More than three decades have elapsed since the idea of Islamic economics first appeared in Pakistan. During this period much constructive debate has taken place in Muslim circles with the objective of discerning the premises and operational features of Islamic economics.¹ Yet, the sundry responses to the question: "what is Islamic economics?" have so far failed to produce a satisfactory definition of the concept either at the interpretive or the heuristic level. While for a long time Muslims could dismiss this shortcoming as an intellectual hiatus destined to be filled as the nascent field continued to develop, recent trends in Islamic economics cannot but arouse concern amidst Muslims with regard not only to the oft-asked question "What is Islamic economics?", but also to the paramount one, "Whither Islamic economics?

Over the past decade, expositions of Islamic economic thought and praxis have increasingly resembled exercises in apologetics. In the absence of Islamic equivalents for such concepts as 'efficiency', interest free banks have been compelled to defend their records according to western economic criteria. Yet, rather man searching for Islamic standards of judgement (or evaluating the results of their efforts, more often than not Muslims have sought to live up to western expectations and to make interest-free banking viable in the eyes of western economics. As a result of this digression, which burdens Islamic economics with the responsibility for satisfying Westerner's carping,² this once intellectually effervesent field of study has begun to show signs of fatigue and stultification.

As Islamic economics in general, and interest-free banking in particular, have exchanged their intellectual directives for debates which are tantamount to emotional altercations and contending with other's caviling, exercises which can be classified under rubric of comparative banking studies', the prospects for the healthy growth of Islamic economics now looks more grim than ever. These days there is less concern for epistemological issues, while more energy is being spent on insisting that interest free financial institutions are not only economically efficient, bun are in fact superior in both ethical and financial terms to those institutions in non-Islamic societies which perform similar functions. One may well question the wisdom of this practice of comparing the trees and as a result remaining oblivious to the forest.

Consequently, more often than desired, Muslims have come to see Islamic economics not as a worldview governing man's relations to his environment, but merely as a process for creating interest-free institutions.³ The malformation inherent in the precarious intellectual environment in which Islamic economics seeks to establish itself extends beyond a propensity for institution building, and influences the content and form of those institutions as well. Under the pressure of outside criticism, the need for suitable responses, and with no body of thought to guide the way, institutional development has shown the tendency to create mere alternatives to western financial institutions. Therefore, while still no satisfactory explanation exists as to what a Muslim homo economicus is, and how his existence relates to the fundamentals of the Islamic faith (such as tawhid or adl), Muslim thinkers, with a view to responding to western criticism, are engaged in discussions as to whether the Debt Crisis would have happened in an interest-free environment, or whether it can now be resolved by interest-free banks. While such speculations are valid in their premises and could conceivably contribute to the resolution of the Debt Crisis, they will inevitably relegate Islamic economics to the status merely of a more ethical or efficient variation to the concept of banking as understood in the West. Muslims often compare interest-free banks with western banks, concluding that the former are superior to the latter. Needless to say. Much comparisons not only do not erect an Islamic economic system, but in fact create the impression that Islamic economics is more concerned with justifying its existence to the West than creating a milieu wherein Muslims could engage in spiritually satisfying economic activities. More importantly, such comparisons contribute little to either the viability of Islamic economics or the role which it can play in the life of Muslims. Dwelling upon the thought that the principle of mudarabah (profit-sharing) fosters more efficient banking operations does not necessarily help establish Islamic economics as a body of economic thought; it is rather more likely to attest to the more limited conclusion that interest-free banking is possible.⁴ However, even this conclusion cannot serve as a mainstay for Islamic economics. In the absence ef a philosophy of Islamic economics, interest-free banking will have to be examined within the context of western economics (as is now the case), which would in effect ascribe to interest-free banking the status of an alternative to western financial procedures. For Muslims often lose sight of the fact that there is nothing particularly Islamic about the principle of mudarabah itself. It is merely a mechanism which allows Muslims to conduct a financial transactions without violating the injunctions of the sharia regarding usury. It is a means to an end, one which is not conditioned by the end. Mudarabah can be adopted (in principle at least) by Christians, Hindus, or Shintos with the result of greater ethical (or economic) efficiency in those economies, and yet, without bringing about an Islamic economic system.

