The Economic System of Islam — Page 57
57 prices. If a person hoards goods for this reason, he does so by going against the Islamic principles. If a trader has wheat but deliberately withholds its supply from the public in order to raise prices, he is engaged in a sinful activity, according to Islamic teachings. Some people believe that regulation of markets by the state is a modern economic concept, but Islam has always recognized its need. The British have now come to recognize that hoarding with the purpose of extracting higher prices is not good for the economy, but Islam recognized it thirteen centuries ago. An Islamic govern- ment would require that no trader could hoard his goods, and if any trader were found to be doing so, the government would be entitled to force liquidation of his inventory at appropriate market prices. Thus, the broader Islamic principle mandates that any good that is a need of the people must not be artificially hoarded. The word used for hoarding is i h tik a r which primarily refers to the hoarding of food grains. But in line with the Islamic rules of jurisprudence, this injunction would be interpreted broadly to cover all goods that are withheld from the market with the intent of raising the price. Injunction Against Artificial Lowering of Prices Similarly, Islam does not permit that prices be forced down by artificial means, because, as mentioned above, this too enables unscrupulous traders to strangle their rivals by forcing them to sell at reduced prices. During his reign, Hadrat Umar ra , while inspecting the market, came across a trader from outside Madinah who was selling dried grapes at prices that local producers and traders could not compete