but work for the Hereafter as though you will die tomorrow.” (Darimi; Mishkat)
Striving for a better worldly life is not only allowed, but rather encouraged. Gaining knowledge and striving for living (working) are considered to be Ibadah. The Holy Prophet (S.A.W.W) said:
“One who works is the friend of Allah” (htt3)
On the other hands, all other religions separate worldly life from religion. Either a person dedicates to religion, or strives for worldly life, hence the balance is not there.
This is reflected in framework of Business Ethics as well, in which Islam considers Business too as an act of virtue, if conducted in the right manner. While other religions categorize it as a matter of worldly affairs separate from religion.
4. Frameworks of Business Ethics – A Comparison
Objective of Islamic Framework of Business Ethics is human and spiritual development at individual level (micro perspective), and the promotion of justice and equality at society level (macro perspective). (Zaman, 2008)
Human and spiritual development is achieved through motivations to do good deeds. These motivations are (Exhibit 1):
a. Good deeds will lead to peace of mind and heart in this world. As mentioned in Quran:
‘Those who have believed and whose hearts are assured by the remembrance of Allah. Unquestionably, by the remembrance of Allah hearts are assured’ (Quran 13:28)
b. Good deeds will lead to heaven in the hereafter.
‘Truly, Allah will admit those who believe and do righteous good deeds, to Gardens underneath which rivers flow (in Paradise), wherein they will be adorned with bracelets of gold and pearls and their garments therein will be of silk.’ (Quran 22:23)
c. Halal food is healthier spiritually, hence betraying people (making your earnings haram) will be bad for spiritual growth. (Alserhan, 2015)
Similarly, Social Justice and Equality is promoted through the following axioms (Beekun, 2006):
a. Unity: Humans shall all strive for unity
b. Equilibrium: All humans are equal
c. Free Will: Humans are free to act
d. Responsibility: Every right comes with duty; humans are responsible for well-being of relatives, friends, neighbors, etc.
e. Benevolence: Humans should show benevolence in behavior and action towards the whole of humanity.
Exhibit 1 Motivations to do good (Alserhan, 2015)
So all in all, there are well defined objectives of Business Ethics in Islam, and these objectives are achieved through certain motivating factors. In all this, money is only a means to achieve those objectives, not the objective itself.
On the other hand, while originally all religions had the same objectives, but due to distortions, undue power of their scholars, and separation of religion from worldly matters, the main objective of all other self-proclaimed Found Frameworks shifted to money; same as that for Created Frameworks. While on paper, objectives might be to strive for betterment of humanity, but due to aforementioned factors, either these religions are silent about majority aspects of business, or have given rulings keeping in mind the demands of people: money.
4.2. Role of Manager
Islam not only defines a manager, but also shares the characteristics. In Quran, Allah tells the reason why some people are higher in rank than others: so that they may command work from others.
‘…..We raise some of them above others in ranks, so that some may command work from others…’ (Quran 43:32)
With the evolving hierarchies, the role of managers became more prominent over time. Today, a manager is central to decision making, and has subordinates to follow orders. These decisions can have impact on all stakeholders, may they be suppliers, customers, retailers, contractors, shareholders, etc. And it is self-evident that given the selfish nature of human beings, if criteria of judgment (ethical standards) are not defined for managers, rights of people will surely be violated.
Therefore Islam has defined the characteristics of best of people – the characteristics that managers should reflect (Abbas, 2012):
‘You are the best of peoples, evolved for mankind, enjoining what is right, Forbidding what is wrong, And believing in Allah.’ (Quran 3:110)
Enjoining Right: A manger not only does the right act himself, but also inspires others to do so.
Forbidding Wrong: Again, in forbidding evil, the manager leads by example.
Faith: And as a prerequisite to all of this, a manager should have faith in all religious values. This faith gives courage to managers to do what is ethically right, regardless of the consequences.
‘And He provides for him from (sources) he never could imagine. And If Anyone puts his trust in Allah, Sufficient is (Allah) for him. For Allah will surly accomplish His purpose verily, for all things Has Allah appointed a due proportion.’ (Quran 65:03)
On the other hand, the characteristics of managers are not explicitly described in any of the other major religions. So in their frameworks, manager’s duty is to do what is better for the corporation. But again, if the corporation is demanding unethical practices? Then these frameworks give argument of ‘greater good for larger number of people’. But again, since the manager himself has to decide, this framework takes the form of Created Ethics and Descriptivism.
4.3. Riba and Usury
Interest or Riba is probably the most debated upon topics in modern times. Since Islam is in the favor of welfare for the whole of humanity, it has strictly forbidden to take advantage of someone’s need for loan. In Islamic framework, rent can only be charged on Green Balloon Assets: Non-Consumables. This means that whenever something is rented, it corpus remains while usufruct is consumed. Therefore, there is no possibility of a bubble burst, as in case of Riba based economy. Bubble is only created when Asset is not present while rent is still charged, and if a time comes when debtor is neither able to pay the rent, nor is the asset present, the bubble bursts – crashing the whole of economy – as was the case in 2008.
‘O you who have believed, fear Allah and give up what remains due to you of interest, if you should be believers. And if you do not, then be informed of a war against you from Allah and His Messenger. But if you repent, you may have your principal – thus you do no wrong, nor are you wronged.’ (Quran 2:278-79)
Interestingly, as discussed earlier as well, since Christianity and Hinduism are based on the prevalent practices, they allow Interest. Although they forbid Usury (excessive interest), but again who would determine how much is excessive?
