This paper presents the ideas of transformative school in Islamic economics. Transformative school of thought in the methodology of Islamic economics is not that much interested in descriptive studies and improving the predictive capability of models to analyze market outcomes and to design policies accordingly. It believes in the transformation of choices through education.
Muslim economists have employed the mainstream economics tools to explicate consumption in the Islamic framework. Two of the key limitations of these early works are that they used the Keynesian framework without building micro foundations and they did not model the behaviour in an intertemporal context.
There is considerable debate in Islamic economics literature on what shall be the correct response and attitude towards mainstream economics methodology. There are three varied responses among Islamic economists regarding the issue. The first response is to use the methodology of mainstream economics in Islamic economics as is. The second response is to modify it according to the needs and the context of Islamic framework. The third response is to discard it altogether and devise a new methodological framework from scratch.
Islamic Economics Project 