A Truly Open Marketplace

When Mayor David Miller spoke at Masjid Toronto 10 years ago during Doors Open Toronto, he made an interesting observation. He remarked on the contrast between our masjid and the church his family attended in the Anglican tradition.

Unlike the church, the masjid is an open space where anyone could pray at the front (or anywhere else, really). It’s first come, first served.

In his family’s church, the pews were assigned. The wealthier, upper class families would sit in the front, and poorer members of the congregation sat towards the back.

There are no such assigned seats at the masjid. Whoever comes to a spot first will pray there. And they can stay in that space until they’re ready to leave.

When the Prophet, peace and blessings be upon him, came to Medina, he established a masjid and a marketplace. They were both endowments (waqf / awqaf), meaning that they were public property, not privately owned by any individual or group. They also both followed the first come, first served rule.

Just as no one reserves places in the masjid to pray, in this open marketplace in Medina, no one reserved a place to sell.  Whoever came to a spot in the marketplace first could occupy that space and sell there until he was done.

Imagine what this meant.

One of the biggest barriers to entry for a merchant is rent — the cost of a spot in the marketplace to sell in. This barrier to entry allows big players to maintain and grow their position by keep small players out.

Imagine a publicly owned marketplace, like a publicly owned prayer place, like the masjid.

The implications and opportunities are huge.

Business Ethics in Islam

From a talk by Sh. Abdal Hakim Murad on Business Ethics in Islam (the transcript starts from the 5 minute mark in the video).

When we look at the history of Islamic civilization, we see a civilization which is a story of achievement. What more impressive achievement in history than for the Muslims, who began as a small group of browbeaten and oppressed monotheists, in a small dusty Arabian town, within 50 years, certainly within a hundred years, to create the largest and the greatest and the most populous civilization the world has ever seen? What is it about that message that produced such excellence, such professionalism, such structures, financial structures, mercantile structures as well as intellectual and institutional and educational structures? How did they do that?

This golden age that we read about, the age of Sinbad the sailor, medieval Muslim trade outshone any other form of trade in the world. This is the world of the Silk Road. This is the world of the golden web. This is the world where you could have a financial document that was drawn up in Cairo and have it honoured in Shanghai by a Muslim banker. A brilliant global mercantile civilization. Unusual for a religion to accomplish that. So often you think of religions generally as encouraging just a preoccupation with the life of the soul and the life to come.

Mercantile Piety

But the holy Prophet, sallAllahu alayhi wa sallam, how does he begin? He begins as merchant. As-Saadiq Al-Amin the truthful and the trusted merchant. So that his house, according to the books of the seerah, becomes the place where you can leave your valuables a kind of safe deposit facility in the city of Makkah. This is an age before combination locks. This is an age before a security camera. This is an age before banks. In Makkah if you are buying and selling and you had goods or money that you wish to keep in a safe place, you would leave it in the house of Al-Amin alayhi salam. He was part of the commercial life of his community. I found this particularly inspirational.

We remember how he was earning a living and how his first wife Khadijah Al-Kubra radhiAllahu ‘anha was his employer. I don’t know of any other founder of world religion who is in business, who is employed by woman, who is a merchant. Very remarkable. As a result, from that time to this day, the mercantile calling has been regarded as an honourable context for the exploration of a quite scrupulous religiosity. It’s not about dunya and deen in opposite corners of one’s life and that serving one represents concessions in the other. Instead, islamic civilization, generation after generation after generation, has produced brilliant mercantile personalities and institutions and trading routes that have transformed the economy of the world.

Now we know that this comes about through a certain subtlety in the approach to wealth. So perhaps this should be the first thing we reflect on.when we use the slightly but not inappropriately or incongrously modern category of business ethics to look at how Muslims traditionally saw how you get to heaven through rather than despite running a business

Some of the Sahaba radhi Allahu ‘anhum were really poor. Or really poor, and were rich and then became poor. Like Abu Bakr As-siddiq radhiAllahu ‘anhu, basically all of his wealth went in supporting the poor, the orphans, the muhajireen the widows. This was his calling. This was his nature and he was loved as a result.

Sayyidina Uthman, his title in Islam is Al-ghani (The Wealthy). That’s another interesting thing about Islam. We can go to great mosques in Istanbul and you see the four names of the khulafaa ar-rashidun: Abu Bakr As-siddiq, Umar Al-faruq, Uthman Al-ghani… That may be strange but there he is. And we honour him for that.

Why? Because of the saying of the Holy Prophet sallAllahu alayhi wa sallam, when some came to him, poor people came to him complaining, and they said:

Ya Rasul Allah, dhahaba ahlu dufuri bil fujur yusalluna kamaa nusalli wa yatasaddaquna wa laa natasaddaq

They said O Messenger of Allah the rich folks have got all the great rewards because they pray as we pray and they give sadaqa and we’re not able.

Fa qaala al-Mustafa alayhi salat wa salam dhaalika fadlu lillahi yu’tihi man yashaa

That’s Allah’s Grace He gives it to whom He will.

None of this in our subtle religion, which says really what counts is the quality of your heart, means that any particular economic group has any necessary merit. And generally we believe that soft-heartedness attaches primarily to the fuqaraa. And the Holy Prophet ‘alayhi salat wa salam was himself one who made the choice to live with the poor. But there is this possibility that Uthman and so many of the other of the Sahaba of the early Muslims represent, which is part of the shumuliyya the comprehensiveness of Islam. There are many points in society from which one can face the qiblah and many contexts in which one can seek salvation.

This again is part of the excellence the itqaan of our civilization and was one reason why it was possible for this civilization to be focused absolutely on Almighty God and for mosques to be built from east to west so quickly, including some of the most magnificent structures in the history of architecture. At the same time we have this wonderful economic system and this structure of trade, which really defined the medieval world and dominated global trade, until the 15th in the 16th century, when the trade routes were fundamentally dislocated by Columbus, the crossing of the Atlantic, the silver route from the New World and the map of the world and commerce started to look very very different–the Portuguese the Dutch and others starting to circumvent the Islamic world–and the traditional sources of prosperity in our communities, which had been managed so brilliantly and so well for so long started to fall into disuse. We have this honourable tradition, this tradition of mercantile piety, which is the basis for the understanding of business ethics in Islam.

