Islamic economics and economics as a system of power

Abstract

Islamic economics emerged in the post-colonial period as a novel and independent approach to political and economic discourse. It sought an ideal economic system that could encompass interest-free commercial relations, moral behavioral norms that eschewed self-interest, and the pursuit of social justice and welfare. After some time, however, Islamic economics was perceived as having failed to meet these expectations, or even to create an original methodology. This saw it become subject to harsh criticisms regarding incompatibility between its theory and practice. Such observations are not unique to Islamic economics; various heterodox schools of economics have made similar critiques of mainstream neoclassical economics. The latter, however, has hereto overcome such criticisms by offering technical analysis backed by institutional power. In their application to Islamic economics, however, such criticisms generally ignore the fact that economics is a "power system" or "issue of power"-an issue with significant implications for the application of any economic school of thought. Notably, the United States of America's post-1945 assumption of global dominance in terms of political power and economic wealth led to the emergence of a robust mainstream international theory of economics. This saw mainstream neoclassical economics become intertwined with the experience of the post-1945 hegemonic state. The consistency and validity of this theory was thus directly related to political power and institutionalization. Islamic economics today exhibits theoretical disorganization because it needs an institutional center like that of mainstream neoclassical economics. It is in this context that this study examines the relationship between institutional power and economic theory from the perspective of Islamic economics.