The Theoretical Basis For Distribution Of Production Output, Among Different Means Of Production

The Theoretical Basis For Distribution Of Production Output, Among Different Means Of Production1

The Upper Structure

Al-’Allamah al-Hilli, the Muslim research scholar (muhaqqiq) mentions in his book ash-Shara’i, in the chapter on “Wikalah” (Agency) that wikalah for the labour work of harvesting wood or works of similar type is invalid. For instance, if a person appoints another person as his wakil (agent) to harvest wood from the forest on his behalf, the wikalah will be null and void. The hirer will not become the owner of the woods harvested by his agent.

The reason is that the labour involved in extracting wood from the forest or from other similar works in nature does not result in any entitlement or ownership right for a person unless the person himself performs the work or spends his efforts directly in the work. The purport of the Shari’ah and its giver – the Prophet - according to the Muhaqqiq (al-Hilli)’s interpretation, is the iqa’ (performance) of those works or acts directly by the person himself.

1. Here is the actual text (quoted from the above-mentioned book of) al-’Allamah al-Hilli:

“Among the acts for which niyabah (agency) is not legally valid, are those acts in which the governing rule thereof pertains the purport of the shari’ (lawgiver) to the iqa’ (performance) of these acts by the person himself. For example taharah (ritual purification) and salat (obligatory prayers) as long as one is alive; sawm (fasting); i’tikaf (physical retreat for spiritual contemplation); obligatory hajj for one who can afford; iman (faith); nadhr (vow); al-qasm baynaz-zawajat (justice between one’s wives); zihar (a man’s comparing the back of his wife with his mother or any female in the groups, with whom marriage is prohibited); li’an (accusing one’s wife with adultery); qada’il-’iddah (completion of the waiting period for a divorced woman or after the death of her husband before contracting a second marriage); janabah (major ritual impurity); itqat (finding a property of unknown ownership from a public place); harvesting of wood and grass.”

2. This is on wikalah in the book at-Tadhkirah by al-’Allamah al-Hilli:

“As for the validity of wikalah in mubah (permitted) acts like hunting, cutting of wood or grass, reclamation of infertile lands, taking possession of a quantity of water or a similar (substance), more clarification is needed.”

3. It is mentioned in Kitabul-qawa’id:

“Indeed in appointing a wakil for acquisition of mubah assets like treasure trove or found property (of unknown ownership), hunting or fishing, or extraction of wood or harvesting grass (from the wild), review is required.”

4. A number of jurist sources, like at-Tahrir, al-Irshad, al-Idah etc. share this opinion.

5. Several other jurist sources went beyond expressing doubts about the validity of wikalah in such matters or leaving it for review. They explicitly stated its invalidity, in agreement with the shara’i’ like al-Jami’ fil-fiqh and as-Sara’ir in respect of hunting as ash-Shaykh at-Tusi in his book al-Mabsut (in some editions). The invalidity of appointing a wakil in the case of reclamation of wasteland and also the invalidity of wikalah in case of harvesting wood and grass were also mentioned.

6. Al-’Allamah al-Hilli links together, wikalah (agency) and ijarah (work/service hire) and then states that when wikalah is invalid in regard to those works, then so is ijarah. So just as the principal does not acquire the ownership of the harvested wood or the hunted prey or a piece of reclaimed infertile land by the labour of his agent, the hirer (of the worker) also does not acquire the output of labour of the workman he hires2.

Here is the text of what he wrote in at-Tadhkirah:

“If we allow that wikalah to be valid in such acts then we will allow that hiring too is valid in those. So if a man hires labour to extract wood, or to carry water or to reclaim a piece of wasteland, these would be valid and he would become the owner of the product of the work of the worker that he hires. But if we deny the validity of such wikalah, we thereby deny the validity of hiring other persons (so the employer could own the output).

The research scholar al-Isfahani confirms in the book al-Ijarah that “hiring of labour (in relation to natural resources) is ineffective in gaining the ownership and entitlement by the hirer of the labour - that is, the person who pays the wage - of the output of the labourer through his physical work. Thus if the worker takes possession of the product of his work, then it will be his and the hirer will get nothing.”

7. al-’Allamah al-Hilli mentions in al-Qawa’id: “If a man captures a wild animal or extracts wood or gather grass with the intention that whatever he secures by his work will be for himself and for someone else, that intention of his, will be ineffective. Whatever he acquires will be wholly and solely his3.

8. (It is given) in the book Miftahul-karamah that ash-Shaykh at-Tusi, al-’Allamah al-Hilli and Muhaqqiq al-Hilli, all the three have decided that if a person secures possession of some natural assets with the intention that what he secures will be for him and for someone else, such intention will be ineffective in law as the whole of it will be his.

9. It occurs in al-Qawa’id of al-’Allamah al-Hilli: “If a man lends a net for catching game with the intention of getting a share in the game, the captured game shall belong to the hunter and a remuneration will be due to him in respect of the use of his net. A number of other jurist sources like al-Mabsut; al-Muhadhdhab, al-Jami’ and ash-Shara’i’ confirm this.

10. In the discussions of hunting in the book al-Jawahir of al-Muhaqqiq an-Najafi, it is stated:

“If a man usurps a tool for hunting and bags a game with it, I find no jurist opinion to the contrary that the captured game will be the property of the hunter and not that of the owner of the tool, even if he had secured the game with the tool which it was illegally obtained, for instance the ownership of the mubah thing was acquired by direct labour and the usurper has realized it in that way. Certainly, the rent of the tool shall be due from him as in the case of the rest of the usurped accessories, nay, rather this (rent is due) even when he does not capture any game with it so as to make good for the opportunity forgone.”

11. Here is an extract from the book al-Mabsut, the eminent ash-Shaykh at-Tusi wrote in respect of partnership:
“If a person authorises another person to catch game on his behalf and that person goes out to catch the game with the intention that the captured game shall be for the one who ordered it and not for him, whose property will the captured game be? There is one opinion that it is similar to a water carrier’s carrying water with the understanding that what he earns will be shared between them and the price of water will be his, i.e. the one who does the work of carrying water and his partner shall be entitled to nothing out of it. So in this case also the captured prey will be the property of the man who did the work of the capturing it by himself and not the property of the person who ordered him. According to another view it will be the property of the man who ordered him, for that was the intention of the hunter in the capturing the prey and that intention will be taken into consideration. But the first view is sounder.”

12. Al-Muhaqqiq al-Hilli mentions in ash-Shara’i’:
“If a man gives, for example, another man his animal and water-skin to a water-carrier with the understanding of sharing in the earnings therefrom, no partnership will take place, so in such a case whatever is earned will belong to the water carrier and compensation for the use of the animal and the water-skin will be due from him.”

From The Theory

The whole of this upper-structure reveals the basic fact in relation to the general theory on the post-production distribution, and consequently the material difference between the Islamic general theory of post-production distribution and that under the capitalist doctrinal (applied) economics. However, instead of beginning with deduction of the theory from the upper-structure we have preferred to begin with the formulation of a general idea and a common conception of the nature of the theory of post-production distribution by presenting an illustration from the capitalist doctrinal system of economics to ascertain the scope, which the doctrinal theory in regard of post-production distribution must cover.

After presenting (the example of) the theory in the capitalist frame, we will present the Islamic theory of post-production distribution and give it a definite form. That will help reveal and highlight the difference between the two theories. Then we will come back to the upper-structure given above, in order to strengthen and support our assumptions relating to the Islamic theory as well as explain our method of adducing them from that upper-structure in which its basic guidelines and main features are reflected.

Thus, the journey of our inquiry will be completed in three stages.

Illustration From Capitalist Economics

In the mainstream capitalist economic system, the process of production is usually reduced to the main factors engaged in the process and the general idea about the distribution of the production output is based on the outcome of the interplay of those factors. Each of these constituent factors earns its share in accordance with its role in the process. It is on this basis that capitalist system of economy decides the distribution of the goods produced or its market value, and the sharing among the factors of production in the forms listed below:-

1. Interest
2. Wages
3. Rent,
4. Profit.

Wages are the share of human labour or the worker, being the prime factor in the process of production in the capitalistic theory. Interest is the share of the borrowed capital used and profit is the share of the internal capital used in actual production, while rent expresses the share for land.

There have been several modifications in this capitalist method of production on the formal side. Some include wages and profit in one group, in the belief that profit is a form of wages for a specific category of labour. That is the work of the business owner or the entrepreneur in organizing the various factors of production - capital, land and labour – and skilfully managing them is the process of production.

Some broaden the definition of rent beyond its original meaning – as return on land - to cover various types of rents from other assets. Likewise, there is also a view preferred by some to give capital a more comprehensive meaning covering all the elements of nature including land. Despite these formal variations and adjustments, the essential view regarding the capitalist distribution has remained intact and is firmly fixed without any change.

The view is that all these factors of production are to be considered on an equal footing and that each of them is to be assigned its respective share from the goods produced as a participant in the operation and within the framework of its collabouration with all the other factors in the full production process of the goods.

The worker receives his wage according to the very method and on the basis of the same doctrinal theory according to which interest is paid for capital. Each of them, in the established capitalist term is an agent of production and participating force in the organic mechanism of the operation. So it is only natural that the output be distributed among the respective factors in a proportion determined by the law of demand and supply and other such forces governing the distribution.

The Islamic Theory Compared To The Capitalist Theory

Islam rejects altogether this materialist view and is fundamentally different from the capitalist doctrine as it does not place the various factors of production on an equal footing. Furthermore Islam does not consider the law of demand and supply a satisfactory mechanism in deciding the eventual sharing of the value of the production output as the capitalist economic system does. On the contrary, the general Islamic economic theory on distribution regards the production output in relation to natural resources as the property of the production worker alone.

As for the material means of production and the various tools, which a worker employs in the operation of that production, they have no share from the output itself. They are only means that provide man with the convenience to gain access to the natural resources and the harness nature for the purpose of production. If these means happen to belong to an individual other than the production worker, then it is an obligation on the production worker to pay to their owner (a rent) in consideration of the services that he benefits from.

The payment that the production worker makes to the owner of the land or the owner of the implements or the tools that contribute to the production process does not represent the share of the land or the tools or the instruments in the end product in their capacity as factors of production. It is only a way of compensating the owners of those means of production for the services they have rendered the production worker by allowing him to allow those assets in his production work.

So in case the whereby the means of production are owned by the production worker himself, then the term ‘compensation’ will be meaningless as in such situation, the benefit will be a gift of nature, not a service provided by another person. Therefore, in the Islamic theory of post-production distribution the production worker is the real owner of the material produced from the natural raw material and the material factors of production have no share in the value of the output. It only considers the production worker a debtor to the owners of the means he has employed in the production. He is this obliged to pay compensation to them in consideration of the services he benefits from those means of production.

The share of the participating material means that the production operation bear the mark of compensation in consideration of service rendered. It represents a debt arising from the obligation on the worker to pay for their use. It does not mean treating the material means and human labour equally, or a partnership between both on an equal basis. In the course of our continuous search for the general theory of post-production distribution, we shall come to know the theoretical justification for the compensation that the owners of the material elements and tools earn from the means (of production) that they own, in view of increase in production made possible by those means.

So the difference between the Islamic theory of post-production distribution and the capitalist theory in this respect is very significant. This difference between the two theories - Islamic versus capitalist - arises from the view on the status of man and his role in the production operation. The role of man in the capitalist view is that of a means which serve production, not the end that production serves. In this respect, he shares in the production output - with all the other production forces such as natural resources and capital - on an equal footing.

The capitalist view is that man - together with the other productive forces – joins as a participant and a servant of the production. Therefore, a single theoretical basis is applicable in relation to the distribution of the production output among all of them including man. The other productive forces are viewed as his ‘partners’ in production.

However, from the Islamic view the status of man is that of an end, not a means. Therefore, he is not on equal footing other material means in the distribution of the produced goods. On the contrary, Islam considers the material components and tools of production as servants of man in accomplishing the operation since the production is for the sake of man and as such theoretically, the share of the production worker differs from the share of the material elements.

Hence if the material means belong to a person other than the production worker and their owner provides them for use in the production, it is a part of his right that the production worker pays him compensation in consideration for the usage. The compensation here constitutes payment for the benefits as an obligation of the production worker. It does not theoretically represent a sharing under partnership (between the production worker and provider of the material).

With the status assigned to the material elements in the production process, the Islamic theory prescribes that the production worker pays compensation (for the materials) as his servants and not as his partners. Similarly, the status of man in the production operation as its goal accords the production worker sole ownership over the right to the natural resource, which Allah the High has prepared for the service of man.

A very important factor that reflects this significant difference between the two theories – the Islamic and the capitalist – is the standpoint of the two systems of economics, in relation to the extraction or production of natural raw material. The capitalist doctrine permits use of capital to carry out extraction of natural resources. With the use of sufficient capital funds, the capitalist producers can hire labourers to harvest timber from the forest or extract of petroleum from oil wells. Under the capitalist system of distribution, the wages represent the full share of the workers, while the capital provider becomes the owner of all the timber harvested or the minerals extracted by the workers. Similarly the revenue from the sale of the products, as determined by the owner, belongs to him.

According to the Islamic theory on distribution, there is no room for such mode of production4 because the provider of capital or tools is not entitled to the output by the workers he employs for labour for harvesting of wood or extraction of minerals. The Islamic theory has made direct labour a necessary condition to acquire ownership of natural assets and confers the entitlement solely to the worker. It disallows ownership of natural resources by way of hired labour.

The domination of capital over these natural assets under the capitalist system is simply because of the ability of the capital providers to pay for wages and tools for the production work. It results in the appropriation of the natural raw material (to the business owner) through hired labour. The domination of capital and its significance over natural resources eventually dissipated (at one stage in history) giving way to dominance of labour.

However the disappearance of that capitalist mode of production is not an accidental event or a passing manifestation. It was not a partial difference between the Islamic theory of distribution and that of capitalist economic system. In fact it was an explicit expression of the direct conflict between the two theoretical bases, as we have learnt.

