Rather than take up the torch the liberals had lighted and going forward to complete the unfinished agenda of such noble and enlightened Islamic liberals as Muhammad Abduh of Egypt, Sir Syed, Iqbal and Abul Kalam Azad of the Indian sub-continent, the champions of theocracy and Islamization limit their task to the ‘adjustment’ of the ‘shariah’ (as a total code of conduct) to modern times. They have no inkling of the deeper issue of redefining the proper function and jurisdiction of all religions (including Islam) in the age of modern science and technology and a global society. What is really needed is that the Muslim mind liberates itself from several unquestioned assumptions that are not integral to the essence of the Islamic faith, though they have entered into mainstream Islam due to various factors.

Notes and References to Economics System:

1. Though the Quranic command to cut off the hands of the thief is categorical, the shariah admits of several exceptions, namely, when the thief and the victim are close blood relations, or when the stolen amount is below a prescribed minimum. It is also waived in the case of eatables, musical instruments and some other articles.

2. Usury on distress loans has been universally disapproved and morally condemned because it implies turning the suffering of a fellow human into an opportunity for material profit. In ancient Babylonia Hammurabi (app.2000 B.C) sought to regulate the rate of usury. A new king often declared the cancellation of all debts at the time of his coronation. Judaism prohibited usury in the strongest possible terms making no distinction between distress loans and loans for any other purpose, but permitted Jews to charge usury from Non-Jews. The Christian canon law made the prohibition universal. In the middle ages Thomas Aquinas (d.1274), the greatest medieval Christian theologian, made a distinction between distress and commercial loans, but the canon law was not altered. In practice, however, the prohibition was conspicuous by its violation due to economic compulsions.

The religious leaders of the mercantile Italian city-states of the early modern era, Florence, Venice and others ( which were the pioneers of modern international commerce and banking) were the first to question the ethical and religious validity of the absolute Christian prohibition of interest without distinguishing it from usury when commercial practice had already sharply deviated from canon law. It was, however, John Calvin (d.1564), the great Swiss Protestant reformer, no less influential than his more internationally famous German contemporary, Martin Luther, (d.1546) who forcefully pleaded that while usury was morally repugnant, interest on commercial and development loans served social needs. The above approach found ready acceptance in Britain – the first industrialized country in the modern sense and also the country where the seminal work, The Wealth of Nations, published in 1776, by the philosopher, Adam Smith (d.1790) gave birth to Economics as a social science. Significant contributions by Jeremy Bentham (d.1832), J.S Mill (d.1873), Ricardo (d.1832), Malthus (d.1834) and others followed to enrich Economics as a pure social science.

The growth of theoretical Economics and the practical constraints of rapid industrialization fostered a new outlook on social and religious problems. The legal prohibition against usury was repealed. Soon afterwards, the statutory ceiling on the rate of interest, and the legal penalty for violating the maximum limit, was removed in the early 19th century in Britain and elsewhere under the influence of the philosophy of laissez faire liberalism, that is, uncontrolled reign of the market price. .

The middle of the 19th century, however, saw a reaction against the doctrine of absolutely free and uncontrolled market economy. Several sensitive minds began to think that the much-lauded free market economy had bred numerous social and economic evils-uncontrolled urbanization, poor-house poverty, crime, social uprooting, anonymity, alienation, dehumanization of labour, unemployment, all flourishing in the midst of and despite mass production and affluence. The ideas of cooperative production, state regulation, and finally, of socialism came to the fore in order to remove the grave imbalances created by the free interplay of market forces. There was a spate of social welfare legislation and economic regulations in western countries to protect the weaker sections. Institutional arrangements were made for the supply of cheap credit to the needy and for protecting insolvents. Thus, while the religious prohibition against usury was done away with, its basic objectives- the protection of the interests of the weak was sought to be promoted by means of democratic and socialist ideals. Liberal Christian thought contributed to this development but conservative, rather static, quarters within the Church were reduced to the position of perplexed and helpless spectators of the new emerging values.

To complete the picture, a few remarks may be made concerning the ancient Indian approach to usury. The Dharmashastras also strongly disapprove of usury on distress loans. Indeed, one Dharmashastra declares that usury (kuseed) in the case of a distress loan is a greater evil than even the murder of a Brahman (Brahmhatya). However, commercial interest is permitted. Different law-givers prescribe different rates of interest bearing in mind different relevant factors and also safeguarding the legitimate interests of the creditor and the debtor and also of the society in general. However, it must be pointed out that there was caste discrimination while fixing the varying rates of interest (the rate being lowest for the Brahman borrower, approx.15% per annum). Moreover, the general rate of interest was much higher than is the case in modern times. Buddhism followed the Hindu practice but without any caste bias. 

3. Ghulam Ahmad Parvez and some others are inclined to Socialist ideas, Mawdudi, Baqir Al-Sadra and others to free enterprise. See Nijatullah Siddiqi: Survey of Islamic Economic Thinking, Leicester, UK ,1980, pp.46-53

4. Edmund Husserl (d.1938) first elaborated the concept of ‘epoche’. This means complete suspension of all previous judgments and adopting the posture of ‘epistemic openness’ without any evasion or unconscious slant and the maximum possible effort to mentally grasp the structure and inter-relations of a specific concept or belief.

5. The prohibition of interest, the institution of zakaat, the implementation of the Islamic law of inheritance, severally or jointly, would not suffice to solve our complex problems. When there is urgent need of capital for macro development national defence, acute distress or natural calamity etc borrowing on interest becomes unavoidable.  Zakat will not do when savings are almost zero. Islamic inheritance will not do when all there is to inherit is poverty and disease.

Moral exhortations will not do when the facts of life have been ignored. The nationalization of means of production will not do when productivity remains low. No economic system will work if we do not give up romantic illusions concerning human nature.