Re-Thinking Economics Part 11

Emerging Patterns from Shariah-Based Economic System

What matters most from this study is not to unearth ideal economic state of past Muslim civilizations. More importantly, we want to grasp the logic and pattern so we can chart a new manifestation of Shariah-based Economic System.

Crescent & Start Over Capitol by Eneas de Troya
Crescent & Start Over Capitol by Eneas de Troya

Shariah-based Economic System puts human nature at the very heart of its logic. Taking into account human’s cognitive and psychological biases, the system is designed to provide transparent feedback on the risk posed by the market.

Many safeguards and warnings were made against human greed. Yet at the same time it still have faith on human kindness and altruism.

With human individual nature dealth with, Shariah-based Economic System actually is more concerned with human as a social being and the wellbeing of the society itself. Anything that are onl beneficial to an individual at the expense of the society is prohibited. In other words, Shariah-based Economic System puts the society before the indidividual.

Trade is viewed as an extension of mutual aid thus greater emphasis was placed on real economic activities providing product and services. Making money from purely financial transaction is strictly prohibited. Because it is only real product and services (digital ones included) that can benefit humans.

We eat food — not numbers. Money are means for greater good, not the end in itself.

Although real product and services provide benefit to humans, too much of a good thing can be harmful as well. Thus the logic of SBES is to restrict consumption and curb consumerism.

The logic is that if an individual consumes too much of something, he is actually depriving others from benefiting from it. Seen from another angle, Shariah-based Economic System views that scarcity arises from human greed. Contrastingly, mainstream modern economic system promotes greed because of the fear of scarcity.

This thinking extends to the pattern of avoiding concentration of wealth. It doesn’t stop at that, Shariah-based Economic System even promotes redistribution of wealth through various means. At times it even ‘forces’ redistribution such as in the case of faraid.

It is not enough that wealth must not be concentrated and must be redistributed. In fact wealth and money must be highly liquid flowing fast and evenly throughout the society — whether through commercial or charitable transcation. The market also must be decentralized to avoid fragility in the system.

Shariah-based Economic System protects the market from fragility. Any measure that can fragilizes the system is prohibited. This includes but not limited to price control, ususry and large concentration of wealth.

Amidst all the economic -ism, what does Shariah-based Economic System most closely resembles? In short; Capitalism without Consumerism. The long one; Regulated Free Market Capitalism without Consumerism governed by Small Government.

Alhamdulillah, I think this more or less concludes this humble thesis of mine. The are many more tangential thoughts arising from this study but I will deal with it in separate writings.

Is This Idea Really That Radical?

At first brush, discussing about innovation in ummatic context seems paradoxical. It doesn’t help that the current image of innovators celebrated by the world are potrayed to be iconoclastic individuals. Such image is perceived to be at odds with a way of life that puts a premium on communal ties and brotherhood.

However, it is possible to innovate while maintaining a mindset of putting the community before the individual. Perhaps we are uncomfortable to put out our best self since we are ‘overdosed’ in brotherhood until it induced groupthink.

The world is moving too fast, the changing dynamics of society, politics, technology and economy are even challenging the so-called first world countries. Even they are unsure how to deal with this changing fundamentals.

We can’t wait for them to figure it out, we need to think for ourselves. We need to innovate our society, not innovating Islam. What we are changing is how the wisdom of Islam is being manifested in this world, the core teaching will remain intact.

The perceived radicalism is that sometimes we conflate the customs we practiced as the core part of Islam. But at the same time, we readily accept and follow new customs and way of life created outside Islamic framework. As if we are not confident to use our Islamic heritage as a source of solution to the challnges brought upon by the changing times.

The root word of radical is exactly that, a root. From the latin word radix, which means root. However these days, radical is usually taken to mean being root-less. But it also radical (from Western/post-Modern standpoint) to be deeply rooted in past tradition (ie: Quran, Sunnah, wisdom of elders, etc)


I paraphrased the above passage from a lecture by Shaykh Abdal Hakim Murad. This seemingly innocent wordplay strikes deep to the heart of the matter. What kind of radical idea we have – deeply rooted or completely uprooted? Challenging the ‘West’ or challenging ‘Islam’?

At times, we don’t even know what we are up against. Take capitalism for example, it is used as a convenient catch-all word to describe what’s wrong with the current economic system. But what if the arrival of Islam through Muhammad s.a.w itself means the beginning of capitalism? Does the unjust economic system we currently face is really capitalism?

We’ll let it linger for a while. But for the time being I suggest dear readers to watch this video by Benedikt Koehler deliverng his lecture entitled ‘Early Islam and the Birth of Capitalism’.

p/s: You can also get the transcript here


Statement of Ideas – Ummatic Innovation Initiative

The future of Islam is significantly depending on the qualities of Muslim individuals, communities and organizations. While we concur that Islam is revealed as a complete and perfect teaching for mankind, it depends very much on how Muslim society deals with dynamic, systemic yet radical changes from various dimensions of human affairs. In other word, we will never innovate Islam, yet we need to innovate Muslim society at large.


Moreover, as we gradually leap through the first quarter of the century, the need for Muslim societies that embrace this century multifaceted challenges through innovation appear to be demanding and sought after than ever. Muslim society must bring itself at the center-stage of post globalization era by playing active roles in leading critical areas of human endeavors including education, women empowerment, sustainable development, post digital economy, healthcare, sciences and social entrepreneurship.

Therefore, we would like start this Ummatic Innovation Initiative to spur conversation and discourse in the view of civilizational renewal of innovation leaning Muslim society.

We would like to invite similar minded individuals like you to contribute in any manner possible through series of conversations, writings and projects. Yes, we know this is a gigantic task to be shouldered on us.

Let us start small and start moving the mountain!