There’ve been many classical sources in Islamic civilization that talk about this. They usually speak in terms of Adab Al-Kasb or sometimes Adab Al-Kasb wal Ma’isha. — hundreds of books on this, the adab, the courtesies of gaining a living. Kasb means to acquire and of ma’isha of life itself and of engaging with others. These two things are often treated together. Imam Al Ghazali has a very remarkable book in his Ihya ‘Ulumi Deen where he talks about kasb and I think of all of the works of our civilization this is the one that speaks to me most and that has stood the test of time.

Redistribution of Accumulated Capital

One can speak abundantly about the underlying principles of our economic vision, which of course with the zakat system, ensure that very long term perpetuations of capital, if it’s justly declared, become difficult. One reason why the feudal system never developed in the Muslim world the way it did in the West is that capital tended to get eaten away by the zakat. And when you died it was distributed not to your elder son, as in England and the European world, but to a range of successors.

Accumulated capital was always broken up with each generation and was helped to be redistributed. So the feudal system, we never really had it in the world of Islam. You see people rising to positions of economic eminence and descending quite rapidly as well with the usual fortunes of the world politics and and trade. That’s a big difference. The inheritance laws and the zakat laws made that fundamental distinction between medieval Islam and medieval Christendom a possibility.

There’s other things that experts in Sharia will be able to tell you about: a particular tax on mineral wealth, certain ways in which land taxes can be levied–fairly light compared to a lot of taxes that we have to put up with in Europe nowadays, but still they were there. And the purpose of it was always very clear: to ensure the circulation of wealth.

Remember some of the earliest and firmest passages to be revealed in the holy Quran were against the plutocrats of Mecca because they didn’t share with the poor. Some of the earliest things that it says even before it talks about prayer and other things:

alhaakumu takaathur, we know this verse, hatta zurtumul maqaabir.

Rivalry in worldly increase has distracted you until you go to your graves.

The opponents of the blessed Prophet sallallahu alayhi wa sallam were merchants of the wrong kind–those whose wealth had hardened their hearts and who were kicking around their slaves and persecuting the early Muslims and maltreating the orphans and hoarding their wealth. So this is clearly an important principle in the Qur’anic revelation, one of the first things that had to be stated.

And we find that this vision, of there being necessarily the circulation of wealth and a real concern for the poor, generated in classical Islamic civilization a much smaller polarization between the super-rich and the super poor than you find in say the modern United States, the land of opportunity. In fact there aren’t as many opportunities as people think to get up the ladder. And with the new tax regime in the United States probably the polarization will continue. It’s one of the scandals of the modern world and perhaps one of the Achilles heels of the modern world.

An interesting study done recently at the University of Maryland in America looking at the history of civilizations and their rise and fall said that there’s two factors that are likely to precipitate the collapse of modern civilization. The first is the environmental crisis. We may run out of oxygen. And the second is the growing disparity between the super rich and the poor, which is going to create social unease and unrest increasingly in an ever-increasing number of countries. A very interesting piece of research, actually done by an Iranian Muslim researcher Safa Motesharrei. You can look it up on the Internet. So two things that can bring about the collapse of the civilization.

In the context of the Islamic world, that didn’t happen because we had these mechanisms: as-sadaqah, az-zakat, other forms of charitable giving, the waqf institution that recycled and recycled and recycled.

I was reading a paper recently about the waqf institutions in Istanbul before they were taken over and destroyed by the Republican Turkish nationalists in the 1920s. A third of the land in Istanbul was owned by awqaaf. The function of the awqaaf was essentially charitable. You have a kind of social services provided but not by the state but by the generosity of individual people. Usually people who are leaving something as wasiyah in their wills for providing a soup kitchen, or a public water fountain, or a little hospital, or whatever it might be. Our civilization has an excellent record of delivering but without endless state intervention. The beauty of the Islamic model is that the state actually doesn’t do very much but the masses, because of their religious commitment, do a lot.

Being Watched by Al-Raqeeb

Now Imam al-Ghazali in this book says the first principle to remember here is that you are remembered. That Allah subhana wa ta’ala is watching you.

Maa yalfizhu bi qawlin illa ladayhi raqeebun ‘ateed.

Never do we say a word but that there is One who is Vigorous and Vehement scrutinizing us at all times.

Allah is the Raqeeb. And that’s the basic ethical principle of Islamic business ethics.

The businessman can’t conceal anything from his Creator. To the extent that is Muslim, he knows that all of those accounts in Panama, Fonseca, you’ve read all of the news all of the wealthy especially in the United States and Europe salting away their wealth in various shell companies and smoke and mirror ways of avoiding taxation. That’s the secular strategy. But you can’t hide from the unblinking eye of the Almighty.

And the zakat is an obligation. And you have a moral obligation if you’re a citizen of a nation-state to pay your taxes in the nation-state and to avoid that is to play games with God.

The smart believer, the mukhlis, when he thinks about it, isn’t going to want to do that. So this is the basic principle. And the divine name that applies is Ar-Raqeeb.

The Achilles Heel of Business

The holy Prophet alayhi salatu salam–who grew up and existed in a world where he knew very well merchants and their tricks and the temptations and the games that they play and the deceit of which they are capable, the flipside, the darker side, of something that has its positive side of circulating wealth and bringing products and wealth to the world–he knew the great failing was deceit and lying.

So he says ‘alayhi salat wa salam in a hadith:

Li kulii shay’in aafa wa aaftul tijaara al-kathib.

Everything has its Achilles heel, its weak point, its hazardous area. And the weak point of business is telling lies.

