Islamist Economics

References

• Islamic Economics Wikipedia Article

Notes

Islamic economics refers to the knowledge of economics or economic activities and processes in terms of Islamic principles and teachings. Islam has a set of special moral norms and values about individual and social economic behavior. Therefore, it has its own economic system, which is based on its philosophical world views and is compatible with the Islamic organization of other aspects of human behavior: social and political systems.

• Islamic economics is a broad field, related to the more specific subset of Islamic commercial jurisprudence. It is also an ideology of economics similar to the labor theory of value.
• Islamic commercial jurisprudence entails the rules of transacting finance or other economic activity in a Shari'a compliant manner, i.e., a manner conforming to Islamic scripture (Quran and sunnah).
• Early forms of capitalism are thought to have been developed in the Islamic Golden Age from the 9th century and later became dominant in European Muslim territories like Al-Andalus and the Emirate of Sicily.
• By the 1970s, Islamic Economics was introduced as an economic discipline in a number of institutions of higher learning throughout the Muslim world and the west.
• Advocates of Islamic economics generally describe it as neither socialist nor capitalist, but as a third way, an ideal mean with none of the drawbacks of the other two systems.

Descriptions and Definitions

• A consensus on the definition of Islamic economics has not yet emerged.
• Fiqh (religious law) has developed several traditional concepts having to do with economics. These included:
• • Zakat
  • • the charitable taxing of certain assets, such as currency, gold, or harvest, with an eye toward allocating these taxes to eight expenditures that are also explicitly defined in the Quran, such as aid to those in need
  • Gharar
  • • "uncertainty" . The presence of any element of excessive uncertainty, in a contract, is prohibited.
  • Riba
  • • "referred to as usury" is prohibited
• Hardly any Islamic text focuses on economics in the same way that we view it today.
• A number of scholars have noted the recentness of reflecting on economic issues in the Islamic world, and the difference between economics the social science based on data, and Islamic jurisprudence based on revealed truth.

History

Pre-Modern Thought

Classical scholars in the Muslim world did make valuable contributions to Islamic thought on issues involving production, consumption, income, wealth, property, taxation, land ownership, etc. since the 8th century.

• Abu Yusuf (798) wrote al Kharaj the return or revenue
• Ibn Khaldun (1406) is the most well known Islamic scholar who wrote about economical issues. He has been called the father of modern economics by IM Oweiss.
• • He wrote about social cohesion, which he cited as the cause of advancement of some civilizations.
  • His ideas about the benefits of the division of labor also relate to asabiyya, the greater the social cohesion, the more complex the successful division may be, the greater the economic growth.
  • He noted that the forces of supply and demand are what determines the prices of goods.
  • He believed that population growth was directly a function of wealth.
• Medieval Islamic economics appears to have somewhat resembled a form of capitalism, some arguing that it laid the foundations for the development of modern capitalism.

Property

• The Qur'an states that God is the sole owner of all matter in the heavens and the earth, but man is God's viceregent on earth and holds God's possessions in trust. Islamic jurists divide properties into public, state, and private categories.

Public Property

• Islam introduced the distinction between private property and public property and made the rulers accountable to the people according to M.A. Khan.

State Property

• State property includes certain natural resources, as well as other property that cannot immediately be privatized.
• During the life of Muhammad, one fifth of military equipment captured from the enemy in the battlefield was consisted state property.

Muhammad said Old and fallow lands are for God and His Messenger (i.e. state property), then they are for you. Jurists draw from this the conclusion that, ultimately, private ownership takes over state property.

Private Property

There is consensus among Islamic jurists and social scientists that Islam recognized and upholds the individual's right to private ownership.

Banking and Finance

• Islamic banking has been called the most visible practical achievement of Islamic economics, and the most visible mark of Islamic revivalism. BY 2009, there were over 300 shariah compliant banks and 250 mutual funds around the world, and around $2 trillion were sharia-compliant by 2014.
• Domination of the industry by debt-like instruments such as murabaha rather than risk-sharing products, has driven even some leading advocates and experts in Islamic banking (such as Muhammad Nejatullah Siddiqi) to talk about a crisis of identity of the Islamic financial movement

Criticism and Dispute

• Islamic economics has been criticized for:
• • its alleged incoherence, impracticality, and irrelevance, driven by cultural identity rather than problem solving
  • being a hodgepodge of populist and socialist ideas in theory and nothing more than inefficient state control of the economy and some almost equally ineffective redistribution policies in practice
  • In a political and regional context where Islamist and ulema claim to have an opinion about everything, it is striking how little they have to say about this most central of human
  • being little more than a mimicry of conventional economics embellished with verses of the Quran and sunnah
  • claiming to call for a return to Islamic practices that are actually an inverted tradition