The debate with non-Muslims over mudarabah is essentially a debate over the operational efficiency of various banking procedures, and not a discussion on Islam's fundamental views on the economic livelihood of human society. Mudarabah can only find spiritual meaning if it is placed within the context of an overall Islamic outlook on economics. This point becomes more apparent when the objective of mudarabah itself is looked upon care fully. The use of mudarabah owes more to the fact that it achieves a Muslim goal, namely avoiding usury in economic transactions, than to it's operational efficiency. In fact, it is conceivable that a fully operational Islamic economic system may be based on centralized control mechanisms, and therefore have no use for market operations or mudarabah. Hence, Muslims stand to gain little by seeking to prove the virtues of mudarabah in western economic terms; rather, they should define a philosophy of Islamic economics and the loci of efficiency in it wherein mudarabah would find new meaning, independent of the trappings of western economic criteria. Only then will Islamic economics be freed from the task of operationalizing mudarabah and verifying its viability, and find a concrete intellectual reality which mechanisms such as mudarabah could serve.

Therefore, while interest-free financial institutions constitute an important aspect of Islamic economics, they should never be mistaken for Islamic economics itself, nor be ascribed the role of the harbinger of Islamic economics. In fact, interest-free financial institutions would stand to gain immensely if they were to follow in the footsteps of a philosophy of Islamic economics.⁵ Such an order of events would free interest-free banking from any obligation to live by western economic criteria of judgement, and the otherwise unnecessary need to serve as the flag-bearer of Muslim apologia in the face of western criticism.

It is important to reassert the fact that the foregoing criticism of the current state of affairs in Islamic economics is neither meant to suggest that Islamic economics is an inoperable concept a contradiction in terms, as the western observer would argue nor that interest-free banks are unviable as financial institutions. In fact, it is the fundamental contention of this essay that Islamic economics and the institutions would emanate ffom it have tremendous unfulfilled potentials yet to be realized. The notable progress already achieved by thinkers and financiers in various Islamic banking institutions attests to this fact. Moreover, the arrested progress of Islamic economics, whether due to theoretical problems or operational impediments can, by and large, be remedied, to accomplish such a feat, however, Muslim thinkers will have first to pin-point the root of these problems. It is safe to assert at this juncture that, the purely operational dilemmas aside, the most fundamental predicament facing Islam economics, apparent in western criticism of the discipline and imprinted on the subconscious of Muslims, is the seeming idiosyncratic appearance of the concept of religious economics.⁶ Western criticism and Muslim apologia tend to reaffirm this belief, and the oft-quoted observation that faith compels Muslims to prefer Islamic economics over other economic regimes does little to convince Muslims and westerners alike of its 'scientific' soundness. Yet, Islamic economics need not be bound by the shackles of this anachronism. For the intellectual dilemma confronting Islamic economics is neither as fundamental nor as permanent as the critics or the charge of intellectual idiosyncracy may suggest. The antinomy associated with Islamic economics is rather the consequence of the eschewed process of intellectual and institutional development to which this field of study has been subjected.

Succinctly put, excessive emphasis placed upon institutional developments, and at times, even viewing this process as synonymous with Islamic economics, combined with the atrophied state of the philosophy of Islamic economics, has impeded the natural and healthy growth of this field of study and mode of social organization. This development has made Muslims susceptible to unnecessary and even impertinent criticism from non-Muslims, which in turn acts to prompt even more hasty responses from the Muslims with the effect of further distorting the development of Islamic economics.

The point of the discussion here is not to belittle the importance of interest-free banks, but to warn of the dangers which the unbalanced attention devoted to them, shrouded in apologetic casuistry in relation to the West, could harbor for Islamic economics. It should be kept in mind that dabbling in micro-level procedural concerns or ideas will never produce a discipline, a field of study, or a system of thought. History is replete with examples which bear witness to this observation.

