Islamic Economy: Review and Evaluation
The concept of “Islamic economics” differs significantly from “Islamic finance”; the former is more of a belief than a reality. The latter—Islamic finance—is a successful invention that exists in practice through dozens or even hundreds of banks and financial institutions, employing thousands of workers and utilizing investment instruments accepted by religious authorities. Islamic finance has gained the satisfaction of millions of participants across the Islamic world through these financial institutions. However, “Islamic economics” as an academic subject has not demonstrated its academic rigor; it has not evolved into a science. This is because its foundation is faith-based, whereas economics took humanity thousands of years to become an independent discipline. As I explained previously, economics was not studied as an independent subject in universities until 1905, when Alfred Marshall introduced it at the University of Cambridge. Although it began to take shape after the publication of Adam Smith’s “The Wealth of Nations” in 1776, such development could not have occurred earlier, as economic theory could not evolve without international trade exchanges and government policies, which only reached reasonable intensity in the 18th century. Economics had to benefit from the social sciences and mathematics to carve out its own independent path. Its reliance on mathematical sciences was fundamental; without statistical studies and the analysis of economic indicators, economic vision remains unclear. In fact, many mathematical models and equations were developed by mathematicians who initially did not recognize their utility for economics, such as the Hungarian John von Neumann and the American John Nash. Nash himself was surprised to win the Nobel Prize in Economics, remarking, “But I am not an economist.” Thus, studying mathematics became essential for excellence in economics.
There is also significant overlap between sociology, psychology, and economics, particularly regarding what is known as “behavioral economics.” In 2002 and 2017, psychologists and behavioral economists won the Nobel Prize; Israeli Daniel Kahneman, a psychologist, won the Nobel Prize in Economics. Similarly, Richard Thaler won the Nobel Prize for his research in behavioral economics.
To date, the most prominent book on Islamic economics remains “Our Economics” by the late Muhammad Baqir al-Sadr (the first volume of which was published in 1960). Al-Sadr did not aspire to establish an Islamic economy that would compete with the positivist economics taught in universities; he acknowledged that this would require cumulative economic experience that Muslims had not yet achieved. Most publications on Islamic economics between 1960 and 1990 did not aim to compete with positivist economics but rather to reinforce Islamic identity in the face of the Marxist wave that emerged during that period. Al-Sadr was particularly concerned about the spread of Marxist thought in Iraq, so Islamic economic writings of that era were critical of communist ideology and rarely criticized capitalist thought.
In the last three decades, some research and publications on Islamic economics have emerged, most notably those presented by Dr. Munther Qahhaf and Dr. Jaafar Haji, both specialists in economics from Western universities. Both attempted to clarify their expertise and education in positivist economics to explain their perspectives on what Islamic economics might entail. However, what they presented stemmed more from a belief in the existence of an Islamic economy than from logical analysis. Qahhaf argues that Islam, as a religion, must have its own economic system based on the Quran and Sunnah, citing the verse: “Woe to those who give less [than due], who, when they take a measure from people, take in full. But if they give by measure or by weight to them, they cause loss. Do they not think that they will be resurrected? For a tremendous Day? The Day when mankind will stand before the Lord of the worlds?” Dr. Jaafar Haji, drawing on his economic studies, offered an advanced version of al-Sadr’s “Our Economics,” adding that the heart and intuition lead to knowledge that brings us to truth, relying on the verse: “And those who strive for Us – We will surely guide them to Our ways. And indeed, Allah is with the doers of good.”
I believe that Islamic distinction in economics comes from the contribution of Muslim economists to economic research presented globally to address crises and economic problems affecting the world as a whole, not just Islamic countries. Issues such as unemployment, improving production efficiency, and enhancing the social and economic status of the lower class are important to peoples regardless of their geographic or religious affiliation. Moreover, distinguished economists do not distinguish themselves by conducting research specific to a particular religion or nationality. It is notable that Jews have excelled in economics, but this is not due to their religious affiliation or concerns; rather, it is because they conducted economic research within their specialties at distinguished universities. For these reasons and others, specialization in Islamic economics is declining, despite the interest and achievements of Islamic finance, which has benefited from Western experts and financial institutions operating within the global economic sphere. In fact, many investment instruments used in Islamic banks were developed by Western financial institutions.
Dr. Hamed Al-Hamoud
