FROM THE EDITORIAL DIRECTOR

Economic activity in Islam is governed by what is economically, socially and morally good. Economic activity that is destructive of man’s innate goodness and harmful to the individual and society has been declared unlawful or haram. it; and that traders must tell the truth and spell out the good and bad points of the goods offered for sale. If they do so, their trade shall be blessed; but if they tell lies and conceal defects, they shall not receive God’s blessings. The Prophet severely warned shopkeepers against selling their goods on false oaths. Economic activity in Islam is governed by what is economically, socially and morally good. Economic activity that is destructive of man’s innate goodness and harmful to the individual and society has been declared unlawful or haram. LABOUR AND ECONOMIC RISK In Islam, gains from economic activity should be based on two factors: labour and economic risk. Income from betting or gambling, for example, is therefore unlawful because it is not acquired through work or labour. Such income is called “unearned income”. Income from lending money at a guaranteed rate of interest is unlawful because it is not earned through labour or economic risk. Income from such activities as usury, gambling, monopolistic trade practices, hoarding and speculation is therefore regarded as unlawful or haram. All the practices that are not based on productive work can be shown to create hardship and may even lead to social strain and upheaval. What is most severely condemned in particular is riba which is interest or usury. This involves lending money on condition that you get back not only the sum lent but an additional guaranteed sum—without any work on your part and without any economic risk. Riba exploits the needs of the borrower and may cause further economic hardship. The lender thus becomes a parasite feeding on the needs of the borrower. As such, riba lies at the root of much of the economic and political instability in the world. PRIVATE AND PUBLIC ENTERPRISE Public finance as practiced in the early Islamic period was based on the ethical and social philosophy of Islam. It did not depend on the discretion of the ruler, rather it was based on guidance from Islamic Shariah (law) and aimed at public interest. The general principles