Prof. Dr. Tariqullah Khan is Professor of Islamic Economics and Finance at Istanbul Zaim University. Formerly, he was President of International Association for Islamic Economics (2011-2019). He was also Professor and Program Director for Islamic Finance at Hamad Bin Khalifa University, Qatar Foundation (2009-2020). He also served as visiting scholar at Stanford University (2017) as well as at Harvard University (2011). During 2005 to 2009, he worked as Division Chief Islamic Banking and Finance at Islamic Research and Training Institute of Islamic Development Bank Group. After starting as an academic in Gomal University, Pakistan (1976-81) and International Islamic University Islamabad (1981-83), for a long time in his early career, he worked as Principal, Lead and Senior Researcher at Islamic Research and Training Institute of Islamic Development Bank Group (1983-2009). Apart from patronizing and spearheading policymaking, institution building and establishment of Islamic finance industry on sound and sustainable footing, he has written several papers, chapters and books in many research areas of Islamic economics and finance as an established academic over the years. 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.
Q.1: What inspired you to become researcher in Islamic economics?
During 1971-1972, I was a B.A. student in Sindh Muslim College Karachi studying Economics, Political Science, and Islamic History. Economics was about individual behaviors and its consequences for markets and about the economy. I was trying to relate economics with my own behavior and other people’s behavior, but was not able to connect them. Particularly, most people that I interacted with were helpful to me and were talking to me in my interest not in their own self-interest. There were numerous questions arising in my mind. However, to pass the syllabus, I had to follow it through the books and the teachers. I used to visit nearby Urdu Bazaar, a sprawling market for books. There I came across “Economic Problems of Man and its Islamic Solutions” by Abul A’la Mawdudi and “The Economic Enterprise of Islam” by Nejatullah Siddiqi. I used these two booklets to supplement the prescribed textbooks. In retrospect, I consider Mawdudi’s booklet as vision statement and Siddiqi’s booklet as mission statement for reforming economics for making it relevant for Muslim societies. Later, when I was a lecturer in Gomal University, I was introduced to the book Iqtisaduna – “Our Economics” – by Baqir Al Sadr. I had therefore an early interest in reforming economics and when in 1981, the School of Islamic Economics, International Islamic University Islamabad was established, I was prepared and able to join it as a founding faculty member. In 1983, we organized the Second International Conference in Islamic Economics and in that same year, I joined the newly established Islamic Research and Training Institute of the Islamic Development Bank. So, I would say that it was all my personal interest and then following on resources and opportunities helped me to establish a career in the field.
Q.2: What makes you think that Islamic economics has merit to be a distinct and analytical field?
If we look at the literature, we find two interrelated threads – Mawdudi-Siddiqi inspiration to reform individual behavior and hence markets to become more compassionate and markets-Hisba as the balancing institution. The second thread is the Al Sadr-Naqvi inspiration. Nawab Haider Naqvi was a Yale MS and Princeton University PhD and DG of PIDE in the early 1980s. His works focused on ‘Al-Adl wal-Ihsan’ emphasizing the problem of inequality and the need for distributive justice and important role of the Islamic State. However, there is a significant commonality in these two threads: a) man as trustee of Allah on earth b) al Meezan (the universal balance) c) institutions of Zakah and charities d) and Islamic finance.
In the Anthropocene (men’s behavior causing disastrous climate change), the humanity’s problems are linked to a) the social foundations of societies – inclusion, opportunities, shared prosperity of our generation and shared with future generations and b) the planetary boundaries – waste, emissions, deforestation etc. To highlight the problem – using ecological footprint technology, I found that if all the 8 billion people must live my lifestyle – then we need 3 earths to sustain such a lifestyle. Most of this imbalance is coming from waste and emissions. Consider people driving 9-seater SUVs where only one seat is utilized and 8 seats are wasted. The global ecological footprint data for some countries requires 20 earths not one earth.
