Is there a limit to profit in trade, and what is the ruling on price control?
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The questioner : Is there a limit to profit in trade, and what is the ruling on price control?
The Shaykh : There is no limit to profit, for it is from the provision of Allah (Mighty and Majestic). Allah the Exalted may send abundant provision to a person. Sometimes a person makes a hundred or more on ten, having bought an item when prices were low, and then prices rise and he makes a large profit. Likewise, the opposite may happen: he may buy when prices are high, and then they drop significantly. So there is no limit to the profit a person is permitted to make. Yes, if this person is the one who exclusively brings in these goods and markets them, and he makes a large profit at the expense of the people, then it is not permissible for him to do so. This is because it resembles selling to one in dire necessity, meaning selling to someone in a state of dire necessity. When people’s need is tied to an item that is not available except from a specific person, they are in need of buying from him and will buy from him even if the prices increase for them. In such a case, it is permissible to impose price controls on him, and for the government and those in authority to intervene by setting a suitable profit that does not harm him, and preventing him from the excess profit that harms others.
From this, we know that price control is divided into two categories:
One category is resorted to by those in authority due to the oppression and hoarding of people, and there is nothing wrong with this, for it is part of good governance. It is established from the Prophet (peace and blessings be upon him) that he said:Sunan Ibn Majah 2154Sahih (Darussalam) And the one who errs is the one who commits an error intentionally. If he is in error, then it is obligatory for him to correct his course through those in authority. If a person hoards a commodity and it is not available from anyone else, and people are in need of it, then it is upon those in authority to intervene in this and set a profit that does not harm the seller and benefits the buyer.
However, if the rise in prices is not due to oppression but is from Allah (Mighty and Majestic), either due to the scarcity of the item or for a reason that affects the general economy, then it is not permissible to impose price controls in this case. This is because it is not the removal of oppression from this person who raised the price, for matters are in the hands of Allah (Mighty and Majestic). For this reason, when prices rose in Madinah during the time of the Prophet (peace and blessings be upon him), they came to him and said: O Messenger of Allah, set prices for us. He said:Bulugh al-Maram 7:38 The Prophet (peace and blessings be upon him) refrained from setting prices for them because this high cost was not due to their actions or deeds.
By this, we know that price control is of two types: If its cause is the removal of oppression, there is nothing wrong with it. And if it is itself an oppression, such that the high cost is not due to human oppression, then price control at that time becomes an oppression and is not permissible.
The Shaykh : There is no limit to profit, for it is from the provision of Allah (Mighty and Majestic). Allah the Exalted may send abundant provision to a person. Sometimes a person makes a hundred or more on ten, having bought an item when prices were low, and then prices rise and he makes a large profit. Likewise, the opposite may happen: he may buy when prices are high, and then they drop significantly. So there is no limit to the profit a person is permitted to make. Yes, if this person is the one who exclusively brings in these goods and markets them, and he makes a large profit at the expense of the people, then it is not permissible for him to do so. This is because it resembles selling to one in dire necessity, meaning selling to someone in a state of dire necessity. When people’s need is tied to an item that is not available except from a specific person, they are in need of buying from him and will buy from him even if the prices increase for them. In such a case, it is permissible to impose price controls on him, and for the government and those in authority to intervene by setting a suitable profit that does not harm him, and preventing him from the excess profit that harms others.
From this, we know that price control is divided into two categories:
One category is resorted to by those in authority due to the oppression and hoarding of people, and there is nothing wrong with this, for it is part of good governance. It is established from the Prophet (peace and blessings be upon him) that he said:
No one hoards but a sinner.
لا يحتكر إلا خاطئHowever, if the rise in prices is not due to oppression but is from Allah (Mighty and Majestic), either due to the scarcity of the item or for a reason that affects the general economy, then it is not permissible to impose price controls in this case. This is because it is not the removal of oppression from this person who raised the price, for matters are in the hands of Allah (Mighty and Majestic). For this reason, when prices rose in Madinah during the time of the Prophet (peace and blessings be upon him), they came to him and said: O Messenger of Allah, set prices for us. He said:
Allah is the One Who fixes prices, Who withholds, gives lavishly and provides. And I hope that when I meet Allah, the Most High, none of you will have any claim on me for an injustice regarding blood or property.
إن الله هو المسعر القابض الباسط الرازق وإني لأرجو الله أن ألقى الله عز وجل وما أحد منكم يطلبني بمظلمة في دم ولا مالBy this, we know that price control is of two types: If its cause is the removal of oppression, there is nothing wrong with it. And if it is itself an oppression, such that the high cost is not due to human oppression, then price control at that time becomes an oppression and is not permissible.