Wherever in history one looks for the origins of a system of thought or for institutions associated with particular world-views, in Islamic as well as in non-Islamic social settings, it will become apparent that the constructive impetus always begins with the elaboration of a philosophy and a weltanschauung, and eventually culminates in institutions which capture the spirit and the message of the original philosophy. Modern capitalist financial institutions appeared in Europe in pursuance of what Weber has termed 'capitalist ethics.⁷ It was not the financial institutions that brought about capitalism, rather it was capitalism that produced institutions which represented and operationalized capitalist views on social and economic activities. By the same token it will not be institutional change, but novel economic world-views which will initiate change in the capitalist economic structure.

Similarly the evolution of an Islamic political system during the time of Prophet Muhammad in Medina did not begin with institutional or procedural developments, but rather with the emergence of the Islamic world-view, whose spirit was then captured in both novel and centuries-old institutions. While these institutions guaranteed and represented Islamic temporal rule and adhere to the injunctions of the Shariah, at no time aid they act as either the harbinger or the actual message of Islam. That message was vested in the essence of Islam itself, from which all institutional and organizational activities followed. The injunctions of the Shariah meanwhile determined the manner in which the Islamic world-view was translated into praxis, and governed the activities of the subordinate institutions. Therefore, the hierarchic flow of spiritual and authoritative constructive impulses from the Islamic world-view to various institutional structures, mediated and governed by the injunctions of the Shariah, acted to delineate and form the Islamic political order. Similar processes also formed the bases of the evolution of Islamic science and Islamic art.

In all these examples, the elaboration and in certain instances construction of the omnipotent philosophy, Weltanschauung, or more generally the spiritual content of a belief system preceded the emergence of the institutions or organizational expressions which were the bearers of the message and implementers of the objectives of those original ideas. Religious law, meanwhile, has always acted as the guiding criterion for the explication of the original ideas and the delineation of the activities of the institutions which emanated from those ideas.

In the case of Islamic economics, it seems that the aforementioned process has been reversed. Muslim thinkers have devoted the Iion's share of their attention to issues which pertain solely to the management of Islamic economic institutions. The philosophy of Islamic economics, instead, suffers from neglect and atrophy. The conspicuous absence of a philosophical outlook, from the prolegomenon to Islamic economics, in practice, translates into an intellectual lacuna which could seriously impede the operational viability and the developmental capacity of Islamic economics.

In the absence of the guiding light of comprehensive philosophical exposition, Islamic economics has often been viewed as either a conglomorization of assorted injunctions of the Shariah or the creation and management of interest-free banks. Seldom has Islamic economics been viewed as an extension of Islam's very views on terrestial life, and the subjugation of social livelihood to man's spiritual yearnings.

As a consequence of the importance which has been accorded to the more limited definitions of Islamic economics, this field of study has failed to become a science of economics, bun has rather evolved into procedural guidelines for practicing western economics with the least amount of violations of Shariah injunctions. For, while Islamic financial institutions have shown operational success, they continue to operate within tha western economic milieu, as components of an overall western economic system. Therefore, the success of interest-free banks in their market operations by itself will not usher in an Islamic economic order, nor will it evince, in the science of economics, the merits of the Islamic system.

The path out of the intellectual quagmire which today threatens to reduce Islamic economics to either a simple manifestation of Muslim 'idealism', or a 'quaint' variation of western economics, seasoned with disparate Islamic ethical and procedural guidelines, is for Muslim thinker to pay greater attention to the philosophical underpinnings of economic thought and praxis in Islam. In this regard they must first identify the fundamental tenets of the Islamic world-view and the manner in which these pertain to economics. In accomplishing this task they can look to the way in which traditional Islamic sciences in general, and those pertaining to man's livelihood in particular, have drawn their directives from the Islamic revelation, and examine how these directives evolved through Islamic history.

Secondly, Muslims must discern the basic premises of the modern science of economics, identifying the key assumptions upon which that science rests. Having completed this task, Muslim thinkers must identify those tenets which are compatible with the Islamic world-view and separate them from the theoretical assumptions which, would have to be 'Islamized' before an Islamic science of economics could be elaborated and operationalized. Once a general Islamic outlook on economics is developed and the theoretical underpinnings of the science of economics are interpreter according to Islamic dicta, injunctions of the Shariah pertaining to economics can be used as the guiding lights for developing procedures and mechanisms for the implementation, operation and management of Islamic economics in practice. Yet, here also the- teachings of Shariah have to be studied and examined with a view to the functions which they will monitor and govern. For instance, as yet there exist no satisfactory understanding of the Shariah's view's on riba' whether the term refers only to the real rate of interest, or to any interest income.⁸

