Potential of Islamic socioeconomics and finance

The history of the disciplinary development of economics is characterized by debates on the scientific or social nature of economics. The continuation of the classical school of economic thought advocates the development of economics in the direction of physics as an exact science. This approach has led to countless crises and repercussions in society and has even led to wars. The rise of Keynesian economics in the Great Depression of the 1930s dealt a final blow to classical economics by emphasizing its nature as a social science. While classical economists valued the idea of ​​the absence of a role for government in the economy, Keynesians saw government intervention as essential for overall socio-economic stability.

Economic development also involved a broader discourse between capitalist and socialist systems. Those disillusioned with decentralized capitalist instabilities viewed socialist-centralist planning as the means to greater socio-economic well-being. As the capitalist system prevailed on the world stage, neither system proved self-sufficient or without major flaws. The socialist system is characterized as communist and fascist or right wing, but the capitalist system increasingly serves the enrichment of the dominant minority classes. Although the neoclassical capitalist economic paradigm has set the standard in practice and theory, many of its proponents have criticized it for its extreme failure to provide stability in economic and financial markets, minimum unemployment, and social well-being. general economy of the majority. The socio-economic aspects of the capitalist system have proven ineffective. Some of the European welfare states, namely the Scandinavian or German social market economies, represent excellent models of reproduction, but they have also suffered from the same problems as the main capitalist United States and others. Thus, the alternatives to such a system have long been at the center of the concerns of intellectuals within the movements of post-modernism or post-structuralism. Heterodox economists constitute a sharper opposition to conventional or orthodox economic thought. While the heterodoxies were in sharp opposition to the patterns and general philosophy of the orthodox economic system, none appreciated other solid philosophical underpinnings. Islamic economics is one of the heterodoxies that uses an alternative economic approach rooted in strong philosophical foundations.

Reform and renewal

Within the general iṣlaḥ (reform) and tajdid (revival) movements over the centuries, 20th century Muslims awoke from the colonialist shadow to systematize an uninspiring economic system with unique socio-economic characteristics. Studies of literature by traditional Muslim religious and economic thinkers and noted scholars from the early decades of the 20th century have supported deliberations on the Islamic challenges of modernity and the inevitability of socio-economic collapse if socio-economic practices -Islamic civilizational economics are ignored or abandoned. Intellectual discourse on the welfare and socio-economic goals of an Islamic economy was guided by the rich heritage of waqf, zakat (alms) and sadaqat (charities). Although these institutions and acts of giving for public welfare were the target of colonialist powers, entire cities built via waqfs maintained the impact of these socio-economic institutions and practices in the psyche of Muslims and non-Muslims alike. -Muslims. No country in the 21st century can claim as much pride in the institutionalization of waqf, besides that of zakat and sadaqat, as Turkey. It is a fact that about two-thirds of the whole Ottoman Empire was financed by socio-economic institutions like waqfs, zakat, sadaqat and even other taxes. Therefore, the potential of Islamic socioeconomics and finance in contemporary times necessitates reminders of the innumerable benefits that applications of such reasoning could provide.

From generation to generation

Even today, Muslims tell stories of generations who were born, grew up, survived, were educated, worked, retired and died in waqfs. The apparent reflection of a social mindset through the institution of waqfs infuses faith, security and self-reliance into an economy. Additionally, waqfs served the educational needs of the entire caliphate, represented halfway houses for travelers and offered healing to the sick, homes to the homeless, as well as kitchens to the needy, hungry and invited. . The public wealth represented by such an Islamic socio-economic and financial institution has long concealed the potential to deal with some of the most pressing humanitarian disasters of our time. The coronavirus pandemic has underscored the need for greater social autonomy. Thus, shareholders and stakeholders saw their separate competition for interests pre-pandemic dramatically impacting profitability and redefining mutual dependence on each other’s well-being. The contingency measures taken to save the public amid the pandemic have been seen as common future welfare business plans.

The continued strengthening and development of Islamic socio-economic institutions in contemporary times has gradually revealed the solution for the welfare of future generations and increased the sense of mutual responsibility. The role of fintech through blockchain technology, artificial intelligence (AI) and other platforms exponentially increases the impact and facilitates the scaling of this Islamic socio-economic and financial institutional development. The growing role of technology in our lives and greater social responsibility complement the global agenda undertaken of the Sustainable Development Goals or more specifically, the Environmental, Social and Corporate Governance goals and the global push for products and services economic and financial more compliant with Sharia (Islamic law) .

It should be noted that Islamic socio-economic and financial institutions, or the so-called Islamic third sector economy, are deeply rooted in Islamic religious teachings and philosophical foundations. For example, waqfs are not public properties but endowed properties belonging to God. Once a property is endowed as a waqf, its property permanently belongs to God. This is clearly defined by the example of the Prophet Muhammad and instills in individuals the Islamic worldview. The philosophy of the Islamic third sector is an inalienable factor that constantly nurtures the consciousness of the beneficiaries and connects it to the notions of tawhid (belief in one God). Thus, the grantees endeavor to maintain, protect and develop the institutional infrastructure of the third sector within a teleological framework aimed at achieving the religious objectives of Islamic law, namely falah (grace in the hereafter ), better education, a quality lifestyle, infrastructure, health care, halal food. and everything needed or invented in a complete ecosystem. Fostering the development of Islamic socio-economic and financial infrastructure contributes to a much more resilient and sustainable Islamic economic system and as such is the reason for naming it the alternative economic system of the contemporary neoclassical era.

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