Ouch. I know the temptation myself if I’m trying to sell something on eBay or whatever it might be, am I going to list everything about whatever it is that I’m selling frankly and honestly? Hmm… And there’s all kinds of things in Imam al-Ghazali’s book. This issue of ghabal, as they call it ,which is a kind of deceitful presentation of the goods as that which they are not, all comes under this prophetic anger against deceiving people.

Despite modern regulatory frameworks–and in England we have the Serious Fraud Office and we have the Department of Trade and millions and millions and millions of tax inspectors, have got no idea how many they are, but they’re putting us all under the microscope–the believer accepts that, but also as a man or woman of honour wants to be frank with his customers, wants to do things honourably. Because the image of the traditional merchants, the taajir, which is an honourable description in Muslim civilization, the image of that person is that he is following Al-Amin, The Trustworthy One.

Muslims converted the world not really through missionaries and trained people the way the Christians did it but largely through merchants. They went to places like Indonesia, they went to China, they went to East Africa to trade, to buy and sell stuff, but they were so magnificent and so respected and so honest, that people wanted to know more. What was it that have made them into these sober restrained dignified people rather than hustlers? What is it about the Muslim merchant that is so impressive? And he can be a brilliant trader, Islamic history is full of such people. But the person of dignity, of honour, because he knows that Allah is Raqeeb, he is being watched, he can’t hide anything. And this has always been something of which our civilization has been proud.

So this category of kathib of deceiving the customer really occupies most of Imam al-Ghazali’s book on business ethics. And some of the things might seem obsolete but in fact when you think about them they’re not really.

An Ottoman Guild’s Response to Overcharging Customers

So he talks about rikbaan for instance:

Naha RasulAllahi sallallahu alayhi wa sallam ‘ani rikbaan

He forbade the practice of overcharging strangers.

Imagine the traditional world. There’s no internet. There’s no standard currency system. There’s no banking system. You travel for days to another city and you buy and sell things. You’re not sure what the prices are. The temptation for the merchants in the bazaar is to up the prices because they can see that you don’t know. The Holy Prophet ‘alayhi salatu salam specifically forbade this. There’s a hadith in Bukhari and Muslim in which he does not allow you to do this.

I recently examined a PhD thesis which was about guilds, who would ensure that everybody behaved in an honourable way and did not bring that profession into disrepute. So in Sarejevo over 300 years ago, if you were in town and you were from some little village in the mountains, and you were overcharged something by somebody who was taking advantage of you, and the head of the guild came to hear about, it there’ll be a whole ceremony–the Ottomans love ceremony–but rather depressing if you were a merchant, because it meant that the guild master the yul atase would come in his splendid robes with his assistants and he would open the door of your shop and he would take green silk square embroidered with a verse of the Holy Quran and place it over the goods that you were selling and then he would leave and you had to sit there with your door open and you wouldn’t be allowed to sell anything until the yul atase had decided that you’d learned your lesson idea to come back and remove and fold up the cloth and recite some Qur’an and you could get back to business.

It’s not government, not the taxman, not anything, but this is how life was in the bazaar culture of classical Islamic civilization. It’s really dishonourable against what they called futuwwa, which I was also talking about the other day, unchivalrous to exploit your customer.

Weigh and Put in a Little Extra

Another hadith, it’s in Tirmidhi the Holy Prophet sallAllahu ‘alahi wa sallam when he went to somebody in the markets said zin fa arjih. And this has become a kind of proverb in the bazaars to this day. Weigh it and put in a little extra. It’s like the idea of the baker’s dozen. I don’t know if that means anything in South Africa but in England you would buy a dozen loaves of bread and the baker would add another loaf just in case the loaves turned out to be a little bit small that you haven’t been shortchanged. The baker’s dozen is 13.

That’s exactly what this sunnah practice is. If you’re weighing out the weights or the coins or the gold whatever it is into the scales, make sure that the scales don’t exactly balance, but they go clunk on the customer side–throw in something extra just to make sure you hear that clunk. That is part of the adab of the taajir: to make sure that you’re not guilty of shortchanging your customer.

Now that’s the kind of medieval image. How many of us actually go into shops and have things weighed up unless we’re selling your wife’s jewelry or something, certain emergencies maybe at the pawn broker, but basically that doesn’t happen. But the principle is certainly the same: Make sure that they get exactly what they are paying for.

And it’s the same with the khazzazine. Medieval Islam was a civilization that produced a lot of fabrics and silk and the khazzaz, according to the guilds, had to measure out, somebody might say I want a bolt of say silk that’s say 20 meters long, measure it and a little bit extra at the end. And this was kind of normal. Everybody did it.

Whoever Cheats Us is Not One of Us

You also have hadith in which the holy Prophet alayhi salat wa sallam forbids people from concealing the faults of their goods. There’s a hadith in which the holy Prophet sallallahu alayhi wa sallam marra ‘ala rajulun yabi’u ‘ala ta’aaman fa ‘ajabahu. He walked past a man in the market who is selling some food, probably corn and he liked it. Fa adkhala fihi yadan, so he put his hand inside it. Fa wajada balala, deep down he found it was damp, which is a disaster. Damp corn is going to rot. It probably already started to ferment. Maa hadhal balal, he said, why is it wet? And the man said assaabatu samaa, well it was raining. And the holy Prophet sallallahu alayhi wa sallam said fa halla ja’altahu fawqa ta’aam? If it the rain was falling on it how come it’s moist underneath why didn’t you put it on top of the food? And then he says the famous words man ghashana fa laysa minnaa whoever cheats us is not one of us.

It’s a quite drastic thing. He doesn’t mean you’re kaafir but if you cheat other people in the marketplace by selling them something, and there’s stone in the rice, or it’s actually poor quality and you’re claiming that it’s high quality, all of these are the tricks of so many trades–if you do that deliberately and knowingly, the Holy Prophet alayhi salatu salam has said something about you that is kind of dark and alarming: Whoever cheats us is not one of us.

