The Prophet’s ﷺ Market – An Incredible Economic Revolution
What were the major outcomes of the establishment of the Prophet’s ﷺ marketplace (Souq al-Nabi ﷺ)?
The existing markets
When the Prophet ﷺ arrived in Madinah, he sought to understand the city’s economic structure. At the time, there were three markets, the largest of which was operated by the Jewish tribe of Banu Qainuqa. It functioned as the commercial hub of Madinah, the equivalent of a city centre or large mall.
However, the Prophet ﷺ was not satisfied with what he saw. Having spent years in trade himself, from his youth as a shepherd to his later experience as a merchant known for honesty and fairness, he understood business well. He had negotiated deals, handled goods, and upheld high standards of quality and integrity. He recognised immediately that Madinah’s existing markets were plagued by unethical practices.
Unethical market practices
The main market was rife with corruption. Interest (riba) was charged openly. Traders deceived customers, manipulated prices, and engaged in dishonest schemes. Seeing this, the Prophet ﷺ told his companions plainly: “This is not your market.”
He realised that true reform required financial independence. Without an ethical and autonomous marketplace, the new Muslim community would remain vulnerable and dependent on unfair systems.
Establishing a new market
In response, the Prophet ﷺ took a bold step: he founded an entirely new market, Souq al-Manakh, later known as Souq al-Nabi ﷺ. Initially, it measured roughly 500 by 100 metres, and later expanded to 1200 by 500 metres. The Prophet ﷺ personally indicated its location by tracing its outline in the sand with his foot.
He chose a strategic position near the entrance of Madinah, in an open area where no previous market had existed. The new marketplace was to be a tax-free zone, unlike the Jewish markets which imposed entry fees, rental charges, and commercial dues. Traders were forbidden from constructing permanent buildings; whoever arrived first each day could claim their spot. This ensured fairness and accessibility for all.
The Prophet’s ﷺ decision was economically revolutionary. It created healthy competition, drew merchants to fairer conditions, and broke the monopoly that had long constrained Madinah’s trade.
Establishing ethical market practice
Now that the Prophet ﷺ oversaw the market, he could ensure that it operated according to the principles of Shariah. The new marketplace became a centre of transparency, justice, and ethical conduct, free from cheating, swearing false oaths, deceit, and manipulation.
One of the most common tricks among traders had been the manipulation of scales and measures, short-changing customers while pretending to sell full weight. In this context, Allah revealed Surah al-Mutaffifin, a powerful condemnation of commercial fraud:
وَيْلٌ لِّلْمُطَفِّفِينَ، الَّذِينَ إِذَا اكْتَالُوا عَلَى النَّاسِ يَسْتَوْفُونَ، وَإِذَا كَالُوهُمْ أَو وَّزَنُوهُمْ يُخْسِرُونَ
“Woe to those who give less than due, who, when they take a measure from people, take in full, but when they give by measure or weight to others, they cause loss.”
(Surat al-Mutaffifin, 83:1–3)
Fairness, justice, and new standards
To eliminate this injustice, the Prophet ﷺ introduced reliable systems of measurement. Madinah, being an agricultural society, already used the Sa‘ for large quantities, but lacked precision for smaller measures. Drawing from Makkah’s commercial practices, the Prophet ﷺ standardised weights and measures and defined fair currency use.
He also clarified which types of transactions were permissible and which violated Shariah principles. Some pre-Islamic contracts relied on chance or deception, such as the game where a customer would throw a stone and pay for whatever item it landed on. The Prophet ﷺ banned such transactions for their inherent injustice and uncertainty (gharar).
In essence, he abolished exploitative contracts, corrected ambiguous ones, and retained only those that met the standards of fairness and clarity. Later Qur’anic revelations would expand upon these principles, forming the foundation of Islamic commercial jurisprudence.
Protecting suppliers and promoting fair competition
The Prophet ﷺ also addressed unethical behaviour towards suppliers. Some merchants would meet incoming Bedouin caravans outside Madinah and purchase their goods at very low prices before they reached the market, a practice known as talaqqi al-rukban. This deprived the sellers of a fair return and distorted market prices.