Deduction Of The Theory From The Upper Structure

So far we have presented the Islamic post-production distribution theory hypothetically to the extent it was necessary for the comparison and contrast against the capitalist theory with respect to natural assets, which also constitute the factors of production (for downstream processing). However to prove the soundness of our conception of the theory, it is necessary for us to revert to the upper structure given in the early part of our discussions. That will enable us to deduce the feature that we regard as reflective of the Islamic theory and one that reveals its religious significance in practise. It also demonstrates the extent of its conformity with the conception we have presented. The precepts that we have presented in the upper structure lay down these points:

First: it is not valid for the principal to reap the fruits of the labour of his wakil (agent) on works relating to the natural assets. Hence if an individual appoints another person as his wakil for harvesting wood from the forest, for example, it will not be valid for him to appropriate the quantity of the wood his wakil extracts. As he has not performed the work himself he shall not be entitled to the output from the work, because only the worker alone earns the entitlement. This fact is quite clear from the first eight extracts in upper structure quoted earlier.

Second, the hire-contract is similar to agency contract. In either case, just as the principal does not become the owner of the materials that his agent extracts from nature, the employer of waged labour also does not earn entitlement to the natural resources or assets that his hired labourer acquires, just because he pays the wages for the work. Those assets from nature get to be owned only by direct labour and work. This fact is clear from the sixth extract quoted above.

Third, if a production worker who performs a work to extract natural materials employs tools or materials of production owned by another, there will be no share (in the output) for the provider of the tools. The production worker will be obliged to pay the owner of the tools an amount in consideration for their usage in the production. As for the product, it will be wholly the property of the worker alone. This is clear from the quoted extracts, the ninth, tenth and twelfth.

These three points are sufficient for the discovery of the post-production distribution theory, which is based on the super structure of all of these precepts. In the same manner, it is sufficient as evidence that we have discovered the theory and provided it proper context and features. Thus we see that the production worker becomes the owner of the assets he obtains from nature, not as a shareholder and a servant in the process, but on the basis that he is the goal that the production (process) serves. So he appropriates all the output, while the other forces and means (of production) that serve and participate in the production do not share the output with him.

However (the owner of) the material elements and tools have a claim on the production worker - who pursues the work of production with their contribution - because they are deemed to be his servants and not because they are deemed to be on equal footing with him5.
Thus by making use of the upper structure given above, we obtain the Islamic basis for the post-production distribution and prove the correctness of the conception we have presented according to the Islamic theory, upon comparison against the capitalist theory.

Now let us continue with our quest for the doctrine and take up the study and presentation of another aspect of the theory by way of comparison and contrast against the Marxist theory of post-production distribution. We would be able to determine of the salient and outstanding difference between them.

Striking Difference Between Islamic And Marxist Theory

The Upper Structure

1. Al-Muhaqqiq al-Hilli writes in his ash-Shara’i’ in the book al-Ijarah:

“A man gives another person an article to do some work on for him. Let’s assume that he engages a washer or a bleacher that job, at a fair wage. If it is not usual of the washer or bleacher to charge a wage but it is a type of jobs, for which there is usually remuneration, then he can demand the remuneration. He is the better judge of his intention. However, if it is one of the jobs, for which usually there is no remuneration, then his claim may be ignored”.

The commentator added the following: If it is known from his intention that he performed the job gratuitously, then it will not be valid for him to put in his demand for remuneration.

2. Al-Muhaqqiq an-Najafi cites in his al-Jawahir in the book “Usurpation”: If someone takes by force some seeds and sows them, or an egg and hatches it without the consent of the owner, the opinion of many of the jurists is that the real owner is the one from whom the material has been usurped. Rather there is, on the authority of an-Nasiriyyah, nothing against this verdict but in as-Sara’ir, thus there is a consensus on this. It is like the principle and norms of the juristic practice.

He (an-Najafi) also quotes another jurist who claims: The green crop and the young bird belong to the usurper because the usurped seed and egg are considered to have been non-existent (at the beginning). So the green crop and the young bird are new things that the usurper, as the result of his labour, owns them.

3. In the same book it is mentioned:

If someone usurps a land and cultivates it or plants trees on it, then the crops and plants will belong to the planter, and I do not find any disagreement (on this point) among the (Muslim) jurists. On the contrary I find consensus in the book of at-Tanqih. But the farmer has to pay rent of the land to the owner of the land (from whom he usurped).

This rule has been confirmed by some traditions. Here is one report of the tradition on the authority of ‘Uqbah ibn Khalid who says: “I asked Imam as-Sadiq (a.s.) about a person, who had made use of a piece of land to raise crop on it, without obtaining the consent its owner. When the crop has matured, the owner of the land came along and told the man who raised the crop ‘You have raised crop on my land without my consent, so the crop you have raised on my land is mine, and I will pay you a remuneration for the labour you have expended on it.’ “ ‘Uqbah says: “Then I asked the Imam: ‘Will the crop be his or not?’ The Imam replied: ‘The crop belongs to the man who grew it, and the owner of the land will have rent for the use of the land.’ “

4. It was mentioned in al-Jawahir in the book “al-Mazari’“:

In every case, whenever the agricultural contract becomes invalid it is upon the owner of the land to pay the wage of the labour. If the seed belongs to the worker, then the crop also belongs to him, and he has to pay the rent of the land to its owner. But if the seeds are from the owner of the land, then the owner of the land will have the crops too, and he will be responsible for remuneration payable to the worker and for the tools too. However, the seeds are contributed by both of them, the yield shall be proportionately divided between both of them.

From these details it may be deduced that the owner of the seeds will have the yield accruing from the seeds, be he the farmer who sows them or the owner of the land on which they are sown because it is the seeds that constitute the basic substance of the crops grown. In case the seeds belong to the farmer, the landowner is not entitled to the yield. He would only earn the rent (on the land) that is due from the farmer for use of the land.

5. It is stated in al-Jawahir in the book of “al-Musaqat”:

In any case, whenever musaqat (share-cropping contract over the lease of a plantation, limited to one crop period) becomes invalid, the labour should be paid (according to the mutual agreement), and the fruits belong to the real owner because the growth (of the fruit) goes according to actual ownership.

Here is an elucidation of the above text:

(This is) when a person owns trees that need watering and (crop) maintenance to bear forth its yield. The owner of the trees engages a caretaker and hands over the crops to him, binding him with a contract whereby the caretaker agrees to undertake to maintain and water the trees and (thereby) becomes a partner in the yield of the crops according to the contract. For this kind of agreement entered into between an owner of the trees and its caretaker, the term al-musaqat, is applied. The jurists have specified the obligations binding both contracting parties to the contents of the contract if the term of the contract is to be completely fulfilled. But if there is a breach of any term and conditions of the contract, then according to Shari’ah it has no effect. In this case the juristic text we have cited above specifies that the yield, the whole of it - in case of any breach of the contract - will become the property of the owner of the trees. The caretaker will have suitable remuneration for his services and his labour in looking after the trees. The juristic term ujratul-mithl (adequate payment) is applied to such remuneration.

6. ‘Aqdul-mudarabah’ (contract of silent partnership) is a particular type of partnership in which the worker agrees with the owner of the capital to carry out trades with the owner’s capital, on the basis of profit sharing. In case the terms of the agreement are not fulfilled in any way, the whole profit will belong to the owner of the capital, and the worker will be entitled to remuneration in as specified by the jurists in al-Jawahir.

From The Theory

We have until now revealed as much as required of the general theory of post-production distribution in the Islamic system of economy, for a scientific comparison with similar theory in the capitalist economic model. Now we propose to continue our search of the guiding principles and distinct features of the Islamic economic model by comparing against the respective theory according to the Marxist economic system, and identify the most salient differences between them.

As we did in the earlier part, we shall begin by providing an idea and highlighting the most salient difference between the two theories as we perceive. Later, when can clearly envisage the conceptual aspects of differences and their doctrinal source, we may discuss the upper structure. We would return to the examination of the grand structure in order to elicit from it the evidence in support of the correctness of our hypothesis and establish the conception juristically.

Theoretical Proof Of Ownership

We can sum up the difference between the Islamic and the Marxist theories on post-production distribution in two fundamental points.

The first is as follows:

The Islamic general economic theory on post-production distribution confers upon a worker private ownership or a right or title to such ownership to every asset that he produces by his spending labour on it. But this applicable only when the basic material, on which he carries out the work of production, is not a natural asset owned by another person (as his private property or such right or title to that property). Examples of this include the wood that the worker extracts from the forest or wild birds or fish he captures. They also include mineral materials that a miner extracts from the mines or a piece of wasteland a farmer reclaims and rehabilitates or a water spring a person excavates and uncovers. All of these belong to the respective persons who spend their labour, because these assets did not belong to anyone in particular in their natural state. A productive work carried out on them gives to the worker an entitlement to privately own the respective assets. But as we have already learnt, the means of production have no share in the ownership of the production from these assets.

However, if the base material, on which the man carries out his work of production, is the private property of another person or an asset that another person holds right or entitlement to - resulting from one of those grounds in the Islamic general theory on the factors of production distribution - then this would mean that the right over the material had been acquired earlier. There is therefore no room for conferring entitlement (again) on the basis of a new production process, either to a person who does work on it, or to an owner of the means of production the worker employs in the new work of production.

Thus the worker who spins yarn or weaves a fabric out of some wool owned by a shepherd would not be entitled to the possession the fabric made. He also does not become a partner to the shepherd on the basis of the labour he has expended in making the fabric. The whole quantity of fabric he has produced will be deemed as property of the shepherd as long as he is the owner of the base material – the wool – since his ownership of the material neither lapse nor is invalidated by the act of another person expending labour to make fabric from it. This is to which we apply the term ‘the phenomenon of the constancy’ in respect of ownership of a property.

The Marxist general economic theory of post-production distribution is in fact the opposite of this. It holds that the worker, who receives materials from the capitalist and upon which he expends his effort, becomes its owner proportionate to the new exchange value he contributes with his labour. According to the view held by the Marxist theory, the worker would thus be the legal owner of the goods produced minus the value of the material he (the worker) receives (from the capital provider) prior to his productive operation.

This difference between the Marxist theory and the Islamic theory arise from the Marxist’s contention about the link between the end product with exchange value on one side, and that between the exchange value and labour on the other. The Marxist theory contends that exchange value is born of labour6 and explains the worker’s ownership of the material - on which he has carried out his labour - on the basis of the exchange value that his work generates in the material. As a result of this (value) it becomes the right of every maker of a particular object - as he contributes a new exchange value to the material produced - to own this value that he has injected into the material with his labour.

Contrary to this, the Islamic theory separates the ownership of a property and its exchange value from each other. Further, the Islamic theory does not give the maker an ownership right to the material on the basis of the new exchange value that he has contributed to the material. Instead, it makes work the direct basis for entitlement as we have come across in our inquiry and discussion of the theory of distribution in relation to production of natural resources. So when an individual acquires ownership of a material on the basis of labour and the basis continues in exist, it will not be permissible for another person to acquire a new ownership of the material even if he were to contribute a new value to it by virtue of his labour.

Thus we can recapitulate the Islamic theory as follows. As for the material for the production that a man performs his labour on - when it is not already owned by another person - the end product of his production will be wholly and solely his own property. All other elements participating in the production will be regarded as servants of the worker and their providers shall be remunerated for their use and not as partners in the production at par with the production worker. But if the base material is a property already owned by another person, then it will continue to remain - according to the principle of the constancy of ownership - the private property of owner, irrespective of the changes it may undergo as we saw in example of the wool.

It may appear to some that this ownership - the wool owner’s appropriation of the woollen fabric made from his wool, i.e. whereby the owner of a material keeps his ownership - would imply that the providers of capital and the material elements (in the production operation) would appropriate the output. It may be perceived that the (base) material (in our example, the wool) would be a type of (economic) capital in the production of the woollen yarn and the woollen fabric, since raw material of every commodity constitutes a type of a capital.

But the interpretation of this principle of the constancy of the ownership of an asset in a capitalist way is a misconception. The conferring of the ownership of the woollen fabric (which the worker has woven from his wool) upon the owner of the wool is not based on recognition of the wool as capital. It also does not mean that the provider of capital has a right to take possession of the commodity produced because of its role in providing a participating factor as the base material in the production of the woollen fabric.

Although the wool constitutes a capital in the production of the woollen yarn or the woollen fabric - in its character as a raw material for this production - the tools that are employed in the spinning and weaving process also bear capital-like characteristics and participate in the operation as another type of ‘capital’. Yet no ownership entitlement is conferred to their providers in relation to the end product. Neither is a share granted - to the providers of these elements - in the ownership of the fabric along with the owner of the wool.

The Islamic economic theory of post-production distribution - in preserving intact the shepherd’s right to his ownership of the wool after the worker made a woollen cloth from it - does not intend to single out capital as the basis for conferring ownership to the output produced. This is demonstrated by the fact that the theory does not confer upon (the other providers of) capital - the tools and implements - that ownership right. Holding that the shepherd is the owner of the end product only demonstrates the theory’s regard for the constancy of right to the ownership of the material (wool) that was firmly established before its processing into yarn or the fabric. The theory holds the opinion that merely changing the form of a property does not impair the rights of its original owner even if the change leads to the creation of a new exchange value. It is this that we refer to as the principle of constancy of ownership.

In the Islamic theory, the (providers of) capital and the material elements participating in the production operation are not given a right to the wealth produced in their character as capital and material forces participating in the production operation. This because in this capacity they are regarded only in their character as nothing more than servants to man, the production worker. Man is the main and pivotal point, the hub of the axis in the production operation, and it is in such a character that they are entitled to remuneration from him for their use. The shepherd who is the owner of the wool in our example wins the right to the ownership of the woollen fabric only because the woollen fabric was the very wool that the worker was possessing and not because of the fact that it constitutes a capital in the production operation.

