Paper Title: Islamic Economics and Economics as a System of Power

Author:        Dr. Adem Levent and Dr. Fahriye Afacan

Publisher:    Turkish Journal of Islamic Economics, 13(1), 61–86, 2026

The research paper by Dr. Adem Levent and Dr. Fahriye Afacan provides a critical examination of the theoretical status of Islamic economics by situating it within the broader framework of institutional power and the historical evolution of economic thought.

The central thesis of the work posits that the perceived theoretical disorganization and lack of analytical maturity in Islamic economics are not merely internal failures of methodology or doctrine but are primarily a consequence of its lack of an institutional center and an associated economic-political power base.

By drawing a parallel with the ‘Americanization’ of mainstream neoclassical economics after 1945, the authors argue that the validity and dominance of any economic theory are directly related to its institutionalization and its integration into hegemonic power structures.

The paper begins by addressing the post-colonial emergence of Islamic economics, which sought to establish an independent discourse based on interest-free commerce, moral behavioral norms eschewing self-interest, and the pursuit of social justice.

Despite these ideal goals, the field has faced severe criticisms from scholars such as Prof. Timur Kuran, Prof. Akram Khan, and Prof. Syed Tahir for failing to develop a unique value set, an original methodology, or the analytical power necessary to solve modern economic problems.

However, the authors suggest that these criticisms often overlook the fact that economics itself is a power system. They note that mainstream neoclassical economics faces similar charges of being pseudoscience or detached from reality by heterodox schools, yet it remains definitive and decisive because it is backed by institutional power.

A significant portion of the analysis is dedicated to the historical institutionalization of neoclassicism in the United States. The authors identify two pivotal shifts: The Marginalist revolution of the 1870s, which transformed political economy into a formal science of models, and the post-1945 shift of the discipline’s center of gravity from Europe to the US.

During this latter period, economics became Americanized, characterized by a high degree of specialization, mathematization, and a reliance on mathematical deductive models. This transformation was not accidental but was intertwined with the rise of the United States as a global hegemonic power. Most of the theories built in macroeconomics would take the context and evidence for America alone while ignoring the rest of the world.

The authors opine that it is the acceptance of neoclassical theory by a powerful state, rather than its internal consistency, that has carried the theory into the mainstream.

The authors utilize the perspectives of institutional economists such as Warren J. Samuels and John Kenneth Galbraith to define economics as a system of power.

Samuels argues that economic policy theory is essentially concerned with the distribution of power, while Galbraith highlights how large corporations have taken over politics and the economy, creating a producer sovereignty that contradicts the neoclassical assumption of consumer sovereignty.

According to this view, mainstream neoclassical economics often camouflages the existence of power by using seemingly neutral mathematical models, thereby legitimizing the existing social and economic order. The authors suggest that neoclassical theory’s dominance is an example of structural power, which is systematic and reinforced by institutional structures, much like Max Weber’s definition of power as the ability to impose one’s will despite resistance.

In contrast to the robust institutionalization of the mainstream, Islamic economics is portrayed as theoretically fragmented. The paper traces the development of the field through four generations of scholars.

The first generation (1926–1950) laid the foundations and introduced core terminology. The second generation (1951–1975), led by figures like Prof. Nejatullah Siddiqi and Prof. Umer Chapra, adopted an analytical style and established the First International Islamic Economics Conference in 1976—a major turning point that led to the creation of research centers and financial institutions.

The third generation (1976–2000) saw wider recognition through professional journals and academic departments. The fourth generation, emerging in the 21st century, often holds degrees from Western institutions, leading to an increased use of financial engineering and econometric models in empirical researches, but also a widening gap between theorists and practitioners.

Despite these developments, the authors argue that Islamic economics has not yet achieved a complete distinct institutional identity. Furthermore, the rise of financialization after 1980 has diverted the focus of Islamic economics toward Islamic finance, further complicating its development as a coherent alternative to capitalism.

The ontological differences between the two systems are also examined. Mainstream economics relies on a social ontology of isolated atoms and deductive laws to achieve mathematical certainty.

Islamic economics, however, is based on an ontology derived from religious texts (Qur’an and Hadith) and philosophical foundations such as tawhid (the Oneness of God), justice, and responsibility. Tawhid provides the essence of the Islamic worldview, linking finite social institutions to an infinite being and emphasizing inherent human equality.

The authors note that while some scholars like Prof. Akram Khan suggest Islamic economists should work within the neoclassical mainstream to gain academic legitimacy, others like Prof. Nejatullah Siddiqi see Islamic economics as a heterodox school offering a critique of the orthodox center.

The authors conclude that the primary reason Islamic economics appears disorganized is its lack of a state experience and an institutional center similar to those that propelled neoclassical economics to the forefront. They argue that it was the acceptance of neoclassical theory by a powerful state—specifically through massive government spending on higher education and the professionalization of the American Economic Association—rather than its internal consistency that ensured its dominance.

The paper ultimately suggests that for Islamic economics to become an influential social science worldwide, it must go beyond mere theoretical refinement and gain an experience mixed with institutional and political power. Only by acquiring such power and sharpening its claims can Islamic economics transition from its current peripheral status to a robust global alternative. Hence, the authors attempt to reframe the perceived failures of Islamic economics not as a lack of theoretical or methodological rigor, but as a consequence of its lack of institutionalized power.

However, the paper makes some debatable assertions. The authors opine that consistency and validity of an economic theory are directly related to political power and institutionalization.

This assertion represents an epistemological anomaly; it conflates sociological dominance (hegemony) with epistemic truth or internal logical consistency. In the philosophy of science, the validity of a theorem or the empirical robustness of a model is independent of the political status of its proponents.

By suggesting that Islamic economics would become a certainty or valid if it possessed a strong state experience, the authors risk reducing social science to mere ideology.

By focusing on the lack of power, the authors miss the opportunity to critique how the current institutionalization of Islamic finance may actually be undermining the original moral goals of Islamic economics (i.e. justice, ihsan, and welfare). If Islamic finance is successfully institutionalizing by mimicking the power structures of global capitalism, then the authors’ thesis would suggest it is becoming more valid, even as it potentially loses its Islamic character. This contradiction is not fully resolved in the paper.

In place of the power-centric presentation in the paper, a more balanced viewpoint would suggest that the success of a social science is a symbiotic result of both internal logical consistency and external institutional support.

Islamic economics, conversely, may be struggling not just because it lacks a hegemonic state experience, but because its core axioms are yet to be translated into a functional, predictive macro-model that can compete in the global marketplace of ideas.

The paper’s conclusion that criticisms of Islamic economics would become invalid with state power is a dangerous precedent for any academic discipline, as it suggests that truth is a function of might.

Malaysia and other countries had provided legal breakthroughs to Islamic economic institutions and there is no lack of funding for the promotion of Islamic economics and finance conferences. The author is right that the field has to be developed more committedly to overcome the disorganization. However, state support alone may not mask the disorganization, incoherence and lack of preparation.