The Prophet ﷺ prohibited this and other forms of manipulation, ensuring that rural traders had equal opportunity to sell their goods in the open market. This established justice not only among buyers but also between urban and rural communities.
The Prophet ﷺ said:
التَّاجِرُ الصَّدُوقُ الأَمِينُ مَعَ النَّبِيِّينَ وَالصِّدِّيقِينَ وَالشُّهَدَاءِ
“The truthful and trustworthy merchant will be with the prophets, the truthful, and the martyrs.” (Tirmidhi)
Through this market, the Prophet ﷺ created an environment that rewarded honesty, minimised exploitation, and ensured that wealth circulated justly among people. At last, the economy was not locked within the grip of elite classes or tribal groups.
The establishment of the Prophet’s ﷺ marketplace was a defining moment in Islamic economic history. It represented the restructuring of trade in Madinah as well as the formation of a new economic identity based on ethical principles. It enabled new businesses to flourish. It also created a blueprint for economic policies for all times.
Its outcomes can be summarised into seven main categories, each revealing an important dimension of how Islam reformed economic life and made it more just and inclusive.
FIRST AXIS: ECONOMIC REVOLUTION
1. Ending economic monopoly
Before the Prophet’s ﷺ arrival in Madinah, the city’s markets were dominated by the three Jewish tribes, especially Banu Qaynuqa. They controlled trade routes, imposed taxes, and dictated market practices. Local Arab tribes like Aws and Khazraj operated under these restrictions and rarely competed on equal terms.
When the Prophet ﷺ established an independent marketplace, several key transformations occurred:
- The old monopolies collapsed as trade shifted to a new market built on fairness and freedom.
- Wealth and lineage no longer gave people special power — success now depended on honesty, effort, and skill.
- Exploitative taxes and price manipulation by powerful groups were abolished.
The Qur’an condemns dishonest trade and calls for equity:
وَيْلٌ لِّلْمُطَفِّفِينَ، الَّذِينَ إِذَا اكْتَالُوا عَلَى النَّاسِ يَسْتَوْفُونَ، وَإِذَا كَالُوهُمْ أَو وَّزَنُوهُمْ يُخْسِرُونَ
“Woe to those who give less [than due], who, when they take by measure from people, take in full; but when they give by measure or weight to them, they cause loss.” (Surat al-Mutaffifin, 83:1–3)
The Prophet ﷺ restored the dignity of commerce. This marked Madinah’s first major economic liberation, redistributing wealth and reviving moral integrity in trade.
2. Freeing the market from taxes and tolls
Prior to the Prophet’s ﷺ reforms, Madinah’s markets were tightly controlled by wealthy merchants and tribal authorities who levied various charges:
- Entrance fees to participate in trading
- Commercial dues on goods sold
- Rental fees for market space
This system restricted opportunity and allowed a few to profit at the expense of many. When the Prophet ﷺ founded Souq al-Manakh, he abolished these charges and declared:
لَا يُؤْخَذُ مِنْ سُوقِ الْمُسْلِمِينَ خَرَاجٌ وَلَا عُشُورٌ
“No tax or tolls/levies are to be taken from the market of the Muslims.”
This principle of free and fair trade opened the market to all, removing hidden costs and unjust restrictions.
The Qur’an reinforces this ethic:
يَا أَيُّهَا الَّذِينَ آمَنُوا لَا تَأْكُلُوا أَمْوَالَكُم بَيْنَكُم بِالْبَاطِلِ إِلَّا أَن تَكُونَ تِجَارَةً عَن تَرَاضٍ مِّنكُمْ
“O you who believe, do not consume one another’s wealth unjustly, but only through trade conducted by mutual consent.” (Surat al-Nisa’, 4:29)
The Prophet ﷺ created an economic environment based on mutual consent and justice. This transformed commerce from a system of oppression into one of empowerment, enabling all residents of Madinah to participate with dignity and equal opportunity.
