Islamic economics in the world

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This is a sub-article of Islamic economic jurisprudence and Muslim world.

Islamic economics in practice, or economic policies supported by self-identified Islamic groups, has varied throughout its long history.

Contents 1 Early Islamic economics 1.1 Early reforms under Islam 1.2 Corporate social responsibility in commerce 2 Legal institutions 2.1 Hawala agency 2.2 Lawsuit 2.3 Waqf trust 3 Classical Muslim commerce 3.1 Age of discovery 3.2 Agricultural Revolution 3.3 Capitalist market economy 4 Classical Islamic economic thought 4.1 Early Islamic economic thinkers 4.2 Riba 4.3 Ibn Khaldun 5 Post-colonial era 5.1 Traditional approach 5.2 Contemporary economics 6 Finances 7 Banks 8 Notes 9 References

[edit] Early Islamic economics

[edit] Early reforms under Islam

Main article: Early reforms under Islam

Some argue early Islamic theory and practice formed a "coherent" economic system with "a blueprint for a new order in society, in which all participants would be treated more fairly". Michael Bonner, for example, has written that an "economy of poverty" prevailed in Islam until the 13th and 14th centuries. Under this system God's guidance made sure the flow of money and goods was "purified" by being channeled from those who had much of it to those who had little by encouraging zakat (charity) and discouraging riba (usury/interest) on loans. Bonner maintains the prophet also helped poor traders by allowing only tents, not permanent buildings in the market of Medina, and not charging fees and rents there.^[1]

[edit] Corporate social responsibility in commerce

Social responsibility and corporate social responsibility in commerce was stressed in Islamic sociology. The development of Islamic banks and Islamic economics was a side effect of this sociology: usury was rather severely restrained, no interest rate was allowed, and investors were not permitted to escape the consequences of any failed venture -- all financing was equity financing (Musharaka). In not letting borrowers bear all the risk/cost of a failure, an extreme disparity of outcomes between "partners" is thus avoided. Ultimately this serves a social harmony purpose. Muslims also could not and cannot (in shariah) finance any dealings in forbidden goods or activities, such as wine, pork, gambling, etc. Thus ethical investing is the only acceptable investing, and moral purchasing is encouraged.^[2]

[edit] Legal institutions

See also: Sharia and Fiqh

[edit] Hawala agency

The Hawala, an early informal value transfer system, has its origins in classical Islamic law, and is mentioned in texts of Islamic jurisprudence as early as the 8th century. Hawala itself later influenced the development of the agency in common law and in civil laws such as the aval in French law and the avallo in Italian law. The words aval and avallo were themselves derived from Hawala. The transfer of debt, which was "not permissible under Roman law but became widely practiced in medieval Europe, especially in commercial transactions", was due to the large extent of the "trade conducted by the Italian cities with the Muslim world in the Middle Ages." The agency was also "an institution unknown to Roman law" as no "individual could conclude a binding contract on behalf of another as his agent." In Roman law, the "contractor himself was considered the party to the contract and it took a second contract between the person who acted on behalf of a principal and the latter in order to transfer the rights and the obligations deriving from the contract to him." On the other hand, Islamic law and the later common law "had no difficulty in accepting agency as one of its institutions in the field of contracts and of obligations in general."^[3]

[edit] Lawsuit

The first known lawsuits were described in the Ethics of the Physician by Ishaq bin Ali al-Rahwi (854–931) of al-Raha, Syria, who describes the first medical peer review process. His work, as well as later Arabic medical manuals, state that a visiting physician must always make duplicate notes of a patient's condition on every visit. When the patient was cured or had died, the notes of the physician were examined by a local medical council of other physicians, who would peer review the practicing physician's notes to decide whether his/her performance had met the required standards of medical care. If their reviews were negative, the practicing physician could face a lawsuit from a maltreated patient.^[4]

