The last of these three theses lies at the core of 'Islamic economics’, a contemporary school of thought whose stated goal is to restructure economic relations on the basis of fundamental Islamic teachings. Not all living Muslim economists subscribe to it, or even take it seriously. At least implicitly most of today’s Muslim economists treat economics as a secular domain. However, a vocal minority wants to ground economics in religion. This minority forms a component of the global movement known as Islamism or Islamic fundamen talism. The broader movement seeks to rebuild the entire social order according to presumed Islamic principles.
The basic argument of Islamic economics is simple: many verses of the Qur'an encourage effort and enrichment, and the economic prescriptions developed during Islam’s earliest period are ideally suited to economic devel opment. Specifically, Islam’s contract law, financial regulations, distributional instruments and behavioural norms provide an institutional framework con ducive to enrichment in a socially just way. For proof, say Islamic economists, one needs to look only at the impressive economic record of the first Islamic society in seventh century Arabia.4
Although little is known about the economic record ofthe earliest Muslims, it is abundantly clear that during the first few centuries of Islam regions under Muslim rule flourished economically. Also beyond doubt is that economic institutions assimilated or incorporated into Islamic law contributed to the observed economic growth. However, these indisputable facts leave open the
3 For one variant of this argument, see Muhammad Hussain, Development planning in an Islamic state (Karachi, 1987), p. 14.
4 Influential statements of the goals, methods and claims of Islamic economics include Umar Chapra, Islam and the economic challenge (Leicester, 1992); Aidit Ghazali, Development: An Islamic perspective (Petaling Jaya, Malaysia, 1990); Muhammad Abdul Mannan, Islamic economics: Theoryandpractice (Lahore, 1970); Sayyid Qutb, Socialjusticein Islam, trans. John D. Hardie (New York, 1970). For critiques of Islamic economics see Mohamed Aslam Haneef, Contemporary Islamic economic thought: A selected comparative analysis (Kuala Lumpur, 1995); Timur Kuran, Islam and mammon: The economic predica ments of Islamism (Princeton, 2004); Sohrab Behdad, 'Property rights in contemporary Islamic economic thought: A critical perspective’, Review of Social Economy, 47 (1989), pp. 185 211.
Possibility of growth inhibiting influences, at one time or another. In princi ple, the early Muslims might have been economically successful in spite of obstacles to development grounded in Islam. The primary source of economic advancement might have been the mixing ofcultures generated by conquests, conversions and political reorganisation. In any case, even if Islam promoted growth for a while, it obviously failed to ensure quick adaptations to later opportunities. Perhaps, then, Islam has been less conducive to economic development under certain conditions than under others.
Islamic economics rejects this interpretation out of hand. Indeed, it attrib utes all Muslim economic successes to institutional and moral changes insti gated by Islam from scratch, without building on pre Islamic structures or drawing on the experiences of non Muslims. By the same token, it ascribes all subsequent failures to forces that made Muslims become, after the brief age of felicity, progressively readier to depart from Islamic norms. If the Islamic world is currently poor, it says, the reason lies in aspirations, events and personalities that made Muslims stop practising their religion faithfully. The foregoing historical interpretation makes all accomplishments of Islamic civilisation after the early period even the splendours of Baghdad under Harun al Rash'id (r. 786 809) and of Istanbul under Suleyman the Magnificent (r. 1520 66) appear as degeneration. It leaves unaddressed why Muslims fell victim to corrupting influences. At least implicitly, moreover, it treats the ideal economy as static. The key to economic success, it holds, lies in identifying and preserving the institutions spelled out in the fundamental sources of Islam, rather than in optimising institutional responsiveness and flexibility.
Some Islamic economists go beyond denying the existence oflinks between Islam and the reality of the Islamic world’s present economic shortcomings. In addition, they downplay the West’s economic achievements. As they see it, the West’s economic expansion has induced vast economic inequalities as well as massive unhappiness, as evidenced by millions of Westerners depend ent on psychotherapy. As such, the economies of the West offer little worth emulating, and their evolution should not even be characterised as develop ment. The key to development worthy of the name lies in restoring Islamic economic patterns and returning to the pristine simplicity of the age of felicity.5
What such a revival would mean in practice is a matter of heated con tention. Nevertheless, there are basic assumptions and perceptions shared by
5 For the full blown argument, see Ahmad R. Haffar, 'Economic development in Islam in Western scholarship’, Islam and the Modern Age, 6, 2 (1975), pp. 5 22 and 6, 3, pp. 5 29.
Almost all contributors to Islamic economics. In a properly Islamic economy, they say, the individual leads a distinctly Islamic way of life; his entire existence is governed by Islamic rules and regulations family, marriage, dress, entertainment, education, politics and, of course, economics. In each of these domains, they believe, there is a clear demarcation between Islamic and un Islamic behaviours. Still another perception is that the ongoing march of history favours the spread of Islamism. Earlier generations of Islamists had predicted that capitalism and communism, the two major economic systems of the modern era, were both doomed to fail, because in different ways each bred injustice, inequity and inefficiency. Capitalism offers broad freedoms but is rife with exploitation. Socialism provides relatively more equality but limits personal freedoms and denies the individual respect. One part of this predic tion has already been borne out with the collapse of communism in 1991. Capitalism is next, say Islamic economists; it will collapse like a pack of cards as soon as someone exposes its vulnerability. The global economy is all interconnected, and if one of its components gets destroyed, panic will set in, bringing down the rest.
The economic system that Islamic economics proposes as an improvement has three distinguishing features, each ostensibly based on fundamental Islamic teachings and early Islamic practices. The first is an Islamic banking system that avoids interest, considered to be prohibited explicitly and unequivocally by the Qur'an. The establishment of Islamic banking would eliminate, it is believed, a huge source of exploitation in the contemporary global economy; it would also unleash hidden reservoirs of economic crea tivity. Second, there would be an Islamic redistribution system, zakdt, based on principles of charity and sharing found in the Qur'an. This system would dampen inequalities and guarantee everyone a dignified existence. Finally, the norms of economic behaviour thought to have prevailed in early Islam would be reinstituted, to promote fairness and honesty in the marketplace. In so far as these norms were followed, confidence in the economic system would improve, stimulating investment and growth.
World History