Separation Of Ownership (Proprietary Rights) From The Exchange Value Under The Theory

The second point of the essential difference between the Islamic and Marxist theories on post-production distribution, it is that the Marxist theory gives to every individual a proprietary right to the production output proportionate to the exchange value that he injects into the goods produced. The theory holds the belief – on the basis of the link between the proprietary right with the exchange value – that the owner of the material elements and tools participating in the production enjoys a share in the wealth produced because these forces and means contribute to the formation of the value of the commodity produced in proportion to the amount consumed during the act of the production. The owner of the materials consumed in production becomes the owner of the production output in proportion to the amount the materials he contributed in the creation of the value of that commodity.

As we have learnt, the Islamic theory strictly separates ownership from exchange value. Even if we were to accept that the materials utilized in the production of a commodity are included in the formation of the value of the end product - in proportion to the amount of their consumption - it does not necessarily mean that the benefit of the proprietary right in respect of the end product be conferred to their owner. The materials used in production of a commodity are always regarded in the Islamic theory only as servants of the man (the worker) and their right is subject to this principle.

This is the result of the separation of the ownership of the commodity produced from its exchange value. The (providers of) material elements that contribute their share in production of a commodity shall be entitled to their remuneration on the same principle.

Inference Of The Theory From The Upper Structure

We have discussed the most striking difference between the two theories - Islamic versus Marxist – in relation to post-production distribution, in the way we conceive and visualize the subject. It is now possible for us to identify the roots of this difference, and their supporting evidence from the upper structure we have presented. This is in line with our top down approach in the quest for the theory, by first looking for clues in the explicit legislative instructions.

In the extracts (from the upper structure) quoted above, the material used in the act of production of the new commodity remains the property of a particular person. Because of this, all the quoted extracts affirm the right over the material to continue being with its original owner, despite its transformation into a new commodity, as a result of the production process.

The commodity, which its owner hands over to a hired worker - to perform work on and transform - remains his (the owner’s) property, as stated in the first extract. The hired worker will not become the (new) owner on the ground of his work, even if he transforms it into a new commodity and creates a new value for it, because of the fact that it is already owned.

The worker (farmer) who usurps the land of another person and sows his seeds on the land, will own the yield accruing therefrom as stated in the third quoted extract and the owner of the land will have no share in the yield. That is because the farmer is the owner of the seed and the seed is a constituent factor of the basic material that transforms into the crop (and provides the yield) in the course of the cultivation operation.

As for the land, being a material element participating in the production, it is regarded in the Islamic economic theory of post-production distribution as a servant of the farmer, and he has to pay remuneration for its use to its owner. Islam, then, differentiates between the seed and the land and gives the ownership of the crop to the owner of the seed and not to the owner of the land, notwithstanding the fact that both of them – the seed and the land – constitute capital in the economic sense and are both participating forces in the production.

This clearly reveals the fact, which we have already stated, that the owner of the raw material employed and transformed in the production, only owns the material after its transformation because it is the material that he owns and not because it plays the role of capital in the production operation. If that were so, then Islam would not have made a distinction between the seed and the land and would not have denied the owner of the land ownership of the crop, when it conferred it upon the owner of the seed despite the fact that both the land and the seed contribute to the operation in capital-like roles in the economic sense.

The fourth and fifth quoted extracts are both consistent with the principle established by the third quoted extract. That is, the ownership of the crop or the produce is conferred upon the owner of the seeds, instead of the person that own the land or any other factors participating in the production operation and playing capital-like roles in the production.

The last extract quoted confers to the owner of the capital a right to the whole profit when the (implied) mudarabah (partnership) contract is rendered null and void. It disallows the share for the worker, because even though the profit is largely the result of the effort and labour of the working ‘partner’ in selling and bringing the commodity before its end buyer enabling its disposal at a higher price. However this effort is similar to the effort of the spinner or the weaver of the wool that was owned by the shepherd. It has no effective force according to the theory as long as the material under the working partnership contract (the wool) is a property already owned.

Now there remains the second quoted extract in the upper structure for us to point out in particular. It discusses the case of a person who takes - without permission - an egg from another person and from it hatches (and grow) a chicken, or a quantity of seeds from which he cultivates some crops. The extract states that according to one prevalent juristic opinion, the produce – chicken or crop (grain) – belongs to the owner of the egg or the seeds. It also mentions that according to another juristic opinion, the produce belongs to the worker who actually carries out the work for its production even when he had illegally acquired the egg or the seeds.

We see from the extract which presents these two opinions that both arise juristically from the difference between the jurists as to the determination of the relation that subsists between the egg and the chick that comes out of its entrails, and likewise between the seed and the crop that is grow from it. Some jurists view that both the egg and the chick (or the seed and the crop) is the same, and differ only in the degree, similar to the difference between a wooden block and a bedstead made out of it. They thus adopt the first opinion and consider the person from whom the egg or the seed is usurped as the owner of the produce – the chicken or the crop.

Another group of jurists view that the base material – the egg or the seed – gets consumed and is thus destroyed in the production operation. They hold that the new item that is produced – by common perception – is a new thing that arises from the destruction of the primary material because of the work and labour of the worker during production process (hatching or tilling). In their opinion, the produce (chicken or the crop) belongs to the worker (who had illegally acquired the egg or the seed) because the produce is a new item, which the owner of the egg or the seed did not possess before this. Hence it is within the right of the one who produced it by his effort, to appropriate the produce in spite of his illegal act.

It is not important here to solve this conflict between the two opposing juristic opinions and to examine their viewpoints. Our goal actually is to benefit from the theoretical implication revealed by this juristic disagreement in relation to our doctrinal standpoint, with greater clarity and precision as other quoted extracts of the upper structure do. We already see clearly that the owner of the wool would own the woollen fabric made out of it, or that the owner of any primary material would own the end product. And we see that this it is not because the wool or any primary material - used in the production - constitutes a type of capital in the production. It is only because of the principle of constancy of ownership, which holds that he who owns a material continues to retain its ownership as long as the material remains in existence and as long as it is in conformity with Islamic rules.

When the jurists differ as to whether the produce is from the egg (or the seed), they link their juristic standpoint in relation to the issue with their viewpoint regarding the nature of the relationship with the primary material and the produce. This means that the jurists who decide that product belongs to the owner of the primary material - which was usurped from him - does not hold that opinion on the basis that he is a provider of capital.

If this preference is indeed because of the fact that he is the one who provides the capital or anything used in the production operation, there would not be any conflict of opinion among jurists. This is so because whether they view the end product as continuation of the primary material or as emergence of a new item, the result would be the same. The primary material - used in the production operation – in either case would have been regarded as capital, anyway. And its owner would thus be conferred the ownership of the end product because of his capital. It would have made no difference whether the primary material gets destroyed or depreciated or transformed in the process of production. Thus, from that perspective, it would have become necessary for the jurists to grant the ownership of the produce to the owner of the material, the egg or the seed irrespective of the relationship between him and the material.

Yet, the jurist decided to confer the owner of the material (for instance the seed) the proprietary right to the crop only when it is established according to the common view that the end product is the same thing (as that at the start) and the difference is only because it is in a particular state of its transformation. This demonstrates that conferring ownership of the end product to the owner of the primary material (and not to the one who carries out work on the material) rests on the basis to of principle of the constancy of ownership. The Islamic justification differs from the capitalist point of view, which holds that capital (provider) owns the end product and that the labourer is (only) an employee of the capital (provider) and only deserves to be paid wages for the work done.

Thus we understand clearly the extent of the theoretical difference between the Islamic bases of conferring ownership of the wealth produced to the owner of the primary material used in the production, against the justification for the same result on the basis of the capitalist point of view.

The General Law On Earnings From The Material Means Of Production

The Upper Structure

i. It is valid for a production worker to rent tools or materials he needs for his work and pay the owners of the tools or materials compensation as agreed. This compensation will be regarded as rent to the owner of the tools in consideration of their contribution to the production operation and a debt is payable by the production worker. The respective amounts are payable by the production person irrespective of the actual earnings he gains from the production operation. On this, the jurists are unanimous.

ii. Just as it is valid to rent (tools and materials) for ploughing or weaving, it is also valid for a production person to rent a land from the person who holds private proprietary right to it. For example, if you are a farmer you can make use of another person’s land by entering into an agreement with him and pay to him a rent for the use of his land in the production operation. On this, there is agreement among the majority of the Muslim jurists. However, there are some ashab (companions of the Holy Prophet) and a few Muslim thinkers who deny the legality of the rent of piece of land relying on specific traditions of the Holy Prophet. We will, Allah willing, study and examine these traditions in our future discussions and explain that they do not go against the prevalent juristic opinion.

Similarly, it is lawful for a man to hire a worker for stitching of clothes, spinning of wool, selling books or transacting businesses. When the hired person has completed the assigned task, it is obligatory upon the employer to pay him the wages as agreed between them.

iii. Islam has laid down a model of a stipulated partnership between a land owner and a farmer, under which the farmer agrees to cultivate the land on the condition that the land owner shares with him in what accrues from his labour, whereby the portion for each from the total output is determined on fixed percentage.

Let us concentrate on the ‘aqdul-Muzara’ah (share cropping contract) from ash-Shaykh at-Tusi’s book al-Khilafah, in which he explains the implication of al-Muzara’ah and its legal limitations. He writes therein:

“It is permissible for him (that is, the owner of the land) to give his land to another person to grow something on it, on condition that the land and the seeds will be from him, and it is upon the mutaqabbil7 (the person who accept and assumes the obligation) to undertake the cultivation on the land and the related crop maintenance.”

In light of this we learn that the farming contract constitutes two elements. First is the work of cultivation by the worker and second the land and seeds from the owner of the land. The basis of the terms agreed as written by ash-Shaykh at-Tusi is:

“It is not permissible for the land owner to conclude ‘aqdul-Muzara’ah by merely contributing his land and holding the farmer responsible for cultivation and provision of seeds at the same time, since the contribution of the seeds by the land owner is a basic condition for the fulfilment of the farming contract as stated in the previous texts.”

When what is stated in this text about seeds is finalized, we can then understand the reason for the prohibition of the mukhabbirah (by the prophet). Mukhabbirah is a type of Muzara’ah agreement, in which the owner is required to give the land but not the seeds. In this way, from the terms given in the text of which ash-Shaykh at-Tusi has written, we learn that the basic condition of the farming contract include the obligation of the land owner to provide seeds to the farmer while the farmer is required to undertake the cultivation work. Without these, the contract would not be proper.

iv. The responsibility of the landowner under the contract is not confined to merely providing the land and seeds, but also extends to the expenditure on the soil if the soil requires manures. Al-’Allamah al- Hilli has stated in al-Qawa’id:

“If the ground needs manures the owner of the land should buy it and the farmer shall spread it on the ground.”

This has been confirmed by a number of juristic sources like at-Tadhkirah, at-Tahrir and Jami’ul-maqasid.

v. Al-Musaqat is another type of contract, which resembles the farming contract. It is a form of agreement between two persons, one of whom is the owner of the trees and tender plants while the other is a person with the skill of watering them in order to bring forth their yield. In this contract the worker undertakes the responsibility to water the trees and seedlings until maturity. In return for that, he shares with the owner the yield on the basis of a rate agreed upon in the contract. Islam allows this contract as has stated in many of the juristic texts.

vi. Al-Mudarabah is a legal contract in Islam. Under this contract, the worker enters into an agreement with the provider of capital to carry out trades with his capital and earns a share in the profit at specified rate. If the person is able to make a profit from the trading with the given capital, it will be divided between him and the owner according to what has been agreed in contract. If the trade results in a loss, then it will be borne by the owner alone. The worker will only suffer from loss of his labour and efforts. It is not permitted for the owner of the capital to make the worker bear the (capital) loss, because if the worker gives a guarantee against loss under any condition, then the owner of the capital will be not be entitled to profit. This is in line with that stated in the tradition reported on the authority of ‘Ali (a.s.): “Whoever guarantees a merchant (to pay back the capital he has taken from him), for him (the merchant) is to receive his capital and he will have no share in the profit (of that capital).”

In another tradition it was stated: “Whoever guarantees (the benefit of) al-mudarabah (silent partnership) (in favour of the owner of the capital) – i.e. to hold the agent of mudarib (speculator or trader) responsible for the (benefit of the) capital – for him (the owner of the capital) is to receive his capital and he will have no share in the profit (of that capital).” So the fulfilment of the condition of leaving the risk on the part of the owner of the capital and the agent’s not giving him the guarantee for the security of his capital are the basic requirements for the legal validity of the mudarabah contract. Without this, it will not be partnership but a loan contract, and the profit will all be for the agent/trader.

If the agent enters into an agreement with the owner of the capital to trade with it, it is not permissible for him to get another agent who is satisfied with a smaller share of profit and hand over the capital to him trade with it, and earns the difference between the two rates without actually doing any work in earning it. For example, he enters an agreement with the principal on the condition of having half the profit and then enters into another agreement with another agent who is content with only a quarter of the profit. The first agent thus earns a quarter of the profit in this way without having to do any work. This is not valid in Islamic law.

Al-Muhaqqiq al-Hilli writes under the section of “al-Mudarabah” of his book of ash-Shara’i’ that this action is illegal, saying:

“Whenever an agent gives a capital to another agent as al-mudarabah with the permission of the owner of the capital on the basis of profit sharing between the owner of the capital and the second agent, there is no objection in this matter. But if it is not so, that is, the first agent shares the profit with the second (agent), this is not permitted, since the first agent has done nothing.” It is mentioned in a tradition that someone asked the Imam (a.s.): “Is it lawful for someone who has taken a capital (from someone else) on the basis of al-mudarabah, to make a third person share with him in that capital with less profit (for the third)?” The reply was “No.”

vii. Lending of money on interest is haram (prohibited) in Islam, that is, lending money to another person for a fixed period and the borrower returning - at the time agreed upon - the principal with interest is haram in Islam. Only lending of money without interest is permissible, so the lender can ask only for the return of the money he lends without any addition to the principal, even if it is only a small amount. This precept is considered Islamic - in the degree of its clarity and non-ambiguity -to rank with the main requirements of Islamic legislation.

