[sesIgnose]

in a business is their an upper limit on profit one can try to make?

for example i bought something for 'x' dinar. i decide to sell it for 'x+10000' dinar. is such an outlandish offer that legit?

does one have to stay close to the market value?

if yes then how close?

[bug_user]

I have heard its 30%....also Islam does not allow a price war and undercutting competitors because if allowed to continue one or two companies will dominate (monopoly or oligopoly) the market and it will cause problems.

[attanilifardy]

I have heard its 30%....also Islam does not allow a price war and undercutting competitors because if allowed to continue one or two companies will dominate (monopoly or oligopoly) the market and it will cause problems.

I have heard no such thing. From what I know free markets are promoted by Islam. The "price war" and "undercutting competitors" that you mention are negative words to describe exactly what happens in a free market (which is not a bad thing).

Bring your proof, I would be interested.

[domeffire]

I have heard no such thing. From what I know free markets are promoted by Islam. The "price war" and "undercutting competitors" that you mention are negative words to describe exactly what happens in a free market (which is not a bad thing).

Bring your proof, I would be interested.

I cannot remember where I read it, it might be Imaam Malik's Muwwata, or Umar Vadillio's fatwa on paper money, or his book The End of Economics.

In the UK we have supermarkets, they have a unwritten agreement between themselves not to have a price war (the cake is big enough for all of them to profit nicely). Independents cannot compete with the supermarkets. So we have a oligopoly. Monopolies and oligopolies are not a free market, in fact they emerged in a unfree market through state help, they also use the national road system with the trucks without paying for the cost of maintenance of the roads..they get subsidies from the state. So people might think they are benefiting from having these supermarket chains (relatively cheap prices), but the High Street independents have closed and look like ghost towns...so there are socio-economic costs that will impact on the community in years to come. Less cohesion less community brotherhood/sisterhood.

[grizolsemn]

I cannot remember where I read it, it might be Imaam Malik's Muwwata, or Umar Vadillio's fatwa on paper money, or his book The End of Economics.

Any non-muraabitoon literature?

In the UK we have supermarkets, they have a unwritten agreement between themselves not to have a price war (the cake is big enough for all of them to profit nicely).

If it's really unwritten, and there was no illegal contact between the companies ... I don't understand how the state is supposed to police it, or if they even should police it.

Independents cannot compete with the supermarkets. So we have a oligopoly. Monopolies and oligopolies are not a free market, in fact they emerged in a unfree market through state help

You're saying that an oligopoly cannot exist within a free market? It's a free market, the necessary forces exist to produce an oligopoly. The burden of proof is on you to prove that a free market would never result in an oligopoly.

they also use the national road system with the trucks without paying for the cost of maintenance of the roads

Who says they don't pay for road maintenance? Generally, road infrastructure is supported thru fuel taxation. Everyone pays fuel taxation. And since you are paying taxes of the fuel you use, naturally those who use more fuel (and hence more of the road infrastructure) will pay more in taxes to fund the said infrastructure.

..they get subsidies from the state. So people might think they are benefiting from having these supermarket chains (relatively cheap prices), but the High Street independents have closed and look like ghost towns

Large market chain grocery stores get more in subsidies as compared to independent grocery stores? Proof. Is it not possible that the large chain grocery store acquired a bunch of capital, took a risk, and setup a scaled up business allowing them to consolidate and reduce costs - undercutting the independent grocery store? Perhaps the independent grocery store wasn't as lucky, or not as entrepreneurial, or was happy with their little store and not interested in expanding, or didn't have access to the capital, etc .. (i.e. stuff that happens in a free market).

...so there are socio-economic costs that will impact on the community in years to come. Less cohesion less community brotherhood/sisterhood.

Free markets don't create utopia, but at least it is fair. Utopia is not the goal of Islam either. As far as I understand, Islam doesn't design economic principles to reduce disparity between rich and poor below a certain ratio, nor does it morph the economic environment so that no one company can have more than X% market share ... Islam implements justice, and sort of lets things go as they go ...

[durootrium]

Salamu 'alaikum,

A brother told me to post this on behalf on him:

عن أبي هريرة رضي الله عنه ، قال : قال رسول الله صلي الله عليه وسلم : ( لا تحاسدوا ، ولا تناجشوا ، ولا تباغضوا ، ولا تدابروا ، ولا يبع بعضكم على بيع بعض ، وكونوا عباد الله إخوانا ، المسلم خو المسلم ، لا يظلمه ولا يخذله ، ولا يكذبه ، ولا يحقره ، التقوى ها هنا ) ويشير صلى الله عليه وسلم إلى صدره ثلاث مرات – ( بحسب امرىء أن يحقر أخاه المسلم ، كل المسلم على المسلم حرام : دمه وماله وعرضه ).
رواه مسلم [ رقم : 2564 ]

On the authority of Abu Hurairah (radiAllaahu anhu) who said : The Messenger of Allaah (sallAllaahu alayhi wa sallam) said :

Do not envy one another, and do not inflate prices for one another, and do not hate one another, and do not turn away from one another, and do not undercut one another in trade, but [rather] be Slaves of Allaah and Brothers [amongst yourselves]. A Muslim is the brother of a Muslim : he does not oppress him, nor does he fail him, nor does he lie to him, nor does he hold him in contempt. Taqwaa (Piety) is right here [and he pointed to his chest three times]. It is evil enough for a man to hold his brother Muslim in contempt. The whole of a Muslim is inviolable for another Muslim : his blood, his property, and his honour.

