Contents of Topic 132
1. Sources of Islamic ethical system
2. Characteristics of Islamic ethical system
3. Axioms of Islamic ethical philosophy
4. Islam and stakeholder relationships
5. Prohibited earnings
6. Ethical guidelines in business
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Sources of Islamic ethical system
Both provide complete guidance for Muslims to live their life
Decisions that are based on the Qur’an and Sunnah are deemed ethical
Qur’an
A book revealed by Allah to
Prophet Muhammad
p.b.u.h in seventh century
Arabia
Sunnah
The recorded sayings and
behaviour of the Prophet
Muhammad p.b.u.h
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Ethics from Islamic perspective
A concept of goodness, righteous, equity, equilibrium and justice, truth and right, known and
approved and PIETY.
Ethics governs all aspects of life
Success in life = “inviting to all that is good, commanding what is right and prohibiting what is wrong.”
Ethics
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Characteristics of Islamic ethical system
Based on how Islam views this world – ‘Islamic Worldview’
The Islamic Worldview
Nature is God’s creation
The creation of the universe, nature and man constitute signs of God’s existence, power, wisdom and purpose
The nature contains His bounty meant for human use and enjoyment but constrained by divine law
His power over all created things is absolute
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The Islamic Worldview (1)
The earth and the universe, and all those exist in them, have been made obedient to man
Man have special position
Man have great moral responsibility: mindful of God’s
commandments, obedient to Him, be morally upright and forever grateful to Him.
Man = servants to God must manage and
develop the world in accordance with His plan
to gain goodness.
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The Islamic Worldview (2)
Goals in life
Based on human well being and good life Stress brotherhood/
sisterhood and socio-economic justice
Balance the satisfaction from achieving both the material and a spiritual needs
God has created balance and harmony – maintain it
HARAM
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The Islamic Worldview (3)
God subjects humans to continuous tests – their behaviour and use of natural resources
Behaving ethically amidst the test of worldly temptation shows that Muslims have proven their worth to God.
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The Islamic Worldview (4)
Intention is important in determining whether actions and decisions ethical
God knows everything, thus knows our intention completely and perfectly
Good intentions followed by good actions are considered as acts of worship
Rejects utilitarianism
Forbidden acts cannot be compromised
Decisions that benefit the majority or a minority are not necessarily ethical
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Unity
Muslims must not separate his daily life with his religious beliefs
Muslims life composed of political, economic, social and religious aspects
People are accountable to God and their success in the hereafter depends on their performance in this life on earth
Muslims should strive for cooperation and equality of effort and opportunity in business.
Muslims must not separate his daily life with his religious beliefs
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Equilibrium
A sense of harmony among the various aspects of human life - produce the best social order.
Strive to behave in a way that promotes harmony
Wastage is condemned
Act of giving is important –balance between poor and rich
Any extremist acts such as extravagant and spendthrift acts are condemned
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Free will
Man have ability to act without external force within the parameters of God’s creation and as God’s trustee on earth.
Man have freedom to lead his life as God’s servant on earth
Free will to live must be exercised intelligently
Man have intelligence to choose how ethically or unethically they will behave
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Responsibility
Must accountable for own actions
Unlimited freedom is absurd
Individual and collective responsibilities
Need to fulfill obligations to God and other human beings
Business contract is sacred Promises must be honored - obligation to business
partner
All business obligations must be honored unless morally wrong
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Benevolence
A kind action that benefits persons – encouraged
Committed without any obligation to do so
Business people are encouraged to be kind to customers, employees, suppliers, debtors and partners
Examples?
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Stakeholder relationships
Expected to care about the general welfare of the society
Businessmen expected to help those in need, weak and poor – benevolence
The reward for taking care of the poor and weak is stressed in Islamic teaching.
Highly encouraged to be involved in philanthropic activities and give charities to needy people
Business owners are accountable for problems they created
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Workplace Issues (1)
Islam wishes its followers to treat all Muslims equally well - Al-’Adl (Justice and Fairness) E.g. Fair in hiring, promoting, performance appraisal,
disciplining employees etc
Employers are under obligation to pay fair remuneration - Al Ujrah (Fair wages) Exploitation is forbidden
Employers should understand that Islam is applicable in all aspects of lives Should give employees time off to perform prayers Should not make employees do something that is against
their religion Should not sexually harassed employees
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Workplace Issues (2)
To foster equity and balance, non-Muslim employees’ beliefs should be similarly respected
Employers must respect employees’ right to privacy - Huquq-al ‘Ibad (People’s Right)
Employers should not publicize employees wrongdoing with the intention of shaming them
Employees must avoid from being dishonesty, breaching trust, and involving in conflicts of interest - Al-Amanah and al-Ikhlas (Trust and Honesty)
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Marketing (1)
Emphasizes free and independent judgment of consumers
Consumers should not be cheated, coerce, mislead in marketing exchanges
The Prophet Muhammad (pbuh) prohibited a transaction concluded under coercion. Unethical because consumer’s decision-making freedom
must be protected from all elements of coercion
E.g. of coercive elements: sexual appeal, fear appeal, subliminal advertising, and fake scientific claims
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Marketing (2)
Buyers should expect to receive goods that are in working conditions and priced fairly
Islam forbids unethical practices such as Use of incorrect weights and
measures Hoarding Price manipulation Deception Purchase of stolen property Charging and receiving
interest (riba)
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The environment
God gives us a temporary custody of the environment to facilitate our life
Appreciate beauty of natural environment - God’s signs
Use resources but don’t cause injury or damage or inconvenience
Must take corrective action if cause damage and endanger others
“There is no scope for causing damage in Islam neither in the case of an independent action nor as a reaction’ - The Prophet Muhammad(pbuh)
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Suppliers
Must negotiate a fair price and terms of contract
Must not take advantage of their influence and size
Islam honours written contractual obligations to govern biz relationship
But gharar (uncertainty/ambiguous) type of transaction are forbidden because it could lead to dispute or conflict.
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Debtors and shareholders
Islam encourages benevolence – help debtors in financial trouble
Debtors must not delay debt repayment Not paying debts are
considered as big sin
Shareholders
Debtors
Islam encourages partnerships especially if the intention is righteous
Islamic code of ethics requires all partners to be fair and to avoid cheating one another
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Prohibited business/earnings
Muslims are not allowed to involve in Haram business
Haram = forbidden
Examples: Trading in alcohol Drug dealing and trading Sculptors and artists Production and sale of Haram goods Prostitution Al Gharar – uncertainty or unspecified quantity
e.g. selling of agricultural produce not yet harvested.
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General ethical guidelines for Muslims in Biz
Also govern one’s daily life. God is witness to biz transactions, thus must
behave ethically. Be honest and truthful Keep your word/promise Love God more than your trade Be humble in how you conduct your life Use Mutual consultation in your affairs Do not deal in fraud Do not bribe Deal justly
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