In the Name of Allah, Most Merciful, Most Gracious.
From Prophetic Guidance in Economics. (1)
It has been related on the authority of Anas, that a man from among the (Supporters) came to ask the Prophet (peace and prayer are upon him), who said to the man: "Is there anything in your house ?" the man said that there was a cloth-carpet for both sitting on and dressing, and there was a bowel for drinking water. The Prophet (peace and prayer are upon him) asked him to get him these things. Then he
(peace and prayer are upon him) held them up and announced, "Who will buy these ?" A man said, "I will take them for one dirham". The Prophet (peace and prayer are upon him) said - twice and trice, "Who will give more than one dirham ?" A man said, "I will take them for two dirham's worth." The Prophet (peace and prayer are upon him) gave the two things to the buyer, and the money to the man, and said to him, "buy your family some food for one dirham, and buy an axe for the other dirham, and bring it to me." When the man brought the axe, the Prophet (peace and prayer are upon him) fixed a wooden handle in it, and said to the man, "Go, cut wood, and sell it, and don't see me before 15 days".
Then the man cut wood, and gained ten dirhams. He spent some of them on food, and some on clothes. The Prophet said to him, "This is better than begging, and coming on Doomsday with the black mark of begging on your face. Only three persons are entitled to beg: of severe poverty; of extreme inability to repay loans, of great lack of money to pay in compensation for unintentional killing of somebody killed by a close relative."
Sunn Ibn Mjah, Book of Trading, Chapter of Sales at Auction, Vol. 2, p. 740, No. 2198.
Lessons Inherent in this Prophetic Tradition
In this Prophetic Tradition (Hadith), we can deduce a number profound economic meanings:
1- Government's Responsibility:
The governor is responsible for providing means of living for his subordinates because he cares for Muslims' funds collected from alms. He distributes this money among needy people in a fair way, neither being mean nor extravagant, and at the appropriate time. There is the Prophetic tradition which says: "You 're all guardians, and you 're all responsible for your subordinates."
2- No Absolute Reliance of Social Guarantee Money:
Islam has laid the principle of social guarantee for disabled who should receive money from alms. However, those who are able to work are prohibited from such money. Therefore, the Prophet (peace and prayer are upon him) didn't give the man from alms fund. Instead, he (peace and prayer are upon him) provided the man with (factors of production) found in (capital) brought by selling some assets "the carpet and bowel"; (land) which is forest and axe; (labour) found in the man's effort to cut wood; and (entrepreneur), who is the director of the whole business represented by the Prophet himself. Of course the forest here represents the national resources whose utilization can be permitted by the governor.
3- Balancing Between Consumption and Production:
The Prophet (peace and prayer are upon him) has divided the man's revenue from selling his fixed assets (carpet and bowel) into two utilities. He bought some food to satisfy the immediate need for food, this lies in consumption area. The rest of the money is invested in buying means of production (the axe). Consequently, the future investment does not encroach on the immediate need for food, leaving the present generation starving; and likewise, the immediate consumption does not spend all the money, leaving nothing to invest for future generation. This genius equilibrium is the innovation of the Prophetic Teachings.
4- Sales at Auction:
The Prophet (peace and prayer are upon him) has used sales at auction. In fact Ibn Majah was very clever to classify this Prophetic Hadith in the chapter of "Sales at Auction". In such type of sales there is consent from the part of the seller and the buyer. It is noteworthy that the Prophet (peace and prayer are upon him) did not raise the price very high to please the seller, nor was he contented with just a dirham to please the buyer, teaching the buyer not to abuse commodities, and the seller not to be greedy. He stood in between, and obtained for the seller enough money to enable him to buy food and a means of production (the axe).
On the other hand, the Prophet didn't use sales by barter, because in this case the seller would get only food in exchange for his commodity. The Prophet (peace and prayer are upon him) wanted for the man to get money so as to buy some food and an axe.
Moreover, the Prophet (peace and prayer are upon him) did not charge the man any prior fees for using the forest or getting consultancy; nor did the Prophet (peace and prayer are upon him) obtain any percentage for his own benefit.
5- Follow up or Feedback System:
In order to follow up the economic activity, the Prophet (peace and prayer are upon him) asked to see the man after 15 days. In this case the Prophet (peace and prayer are upon him) will get feedback, and follow up to see the success of this economic programme. As for the period of 15 days, it exhibits the method of scheduling the activity that conforms to a specified period to encourage effort and fulfillment. Today, counties set what is called "a five-year plan" to be achieved within this time-span.
6- Economic Development Through Increasing Income:
By working, the man could get money for himself. This is increasing his personal income. At the same time, national income will be increased through the increase of production; the man produced some wood and rendered services to the consumers of this wood, thus pushing economic development forward. Of course, it is increase in production that generates money and alleviates inflation.
Pondering on this Prophetic Tradition, one can not escape saying that it is a highly scientific Tradition that has preceded and surpassed economic theories that are still fighting unemployment, inflation, and depreciation in both personal and national income.