Shared Prosperity in Islamic Social Finance

Valentino Cattelan


Looking for the roots of social finance in Islam

In the world of contemporary capitalism, grounded in a constant struggle for competition and troubled by cyclical financial crises, looking for objectives of long term sustainability has become a global imperative, as witnessed by the Resolution Transforming Our World: The 2030 Agenda for Sustainable Development, adopted by the General Assembly of the United Nations in September 2015.

But, if the intention to achieve this goal is clear, less manifest are the means of action to foster social investments that are able to firmly connect profitability with community welfare. In fact, the parameter of “social responsibility” that has become popular through the recent growth of ethical finance, if able to rectify at the “borders” the eco-system of capitalism, has proved insufficient till now to renovate its “house” from the “pillars”. Last but certainly not least, property rights and relations in contemporary capitalism are also experiencing deep transformation due to the impact of the digital revolution, where the so-called “sharing economy”, to the extent to which certainly offers new possibilities of collaboration, networking and venture businesses among economic actors, is also affecting (if not revolutionising) the global market from its “roots”. Within this background, what can be the effective contribution of Islamic finance to transform the world of capitalism in the light of sustainable development?


From the risk of self-interest to the benefit of shared prosperity

Achieving objectives of long term sustainability requires to (re-)found global eco-logy (in the Greek literal meaning of oikoslogos, “house discourse” – the world as the prosperous “house” for all the human beings) on more stable “roots”, as symbolic means of (economic and social) security from the perils of everyday life.  

From the time of Adam Smith, the father of economic science in the Western tradition with his Wealth of Nations (1776), it has been a common viewpoint that we should not expect “our dinner” from “the benevolence of the butcher, the brewer, or the baker”, but from “their regard to their own (self)-interest”. Accordingly, in Smith’s elaboration (which reflects the logic of modern capitalism), it is the individualistic self-love that nurtures the “invisible hand” behind the prosperity of each one’s “human house”, so much that each one’s “dinner” becomes, in the end, a risky enterprise: that is to say what can be conceived as the result of a selfish competition between antagonist actors for the division of scarce resources. Acting one against the other, since “mine” exists versus “yours”, summarizes the “morality” of a risky self-interest, whose protagonists are asked to fight one against the other in their economic undertakings.

It is not by chance that the etymology of the risk of self-interest (which indirectly reveals its conceptual background) derives from the Latin resecare, resicum, risicum, riscus, the direct precedents for the Italian risicare, meaning “to dare”. And daring to struggle for economic competition still represents the foundation of the “house” of world capitalism, whose borders can certainly be “rectified” through ethical values (one would say, so to “embellish” its facades), but without any possibility to change its “pillars” (otherwise all the building of capitalism, with its logic of competition, would collapse). But, what if we look for a “market house” built on Islamic roots?

Although the Latin riscus seems to find an equivalent (at least phonetically) in the Arabic rizq, as if a common etymological origin could be implied, the significance of the word, from Latin to Arabic language, changes radically in terms of the “benefit” that any fortune, profit or gain implies “a substance that is given by God for livelihood” (in this sense, see Hans Wehr’s authoritative Dictionary on Modern Written Arabic).

Accordingly, the verb razaqa is always used in the sense of ‘God providing somebody with means of subsistence’;الرزا  ar-Razzaq, ‘the Maintainer’, ‘the Provider’ is one of the ninety-nine attributes of God; and مرزوق marzuq is the ‘person blessed by God’, thus ‘fortunate’, ‘prosperous’, ‘successful’

In other terms, the “root” of any profit in Islam necessarily derives from the risk of an economic activity whose potential outcomes are provided by Allah as God’s blessing (again, rizq). It is this radical departure from individual self-interest to the benefit secured through God’s Guidance that replaces economic competition of the capitalistic market with criteria of mutual cooperation and common welfare (falah). A “house” (oikos) regulated by the rule (nomos) of Shari‘ah, whose outcome is the transformation of the pillars of economy (oikos + nomos) into the basis of a social entrepreneurship grounded on the “roots” of a balance between available resources, human needs and desires, “so not to ‘devour’ each other’s wealth and struggle ‘in vain’ by transforming the market in a place of scarcity, division and competition”, but substituting the economic self-consumption – that is inherent to the illegitimate gain derived from (self-)interest (riba) – with a shared prosperity brought about by doing business “by mutual good-will”.


