Why Islamic Economics?

Islam as a comprehensive religion is not only deals with specific worships like prayer and pilgrim. In fact, Islam is ad-deen, which is the way of life according to the divine laws of Allah, the Almighty. It covers various aspects of life and that includes economics.

In order to develop the Islamic economic system, a good understanding of Islamic worldview is important. The question of worldview is crucial because from a worldview we derive an ideology, and from an ideology we derive a system.

Since the Islamic worldview is different from the secular worldview (which lays the foundation of the conventional economic systems, namely capitalism and socialism), the establishment and development of Islamic economic system is obligatory for all Muslims.

Another reason why we need to establish Islamic economic system is due to different methodology used in its model-building process as compared to the methodology of model-building in the conventional economics. In Islamic methodology, the superiority and prerogative of the divine laws over any other laws will nullify the latter in a case where the two go against one another.

For example, according to the Qur’an, riba or usury is unlawful. Therefore, any economic theory, law, principle or logic which is backed by the idea of interest is fundamentally wrong from its very beginning and therefore, the system which exists from it, is basically a rotten and erroneous system.

Furthermore, the operational design of Islamic economics is also different from the conventional economics. The values, norms, laws and institutions in Islamic economic system are based on Islam. These then, shaped the market and the economic agents of the system to conduct their activities and to behave based on “the Islamic rules of the game”.

Our last point is that, the need and urgency to develop Islamic economic system is also attributed to the problems and shortcoming of the conventional economic systems. Failures of socialism to provide sound solutions to the problems brought by capitalism, and the heightening problems of capitalism today, require economists and scholars to find new alternatives and new paradigms to fix and solve the problems.

Islamic economic system provides many solutions and answers to the problems. The system is moderate, practical, dynamic, rational and compatible for every nation, society and individual at any time and place. Our discussion here will provide proves to all these claims.