Prof. Dr. Asad Zaman is a prolific scholar in Islamic economics with his own views about what should be the focus, methodology and scope of the subject. He did PhD in Economics from Stanford University and MS Statistics from the same university. He did his BS in Mathematics from MIT, USA. In his initial career, he had contributed to classical and Bayesian econometrics. Some statistical tests are named after him. He had taught in University of Pennsylvania and Columbia University, USA as an Associate Professor. He has also taught in John Hopkins University.

He has been colleagues with several Nobel Laureate economists. But, as his conviction grew that mainstream neoclassical economics is inadequate and built on weak foundations, he had a change in academic focus. He came back to his native country Pakistan and also served at LUMS University, IIUI and at PIDE University as Vice Chancellor. In the later part of his career, he became critical of neoclassical economics. He contributed many critical papers on neoclassical economics theory, methodology, its historical foundations and how economics should be reformed.  In Islamic economics as well, he presented many unique ideas and cautioned against mimicking Western institutions, their historical experiences, and body of knowledge and methodology in Western social sciences. He believes in transformative and reformative education which gives ethics and values a central place in how we think about real world issues. He has written several highly cited and influential papers and book chapters.  We got an opportunity to get his insights on Islamic economics and finance and hope that these insights will introduce new ways of thinking for young economists and social scientists aspiring to contribute in this field.

Question 1: Do you think that Islamic economics has a distinctive identity different from both Socialism and Capitalism?

Yes, I have spelled out the differences in my 100 page article: Islamic Economics: A Survey of the Literature. There are several books which also summarize this difference. To put it very briefly, both socialism and capitalism are materialist philosophies which see human welfare as being determined by wealth. They differ on how wealth should be produced and distributed.

In Islam, wealth or lack of it are both spiritual trials. Indeed, our life on earth is a trial and material goods are one part of this trial. If we act in appropriate ways with wealth, it can be a means of spiritual progress. If we act like Qaroon, then this same wealth can be a curse. The literature survey is available on this link:

https://sites.google.com/site/zamanislamicecon/lectures

Question 2: In your opinion, is Islamic banking industry heading in the right direction at the moment considering the broader egalitarian goals of Islamic economics?

At the start, everybody recognized and stated that we will start from an imperfect beginning, using less than ideal instruments, because that is what was possible then.

We thought that later on, we could move towards more ideal Islamic systems. However, from the starting point, movement has been in the opposite direction, towards more and more similarity with capitalist system on instruments.

One of the strong claims and ideas was that capitalist banks lead to concentration of wealth, while Islamic banking would benefit society in various ways by socially responsible behavior. There are no signs of this happening.

In addition, an extremely large percentage of the industry has been captured by Western banking industry or by banks which also have side by side conventional banking and finance operations. Obviously, these institutions are motivated by profit, and not by the idea of providing social service in Islamic countries.

Question 3: Do you think it is right to evaluate and compare Islamic economics by comparing practiced Islamic banking and finance with conventional banking and finance institutions?

Islamic economics represents a system which is just and equitable and provides for the needs of all.

Islamic banking as currently practiced is simply an extension of the capitalist drive to control and direct all wealth for the advantage of small elite.

Question 4: For the recognition of Islamic economics as a distinctive economic system in mainstream academic literature, what steps are necessary which must be taken by academic policymakers?

Islamic economics is built on the hearts of people. It requires inner spiritual transformation like the one brought about in the Arabs by the teachings of our Prophet Muhammad (peace be upon Him). Policy makers of academic institutions should change the methodology of education to the one brought by our Prophet (peace be upon Him), who was the best of teachers.

The differences and advantages of an Islamic methodology of education have been spelled out in my essay: Principles of an Islamic Education. This essay is the first lecture of my lectures on Islamic Economics: https://sites.google.com/site/zamanislamicecon/lectures

Question 5: Do you think that Islamic worldview is the cornerstone in understanding and developing Islamic economics literature and institutions in particular? Has it been equally appreciated by Islamic economists and practitioners in Islamic financial institutions?

An Islamic worldview is absolutely central to understanding the Islamic system. This system is a complex web of inter-related institutions, none of which can be understood in isolation. Furthermore, it is not sensible to talk about Islamizing banks, while leaving intact the entire complex architecture of capitalist institutions within which it is placed.  

The Islamic economy requires Islamic political, social, educational, judicial, and other institutions to work in harmony with the economic system. Taking just one piece does not work. Again, I have discussed this issue in many of my writings. My essay entitled “An Islamic Worldview: An Essential Component of an Islamic Education” is also available from these websites.