Above is a screenshot of a response I got from a “scholar” I asked about the Halalness of Human Capital Mudarabah (Halal means permissible in Islam; Halalness is a word I made up). Now you may be wondering: well if you were not going to follow what the scholar says, why did you ask him in the first place? Well, two things here:
1- The only things I follow are the Quran, the sayings of the prophet and what I deem to be sound reasoning. In my opinion, the response of the scholar relies on none of these and therefore shouldn’t be followed.
2- Truth is I’ve been working on HCMs for the past five years. I’ve spoken with hundreds of people about the product and heard hundreds of opinions. At this point, when I ask someone about the product I think there is a 1% chance they give me an objection I haven’t heard of before. In other words, I’m 99% sure that HCM is 100% Halal. I’ll always leave 1% there so as not to betray the spirit of an honest scholar. So when I ask others about their opinion on HCM my motivation is 1% curiosity and 99% an effort to build support for the product among the greatest number of people. Excuse my candor.
Now let me deal with the objections mentioned in the email briefly. The scholar’s objections are in blue, my responses are in black.
1. As described, the scheme is impermissible (i.e. to execute or market), as it is an exchange contract characterized by riba and major gharar.
It’s not an exchange contract. It’s an investment. I can only hope you know the difference.
Saying that it is Riba and Major gharar implies you don’t know the meaning of either term. Riba implies a predetermined return while major gharar implies excessive ambiguity. So which is it? predetermined or excessively ambiguous?
P.S. no need to say “it’s impermissible to execute or market” because if something is impermissible in Islam it’s always impermissible to execute or market. There is never a distinction.
1.1 It appears to be an exchange of money for an indeterminate future income stream. It fails to fulfill the conditions of validity for a currency exchange transaction and violates the conditions of a loan.
“Exchange of money for indeterminate future income stream” is a good way to define the word “Investment”. Hopefully, the commentator doesn’t think investments are Haram.
It sure as heck isn’t a currency exchange – where did that come from??? It’s also not a bicycle.
I’m glad it violates the conditions of a loan. That’s the point, its not a loan! Also, I might add, you’ve managed to contradict yourself for the third time in as many sentences. Claiming that it violates the conditions of a loan would exonerate it from your claim that it is Riba’ AnNisi’ah (one of two types of Riba in Islam, Riba AnNisi’ah refers to interest on loans which I’m hoping he was referring to). If you’re referring to the other type of Riba, i.e. Riba’ Al Fadl (which applies to barter exchanges) then your misunderstandings are even more serious.
1.1 If conceived of as a mudarabah, it fails to meet a basic condition, i.e. that there be defined ratios of *profit* assigned to investor and entrepreneur.
There is a predefined ratio of profit assigned to investor and entrepreneur. Reread the example I sent you.
1.2 It cannot be conceived of as an employment contract, because it is a money-money exchange, not a money-service exchange.
It is not a money-money exchange. If that were the case, the investor would have to be entitled to money! The investor is not entitled to any amount of money. Rather, the investor is entitled to share in a percentage of the investee’s income if and when that income materializes. Which could be never. Investments are not money-money exchanges. They are, as you put it earlier, “an exchange of money for an indeterminate future income stream”.
1.3 Note that this and very similar schemes have been suggested by a few thinkers in N America and Europe and have been discussed more than a few times over the last decade or so. I know of no faqih-specialist–teacher, elder or colleague–who has ever opined that it is permissible.
There is no evidence that this has been discussed by “specialists” in the Muslim community.
Assuming it has, do you know of any reasonable objections these “specialists” may have had? Please share if you do because you haven’t mentioned any yet.
2. Nevertheless please do not be disheartened. I applaud your innovative thinking; encourage you to continue to address this area of pressing need for the community and encourage you to continue think originally. If you have questions please contact us.