On the other hand, Judaism allows charging interest from non-Jews, while forbids to do so from Jews. Now where is Justice? Where is equality? This concept alone of ‘chosen ones’ is sufficient to destroy peace of this world.
Gharar is risk or uncertainty related to a transaction, and is strictly forbidden in Islam. This is to make sure that both seller and the buyer get benefit from the deal. There is no lie or ambiguity related to what is being sold and for how much. As explained by Ahmad ibn Naqib Al-Misri:
‘Gharar is chance or risk, meaning it is not known whether it will come to be or not, such as selling fish in the water or birds on the wing. It includes transactions of unknown things, the particulars of which are not fully comprehended by the buyer and seller.’ (Al-Misri)
Islam gives guidelines about elimination of Gharar from transactions: by carefully stating the object of sale and the price (El-Gamal, 2000).
Again, other religious frameworks do not guide about Gharar, and essentially the Businesses are free to do as they like. Therefore, we see that some customers pay so much to insurance companies year in and year out, and get nothing in return, while others who have paid less end up with huge insurance claims.
4.5. Baraka and Story of Junaid Jamshed
In Islam, the aim of a business transaction is mutual benefit of both related parties: buyer and seller. When a seller presents something for selling, for example, a plastic bottle, he values the bottle at a certain price (as per bottle’s utility for him). Similarly, the buyer values to bottle at another price, again as per utility. Let’s assume that the seller values the bottle at PKR 45, while buyer values it at PKR 55, and after discussing the qualities of the bottle, they mutually agree at a price of PKR 50, both go home happy and satisfied. Both the seller and the buyer look at the deal positively. This is an ideal transaction in Islamic framework, where everyone gains.
Now very closely linked with this is the concept of Baraka (blessings) in Islam. Muslims believe that Allah Blesses both seller and buyer in such a transaction, since seller is satisfied due to the price paid by buyer, while buyer is satisfied with the product provided to him at that price. And the blessings of Allah (Baraka) will be in the form of better utility for the same money for seller, and more utility for the same product for buyer.
Discussing about the concept of Baraka, Junaid Jamshed shared story of his business (in a bayan):
When me and my partner were about to start a business, we went to Maulana Taqi Usmani saying that we want to do a business. He said “do these 3 things:
1. Whatever business you want to do, and however you want to do it, write it down, including the conditions on which this business will end.
2. Promise to your own selves that you won’t cheat or deceive each other.
3. Have the intention that we have to benefit the Muslim ummah through this business.
If you do these three things, then Allah will become the third partner in your business. And if you leave any one of these three conditions, first of all Allah will leave you.”
Now the third condition was extremely difficult to understand, because we had planned to do business with the intention of earning money, so how could we benefit the Muslim ummah while earning money ourselves? (Which we understood when customers were satisfied with value they got for their money).
Once upon a time, still during the nascent stages of the business, while cutting the pattern for Shalwar Kameez, it got cut shorter than required. Now we were extremely worried since we had spent all our money and thought that the material (and the money) would be wasted due to the shorter pattern. Within a few days, a person came from Bangladesh, ordering a shorter pattern. All the Shalwar Kameez were profitably sold to him.
This is Baraka, which is a result of conducting business on the ways told by Islam!
Now we see that in other religious frameworks, the concept of Baraka is not present. Although they encourage to be ethical, but practically there is no incentive. Consequently, those frameworks actually depend on hard and fast numbers, and these numbers shifts the focus of Management towards only Numeric Maximization of these values. In other words, while in Islamic framework, management is inspired to follow Ethical values regardless of (apparent) results, the whole focus in non-Islamic frameworks is on the end result, and hence ethical values and mutual gain in dealings become secondary.
All in all, we have seen that although all religious frameworks are thought to be similar, but in reality, Islamic Framework of Business Ethics is quite distinct from the rest of the frameworks. The reasons are that:
a. Other religions were meant to be for certain nations or generations, while Islam was meant to be for the whole of humanity. Other religions were to be superseded by a more refined version, while Islam was designed to be the final religion – to be followed by the whole of humanity until the Day of Judgment. Hence, Islam distinctively covers all aspects of human life. We have seen how Islamic Framework has detailed rulings for Business Ethics, while other religions are silent about either the basics or the details.
b. Islam is the only religion that claims to have book of Allah in exactly the same form as it was revealed. And consequently, the scholar can only extract the rulings, not fabricate them. While in all other religions, with distorted books, scholars can fabricate source further to satisfy the popular opinion. Hence all non-Islamic frameworks are in effect based on Descriptivism.
c. Religions such as Hinduism and Christianity have been based on prevalent practices since the very beginning, while distortions have set in Judaism to incorporate the dominant traditions (at least towards non-Jews). Therefore, Islam is the only religion that has bold rules (in the original form) such as prohibition of Riba.
d. Lastly, the ultimate goal of Islamic Economy and Finance concepts is to attain Satisfaction and Pleasure of Allah, which in turn Nourishes Human Spirit and promotes Justice and Equality. So Islam, contrary to other religions, provides motivations to businesses to remain ethical regardless of the material (apparent) results. Since other religious frameworks lack these motivators, the objectives become materialistic.
So yes, if one wants to teach the real and undistorted Found Business Ethics, it is necessary to mention Islam; hence the time: Business Ethics in Islam!