Islamic Economics 101: All Rhetoric, Little Reality

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An Egyptian woman looks at a window display selling women's clothes in downtown Cairo on 18 October 2012. (Photo: AFP - Khaled Desouki)

By: Rami Khrais

Published Sunday, November 18, 2012

What I can vividly remember from my years at university is the controversy that rose over the concept of “Islamic Economics” with some of my teachers. In those years, the Islamists were in the opposition calling for comprehensive social change based on the principles of Islam.

The Islamists’ insights were based on the famous slogan, “Islam is the resolution,” which means that the various problems facing Muslim societies could be solved by returning to the principles of Islam. Actually, the textbook that I studied in the course of “Islamic Economics” was full of Quranic verses. Its author sought to glean insight from the principles of Islamic law and the Prophet Mohammad’s hadith, or sayings, and apply them to modern economic issues.

From my perspective, this endeavor was useless. The conceptual gap between the two systems of ideas was too vast. The Quranic foundations dealt with a society in which the economy was in an embryonic phase. The texts from this time focused on general, moral values, instead of getting bogged down with details.

In contrast, the economy now being studied at universities worldwide is the product of modern times. The battery of complicated issues considered by today’s economists such as exchange rate volatility, trade policies, taxation systems, and financial markets are all products of modern economic systems. Therefore, the endeavor to make such issues compatible with Quranic foundations seemed to be fairly useless.

However, it’s still useful to understand the context through which the discipline of “Islamic Economics” has emerged, and how it has come to occupy such a prominent position in educational curricula across universities in predominantly Muslim societies.

Universities have been affected by the wave of “Islamization” that grew as a response to the decline of secularist trends. Under the atmosphere of what was called the “Islamic awakening,” the Islamists aimed at Islamization of all facets of society. By the beginning of the 1970s, it was clear that the social sphere was profoundly influenced by Islamist tendencies, which manifested in the spread of veils, the prominence of religious preachers, the publishing of Islamic pamphlets, and most importantly, the electoral triumphs of Islamists in universities and syndicates.

The Islamist penetration of educational institutions provoked the Islamization of economics, considering its place as a significant field intimately connected to the perspective of social change. In fact, that was the other point of contention with my professors; the emergence of Islamic economics was not an outcome of the historical development of Islamic thought, but rather a product of Islamization dynamics.

In his celebrated book The Failure of Political Islam, Olivier Roy wrote that Islamists have undertaken the systematization and conceptualization of basic Islamic law prescriptions in order to construct a coherent and functional ensemble that would offer a middle ground between Marxism and capitalism.

However, as Roy argued, the synthesis created in the name of an Islamic economy was above all an ideological construct. According to Roy, the Islamization of the economy is an interface between two systems: one ethical and legal (Sharia), the other the reality of the universal economy. The conversion works in only one direction, it is a simple transference, with hardly any influence on reality.

Questions regarding the legacy of Islamization have again been raised after the current rise of Islamists to power. If the Islamic economy is an objective notion, then Islamists are supposed to be the party that could integrate such a notion into the practical arena. However, the Islamist discourse regarding economic matters has reflected a deep vacuum of what they have long preached.

By calling for boosting foreign investments, promoting the private sector, and opening markets, the behavior of Islamists seems more compatible with the principles of economic liberalism than anything else.

Interestingly, the neo-liberal wave that dominated the economic landscape over the last three decades in Muslim societies has given Islamists the impetus to engage in a flourishing business society. The marriage of Islamists and business is having widespread impact and it seems that such a dynamic will be entrenched in cases where Islamists hold power. As in Gaza under Hamas, where the Islamists have become so active in a wide spectrum of lucrative businesses, and Egypt, where the Muslim Brotherhood’s businessmen, such as Khairat Al-Shatter and Hassan Malik, have become “ambassadors” of foreign investments – the new order shows how Islamists have replaced the old interests with their own.

The wide gap between rhetoric and reality could be ironically summed up by this episode: While Egyptian President Mohamed Morsi commented in a speech that he would never accept for Egyptians to live off interest, his government issued treasury bills at high interest rates and, moreover, asked the International Monetary Fund for a loan to shore up its budget deficit.

The Islamists have been spouting empty rhetoric on the economy for decades while the political reality shows that their words are merely a veneer concealing their original goal to assimilate into the existing economic matrix, even if such a matrix is responsible for the social grievances that they have historically promised to overcome.

Rami Khrais is a graduate in Economics and commentator on Middle Eastern politics. You can find him on Twitter @RamiNKhrais.

The views expressed by the author do not necessarily reflect Al-Akhbar's editorial policy.


Your articles are always aggressive against Islam and Islamists. However, the Islamist based on their great principles of Islam will restore the dignity and prosperity of the Islamic nation. Our project will not be stopped even if leftists try to obstruct such project by their absurd criticisms.

I agree absolutely with this. The process parallels almost exactly the early-20th century European Catholic attempts to placate the fascists while avoiding the communists, by inventing a phantom 'usury-free capitalism'. By adopting a deliberately, artificially restricted definition of 'usury', they conceal the usurious character of the system as a whole, and the more fundamental fact that private ownership of productive resources is antisocial anyway.

This is an example of one of the basic facts of humanity, which is that people in general are overwhelmingly concerned with the practical question of what they have to pretend to believe in order to be allowed to live their lives in peace, and they will pretend to believe whatever they're told. 'Intellectuals' and university students are held in great suspicion if not contempt by the masses because they arrogantly refuse to do this.

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