[edit] Waqf trust

Main article: Waqf

The waqf in Islamic law, which developed in the medieval Islamic world from the 7th to 9th centuries, bears a notable resemblance to the English trust law.^[5] Every waqf was required to have a waqif (founder), mutawillis (trustee), qadi (judge) and beneficiaries.^[6] Under both a waqf and a trust, "property is reserved, and its usufruct appropriated, for the benefit of specific individuals, or for a general charitable purpose; the corpus becomes inalienable; estates for life in favor of successive beneficiaries can be created" and "without regard to the law of inheritance or the rights of the heirs; and continuity is secured by the successive appointment of trustees or mutawillis."^[7]

The only significant distinction between the Islamic waqf and English trust was "the express or implied reversion of the waqf to charitable purposes when its specific object has ceased to exist",^[8] though this difference only applied to the waqf ahli (Islamic family trust) rather than the waqf khairi (devoted to a charitable purpose from its inception). Another difference was the English vesting of "legal estate" over the trust property in the trustee, though the "trustee was still bound to administer that property for the benefit of the beneficiaries." In this sense, the "role of the English trustee therefore does not differ significantly from that of the mutawalli."^[9]

The trust law developed in England at the time of the Crusades, during the 12th and 13th centuries, was introduced by Crusaders who may have been influenced by the waqf institutions they came across in the Middle East.^[10][11]

After the Islamic waqf law and madrassah foundations were firmly established by the 10th century, the number of Bimaristan hospitals multiplied throughout throughout Islamic lands. In the 11th century, every Islamic city had at least several hospitals. The waqf trust institutions funded the hospitals for various expenses, including the wages of doctors, ophthalmologists, surgeons, chemists, pharmacists, domestics and all other staff, the purchase of foods and remedies; hospital equipment such as beds, mattresses, bowls and perfumes; and repairs to buildings. The waqf trusts also funded medical schools, and their revenues covered various expenses such as their maintenance and the payment of teachers and students.^[12]

[edit] Classical Muslim commerce

During the Islamic Golden Age, guilds were formed though officially unrecognized by the medieval Islamic city. However, trades were recognized and supervised by officials of the city. Each trade developed its own identity, whose members would attend the same mosque, and serve together in the militia.

Technology and industry in Islamic civilization were highly developed. Distillation techniques supported a flourishing perfume industry, while chemical ceramic glazes were developed constantly to compete with ceramics imported from China. A scientific approach to metallurgy made it easier to adopt and improve steel technologies from India and China. Primary exports included manufactured luxuries, such as wood carving, metal and glass, textiles, and ceramics.

The systems of contract relied upon by merchants was very effective. Merchants would buy and sell on commission, with money loaned to them by wealthy investors, or a joint investment of several merchants, who were often Muslim, Christian and Jewish. Recently, a collection of documents was found in an Egyptian synagogue shedding a very detailed and human light on the life of medieval Middle Eastern merchants. Business partnerships would be made for many commercial ventures, and bonds of kinship enabled trade networks to form over huge distances. Networks developed during this time enabled a world in which money could be promised by a bank in Baghdad and cashed in Spain, creating the cheque system of today. Each time items passed through one of the cities along this extraordinary network, the city imposed a tax, resulting in high prices once the items reached their final destinations. These innovations made by Muslims and Jews laid the foundations for the modern economic system.

Transport was simple, yet highly effective. Each city had an area outside its gates where pack animals were assembled; found in the cities' markets were large secure warehouses; while accommodations were provided for merchants in cities and along trade routes by a sort of medieval motel.

[edit] Age of discovery

See also: Muslim navigational technology, Pre-Columbian Islamic contact theories, Ibn Battuta, Tabula Rogeriana, and Piri Reis map

