Introduction

In Islamic finance, the principles laid down by the Holy Quran and the hadith of Prophet Muhammad serve as the foundation for ethical and fair economic practices. One such principle is the prohibition of selling a commodity that one does not own, emphasizing the importance of possession and risk in financial transactions. According to this principle, it is not enough to merely own a commodity; one must also take possession of it to sell it legitimately. Sharia law dictates that without assuming the responsibility and risk of a commodity, an individual cannot profit from its sale. This fundamental principle, guided by the teachings of the Prophet, is unanimously upheld by jurists across the Muslim community.

This principle has broader implications beyond religious doctrine and extends to modern-day economic practices. It addresses issues prevalent in commodity and equity markets, where speculative trading, detached from actual ownership and possession, contributes to economic volatility and crises. Transactions based on speculation, detached from the physical possession of the commodities or shares being traded, have the potential to disrupt economic stability. As a result, adherence to the principle of ownership and possession as established in Islamic teachings can offer insights and solutions to the economic challenges faced in contemporary global markets.

The Quran and Hadith Principle

In the Quran and Hadith, the principle laid down is that one cannot sell a commodity that they do not own, as outlined in verses 1.76, 5.759, 7.919, and 9.76. This principle is deeply rooted in Islamic finance and commerce. It emphasizes the importance of ownership and possession in transactions. The Hadith of Rasulullah further reinforces this concept, highlighting that merely owning a commodity is not enough; one must take possession of it. Therefore, according to Sharia law, selling a commodity without prior possession is not permissible.

This principle reflects the Islamic perspective on risk and responsibility in trade. It asserts that unless an individual assumes the risk of ownership, they cannot profit from a commodity. This plays a significant role in regulating speculative practices in financial markets, such as commodity and equity markets. The Quran and Hadith's emphasis on tangible ownership and risk-taking aims to promote ethical and responsible business conduct. However, the disregard for these principles has led to speculation and economic upheavals, as discussed in the Quran and Hadith principles.

Ownership and Possession in Sharia

In Islamic finance, the principles of ownership and possession hold significant importance. The Quran and the Hadith of the Prophet Muhammad establish the basic principle that one cannot sell a commodity that they do not own or possess. Simply having ownership of a commodity is not sufficient; one must also take possession of it. This means that if a person owns a commodity but has not taken physical possession of it or had it delivered to them, it is not permissible in Sharia to sell that commodity. The concept of taking possession also includes assuming the responsibility and risk associated with the commodity. According to Sharia, one can only earn a profit from a commodity if they have taken possession of it and thus have shouldered the associated risks. This principle is considered fundamental in Islamic finance and is unanimously upheld by the jurists of the Muslim community. It contrasts with speculative practices in modern markets, where commodities and shares are often traded without actual ownership or possession, leading to economic upheavals and crises.

Undertaking Responsibility and Risk

The principles laid down by the Holy Quran and the Hadees of Rasulullah emphasize the concept that one cannot sell a commodity without ownership or possession. Mere ownership is not sufficient; one must also take possession of the commodity to be able to sell it according to Sharia. By taking possession, one also undertakes the responsibility and risk associated with that commodity. This means that if the commodity is destroyed or faces any other loss, the owner will bear the consequences.

In essence, Sharia dictates that one must take on the risk of a commodity to earn profit from it. Without ownership or possession, selling a commodity is not permissible in Islamic finance. This principle is widely accepted by the jurists of the Muslim Ummah. However, in modern markets, such as commodity and equity markets, transactions often occur without actual ownership or possession, leading to speculative practices. Speculation creates economic upheavals and is considered to be a contributing factor to the financial crises faced by the world today. Therefore, understanding and upholding the principles of undertaking responsibility and risk are essential in aligning with Islamic financial principles and maintaining stability in the market.

The Basic Principle in Sharia

In Sharia, the basic principle regarding the sale of commodities is rooted in the Quran and the hadith of Rasulullah. It emphasizes the concept that one cannot sell a commodity they do not possess or own. Simply having ownership of the commodity is insufficient; possession is also required. Thus, if an individual owns a commodity but does not take possession of it, it is impermissible to sell it according to Sharia. This principle is fundamental in Islamic jurisprudence and is unanimously agreed upon by the jurists of the Muslim ummah. It serves as a cornerstone for ethical and fair trade practices within the Islamic economic framework.

The Sharia dictates that for an individual to earn profit through selling a commodity, they must bear the risk associated with it. By taking possession of the commodity, the seller assumes the responsibility and risk. If the commodity is destroyed, the seller will consequently suffer the loss. Only after undertaking this risk and responsibility are they permitted to sell the commodity and obtain profit from it. However, engaging in speculative transactions, such as buying and selling shares without assuming ownership or possession, is considered impermissible in Sharia. Such practices are believed to contribute to economic instability and crises, aligning with the current challenges faced in the global economic landscape.

Unanimous Agreement of Jurists

The unanimous agreement of jurists in the Muslim ummah emphasizes the principle laid down by the Holy Quran and the hadith of Rasulullah. According to this principle, an individual cannot sell a commodity that they do not own or possess. Merely owning a commodity does not suffice; the individual must also take possession of it. Sharia prohibits the sale of a commodity that has not been delivered to the seller. In Islamic finance, the concept of ownership and possession is crucial. If an individual takes possession of a commodity, they also bear the risk associated with it. This indicates that they are responsible for any potential losses if the commodity is destroyed. Consequently, they are permitted to sell it and earn a profit. However, without ownership and possession, selling a commodity is not allowed within the principles of Sharia.

This application of the principle in commodity and equity markets exemplifies how transactions without ownership and possession lead to speculation. Such speculative practices contribute to economic upheavals, which have been observed in today's global economic crisis. Therefore, the unanimous agreement of jurists in the Muslim ummah underscores the significance of ownership, possession, and bearing the associated risks in economic transactions, and highlights the detrimental impact of speculation on the economic atmosphere.

