Ahmed El-Ashker and Rodney Wilson

This book provides a succinct summary of Islamic economic thought over the different eras in history. It covers the development of ideas from the early Muslim jurists to the contemporary period.

The author gives an account of the state of development of the economy and markets in Arabia. It explains how Islamic jurisprudence paved the way for institutional and governance framework to facilitate Shari’ah compliant trade of goods and services. It outlines the principles of Islamic economics which adds the dimension of distributive justice in macroeconomic and Akhlaq in microeconomic behaviour.

After covering the details on economic context, economic management, issues and reforms in the period of Khulfa-e-Rashideen in the first four chapters, Chapter 5 gives an account of the analytical works by Muslims thinkers who came after the period of pious companions (rta). Chapter 5 focuses on the peak of intellectual development in Islamic history, which led to the first specialized books on Islamic economics. It explores the changes in economic features and the intellectual development that characterized this period.

The earlier scholars provided application of Islamic juristic principles to derive and apply the Islamic teachings related to commerce, entrepreneurship and consumption. Muslim scholarship initially focused on public finance and its administration to deal with the practical problems of the newly formed state which expanded rapidly and required sound legal and administrative framework to legislate economic activities centred around agriculture and trade.

The earlier works addressed the land reforms, administrative reforms, establishment of property rights and developing market norms and market legal infrastructure for sound governance. In the earlier works, the focus remained on developing the legal frameworks. Kitab-ul-Kharaj by Abu Yousuf is the first masterpiece and organized work on Islamic Economics, followed by another work by Abu Ubaid on Kitab-ul-Amwal.

Kitab-ul-Kharaj is a work on land taxation which also touches upon the issues of equity, welfare, justice and welfare enhancing public spending such as digging canals and building bridges to improve productivity and increase tax revenue.

Imam Shaibani moved from a macro to a micro-economic focus. Imam Shaibani’s Kitab-ul-Kasb looks at the microeconomics and deduces the Shari’ah principles and teachings related to earning, consumption and spending on welfare.

The subsequent works also categorized the economic activities and discussed the governance and administration keeping in view compliance with Shari’ah and also achievement of social justice, distributive justice and welfare. It is also important to note that the literature from the Sufi tradition did not completely deny the importance of earnings, productive pursuits and enterprise. It emphasized on Tawakkul with Harakah (movement, i.e. enterprise).

Muslim thinkers also built the foundations of market-based economics by talking about division of labour, importance of trade based on fairness and comparative advantage, role of money and importance of risk-sharing based financial and economic enterprise.

Imam Ghazali writing on money emphasized that money should act as a medium of exchange and a unit of account. However, usurious practices promote fetching money from money which brings about concentration of wealth, decline in investment and retards productive pursuits in the economy and employment creation.

The subsequent literature in Islamic economics also builds the foundations of Islamic institutional economics including Ahkam-us-Sultania by Imam Mawardi and Siasat-e-Madina by Farabi. It highlighted the governance principles. Ibn-e-Khuldun worked on sociology of economics and provided positive theories to explain civilizational growth and decline. Shah Waliullah also emphasized the principles of sound governance to establish order and justice in the state, which is precursor for development and welfare.    

Chapter 7 covers the period when three powerful empires—the Ottoman, the Safavid, and the Mongol—dominated the Islamic world. The book highlights the socio-economic and political changes that occurred during this time and their effect on intellectual development and Islamic economic thought.

Chapter 8 focuses on the Islamic reform movements from the 19th century to the 20th century. It discusses three main types of reform movements: traditional, reconciling, and secularization. The chapter also covers the rise of Islamic revivalism and its main features, which became more prominent in the 20th century, particularly with the emergence of Islamic banking.

The last chapter on the future of Islamic economics also highlights important trends in the literature on Islamic economics. There is more emphasis on empirical research after the proliferation of Islamic financial institutions and availability of data together with juristic analysis of contemporary contracts, institutions and practices.

However, there ae unsettled issues which deserve attention including the institutionalization of Zakat in modern economy, liquidity management in Islamic finance, decoupling from the structures and pricing of conventional financial products and developing descriptive theories in Islamic economics, which are analytical and yet rooted in the sources of knowledge in Islam.