Many of us can think of times in which this has happened. Nowadays, unfortunately, if you buy things in the market, especially touristy areas in the Arab world the miracle is if you don’t get cheated. Or riding a taxi. Our cultures have often become quite degenerate. And we do take advantage and the old dignity has been lost, which is such a shame, such a tragedy. But the Islamic principle is clear: man ghashana fa lays minna. Whoever cheats us is not one of us.

Against False Advertising

The Holy Prophet ‘alayhi salat wa salam also forbade us to describe the product in a way that was misleading. There’s even discussions in Sharia as to whether a contract on that basis can be the subject of its revocation. So if you go home and you find that the car you’ve just been sold, actually the odometer has been adjusted and it’s done a hundred thousand miles and not ten thousand miles and it’s obvious you’ve been done, in many cases the Shari’a will allow you to abrogate that contract of sale and take it back if you have documentation. The holy Prophet sallallaahu alayhi wassalam forbade people to sell things according to a description which is not accurate. There’s a long section in the Ihya at which sometimes is a bit mind-boggling because it evokes a time of scrupulousness that is almost unimaginable today.

The conversion of Jareer bin Abdullah, is one of the great sahaba: He takes his shahada and then he turns away fa akhadha rasulullah sallallahu alayhi wasallam thoba, the Holy Prophet brings him back. Not just the shahada, young man, he tells him, because Jareer is a man who is engaged in business, never to mis-describe his goods.

We don’t know why exactly this was his instruction to him, but from that time on Jareer became famous in the marketplace of Madina because when you went to buy from him, he would say, well this is actually not very good and there might be all kinds of problems with this thing. Fa shakaa ilayhi rajul fa qal law dawamta ‘ala hadha lam yanfudh laka bay’un qat. If you continue like this in your shop you’ll never sell anything. But he said, amrun baya’tu Rasul Allahi sallallahu alayhi wasallam ‘alahi, maa taraktu abada. Something on the basis of which I gave my bay’ah of the Holy Prophet sallallahu alayhi wa sallam I will never leave off.

You will also find that Imam Al-Ghazali talks about this as part of the spirituality of the honourable merchant. He says that acquiring wealth that benefits you is an almost arcane matter. It’s not just about trotting up figures but money does odd things. And there’s baraka fil maal. It’s very Islamic kind of conception: that if you follow these scrupulous principles when running your business, when running your shop, when driving your taxi, when filling out your tax return, whatever it may be, that the money that does come your way will become blessed. And all kinds of wonderful things will happen to you through that maal. Whereas other people may find they have a mountain of money but somehow it turns to ashes, no good comes of it. This is a subtle thing. Hard to imagine unless you’ve actually experienced it but it’s a very important part of Islamic way.

I guess advertising and dishonest advertising campaigns will come under this heading of mis-describing goods. And sometimes advertising can be really very esoteric and strange. particularly if its products that are really damaging like tobacco.

So the tobacco advertisement, you see the pack of Rothman’s and then you see the cowboy on his horse. And somehow seeing the cowboy and his horse is meant to make you rush out and buy a packet of Rothman’s. Very odd kind of psychology but they must have found that it works or they wouldn’t be spending millions and millions and millions on advertising. Ahat also is regarded as problematic.

It’s straightforwardness. It’s perfectly legitimate to make a profit but be straightforward. And make sure that you can go to bed relaxed as an honourable man in the evening even if you haven’t quite cut the profit that you hoped for.

Prayers for the Easy Buyer, Seller, Borrower and Lender

And other things which are not really Sharia related but to do with the adab and the ihsan of buying and selling. The Holy Prophet sallallahu alayhi wa sallam says in another hadith:

rahim Allahu imra’an sahla ashiraa sahlal bay’ 

May Allah have mercy on a man who is easy as he sells and easy as he buys

Imam al-Ghazali says this has many meanings. It has something to do with adab — not really grinding somebody who’s needy into the dust because you are in a position of kind of holding him to ransom. That you’re an easy guy to do business with. That you make allowances. That you don’t push for the final cent. And this is one of the meanings of it.

But it also means, and this is more subtle, and particularly in the old bazaar culture was important, that you differentiate in your transaction between rich and poor. That if a poor person comes to you, you can do something like, for instance, saying, well you can pay me later, with the intention of never asking that person for repayment. This is one of the traditional fadhail of Muslim culture that so as not to humiliate somebody by saying this is just a gift. To preserve their honour, they say, you can pay me later but the understanding is that it’s very unlikely that person will ever pay it back. This is common in traditional Islamic ethics and it’s part of what the Holy Prophet is getting at when he speaks of sahla ashiraa sahlal bay’. So don’t force things in a kind of unreasonable and greedy and discourteous way and again you’ll find that baraka will ensue.

And in one narration of this hadith it goes on to say:

sahlal qada sahlal iqtida

which means that when the believer repays his loans he does so easily.

He doesn’t endlessly make excuses. And trying to postpone it. And I can do a little bit with the money and pay it back next year instead of this year. And the games that often happen in the commercial world. Okay it’s a payment within 28 days but let me see if I can get three months because I can invest it in this product and get a little bit of money in the interim. That’s not the Islamic ethic. That if you owe something, sahlal qada means that you’re an easy guy to get your debt back from because it’s a matter of honor that you repay your debt.

And sahlal iqtada means that when you’re dunning somebody you’re asking for a loan to be repaid you make it really easy for them. You give them as long as it takes. In some cases you may just write it off. And this is again a Qur’anic virtue.

In kaana dha ‘usratin fa naziratun ilal maysara

If somebody is in difficult circumstances, so they owe you their rent for instance, and you’re banging on the door and saying, I have the legal right to chuck you out, the Qur’an is saying if the person is in difficulty then give them a period of time until things become easier for them. And this is also part of the merchant world because debt, owing, borrowing is part of the commercial existence.

