<Articles> Islamic Approach of Economics: Some Discourses

Title on Khurshid Ahmad's Vision of Socio-Economic Order, Self-

Reliance and Economic Development

Author(s) UL HASSAN, Mehboob

イスラーム世界研究 : Kyoto Bulletin of Islamic Area Studies

Citation (2010), 3(2): 216-240

Issue Date 2010-03

URL https://doi.org/10.14989/123293

Right

Type Departmental Bulletin Paper

Textversion publisher

Kyoto University
イスラーム世界研究　第 3 巻Studies
Kyoto Bulletin of Islamic Area 2 号（2010 2010) –240 頁
年 3 月）216
3-2 (March
Kyoto Bulletin of Islamic Area Studies, 3-2 (March 2010), pp. 216–240

Islamic Approach of Economics: Some Discourses on Khurshid Ahmad’s Vision of

Socio-Economic Order, Self-Reliance and Economic Development

Mehboob UL HASSAN*

1. Introduction

Many thoughts have been given to the economics since the beginning of Enlightenment
Movement of the seventeenth and eighteenth century, but never in the history of mankind
has economics assumed the importance it has today. Later on, during the second half of 19th
century to the beginning of 20th century it passed through a revolutionary changing phase.
Economics, hitherto a subsidiary of social sciences and fully integrated with moral norms and
ethics, segregated from its main discipline and was emerged as an independent, value-neutral,
scientific discipline in the West. Western economics intelligentsia, because of secular and
materialistic influence, rigorously ponders maximum importance to the engineering outcomes
and merely ignores the importance of social-moral paradigm. With this background, the
focus of economic development was more on the engineering growth and to fulfill of basic
needs and self-interest. This trend has established such firm roots that Joan Robins [1903–
1983] made a clear statement on the segregation of economics from the ethics and says that
ethics and economics are strange bedfellows: there cannot be any link between the two.
They can only be juxtaposed, not integrated. And now a day, the economic problem is being
considered as the only problem facing by human being. Mawdudi truly observed this trend:
“The human-being has become an (economic) animal in the hands of one-eyed specialists
in different sciences and professions … who examine his particular problem through their
own microscopes” [1984: 9; 1992: 6]. Easterlin A. Richard in “Will raising the income of all
increase the happiness of all” has therefore raises the question of whether human well-being,
in its true and real sense, can be realized and sustained by mere increase in money and wealth
[1995]. Many moral and Philosophical experts observe that mankind is wretched and tired of
bearing the burden of materialistic civilization, value-neutrality and luxury, and now a day
the most crucial task needed to be performing is to find a proper strategy that could solve the
problem of mankind.
On the contrary, Islam is a comprehensive system and complete code for successful
life spending in this world and hereafter. In Islam social educational, political, ethical and
economic aspects are described clearly and interconnected with each other. Economics is seen
as a part of this framework and the ultimate objective of economic development is not only
*  Visiting Project Researcher at Centre for Islamic Area Studies, and Post Doctoral JSPS Fellow at
Graduate School of Asian and African Area Studies, Kyoto University

216
 Islamic Approach of Economics

to accelerate well-being of all individual but also to establish an ideal structure for a society
with a mere application of morality, ethics and social comportments. It tries to promote
human brotherhood, socio-economic justice and well-being of all through an integrated role
of moral and ethical values. Holy Qurʼān introduces a wide range of ordinances on socio-
economic justice, equality, brother-hood and equal distribution of wealth and resources in an
interconnected and unrelenting approach. Holy Qurʼān says:

Ϣ̰Ϩϣ ˯ΎϴϨϏϻ΍ ϦϴΑ ΔϟϭΩ ϥϮ̰ϳ ϻ ̶̯

“So that it [the wealth and resources] may not circulate only between the rich
among you” (59:7)