During the Muslim conquests of the seventh and early eighth centuries, Arab armies established the Islamic Arab Empire, reaching from Central Asia to the Iberian Peninsula. An early form of globalization began emerging during the Islamic Golden Age, when the knowledge, trade and economies from many previously isolated regions and civilizations began integrating due to contacts with Muslim explorers, sailors, scholars, traders, and travelers. Subhi Y. Labib has called this period the Pax Islamica, and John M. Hobson has called it the Afro-Asiatic age of discovery, in reference to the Muslim Southwest Asian and North African traders and explorers who travelled most of the Old World, and established an early global economy^[13] across most of Asia, Africa, and Europe, with their trade networks extending from the Atlantic Ocean and Mediterranean Sea in the west to the Indian Ocean and China Sea in the east,^[14] and even as far as Japan and Korea.^[15] Arabic silver dirham coins were also being circulated throughout the Afro-Eurasian landmass, as far as sub-Saharan Africa in the south and northern Europe in the north, often in exchange for goods and slaves.^[16] In England, for example, the Anglo-Saxon king Offa of Mercia (r. 757-796) had coins minted with the Shahadah in Arabic.^[17] These factors helped establish the Arab Empire (including the Rashidun, Umayyad, Abbasid and Fatimid caliphates) as the world's leading extensive economic power throughout the 7th–13th centuries.^[13]

Apart from the Nile, Tigris and Euphrates, navigable rivers in the Islamic regions were uncommon, so transport by sea was very important. Navigational sciences were highly developed, making use of a magnetic compass and a rudimentary instrument known as a kamal, used for celestial navigation and for measuring the altitudes and latitudes of the stars. When combined with detailed maps of the period, sailors were able to sail across oceans rather than skirt along the coast. Muslim sailors were also responsible for introducing the lateen sails and large three-masted merchant vessels to the Mediterranean. The origins of the caravel ship, used for long-distance travel by the Spanish and Portuguese since the 15th century, also date back to the qarib used by Andalusian explorers by the 13th century.^[18]

Ibn Battuta (1304–1368) was a traveler and explorer, whose account documents his travels and excursions over a period of almost thirty years, covering some 73,000 miles (117,000 km). These journeys covered most of the known Old World, extending from North Africa, West Africa, Southern Europe and Eastern Europe in the west, to the Middle East, Indian subcontinent, Central Asia, Southeast Asia and China in the east, a distance readily surpassing that of his predecessors and his near-contemporary Marco Polo.

Several contemporary medieval Arabic reports suggest that Muslim explorers from Islamic Spain and Northwest Africa may have travelled in expeditions across the Atlantic Ocean, possibly even to the Americas, between the 9th and 14th centuries. Ali al-Masudi (896–956) reported that the navigator Khashkhash Ibn Saeed Ibn Aswad, from Cordoba, Islamic Spain, sailed from Delba (Palos) in 889, crossed the Atlantic, reached an unknown land, and returned with fabulous treasures.^[19][20][21] Another Muslim navigator, Ibn Farrukh, from Granada, sailed into the Atlantic on February 999, landed in Gando (Canary islands) visiting King Guanariga, and continued westward where he eventually saw and named two islands, Capraria and Pluitana. He arrived back in Spain in May 999.^[20][22] Other theories suggest that explorers from the Muslim West African Mali Empire may have reached the Americas, or possibly the Hui Chinese Muslim explorer Zheng He according to the 1421 hypothesis. When Christopher Columbus made his first voyage to the Americas in 1492, he was accompanied by a number of Muslim sailors (Andalusian Moors), who travelled with him to the New World.^[23]

[edit] Agricultural Revolution

Further information: Muslim Agricultural Revolution

During the Muslim Agricultural Revolution, the Caliphate understood that real incentives were needed to increase productivity and wealth, thus enhancing tax revenues, hence they introduced a social transformation through the changed ownership of land,^[24] where any individual of any gender^[25] or any ethnic or religious background had the right to buy, sell, mortgage and inherit land for farming or any other purposes. They also introduced the signing of a contract for every major financial transaction concerning agriculture, industry, commerce, and employment. Copies of the contract were usually kept by both parties involved.^[24]

The two types of economic systems that prompted agricultural development in the Islamic world were either politically-driven, by the conscious decisions of the central authority to develop under-exploited lands; or market-driven, involving the spread of advice, education, and free seeds, and the introduction of high value crops or animals to areas where they were previously unknown. These led to increased subsistence, a high level of economic security that ensured wealth for all citizens, and a higher quality of life due to the introduction of artichokes, spinach, aubergines, carrots, sugar cane, and various exotic plants; vegetables being available all year round without the need to dry them for winter; citrus and olive plantations becoming a common sight, market gardens and orchards springing up in every Muslim city; intense cropping and the technique of intensive irrigation agriculture with land fertility replacement; a major increase in animal husbandry; higher quality of wool and other clothing materials; and the introduction of selective breeding of animals from different parts of the Old World resulting in improved horse stocks and the best load-carrying camels.^[24]

