Toward the Shari'ah Paradigm of Islamic 
Economics: The Beginning of a 

Scientific Revolution 

by 
Muhammad Arif* 

I. INTRODUCTION - THE MAJOR CRITICS OF

ISLAMIC ECONOMICS: 

This paper attempts to respond to the critics who, on various grounds, 
oppose the development of Islamic economics. The author feels that a 
scientific response to these critics is the responsibility of the Islamic 
economists. It is believed that such a response would be educational for 
the critics and their followers. It would enable them not only to 
understand the scientific nature of Islamic economics but would also 
allow them to appreciate that the development of the Shari'ah paradigm 
ofislamic economics is, in fact, the beginning of a scientific revolution in 
economics. 

Given the bases of their arguments, these critics of Islamic economics 
can be classified into the following three schools of thought. 

1) The Adjusted Capitalism School:

According to this school the fundamental principles of the Islamic
economic system are the same as those of capitalism. In support of this 
assertion they point out that like capitalism, Islam also allows the right 
to private property, free enterprise, and market economy. They, 
however, acknowledge that certain adjustments need to be made in 
capitalism to bring it in conformity with Islamic principles. They hold 
that these adjustments should be made according to Islam's distinction 
between Haram and Halal, and Islam's teachings in financial and fiscal 
areas; namely, riba and zakat. According to this school, if these areas of 
capitalism are adjusted according to Islamic requirements, then the 
adjusted form of capitalism will be nothing but the Islamic economic 

system. Thus this school holds that the conventional economic theory, 

*Muhammad Arif - Research Department, State Bank of Pakistan; currently a Ph.D.
candidate in Economics. Clark University, Worcester. MA 01610, USA.

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with only a few adjustments, is fully capable of generating the Islamic 
economic system. Hence, they see no scientific justification for the 
development of Islamic economics toward the creation and establish­
ment of an Islamic economic system. 

2) The Conventional School:

This school believes that there are major discrepancies between Islamic
economics and the conventional economic theory. These discrepancies 
are an evidence that Islam's teachings cannot be transformed into an 
economic system which will be consistent in its functioning and 
structure. Thus the adherents of the conventional economic theory are 
opposed to the development of Islamic economics, and hold that 
conventional economics is the only scientific basis for creating and 
establishing a workable economic system. 

3) The Sectarian Diversity School:

According to this group, Islamic economics lacks a scientific basis; and
is merely a reflection of certain religious beliefs. The adherents of this 
school point out that efforts to develop Islamic economics will result in 
intellectual chaos because of the following two reasons: 

a} Islamic economics lacks a scientific basis
b) the existence of different sects in Islam

In view of these perceived problems, this group holds that Islamic 
economics will be plagued by a diversity of opinion and will be 
dominated by sectarian influences. Thus, they are opposed to the 

development of Islamic economics, as to them, an effort in this area is an 
exercise in futility. 

We find that the adherents of the Adjusted Capitalism School do not 
see any difference in the fundamentals of the Islamic economic system 
and capitalism. Here we disagree with them. We claim that, 
fundamentally, Islamic economic system is very different from 
capitalism. As a matter of fact, it is the existence of these fundamental 
differences that provides the scientific justification for the development 
of Islamic economics. In Section II, we will discuss this scientific 
justification in detail. 

The adherents of the conventional school do understand that the 
fundamentals of Islamic economic system are very different from the 
fundamentals of capitalism, but despite this fact they are not ready to 
accept this reality that Islamic economics deserves to be developed in its 
own right. Their lifetime training in conventional economics, and their 
intellectual dependence on the western economists demands loyalty to 
conventional economics. They demonstrate this loyalty by opposing the 
development of Islamic economics. But their opposition has no scientific 
basis; and therefore, we will discuss the case for the development of 
Islamic economics starting in Section II. 

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