  1. 2:275 – Those who consume riba (interest, usury) will not stand (on the Day of Resurrection) except as one stands who is being eaten by Satan into insanity. That is because they say, “Trade is [just] like interest,” whereas Allah has permitted trading and forbidden riba. […] (see also Q. 2:276-281).
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  3. 4:29 – O you who believe! Do not consume one another’s wealth unjustly but only in [lawful] business among you by mutual good-will. And do not kill yourselves (nor kill one another). Surely, Allah is Most Merciful to you!


The “house” of Islamic social finance

The centrality of the pillars of shared prosperity as result of God’s sustenance is of paramount importance for the “house” of Islamic social finance, so as to overcome the limits of contemporary capitalism through principles of cooperation and sharing. In particular (as words can be phonetically similar but, in actual fact, as in the case of risk / rizq, do hold specific sense in different cultures), the notion itself of sharing (so relevant for all the Islamic finance market, both in terms of “risk-” and “profit-”sharing) assumes radically alternative meanings from the universe of capitalism to that of Islamic economy. Indeed, if acting one against the other (“mine” versus “yours”) summarizes the “morality” of the risky self-interest, Muslim agents (as khalifa-s, vice-regents of God on earth) are assumed to operate one next to the other in a marketplace conceived as a space where what is “mine” exists only besides what is “yours”.

Hence, if the contemporary global economy is experiencing radical innovations, both in terms of a stronger attention to sustainability, community development and social impact (the “sustainable development goals” mentioned at the beginning of this article) and the impact of the digital revolution with the new opportunities offered by the so-called “sharing economy”, it is with reference to its own foundational idea of sharing that Islamic social finance can offer a real alternative to capitalism, both for Muslims and non-Muslims alike.

Moving from God’s Revelation to the daily life of the market, the Islamic rationales of sharing affect the conceptualization of the market in Islam as a socio-economic community of shared prosperity, where entrepreneurship itself becomes a means of common welfare.

Consequently, by  “rooting” the understanding of Islamic social finance within this background, operative strategies of shared prosperity can feed its “house” (what Adam Smith would describe as “our dinner”) both through traditional Islamic institutes (such as zakat and waqf) and in relation to instruments offered by the new digital revolution (crowdfunding platforms, for instance). At the same time, moving away from the risk of self-interest to the benefit of shared prosperity, social investments, impact financing as well as emergent new markets (e.g. green and environmental finance) can identify in Islamic social finance their own conceptual transformation into an eco-logy (an “house discourse”) rooted in values of common welfare: values which do not simply “decorate” the exterior design of the market with an ethical touch, but “(re-)establish” from its foundation a new inner morality.

In the end, by looking at the “roots” of Islamic social finance as the foundation for a new “house” for the global marketplace, its transformative impact into the contemporary global economy can become a real prospect for researchers, practitioners and policy-makers “dealing with the challenges of a market where not only is diversity being perceived as a value to be fostered, but also as an important opportunity for a more inclusive welfare for everybody”.

This contribution to Wahed Online Halal Investing Journal takes inspiration from the introduction to the volume Cattelan, V. (2018, ed.), Islamic Social Finance: Entrepreneurship, Cooperation and the Sharing Economy (currently under publication by Routledge), and from the ideas originally expressed in Cattelan, V. (2014), “In the Name of God: managing risk in Islamic finance”, Eabh Working Papers Series, Paper no. 14-07 (available online at


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