The Anthropocene is being validated through data only during the last five years. We cannot and should not expect past scholars to have understood the phenomenon and to have provided the solutions. However, when we interpret the Al Meezan (universal balance) and concept of men as trustee of Allah, abhorrence to Israf and Tabzeer, we have a behavioral and institutional solution to remediation of the Anthropocene. This is what makes Islamic Economics a nature-based solution, especially if we revisit the Maqasid (Intent of Legislation) in our recent contemporary perspective.
Q.3: Analyzing the last 50 years of research in Islamic economics, what are the points of success and shortcoming?
Islamic Economics has inspirational underpinnings and these well fit in the current context of post Covid-19 global transformation. It should come from paradigm shift from a financialized waste and emissions driven current system to a zero-waste, zero-emissions and zero-financialized compassionate system. So far, the practice of Islamic Economics has followed the path of the dominant paradigm adding Halal script to it. So far, financialization has hijacked Islamic Economics. Halal is essential but insufficient – this pivot explains the path forward.
The challenge is that for a discipline to flourish, there must be an active practice. The closest active practice to Islamic Economics is Circular Economy which is based on the core philosophy that nature does not waste – water and oxygen cycles are examples. Studying the policy initiatives and practices for transitioning to circular economies offer a good opportunity for Islamic Economics to further its own added inspirations.
Q.4: As we deal with Post COVID-19 recovery, what role Islamic economics through its principles and institutions could play in your opinion?
The first and overarching priority should be to revisit the Islamic Economics agenda in the context of the Anthropocene and find an implementable paradigmatic approach, which is Islamic Circular Economy that is to address the social problems of exclusion, poverty, and discrimination within the planetary boundaries.
That also requires the not-for-profit (philanthropic–charitable) sector or Awqaf and the for-profit Islamic finance sector to work on joint initiatives. An example is green energy low-cost housing or Zero-waste, zero-emissions SMEs where the charitable sector can subsidize the cost of financing for the beneficiary financed by the Islamic commercial banks.
Q.5: How do you see Islamic finance and Islamic capital markets in 2021 as most economies are expected to post positive growth rate and vaccination at mass scale may keep spread under control?
Islamic financial institutions, products and markets will face tremendous pressure from the global responsible finance movement. There is a huge transition movement to circular economy. Pakistan for example has announced that by 2025, 60% of vehicles in Pakistan will be on electricity. The UNEP has announced to close all coal energy centers. There is an unprecedented transformation taking place having immense implications for supply chain, resource extraction, waste, and emissions strategies. Governments under Paris Agreement are offering significant subsidies to businesses and regulators are trying to put together new criteria for conducting businesses. Central Bank reserves management, pension fund managers, banks and insurance companies are all under pressure to green their operations. Sticking to Halal is essential, but if it is deemed a completely sufficient approach, it will make Islamic finance lag in this race towards responsibility. So, in 2021 and beyond, we see significant green transformation in Islamic finance and overall business processes, government policies and regulations. Furthermore, I hold the view that why not reform Islamic Finance Education as well to prepare and respond to the new opportunities as well?
Q.6: What is your advice to aspiring researchers in the field of Islamic economics and finance?
I would make several suggestions. 1) Converge the above two threads – Markets should be compassionate (inclusive of present and future generations and other species) and States must ensure inclusion and facilitate opportunities without discrimination. 2) Find a paradigm which is in practice and which is internally consistent with the foundational teachings of Islamic Economics. This in my view is Islamic Circular Economy. 3) Follow the Anthropocene related ecological debate to heal businesses and economies by catering to social foundations of society and planetary boundaries. 4) Follow the scientific data on climate change and climate policy landscape to make the research relevant and in service of humanity and other species. 5) Find nature-based solutions. 6) Explore the prospects of Islamic social finance and Islamic finance to work jointly on initiatives and projects that are beneficial for the society. 6) Help in greening Islamic Economics and Finance practices. Here is a summary of research agenda to make Islamic Finance more responsive by greening it at all levels.