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Islamic Economics

Declared Purpose of Islamic Economics
The declared purpose of Islamic economics is to identify and establish an economic order that conforms to Islamic scripture and traditions. According to the Islamic economic system, the economy, like all other aspects of the Islamic “way of life,” should be managed in a way that allows it to contribute richly to the achievement of the major socio-economic goals of Islam, i.e., creating the “Islamic kingdom of God on earth.” The system should also continue to perform the usual functions that relate to its own special field and which other economic systems perform.

The Spread of Islamic Economics
The declared purpose of Islamic economics is to establish a new world economic order that conforms to Islamic scripture--the Qur’an--and Muslim tradition. (1) Its core positions took shape in the 1940s, and three decades later, efforts to implement them were under way in dozens of countries. (2) In Pakistan, Malaysia, and elsewhere, governments are now running centralized Islamic redistribution systems known as zakat.

More than sixty countries have Islamic banks that claim to offer an interest-free alternative to conventional banking. Invoking religious principles, several countries, among them Pakistan and Iran, have gone so far as to outlaw every form of interest; they are forcing all banks, including foreign subsidiaries, to adopt, at least formally, ostensibly Islamic methods of deposit taking and loan making. Attempts are also under way to disseminate religious norms of price setting, bargaining, and wage determination. And for every such initiative, others are on the drawing board.

From these developments one might infer that Islamic economics arose to advance an economic agenda. In fact, the doctrine emerged in late-colonial India as an instrument of identity creation and protection; at least initially, the economics of Islamic economics was merely incidental to its Islamic character.

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