By Shaykh ʿUmar Vadillo

What is Islamic Trade?

Islamic Trade is trade conducted under Islamic Law. The most important prerequisite for the existence of trade is the existence of the Islamic Market. A key characteristic of Islamic Trade is its openness to everyone. It restores a natural right to the individual, which is, the right to trade: everyone has access to trade for free in a fitting venue, such as the traditional Open/Islamic Markets. This right has rapidly disappeared with the malls, supermarkets and hypermarkets, and has become the privilege of few. For example, the five largest supermarkets in Britain control two thirds of all retailing.

Trade cannot exist in a regime in which supermarkets control retailing. You cannot trade as an individual in a supermarket, you can only trade if there is a market-place available. This is why trading needs markets and why trading becomes monopolistic distribution if there are supermarkets instead of market-places.

Islamic Trade is opened to all: Muslims and non-Muslims.

Allah has presented trade in parallel to usury by saying: Allah has permitted trade and forbidden usury. This is like saying usury is the illness and trade is health. To restore health is not enough while suppressing the illness, we need to promote health (good eating, exercise), a healthy body. To promote trade is the effective way of eliminating our dependence in usury. Promoting Islamic Trade will be a positive way to present Islam to millions of victims of capitalism. Islamic Trade will be a way of calling millions of non-Muslims to Islam.

Another aspect of Islamic Trade: the Guilds

Islamic Trade is a complete recipe to stimulate and encourage independent entrepreneurship. An Islamic society is not a society of employees. We know through the literature that Muslims lived and worked organised in guilds. Belonging to a guild was the norm in Muslim societies. Businesses were created in collaboration with other members of a trade with the support and infrastructure of a guild organisation. The conditions to create an independent business were all favourable. The relationship employer/employee was replaced by master/apprentice. There was not a class of employees in the days of the guilds. Guilds were eliminated and a new set of privileges and monopolies were put in place. Today free competition and free access to the market do not exist for all. Islamic Trade guarantees equal rights for all. Islamic Trade will decisively contribute to the re-establishment of the guilds, challenging the system of the modern corporation based on one owner and 14,000 employees. It will encourage new models of open production processes (guilds), where production is open to thousands of free small owners who are associated.

This is also part of the wider framework of the Islamic Trade Initiative. Concerning this matter, it is important to point out that especially since the beginning of the 1990s, quite a few corporations have partially understood the benefits of dividing their production processes into smaller units. Instead of one pyramidal structure with one source of decision, they saw the benefit of many autonomous units working in collaboration while competing among each other. Thus, Toyota now claims that there is not one Toyota but two thousand Toyotas. Asea Brown Boveri, the Swedish-Swiss engineering giant, has subdivided itself into 1,300 independent companies and 5,000 autonomous profit centres. Their prosperous success is forcing others to adapt to the same principle. The policies of decentralisation, though they seem a step in the right direction, are limited because they have all been designed by corporate staff. Corporate staff could not suggest the ultimate step which would be to eliminate the corporation altogether, or in other words to give total independence to the autonomousworkshops. That could only happen if the small workshop could have an access to the customer identical to that of Toyota itself. To make that step we need open distribution networks and free market-places for all. These are all part of Islamic Trade.

Islamic Trade can transform money, transform production and distribution, create a new formulation of contractual law and, perhaps the most important, open trading to all in society. Islamic Trade consists of new procedures, mechanisms and institutions based on justice. But Islamic Trade is not a moral proposition, it is existential reality. It does not judge your inner convictions but only your outward behaviour and the effects of your behaviour.

The Foundations of Islamic Trade

consist of five main elements:

•The Open Market-place — a market-place open to all

•The Open Production Process—a production accessible to all

•The Open Distribution Network—a distribution accessible to all

•The Free Medium of Exchange—a medium of exchange freely chosen by all

•The Islamic Business Contracts—the contracts that guarantee 

What is the Islamic Market?

Soon after his arrival in Madinah al-Munawwara, the Prophet of Islam, salallahu alayhi wa sallam, created two institutions, a mosque and a market. He made clear by his statements and explicit injunctions that the market-place was to be a space freely accessible to everybody, with no divisions (such as shops) and where no taxes, levies or rents could be charged.

The Market is like a Mosque: …

The Messenger of Allah, salallahu alayhi wa sallam, said: 

“Markets should follow the same Sunna as the mosques: whoever gets his place first has a right to it until he gets up and goes back to his house or finishes his selling. (suq al-muslimin ka-musalla l-muslimin, man sabaqa ila shay’in fa-huwa lahu yawmahu hatta yada‘ahu.)”.