The following sacred verses of the Holy Qur’an pointing to this are sufficient: -

“Those who devour usury will not stand except as stand one whom the Evil one by his touch Hath driven to madness. That is because they say: "Trade is like usury," but Allah hath permitted trade and forbidden usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge); but those who repeat (The offence) are companions of the Fire: They will abide therein (for ever).” (2:275).

“O ye who believe! Fear Allah, and give up what remains of your demand for usury, if ye are indeed believers.” (2:278).

“If ye do it not, Take notice of war from Allah and His Messenger: But if ye turn back, ye shall have your capital sums: Deal not unjustly, and ye shall not be dealt with unjustly.” (2: 279).

viii. The last sentence of the verses of the Holy Qur’an quoted above, which restricts the right of the creditor to the principal sum lent by him and which permits the return of his money if he repents is a clear proof of the order of the prohibition to lend money on interest and the unlawfulness of (charging) any kind of interest however slight it may be, for that constitutes an injustice on the part of the creditor towards the debtor, as implied in verse of the Qur’an.

ix. It is mentioned in the tradition of the Prophet: “Usury is the worst of gains. Allah fills the belly of the one who devours it with the fire of hell to the proportion of its amount. And if he earns money therefrom neither will Allah accept his work nor will he cease to be under the curse of Allah and the angels as long as a qirat8 of it remains in his possession”.

x. Al-Ju’alah (pay, wages, allowance, reward) is legal in Islamic Shari’ah; that is, one promises to do an allowable intended work. For example, when one says he who finds out a book he has lost, he will have a dinar or he who tailors his garment will have one dirham. The dinar or dirham is the return the owner of the book or the cloth takes upon himself to pay to one who does the specific actual work in connection with his property.

It is not necessary that the wage be a specified sum such as a dinar or a dirham. It is permissible for a man to make it unspecified in its nature. For instance, he may say that whosoever cultivates this land of mine, he may have half of the produce; or the one who brings back to me my lost pen, he will be my partner for the half of it, as has stated by al-’Allamah al-Hilli in at-Tadhkirah, by his son in al-Idah, by ash- Shahid in al-Masalik and by the Muhaqqiq an-Najafi in al-Jawahir.

The difference between the ju’alah and hiring on wage basis juristically is this. If, you, for example, engage a person on hire for tailoring your garment, you become, according to the hire-contract, the owner of the service of the employee that is the fruit of his tailoring work just as the employee becomes the owner of the wage specified in the contract. But if you stipulate with the man who tailors your garment to give him one dinar for tailoring it you do not become the owner of (the service) of tailoring work just as the tailor does not become the owner of anything for which you are responsible unless he carries out the work. If he does the tailoring work then he will have due to him one dinar from you, which you have stipulated to give him for the tailoring work.

xi. Al-Mudarabah, on which a tradition has been already mentioned in the sixth extract, is limited as defined in law, to the extent of commercial operations of buying and selling. A person who possesses a commodity (goods) or cash is permitted to enter into agreement with a particular agent to trade with his goods or money, or to buy goods with his money and sell it; and the partnership with an agent in profit is on a ratio as mentioned in the sixth extract.

Al-Mudarabah, however, is not valid outside the commercial orbit, which is defined legislatively as buying and selling operations. For example, if a person owns an article or tool of production, intends to enter into a mudarabah contract with a worker (‘amil) on the basis that he gives his tools of production to the worker to use for production, he is not entitled to impose a condition such that he will get a share in the profit resulting from the production operation.

Al-Muhaqqiq al-Hilli, writes in the book of al-Mudarabah of ash-Shara’i’ on this matter, saying:

If the owner of hunting paraphernalia, for example, gives it to a hunter on the condition that one-third of the game captured with it and the hunter agrees, this will not be a valid mudarabah deal. The captured game shall be the property of the hunter and the owner of the hunting paraphernalia will have no share in it. He is entitled only to rent due from the hunter for the use of the paraphernalia.

From this we learn that mere participation in the productive operation with tools and materials does not entitle the owner of the tools or materials to a share in the profit. The owner of the tools or materials is only allowed to share in the profit with a trader, who carries on commercial activity when, he (the owner) offers to him goods or cash and appoint him to carry out trades under a profit sharing arrangement.

Just as mudarabah and participation in the profit by way of providing tools for production is invalid, so is muzara’ah contract, a contract that we have come across in the third extract. It is not valid for a person who owns some tools of production to share with a farmer, in his agricultural produce, merely by giving the farmer these tools. Such partnership (with entitlement to a share in the eventual profit) is however possible for one who provides land and seeds, as we have learnt from the text from ash-Shaykh at-Tusi, mentioned earlier.

xii. It is not valid for a man to lease a land or production tools at a specified rental and then lease it out to another person at a higher rental unless he does some work on the land or tools that justifies earning a higher rental. If you lease a land for ten dinar, then it is not legally permissible for you to lease it out to another person and demand from him a bigger rental, unless you have expended labour on improvement and preparation of its soil that justify the difference that you earn.

A group of great jurists, including as as-Sayyid al-Murtada, al-Halabi, as- Saduq, Ibnu1-Baraj, ash-Shaykh al-Mufid, ash-Shaykh at-Tusi have specifically given this verdict in agreement with many traditions in this connection. Some are given below.

a. Sulayman ibn Khalid reports a tradition from the Imam as-Sadiq (a.s.) that he said, “I dislike. I dislike that I take a quern (stone hand-mill for grinding grain) on a fixed rent and then lease it to another person on a higher rent than the rent at which I took it on lease, except when I make some change in it.”

b. On the authority of al-Halabi (it is stated that) he says, “I asked al-Imam as-Sadiq (a.s.): ‘Can I enter into a tenancy (lease) contract for a land holding myself responsible for one-third or one-fourth, then I enter into a tenancy (lease) contract in respect of the land with someone else holding him responsible for one-half?’ The Imam replied: ‘There is no objection’. I then asked, ‘Can I lease it for one thousand and lease it to someone for two thousand?’ The Imam replied, ‘No, it is not permissible’. I asked him, ‘Why?’ He replied ‘Because (in) this later (case the amount) is guaranteed, (in) the former (case fixed amount) is not guaranteed’9.

c. In a tradition reported by Ishaq ibn ‘Ammar on the authority of as-Sadiq (a.s.) it is stated that the Imam said: “If you take lease of land holding yourself responsible for gold or silver then do not lease it to someone else to make him responsible for more gold or silver fixed in the contract. But if you have taken the land on lease making yourself responsible for a return of one-half or one-third then you can execute the same transaction with someone else holding him responsible for a higher share than you have made yourself responsible for in your contract because gold and silver are guaranteed amounts”.

d. Isma’il ibn al-Fadl al-Hashimi reports: “I asked Ja’far ibn Muhammad as-Sadiq (a.s.) about a man who takes on lease from the sultan a taxed land for a fixed number of dirham or for a fixed quantity of grains. He then lets it on rent and stipulates with the one who tills it that he will share in the half or less than half of the yield, then there is some surplus from the (yield of the) land, will it be fit for him to take it?” The Imam replied, “Yes if he digs a canal or does something which helps those who cultivate it, then the surplus will be his”.10 He says, “ I then asked about a person who undertake a lease a taxed-land for a fixed number of dirham or for a quantity of grain then lets it piece by piece or by jarib 11. Then there is surplus over the sum for which he had leased from the Sultan, while he spends nothing on it, or he enters into farming contract - giving those who cultivate it seeds and expenses of cultivation – and there is surplus over the sum for which he has taken on lease, will the surplus be his or not? The Imam replied: ‘It will be his if he takes the lease, spends something on it and develops it then there is no objection to what you have mentioned.’

e. A tradition reported by Abu Basir from as-Sadiq (a.s.): that he said: “ If you lease a land holding yourself responsible for (a fixed amount of) gold or silver, then do not lease it to someone else making him responsible for a greater amount, for both gold and silver are madmun i.e. guaranteed”.

f. There is a tradition reported by al-Halabi on the authority of Imam as-Sadiq (a.s.) about a person who rents a house and then he rents it out to another for a higher rent than he had rented it. The Imam said, “It is not proper for him to do so unless he makes some changes in the house”.

g. It is in the tradition reported by Ishaq ibn ‘Ammar that al-Imam al-Baqir (a.s.) used to say: “There is no objection to a person taking on hire a house, a land or a boat then give it on hire at a rent higher than the rent at which he hires it, provided that he made some improvement therein.”

h. Sama’ah narrates a tradition saying; “I asked the Imam about a man who purchases a pasture in which he used to graze his flock, at fifty dirham or for a sum less or more than that. Then he wishes to join with him those who used to graze their flocks along with him making them responsible for the price before he joins them with him. The Imam said: “He may join with him whomsoever he wishes for a part which he gives something and if he joins them with him making them responsible for forty-nine dirham and his sheep be for one dirham, then there is no objection. But if he grazed his flock for a month, two months or for more months even then there is no objection if he joins them provided he makes it clear to them. However, it is not lawful for him to sell it for fifty dirham and graze his flock with them or for more than fifty dirham and not pasture with them unless he has already done some helpful works on the grazing ground, the digging of a well or excavating a canal, with the consent of the owners of the pasture. Then there this is no issue for him to sell it at sum greater than at which he obtains it for. Since he does some work, it is quite proper for him to do so.”12

Just as it is not permissible to a person, who leases a land or means or tools of production to sub-lease them at a higher rental, it is also not permissible for him to enter into agreement with a person to perform a work at a specific rate and then to engage another man to do the work for a rate less than that which obtains under his first agreement, and keeps for himself the difference between the two rates.

In the tradition reported by Muhammad ibn Muslim, it is stated that he asked al-Imam as-Sadiq (a.s.): “If a man undertakes to do a work on a contract, then he himself does not do that work but gives it to some other person, can he pocket the profit therefrom?” He replied: “No, unless he has done some work.” In another tradition, it is stated that Abu Hamzah asked al-Imam al-Baqir (a.s.): “If a man undertakes to do a work (on contract) but does nothing and gives it to someone else to do it, can he pocket the profit (arising) therefrom?” The Imam replied: “No.” In a third tradition, it is stated that the Imam was asked about a tailor who takes a tailoring work on contract. He cuts the cloth and gives it to someone else for sewing. Can he take the surplus? The Imam replied: “There is no objection, for he has done some work.”

It is stated in a tradition reported by Mujma’ that he asked Abu ‘Abdillah [Imam as-Sadiq (a.s.)]: “Can I take a piece of cloth on contract to stitch it then give it to boys to stitch it at two-third of the amount? The Imam asked: ‘Did you not do therein any work?’ I replied: ‘I cut it and purchased thread for it’. The Imam replied: ‘There is no objection.’ ” In another tradition, it is stated that a goldsmith asked Abu ‘Abdillah as-Sadiq (a.s.): “Can I take a work on contract, then give it on contract to boys working under me for two-third of the amount?” The Imam replied: “It would not be proper unless you do the work with them.”

The Theory

We examined in the preceding theoretical space when work is carried out on a material, which was not already owned by someone else. We were able to discover quite clearly that the Islamic theory of post-production distribution - in such a case - confers the ownership of the whole output upon the man who carries out the work. And it does not assign any share (of ownership) in it to the (providers of) material elements, on the basis that they are production factors that serve the production person and are not his equals. They earn their respective compensation from the production person but do not share with him in ownership of the output.

We also examined the case of work carried out on a (primary) material owned by another person, such as that of a spinner, who works on some quantity of wool that belongs to a shepherd. We learnt the view of the theory in such a case that the material continues to remain the property of its owner. Neither the worker nor any of the providers of tools and other material elements that take part in the production operation will have any share in the output produced. They are only entitled to compensations from the owner of the primary material, according to the services they render in transforming and improving of the material.

We now intend to study - through the new upper structure - the compensations, which the factors or the means of production earn under these circumstances and find out the limits, types and subsequently the theoretical basis. With the restrictions on the mode of compensation which are allowed to the factors of production - such as labour, land, tools of production and capital - we will learn the extent to which Islam allows the acquisition of earnings resulting from ownership of each of them and the theoretical justification for the earning from their ownership.

The Regulation Of The Upper Structure

Let us summarize from the process of the regulation of the new upper structure, the general results which lead to it, and then to unite those results into a well-organized theoretical composition.

According to the upper structure of the Islamic legislation, two modes are allowed in determining the compensation for a work, and the worker has the right to choose the mode he prefers.

The first is, ‘ujrah’ (a return on hire, wage) and second is share in the profit or the produce. A worker is entitled to demand a specified amount of money as a recompense for the work he does. As for the second mode, he is also entitled to ask for a share in the profit or the production output, and enter into an agreement with the owner of the property (maal) for a share in the profit or the output - as specified - that constitutes his recompense for the work he does.

The first mode is distinguished by an element of security. When the worker is content that he may be recompensed with a specified amount of money – and this is to which we apply the term ujrah (recompense), the owner of the property will have to pay him this amount of money without looking at the results of the work or at the value accruing in the end product – whether it is a gain or loss. But if the worker chooses to join in a partnership with the owner of the property and earn a share in the end product - with the hope to obtain a greater return - then by doing so, links his fate with the work he pursues and thereby waives security.

It is quite possible that he may obtain nothing if no profit accrues. But for the security he foregoes, he gains an unlimited upside in the return that may surpass limited return (under the first mode) because the amount of profit or produce is a variable. So fixing the pay for work as a share of the profit or the end product, implies the possibility of gains and loss. Each mode has its distinctive characteristic.

