Introduction to Islamic Economics

According to the standard narrative, economics is an objective and scientific study of universal laws applicable to economic affairs of modern societies. After a brief introduction, the second section of the paper presents a counter-narrative which disputes this claim, and provides an alternative point of view which situates modern economics within its European historical, political, and social context. We briefly discuss why the conventional methodology of modern economics makes false claims to objectivity and universality. The third section provides an alternative methodology, which is based on the recognition that human behavior is inherently and unavoidably normative, and any study of human beings and societies must take this into account. The fourth section of the paper brings out the norms concealed within the foundations of modern economics, since the avowed methodology does not permit explicit and open expression of these norms. The fifth section describes Islamic views which describe the normative ideals for our personal and social lives. In particular, Islam aims at the development of the potential for excellence that every human being is born with. It does not aim at accumulation of wealth and material possessions, nor does it aim at achievement of happiness through the maximization of pleasure achieved by consumption. The sixth section describes the transformational strategies required for spiritual progress in different dimensions of our human existence. The seventh section describes some of the institutional structures required in the economic realm to assist in the achievement of the transformation towards the normative ideals. The final section explains how we should use our unique and precious lives to aim for higher goals than mere consumption of goods and acquisition of wealth