Do you know the Social Safety net for businesses/individuals proposed in Islam? (God’s proposed structure – part 16)
Sahih Muslim Hadith 3981 (1556) (The creditor should take whatever amount is available):
Narrated from Abu Said Al-Khudri (RAA):
that during the Messenger of Allah’s (PBUH) lifetime, a person suffered losses due to the fruits he had purchased and therefore his debt increased; then Allah’s Messenger (PBUH) informed the people to provide this person charity, and the people gave that person charity, but still the amount collected was not sufficient to repay the full amount of the debt. The Messenger of Allah (PBUH) stated to that person’s creditors: “Take what you find, you will receive nothing except that.” [Sahih Muslim Hadith 3981 (1556)]
1. The trigger/risk event is ex-post (actual occurrence), and only then is the Zakat and Sadqa of that market used to assist the damaged business party, thereby creating a “safety net” of the participants. However, if this is not enough to cover the damages, the rest of the loss is borne by the respective participants. (As seen in the, Sahih Muslim Hadith 3981 (1556), shown above.) This “skin in the game” (residual risk exposure) forces self regulation and thorough due-diligence of all participants. This social safety net structure, takes out the speculative nature of ex-ante projections, with no unnecessary corporate structure, management layers, profits and capital put aside (pre-emptive funds).
Sahih Al-Bukhari Hadith 2399 (Regarding the funeral prayer for a deceased person owing debt.):
Abu Huraira (RAA) Narrated:
The Prophet (PBUH) stated, “I am nearer to the believers than they themselves both in this world and in the Hereafter, and if you prefer, you may recite Allah’s Statement: ‘The Prophet is nearer to the believers than they themselves.’ (V.33:6) Therefore, when a true believer dies and leaves behind some wealth, this will belong to his inheritors (from the father’s side), and if he leaves behind some debt needing to be repaid or needy children, then these should come to me for I am the guardian of those that are deceased.” [Sahih Al-Bukhari Hadith 2399]
2. On a personal level, the social safety net starts with the rights and obligations of family members, neighbours, tribe and expands to the state and government. As seen in the Sahih Al-Bukhari Hadith 2399, shown above)
Sahih Al-Bukhari Hadith 2418 (Regarding the talk of opponents against each other.):
Abdullah bin Kab bin Malik Narrated:
Kab (RAA) demanded the return of his debt back from Ibn Abi Hadrad while they were in the mosque and their voices became louder until Allah’s Messenger (PBUH) could hear them from inside his house. He came out towards them lifting the curtain in his room and spoke to Kab, “O Kab!” Kab responded, “Labaik, O Allah’s Messenger.” (He then said to him), “Reduce your debt by half,” making a gesture with his hand. Kab responded, “I have made it so, O Allah’s Messenger!” Upon that the Prophet (PBUH) stated to Ibn Abi Hadrad, “Get up and pay the debt back to him.” [Sahih Al-Bukhari Hadith 2418]
3. The State can use its Zakat and Sadqat for providing the necessities of its citizens, and hence IS the social safety net. It also has the ability to reduce the obligations of those citizens that find themselves in difficult circumstances (example reducing debt by 50% in Sahih Al-Bukhari Hadith 2418, shown above)
4. So in an Islamic Economy, the social safety net is a self correcting model with opposing forces, providing optimisation, cost efficiency, due-diligence and development (innovation). This is critical to ensure transparent markets and the optimal setting of equilibrium prices and utilisation of resources.
Do you want to know more of what is allowed and what is forbidden ? How should the economy and finance on the whole be structured?
The book “Islamic Finance and Trade: God’s Economic System”, is the culmination of over 25 years of research, to present the answer to the above question. You are kindly invited to Read, Review and Recommend the book. It is available at https://a.co/d/f1jTXvP and on all Amazon sites.