The raison d’être of the Islamic Shari’ah is to establish a society where the basic
needs of are provided and individual interests are protected from all kinds of harm. Islamic
economics recognize private ownership and market mechanism for efficient allocation of
resources and price mechanism but does not accept perfect competition or free market to
be sufficient to safeguard the social interest. Throughout Islamic history, in the exegeses
of Qur’ān and in the commentaries on Ĥadith, the primary objective (Maqšid) of Islamic
economic doctrine is correlated socio-economic justice and uplift of deprived peoples.
Muslim intelligentsias like Zayd ibn ‘Ali (d.740), Abu Yusuf (d.798), Al Mawardi (d.1058),
Ibn Ĥazm (d.1064), Al Sharakhasi (d.1090) Abu Ĥamid al-Ghazali (d.1111), Ibn Taymiyyah
(d.1328), Ibn al-Qayyim (d.1350), Ibn Khaldun (d.1406) and Shah Waliyullah (d.1762) have
contributed significantly in this discipline, and in recent history, the works of Abul ‘Ala
Mawdudi (d.1979), Anwar Iqbal Qureshi (d. n.d.), Sheikh Mahmoud Ahmed, Hafzur Rehman,
Fazlur Rahman (d.1988), Nejatullah Siddiqui (b.1931) and Muhammad Umer Chapra (b.1933)
are renowned and significant.
Now a day, when Islamic monotheism has spread out all over the world, as a result
the problems Muslims are facing have become diverse and complicated in nature. Various
intellectual approaches are emerged for solving the political, social and economic problems
of Muslims during the last one or two centuries. While there seem to be no differences among
the Muslim intelligentsias that the fundamental values and message of Islam are unchangeable
and the primary purpose of economic development is to promote human well-being, there
appears to be a difference for concerning that what constitutes real well-being and what
approach and methodology should be applied. On this ground Muslim intelligentsia can be
divided into the following groups:
1. The Traditionalists or Sufis; mostly located in rural and sub-urban areas, are the
religious scholars (‘Ulema, Peers and Sufis), who believed that they themselves

217
Kyoto Bulletin of Islamic Area Studies 3-2 (March 2010)

were the custodians and successors of the Prophet (peace be upon him) and claimed
themselves as responsible for Islamic propagation in their localities. Having the
little capability of Ijtihad and legist, they attempted to justify their individual
interpretations of specific practices not on the basis of reason analysis but simply on
the basis of precedent. They usually worked individually and voluntarily and could
not establish in institutionalized forms; they could not formed societal reforming
parties or movement, however left a significant spiritual impact on society. They
encouraged sinners to confess and seek forgiveness. The Sufi of Chishtiyya and
Suhrawardiyya are notably regarded as vanguards of this group.

2. The Modernists; either attempted to derive inspiration from Western sciences or re-
considered the orthodox Islamic views under the influence of Western thoughts.
Modernists accepted a demarcation between religious and socio-political life and
supported the notion of modern life [Gellner 1981]. They considered that insisting on
the implementation of Qurʼānic literature, while shutting one’s eyes to the changing
environmental issues of the ever-changing environment and ground realities, was
tantamount to deliberately defeating Islam’s social-political purpose and objective.
They supported a liberal vision regarding the political and social affairs of state.

3. The Secularists or Westernized Muslims; were small in number but occupied key
positions in the civil administration and bureaucracy. They emerged during the later
nineteenth to earlier twentieth century, advocated Western style in all matters of daily
life and vehemently criticized the Islamic values.

4. The Neo-Revivalists; most dominantly led by Syed Ahmed Sirhindi, Shah Waliyullah
Dehelvi and Moulana Abul ‘Ala Mawdudi. This group emerged by the resistance
and challenging to the forcibly imposed Western disciplines, advocating the self-
sufficiency inherent in Islam, and rejecting any self-esteemed pseudo reinterpretation
of Qur’an and Sunnah [Muzaffar 1986: 5–8]. In comparison to the medieval
traditionalists, they succeeded in establishing their own parties or groups such as,
Al-Ikhwan al-Muslimun (The Muslim Brotherhood), Jamat-e-Islami (The Islamic
Party) and Jamiat-e-Ulama-e-Hind (Islamic Party of Indian Scholars). Their common
slogan was “Let us return to Qurʼān and Sunnah”. They advocated the supremacy
of Islam over Western institutions and thought and proclaimed for the relevance of
Islam to the contemporary society. They focused on the problematical aspects of
foreign approaches, such as alleged moral decadence, capitalist greed, materialistic
egoism and anomie, and atheism under communism [Saeed 1999: 6]. They attempted

218
 Islamic Approach of Economics

to present the solution of contemporary problems in the light of the Islamic teachings.