(Al-Hindi, Kanz al-’Ummal, V, 488, no. 2688)

It is a sadaqa, with no private ownership …

Ibrahim ibn al-Mundhir al Hizami relates from Abdallah ibn Ja’far, that Muhammad ibn Abdallah ibn Hasan said, “The Messenger of Allah, salallahu alayhi wa sallam, gave the Muslims their markets as a charitable gift (tasaddaqa ‘alal-muslimina bi-aswaqihim).”(Ibn Shabba, K. Tarikh al-Madinah al-Munawwara, 304)

With no rent charged … Ibn Zabala relates that Khalid ibn Ilyas al-’Adawi said, “The letter of ‘Umar ibn ‘Abd al-‘Aziz was read out to us in Madinah, saying that the market was a sadaqa and that no rent (kira’) should be charged on anyone for it.” (As-Samhudi, Wafa al-Wafa, 749)

With no taxes levied on it …Ibrahim ibn al-Mundhir relates from Ishaq ibn Ja’far ibn Muhammad, from Abdallah ibn Ja’far ibn al-Miswar, from Shurayh ibn Abdallah ibn Abi Namir, that Ata’ ibn Yasar said, “When the Messenger of Allah, salallahu alayhi wa sallam, wanted to set up a market in Madinah, he went to the market of Bani Qaynuqa’ and then came to the market of Madinah, stamped his foot on the ground and said, ‘This is your market. Do not let it be lessened (la yudayyaq), and do not let any tax (kharaj) be levied on it.’” (Ibn Shabba, K. Tarikh al-Madinah al-Munawwara, 304)

Where no reservations or claims can be made …Ibn Zabala relates from Hatim ibn Isma’il that Habib said that ‘Umar ibn al-Khattab [once] passed by the Gate of Ma’mar in the market and [saw that] a jar had been placed by the gate and he ordered that it be taken away. … ‘Umar forbade him to put any stones on the place or lay claim to it [in any way] (an yuhajjir ‘alayha aw yahuzaha). (As-Samhudi, Wafa al-Wafa, 749)

And where no shops can be constructed. Ibn Shabba relates from Salih ibn Kaysan …that …the Messenger of Allah, salallahu alayhi wa sallam, …said: ‘This is your market. Do not build anything with stone (la tatahajjaru) [on it], and do not let any tax (kharaj) be levied on it.’” (As-Samhudi, Wafa al-Wafa, 747-8)

Abu r-Rijal relates from Isra’il, from Ziyad ibn Fayyad, from one of the shaykhs of Madinah that ‘Umar ibn al Khattab,

radiya’llahu ‘anhu, saw a shop (dukkan) which someone had

newly put up in the market and he destroyed it. (Ibn Shabba, K. Tarikh al-Madinah al-Munawwara, 750)

Without the Market-Place there is no Trade

The first thing is that we need to distinguish between trade and monopolistic distribution. Supermarkets do not allow trade to happen, no one can go there to trade. The products that arrive at the supermarket have already been bought by the supermarket. The goods come from a warehouse that distributes them to the network of supermarkets throughout the nation. The goods arrive at the warehouse from producers or other warehouses, from where the goods were originally bought. This is not trade, this is monopolistic distribution. The clearest evidence that trade has disappeared is that there are no caravans any more. Caravans are the institution of trade. There cannot be caravans if there is nowhere to go to sell. If there are no markets there will be no caravans. Therefore if there are no markets there is no trade. To recreate trade we need to recreate Islamic or Open Markets.

Islamic Trade generates “New Wealth”

Trade is in itself a source of wealth.

Rasulullah, salallahu alayhi wa sallam, said: “9/10 of the provision comes from trade”. That is like saying that 9/10 of the generation of wealth comes from trade. If this is so important to us, it is obvious that its defence is proportionally important. Considering that trade is no longer possible without market-places, we can conclude that we have eliminated 9/10 of our provision. To re-establish trade must be considered a priority of every responsible government, and this primarily means the establishment of networks of Islamic Markets.

We are unfortunately living at a time in which people do not regard trade as something important. The result of this is that economists have concluded that traders should be eliminated from the economy in favour of distributors: supermarkets are encouraged while old markets are closed down.

Another result of this philosophy is that real traders are thrown into the streets with no infrastructure to support them (street  markets), while bankers (usurers) sit in palaces. The reverse of this is the Islamic way. ‘Umar ibn al-Khattab, radiallahu ‘anhu, considered the traders that came to Madinah his guests.

Consequently, all Islamic cultures have treated traders with great esteem. They built for them palaces in which to trade. See for example, the markets of Istanbul, Samarkand or Isfahan. In the past our traders were in palaces while the usurers were in the streets chased by the police. Today the reverse is the norm.

Traders are a source of wealth for us and adequate infrastructure should be given to them. This is what the Islamic market provides for them.

The important thing is that the Islamic Dinar associated to Islamic Trade can generate new wealth with those people in society whom economists reject. The Islamic Dinar can generate a new wealth with the rejects of the present economy, that is, the real economy. The fate of the Islamic Dinar and the Real Economy are bound together through Islamic Trade.

The Islamic Trade Bloc

The implementation of Islamic Trade has its maximum political reality in the establishment of an Islamic Trade Bloc. The establishment of the Islamic Trade Bloc will have three conditions:

1.It must be based on the use of the IGD as currency rather than the creation of yet another paper currency.

2.It must be introduced gradually and should be offered as a choice to the Muslim community

3.It must be accompanied by the establishment of a trading infrastructure based on Islamic Markets.

The Core Mechanism of an Islamic Trade Bloc


The minimum mechanism that can guarantee a sustainable and continuous growth of the use of the Islamic Dinar as currency consisting of three elements, i.e. the Payment System, the Market Network and Investment (qirad). All three elements enhance trade and synergise one another.

Published in: Uncategorized on October 17, 2020 at 00:36  Leave a Comment  

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