Islam regulates the first mode – ujrah – by the legislative enactments regarding ijarah. We have seen this in the first quoted extract. The second mode - the sharing in the profit or end product – is governed by the legislative enactments regarding al-Muzara’ah, al-musaqat, al-mudarabah and al-ju’alah as we came across earlier in the 3rd, 5th, 6th, 10th quoted extracts.

In the farming contract, the worker-farmer can enter into an agreement with the owner of the land and seeds to cultivate the land on the basis of jointly sharing the produce. And in the musaqat (watering of the trees) contract the one who undertakes the work enters into agreement with the owner of the trees wherein he may undertake the responsibility to water and maintain the crops in return for the owner giving him a share of the yield on a certain ratio. In the mudarabah contract the working partner is permitted to conduct trading with the goods of the owner on profit sharing basis. In the ju’alah it is allowable for a merchant of wood for example, to declare his willingness to give any person who makes bedsteads from those pieces of wood, half the value of the end product. So under this arrangement, the worker’s wellbeing is linked to the results of the operation he carries out.

Under both modes of compensation for a worker, it is not valid for the owner of goods or capital to impose any loss upon the worker. Rather, the entire loss will be borne by the owner of the material or the capital. If a worker has linked himself with the owner on the basis of mudarabah contract, then his expending labour in vain is a sufficient loss for him.

However, for the materials and tools or production - like the spindle/spinning wheel or the plough for example - if they are used for spinning wool or ploughing a field, then the remuneration for these is legally restricted to one mode, which is rental or wage. So if you wish to use a plough or a net owned by other persons, then you may hire them on hire their owners as stated in the second quoted extract from the above given upper structure.

Their owners cannot demand a compensation for their use by way of a share in the profit. The option to benefit by sharing in the profits from the operation, which is permitted in exchange for labour, is not legally allowed for the owner of tools of production. Hence their owners have no right to enter into mudarabah partnership with a worker. For example, a person who owns a net cannot give it to a hunter and expect to share the profit with him from the game captured.

We can see this in the quoted extract no. 10 of the upper structure. In the same way, a person who owns agricultural tools and equipment, is not allowed to give them on hire to a farmer for use in farming operation and expect to share in the produce with him, as stated in the quoted extract no. 3 of the upper structure. We have already learned from the text of ash-Shaykh at-Tusi that a farming contract can be made between two individuals on the basis of one person contributing land and seeds and the other person contributing labour. Thus, for the execution of the contract, it is not sufficient that the first party provides only tools of production.

The same case also applies to ju’alah whereby the agreement allows a maker of the wooden bedstead to join the owner of the wood material in sharing of the profit as given in the quoted extract no. 8 (of the upper structure). The owner of the wood may offer half of the profit to anyone who makes bedstead from his wood. But it does not permit him to enter into ju’alah agreement whereby he gives one half of the profit to a person who provides him with the tool he needs for the production of the bedstead, because ju’alah in Islam represents a return which a person determines beforehand for a work he likes to be done for him, not a compensation or for any type of service rendered.

Anyway, the provider of tools of production has no share in the profit and may only demand compensation or rent. The scope of earnings resulting from ownership of the tools of production is thus narrower than that from provision of labour. For ownership of tools or material, only one mode is allowed, while for labour is allowed both modes are permitted.

The case of trading capital (in a commercial operation) is opposite to that of the tools (in production). It is not permitted to the owner of the capital to lend his money on interest to his agent or trader to conduct trades with it. The worker (trader) enjoys security of his wage and is insulated from the financial outcome of the operation and the risks associated with it. Furthermore, lending of money with riba (usury) and is haram (strictly forbidden) by the Islamic law, as stated in the 7th quoted extract.

However the owner of the capital or the commodity is allowed to provide his funds (or his stock-in-trade) to an agent to trade with, based on profit sharing on an agreed ratio. But the sharing basis has to be such that that the eventual profit be distributed according to the ratio, while in the event of losses, it would be on the owner’s account alone. The share of loss of the trader or worker is to be limited to only his loss of wages from his efforts. Only this basis of sharing is allowed for in commercial operations between a capital owner and his agent/trader.

From this we learn that the lawful modes of earnings for providers of tools of production and those providing trading capital are the opposite of each other. Each has its respective mode, while in both modes are allowable as remuneration to the agent or the worker (‘amil).

In case of an uncultivable land - that requires fresh work and labour to be productive – the owner is only allowed to charge a rent. It is not permissible for him to seek a share in the produce or profits accruing from cultivation. Certainly, a landowner shares in the profit on an agreed ratio in the sharecropping contract (‘aqdul Muzara’ah). But we have learnt from the jurist text of ash-Shaykh at-Tusi as per the extract no. 3, that farming contract is allowed only if the landowner provides both the land and the seeds. So the owner of the land is also the owner of the seed according to the opinion of ash-Shaykh at-Tusi, as appears from the text given. Thus, his share in the product is not on the basis providing the land, instead it is on the basis of his ownership of the materials, which are the seeds.

Earnings Stands On The Basis Of Expended Labour

Having organized the upper structure and summing up its general phenomena, it is easy for us to reach the doctrinal (normative) side of the theory which binds and unites together the phenomena, and to know the norm, which explains the modes of earnings and remunerations that result from ownership of the forces of production and justifies the permissibility or prohibition either mode, or both in the respective cases.

The norm - which combines all the legal precepts of the upper structure on its discovery or its proceedings - is that the acquisition of a gain or an earning (al-kasb) stands on the basis of labour expended in the course of an undertaking. The expended labour is the single fundamental justification by the one who expends it, for the entitlement to recompense from the owner of the enterprise, who engages the worker. Without a person’s share in the expending of labour, there is no justification for his entitlement to earnings.

The norm has its affirmative (positive) and negative sense and purport. On the positive side it lays down that acquisition of gains on the basis of labour is valid. On the negative side, it declares the invalidity of gains that do not stand on the basis of expending of labour in an undertaking.

The Affirmative Limb Of The Norm

The affirmative (positive) side is reflected in the prescriptions regarding hire or renting, as stated in the first and second quoted extracts. These prescriptions permit an employee (a labourer) whose service has been engaged for a particular intended work to receive a wage by way of compensation for the labour expended by him on that project.

The prescriptions also permit one who owns tools of production to give them to another person to use in the project in consideration for a specified remuneration (in the form of rent) that he receives from the person who undertakes the project. This is in view of the fact that the tools embody the ‘labour’ embedded in them and that this labour disintegrates in the course of its employment in the production operation. For example, the spinning wheel represents an embodiment of a specific (amount of) labour, (being) made from an ordinary piece of wood as a tool for spinning. This labour embedded in it is ‘expended’ progressively during the spinning operation. So the owner of the spinning tool has a right to earn for ‘his labour’ as a result of the depreciation of the labour stored in the tool. Thus, the hire that the owner of the tool of production earns is a type of wage or hire that an employee or a hired labourer receives.

The earnings from both of these rests upon the investment of labour in the course of project, with the labour being in two different natures. The labour that the worker expends in is direct and in real time. He accomplishes the work and expends the labour at one and the same time. As for the ‘labour’ that undergoes wear and tear - and is expended in the course of the employment of the tool of production - is a ‘packaged’ labour, from the owner of the tool. The work was already accomplished and is in a form ready for use and is subject to wear and tear in the production operations.

We thereby learn that the expended labour that the theory regards as the sole basis for earning compensation is not merely direct labour, but also includes embedded labour ‘stored’ in goods. Hence so long as there is an expenditure of labour and depreciation or wear and tear of embedded labour, it is the right of the owner of the expended labour to earn compensation agreed upon with the enterprise owner irrespective of whether the labour gets ‘consumed’ by the project directly or indirectly.

On the basis of this demarcation of the expended labour, which includes both modes of compensation, we can also include buildings as among tools of production. Islam allows a building owner to provide his property on rental and earn remuneration in consideration for its use. A building is also a ‘product’ of previous works - with embedded labour – and gets consumed through wear and tear during its use, even though it has a longer life span. Hence the owner of the house has a right to obtain compensation vis-à-vis the ‘work’ stored in the house, utilized and sacrificed in a production operation.

It is similar with a piece of agriculture land that the owner provides to a farmer in consideration for a rent. The owner of the land receives his right to the land on account of his reclamation works in relation to the land, and works related to the conditioning of its soil and rendering it fit for cultivation. His right to it ceases when the land is exhausted and when traces or results of his labour vanish, as stated in the foregoing jurist’s texts. Thus, as long as his labour remains embodied and his endeavours stored in the land, the owner of the land is entitled to demand rent from the farmer’s use of the land and benefits from it, since the farmer’s exploitation of the land causes the depreciation (loss) of a part of the labour, which he (the owner of the land) has expended in the course of its reclamation and refitting for cultivation.

The rent or wage, within the permitted limits of the theory, always stands on the basis of the consumption of a person’s labour by another in the course of the operation and it is paid to the owner of the consumed labour. There is no distinction between wages for labour or rent for (the use of) tools of production or landed property or agriculture land as regards this basis, even though the nature of the bond that connects the owner of the wage with labour may differ. Waged labour is a direct work by the employee while the labour stored in the tools of production, for example, is indirect labour derived from past work and stored in the tool now consumed in the operation run by a new person.

Hence the wage an employee receives is a wage for the newly expended labour that he himself undertakes while the rent which the owner of the tool receives is in fact a rent against labour expended in the past, stored in the tool and is now consumed in the operation by the owner of the enterprise.

This is the affirmative sense of the norm, which explains the earnings derived from ownership of the forces of production. We have learnt that this sense is reflected in all manners remunerations are earned from having ownership over the forces of production.

The Negative Limb Of The Norm

The negative limb disallows earnings that are not justified by labour expended in the course of an operation. This is conspicuously clear from the texts and prescriptions given in the preceding juristic text in the extract xii (h). It was mentioned that that if a person buys a pasture for fifty dirham then it is not lawful for him to sub-lease (or give on hire to another person) for a more than fifty, unless he does some work on the pasture to improve it with the consent of the owners of the pasture. In such a case there is no objection to sub-lease it for a sum higher than the price he had leased it for. His work makes it legitimate for him to earn a higher rental.

This text explicitly establishes this negative limb because it prevents the herdsman from acquiring a gain resulting from the sub-lease of the pasture for a rental higher than that he paid to the first owner, without doing any work on it. The text affirms in the book an-Nihayah that if he does some constructive works on the pastureland, then his efforts justifies the surplus he earns. The profits that he acquires are for the labour that he advances as seen in this extract: “indeed he did some work therein so it is proper for him.”

By accounting for the gains and linking it with labour in this manner, the text intends to affirm the negative limb of the norm. With labour it becomes proper for the herdsman to acquire the new gain, while without labour it is not. It is obvious that this reasoning gives the text the meaning of the principle. Thus, it does not remain a mere rule in the case of the herdsman and the pasture, instead its significance and application extends to other business areas so as to make it a basis for earning of gains in general13.

Therefore, acquisition of gain - according to this text - is not valid without direct labour that is embedded in the tools of production or landed properties. This fact itself follows from the text in extract xii (b), which prohibits a person who leases a piece of land at one thousand dirhams from sub-leasing the land at two thousand dirhams, without expending any labour thereon. This is in line with the principle that explains it and the general basis on which the prohibition is established, that is because it is guaranteed as stated in the text14.

By this approach of understanding the context and seeking the meaning behind the juristic decision, and we elevate the instruction for a specific transaction to that of a general rule, that it is not permissible for any person to secure for himself a gain without putting in labour since work - in the theory - is the main justification for remuneration and gains.15

Just as the texts state the negative limb of the rule, they also connect it with a number of prescriptions from the foregoing upper structure. Among those prescriptions are those which prohibit a lessee of a land or a building or a hirer of tools of production from sub-leasing or renting them out with at higher rates, unless he does some work on them. For example, people takes on the lease of a building for ten dinars and sub-lease it at twenty dinars, thereby earning a net gain of ten dinars without any expended labour. This is prohibited on the basis of the principle we have discovered.

Among the prescriptions that are connected with the principle is the prohibition of an employee from employing another worker to do the same work he is hired for at compensation less than what he earns, as stated already in the quoted extract no xii (h). For example, it is not valid for a person who is employed to stitch a dress for ten dirhams to hire another person to do that work for eight dirhams for this leads to a surplus of two dirhams for himself without doing the work.

The law of Islam makes that illegal in accordance with the negative limb of the principle, which rejects the types of earnings that are not based on the performance of work. The tailor hired by the owner of the piece of cloth to make a dress is allowed to employ another person to do the work for eight dirhams and keep the two dirhams for himself only if he does part of the work - in making of the dress and completes a phase of the tailoring work - which he is hired for, in order to legitimately earn the two dirhams from the tailoring work he expended on the making of the dress.

The third prescription we find in the upper structure connected with the negative limb of the principle is that we came across in the quoted extract no. VI. That is the prohibition of the owner of the capital or stock-in-trade (maal) in a mudarabah partnership contract, from holding the agent or trader responsible for the security of his maal (capital or stock-in-trade). The significance is that if a merchant gives trading capital - such as cash or commodity – to his agent or trader, to trade with on the basis of profit sharing, then he is not legally entitled to charge the latter with the deficit in case the trade results in a loss.

This means that the owner of the capital has before him two options in dealing with the trader or agent. First, he may sell the merchandise to the agent for a specified amount of money, which the agent will pay him from the proceeds after the final disposal of the goods. In such a case, the agent becomes a guarantor for the specified amount of compensation agreed upon and holds himself responsible for its payment, along with the fulfilment of all the legal conditions, irrespective of whether the trades will eventually result in profit or loss. Under such arrangement, the owners of the merchandise will neither share the profit with the agent nor will he be entitled to anything except the agreed specified sum of compensation, since the merchandise becomes the property of the agent and all profits accrue to him alone.

It is on account of this that it is mentioned in the tradition given previously in the quoted extract: “He who holds an agent that is the merchant who trades will be entitled only to his capital (the merchandise or the capital, he gives)”.