The dynamic's of this process of intellectual metamorphosis can be better elucidated by examining its actual workings. Beginning with Islam's views on man it should be asserted that man in Islam -- homo Islamicus -- is not as concerned with happiness on earth (as the term is understood in the West today) as homo economicus in western economic thought since Adams Smith, has been. The livelihood of Muslims is essentially directed towards the realiztion of then spiritual goals. Therefore, every aspect of human existence is related and subordinated to this concern. Economics, in the context of Islam, is therefore neither the harbinger of man's happiness nor the determinant of his behaviour. It is merely one component in the totality of existence upon which man's spiritual quest is based.⁹

Exending this truism to a novel approach to economics, Naqvi, in his important work, Ethics and Economics, has argued that the concept of economic efficiency in Islam is not merely a guarantee of balance in production and consumption relations in the market, but reflects the harmonious interaction between man's spiritual yearnings and his worldly existence.¹⁰ Economics in Islam is, therefore, directed towards establishing the kind of social equilibrium which can best facilitate man's spiritual well-being. From this it follows that, in Islam, economic efficiency and equilibrium are not bound or conditioned by the possibilities of the market, but by man's concern for spiritual satisfaction.

Meanwhile, much of western economic thought, including notions such as market equilibrium, laws of supply and demand, or utility consumption and maximization are predicated on the belief in the 'rational' behaviour of homo economicus. This rationality implies that man always acts in such fashion as to maximize his individual gain a belief which modern economics views as scientific truth. The rational behaviour of man is gauged, measured and monitored in economics through the concept first introduced by Lionel Robbins and generally known as 'optimality  constraint¹¹ in practical terms, 'optimality constraint' can be interpreted to me in that in his consumption and production decisions man seeks to maximise his interest, and utility. Confronted with various consumption and production limitations, mail is forced to make a choice, and hence the mere optimization of his interest. Therefore, rationality is understood in terms of man's drive to maximize his interests, and in practice, it becomes the exercise of choice between various alternatives available in the market, an activity necessitated by scarcity of resources and possibilities. From this it can be concluded that the significance of economics itself lies in its ability to make rational choice possible, permitting man to settle for optimization of his interests when limitations deny him their absolute maximization.

When juxtaposed with Islam's views on economy and society a number of discrepancies between the two systems of thought become, apparent. Probably the most obvious difference between Islamic and western economic thought is the nature of human action in the market. The Muslim homo economicus is also, no doubt, a rational actor. Yet, rationality as understood by Islam and practiced by Muslims is not tantamount to the management and implementation of choices with a view to optimizing (if not maximizing) individual interest. Rather, the Muslim homo economicus is rational primarily in the fact that he recognizes the supremacy of his spiritual concerns over his mundane pursuits. In western economic parlance, this truism means that Muslims have a high marginal utility for spirituality. However, since spiritual concerns cannot be measured in economic terms and are not represented in the bundle of goods and resources from which man chooses, it will logically follow that rationality in Islamic economics is conditioned and even tempered by an important exogenous factor. For the Muslim homo economicus, therefore, indivicual gain is never an objective, but the means to an end. Economics in Islam merely prepares man's social setting in such manner as to accommodate his spiritual satisfaction. It is based on the premise that Islamic economics, in practice, tends towards greater concern for society than is the case in western economics.

Since, the Muslim homo economicus pursues this mode of economic behaviour out of choice, it can be concluded that individual economic action in Islam does not hinge on 'optimality constraint', but rather on 'optimality restraint'. From this it can be concluded that by adhering to his spiritual yearnings, the Muslim homo economicus does not simply disobey dicta which western economics sees as 'scientific laws', but that he reinterprets them, giving new meaning to their sacrosanct precepts, and then implements them as alternate laws of economics; laws which resemble in every way their 'archtypes', and yet reflect Islam's ethical and spiritual concerns. Therefore, Islamic economics, as a comprehensive body of scientific and social thought, is not a rebellion against the science of economics, nor a call for anarchy in the order of the market, but rather, a reinterpretive force which examines the fundamental notions of western economics, informing them with spiritual concerns, and hence altering the causal and logical linkages which relate theories to fundamental assumptions, setting in motion a process which eventually will change the entire structure of economic thought.

