The Role of Government in Determining the Price of Goods and Services in the Economic System of Islam

Man has a social existence. His different needs and abilities limitation lead him to exchange in order to provide his needs. For this purpose, he exchanges his production surplus with other’s production surplus. In this case, the equal value of traded goods is to ensure justice. Today, the most transactions are paid with money. However, these questions come to existence when the price of goods and services increase and the purchasing power of payrolls decline in Islamic community: What will be the duty of government dealing with this situation? Can the government set prices for goods and services and monitor or control them? Will advising people to forbid the vices and to promote the virtues be enough? In this paper, the methodology is based on the documents and deductive reasoning, using original Islamic resources, such as Quranic verses and interpretations and also Imams’ Hadiths. This paper shows that Islamic governor should not intervene in pricing goods and services and the relative abundance and scarcity of goods and services, seasonal conditions and other factors determine prices freely. In the case of abnormal conditions, when the increase in the prices is led to people’s suffering, government should intervene in market affaires and pricing in order to prevent injustice to people. In a normal condition, the Islamic governor’s or his representative’s guidance to people to pay attention to their religious and ethical duties can be effective in ensuring the fairness of prices.