3. Establishing the first ‘Free Market’
The Prophet Muhammad ﷺ established what can rightly be called the first free market in Islamic history – a space that belonged to everyone and was controlled by no one. The Souq al-Nabi ﷺ was free from ownership, fees, and domination, allowing traders from all backgrounds to buy and sell under equal conditions.
He prohibited any claim of possession or permanent structures:
لَا يُضْرَبُ عَلَيْهِ خِبَاءٌ وَلَا يُبْنَى فِيهِ بِنَاءٌ
“No tent shall be pitched and no building shall be constructed in this market.”
This ensured the market remained a public trust, accessible to Muslims and non-Muslims alike.
Compared to the heavily regulated and elite-controlled markets of Persia and Byzantium, the Prophet’s ﷺ marketplace was revolutionary. It reflected the Qur’anic principle:
وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا
“Allah has permitted trade and forbidden usury.” (Surat al-Baqarah, 2:275)
Trade was not just allowed — it was encouraged, but within a framework of taqwa and accountability to Allah. This ensured that economic freedom did not become a licence for exploitation.
The free market of Madinah laid the foundation for the Islamic economic system, showing that Islam supports personal enterprise and wealth creation, but only within the bounds of justice, honesty, and social responsibility.
4. Enabling economic growth for migrants and entrepreneurs
When the Muhajirun (the migrants from Makkah) arrived in Madinah after the Hijrah, they had left behind their homes, businesses, and wealth in Makkah. Many of them, including well-known companions such as ʿAbdur-Rahman ibn ʿAwf, Abu Bakr al-Siddiq, and ʿUthman ibn ʿAffan (may Allah be pleased with them all), came with little or no material possessions.
The Prophet ﷺ understood that their integration and stability in Madinah required not only social and spiritual support but also economic empowerment. The newly established market of the Prophet ﷺ became the perfect avenue for this. It gave the Muhajirun, who were skilled in trade and enterprise, an immediate opportunity to:
- Rebuild their livelihoods from scratch without debt or obligation.
- Start new businesses and participate in open commerce free from barriers or monopolies.
- Contribute to the local economy, generating income that supported both their families and the wider Muslim community.
A famous example is that of ʿAbdur-Rahman ibn ʿAwf. When he first arrived in Madinah, he was offered wealth by his brother in faith from the Ansar, but he declined, saying:
“May Allah bless you in your wealth and family. Just show me where the market is.”
He went to the new marketplace, traded modestly, and within a short time became one of the most successful merchants in Madinah, known for his honesty, generosity, and support for the Prophet’s ﷺ mission.
The Qur’an praises such believers who worked diligently and spent from what Allah had provided:
الَّذِينَ يُنفِقُونَ أَمْوَالَهُم بِاللَّيْلِ وَالنَّهَارِ سِرًّا وَعَلَانِيَةً فَلَهُمْ أَجْرُهُمْ عِندَ رَبِّهِمْ
“Those who spend their wealth by night and day, secretly and openly, will have their reward with their Lord.” (Surat al-Baqarah, 2:274)
The Ansar (the host community, who absorbed the migrants from Madinah) also benefited from this new economic order. Instead of maintaining an unequal system where wealth remained in a few hands, the Prophet’s ﷺ marketplace fostered mutual cooperation and shared prosperity.
The market became a place where brotherhood turned into real cooperation. The Muhajirun brought their skills and business experience, while the Ansar provided support, resources, and partnership. Together, they built the foundation of an independent Muslim economy that supported the growing community and strengthened the new state.
This inclusive model of economic participation, allowed Madinah to thrive – materially, socially, and spiritually. It showed that economic growth in Islam is achieved through honest work, collaboration, and barakah (divine blessing).
5. Creating continuous economic activity in Madinah
The establishment of the Prophet’s ﷺ marketplace transformed Madinah from a modest oasis town into a thriving centre of trade and production. What had once been a limited, locally focused economy became an active commercial hub attracting traders from across Arabia.