So just to wrap it up these are the insights that the Imam is sending to us down the corridor of time from Central Asia nine centuries ago. But what we find is that most of these things actually still apply despite the inconceivable and possibly even unstable and dangerous complexity of the world economic and financial systems, we can recognize that there are certain things that are constant.

But the underlying principle is, Islam really likes the recycling of wealth from the rich to the poor, but Islam also honours the one who is wealthy as part of that process. And there is a pious dignity in the mercantile calling, which is a very high dignity and is part of the prophetic dignity itself. And that scrupulousness is going to make you experience the pleasure of that dignity, an honourable man, so that the money that is passed onto one’s descendants is insha’Allah 100% halal. And one is remembered as somebody who was decent to his customers, who was compassionate to debtors, who helped and supported employees, who was just a decent person in the business realm.

And I suspect it’s that, as well as the genius of the Sharia itself that made Islam such a brilliant mercantile civilization. The world’s greatest cities were in the world of Islam because the economy worked. Baghdad with a million people. Qurtuba with a million people. At a time when London had maybe 40,000. Because the system was run on the basis of itqan it was efficient it was well thought out. But also because the poor weren’t starving to death. And there were these facilities for the recycling of wealth but at the same time there was public respect for the decent merchant.

Remember the Prophet sallallahu alayhi assalam is, in this last hadith that I gave you, actually praying for the person who is in this situation of buying and selling and borrowing and lending. Rahim Allah, he says, May allah have mercy on that person. So we need to get this into our minds. Because very often especially in the modern strange culture we tend to assume that this is a very dunya kind of activity.

But in fact islamic civilization, I suspect better than any other pre-modern civilization, has created a context in which one can be absolutely 100% right with the Almighty and finding salvation through these akhlaq and these adab of the righteous merchant. And that so brilliant was the civilization, so much baraka flowed from the wealth of the people who conformed to these stringent but beautiful and ethical rules, that we created a civilization that was flourishing and sustainable for hundreds of years.

So those are some of the things that I have found in Imam al-Ghazali’s book on business ethics Adab Al-Kasb the courtesies of earning a living. I’d recommend that you all take a look at that book and you can do so because online Shaykh Seraj Hendricks Cape Town of the Zawiya mosque has done a video class on this very book of the Ihya Ulumu Deen. It’s well worth watching.

So may Allah inshaAllah bless us all in our buying and our selling, make us all people of honour and mercy and make us all remember that Allah subhana wa ta’ala is ala kulli shayin Raqib is the one who scrutinizes and observes all things. Allah bless you, bring you together, bless those who are in this congregation, bless your families, bless your country insha Allah and bring us together as Bani Adam in love compassion and unity barakAllahu fikum wal ‘afwu minkum assalamu alaikum wa rahmatullah.

Finding God…At Work

Often, Muslims working in a contemporary, fast-moving, turbo-capitalistic-world workplace, feel guilty and uncertain and think that perhaps they’re selling out.In fact, ours is not a worldly religion, but a religion that teaches us to be at ease in the world.  

And our founder, the Holy Prophet, salla Allahu ‘alaihi wa sallam, was in the world.

He was not a monk or a nun.  He was part of his society.  He fully participated in the political and economical and social and marital life of his culture.

He was an economic actor.

So when we look at issues like this, we find that we’re able to go right back to the fountain head of the religion to see what he, himself, had to say about issues that are very contemporary, but in fact are part of the timeless language of human ethics.

This is about issues that are eternal — issues of charity, issues of empathy, issues of justice.  This is not a new innovation.

What I want to do, is consider a hadith — a well know saying of the Holy Prophet, salla Allahu ‘alaihi wa sallam.  It’s narrated by Jabir bin Abdullah and it’s in the collection of Al Bukhari, so it’s rigorously authenticated.  And he says, sallaAllahu ‘alaihi wa sallam,

Rahima Allahu imra’an
sahla al-bay’ee
sahla ash-shiraa’ee
sahla al-qadaa’ee
sahla al-iqtidaa’ee

It’s one of those pithy, syncopated, rhyming statements that we often find in the hadith.

What it means is,

May God have mercy upon a person
who is easy in his buying,
and in his selling,
and in his taking of money in a loan,
and in his reclaiming of money that is owed to him.

Not a very elegant English translation, I’m afraid.  Even if you don’t know Arabic, you’ll know how zippy is the original.

And it’s a prayer from the Prophet, that God should have mercy on these people.

This may come as some kind of culture-shock, because we tend to assume nowadays–Muslims, like everybody else — that religion, spirituality, personal transformation, the “Hotline to God”, are things that happen in a beautiful sacred place, a little quiet backwater, perhaps a retreat centre, perhaps a place we go to on Friday or Saturday or Sunday, and the real world is out there, where we accumulate all kinds of bad vibes, which we then purge at a place of worship.

Sometimes we treat a place of worship as a kind of spa, where we go to decontaminate.

That’s a very unhealthy way of looking at what we do 5 or 6 days a week.

The Muslim vision is that of a totality.

Everything is to be incorporated into the Fundamental Human Project, which has to be, for Islam, as for all other religions, turning away from the self, towards the other — the Other with the big ‘O’ and also the other with the little ‘o’.

Turning away from our lower selfishness toward something that, in some strange but convincing way persuades us that it is what we really are, underneath.

The fundamental turning, which the Qur’an calls Tawbah, which we translate as repentance, means turning, turning away, and turning away from sin to righteousness, which is another way of expressing turning away from the rubbish within, to what is beautiful that God has placed within the soul.

So, when the Holy Prophet salla Allahu ‘alaihi wa sallam, is speaking about economic matters, and matters of business ethics, this doesn’t surprise us because everywhere belongs to God.  And everywhere is a place where God is to be celebrated — even the computer terminal in the estate agent or wherever it is that you work.  Muslims are invited to find a way of sanctifying every moment of those experiences.