2. Khurshid Ahmad: Early Years and Fundamental Ideas

Khurshid is one of the pre-eminent writers of contemporary Islamic world. Indeed, the
recognition he has received from Western as well as Islamic world testifies to his stature
as world intellect figure. Khurshid was born on 23rd March 1932, in Delhi to a noble and
respected family. His father Nazir Ahmad Qureshi was second son of Maulvi Barkat Ali who
was a leading advocate during the British period. His elder son, Abdullah Shah also followed
his way after completing his Bar at Law from Lincoln Inn, UK and practiced in Indo-Pak
subcontinent. Khurshid’s father, Nazir Ahmad also had attended the Aligarh University for
some period but chose the trade as his profession. Nazir Ahmad had a great interest in learning
and had a clear leaning towards the political manifesto of Muslim League and participated
actively in independent movement and other socio-political activities. Besides academia,
Nazir Ahmad was a close friend of Moulana Abul ‘Ala Mawdudi since his very youth.
Khurshid’s own education had been very traditional and simple; he completed his early
education in Delhi until they migrated to Pakistan on 12th February 1948. First he entered in
a college at Lahore then moved to Karachi where he obtained, with distinction, two Masters
Degrees from University of Karachi in economics (in 1955) and Islamic Studies (1964)
respectively. Khurshid succeeding his elder brother Zamir Ahmad, joined Islami Jam‘iāt-
e-Ťulabā’ in 1949, the student wing of Moulana Mawdudi’s party Jama‘at-e-Islami, where
he served at key positions soon after his joining. Islami Jam‘iāt-e-Ťulabā’ he expanded his
exposure and deepened his understanding of Islam. During this period he came to know
the significance of the media for the propagation of one’s thoughts and ideas, he launched
Student Voice, a 15 day English news paper of Islami Jam‘iāt-e-Ťulabā’ (1952–55), a weekly
newspaper New Era (1955–56), a monthly The Voice of Islam (1957–64), and Chiragh-i-
Rah (1957–68), all these publications, with clear Islamic orientation and reflections, show his
creative capacity and ability of writing in variety of subjects and issues. Khurshid successfully
applied his abilities of writing for the propagation of his ideas and perceptions; he combined
the intellectual and religious aspects and strike at the roots of secularism through the platform
of Islami Jam‘iāt-e-Ťulabā’ and Jama’at-e-Islami which he joined in 1959.
His meeting with Moulana Abul ‘ala Mawdudi during the 1950s proved to be turning
point in his life, ideologically as well as intellectually. This perhaps set a goal of his life and
that was to struggle incessantly for realizing the Islamic reforms into the contemporary time
—— an agreed upon concept among Muslim Neo-Revivalists. Later on, Khurshid proved to
be a protégé and dedicated disciple of Maulana Abul ‘Ala Mawdudi. Khurshid had another
  Notes from Interview.

