Islamic Economics and Finance, Then and Now: a Fiqhī-conomic Perspective on Its Doctrines and Debates*

Each economy functions within a particular social framework, defined by its moral philosophy and legal system. What makes an economy Islamic is Sharīah, the moral/legal discourses of the classical fuqahā’, which defined the economy of classical Islam, shaped its micro and macro institutions, and modulated its actual performance. This economy, which was virtually effaced during the age of European colonialism, has become, in the post-colonial era, both a symbol and basis for revivalist movements in their attempts to re-Islamicize their economies and polities. Taking the economy of classical Islam and its fiqhī-conomic foundations as a point of departure and reference, this study generally aims at overviewing the salient features of the modern Islamic economy, its performance criteria and theoretical justification as envisioned in Islamic Economics, viewed as a science. In particular, it critically narrates the mainlines of the ongoing debate among Muslim scholars, and juxtaposes three main doctrinal approaches advanced by Muslim economists, viewed from the vantage point of efficiency and justice, the sine qua non of that economy: namely, those of what I nominatively categorize as Reformist Traditionalists (Neo-Taqlīdīs), Islamic Modernists/Rationalists (Neo-Kalāmis), and Neo-Conservative Muslim Secularists. In Section 1, I present a portrait of what I have called the fiqhīeconomy of classical Islam: its philosophy of social harmony and related moral doctrine of economic justice as fairness (cadl qua qist), as well as its microand macro-economic institutions, and their underlying economic doctrine of socially embedded markets (sūqs) à la Polanyi (1957). It serves as a backdrop for dialogically representing the modern (especially the post-colonial) debate on Islamic Economics, and Islamic finance, in the following sections: In section 2, *This paper was read at the International Conference on Islamic Economics & Economies of the OIC Countries, organized by the International Islamic University Malaysia and Islamic Development Bank, Kuala Lumpur, 28–29 April, 2009. I gratefully, but not implicatively acknowledge the beneficial suggestions of the Editor, Dr. Ruzita Mohd Amin, and an anonymous referee of this Journal. International Journal of Economics, Management & Accounting 19, no. 1 (2011) 78 the two polar disputational groups, the Reformist Traditionalists vs. the Muslim Secularists; in section 3, the Islamic Modernists; and in 4 the study concludes by delineating some fundamental commonalities and differences in their respective doctrinal positions. In general, the approach I follow is historicist and comparative-institutionalist; and the mainline argument follows the timehonored classical method of induction by example à la Aristotle. As such, the study and its conclusions are bounded by the limitations of this methodology. JEL classification: B4, K00, N20, P5