Imam Al Ghazali, one of the great ethical thinkers of Islam used to say that humanity basically exists in three categories:

Rajulun shaghalathu dunyaahu ‘an ukhraahu, fa huwa min al halikeen

Category number one is the person whose worldly concerns distract him from his otherworldy concerns, and he is of the lost.

Wa rajulun shaghalthu ukhraahu ‘an dunyaahu, fa huwa inshaAllah min al faa-izeen

And a man who is distracted by his otherworldly concerns from his worldly concerns and he is, God willing, one of the successful

wa rajulun a’aanat-hu ukhraahu ‘ala dunyaahu wa dunyaahu ‘alaa ukhraahu fa huwa min al muqarrabeen

And a man whose worldly concerns help him in his otherworldly concerns and he is of those brought near to God.

So we move close to God, not by skirting the realities of the world but rather going through them.  And that takes some doing.  Particularly in the modern world, where it is fair to say that the average contemporary workplace is not primarily geared up for fostering the spiritual life of its employees.

But in any case, whether we’re Muslims or not, if we have any interest in what we call spirituality, it’s something we’re going to want to think carefully about.

The Myth of Barter

In his book, Debt: The First 5000 Years, David Graeber writes at length about the myth of barter. It’s the origin story of money, taught in every introductory economics class. Once upon a time, there was no money. So people used to barter to get the things they need. If Henry had too many potatoes and he needed shoes, he would trade them with Alfred the shoemaker. But what if Alfred didn’t want potatoes? Or what if he did want potatoes, but Henry didn’t need shoes? Barter necessitated a double coincidence of wants. Money was introduced to resolve this issue.

It’s a quaint story. Easy to understand and imagine. Unfortunately, there’s no evidence that it ever happened.

A professor of anthropology in the London School of Economics, Graeber goes into detail about a number of fascinating systems that various societies and cultures developed to distribute goods and labour amongst its members prior to the emergence of money. None of them resembled the land of barter described in economics textbooks.

Why is this important?

The myth of barter is an expression of some fundamental assumptions about human nature that underpin the study of economics. It assumes that people will only give something if they can get something. That we’re built for competition, not cooperation. That greed, and self interest are the primary drivers of human behaviour.

If this land of barter is indeed a myth that has never existed, it suggests that the assumptions it is based on are also flawed. If that’s true, then perhaps we can open our minds to an economic system that reinforces the best innate characteristics of human nature rather than the worst. If we can do that, the possibilities are very exciting indeed.

The lie of Homo Economicus

In this TED talk by George Monbiot and Ewan McLennan, Monbiot introduces the lie of Homo Economicus.  The talk is about loneliness but the false assumption of Homo Economicus  is a key issue of what makes Islamic economics / Islamic finance fundamentally different.  I hope to think and write more on this later but for now, here is Monbiot’s introduction to the TED talk.

Our dominant ideology is based on a lie: the idea that human beings are fundamentally selfish. Some economists even have a word for this. They call us homo Economicus, self-maximizing man, elbowing other people out of the way in order to enhance our own wealth and power. And it’s certainly true that some economists behave like that and some public figures behave like that. But it does not describe the majority of human by a long shot.

We are in fact an exceptional species with levels of altruism and empathy that exceed those of any other species. And that capacity for altruism appears to be innate.

From the age of 14 months, children will try to help other reach something that’s out of their grasp.  By the time they’re two, they will start to share valued possessions, not just with family members but with unrelated people — something which really marks us out from the great majority of animal species. By the time they’re three, they will start establishing moral norms, imposing on their friends and other people they know, altruistic codes. “Don’t behave like that!” “That’s wrong!”

All these seem to be innate and embedded characteristics — part of the normal human psyche — but it is quite exceptional in terms of the rest of the animal kingdom.

When it comes to another characteristic too, we are way out ahead of almost any other species, which is our degree of social interaction, the extent to which we possess social minds. Perhaps the only species which goes further than us is the naked molerat but I won’t go into that today.

And these two characteristics brought together will create this remarkable moral sense and an ability to project our moral selves well beyond our immediate circumstances.

A recent paper in a psychology journal points out that Homo Economicus is an excellent description — of chimpanzees. And it’s a really bad description of human beings.

But the danger is that if we keep telling ourselves that we’re selfish and greedy and grasping and we just shove everyone out of the way, that that could become a self-fulfilling claim. That we start to see other people as a social threat, we start to see them as, above all else, competitive in their relations with us, rather than, the thing that human beings do better than any other species, being co-operative.

And I wouldn’t claim that this is the only thing setting us apart. Or the only thing responsible for the extraordinary levels of loneliness that many of the 7 billion people crowded on this planet paradoxically suffer. Plainly there’s been all sorts of economic and technological and social change which have also been responsible for these horrendous levels of involuntary social isolation but it’s bound to be a factor. Surely, if this is the way that we see other people and we sense this social threat from other people, that is bound to set us apart.

Why an interest-free savings account RRSP can be a good investment

I got an email a couple of months ago from a Muslim Link reader who had a question about halal investing. Her employer offers a company-matched RRSP (Registered Retirement Savings Plan) program. So she could contribute a portion of her pre-tax income to an RRSP and the employer would match her contributions up to a limit.

They gave her a menu of investments to choose for her RRSP.  She didn’t know which, if any, were halal, so she asked me to have a look.

I’ve had a couple of other friends ask me something similar and unfortunately, none of the options that were offered were halal. They all had either a fixed income component (i.e. bonds, GICs) or they were investing in non-compliant companies (mostly banks).

This reader’s options were no different. I told her the unfortunate news, but that wasn’t the end of this story.

She went back to her employer and insisted that she be given a halal investing option — or at least something that doesn’t involve fixed income, interest-based investments or investments in non-Shariah compliant companies.

They gave her an RRSP account that pays no interest but also doesn’t invest her money in anything.

She asked me to verify if that was halal. I told her it was just like a regular no-interest bank account. Sure, it was halal, but there was no obvious benefit to putting money in there either.

Except…

There is an obvious benefit:

If her company is matching her contributions, every dollar she puts in there is doubled.