Observations in the Market

In the context of today’s global economy and markets, the issue of selling and buying commodities and shares without ownership has become commonplace. This practice raises concerns as it deviates from the principles laid down in the Holy Quran and the hadith of Rasulullah. The fundamental principle established is that one cannot sell a commodity that they do not own or possess.

This principle emphasizes the importance of taking actual possession of the commodity, not just owning it in name, in order to assume the associated risks. Sharia dictates that without assuming the risk of the commodity, one cannot reap profits from it. When individuals engage in speculative activities without taking possession, it leads to focused speculation, causing upheavals in the economic atmosphere with far-reaching implications. This type of speculation is a contributing factor to the financial crises that the world is currently facing.

In both commodity and equity markets, the selling and buying of shares and commodities without ownership have become pervasive. This non-compliance with the core Islamic principle is a matter of concern as it contravenes the teachings of the Sunnah and the unanimous agreement of the jurists within the Muslim Ummah. It is evident that these market practices deviate from the fundamental principles outlined in the Islamic scriptures, contributing to economic instability.

Speculation and Its Effects

Speculation in the market refers to the act of buying and selling commodities or shares without actual ownership or possession. This practice goes against the principle laid down by the Holy Quran and the hadith of Rasulullah, which states that one cannot sell a commodity that they do not own or possess. The fundamental concept in Sharia law is that a person must bear the risk of a commodity in order to earn profit from it. Simply owning a commodity isn't enough; the responsibility and risk must be undertaken for the trade to be permissible.

The consequences of such speculation are detrimental to the economic atmosphere, and it is a major contributing factor behind the upheavals witnessed in the market. When individuals engage in transactions without taking possession of the actual commodity, it creates a scenario of focused speculation. This focused speculation, particularly prevalent in the commodity and equity markets, leads to volatile price movements and artificial demand.

The current global economic crisis can be linked to the prevalence of such practices in financial markets. The rampant speculation has disrupted the natural balance of supply and demand, leading to inflated prices and unsustainable market conditions. As a result, it has become crucial to reevaluate trading practices to ensure stability and ethical conduct in financial markets.

Conclusion

In conclusion, the principles laid down by the Holy Quran and the hadith of Rasulullah emphasize the concept that one cannot sell a commodity that they do not own or possess. Merely owning a commodity is not enough; one must also take possession of it. Sharia prohibits the sale of a commodity unless the seller takes the risk of that commodity. This means that the seller must bear the responsibility and risk of the commodity, and if the commodity is destroyed, they will suffer the loss. These principles are fundamental in Islamic finance and are unanimously agreed upon by the jurists of the Muslim ummah.

The violation of these principles, often seen in speculation in commodity and equity markets, leads to economic upheavals and crises. Speculation, where individuals buy and sell commodities and shares without possessing or taking delivery of them, goes against the teachings of Islamic finance and contributes to the instability of the economic atmosphere. It is important to acknowledge and adhere to these principles to avoid the negative consequences that speculative practices can bring, as the world is currently facing economic crises due to these violations of fundamental principles in various markets.

Highlight

The principles outlined in the Quran and the hadith of Rasulullah emphasize that one cannot sell a commodity they do not own or possess. Mere ownership is not sufficient; taking possession and assuming the risk of the commodity is necessary. Failure to do so is considered speculation and can lead to economic upheaval. This principle is unanimously upheld by the jurists of the Muslim ummah and holds significant relevance in today’s commodity and equity markets. The failure to abide by these principles is believed to contribute to the economic crises faced by the world today.

FAQ

Q: What are the principles regarding trading commodities in Islam?

A: The principles laid down by the Holy Quran and the hadees of Rasulullah emphasize that one cannot sell a commodity that they do not own or possess.

Q: Is mere ownership enough to sell a commodity in Islamic finance?

A: No, merely owning a commodity is not enough according to Islamic finance principles. It is essential to take possession of the commodity in order to sell it.

Q: Why is it important to take possession of a commodity before selling it in Islamic finance?

A: Sharia prohibits the sale of a commodity if the seller does not take the risk of it. Undertaking the responsibility and risk of the commodity is necessary to earn profit from it. Without possession, one cannot engage in selling the commodity and earning profit.

Q: How do these principles apply to modern financial markets?

A: The principles outlined in Islamic finance hold that selling commodities and shares without ownership or possession, such as in the case of speculative trading, can cause economic upheavals and crises.

Q: What is the consequence of engaging in speculative trading according to Islamic finance principles?

A: Engaging in speculation, where commodities or shares are traded without ownership or possession, can lead to economic instability and crises, as witnessed in the world today.

Q: What is the general consensus of Muslim jurists regarding the ownership and sale of commodities in Islamic finance?

A: The fokaha, or jurists of the Muslim ummah, are unanimous on the principle that in Islamic finance, ownership and possession are fundamental requirements for the sale of commodities.

This video emphasizes the significance of ownership and possession in Islamic finance and the potential consequences of engaging in speculative trading. It underscores the importance of adhering to these principles to maintain economic stability and ethical trade practices.

Conclusion

In conclusion, the principle laid down by the Holy Quran and the hadith of Rasulullah (peace be upon him) is that one cannot sell a commodity that they do not own or possess. Merely owning a commodity is not enough; one must also take possession of it to sell it in Sharia. The responsibility and risk of the commodity must be undertaken for earning profit. Speculation and unfocused speculation in the market, such as buying and selling shares without ownership or possession, contribute to economic upheavals and crises. These principles are fundamental in Islamic finance and are crucial in maintaining ethical and stable economic systems.