The marketplace quickly evolved into:
- A commercial hub where merchants, craftsmen, and farmers exchanged goods daily.
- A meeting point for caravans arriving from Yemen, Syria, and other regions.
- A centre of supply providing essential goods to the local population and the growing Muslim community.
- A driver of prosperity, enabling new forms of business, partnership, and cooperation.
Madinah thus became, after Makkah, the most significant trade centre in the Arabian Peninsula. Its market operated not just as a place of buying and selling, but as a living institution of social cohesion and economic independence.
The Qur’an highlights the importance of trade as a legitimate and noble pursuit:
لَيْسَ عَلَيْكُمْ جُنَاحٌ أَن تَبْتَغُوا فَضْلًا مِّن رَّبِّكُمْ
“There is no blame upon you for seeking the bounty of your Lord.” (Surat al-Baqarah, 2:198)
Through this market, the Prophet ﷺ gave new meaning to this verse, turning commerce into an act of worship and service. Traders were reminded that while profits sustain worldly life, the ultimate purpose of trade is to seek Allah’s pleasure by dealing justly and providing benefit to others.
As the city’s economy grew, wealth began to circulate more widely, and Madinah’s self-sufficiency increased. The market supplied the Muslim army, supported families, and strengthened community institutions such as the mosque and the treasury (Bayt al-Mal).
This constant flow of trade and production generated a stable rhythm of life in Madinah. Work was not divorced from faith, rather it was God-centred with the accompanying understanding of the duty to benefit the wider community.
By establishing continuous and ethical economic activity, the Prophet ﷺ ensured that Madinah’s prosperity was built not on exploitation or taxation.
SECOND AXIS: LEGAL OUTCOMES
6. Laying down the foundations of Islamic Commercial Law
The Prophet’s ﷺ Marketplace was not only an economic initiative, but it was also the birthplace of Islamic commercial law (fiqh al-muʿamalat). Within this market, the Prophet ﷺ established the essential legal and ethical principles that would later form the basis of Islamic economic jurisprudence across the Muslim world.
By personally overseeing trade and appointing market inspectors (muhtasibun) to uphold fairness, the Prophet ﷺ established clear rules for what was lawful and unlawful in business. These principles protected both buyers and sellers, ensuring that trade benefited everyone and stayed free from exploitation.
Among the key foundations established in Souq al-Nabi ﷺ were:
- Prohibition of usury (riba):
The Prophet ﷺ firmly outlawed all forms of unjust increase in trade or lending, laying the groundwork for an economy based on fairness rather than exploitation.
وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا
“Allah has permitted trade and forbidden usury.” (Surat al-Baqarah, 2:275)
- Prohibition of fraud and deception (ghishsh and tadlis):
Traders were required to disclose faults in their goods and maintain transparency. The Prophet ﷺ said:
مَنْ غَشَّ فَلَيْسَ مِنَّا
“Whoever deceives is not one of us.” (Muslim)
- Prohibition of hoarding (ihtikar):
Stockpiling essential goods to inflate prices was forbidden. The Prophet ﷺ said:
لَا يَحْتَكِرُ إِلَّا خَاطِئٌ
“Only the sinful person hoards.” (Muslim)
- Prohibition of deceptive pricing (najsh):
Artificially raising prices through false bidding was strictly prohibited to preserve fairness and trust. - Prohibition of intercepting rural sellers before they reached the market:
This ensured that sellers from outside Madinah could sell at fair market value without being exploited by middlemen. - Regulation of weights and measures:
The Prophet ﷺ ordered accurate scales and measures, upholding the Qur’anic command:
وَأَوْفُوا الْكَيْلَ وَالْمِيزَانَ بِالْقِسْطِ
“Give full measure and weight in justice.” (Surat al-Anʿam, 6:152)
- Rules of buyer-seller options (khiyar):
The Prophet ﷺ established the right of choice for both parties before completing a sale, ensuring voluntary consent. - Profit is justified only by bearing risk. (al-kharaj bil-daman):
This foundational rule means that the right to profit only comes when coupled with the risk of loss. The Prophet ﷺ said:
الْخَرَاجُ بِالضَّمَانِ
“Profit is justified only by bearing risk.” (Tirmidhi)
Together, these rules became the foundation of Islamic commercial law, balancing trade freedom with moral responsibility. Each one aimed to prevent injustice, exploitation, and corruption.