Also, she’s contributing pre-tax income. So, assuming her income is taxed at 35%, every $1000 she puts into the account only reduces her paycheque by $650. Plus, it’s being matched by her employer. So, by reducing her take-home pay by $650, she gets to increase her retirement savings by $2000.

Finally, contributions to her RRSP are deducted from her gross income.  So when it comes to calculating her income tax, so her income tax bill will also be lower.

This no-interest savings account is actually one of the best halal guaranteed investments you could make!

A Streamlined Path to Investment Growth with Wealthsimple Halal Portfolio – A Fundamentals Portfolio Analysis

Bio: Amin Patel, MSc. PEng is the founder of www.assurednuclear.com. He is a Nuclear Engineer/Scientist by profession and is not a financial advisor. Trading and Investing on the stock market is simply one of his many passions and interests. He runs the PrinceAmori Youtube channel  (with 55k+ subscribers) and also happens to have three IMDB listings for his video footage contribution to an Asian television series (Filipino in case you are wondering).

A Streamlined Path to Investment Growth with Wealthsimple Halal Portfolio – A Fundamentals Portfolio Analysis

  • Why pay fund managers extra when Wealthsimple charges less?
  • Reduce worries about screening halal stocks by letting Wealthsimple’s halal portfolio screening do the work for you.
  • I identify the overall outlook of the Wealthsimple portfolio by using their current stock picks as a proxy to represent past years performance, for both dividends as well as potential growth based on cash flow.
  • For this article I constructed a stock portfolio that mirror’s Wealthsimple’s current halal stock portfolio (by using equal weighting) using back data.
  • Performance indicated in this article may be different from the actual performance of the halal portfolio fund since inception, for a myriad of reasons that are discussed later in the article.

Lately I have been having conversations with my wife Sawitri Mardyani, who is the editor of the Islamic Finance section on MuslimLink about various halal investing options in Canada. I was curious what various advisors had to offer (in the niche halal investing front) and their minimums for starting an investment portfolio. I personally don’t use bank advisors and brokers, I am a Do-It-Yourself (DIY) investor, who consistently beats the TSX (Toronto Stock Exchange) and the S&P 500 (US Standard & Poors 500 index) using just Canadian stocks. Intrigued by Sawitri’s article about Wealthsimple, I decided to test Wealthsimple’s growth based approach, which incidentally is different from my personal swing trading style (See Introduction to Swing Trading).

For the technically inclined ones among you, yes, I do have “skin in the game”, I have put up my own money in a test portfolio with WealthSimple to monitor their performance for the long-term. Also, their growth portfolio is very much in line with this article’s fundamental analyses (See Introduction to Fundamentals Analysis), which is different from the technical analysis approach (see Introduction to Technical Analysis) used for swing trading. Since the time duration of my DIY portfolio and Wealthsimple halal portfolio would not be equivalent, it would be unfair for me to compare the performance for the two. Instead I have adopted a fundamentals analysis approach using tools available to me for just the Wealthsimple halal portfolio for the scope of this article.

Of course these tools are freely available to the reader as well (my affiliate link here if you want to use the same free tools). All the back data presented in this article originates from Simply Wall St. and is based on information from McGraw Hill Financial; the information will be presented as infographs as well as in tabular format. As a disclaimer, I make no comment about the “halal-ness” of Wealthsimple’s portfolio as they state they follow the MSCI Sharia Index methodology, the analysis of which is beyond the scope of this article. Also I shall not be commenting on the nature of halal screening either, nor debt ratios, which can be a subject of much controversy around dinner table conversations between fellow Muslim investors.

Wealthsimple halal portfolio rebalances at certain defined intervals (risk profile change) i.e. when a stock is delisted from the methodology, i.e. no longer meeting the MSCI halal criteria, or because Wealthsimple’s robo-algorithm’s ‘secret sauce’ has decided the company is no longer worth holding for the time being, Tesla (NYSE: TSLA) being a prime example of the latter situation. Note, the ‘secret sauce’ is a ‘black box’ to the end user, and one can only speculate based on various news events and increasing financial worries at Tesla’s end, Elon Musk’s recent twitter outburst certainly doesn’t help. Reminder to the reader, these are personal musings of mine, which may or or not be inputs to Wealthsimple’s algorithm J, also I do not want to be sued by Elon Musk, whom I deeply admire as a self-made engineer and entrepreneur, the inspiration behind “Iron Man” from the Marvel comic movie series.

The Wealthsimple Halal Portfolio Holdings

Holding Company Name Region
XOM Exxon Mobil US stocks
JNJ Johnson & Johnson US stocks
RDS.A Royal Dutch Shell ADR Repstg Class A

Europe stocks excluding UK

Europe stocks
TOT Total ADR Repsg One

Europe stocks excluding UK

Europe stocks
PFE Pfizer US stocks
CNR Canadian National Railway Canadian stocks
SAP SAP ADR Representing 1

Europe stocks excluding UK

Europe stocks
NVS Novartis ADR representing 1

Europe stocks excluding UK

Europe stocks
MG Magna International Canadian stocks
BP BP ADR Each Representing Six

Europe stocks excluding UK

Europe stocks
CVX Chevron US stocks
PG Oil Search ADR Other
SU Suncor Energy Canadian stocks
TRI Thomson Reuters Canadian stocks
BABA Alibaba Group Holding ADR Representing 1

Asia stocks excluding Japan

Asia stocks
DWDP DowDuPont US stocks
INTC Intel Corporation US stocks
GIB.A CGI Group Class A Canadian stocks
UN Unilever ADR Representing 1

Europe stocks excluding UK

Europe stocks
TSM Taiwan Semiconductor Manufacturing ADR Representing Five

Large, mid, and small cap stocks in developed Europe, Australasia and the Far East.