[edit] Capitalist market economy

The origins of capitalism and free markets can be traced back to the Caliphate,^[26] where the first market economy and earliest forms of merchant capitalism took root between the 8th–12th centuries, which some refer to as "Islamic capitalism".^[27] A vigorous monetary economy was created on the basis of the expanding levels of circulation of a stable high-value currency (the dinar) and the integration of monetary areas that were previously independent. Innovative new business techniques and forms of business organisation were introduced by economists, merchants and traders during this time. Such innovations included the earliest trading companies, big businesses, contracts, bills of exchange, long-distance international trade, the first forms of partnership (mufawada) such as limited partnerships (mudaraba), and the earliest forms of credit, debt, profit, loss, capital (al-mal), capital accumulation (nama al-mal),^[28] circulating capital, capital expenditure, revenue, cheques, promissory notes,^[29] trusts (see Waqf), startup companies,^[30] savings accounts, transactional accounts, pawning, loaning, exchange rates, bankers, money changers, ledgers, deposits, assignments, the double-entry bookkeeping system,^[31] and lawsuits.^[32] Organizational enterprises similar to corporations independent from the state also existed in the medieval Islamic world, while the agency institution was also introduced.^[33][34] Many of these early capitalist concepts were adopted and further advanced in medieval Europe from the 13th century onwards.^[28]

A market economy was established in the Islamic world on the basis of merchant capitalism. Capital formation was promoted by labour in medieval Islamic society, and financial capital was developed by a considerable number of owners of monetary funds and precious metals. Riba (usury) was prohibited by the Qur'an, but this did not hamper the development of capital in any way. The capitalists (sahib al-mal) were at the height of their power between the 9th–12th centuries, but their influence declined after the arrival of the ikta (landowners) and after production was monopolized by the state, both of which hampered the development of industrial capitalism in the Islamic world.^[35] Some state enterprises and government-owned corporations still had a capitalist mode of production, such as pearl diving in Iraq and the textile industry in Egypt.^[36]

During the 11th–13th centuries, the "Karimis", the earliest multinational corporation, enterprise and business group controlled by capitalistic entrepreneurs, came to dominate much of the Islamic world's economy.^[37] The group was controlled by about fifty Muslim merchants labelled as "Karimis" who were of Yemeni, Egyptian and sometimes Indian origins.^[38] Each Karimi merchant had considerable wealth, ranging from at least 100,000 dinars to as much as 10 million dinars. The group had considerable influence in most important eastern markets and sometimes in politics through its financing activities and through a variety of customers, including Emirs, Sultans, Viziers, foreign merchants, and common consumers. The Karimis dominated many of the trade routes across the Mediterranean Sea, Red Sea, and Indian Ocean, and as far as Francia in the north, China in the east, and sub-Saharan Africa in the south, where they obtained gold from gold mines. Innovations introduced by the Karimis include the use of agents, the financing of projects as a method of acquiring capital, and a banking institution for loans and deposits. Another important difference between the Karimis and other entrepreneurs before and during their time was that they were not tax collectors or landlords, but their capitalism was due entirely to trade and financial transactions.^[39]

Though medieval Islamic economics appears to have been closer to capitalism, some Orientalists believe that there exist a number of parallels between Islamic economics and communism, including the Islamic ideas of zakat and riba.^[40]

[edit] Classical Islamic economic thought

To some degree, the early Muslims based their economic analyses on the Qu'ran (such as opposition to riba, meaning usury or interest), and from sunnah, the sayings and doings of Muhammad.