The other option is for him to remain the owner of his merchandise and employ the agent to trade with it on profit sharing basis. Under this arrangement, the owner of the merchandise will be entitled to profit, for the merchandise is his. But it will not be valid for him to require the agent to compensate for any loss. It is this prescription or legal rule linked with the principle that we have discovered through the upper structure. And that is because the loss in business is not because the agent had consumed the embedded labour in the merchandise in the course of the commercial operation. This is unlike the case a building or of tools of production – used in production operation – whereby the consumption of the embedded labour (in the building or tools) during operation by the enterprise owner entitles their owners for remunerations. This compensation obtained by the owner of the building or the tools of production is based on expended labour.

The case of a trading operation is different. A trader or agent receives from the owner of the capital or property a sum of say, one hundred dinars to trade with on the basis of partnership the profit. The trader buys one hundred pens with the money. Let’s assume that the price of pens fall in the open market for whatever reason. If he is compelled to sell the pen for ninety dinars, he shall not be held responsible for this loss. He shall not be obliged to pay proportionate compensation for the fall in the value of the merchandise because the loss does not result from consumption of the labour stored therein. Instead, it was the result of the fall in the exchange value of the pen or a decline of their market prices.

So here the issue is not that of a person’s stored labour that gets consumed and expended in the course of the utilization of the goods such that the trader needs to compensate the capital provider. On the contrary, the labour stored in the merchandise remains intact as it was, unfettered and unconsumed. Only its price had suffered a decline. So it is not for the owner of the merchandise to seek compensation from the trader for that. Otherwise, he would earn gains without putting expended labour and without the trader having consumed anything of the owner’s (stored) labour in the operation. This is rejected by the negative limb of the principle.

The Binding Of The Prohibition Of Usury With The Negative Limb Of The Principle

Just as the interdiction of imposing guarantee is bound with the negative limb of the principle that we were deliberating on, we can also regard the prohibition of the usury as one of the pillars of the upper structure, which rests on this negative limb of the principle. The interdiction of usury is rather one of the most significant parts of that structure.

We have come across the order prohibiting usury in the quoted extract vii of the foregoing upper structure, which explains Islam’s prohibition (tahrim) of all types of lending with inflated repayment. In the established capitalist practice, interest is considered as a wage (remuneration) for the capital or funds that the owners advance to commercial projects, etc. in return for recompense at a specified rate for a given period on the funds advanced.

It is not very different from the recompense that the owners of the landed properties or tools of production earn from renting of those properties or tools of production, just as you can lease a house to dwell in for a period of time and then hand it over to its owner along with the specified rent. Likewise, it is permitted by common understanding (‘urf) that accepts interest for one to borrow an amount of money for consumption or commercial purpose and then returns the amount along with the specified recompense (the interest) to the lender.

By its prohibition of interest-bearing loans and by its permission of gain or profit accruing from leasing of landed properties and tools of production, Islam reveals the theoretical difference between cash capital and the landed properties and tools of production. This difference should be explained in light of the theory and on the basis of the principle that we are now pursuing, in order to know the reason or the ground that calls upon the economic doctrine to abolish the recompense for capital - or in other words the abolishment of the fixed gain accruing from the ownership of funds - while allowing the recompense for tools of production and even a fixed gain accruing from ownership of these tools.

Why does it permit the owner of the tools to earn income from those assets by way of renting them out at a fixed gain without expending direct labour, and not owner of the capital to earn income from his funds by lending it a guaranteed rate without having to expend labour? This is indeed a question we have to answer convincingly and decisively.

Actually, the answer to this relies on no more than a recourse to the principle either its positive or negative limbs. The secured earning or profit – the rent or wage accruing from ownership of the tools of production - is implied by its affirmative or positive limb of the principle. The embedded labour in the tools of production constitutes a right for compensation for the wear and tear they suffer from in the course the production operation. The wage or rental paid to their owner is, in fact, a wage in respect of past labour and consequently represents a gain or earning on the basis of expended labour. Hence it is permissible according to the positive limb of the principle.

As for the secured gain accruing from the capital fund – the interest – there is no theoretical justification for this. The merchant who borrows a sum of one thousand dinars for a commercial project at a specified rate of interest will repay the lender - within a specified period - the sum of one thousand dinars without any form of loss incurred from wear and tear by its use. Under such arrangement, the interest would become an illicit gain since it is not based on any form of expended labour, and thus comes under the negative limb of the principle.

Thus we learn that in the Islamic Law the difference between the interest on capital fund and the rental on hired tools of production arises from the dissimilarity in the nature of the utilization of the capital fund advanced and that of the hired tools of production. The utilization of a capital fund does not cause any depreciation of the capital fund in terms of its character, or result in a decay of any part of the labour stored therein. This is so as the borrower is obliged under the loan contract for the repayment of the full amount within the specified period. And the money that he repays in discharge of the debt has the same value and utility (as that he borrowed earlier).

As for tools of production which a person hires, its utilization in the course of production operation, would lead to some degree depreciation and decay of the labour embedded in them. Because of this, it is only appropriate that their owners earn some gains, on hiring out of the tools, on the basis of the expended labour. But it is not legitimate for the owner of capital fund to earn any gain in this way because he recovers his rented capital fund as it was, intact and without suffering any wear and tear from its use.

In revealing of the link between the upper structure and the theory, we may add another rule to the collection of the prescriptions, which we have presented, which was already mentioned in the sixth quoted extract. It is a prescription that decrees the prohibition of an agent in a mudarabah contract from entering into another (mudharabah) agreement with a second agent to carry out the work at a lower profit sharing ratio than that he agreed with the principal. Obviously, prohibiting this practice is wholly in agreement with the negative limb of the principle, which we are seeking to reveal.

This rule disqualifies a gain that is not based on expended labour, because when the first agent would be earning the difference between the two different rates of profit sharing without having to do any work. So it is only natural that such a gain be abolished in conformity with the general principle.

Why Are (Providers Of) The Means Of Production Not Granted A Share In The Profits?

From the foregoing upper structure, there is one remaining issue about the prescriptions as to the sharing of profit. Let us prepare ourselves for that question by organizing we have discovered so far.

We have learnt from the Islamic theory of post-production distribution that earning a remuneration or compensation is valid only on the basis of consumed labour. Consumed labour is of two types; labour expended and consumed in real time (of production) like the labour of a production worker; and labour expended in the past, embedded in an item or object and consumed during its utilization in the course of operation, by the hirer of the object. This includes buildings and or tools of production. They suffer wear and tear in the course of their utilization.

We also have learnt that the ownership of capital fund does not constitute a (legitimate) source of earning because interest on loans is not based on consumption of labour in either form. It is thus prohibited. We have looked at all types of fixed earnings and compensations. Some of them are permitted like rental from a building while some forbidden like interest from loans. We have also been able to link each with either the positive or negative limb of the principle.

But so far we have not explained the other type of earnings apart from the fixed compensation mentioned in the foregoing upper structure. By this we mean the sharing in the profit and the eventual outcome of the operations in terms of profit or loss. The working partner in a partnership (‘aqdul-mudarabah) cannot demand, under any circumstances, a fixed return from the partner who invests the money. He can demand only a share in the profit and his contractual wage or spending in accordance with the outcome of the operation.

It is similar with a working partner in the farming contract. In such contract, earnings are permitted on the basis of profits or produce as stated in the foregoing extracts iii, vi and x. Because of this, we stated at the beginning of our discussion that two types of gain for the labour are permitted. First, as wage or compensation and second, as a share in the profit. Likewise, the owner of stock in trade in a working partnership contract and the landowner in a farming contract or owner of the crops in the farm watering contract are allowed to earn compensation on the basis of profit. Each of them has a share in the profit according to terms agreed to in these contracts, as stated in the foregoing extracts we mentioned previously.

In contrast to this, the provider of tools of production is disallowed any share in the profit. The Shari’ah does not permit him a gain on that basis. Rather it allows him an opportunity to earn only on the basis of fixed return. The owner of tools of production cannot provide them to the worker on the basis of a share in the profit or the produce, as stated in the extract no. xi of the foregoing upper structure whereby it is ruled that the person who owns hunting equipment is prohibited from giving it to the hunter on the basis of the owner earning a share of the game captured.

These are quite obvious from the upper structure, and it is up to us to posit the following questions for the purpose of discussion.

Why is it allowed to earn gains on the basis of sharing in the profit for labour, while the same is not allowed in relation to tools of production? And how could it be that while earning gains by this profit sharing is forbidden for the owners of tools of production, it is allowed for the owners of merchandise, lands and crops and farms?

The difference between labour and the tools of production – that allows profit sharing for labour but disallows it for tools of production - arises from the theory on distribution of factors of production, the pre-production distribution. We have learnt from that theory, that labour – the pursuit of works of utilization and deriving benefit from resources in nature – is the general reason and basis for entitlement and ownership in respect of those natural assets. We also learnt that from the standpoint of doctrinal economics there is no other reason or basis for entitlement and ownership. Likewise, we learnt that if an individual acquires a private right by carrying out labour on these assets in nature, his right continues to remain intact and as long as the nature of labour, on the basis of which he acquired the right lasts. Under this circumstance, it is not permissible for another person to acquire a private right in those assets by expending fresh labour on them as elabourated in detail by the theory on the distribution of the factors of production.

But this does not mean that the new person’s labour differs in nature from that of the first. Rather, it is that each of them would itself separately constitute a ground for gaining ownership of the asset he has laboured for. The new labour is denuded of its effect only in consideration of the first labour having preceded it in time and because the operation of the first person results in conferring ownership of the asset to him.

Thus the first worker, on the basis of his having been earlier than the second worker, shields his (right) from the effect of the work of the second. Because of this, it becomes natural that when the first person forgoes his right, the second person’s work may return to take its effect. And this is what takes place in respect of the contracts of muzara’ah, musaqat, mudarabah and ju’alah. For example, in the ‘aqdul-Muzara’ah (farming contract) the farmer exerts and carries out labour for the cultivation of the seeds with the eventual transformation into crops. However, this labour that he carries out does not give him the right to ownership of the crop, for the material that he works on (the seeds) are the property of the landowner. If the owner of the land allows the farmer – by the farming contract - to reap the fruit of his labour and forgo his right to say, half of the material, then there remains nothing to prevent the farmer to eventually own half of the crops.

On this basis we learn that the share of the worker or agent in the produce (or the eventual product or profit) actually expresses the right of labour that he carries out in respect of a material (for example, the seed, the crops and/or merchandise) and the entitlement, which results from its performance, in accordance with the general theory of pre-production distribution. This entitlement is however at times suspended because of the right of another person that precedes it. If that person forgoes his right under a contract, like the contract of farming or other contracts between the worker and the owner of the property, there is nothing to prevent the worker to gain his right in respect of the assets and output of operation within limits ‘waived’ by its previous owner.

As for tools of production, they fundamentally differ from labour that an agent or a worker performs in accordance with these contracts. The farmer, who enters into a farming contract with the owner of the land and seeds, carries out labour and does painstaking work. It is his right that he may own it within the limits of the terms allowed in the contract. But as for the owner of the hunting equipment, who gives it to a hunter, he does not carry out the work. Nor does he make effort to acquire possession of the prey. It is only the hunter alone who carries out the labour and exerts efforts to capture the animal. So there is no justification for the owner of the hunting equipment to be entitled to the outcome of the hunter’s efforts.

The performance of labour in the capture of the prey is the basis for its entitlement and the owner of the hunting tool has not performed that (any part of) labour. Therefore merely having the hunter consenting to a share by the tools owner in the gains from his hunting efforts is not sufficient as long as it is not in conformity in the general theory of distribution. Here, it is not the right of the hunter that prevents an entitlement by the owner of the hunting equipment. It is because there is no theoretical justification for such entitlement.

In this way we learn from this point about the difference between direct labour and stored labour. Direct labour is a labour, which is performed by the worker on the base material. The labour constitutes a justification for his right to the (share of) ownership in the end product of the operation, when the owner (of the material) forgoes his (part of his) right. As for the stored labour, like that in the tools of production, the owner does not expend direct labour in the operation. The owner of the hunting gear, for instance, does not perform direct labour in capturing the prey. So he has no right to the ownership of the output, irrespective as to whether or not the performer of the labour – for example, the hunter - forgoes his ownership. He is only entitled to the compensation for the hire, that is, in consideration of the consumption or depreciation of the stored labour during its use in the operation.

In light of it, we are able also to perceive the difference between the owner of the tools of production who is not permitted to have a share in the profit, and the owner of the land in the farming contract or that of the merchandise in the mudarabah contract and similar objects in cases of whereby sharing in profit is permitted. Those owners who are allowed to a share in the profit or produce, in fact, own the (primary) materials on which the worker performs the labour.

For example, the landlord owns the seed (according to a foregoing text by ash-Shaykh at-Tusi) that the farmer sows, while the owner of the merchandise owns the commodities with which the agent trades. Now we know from the theory of pre-production distribution that ownership of a material does not lapse with the transformation of that material by another person and with the material acquiring a new utility because of the operation. Thus, the right to the produce or profit accruing therefrom is that of the owner of the seed or the merchandise so long as he owns the primary materials.

The circumstances wherein the owner is allowed the appropriation of the profit or produce - such as Muzara’ah, musaqat, mudarabah, etc. - support and consolidate the correctness of the explanation we have offered for this ownership. The common factor in all these arrangements is that the primary material on which the agent or the worker carries out the work is already a property of its owner.

Observations

Risks As Viewed By Islamic Economics

The findings we have come across from the theory of the post-production distribution plainly shows that the theory does not acknowledge risk as one of the basis for earning gains and that there is no type of gains that is justified by virtue of risk-taking. In fact, risk is neither a commodity that an investor or entrepreneur offers to another person such that he may ask a payment for it, nor is it a work that he expends on a material such that he is entitled to appropriate or demand a wage or compensation from its owner.

