Paper Title: Reclaiming Economics as a Moral Science: An Islamic Approach to Monetary Reform 

Author:        Prof. Dr. Asad Zaman

Discussant:   Prof. Dr. Tariqullah Khan

Publisher:    Turkish Journal of Islamic Economics, 13(2), 1-21].

Prof. Zaman’s paper, ‘Reclaiming Economics as a Moral Science: An Islamic Approach to Monetary Reform’ argues that contemporary monetary reform remains incomplete because it concentrates on technical solutions – such as macro prudential regulation, institutional safeguards, and regulatory redesign – while insufficiently addressing justice and public welfare.

He observes that Islamic finance has developed relatively sophisticated mechanisms for micro-level Shari’ah compliance but still lacks comparable institutional capability for governing systemic outcomes in accordance with the public interest. The paper therefore reframes monetary reform as a problem not only of technical design but also of moral governance.

To address this gap, Prof. Zaman proposes a triangular ethical architecture built around three institutional pillars: banks as delegated creators and allocators of money, the state and central bank as regulators and macroeconomic coordinators, and an institutionalized moral authority charged with safeguarding justice and public purpose. The proposed Monetary Justice Commission is intended to give this moral authority an enforceable institutional form.

Using Pakistan as an illustrative case, the paper argues that monetary power rests on public trust and should therefore be treated as an amānah, requiring accountability, equitable distribution of gains and losses, and institutional protection of the common good across both booms and crises.

Viewed through the architecture of Dynamic Prescriptive Islamic Economics (DPIE), Prof. Zaman’s argument can be formalized around two irreducible and non-substitutable dimensions: X=Maqāṣid realization and Y=institutional capacity, subject to a Halal floor. Prof. Asad Zaman’s paper is exceptionally well suited to analysis through the full Dynamic Prescriptive Islamic Economics (DPIE) https://www.tariqullah.com/dynamic-prescriptive-islamic-economics architecture.

Its central thesis is already structurally two-dimensional: Islamic monetary governance requires both normative purpose and institutional power capable of making that purpose operative. The paper argues that contemporary Islamic finance has developed substantial transaction-level Shari’ah-compliance capacity but lacks equivalent institutional capability for protecting justice and public welfare at the system level. The paper therefore provides almost a textbook case for the DPIE proposition that Maqāṣid and institutional capacity are irreducible and non-substitutable dimensions.
We would formalize the paper as

▭(X=”Maqasid Realization” ) ▭(Y=”Institutional Capacity” )
with the target
v^*=(+1,+1)

and with a Halal floor as an admissibility constraint rather than as a substitute for the X-axis. This distinction is crucial because Prof. Zaman himself argues that a system composed of halal contracts can nevertheless generate injustice, exclusion and harmful systemic outcomes: “micro halal does not guarantee macro justice.” Thus, Halal is the floor; Maqāṣid is the direction of improvement beyond the floor.

Level 1 — Normative and Diagnostic Architecture

1. The Halal Floor

The strongest DPIE interpretation is:

H≥H_min

as a prior admissibility condition.

A monetary arrangement that violates the minimum requirements of Shari’ah does not become acceptable simply because it produces high welfare or has excellent institutions. Conversely, satisfying the Halal floor does not place a monetary system at X=+1. It only makes the system eligible for evaluation in the Maqāṣid–institutional space.

This is precisely the distinction the paper seeks to recover. Contemporary Shari’ah governance has concentrated on product certification, Shari’ah boards and formal contract compliance, while systemic justice, inclusion and welfare remain inadequately governed.

2. Normalized Balanced Coordinates

A workable DPIE rubric would be:

The paper gives direct justification for the positive end of the X-axis: monetary authority is an amānah and must promote ʿadl and maṣlaḥah, prevent harm and serve social well-being. It simultaneously justifies the Y-axis by insisting that moral intentions remain ineffective unless translated into formal institutional structures with enforcement.

3. Four DPIE Quadrants

Using standard Cartesian labeling:

This reveals something particularly important about the paper: Prof. Zaman is effectively trying to join Q2 and Q4 in order to produce Q1.