[edit] Early Islamic economic thinkers

Al-Ghazali (1058–1111) classified economics as one of the sciences connected with religion, along with metaphysics, ethics, and psychology. Authors have noted, however, that this connection has not caused early Muslim economic thought to remain static.^[41] Persian philosopher Nasir al-Din al-Tusi (1201-1274) presents an early definition of economics (what he calls hekmat-e-madani, the science of city life) in discourse three of his Ethics:

"the study of universal laws governing the public interest (welfare?) in so far as they are directed, through cooperation, toward the optimal (perfection)."^[42]

Many scholars trace the history of economic thought through the Muslim world, which was in a Golden Age from the 8th to 13th century and whose philosophy continued the work of the Greek and Hellenistic thinkers and came to influence Aquinas when Europe "rediscovered" Greek philosophy through Arabic translation^[43]. A common theme among these scholars was the praise of economic activity and even self-interested accumulation of wealth.^[44] Persian leader Shams al-Mo'ali Abol-hasan Ghaboos ibn Wushmgir (Qabus) (d. 1012) advises his son in the work Qabus nama:

"My son, do not be indifferent to the acquisition of wealth. Assure yourself that everything you acquire shall be the best quality and is likely to give you pleasure."

Persian philosopher Ibn Miskawayh (b. 1030) notes:

"The creditor desires the well-being of the debtor in order to get his money back rather than because of his love for him. The debtor, on the other hand, does not take great interest in the creditor."^[45]

This view is in conflict with an idea Joseph Schumpeter called the great gap. The great gap thesis comes out of Schumpeter's 1954 History of Economic Analysis which discusses a break in economic thought during the five hundred year period between the decline of the Greco-Roman civilizations and the work of Thomas Aquinas (1225-1274).^[46] However in 1964, Joseph Spengler's "Economic Thought of Islam: Ibn Khaldun" appeared in the journal Comparative Studies in Society and History and took a large step in bringing early Muslim scholars to the attention of the contemporary West.^[47]

The influence of earlier Greek and Hellenistic thought on the Muslim world began largely with Abbasid caliph al-Ma'mun, who sponsored the translation of Greek texts into Arabic in the 9th century by Syrian Christians in Baghdad. But already by that time numerous Muslim scholars had written on economic issues, and early Muslim leaders had shown sophisticated attempts to enforce fiscal and monetary financing, use deficit financing, use taxes to encourage production, the use of credit instruments for banking, including rudimentary savings and checking accounts, and contract law.^[48]

Among the earliest Muslim economic thinkers was Abu Yusuf (731-798), a student of the founder of the Hanafi Sunni School of Islamic thought, Abu Hanifah. Abu Yusuf was chief jurist for Abbasid Caliph Harun al-Rashid, for whom he wrote the Book of Taxation (Kitab al-Kharaj). This book outlined Abu Yusuf's ideas on taxation, public finance, and agricultural production. He discussed proportional tax on produce instead of fixed taxes on property as being superior as an incentive to bring more land into cultivation. He also advocated forgiving tax policies which favor the producer and a centralized tax administration to reduce corruption. Abu Yusuf favored the use of tax revenues for socioeconomic infrastructure, and included discussion of various types of taxes, including sales tax, death taxes, and import tariffs.^[49]

Early discussion of the benefits of division of labor are included in the writings of Qabus, al-Ghazali, al-Farabi (873–950), Ibn Sina (Avicenna) (980–1037), Ibn Miskawayh, Nasir al-Din al-Tusi (1201–74), Ibn Khaldun (1332-1406), and Asaad Davani (b. 1444). Among them, the discussions included division of labor within households, societies, factories, and among nations. Farabi notes that each society lacks at least some necessary resources, and thus an optimal society can only be achieved where domestic, regional, and international trade occur, and that such trade can be beneficial to all parties involved.^[50] Ghazali was also noted for his subtle understanding of monetary theory and formulation of another version of Gresham's Law.

The power of supply and demand was understood to some extent by various early Muslim scholars as well. Ibn Taymiyyah illustrates:

"If desire for goods increases while its availability decreases, its price rises. On the other hand, if availability of the good increases and the desire for it decreases, the price comes down."^[51] Ghazali suggests an early version of price inelasticity of demand for certain goods, and he and Ibn Miskawayh discuss equilibrium prices."