Risk is only a particular state of mind that prevails upon a person, who is trying to embark on an undertaking that he is uncertain about. Because of this uncertainty, he may either withdraw from the venture or instead overcome his fear and proceed with determination. Thus, it will be solely for him to choose the course of action by his own will and assume the doubts associated to the intended venture, for which there is a probability of loss. So it is not his right to demand a material compensation in respect of this fear, as long as it is a personal emotion and not that of embedded labour or a produced commodity.

It is true that sometimes determination and the ability to deal with fear and doubts are of great psychological and moral significance. But a moral value is one thing and economic value is another. Many have fallen into error influenced by the capitalist thought, which has a tendency to explain the point and its defence on the basis of risk. They say that the profit allowed to the owner of the stock-in-trade (cash capital or commodity) in the mudarabah contract is theoretically based on risk assumed by the owner. It is argued that even though he does not do any work, he bears the risk and exposes himself to the possibility of loss by providing his funds or merchandise to the agent to trade with. It is a duty of the agent, therefore, to allocate a share of the profits as compensation against the risk undertaken, as agreed upon in the mudarabah contract between them.

But the fact has been made fully clear in the previous discussion that the profit that the owner of the fund or merchandise obtains as a result of the agent’s trading operation is not based on the risks. It is justified on the basis of his ownership of the fund or merchandise. Even though the merchandise is most likely to increase in value because of a commercial labour that the agent carries out – like transferring it to the market place and making it readily available to the consumers - it remains the property of the owner, because his ownership doesn’t get nullified by another person working with his merchandise or making changes to it. This is in line with the principle of constancy of ownership.

So the right of the owner of the fund or the commodity to the profit is the result of his ownership of the material that the agent handles profitably in the trades. It is similar to the right of the owner of a plank of wood, manufactured into a bedstead. Because of this, the profit is considered the right of the owner of the fund or the commodity, even if he does assume any efforts or hardship. For example, a man trades with the property of another person without his (the owner’s) knowledge and makes profit from his trade. In such a case the owner of the property (the fund or commodity) can subsequently consent to that and appropriate the profit himself. He can also object to it and seeks to obtain his property or what is equivalent to it from the agent.

The entitlement of the owner to the profits in this example is not based on the element of risk, for in any case his property is secure. It is the agent (or the trader) who took the risk of having to compensate in the case of an eventual loss. This means that the right of the owner of a property (or fund) is not theoretically the result of the risks he assumes. It is also not a compensation for his resistance of fear of the dangers, as we read in the accounts by the authors of traditional capitalism. These writers attribute the mark of heroism to risk-taking and make it a legitimate basis for earning the gain on the ground of his courage.

There are a number of elements in the Shari’ah, which demonstrate its opposition to the admission of risk-taking as justification for the acquiring of gain. For example, there are many who are inclined to explain and justify usurious interest based on the element of risk involved in lending. Let us examine this deeper.

A person lending his money faces the risk of losing his money if the borrower is unable to repay or if the borrower encounters an unfortunate circumstances such that the loan is not settled. It is argued therefore that it is his right to obtain a recompense for assuming the risk with his money for the sake of the borrower and this recompense is in the form of interest.

Islam does not admit this kind of thinking and does not view the assumption risk as justification for the interest that the lender earns from the debtor. This has been decisively forbidden. The prohibition of gambling and the earning derived from the activity is another legal aspects of the Shari’ah, which demonstrates its adverse view on the element of risk-taking. This is because the earning resulting from gambling is not based on productive work. It instead rests on the risk alone. The gambler obtains his wage because he has taken the risk with his money and proceeds to pay over the wage to his opponent in case he loses.

We may group together with the prohibition of the gambling with that of shirkatul-abdan (pool or partnership bodies). According to many text of jurists like al-Muhaqqiq al-Hilli in ash-Shara’i’, and Ibn Hazm in al-Muhalla, these are forbidden. In this context the jurists refer to a partnership between two or more persons, whereby each of them pursues his particular work and craft and sharing jointly the earning accruing therefrom. For example, two physicians agreed between them that each one of them will perform the work of visiting patients and each would share half of the fees they jointly earn during the month.

The prohibition of this sort of partnership is in line with the adverse view of the Shari’ah towards the element of “risk” in relation the earning based on risk instead of work. The two physicians in the above example engage themselves in this kind of partnership, only because they do not know beforehand the amount of fees they will earn from their work. Each one of them thinks that the fees his partner earns may be more than what he does. So he engages in such a partnership, agreeing to forego part of the fees he earns in the event it is more than that of his partner’s and enjoying part of that earned of his partner, in the event the partner earns more than what he does.

As a result of that, the physician with lesser earning will have a right to share part of the earning of the other physician and the fruits of his labour because he had taken the risk in relation to his own earning from the beginning, if the result were to be the opposite. This means that the sharing in the earning by the physician who earns the smaller fees arises from an element of risk and is not based on expended labour. So its prohibition confirms the Shari’ah’s adverse view on earnings based on risk.

Capitalist Justification Of Interest And Criticisms Against It

We have just learnt that the risk element in lending, against which Islam adopts an adverse view, is one of the justification capitalism uses to support its explanation of interest and the right of the lender to impose it on the debtor. We have also learnt that the justification for charging interest on the ground of the risk element is wrong in Islamic view, because Islam does not consider element of risk a lawful ground for earning. Islam instead connects earnings only with direct or stored labour.

In its justification of interest on the basis of risk, the proponents of capitalism overlooks the role mortgages play in lending operation. By requiring mortgages as collaterals, the lenders obtain guarantees and eliminate the risk element. What then is capitalist view of (interest on) loans propped up with mortgage and sufficient guarantees?

In justifying interest, the capitalist thinkers went beyond just the element of risk. They also have advanced a number of explanations on the doctrinal aspects for its legitimacy. Some said that the interest that a debtor pays to the lender is a compensation for depriving the lender of profitable use16 of the fund advanced and remuneration for having to wait for the whole duration of the agreed period. They argue that it may be viewed as a charge that the lender demands in consideration of the borrower’s utilization of the fund lent to him, similar to the rent that a landlord gets from a tenant for utilization of his residence.

In light of Islamic theory of distribution that we have discovered, we perceive the contradiction between this attempt and the Islamic thoughts in respect of distribution. Islam, as we have learnt, does not acknowledge earning or gain other than that on the basis of compensation of the expenditure of direct or stored labour, while the capitalist thinking is such that a borrower must repay the lender the loan amount along with the compensation (interest) even though there isn’t any labour expended and any depreciation of the fund returned by the borrower. There is therefore no Islamic justification for admissibility of interest, since earning without labour is contrary to Islamic ideas of justice.

There are some who justify interest as an interpretation of the lender’s right to some of the profits, which the borrower reaps by using the fund the lender had advanced to him. But this interpretation has no relevance in the case of loans, which the borrower spends to meet his personal needs, because he does not make any profit from it. It only justifies the validity of capital provider earning part of the profit when he advances the fund for profit-driven commercial activities.

In such a case Islam acknowledges the right of the capital provider to part of the profit. But this right means partnership of the fund owner with the worker on profit-sharing basis and an alignment of the right of the capital provider with the results of the operation. This in the meaning of mudarabah in Islam whereby the capital provider alone bears a loss, while a profit is shared with the worker on the percentage agreed upon in the partnership contract. This substantially differs from profit in the capitalist understanding, which guarantees a fixed return irrespective of the outcome of the trading operation.

Some proponents of capitalism bring forth a stronger justification for interest. They interpret interest as the differential between the actual value of the commodity and its future value. It is based on the belief that time plays a positive role in establishing value. The exchange value of one dinar of today is greater than the exchange value of one dinar of tomorrow. So if you lend a dinar to someone for one year, it is your right that at the end of the year to obtain more than a dinar, so that you may recover thereby a sum which is equal to the exchange value of the dinar you had lent to him.

If the loan period is over longer period, the lender is entitled to a higher amount of interest in accordance with the greater difference between the present value of the dinar and its future value, due to the longer duration. But the notion behind this capitalist justification rests on a wrong basis. It is incorrect for the distribution of post-production to go according to the theory of value. The theory of distribution of post-production is separate from the theory of value itself.

That is why we see that many factors of production which has a role in the formulation of exchange value of the product has no legitimate share in the production output in the Islamic distribution theory. The provider of the respective means of production only earns remuneration from the owner of product, commensurate with his contribution in the production operation. In Islam, the distribution among individuals is not on the basis of exchange value such that each element of production is given a share in the product equal to its role in the accumulation of the exchange value. Instead, the distribution of the produced wealth is connected with its doctrinal concepts and the Islamic ideas about justice.

Thus, from the Islamic point of view it is not necessary to pay interest on the loan to the lender - even if it is true that present commodity’s value is greater than its future value because doctrinally, this is not adequate to justify the interest that represents the ‘decline of value’, unless interest is reconcilable with the ideas about justice embraced by Islam. We learned earlier that on doctrinal side, Islam does not allow an earning that is not justified by an expended labour, either direct or stored labour. Interest is of this category because it is - according to the last explanation given by the proponents of capitalism, which we have examined - only the result of time factor, not that of work. So it is appropriate for the doctrine to prohibit the capital owner to utilize time to gain interest income, even though the doctrine acknowledges that the time factor has a role in the value (of the capital).

We therefore see the mistake of the linking of the equitability of distribution with the theory of value. This error indicates the failure to differentiate between a doctrinal enquiry and a scientific investigation.

Limitations On The Authority Of An Owner Over The Use Of His Assets

Islam places several restrictions on the owner of an asset over the ways he may dispose with it. There are different sources these limitations arise from. Some has their origin in the theory on pre-production distribution. For instance, under the ‘time limitation’, the authority of the owner over his property is limited to his lifespan. He is prohibited from deciding the fate of the asset after his departure, as discussed earlier.

Some of the limitations are the outcome of the theory on post-production distribution, for instance, the limitation on the authority of the fund owner over his capital. He is prohibited from earning interest and disallowed from lending on interest. This limitation arises in relation to the theory of post-production distribution that connects earning to expended labour – either direct or stored labour - as we have learnt above.

There are further limitations in the Islamic economic system related to religious and moral conceptions about private ownership. These result from the person’s membership of the society, for whose benefit and service, Allah has provided natural wealth. Thus, it is not valid for him to act in a destructive way in relation to his asset. Doing so would be harmful and is against the interest and wellbeing of the society, contrary to the purpose the assets are provided by God. It is natural on this basis, to limit an owner’s authority over the use of his assets in a way that may cause injury to others and be detrimental to the interest of the society.

The right of ownership in capitalism is opposite to this. Capitalism does not view the individual’s right of ownership over natural assets as a phenomenon of benefit to society. Instead, in capitalist view the right of the individual is interpreted as the greatest scope of freedom in every field. Capitalism therefore does not place any limit on the owner’s freedom, except that it must not interfere with another person’s freedom.

Thus, in capitalist system an individual has the right to utilize his asset in any way he likes as long as he does not deprive others of their formal freedom.17 For example, if you own a large business then it is within your right – based on capitalist conception of private ownership - to follow any method that may enable you to wipe out smaller enterprises and drive them out of the market, even in a way that may lead to their destruction and injury to their owners, for this does not interfere with their formal freedom, which capitalism jealously guards and assure for everyone.18

It is mentioned in a collection of traditions and reports (ahadith and riwayat) on the Islamic legislative principle that actions of a property owner in such a way as to cause harm to others are restricted, as mentioned below: -

1. It is stated in a number of reports that Samurah ibn Jundab owned a cluster (of dates). His path of access lies across the interior of the premise of an ansari man. Samurah used to come and enter to his raceme without asking permission from the ansari man. The ansari man told him: “Samurah, you always come upon us suddenly while we are in a state that we would not like your coming upon us unannounced. So when you come, ask permission.” Samurah replied: “ I will not ask permission for the path to my cluster.” The ansari man then complained to the Messenger of Allah (S) against him (Samurah). Thereupon, the Messenger of Allah (S) sent for him and when Samurah came, told him: “So-and-so complains against you. His allegation is that you enter his premise without asking his permission, and you come upon him and his family unannounced. So henceforth whenever you wish to enter, ask his permission.” In reply, Samurah said: “ O Messenger of Allah! Do I have to ask permission for my way to my cluster?” The Messenger of Allah then said to him: “Well, then leave it, we will give you, instead, a raceme at such and such a place”. He said: “No.” The Messenger of Allah (S) then told him: “You are a harmful person. (It is not permitted) to harm a believer nor to cause inconvenience to him or injury (la darar wala dirar).” The Messenger of Allah, then, ordered to uproot the raceme and fling it at him.

2. On the authority of al-Imam as-Sadiq (a.s.) that the Messenger of Allah (S) passed for the Medinites a decree concerning troughs for date palms, that the use of extra water should not be prohibited. He (the Messenger) passed a decree to the nomads that the surplus water should not be prohibited (for others to use), and that surplus pasture is no prohibited. And he (the Messenger) said: (It is not permitted) to harm others or to cause inconvenience to them (la darar wala dirar).

3. Also on the authority of al-Imam as-Sadiq (a.s.), that he was asked about ordering a person to rebuild a wall which had fallen, (the wall) used to act as a curtain between him and his neighbour’s premise. He (the Imam) replied: “The owner of the fallen wall cannot be compelled to rebuild it unless it becomes incumbent upon him to do so, on account of the right of the owner of the other premise or on a conditional term agreed upon in the original contract of the property. But it may be told to the owner of the house, ‘You can buy for yourself your right if you wish’ “. He (the Imam) again was asked: “If the wall had not fallen by itself, but the owner razed it down or he razed it down – without any need (reason) – in order to harm his neighbour?” He (the Imam) replied: “(In that case) he should not be let free since the Messenger of Allah said: ‘Neither damage nor harm (la darar wala dirar)’. So if he razed it down, he must be compelled to rebuild it”.