The example cited above elucidates how re-examination of one of the underlying assumptions of western economics, namely the 'rational' behaviour of man in lieu of Islamic teachings, makes that assumption incompatible with Islam's world-view. From this initial change there will follow a myriad of other changes in the various theories and intellectual constructs which were based on that original assumption. If this process is expanded to include all of the major underlying assumptions of the philosophy of western economics, that body of thought will soon be transformed into one which will reflect Islamic ideals in its form and content. Once such an overall conception is at hand, then the teachings of the Shariah and guide the micro-level operations of the market, extending the philosophy of Islamic economics into the whole society.

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NOTES

1. For a discussion of the various aspects of this debate, see Muhammad Nejatollah Siddiqi Muslim Economic Thinking, A Survey of Contemporary Literature. Leicester: The Islamic Foundation. 1981

2. For examples of criticism of Islamic banking, see for instance Timur Kuran, 'The Economic System in Contemporary Islamic Thought: Interpretation and Assessment', Intemational Journal of Middle East Studies, vol.18, no.2 (May 1986), pp. 135-164; and Ahmad Rashid, 'Pakistan Leaps into the Unknown', Euromoney (December 1983), pp. 110-115.

3. Rodney Wilson, 'Islam and Economic Development, Islam in the Modem World, eds. David McEoin and Ahmad al-Shahi.  New York: St. Martin's Press, 1983, pp. 119-131; and John T. Cummings et al., 'Islam and Modern Economic Change, Islam and Development; Religion and Sociopolitical Change, ed. John L. Esposito. Syracuse: Syracuse University Press, 1980, pp. 25-19).

4. For a full discussion of mudarabah see Muhammad Abdul-Rauf, A Muslim's Refleclions of Democratic Capitalism. Washington D.C.: American Enterprise Institute 1984; Syed Nawab Haider Naqvi, On Replacing the Institution of Interest in a Dynamic Economy. Islamabad: Pakistan Institute of Development Economics, 1982; and for the range of views on this subject, see Siddiqi. Muslim Economic Thinking, pp.60-68.

5. For instance Umar Chapra's elaboration of the social ethics of Islamic economics has helped clarify the social role and objectives of interest-free banking, providing Islamic criteria for attaining socio-economic ethical goals. See Umar Chapra, 'Islamic Welfare State' and Its Role in the Economy', Islamic Perspectives, eds. Khurshid Ahmad and Zalar Ishaq Ansari. Leicester: The Islamic Foundation, 1979, pp. 195-223; and idem, 'The Economic System of Islam, A Discussion of its Goals and Nature', Islamic Qiuirterty, vol.xiv, nos.1-4 (1970), pp.3-18, 91-96, 143-156, and 237 251.

6. In general the social sciences in the West view religion as a vestige ol the 'feudal era', which has no place in modern rational thought. Much of Muslim thinking is conscious of this western belief and therefor seeks to justify Islamic economics by viewing it 'scientifically' viable rather than justifying the concept of  religious economics. See for instance,  Mohsin S. Khan and Abbas Kirakhor, 'The Framework and Practice of Islamic Banking', Finance & Development, vol 23. no.3 (September 1986), pp.32-38.

7. See Max Weber, The Protestant Ethic and the Spirit of Capitalism.

8. For the range of opinions on this issue see Siddiqi, Muslim Economic Thinking, pp.54-70.

9. Fritjof Schuon, Islam and Perennial Philosophy. London: World of Islam Festival Publshining Co. 1976; idem, Understanding Islam. London: Unwin Paperbacks, 1979; and Seyyed Hossein Nasr, Ideals and Realities of Islam. London: George Allen & Unwin, 1966.

10). Syed Nawab Haider Naqvi, Ethics and Economics: An Islamic Synthesis. Leicester: The Islamic Foundation, 1981.

11). Lionel Robbins, An Essay on the Nature and Significance of Economic Science. New York: New York University press, 1984.