Other important Muslim scholars who wrote about economics include al-Mawardi (1075–1158), Ibn Taimiyah (1263–1328), and al-Maqrizi.

[edit] Riba

Main article: Riba

The common view of riba (usury) among classical jurists of Islamic law and economics during the Islamic Golden Age was that it is only riba and therefore unlawful to apply interest to money exnatura sua—exclusively gold and silver currencies—but that it is not riba and is therefore acceptable to apply interest to fiat money—currencies made up of other materials such as paper or base metals—to an extent.^[52]

The definition of riba in classical Islamic jurisprudence was "surplus value without counterpart." When "currencies of base metal were first introduced in the Islamic world, no jurist ever thought that paying a debt in a higher number of units of this fiat money was riba" as they were concerned with the real value of money rather than the numerical value. For example, it was acceptable for a loan of 1000 gold dinars to be paid back as 1050 dinars of equal aggregate weight. The rationale behind riba according to classical Islamic jurists was "to ensure equivalency in real value" and that the "numerical value was immaterial." Thus an interest rate that did not exceed the rate of inflation was not riba according to classical Islamic jurists.^[53]

[edit] Ibn Khaldun

Main articles: Ibn Khaldun and Muqaddimah

Further information: Asabiyyah

When civilization [population] increases, the available labor again increases. In turn, luxury again increases in correspondence with the increasing profit, and the customs and needs of luxury increase. Crafts are created to obtain luxury products. The value realized from them increases, and, as a result, profits are again multiplied in the town. Production there is thriving even more than before. And so it goes with the second and third increase. All the additional labor serves luxury and wealth, in contrast to the original labor that served the necessity of life. [54]

Ibn Khaldun on economic growth

Perhaps the most well known Islamic scholar who wrote about economics was Ibn Khaldun of Tunisia (1332–1406),^[55] who is considered a father of modern economics.^[56][57] Ibn Khaldun wrote on economic and political theory in the introduction, or Muqaddimah (Prolegomena), of his History of the World (Kitab al-Ibar). In the book, he discussed what he called asabiyya (social cohesion), which he sourced as the cause of some civilizations becoming great and others not. Ibn Khaldun felt that many social forces are cyclic, although there can be sudden sharp turns that break the pattern.^[58] His idea about the benefits of the division of labor also relate to asabiyya, the greater the social cohesion, the more complex the successful division may be, the greater the economic growth. He noted that growth and development positively stimulates both supply and demand, and that the forces of supply and demand are what determines the prices of goods.^[59] He also noted macroeconomic forces of population growth, human capital development, and technological developments effects on development.^[60] In fact, Ibn Khaldun thought that population growth was directly a function of wealth. ^[61]

Although he understood that money served as a standard of value, a medium of exchange, and a preserver of value, he did not realize that the value of gold and silver changed based on the forces of supply and demand.^[62] He also introduced the concept known as the Khaldun-Laffer Curve (the relationship between tax rates and tax revenue increases as tax rates increase for a while, but then the increases in tax rates begin to cause a decrease in tax revenues as the taxes impose too great a cost to producers in the economy).

Ibn Khaldun used a dialectic approach to describe the sociological implications of tax choices, which is now of course part of economics:

"In the early stages of the state, taxes are light in their incidence, but fetch in a large revenue...As time passes and kings succeed each other, they lose their tribal habits in favor of more civilized ones. Their needs and exigencies grow...owing to the luxury in which they have been brought up. Hence they impose fresh taxes on their subjects...and sharply raise the rate of old taxes to increase their yield...But the effects on business of this rise in taxation make themselves felt. For business men are soon discouraged by the comparison of their profits with the burden of their taxes...Consequently production falls off, and with it the yield of taxation."

This analysis anticipates the modern economic concept known as the Laffer Curve.

[edit] Post-colonial era

During the modern post-colonial era, as Western ideas, including Western economics, began to influence the Muslim world, some Muslim writers sought to produce an Islamic discipline of economics. Because Islam is "not merely a spiritual formula but a complete system of life in all its walks", ^[63] it logically followed that Islam also had its own economic system unique from and superior to non-Islamic systems. ^[64] To date, however, there have been no agreement as to the methodological definition and scope of Islamic Economics.