7. Birth of the institution of market regulation (hisbah)
In the Prophet’s ﷺ marketplace, justice was not left to chance. The Prophet ﷺ himself acted as the first market inspector (muhtasib), personally overseeing trade, checking the quality of goods, and making sure no one was cheated or treated unfairly.
Reports mention that the Prophet ﷺ would walk through the market, inspecting stalls and speaking directly to traders. Once, he placed his hand inside a pile of grain and found that it was wet beneath. He said:
مَا هَذَا يَا صَاحِبَ الطَّعَامِ؟
“What is this, O seller of grain?”
The man replied, “It was rained on, O Messenger of Allah.”
The Prophet ﷺ said:
أَفَلَا جَعَلْتَهُ فَوْقَ الطَّعَامِ كَيْ يَرَاهُ النَّاسُ، مَنْ غَشَّ فَلَيْسَ مِنَّا
“Why did you not put it on top so that people could see it? Whoever deceives is not one of us.” (Muslim)
Through his direct supervision of trade, the Prophet ﷺ established the basis for hisbah, a system of ethical and market regulation that later became a lasting feature of Islamic governance.
The Prophet ﷺ also appointed others, such as Saʿid ibn al-ʿAs and later ʿUmar ibn al-Khattab, to act as market supervisors. Their duties were to ensure honesty, prevent fraud, and uphold fair trade, duties later formalised under the title of al-Muhtasib during the Umayyad, Abbasid, and Ottoman periods.
The institution of Hisbah became a cornerstone of Islamic public life, representing the Qur’anic command:
وَلْتَكُن مِّنكُمْ أُمَّةٌ يَدْعُونَ إِلَى الْخَيْرِ وَيَأْمُرُونَ بِالْمَعْرُوفِ وَيَنْهَوْنَ عَنِ الْمُنكَرِ
“Let there be among you a group who call to what is good, enjoin what is right, and forbid what is wrong.” (Surat Al ʿImran, 3:104)
From this early beginning, hisbah evolved into a sophisticated system of public regulation that governed not only markets but also public morals, city cleanliness, fair pricing, and social justice, ensuring that Islamic ethics remained active in every aspect of daily life.
THIRD AXIS: SOCIAL OUTCOMES
8. Establishing social equality within the market
The Prophet’s ﷺ Marketplace introduced a radical social shift for seventh-century Arabia. In an age where markets were divided by tribe, status, and wealth, the Souq al-Nabi ﷺ became a symbol of social equality and economic inclusion.
The market:
- Belonged to no tribe or authority, it was a public space for the entire community.
- Favoured no class or elite, everyone traded under the same rules.
- Imposed no hierarchy, all participants stood on an equal footing before Allah.
In this market, slaves and free men, migrants and locals, the rich and the poor could all buy and sell side by side. There was no special privilege, no exclusive rights, and no inflated status based on lineage or wealth.
The Prophet ﷺ said:
وَالنَّاسُ بَنُو آدَمَ وَخَلَقَ اللَّهُ آدَمَ مِنْ تُرَابٍ
قَالَ اللَّهُ : يا أَيُّهَا النَّاسُ إِنَّا خَلَقْنَاكُمْ مِنْ ذَكَرٍ وَأُنْثَى وَجَعَلْنَاكُمْ شُعُوبًا وَقَبَائِلَ لِتَعَارَفُوا إِنَّ أَكْرَمَكُمْ عِنْدَ اللَّهِ أَتْقَاكُمْ إِنَّ اللَّهَ عَلِيمٌ خَبِيرٌ.
