Drawing upon the Legacy

The study of fiqh by professional economists is proving to be productive. One recent example is a reclassification of factors of production on the basis of how workers are rewarded in accordance with Islamic law, namely, whether they are paid contractual wages or whether they share in the profits, and may thus be liable to losses. This classification places wage labor, land, buildings, and machinery in one group. Financial capital, the entrepreneur, and land and physical capital whose owners wish to supply them on a profit-sharing basis rather than for hire are placed in the other group. This classification is more relevant to a study of income distribution than the conventional classification into land, labor, capital, and enterprise, which focuses on production. There is a general awareness now, on the part of Islamic economists, that the details of fiqh literature are a must in taking a stand on such issues as the stock and commodity exchanges, speculation and forward sales, and so forth.

Islamic economists often find themselves in a position in which they first have to listen to businessmen, bankers, and men of affairs and then have to discuss the problems posed by them with Shari’ah scholars with a view to advising the former. This can best be explained by the example of murabahahs which is a contract between A and B stating that B will buy a certain commodity for A, which A will purchase from B on deferred payment with a mark-up on the purchase price of B. The jurist bases his opinion on juridical texts relating to similar propositions. But the economist analyzes the issue in terms of its behavioral and institutional implications and its impact on the economic system as a whole. The businessmen's convenience as well as the society's overall interest both are involved. The point at issue is whether the contract is in harmony with the abolition of interest in letter as well as in spirit. The economist's analysis can help bridge the gap between conflicting juridical verdicts on the matter.

Other developments are also likely to contribute to the process of Islamization of economics. Dozens of doctoral theses are being written on subjects relating to Islamic economics. Those done in Western universities are mostly supervised by non-Muslim professors. The most popular subject has been Islamic banking, but economic thought and economic development have also been chosen in some cases. The interaction between professional notions and Islamic concepts during the process of writing these theses is likely to be productive. Those under preparation in the colleges of Shari’ah of various Islamic universities tend to focus on subjects of Islamic economics involving details of fiqh. There is some effort to provide the student with the supervision of a Shari’ah scholar as well as an economist. Here again the interaction between the student and the two supervisors is opening up new possibilities. The unique nature of Islamic economics, which must draw upon Shari’ah studies as well as economics, makes these experiments worthy of attention.

The teaching of Islamic economics in some colleges of Shari’ah at the bachelor's as well as the master's level is also bringing expertise in Shari’ah and economics closer together for both students and teachers. These programs provide an environment in which a synthesis between the Islamic legacy and modern knowledge in the field of economics may take place. The teaching of economics at modern universities in the Muslim world has not gone beyond a course on the economic system of Islam, the rest of the courses being taught along conventional lines. But even this preliminary step has opened a window through which a new awareness may enter that Islam is relevant for economics. The need for introducing Islamic concepts and values into the other economics courses is generally recognized but adequate literature for either teachers or students is not available. Some literature is being produced by the research centers and institutes serving Islamic economics, but it is not designed for the classroom. Sooner or later the university departments themselves have to take the initiative for meeting this need, in which task the research institutions may actively collaborate.

Practical steps toward the Islamization of the economy recently taken in some Muslim countries have provided the greatest impetus to Islamic economics. The main areas of action so far have been the collection and disbursement of zakat and the elimination of interest. Islamic economics has now become the concern of all: bankers, economists, businessmen, and even foreign investors are paying attention to it. Legislatures and ministries of finance, planning, commerce, etc. in some Muslim countries are dealing with issues necessitating the consultation of literature on Islamic economics. There is now some interaction among administrators, Shari’ah scholars, and economists in the wake of these new steps, which augurs well for the progress of Islamic economics.

The one issue all Muslim countries face is that of economic development. Islamic economics is appearing on the scene when imported strategies for development, whether capitalist or socialist, have failed. If Islamic economists have something to say on this subject they will get a hearing. Islamic economics also has the advantage of being the only indigenous school of economics in the Third World. Before the emergence of Islamic economics the Third World societies were obliged to opt for either socialist or capitalist economics, Muslim societies being no exception. For the first time, the Third World in general and the Islamic countries in particular are being introduced to a new approach to their economic problems, rooted in the ideas and cultural heritage of their own people. Given clarity of vision on the part of the spokesmen of this new approach, there is every chance of its being given a fair trial. But the sponsors of the new approach will have to be more specific and come forward with greater details.

Source: Dr. Muhammad Nejatullah Siddiqi, Economics An Islamic Approach. Republished with permission.