It was related by Muslim.


This Hadith is mentioned in the 40 hadith of Imam Nawawi.

Ibn Rajab gives commentary on this hadith:

[Mugflefusysef]

Salamu 'alaikum,

A brother told me to post this on behalf on him:

عن أبي هريرة رضي الله عنه ، قال : قال رسول الله صلي الله عليه وسلم : ( لا تحاسدوا ، ولا تناجشوا ، ولا تباغضوا ، ولا تدابروا ، ولا يبع بعضكم على بيع بعض ، وكونوا عباد الله إخوانا ، المسلم خو المسلم ، لا يظلمه ولا يخذله ، ولا يكذبه ، ولا يحقره ، التقوى ها هنا ) ويشير صلى الله عليه وسلم إلى صدره ثلاث مرات – ( بحسب امرىء أن يحقر أخاه المسلم ، كل المسلم على المسلم حرام : دمه وماله وعرضه ).
رواه مسلم [ رقم : 2564 ]

On the authority of Abu Hurairah (radiAllaahu anhu) who said : The Messenger of Allaah (sallAllaahu alayhi wa sallam) said :

Do not envy one another, and do not inflate prices for one another, and do not hate one another, and do not turn away from one another, and do not undercut one another in trade, but [rather] be Slaves of Allaah and Brothers [amongst yourselves]. A Muslim is the brother of a Muslim : he does not oppress him, nor does he fail him, nor does he lie to him, nor does he hold him in contempt. Taqwaa (Piety) is right here [and he pointed to his chest three times]. It is evil enough for a man to hold his brother Muslim in contempt. The whole of a Muslim is inviolable for another Muslim : his blood, his property, and his honour.

It was related by Muslim.


This Hadith is mentioned in the 40 hadith of Imam Nawawi.

Ibn Rajab gives commentary on this hadith:

i can't view the attachments.

also i didn't get what the part in bold meant. i am sorry, can you explain?

[Kolokireo]

i can't view the attachments.

also i didn't get what the part in bold meant. i am sorry, can you explain?

the bold parts mean do not compete with each other cutting prices of goods.




e. g. Companies are attempting to compete in today's crowded tablet market by slashing product prices to undercut rivals.

[Breilopmil]

[QUOTE]

Any non-muraabitoon literature?

no



If it's really unwritten, and there was no illegal contact between the companies ... I don't understand how the state is supposed to police it, or if they even should police it. They cannot, however the state helps create and sustain supermarkets.


You're saying that an oligopoly cannot exist within a free market? It's a free market, the necessary forces exist to produce an oligopoly. The burden of proof is on you to prove that a free market would never result in an oligopoly. We do not live in a free market, the state intervenes in the market with countless regulations helping big supermarkets to build their stores etc.

http://roma38.wordpress.com/2012/08/...f-the-economy/

http://en.wikipedia.org/wiki/Kevin_C...vs._capitalism
see the section free markets vs capitalism


Who says they don't pay for road maintenance? Generally, road infrastructure is supported thru fuel taxation. Everyone pays fuel taxation. And since you are paying taxes of the fuel you use, naturally those who use more fuel (and hence more of the road infrastructure) will pay more in taxes to fund the said infrastructure. They drive huge trucks and they pay something like £200...when it is obvious that they use the roads much more and also the road gets worn out more.



Large market chain grocery stores get more in subsidies as compared to independent grocery stores? Proof. Is it not possible that the large chain grocery store acquired a bunch of capital, took a risk, and setup a scaled up business allowing them to consolidate and reduce costs - undercutting the independent grocery store? Perhaps the independent grocery store wasn't as lucky, or not as entrepreneurial, or was happy with their little store and not interested in expanding, or didn't have access to the capital, etc .. (i.e. stuff that happens in a free market). It is not a free market


Free markets don't create utopia, but at least it is fair. Utopia is not the goal of Islam either. As far as I understand, Islam doesn't design economic principles to reduce disparity between rich and poor below a certain ratio, nor does it morph the economic environment so that no one company can have more than X% market share ... Islam implements justice, and sort of lets things go as they go ... Islam prevents the development of monopolies and oligopolies because these are bad news.

[Flefebleaft]

can someone give me the upper limit from the hanafi madhab?

[apannamma]

http://www.islam.tc/cgi-bin/askimam/...4469&act=print

There is no profit restrictions in Shari'ah. However, it is disliked to
exceed double the profit margin of the market.

and Allah Ta'ala Knows Best

Mufti Ebrahim Desai
FATWA DEPT.