“People are children of Adam and Allah created Adam from the dust. Allah said: O you people! We have created you from a male and a female, and made you into nations and tribes, that you may know one another. Verily, the most honorable of you with Allah is the one who has most Taqwa. Verily, Allah is All-Knowing, All-Aware (49:13).” (Tirmidhi)
This principle came to life in the marketplace, where people were valued for their honesty, skill, and effort, not their tribe or status. By removing all class and tribal barriers, the Prophet ﷺ made trade a means of equality. The market became a place where everyone could meet, work together, and respect one another.
This brought a major social change to Madinah, ending old divisions and showing that Islam’s message of equality reaches beyond prayer to every part of daily life, including trade and society.
The Prophet’s ﷺ Market was thus a living example of the Qur’anic ideal:
إِنَّ أَكْرَمَكُمْ عِندَ اللَّهِ أَتْقَاكُمْ
“Indeed, the most honoured of you in the sight of Allah is the most righteous among you.” (Surat al-Hujurat, 49:13)
9. Reducing social gaps between Muhajirun and Ansar
Before the Prophet ﷺ established the new market, Madinah’s economy was largely agricultural. The Ansar (the host community) owned orchards, farmland, and date groves, while the Muhajirun (the emigrants from Makkah) were primarily merchants and traders. When the Muhajirun arrived after the Hijrah, they had left behind all their wealth and property, while the Ansar had resources but little experience in commerce.
The Prophet ﷺ knew that for the new community to succeed, they needed not only faith-based brotherhood but also to work and earn together. The establishment of Souq al-Nabi ﷺ made this possible in a natural and productive way.
The marketplace enabled:
- Working together: The Muhajirun used their trading skills to boost Madinah’s economy, while the Ansar gained experience and new skills through partnership.
• Fair partnerships: The market encouraged joint ventures. The Muhajirun brought business knowledge, and the Ansar offered local connections and resources.
• Building bonds: Daily trade helped them understand and respect each other. The brotherhood (ukhuwwah) the Prophet ﷺ built became real through shared work, shared profit, and shared purpose.
This balance between the two groups was one of the keys to the success of the early Muslim community. The Qur’an beautifully describes this spirit of generosity and solidarity:
وَيُؤْثِرُونَ عَلَى أَنفُسِهِمْ وَلَوْ كَانَ بِهِمْ خَصَاصَةٌ
“They give [others] preference over themselves, even though they too are in need.” (Surat al-Hashr, 59:9)
10. Enhancing economic solidarity
As trade in the Prophet’s ﷺ Marketplace flourished, the effects were felt across every layer of the Muslim community. The increase in lawful and ethical commerce naturally led to a rise in charitable giving and social welfare.
With the growth of trade:
- Almsgiving (sadaqah) became more frequent, as merchants and traders shared their profits with the poor and needy.
- Zakat resources expanded, providing a stable and transparent financial base for the developing Muslim state.
- The public treasury (Bayt al-Mal) was strengthened, allowing for the funding of community services, defence, and public welfare.
- The Muslim community grew more self-reliant, reducing dependence on non-Muslim economic structures and building internal resilience.
This system reflected the Qur’anic ideal that wealth should not remain locked among the rich:
كَيْ لَا يَكُونَ دُولَةً بَيْنَ الْأَغْنِيَاءِ مِنكُمْ
“So that it may not circulate only among the wealthy among you.” (Surat al-Hashr, 59:7)
By linking personal gain to the wellbeing of others, the Prophet ﷺ turned earning into an act of worship and service. As the community’s wealth grew, so did its spiritual and moral strength. Prosperity led not to pride or greed, but to gratitude and generosity. Through this balance, economic solidarity became a key feature of early Muslim society. The market was more than a place of trade; it was a means of strengthening the Ummah’s unity and compassion.
FOURTH AXIS: POLITICAL OUTCOMES
11. Building independent economic sovereignty
Before the establishment of the Prophet’s ﷺ Market, the Muslims were economically dependent on external systems, particularly the Jewish markets of Madinah and the tax regimes of local tribes. These markets not only controlled the flow of goods but also imposed taxes and tolls that disadvantaged ordinary people.
