Islamic Economics The Polar Opposite of Capitalist Economics (Hardcover)

The collection of writings on Islamic Economics is so T large and diverse that it is impossible to cover it all in any survey of reasonable length. Some theme and some organizational principle is needed to restrict the literature to a manageable amount, I had several goals in mind when I set out to write this survey. These have guided both the choice of articles/ books to be reviewed and the way these are presented the style and substance. I will list these goals below, so that the reader is aware of the point of view from which this survey is written.
The first issue that arises is "What is Islamic Economics?" The literature contains several answers, and there is no consensus 1. Obviously, our view on this will greatly affect what we select as material to be reviewed. On this issue, my view is that the adjective "Islamic" can only be applied to what is solidly grounded in Quran and Hadith, and early Islamic traditions. This rules out a large amount of literature which makes superficial use of Islamic concepts, and is grounded in modern economics. At the same time, this approach creates a puzzle; since the field obviously originated in the twentieth century, how can it belong to the traditional corpus of Islamic knowledge?
This question is answered in Chapter 2. Briefly, we show how economics emerged as a separate discipline in the West as a response to certain European historical experiences. Similarly, teachings relevant to economics were isolated and collected to form the corpus of "Islamic Economics" in response to certain historical forces in Islamic societies. An important impetus was the need to counter assertions of the superiority of European systems of organizing economic affairs. Another spur to the development of the field was the need to develop interest free institutions. The answer to the puzzle is that "Islamic Economics" is the collection of Islamic teachings relating to economic affairs. These were not collected together and grouped as a separate field earlier, because these teachings are integrated into the body of Islamic teachings. Historical developments promoting Capitalism, Communism and Socialism as ideal economic systems forced Muslim thinkers to organize these teachings into a unified body of knowledge to create a genuine alternative to dominant Western models.
Western economic theory is presented as a "positive" theory: a collection of facts. In contrast, a central thesis of this paper is that social science is the study of human experience, and hence is strongly conditioned by history. Modern Western political, economic and social structures have emerged as a consequence of the repudiation of religion associated with the Enlightenment and are based on secular principles. Many of these are in fact inimical (antithetical) to Islamic principles, and cannot be adapted to an Islamic society. Muslim societies achieved freedom from colonial rule in the first half (towards the middle) of the twentieth century and have sought to construct institutions in conformity with Islam. The development of Islamic economics is part of this process of transition away from Western colonial institutions.
There is a line of thought which takes most of modern economic theory for granted, and then attempts to make modifications to bring it in line with Islamic principles. For example, after accepting the principle of utility maximization, we modify it to allow consumers to take Islamic goals, such as welfare in the Hereafter into account. Similarly, we analyze a standard IS-LM model, but replace the interest rate by a rate of profit. In this survey, we explicitly repudiate this approach to the development of Islamic Economics. We argue that the founding principles of Islamic Economics are entirely different from those upon which modern Western economics is based. There is no possibility of merging the two approaches, or of modifying Western economic theories to arrive at Islamic Economics. One of the goals of this survey is to highlight the contrast between these two approaches to economics.. Many areas where Islamic methodology differs from the dominant Western approach are discussed in the survey. One of these is the idea that scientific objectivity requires detached and neutral observation. Islam explicitly prohibits neutrality when injustices are observed. We are required to actively engage with the world to bring about the good, and to eliminate evil. We are also told that it is this process of engagement in the struggle to bring about the good which will create the required knowledge. This attitude informs this survey, which is not a neutral and unbiased report of what is contained in the literature. Rather it is an attempt to guide research towards fruitful directions, in accordance with views spelled out in the survey.
Asad Zaman