Book recommendation: Islamic Economic Laws and Regulations Handbook (World Business and Investment Library)
By Yasser Latif Hamdani
The Islamisation process in Pakistan has been debated in detail in our national press, but what most commentators fail to take into account are the social and material conditions surrounding the push for Islamisation especially in the early 1980s. It is the view of this author that Islamisation in Pakistan has been a cynical response by the economic elites of Pakistan to both the forces of socialism and Islamism. In the process the economic elites have been willing to give Islamists a space in the society and influence over non-economic matters provided they keep themselves out of economic matters. This strategy however has only found limited success and a full blow back of this became evident when the entire banking sector was under the Sword of Damocles throughout the 1990s when an ill-advised and ill-conceived judgment of the Federal Shariat Court threatened to bring it down to its knees.
As the Islamic world came into contact with western capitalism through colonialism the initial Islamic response was couched in modernist terms. Islamic modernists like Iqbal did not view interest-based economics as a threat to Islam or in violation of Islamic injunctions against Riba. This much is clear from his piece "Ilmul Iqtasad" which was an overview of the modern economic system. The Islamic modernist element was ascendant during the movement for Pakistan and therefore for many years subsequent to the creation of the country no real intellectual movement was seen towards an interest free economy. The notion that modern interest banking was equivalent to Riba found its origins in revivalist Islamic thought championed by Maulana Maududi and Syed Qutb. The idea was wholly misconceived: There are certain fundamental questions that need to be considered when we extend religious logic - and flawed reasoning at that - to issues of economic importance. For example how is western interest-based banking, which developed only 400 years ago, equivalent of Riba that was forbidden by the Holy Prophet (PBUH)? There was no conception in Islam of a banking system where loanable funds were themselves a product. In modern banking, the whole idea of interest is distinguishable from Riba on the grounds that interest is merely a price charged for loanable funds which makes the whole issue a legitimate transaction. Yet modern Islamic thought - instead of updating its world view through ijtehad - has now increasingly come to accept modern interest-based banking as Riba.
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By Yasser Latif Hamdani
The Islamisation process in Pakistan has been debated in detail in our national press, but what most commentators fail to take into account are the social and material conditions surrounding the push for Islamisation especially in the early 1980s. It is the view of this author that Islamisation in Pakistan has been a cynical response by the economic elites of Pakistan to both the forces of socialism and Islamism. In the process the economic elites have been willing to give Islamists a space in the society and influence over non-economic matters provided they keep themselves out of economic matters. This strategy however has only found limited success and a full blow back of this became evident when the entire banking sector was under the Sword of Damocles throughout the 1990s when an ill-advised and ill-conceived judgment of the Federal Shariat Court threatened to bring it down to its knees.
As the Islamic world came into contact with western capitalism through colonialism the initial Islamic response was couched in modernist terms. Islamic modernists like Iqbal did not view interest-based economics as a threat to Islam or in violation of Islamic injunctions against Riba. This much is clear from his piece "Ilmul Iqtasad" which was an overview of the modern economic system. The Islamic modernist element was ascendant during the movement for Pakistan and therefore for many years subsequent to the creation of the country no real intellectual movement was seen towards an interest free economy. The notion that modern interest banking was equivalent to Riba found its origins in revivalist Islamic thought championed by Maulana Maududi and Syed Qutb. The idea was wholly misconceived: There are certain fundamental questions that need to be considered when we extend religious logic - and flawed reasoning at that - to issues of economic importance. For example how is western interest-based banking, which developed only 400 years ago, equivalent of Riba that was forbidden by the Holy Prophet (PBUH)? There was no conception in Islam of a banking system where loanable funds were themselves a product. In modern banking, the whole idea of interest is distinguishable from Riba on the grounds that interest is merely a price charged for loanable funds which makes the whole issue a legitimate transaction. Yet modern Islamic thought - instead of updating its world view through ijtehad - has now increasingly come to accept modern interest-based banking as Riba.
Read more.
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