Topic 3: History of Islamic Economic Thought

1. Topic 3: History of Islamic Economic Thought MFK ISB544 Topic 3

2. Outline • Quranic and Sunnatic perspectives on economics. • Contribution of eminent jurists, philosophers, Sufis etc. • Contemporary Islamic Economic Thought. • Historical Development and Islamic economic reform in Malaysia. MFK ISB544 Topic 3

3. Contribution of eminent jurist MFK ISB544 Topic 3

4. Learning outcomes At the end of the lessons, students should be able: • To highlight the contribution of eminent jurist towards Islamic economics. MFK ISB544 Topic 3

5. Contribution of eminent jurists, philosophers, Sufis etc MFK ISB544 Topic 3

6. MFK ISB544 Topic 3

7. Contemporary Islamic Economic Thought MFK ISB544 Topic 3

8. Learning outcomes At the end of the lessons, students should be able: • To describe the contemporary Islamic economic thought. MFK ISB544 Topic 3

9. Contemporary Islamic Economic Thought • Need to be emphasis that Islamic economic has its own identity. • IE is not something new, it has emerge since the reveal of wahyu to Prophet Muhammad (PBUH). • Hence, the principle of IE has been in existence earlier than the western economic paradigm. MFK ISB544 Topic 3

10. Contemporary Islamic Economic Thought • Islam, as a deen, outlines principles and doctrines to guide relationship among human being and the Allah Almighty. • Unlike Judaism and Christianity which regard as a specific religion, Islam through Shari’ah has provide human being a comprehensive guideline in dealing with material and spiritual matters. MFK ISB544 Topic 3

11. Contemporary IE Thought (ctd) • Islamic resurgence which began in 1930s motivate Muslim economists worldwide to re-develop economics disciplines that in line with Islamic teaching. • The momentum of Islamic resurgence is at its height in 70s,80s and continue until today. • Islamic resurgence also contributed to the end of the colonial era in 1960s. • As the original native of the land has full control on the management of economy, greater attention on was given to the Islamic injunctions relevant to economics. MFK ISB544 Topic 3

12. Contemporary IE Thought (ctd) • As such, review on the modern institutions such as banking, insurance, joint stock companies, stock exchange and taxation has been conducted. • Those institutions that could not be legitimize on Shari’ah grounds, necessitated a search for alternatives which lead to a number of works to attend to the broader issues involved. • As a result, subject such as the nature of economic enterprise, ownership, organization of production and economic development were discussed in some detail. MFK ISB544 Topic 3

13. Contemporary IE Thought (ctd) • In addition, greater details attention was dedicated on public finance, social security, industrial relations and banking without interest. • Subsequently, the resurgence of Islam lead to the First International Conference on Islamic Economics held at Makkah Mukarramah in February 1976 – which regarded as a starting point for the establishment of Islamic economic thought. • Simultaneously it provided a great “political will” in establishing Islamic financial institutions i.e. Islamic Development Bank in Jeddah and the Dubai Islamic Bank. MFK ISB544 Topic 3

14. Contemporary IE Thought (ctd) • Currently, we have more than ____ Islamic financial institutions as well as three countries, Pakistan, Sudan and Iran, have switched to interest-free banking at the national level. • The emergence and continuation of the Islamic financial movement has produced a lot of economic and juridicial research relating to its operational details. • More important, however, are the recent attempts to capture a vision of the Islamic economic system as a whole within the framework of conventional macro –economic analysis. MFK ISB544 Topic 3

15. Contemporary IE Thought (ctd) • Nonetheless, literature on IE thought, according to Anas Zarqa, can be classified into three areas:- • General comparison of Islamic economic with other world economic system i.e. Capitalism and Socialism. • Critiques on other world economic system. • Discussion on specific economic issues such as riba, zakat, Islamic financial system and etc. MFK ISB544 Topic 3

16. Contemporary IE Thought (ctd) • In the early days of Islamic economics resurgence, most of the literature focus on issues of riba, roles of zakat institutions and Islamic financial system. • In fact, until recently these areas remain as a focal point in discussing Islamic economic – perhaps it lies on the fact that Islamic banking and finance is a stepping stone to re-emulate Islamic economics system. MFK ISB544 Topic 3

17. Contemporary IE Thought (ctd) • As a result, not much emphasis was given to other aspects of economics especially in the area that required comprehensive critical analysis on conventional economics concepts. • However, M.A Mannan (1970) and Monzer Kahf (1978) were among the Muslim economists that has significantly wrote on Islamic perspective on conventional economics concepts. MFK ISB544 Topic 3

18. Contemporary IE Thought (ctd) • In fact in Islamic economics thought, they were regards as a pioneer in the area of microeconomics. • Apart from that, a number of works on the microeconomics has been edited by:- • Khurshid Ahmad(1980), • Rafiqul Islam Molla (1988), • Ausaf Ahmad and Kazim Raza Awan (1992) and • Sayyid Tahir (1992) MFK ISB544 Topic 3

19. Contemporary IE Thought (ctd) • As a result, not much emphasis was given to other aspects of economics especially in the area that required comprehensive critical analysis on conventional economics concepts. • However, M.A Mannan (1970) and Monzer Kahf (1978) were among the Muslim economists that has significantly wrote on Islamic perspective on conventional economics concepts. MFK ISB544 Topic 3

20. Historical development and Islamic economic reforms in Malaysia MFK ISB544 Topic 3

21. Learning outcomes At the end of the lessons, students should be able: • To explain historical development and Islamic economic reforms that has been taken place in Malaysia. MFK ISB544 Topic 3

22. Historical development in Malaysia • In Malaysia, efforts to re-emulate Islamic economics has been pioneered by university’s lecturer in the related field through:- • Seminars. • Colloquium. • conferences and etc. MFK ISB544 Topic 3

23. Historical development in Malaysia • Among the courses organised are as follows:- MFK ISB544 Topic 3

24. Historical development in Malaysia (ctd) • Subsequently, Islamic Economics course has been taught to undergraduates as well as post-graduate students in Malaysia’s public universities. • Apart from that, some of Islamic economics aspects has been incorporated in syllabus of economics that taught to form 4 and form 5 students in secondary school. MFK ISB544 Topic 3

25. Islamic Economic reforms in Malaysia • Islamic economic reforms in Malaysia began in 1981 when Tun Dr. Mahathir Mohamad came to power. • Among the initiative taken by him were:-

26. Islamic Economic reforms in Malaysia (ctd)

27. Islamic economics reforms in Malaysia (ctd) • Other than that, many legal reform were also presented and passed in parliament to enable the Islamic institutions to exist and conduct their business according to Islamic requirements such as:- • Islamic Banking Act 1983 • Takaful Act 1984 MFK ISB544 Topic 3

28. References • Islamic economic thought: Foundations, evaluation and needed direction, Muhammad NejatullahSiddiqi. MFK ISB544 Topic 3

29. Recap • Quranic and Sunnatic perspectives on economics. • Contribution of eminent jurists, philosophers, Sufis etc. • Contemporary Islamic Economic Thought. • Historical Development and Islamic economic reforms in Malaysia. MFK ISB544 Topic 3

30. Next class • Read methodology and significance of Islamic economics. MFK ISB544 Topic 3

31. THANK YOU… MFK ISB544 Topic 3