Often, we perceive economics as highly objective and functional science or system that is closely associated with material prosperity, economic development or progress, and consumption and transfer of wealth. We usually perceive economic science as being similar in nature to physics or biology, and given the modern division of sciences, such a view would not be incorrect. On the other hand, what we call economic thought in Islamic tradition was in the classical period (roughly from 9th to 15th centuries) much less concerned with such pursuits or regarded as its own science. Rather, it pertained to much broader human and Divine relations, as well as behavioral patterns of spiritual, metaphysical, and, above all, moral qualities, irreducible to merely the natural order, similar to how economic ideas were considered part of theological and philosophical reasoning in pre-Enlightenment Europe.
Yet, modern Islamic economics seems to differ from ethical-economic philosophy that flourished in the classical Islamic intellectual tradition. Several reasons exist why this is the case. The birth of modern Islamic economics was colored by the evolution of the natural and social sciences and the European classification of modern social sciences, including the very economic discipline, which is concomitant with a particular worldview and vision of knowledge that espouses primarily a material (and not spiritual or metaphysical) understanding of economic relations. Contemporary Islamic economics also draws from socioeconomic and political developments that occurred in the Middle East and South Asia in the nineteenth century as many Muslim reformists across the region envisioned an Islamic society with Sharīʿa as a central paradigm.
This understandably impacted the Muslim development of Islamic economic ideas vis-à-vis the Islamists’ call for an Islamic state. This is, however, not the whole story. Europe’s incursions into the Middle East and North Africa in the nineteenth century amounted to a paradigmatic geopolitical and economic shift in Muslim countries. Economic ideas expounded by Muslim scholars in the first half of the twentieth century emerged as a call for an Islamic vision of economy, which went hand in hand with early twentieth-century Islamists’ call for an Islamic state. This was followed in the latter half of the same century by a flourishing of Islamic economic theories and the establishment of an Islamic banking and financial system. The problem of modern Islamic economics is, however, not so much about the question of religious or political identity in Muslim-majority countries, but rather the history of science, the transmission of knowledge, and the role of Sharīʿa in constructing such an identity in relation to the colonial restructuring of society. Modern Islamic economics has been trapped in this construction of scientific positivism, colonial politics, and the call to Islamize knowledge.
Unlike economic science, from the very outset, economic thought in the classical Islamic tradition was concerned with various fields as a human science in that it nurtured a complex plenitude of interpretations that were associated with the moral understanding of the universe. In other words, it was part of theological, philosophical, legal, mystical, and cosmological discourses, addressing various moral questions These questions addressed, among many other, the issues of righteous earning, barter exchange, development of markets, and how to use money as a medium of exchange, in order to bring about virtuous traits of a character.