By creating an independent, fair, and open market, the Prophet ﷺ laid the foundation of economic sovereignty for the Muslim community. The new market was:
- Free from Jewish control.
- Unaffected by tribal taxation.
- Independent of external financial influences.
This independence gave Muslims full control over their economic life for the first time. It allowed the community to manage its own resources, circulate wealth fairly, and build a self-sufficient economy aligned with divine principles.
This marked a decisive step in establishing the Muslims as a politically and economically independent nation, no longer reliant on others for their sustenance, trade, or stability.
12. Strengthening the Prophet’s ﷺ political position
The Prophet’s ﷺ Marketplace also had significant political consequences. Economic independence soon translated into political stability and authority.
Through the market:
- The Muhajirun gained economic strength, turning from dependents into contributors.
- Muslim wealth increased, funding communal needs and state affairs.
- Jewish economic leverage weakened, as the monopoly they once held dissolved.
- The Prophet’s leadership was consolidated, as he became both the moral and economic centre of Madinah.
This new balance of power gave the Islamic state independence. The community was no longer dependent on outside markets or political powers. Its economy was supported from within, through trade, partnerships, and zakat. It allowed the Prophet ﷺ to lead freely, without outside pressure or compromise.
This independence later enabled the Muslims to fund their defence, support public welfare, and sustain military and political expansion beyond Madinah.
The market of the Prophet ﷺ thus became the economic backbone of the state, providing the material stability that allowed faith, governance, and civilisation to flourish side by side.
FIFTH AXIS: CIVILISATIONAL OUTCOMES
13. Introducing a new economic model to the ancient world
The market of the Prophet ﷺ represented a complete economic paradigm shift in the history of human civilisation. For the first time, a marketplace was established that blended economic freedom with moral responsibility. This was a new approach – the empires of the time and the tribal systems of Arabia had not achieved this.
The Prophet’s ﷺ Market combined the following core principles:
- Economic freedom: Everyone could trade and participate without restriction or control by a ruling elite.
- Moral regulation: Honesty, trust, and fairness were obligatory, not optional.
- Social justice: The market was open to the rich and poor alike, without privilege or discrimination.
- Prohibition of exploitation: All forms of deceit, manipulation, and monopoly were forbidden.
- Equality: Every person, regardless of tribe, lineage, or wealth, had equal standing before Allah.
- Prohibition of usury (riba): The economy was cleansed of unjust gain and interest-based transactions.
This model was unprecedented in the known world. In Persia and Rome, trade was heavily regulated by state monopolies; markets served the ruling classes and the military elite. In pre-Islamic Arabia, tribal groups controlled trade routes and imposed levies. Even in Yemen, where trade was advanced, it remained confined to those with influence and power.
By contrast, the Islamic market established by the Prophet ﷺ introduced a balanced system, one that protected both individual enterprise and collective welfare, guided by divine ethics.
The Qur’an declares this balance clearly:
كَيْ لَا يَكُونَ دُولَةً بَيْنَ الْأَغْنِيَاءِ مِنكُمْ
“So that it may not circulate only among the wealthy among you.” (Surat al-Hashr, 59:7)
14. Creating a new “market culture”
Beyond legal and structural reforms, the Prophet ﷺ cultivated a moral culture of trade that reshaped people’s behaviour and attitudes toward wealth and business.
In this new market culture, traders learned:
- Honesty as a spiritual obligation, not merely a social expectation.
- Transparency in all dealings, full disclosure of product quality and price.
- Accurate weights and measures, as commanded by Allah:
وَأَوْفُوا الْكَيْلَ وَالْمِيزَانَ بِالْقِسْطِ
“Give full measure and weight in justice.” (Surat al-Anʿam, 6:152)
- Fair dealing, ensuring that no one was wronged or misled.
- Ethical competition, where profit was sought through excellence, not deception.