In the 1960s and 70s Shia Islamic thinkers worked to develop a unique Islamic economic philosophy with "its own answers to contemporary economic problems." Several works were particularly influential,

• Eslam va Malekiyyat (Islam and Property) by Mahmud Taleqani (1951),
• Iqtisaduna (Our Economics) by Mohammad Baqir al-Sadr (1961) and
• Eqtesad-e Towhidi (The Economics of Divine Harmony) by Abolhassan Banisadr (1978)
• Some Interpretations of Property Rights, Capital and Labor from Islamic Perspective by Habibullah Peyman (1979).^{[65] [66]}

Al-Sadr in particular has been described as having "almost single-handedly developed the notion of Islamic economics" ^[67]

In their writings Sadr and the other Shia authors "sought to depict Islam as a religion committed to social justice, the equitable distribution of wealth, and the cause of the deprived classes," with doctrines "acceptable to Islamic jurists", while refuting existing non-Islamic theories of capitalism and Marxism. This version of Islamic economics, which influenced the Iranian Revolution, called for public ownership of land and of large "industrial enterprises," while private economic activity continued "within reasonable limits." ^[68] These ideas helped shape the large public sector and public subsidy policies of the Iranian Islamic revolution.

In the 1980s and 1990s, as the Iranian revolution failed to reach the per capita income level achieved by the regime it overthrew, and Communist states and socialist parties in the non-Muslim world turned away from socialism, Muslim interest shifted away from government ownership and regulation. In Iran, it is reported that "eqtesad-e Eslami (meaning both Islamic economics and economy) ... once a revolutionary shibboleth, is indubitably absent in all official documents and the media. It disapperared from Iranian political discourse about 15 years ago [1990]." ^[69]

But in other parts of the Muslim world the term lived on, shifting form to the less ambitious goal of interest-free banking. Some Muslim bankers and religious leaders suggested ways to integrate Islamic law on usage of money with modern concepts of ethical investing. In banking this was done through the use of sales transactions (focusing on the fixed rate return modes) to achieve similar results to interest. This has been heavily criticised by many modern writers as a means of covering conventional banking with an Islamic facade.

[edit] Traditional approach

While most Muslims believe Islamic law is perfect by virtue of its being revealed by God, Islamic law on economic issues was/is not "economics" in the sense of a systematic study of production, distribution, and consumption of goods and services.

[edit] Contemporary economics

In modern times, economic policies of the 1979 Islamic Revolution in predominately Shia Iran were heavily statist with a very large public sector, and official rhetoric celebrating revolution and the rights of the dispossessed, although this tendency has faded over time.^[70] In Sudan, the policies of the National Islamic Front party dominated regime in the 1990s have been the reverse, employing economic liberalism and accepting "market forces in the formulation of state policies." In Algeria, Jordan, Egypt, and Pakistan, Islamist parties have supported populist policies, showing a "marked reluctance to adopt austerity policies and decreased subsidies." ^[71]

[edit] Finances

• Dow Jones Islamic Fund
• Dow Jones Islamic Index

[edit] Banks

• Islamic Development Bank
• Bank Islam Malaysia
• Bank Muamalat Malaysia
• Dubai Islamic Bank
• Islamic Bank of Britain
• Islamic Development Bank

[edit] Notes

[edit] References

• Badr, Gamal M. (Spring 1989), "To the Editor", The American Journal of Comparative Law 37 (2): 424-425
• Gaudiosi, Monica M. (April 1988), "The Influence of the Islamic Law of Waqf on the Development of the Trust in England: The Case of Merton College", University of Pennsylvania Law Review 136 (4): 1231-1261
• Hudson, A. (2003), Equity and Trusts (3rd ed.), Cavendish Publishing, ISBN 1-85941-729-9
• Morelon, Régis & Roshdi Rashed (1996), Encyclopedia of the History of Arabic Science, vol. 3, Routledge, ISBN 0415124107
• Shatzmiller, Maya (1994), Labour in the Medieval Islamic World, Brill Publishers, ISBN 9004098968.