Manual for Azerbaijan companies Rena Safaralieva

 

Islamic ethics in economic relations 

 

Though the overwhelming majority of Azeris do not devotedly observe religious norms, it is difficult to 

deny that religion has a significant impact on the cultural formation of a society.  As we shall see, Islam 

provides an ethical framework within which modern business ethics might be grounded. 

 

The Koran and Shariat (collection of Islamic legal norms and regulations) cover practically all aspects of 

Western business ethics. For example, Islam denounces corruption. The Koran says that when justice is 

administered by genuine Islam, a judge shall be above corruption and bribery and not be afraid of the 

power of the judged.   

 

Islam distinguishes between admissible and inadmissible ways to earn a living. The honest way is 

allowed and is qualified as “halal”. Any income generation, which incurs direct loss to other people or 

implies use of forbidden methods (e.g. stealing, bribery) is referred to as a dishonest way - “haram” and 

is prohibited. 

 

Islam encourages diligence and denounces idleness. Islam requires efficient use of resources, including 

human resources. It also clearly defines employer-employee relations. Employees shall respect property 

of their master and work diligently, while employer shall deal fairly and pay for labor in time. Corporate 

social responsibility is stated in Koran in the form of “zakkat”, or obligatory annual deduction for the 

poor, orphans and the needy.  

 

 The tax rate under “zakkat” constituted 1/10 of the harvest and 1/40 of other property. 

12

 

 

Islam prohibits “riba” - direct money lending against interest or use of money in a capacity of a market 

commodity. Islam also discourages money savings and many Islamic countries put a tax on bank deposits 

to encourage investment or turnover of funds

13

 rather than the payment of interest. Many Moslem 

societies establish special types of banks, or mutual aid trusts, which charge service fees only. There is no 

doubt that such a practice complicates raising capital for start-ups. More and more Moslems all over the 

world realize the need to adapt Moslem heritage to the changing life conditions and the increasing 

globalization of the world community.

14

 In addition, higher living standards require extra income, some 

of which can be generated by working women. Moreover, modern business development requires more 

extensive involvement of women into the production process, which is impeded by many Islamic 

regulations concerning the public role of women.  

 

Ethical dilemmas and how to solve them 

 

Ethical issues greet us each morning in the newspaper, confront us in the memos on our desks and bid us 

good night in the evening news. Dealing with these ethical issues is often perplexing. How, exactly, 

should we think through an ethical issue? What questions should we ask? The first step in analyzing 

ethical issues is obvious, but not always easy to do: get the facts. This first step is also among the most 

important and the most frequently overlooked. But having the facts is not enough. Facts by themselves 

only tell us what is; they do not tell us what ought to be. In addition to getting the facts, resolving an 

ethical issue also requires an appeal to values, which can exist on several levels: the society as a whole, an 

organization and an individual. And these values do not always coincide. Besides, a person has to decide 

for himself or herself, which of the three constants of an ethical act is more important: the act itself, the 

ends, or the means. Philosophers have developed four main consecutive steps for resolution of ethical 

problems. 

15

  

                                                 

12

 Islam, Encyclopedic Dictionary, Main Editing Bureau of Eastern Literature, Nauka Publishing House, Moscow, 1991, p. 74  

13

 R.Maksud, Islam, Grand Publishing House, Moscow, 2001, pp. 204-205 

14

 Azim Nanji, Islamic Ethics in Companion to Ethics, edited by P.Singer, Blackwell, 1994,  Hartnolls Ltd and  Bodmin 

Publishing House, Cornwell, p. 116  

15

 Kenneth Blanchard, Norman Vincent Peel,  The Power of Ethical Management,  William Morrow and Company Inc.  

Publishing House, New York, 1988, p.27  

---

 

Arguments against  taking a certain course of action: 

•

 

Serious legal consequences;  

•

 

Substantial material losses; 

•

 

How shall I feel if I do wrong? 

 

Arguments for taking a certain course of action:  

•

 

Chances to be caught are very little;  

•

 

I will be doing it for somebody else;  

•

 

If I do it, the other side will really suffer no harm; 

•

 

If I do not do it, somebody else will; 

•

 

Everybody does it.  

 

What is of more value to me? 

•

 

The ends/consequences (murder can be justified, if it was not intentional); 

•

 

The means/methods (murder can not be justified under any circumstances). 

 

What do I and other parties lose and gain in the:  

•

 

Short term; 

•

 

Long term.  

---