The Prophet ﷺ said:
رَحِمَ اللَّهُ رَجُلًا سَمْحًا إِذَا بَاعَ، وَإِذَا اشْتَرَى، وَإِذَا اقْتَضَى
“May Allah have mercy on a man who is gentle when he sells, gentle when he buys, and gentle when he demands his due.” (Bukhari)
This moral transformation produced a distinct market identity, an Islamic market culture that promoted compassion, justice, and God-consciousness over greed and individualism.
Over time, this culture became part of the Islamic civilisational identity, influencing markets from Andalusia to Central Asia, as well as South East Asia to the Far East. Muslim traders carried not only goods but also values, honesty, integrity, and fairness, which became a hallmark of Islamic civilisation and a reason for the spread of Islam across the world.
SIXTH AXIS: URBAN AND CIVIC OUTCOMES
15. Establishment of the first central commercial district in Madinah
The Prophet’s ﷺ market became the centre of Madinah’s economic and social life. It was more than a place to buy and sell. It was:
- The main hub for trade in the city
- A gathering spot where people shared goods, news, and advice
- A space that promoted fairness, cooperation, and justice
It was Madinah’s first public market, where trade helped both the community’s needs and spiritual growth.
16. Development of urban space around the mosque and market
The close proximity between the Prophet’s ﷺ Mosque (Masjid al-Nabi) and the marketplace shaped the very urban structure of Madinah. This close connection reflected the way Islam unites faith with everyday life.
As a result:
- Settlements expanded around the mosque and market, creating the city’s first organised civic core.
- Roads and pathways developed to connect trade routes to the market, facilitating access and transport.
- Commercial routes strengthened, linking Madinah to major caravan networks from Yemen, Syria, and the Red Sea.
This combination of spiritual and economic centres – the mosque and the market – became the model for city planning across the Islamic world. In every new Muslim city, from Kufa and Basra to Cairo and Cordoba, the central mosque and public market stood side by side, showing the balance between worship and daily responsibility.
By establishing this dual centre in Madinah, the Prophet ﷺ set the pattern for Islamic urban life, where prayer and trade worked in harmony. The goal was to have communities that were spiritually strong, socially fair, and economically active.
SEVENTH AXIS: INTELLECTUAL AND HUMAN OUTCOMES
17. Affirming the concept of regulated economic freedom
Islam does not reject or suppress commerce; it refines and elevates it. This balance between freedom and accountability is expressed in the Qur’an:
وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا
“Allah has permitted trade and forbidden usury.” (Surat al-Baqarah, 2:275)
The Prophet’s ﷺ Marketplace was the first living model of this principle. Traders could prosper, but only within the boundaries of honesty, transparency, and compassion.
The Prophet ﷺ introduced what we now call regulated economic freedom, which is central to Islamic economic thought. This idea still sets Islamic finance apart today from both uncontrolled capitalism and overly restricted state systems.
18. Transforming the market into a “moral school”
The Prophet’s ﷺ market wasn’t just for buying and selling — it was a place to learn and grow.
- People practiced honesty, humility, and generosity in everyday trade.
- Islamic laws were applied and refined through real-life situations.
- Traders learned patience, sincerity, and good character in how they dealt with others.
- Everyone, rich or poor, traded as equals, guided by faith and fairness.
The Prophet ﷺ said:
إِنَّمَا بُعِثْتُ لِأُتَمِّمَ مَكَارِمَ الْأَخْلَاقِ
“I was sent only to perfect noble character.” (Ahmad)
This transformation of the market into a moral space remains one of the most powerful parts of the Prophet’s ﷺ legacy.
It became the foundation of a civilisation that integrated the moral, legal, social, and political principles of Islam into a single living system.
Its influence continued through the Prophetic era, the Rashidun Caliphate, and the great Islamic empires, Umayyad, Abbasid, and Ottoman, each of which developed its economic life on the same principles first established in Souq al-Nabi ﷺ.
This legacy gave birth to what is now recognised as the Islamic market system, a system that combines freedom with responsibility, profit with compassion, and trade with faith.
It remains, to this day, a model for how economic life can reflect the highest values of justice, honesty, and mercy, the values taught and lived by the Prophet Muhammad ﷺ.
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