Islamic Economics as a New Economic Paradigm

The more recent literature on Islamic economics is largely about Islamic financial instruments and institutions. It might give the impression that the main difference between conventional and Islamic economics is in the instrumental part, rather than fundamental aspects. Islamic economics is not about the prohibition of certain goods and services. It is a vastly different economic system whose answers to the core economic questions vary significantly. As is currently done, mimicking conventional economics and finance is only creating Islamic economics and finance by name. The essence and soul of the capitalist system is largely untouched. It is important to start from the foundation Islamic economics by redefining assumptions, developing new theories of microeconomics and macroeconomics, and offering testable models from the Islamic paradigm. As Nasr indicates, the theoretical works in Islamic economics has “failed to escape the centripetal pull of western economic thought, and has in many regards been caught in the intellectual web of the very system it set out to replace” (Nasr 1991, 388). Indeed, the differences between Islamic and capitalist financial institutions are getting more blurry every day.