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Divergence Between Aspirations And Realities Of Islamic Economics: A Political Economy Approach To Bridging The Divide

  • Nazim Zaman
  • Mehmet Asutay
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    Early writings in Islamic economics depicted a grand and, some would say, utopian image of the type of societal development that would result from implementing Islamic social and economic theory. However, despite the emergence of Islamic economics in a modern sense in the 1960s, we now find that the only manifestation that represents an Islamic alternative to mainstream neo-classical development is the Islamic banking and finance industry (IBF). However, the developments in the IBF industry indicate that it has converged towards conventional finance. Consequently, it has failed to fulfil the institutional and policy aspirations of Islamic economic system. This paper, thus, attempts to identify how such divergence has taken place, presents a conceptual model of development in Islam that goes beyond mere economics and fiqh considerations and suggests a political economy approach to demonstrate that the foundational axioms in fact rely wholly on major institutional implementation. It also identifies the pre-requisites for achieving this that includes political vision, will and leadership.

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    Article provided by IIUM Journal of Economis and Management in its journal IIUM Journal of Economics and Management.

    Volume (Year): 17 (2009)
    Issue (Month): 1 (June)
    Pages: 73-96

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    Handle: RePEc:ije:journl:v:17:y:2009:i:1:p:73-96
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    1. Zaman, Asad, 2008. "Islamic Economics: A Survey of the Literature," MPRA Paper 11024, University Library of Munich, Germany.
    2. Hasan, Zubair, 2005. "Islamic banking at the crossroads: theory versus practice," MPRA Paper 2821, University Library of Munich, Germany.
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