Umar Chapra’s book, The Future of Economics: An Islamic Perspective

Well, this book is a critique of mainstream economics and a plea for taking economics out of its secular and occident-centred cocoon. It presents an alternative paradigm based on the Islamic worldview and values, which can help realize the kind of well-being that Islam envisages for humanity.

Wow, that sounds very ambitious and intriguing. But what is wrong with mainstream economics? Isn’t it based on science and rationality?

Mainstream economics has many problems, Mr. Letterman. It has failed to address the major challenges facing humanity, such as poverty, inequality, environmental degradation, moral decay, social unrest, and spiritual emptiness. It has also failed to provide a satisfactory explanation of human behavior, motivation, and happiness. It has reduced human beings to mere self-interested agents who maximize their utility or profits without regard for the consequences of their actions on others or on the planet. It has ignored the moral and spiritual dimensions of human life, which are essential for human dignity and well-being.

So how does Islamic economics differ from mainstream economics? What are the main features of your alternative paradigm?

 Islamic economics is based on the belief that there is a Creator who has created the universe and everything in it with a purpose and a balance. He has also revealed His guidance to humanity through His prophets and scriptures, especially the Qur’an, which is the final revelation. He has endowed human beings with reason, free will, and moral responsibility. He has also assigned them the role of vicegerents or trustees on earth, who are accountable to Him for their actions and choices. Islamic economics recognizes that human beings have both material and spiritual needs, and that they seek not only worldly success but also eternal salvation. Islamic economics also acknowledges that human beings are interdependent and interrelated, not only with each other but also with other creatures and the environment. Therefore, Islamic economics aims to promote justice, equity, cooperation, compassion, generosity, moderation, balance, harmony, and sustainability in economic life.

 But how do you translate these principles into practice? How do you deal with the practical issues of economic policy and management?

Well, there is no one-size-fits-all solution for every economic problem or situation. Islamic economics does not prescribe a rigid or fixed model or system that can be applied universally or mechanically. Rather, it provides a flexible and dynamic framework that can be adapted to different contexts and circumstances. It also encourages creativity and innovation in finding solutions that are consistent with the Islamic worldview and values.

Can you give me some examples of how Islamic economics works in practice?

One of the most distinctive features of Islamic economics is its prohibition of interest or riba in all forms of financial transactions. This is based on the principle that money is not a commodity that can be traded for profit, but a medium of exchange that facilitates trade and commerce. Interest is considered unjust and exploitative because it involves taking advantage of someone’s need or distress without providing any real value or service in return. Interest also leads to concentration of wealth in the hands of a few at the expense of the many, creating inequality and injustice in society.

But how do you finance economic activities without interest? How do you mobilize savings and investments?

One of them is profit-sharing or partnership financing, where the financier and the entrepreneur share the profits or losses of a project or venture according to an agreed ratio. This creates a relationship of mutual trust and cooperation between them, as well as aligns their incentives and risks. Another alternative is trade-based financing, where the financier buys or sells goods or services on deferred payment terms or on installment basis. This involves providing real value or service to the customer or client, as well as linking finance with the real economy.

And what about other aspects of economic policy and management? How do you deal with issues like inflation, unemployment, taxation, public spending, etc?

Islamic economics has a comprehensive approach to these issues as well. For example,

To control inflation, Islamic economics advocates monetary stability and discipline by linking money supply with real output and demand.

To reduce unemployment, Islamic economics encourages entrepreneurship and self-employment by providing easy and affordable access to finance and markets.

To raise revenue, Islamic economics imposes a mandatory tax or zakat on the wealth of the rich and distributes it to the poor and needy, as well as a voluntary charity or sadaqah on the income of the generous and benevolent.

To allocate resources, Islamic economics prioritizes the basic needs and rights of all people, especially the poor and vulnerable, over the wants and luxuries of a few, as well as the preservation and protection of the environment over the exploitation and destruction of nature.

 But do you have any evidence or examples of how Islamic economics works in reality? Are there any countries or institutions that follow Islamic economics?

 Islamic economics is still a young and evolving discipline. It is not yet fully implemented or practiced in any country or institution. However, there are some signs of progress and potential in various parts of the world. For example,

There are more than 300 Islamic banks and financial institutions operating in more than 75 countries, with assets exceeding $2 trillion. They offer a range of products and services that are compatible with Islamic principles and values.

There are several Islamic development banks and funds that provide financing and assistance for economic and social development projects in Muslim and non-Muslim countries, such as the Islamic Development Bank (IDB), the Islamic Corporation for the Development of the Private Sector (ICD), the Islamic Solidarity Fund for Development (ISFD), etc.

There are several Islamic economic organizations and associations that promote research, education, training, consultation, and cooperation in Islamic economics and finance, such as the International Association for Islamic Economics (IAIE), the Association of Muslim Social Scientists (AMSS), the International Institute of Islamic Thought (IIIT), etc.

But what about the challenges and obstacles that Islamic economics faces? What are the main difficulties or criticisms that you encounter?

ome of them are internal, such as

The lack of consensus and clarity among Muslim scholars and experts on some theoretical and practical issues of Islamic economics and finance.

The lack of adequate human resources and institutional capacity to develop and implement Islamic economics and finance in various fields and sectors.

The lack of awareness and understanding among Muslim masses and leaders about the importance and relevance of Islamic economics and finance for their well-being.

Some of them are external, such as:

The dominance and influence of mainstream economics and finance in the global economic system and discourse.

The resistance and hostility of some vested interests and groups who perceive Islamic economics and finance as a threat or challenge to their power or privilege.

The prejudice and misconception of some non-Muslims who associate Islamic economics and finance with extremism or terrorism.

So how do you overcome these challenges and obstacles? How do you cope with these difficulties or criticisms?

Well, there is no easy or quick solution to these challenges and obstacles. They require patience, perseverance, dialogue, collaboration, innovation, education, action, reform, etc. However, I believe that there is a great potential and opportunity for Islamic economics to make a positive contribution to humanity’s well-being. I believe that there is a growing demand and interest for an alternative paradigm that can address the problems and challenges that mainstream economics has failed to solve or has created. I believe that there is a common ground and convergence between Islamic economics and other ethical or humanistic approaches to economics that share similar values and goals. I believe that there is a hope for a better future for all people if we work together to realize it.