Mainstream macro prudential economics possesses sophisticated institutional tools but, in the paper’s analysis, it largely excludes questions of justice and distribution. It therefore approximates Q2. Islamic moral economy, by contrast, possesses a strong normative conception of justice but lacks “institutional teeth” at the macro level, approximating Q4.

The paper’s triangular governance proposal is explicitly an attempt to escape both traps simultaneously.

Level 2 — Prescriptive DPIE Architecture

4. The Proposed Q1 Institutional Configuration

The paper proposes three integrated pillars: banks and financial institutions; the state and central bank; and an institutionalized moral authority. The third pillar is not intended as symbolic Shari’ah review but as a standing governance institution possessing legitimacy and enforceable restraint.

This can be represented as:

(-,+)_Q2 + (+,-)_Q4 (“institutional integration” ) (+,+)_Q1

This is perhaps the paper’s deepest DPIE insight. Technical capacity cannot compensate for missing Maqāṣid, while moral aspiration cannot compensate for missing institutional capacity.

The paper explicitly reaches essentially the same non-substitutability conclusion when it says that technical and legal pillars without moral governance remain vulnerable to circumvention and capture, whereas moral critique without institutional levers produces denunciation rather than effective governance.

5. d-Gap

DPIE measures distance from the desired state:
d=√((1-x)^2+(1-y)^2 )

The crucial value of d here is conceptual rather than merely mathematical. A system cannot compensate for poor Maqāṣid performance through additional regulatory sophistication, nor compensate for weak institutions through greater ethical rhetoric.
For illustration, the paper’s diagnosis of contemporary Islamic finance might reasonably be located approximately around

v0=(-,0.25+0.35),

meaning that institutional machinery is clearly present, but systemic Maqāṣid realization remains deficient. This is an illustrative DPIE coding, not an empirical estimate reported by Prof. Zaman.

It gives approximately
d0≈1.41.

By contrast, a successfully implemented Monetary Justice Commission architecture might aspire toward something such as

v1=(+,0.80+0.75),

which would reduce the gap to approximately
d1≈0.32.

The important point is not these particular numerical estimates but the direction and measurability of transition.

6. Weakest-Link Principle

DPIE adds a particularly valuable constraint:
P=min⁡(x,y).
Under this criterion, a monetary system with x=0.90, but y=-0.40 cannot be described as highly Islamic merely because its objectives are admirable. Its effective systemic performance is constrained by institutional incapacity.

Likewise,
(x,y)=(-,0.400.90)

does not constitute successful Islamic monetary governance simply because the central bank, regulators and Shari’ah boards are technically sophisticated.

This formalizes the paper’s essential argument: neither Maqāṣid nor institutional capacity can substitute for the other.

7. STO Architecture

Prof. Zaman already provides much of the substance required for DPIE’s Substitution–Transformation–Offset mechanism.

The paper itself contains exceptionally concrete transformations. It proposes macro-ethical Shari’ah opinions covering balance sheets, credit allocation, risk and public-interest performance; treating money creation as delegated public authority; and insulating Shari’ah oversight from commercial capture through centralized financing and appointment structures.

The Offset category is less explicitly developed in the paper. DPIE therefore adds value here. Prof. Zaman explains what institutions should prevent, but a fuller DPIE implementation would explicitly specify how unavoidable monetary shocks, banking failures, inflationary costs or adjustment losses are to be distributed without violating Maqāṣid.

8. Transition Velocity τ

With
d_max=2√2,

a normalized position indicator can be written as

τ=1-d/(2√2).

More importantly, DPIE treats change in τ through time as a governance indicator.

A reform that establishes a Monetary Justice Commission but leaves appointment capture intact may produce very little real increase in τ. Conversely, if public-interest credit allocation, independence, transparency and distributive justice improve simultaneously, the system is genuinely converging toward v^*=(1,1).

This prevents institutional relabeling from being confused with transformation—precisely one of Prof. Zaman’s own concerns about symbolic Shari’ah governance.

Level 3 — Nonlinear Dynamic DPIE

This is where DPIE adds the largest analytical extension to the paper.

Prof. Zaman recognizes that financial systems are endogenous and adaptive. Stability itself encourages greater risk-taking; new rules produce regulatory circumvention; regulated institutions adapt; and regulators can become captured. He consequently rejects a once-and-for-all technical solution.