Foreign stocks
PPL Pembina Pipeline Canadian stocks
TXN Texas Instrument US stocks
CAJ Canon ADR Japan stocks
NTR Nutrien Canadian stocks
CHT Chunghwa Telecom ADR Representing Ten

Asia stocks excluding Japan

Asia stocks
MRK Merck & Co US stocks
ABB ABB ADR Representing One

Europe stocks excluding UK

Europe stocks
CRM Salesforce.com US stocks
IMO Imperial Oil US stocks
PHG KONINKLIJKE Philips ADR

Europe stocks excluding UK

Europe stocks
BHP BHP Billiton ADR Reptg 2 Foreign stocks
DHR Danaher US stocks
TJX TJX US stocks
MRU Metro Canadian stocks
UNP Union Pacific US stocks
BAX Baxter International Individual company stocks
SAP Saputo Canadian stocks
GIL Gildan Activewear Canadian stocks
ASML ASML Holding ADR Representing

Europe stocks excluding UK

Europe stocks
SNC SNC Lavalin Canadian stocks
SNY Sanofi ADR Representing 1 1/2

Europe stocks excluding UK

Europe stocks
FDX Fedex US stocks
CRH CRH ADR Representing 1

Europe stocks excluding UK

Europe stocks
AVGO Broadcom Individual company stocks
FNV Franco Nevada Canadian stocks
SBUX Starbucks US stocks
MDLZ Mondelez International Class A US stocks
BMY Bristol Myers Squibb US stocks
VALE Vale ADR Representing One US stocks

Table 1 – Wealthsimple Portfolio holdings  

The stocks in Table 1 were all in Wealthsimple’s halal portfolio at the time of this article’s writing. 

Overall Outlook

Figure 1 – Overall portfolio outlook

As the ‘snowflake’ descriptions (Figure 1) says, the wealthsimple halal portfolio is an established income portfolio with a great track record. The closer the ‘snowflake’ is to the periphery of a category, the higher the overall score.  

Portfolio Volatility

Figure 2 – Portfolio Volatility vs Market

The Wealthsimple portfolio (Figure 2) [light blue marker] is less ‘volatile’ with respect to the global market average.

 

Returns

  • The following analysis (Table 2) assumes, equal stock weightage, with no changes to the portfolio allocation weightings in the specified time period as a first order approximation.
  • Since in real life these 49 stocks have not been present as part of the Wealthsimple halal portfolio for the same duration, actual returns may reflect lower values.
  • The above two bullets helps to simplify the analysis, because the Wealthsimple Halal portfolio did not exist three and five years ago.
  • Rebalancing, ‘algorithmic’ stock allocation weightage data by Wealthsimple (along with changes to the MSCI halal shariah index) is publicly unavailable for the purpose of this analysis, for the durations listed in Table 2. Hence my use of a roughly equal weighted portfolio.
  • The portfolio for the fundamentals analysis commences on August 8, comprised of 49 stocks. The portfolio being valued at a humble CAD $1000. I have chosen this amount simply because it provides analysis numbers that are easier to understand, and pony up for an initial investment (listening young’uns?).

 

1 year ago 3 years ago 5 years ago
Amount Invested  $ 1,000.00  $    1,000.00  $    1,000.00
Portfolio value now  $ 1,180.77  $    1,361.17  $    1,662.90
% Return 18.08 % 36.12 % 66.29 %

Table 2 – Return rate on Wealthsimple halal portfolio (if equally weighted), without taking into account currency fluctuations.

Diversification

 

Figure 3 – Equal weighting (Disclaimer: Wealthsimple does not use equal weights)

 

Again, this analysis (Figure 3) assumes, roughly equal weightage, with no changes to the portfolio weightage in the specified time period as a first order approximation.

Figure 4 – Diversification across industry

 

Figure 4 demonstrates that the Wealthsimple halal stock portfolio is well balanced across various industries.

 

Conclusion:

While the analysis in this article cannot predict future performance (nor any upcoming market crashes and economic downturns), and is indicative of past performance using back data, we see from table 2 that the returns are quite favourable at 18%, 36% and 66% return for the last 1, 3 and 5 years for an equally weighted Wealthsimple halal portfolio.

Which is really good, in layman’s terms.

Recreating Wealthsimple’s 49 stock portfolio in a DIY manner would be prohibitive from a commissions point of view ($9.99 per trade with TD). For readers who do not want to pay high management fees to portfolio managers, Wealthsimple is a great alternative for starting halal investing and letting a professional firm manage your halal portfolio, they do not charge for purchases nor sales of stocks. At the end of the day, alternative private fund managers and Banks skim a fair bit of your portfolio assets as management fees. If you have a portfolio with assets above $100K Wealthsimple lowers the management fee and is even willing to provide tax-loss harvesting advice (Tax-loss harvesting is the selling of stocks at a loss to offset a capital gains tax liability), along with other perks and benefits listed on their website.

Opening an account with Wealthsimple is fairly straightforward (bonus affiliate link here) and the process is all online, for you young millennials readers who abhor walking into your neighbourhood bank, yes I know, been there done that, one myself. While my personal approach is lumpsum investing (which studies show to be 60% more effective in the long run) [See Bloomberg article for more explanationon lumpsum vs dollar cost averaging], for a first time or new investor, I would recommend, regular contributions (perhaps even automated) which leads to dollar-cost-averaging, and results in lowering the overall purchase price of your shares in the long run. Remember, we are talking about long-term investing here. I do not endorse DIY swing trading for novices.

Disclosure: While I beat the TSX (Toronto Stock Exchange) and S&P 500 (US Standard & Poors Index) with my DIY portfolio using swing trades, for the purpose of diversifying my investments, I now also have a personal Wealthsimple portfolio account, which is a more ‘balanced portfolio’ at the end of the day. Wealthsimple is available to residents of Canada, US and the UK at the time of this article.

I am expressing my own opinions; there are risks involved with investing, there are no guarantees with respect to future returns based on past performance. I have no business relationship with Wealthsimple, apart from the bonus affiliate link posted in this article.

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