Price Control

[bamalli]

In Islam the market is to be free and permitted to respond to the natural
laws of supply and demand. Thus, when the prices became high in the
Prophet's time and people asked him to fix prices for them, he replied, *Allah
is the One Who fixes prices, Who withholds, Who gives lavishly, and Who
provides, and I hope that when I meet Him none of you will have a claim
against me for any injustice with regard to blood or property.* (Reported by
Ahmad, Abu Daoud, al-Tirmidhi, Ibn Majah, al-Dari and Abu Y'ala.)

With these words the Prophet of Islam (peace be on him) declared that
unnecessary interference in the freedom of individuals is injustice and that
one should meet Allah free of blame for such a thing. If, however, any
artificial forces, such as hoarding and manipulation of prices by certain
merchants, interfere in the free market, public interest takes precedence
over the freedom of such individuals. In such a situation price control
becomes permissible in order to meet the needs of the society and to protect
it from greedy opportunists by thwarting their schemes, for the above *hadith
*does not mean that price control is prohibited regardless of the
circumstances, even if it removes harm and prevents obvious injustice.
Researchers among scholars have concluded that, depending on the nature of
the circumstances, price control may at times be unjust and prohibited, and
at other times may be just and permissible.

If price control compels people to sell their goods at a price which is not
acceptable to them or denies them the reasonable profit permitted by Allah,
it is *haram. *If, on the other hand, price control establishes equity among
people, for example, by forcing sellers to accept a price equal to that
commanded by other comparable commodities and restraining them from taking
more than this, it is allowed—indeed necessary.

The *hadith *cited above relates to the first type of situation.
Accordingly, if merchants are selling a commodity in the customary fashion
without any wrong-doing on their part and the price subsequently rises due
to the scarcity of the commodity or due to an increase in population
(indicating the operation of the law of supply and demand), this
circumstance is from Allah, in which case to force them to sell the
commodity at a fixed price would be unjust compulsion.

In relation to the second type of situation, should the dealers in a
commodity refuse to sell it, despite the fact that people are in need of it,
unless they secure a price higher than its known value, they must be
compelled to sell it at a price equal to the price of an equivalent
commodity. Price control here means nothing more than establishing
comparable prices for equivalent commodities and it is therefore in
conformity with the standard of justice demanded by Allah Ta'ala. (Refer to
*Risalat al-hisbah *by Ibn Taimiyyah, as well as to *Al-turuq al-hikmiyyah *by
Ibn al-Qayyim, p. 214 ff.)