4. In Musnad of Ahmad ibn Hanbal there is a tradition narrated by ‘Ubadah that the Messenger of Allah (S) decreed: “Neither harm nor damage”, and he decreed: “For the wrongdoer that he has no right on the crops he raised on a forcibly seized land:” and he also decreed to the Medinites on date palms that the extra water from the well should not be prohibited; and decreed to the nomads that no surplus water should be prevented in order to prevent extra pasture.

• 1. While studying the theory on distribution of the factors of production earlier, we sought to determine the right that individuals acquire in respect of natural raw materials (in the pre-production stage) as a basis for their distribution. As these rights were the outcome of labour, the inquiry was directed to the determination of the role of labour in relation to these natural assets. Therefore, the natural resources acquired through labour - in this sense – are also incorporated in the production output. On account of this, the two inquiries, the pre-production inquiry and post-production inquiry - become partially interlaced. This interlacing makes it necessary to provide explicit description when discussing either stage of distribution.
• 2. Refer Appendix 14.
• 3. Refer Appendix 15.
• 4. For what we have learnt from the upper-structure, i.e. the invalidity of wikalah (appointment of agents) as stated by Muhaqqiq al-Hilli in ash-Shara’i‘ for the work such as harvesting of wood and works in acquiring mubah things, or works related to land rehabilitation, by ash-Shaykh at-Tusi as transcribed from some copies of his book al-Mabsut and confirmed by similar assertion by al-Isfahani in the book al-Ijarah according to which an employer of a worker does not become owner of whatever quantity of natural material his labourer extracts on the basis of hire-contract.
• 5. It will be sufficient for us to arrive at these results theoretically from our summary of the latter two of the three points, the implication of which we have adduced from the upper structure. Even if we do not accept the first point, the structure of the theory we have built will still be sound. Let us suppose that the agent produces something from the natural raw material for his principal and his principal becomes the owner of what he produced (these two are preferred). (Refer Appendix No. 15).

  Yet, this does not contradict the principle which holds that “the production worker alone is the rightful owner of the material he produces” because the worker himself waives his right and hands it over to another person when he intends to acquire something from him. This basis, which holds that the production worker alone is the rightful owner of what he produces, links the point with the dictum of the upper structure to the effect that the material means of production do not share the output with the worker. It also links with the other point which holds that the capitalist does not become the owner of the output the worker produces simply because of his purchase of labour from the worker, and for furnishing the material and tools for the production process.

  Thus the key difference between the idea whereby the principal takes for himself the output of what his agent works on or acquires, and the idea holding that a worker appropriates the output of the work he is hired (by another) to do or what he acquires, became quite fine. The first thought is capitalistic in its nature for it directly accords ownership right of the output to the (owner) of capital and means of production, instead of (the provider of) human labour. It is the opposite to the second thought, which acknowledges the right of the worker to the material (he produces) and regards upon his engagement by another person (for example, for the harvesting of wood from the forest) as implied from the worker’s handing over his ownership of the output to the hirer and waiving his right in favour the other’s favour.

• 6. See Iqtisaduna, Vol. 1, Part. 1.
• 7. Mutaqabbil is the agent or person who uses of the land of another person.
• 8. A measure of weight, equivalent to1/16 dirham or 0.195g.
• 9. The substance of the details in this text and the subsequent text is as given below:
  That the difference in the two cases is that between a lease (tenancy) contract and a muzara‘ah (farming contract). In the case of ijarah (lease) contract, when a person takes lease of a land, for example, at a hundred dinar, it is not permissible for him to give it on a sub-lease to another person for more than a hundred dinar if he himself does not do any work on the land. But in the case of muzara‘ah (farming contract) when the man agrees with the owner of the land (and the seed) to cultivate his land and to share with him in the profit on the basis of, say, fifty per cent, it is allowable for the man - who undertakes the cultivation of the land - to later on give it to another man who manages the cultivation (on the land) on the basis of thirty per cent for the latter, while keeping to himself twenty per cent.

  The text tries to explain this difference between the case of muzara‘ah and the case of ijarah and mentions, in justifying its validity, that this is guaranteed (madmun) and that the other is not. The text (tradition) means to convey by this description (madmun and ghayr madmun, that is, guaranteed and unguaranteed). It says that the second lessee of the land rents from the first lessee for a fixed agreed sum in excess of the rental in the first lease contract. So a fixed rental is guaranteed in the contract itself. But the farmer who receives the lease under a farming contract (‘aqdul-muzara‘ah) to cultivate the land does not guarantee anything to the first lessee. So whatever the first lessee acquires as a result of the farming contract is not guaranteed under the farming contract itself. The tradition means to convey that the difference that accrues to the first lessee when he gives the sub-lease for a sum higher, is guaranteed in the lease contract. So it is invariably necessary that a work, prior to the contract, be carried out to justify this guaranteed gain because the Shari’ah does not acknowledge a guaranteed gain except in return for a work. As for the difference that accrues to the lessee if the second lessee tills the land for half, it is not guaranteed in the farming contract itself. Thus it is not necessary that the first lessee do some work prior to the farming contract to justify this gain.

• 10. The explanation of this tradition is: If a person undertakes the lease a land for one hundred dirham and then gives it to a farmer to cultivate it on the basis of partnership with the producer on a ratio of say, fifty per cent and that this fifty per cent is more than one hundred dirham, it is not (legally) permissible for the lessee to pocket the additional sum, unless he expends some labour on it, such as digging of a canal or similar works.

  Many of the jurists remark that this tradition leads to abolishing the difference between ijarah and muzara‘ah. It is not permissible for a lessee who leases at a lower rental to take advantage of the difference between the two rental rates without any work. Similarly, it is not valid for him according to this tradition to gain from the amount that results from disparity in the two farming contracts. Because of this, this tradition (leads to) clashes in their opinion with the two previous traditions since these two traditions lay emphasis on the difference between the lease and farming contract and on the fact that the difference is not valid without work, but the difference resulting from the percentage ratio difference in the two farming contracts is valid.

  But the fact of the matter is that the traditions go well together and there is no actual contradiction between them. The explanation by juristic mode of discussion is that the two previous texts tackle a specific aspect, that is, the difference between the agreement of the lessee with the landowner and his subsequent agreement with the farmer who tills the land. The profit that the first lessee gains (between the rate he pays to the land owner and that he receives from the farmer who actually tills the land) is the result of this disparity. The profit the lessee (who is actually an intermediary) earns results from the disparity (in the sharing ratio) between the two farming contracts. It is legitimate even if the intermediary person does not do any work on the land before the farmer undertakes to till it for a lesser sharing ratio. But if the disparity between the ratios is the result of the disparity of two lease contracts, then it is illegal unless the lessee does specific work on the land before he lets it to a person who agrees to work for a less percentage ratio of return.

  However the text of the last tradition in the report of al-Hashimi considers that it is necessary for the first lessee to do some works like excavating the canal or a similar work for the validity of the farming contract that he enters into with the farmer, and for the legitimacy in benefiting from the surplus resulting from the difference between what he gives to the landlord and his share of the profits from the actual work (by the farmer).

  In order to know that import of this tradition does not contradict with the two preceding traditions, it is necessary for us to know these. First, the work - which the text in the tradition reported by al-Hashimi considers the condition for the validity of the farming contract that the lessee has with the farmer - is only the work carried out after the conclusion of the farming contract, not before. This is borne out by his (the Imam’s) words (‘‘Yes, if he digs a canal or does something whereby he helps then it is his”). The meaning of his digging the canal or his doing work and his helping them thereby is that these works were accomplished (executed) after the conclusion of the farming agreement he entered into with them. But if the lessee digs the canal before he gets other persons, whom he farms out the field to share in the produce, then this digging cannot be described as done for helping them or done on account of them. The words in the tradition are indicative of the fact that the work - which is made a condition - is the work that is done after the conclusion of the farming contract, while the work made a condition in the two preceding traditions (for the validity of the lease contract with a higher rent) is the work the lessee carries out before he leases out the land for a higher rental than that he pays the land owner.

  Second, in this tradition the extra (a higher) rental is not provided for in the contract. It may only result from outcome of future events. (What really happens is that) the lessee leases the land for a specified rent. The contract states that each of the contracting parties will have half of the yield. That half, by nature, is an unspecified amount. It is just as possible that the (eventual) amount is less than the rent that the lessee has paid to the landowner. Likewise, it may also be equal to the rental amount or more. The extra amount which the tradition talks about is not specified – by the nature of the farming contract – for the farmer to pay the lessee (in the form of a higher rent than that the lessee pays to the land owner). It only binds the working farmer in the contract to pay a specified ratio of the produce irrespective of whether it is more or less than the amount of rent the lessee pays to the land owner.

  When we look at these two matters we can say that the condition (for work to be done on the intermediary lessee) in this tradition of al-Hashimi (in relation to his farming contract) with the farmer who actually tills the land is not for the justification of the surplus the lessee gains from the excess of the rental he pays to the landlord over the share of profits receives from the farmer. Let us, for example, assume a ratio of fifty-fifty. The condition that the lessee must perform some work is only for the validity of the farming contract, for the fulfilment of its legal requirements, as to its being a specific contract irrespective of any addition or deletion.

  That is because of the juristic assumption that in the farming contract, it is not sufficient that the landowner offers only his land. Rather, for the contract is to be valid it is necessary for him to make a commitment to also provide another means of production beside land. This is indicated in the juristic text, which we have transcribed from ash-Shaykh at-Tusi in the third quoted extract. In this text, contribution of seed is made obligatory on the landlord and the element of production that the text (in the tradition reported by al-Hashimi) deals with, it is not specified that the intermediary lessee binds himself to provide seeds to the farmer. Thus it is stipulated that he may be made responsible to share in the farming works of the farmer. From this it may be concluded that the owner of the land — the owner who holds the ownership of the land or owns the benefit accruing from it - who enters into a farming contract, is required to contribute to the cultivation works or provide seeds or spend on similar things. Providing only land would not be adequate.

  The explanation of the text of al-Hashimi in this light does not clash with its general meaning and retains intact the difference between muzara‘ah (farming contract) and ijarah (lease) as fixed by the two preceding traditions, because the work that justifies ‘sub-leasing’ the land at a rent higher than that he pays to the land owner is the work which he does before he concludes the sub-lease contract. Its importance lies in validating the sub-lease contract. As for the work that justifies him partnering with a farmer (under a farming contract) for a specific share (say, half) in the produce, it is a work, which the intermediary lessee invests before concluding the farming contract. Its importance lies in the validating the principle of the farming contract, not only for to justify or legitimize in the higher return.

• 11. A fixed land measurement that equals to five-eighth (5/8) of an acre.
• 12. Herein, the word “bay’ ” is not intended in the specific sense of buying or selling. This is clear from its use in context with his (unless he does some work …. with the willing consent of the owner of the pasture). This shows that the pasture had its owner. This does not go well with the statement that the herdsman had in fact purchased it. You should take the general meaning of the word, “bay’” applicable to entering into a lease arrangement.
• 13. It is like the saying: Do not follow the ‘fatwa’ (verdict) of Zayd unless he is a mujtahid. If he is a mujtahid then it is valid for you to follow his opinion because he is a mujtahid. So because he is a mujtahid, following him (his opinion) is valid for you. The implied sense of this saying by the common understanding (‘urf) is that the validity of following a religious opinion is always bound with ijtihad. Therefore, just as it is not valid to follow the opinion of Zayd unless he happens to be a mujtahid, it is also not valid to follow any other person’s opinion in such situations. In other words, common understanding gushes the peculiarity of an event, by considering the context, and linking the earning with labour or following of the opinion with the ijtihad as a general rule.
• 14. The text given on the authority of al-Halabi as follows: He says: “I asked the Imam as-Sadiq (peace be upon him) ‘Can I enter into a tenancy contract for an agricultural land and hold myself responsible for one-third or one-fourth of the yield, then I enter into a tenancy contract with someone else, holding him for one half yield?’ The Imam replied ‘There is no objection’ “. He says he then asked ‘‘Can I lease it for one thousand dirhams and then lease it out for two thousand dirhams?” The Imam replied ‘‘No”. ‘I asked him ‘Why?’ He replied ‘In the first case it is guaranteed while in the second it is not’. This is quoted in the foregoing upper structure.
• 15. Refer to Appendix 16.
• 16. This is known as opportunity cost, which is the compensation for loss of the opportunity for an alternative use of the capital during that loan period. [Note of Al-Islam.org].
• 17. For clarification of the meaning of formal freedom and real freedom, refer Vol 1.
• 18. The owner’s use of his property that causes harms to others are in two ways: -

  First, the owner’s use of his assets that causes direct material loss or injury to other persons by damage to their properties, such as digging a pit on his land, which may lead to the collapse of a building on a neighbouring land. Second, causing injury to others in an indirect way that leads to the deterioration in the condition of others, without actually damaging their properties. This includes the ways employed by large capitalist enterprises in destroying small ones. Such methods do not actually bring about physical losses to the material assets of the owners of the small businesses. It only compels them to sell their products at lower prices, disabling them from continuing with their businesses and eventually having to withdraw from the industry.

  The first way of using one’s property (that is harmful to others) is included in the general Islamic law la darar wa la dirar (neither harm nor be the cause of harm). The owner of property is forbidden from practising such actions in relation to his property. The second type of actions in relation to one’s property, as a general principle, is connected with the understanding of the term ‘darar’ (harm). If darar means direct loss in terms of damage to material or life - as many jurists think - then this type of harm does not come under this principle; for it is not causing harm in this sense. But if causing harm means causing deterioration of the person’s condition as is given in the lexicons, then the meaning is broader and more comprehensive than direct financial harm. In that case, it is possible to include this second type of harm based on this understanding. The declared limitation of the authority of the owner over his assets shall include forbidding him from practising both types of actions in relation to his wealth, because both result in deteriorating circumstances and worsening condition for others as explained by us in our discussion of the principles, and lead us to the generalizing the rule based on that.