That logic should be formalized dynamically as

x_(t+1)=F(x_t,y_t,S_t,T_t,O_t,C_t,ϵ_t )
y_(t+1)=G(y_t,x_t,S_t,T_t,O_t,C_t,ϵ_t ),

where C_trepresents capture, regulatory arbitrage and political-economic resistance, while ϵ_t represents shocks such as crises.

The functions should be nonlinear, because the paper itself implies threshold effects. A small deterioration in regulatory independence may initially have little visible consequence but, beyond a capture threshold, can destroy institutional credibility very rapidly. Similarly, severe financial crises can produce discontinuous movements in Maqāṣid outcomes through unemployment, foreclosure and asymmetric bailouts.

Thus:
∂x/∂y>0, ∂y/∂x>0

need not be constant. Strong institutions can improve Maqāṣid outcomes; legitimacy and public trust can, in turn, strengthen institutional effectiveness. Conversely, simultaneous deterioration can produce a reinforcing movement toward Q3.

This is a major DPIE extension beyond the paper. Prof. Zaman describes the feedback processes convincingly—the rules/evasion/revision cycle is explicitly discussed —but does not yet convert them into an explicit nonlinear state-transition model.

9. AER — Accumulated Epistemic Rationality

AER_t→”measurement”→(x_tⓜ,y_t )→d_t→STO_t→(x_(t+1)ⓜ,y_(t+1) )→AER_(t+1)

The framework therefore becomes learning governance, rather than a static Islamic monetary constitution.

▭(“Halal Floor” →(x_tⓜ,y_t )→”Quadrant” →d_t→min⁡(x_tⓜ,y_t )→STOs→τ→”Outcome Evidence” →AER→(x_(t+1)ⓜ,y_(t+1) ) )

The cycle repeats because neither financial behaviour nor political institutions are stationary.

This is particularly compatible with Prof. Zaman’s insistence that justice operate as a binding constraint throughout the business cycle, rather than only being evaluated after crises occur.

Overall DPIE Assessment

The paper can be interpreted as a remarkably strong proto-DPIE monetary-governance architecture.

Its central contribution is not merely the proposed Monetary Justice Commission. More fundamentally, it identifies two failures of one-dimensional reasoning:

The proposed Monetary Justice Commission provides an unusually good institutional home for AER.

Each policy cycle would generate evidence on credit allocation, financial inclusion, concentration, household vulnerability, systemic fragility, distribution of gains and losses, complaints, Shari’ah performance and public legitimacy. The Commission already envisaged by Zaman brings economists, civil society and ʿulamāʾ into the governance process.

DPIE would convert this into:

10. Dynamic Iteration

The complete DPIE policy loop for the paper becomes:

▭(“Maqasid without institutions” →Q4)
and
▭(“Institutions without Maqasid” →Q2).

The proposed solution is therefore logically

▭(Q4+Q2⟶Q1:(+ⓜ,1+1) )

rather than maximizing either dimension independently.

I would assess its compatibility with the full DPIE architecture at approximately 9/10 conceptually. It already supplies the Halal-versus-justice distinction, irreducible normative and institutional dimensions, explicit capture mechanisms, system-level governance, concrete institutional reforms and an inherently dynamic understanding of finance. What is missing for a fully operational DPIE model is principally the normalized −1 to +1 rubrics, explicit quadrant diagnostics, d-gap, weakest-link criterion, STO classification, τ measurement, empirical indicators, AER learning loop and formal nonlinear state-transition equations.

The most important intellectual contribution DPIE adds is therefore not to replace Prof. Zaman’s triangular architecture, but to embed it within a measurable dynamic system. Prof. Zaman provides the institutional theory; DPIE turns it into a diagnostic → prescriptive → nonlinear adaptive governance architecture directed toward the joint Maqāṣid–institutional ideal v^*=(1ⓜ,1).

In my assessment, this is one of the clearest applications of the full DPIE architecture because the paper itself demonstrates why Halal compliance is a necessary floor, Maqāṣid realization is the normative destination, and institutional capacity is the non-substitutable means by which that destination becomes governable.