219
Kyoto Bulletin of Islamic Area Studies 3-2 (March 2010)

fateful encounter with Islam at the Crossroads; a remarkable and thought provoking endeavor
of Muhammad Asad [Leopold Weiss: 1900–1992]. Khurshid is also strongly convinced by
the work and efforts of Muhammad Iqbal [1877–1938] and Moulana Muhammad ‘Ali Jouhar
[1877–1931] for the renaissance of Islamic sovereignty. These dare Muslim soles showed a
coherent Islamic world view to Khurshid and brought a radical change in his very early age
and helped for determining the future plan of his life. Khurshid expressed that: “My first and
foremost debt to Dr. Muhammad Iqbal and Mawlana Sayyid Abul A‘ala Mawdudi whose
thoughts and contributions changed the course of my life and inspired me to dedicate my
life to the pursuit of Islamic values and ideals. They gave to me and my generations a new
idealism and a clear vision of a future anchored in Islam.”
Although from his very early editorial life at “Student Voice” and other academic
journals he started to explore his oriented ideas on social, political, economic and other
issues, it was perhaps in the 1970s, that he began to take a serious interest in the solution to
the economic, political and other problems of man from an Islamic perspective. Khurshid’s
lucid academic work is scattered over politics, education, philosophy, humanity and other
intellectual folds, his distinguished economic thoughts stands most prominent. His ideas
and opinions reflect an Islamic oriented orthodox perspective proclaiming that Islamic way
is the only way for success and it is only Islam that provides a complete code of life. He is
constantly disseminating the Islamic teachings on economics and its attributes; stating that in
Islam, there is an ideal and practical guide for everyday living that is harmoniously balanced,
nothing is superfluous and nothing lacking and the result is a structure of absolute balance
and solid composure. The all-important appellation of “Muslim-Economist” is thus well
deserved. Khurshid stresses the application of Islamic injunctions as a daily-life code in all
aspects of life and all levels and spheres of society. Besides translating and editing many of
the significant writings of Moulana Mawdudi on Islamic Faith, Economics, Politics, Social
Thought, Law, History, State and Constituency, Khurshid himself produced a comprehensive
work on the Islamizing of a Muslim’s Life and then the whole society. In 1968 he compiled
and edited “Islami Nazriya-e-Hayat (Islamic Vision of Life)” which encompasses the writings
of prominent Muslim mentors of the time. The work was well arranged and provides a
methodical clarification of the issues confronting modern Muslims. Khurshid makes it clear
that in Islam, economic development is a secondary goal; primary goal is to achieve human
well-being and justice in all aspects of life including moral and material, economic and social,
spiritual and physical. Following discourses are reflections from a wide and vigorous variety
of Khurshid Ahmad’s thought applied to the economic problems of less developed countries
in general, and Islamic countries in particular.
  Notes from Interview.
  Notes from Interview.

220
 Islamic Approach of Economics

2.1 Khurshid’s Review on Western Economic Approaches

Khurshid, as an advocate of Islamic Economics, agrees to accept what is good or beneficial in
Capitalist or Socialist models, he does not call for a total rejection of the West and wants to
recognize what is good and avoid what is bad. “Muslims, who number more than one billion,
form a significant part of the contemporary international political and economic system,
so making good relations are necessary for developing a better relationship and improved
cooperation with the West”. In this context he expresses concern for the religious aspects of
human life, and stands firmly by them, saying “If the only practical ground for cooperation is
the assimilation of Western culture and the rejection of Islam as we understand it, then there is
no ground for any meeting. But if the cooperation is to be achieved on an equal footing, then
it is most welcomed.”
Khurshid is not denying the contribution and impact of Capitalism and Socialism have
produced an unprecedented economic and social transformation and the change came in the
world. However he make striking critic on the dominant doctrines of Self-Interest, Free-
Market, and Value-Neutral in Western worldview. He condemned the resulting contrast of
this dismal discipline and says: “their disregard for moral values and ethical norms, their
obsession with the material and pecuniary aspects of life to the neglect of all other dimensions,
and their pre-occupation with efficiency to the exclusion of justice and equity have led to
a loss of focus and a distortion of priorities with disastrous consequences. The tragic result
is that human society has been reduced to the ‘economy’ and even the ‘economy’ has been
diminished to the ‘market’. The entire domain of man has been usurped by the ‘market’ and
this ‘market’ for all practical purposes reflects the interests and preferences of the moneyed
classes. As profit motive is regarded as the only decisive factor, the whole matrix of the world
economy is woven on self-interest and the maximization of personal gains and economic
profits. This produces a lop-sided society wherein genuine needs often become irrelevant
and all resources are allocated in the name of efficiency to serve the interest of the wealthy
and powerful within each nation and also internationally. …the increasingly materialistic
and egocentric attitude of successive individuals, the doubling and quadrupling debt of Third
World, the widening income discrimination and other curses of these disciplines. All these
problems are the inevitable fallout of the attitude of ‘Love of Money’, money is treated as a
major factor of production and a secured return ‘La Saint Interest ’, is designated against its
utilization.”
The Western models, mainly the Capitalist and Socialist, pitiably offer only two

  Notes From Interview.

  Notes From Interview.
  Notes from Interview.

221
Kyoto Bulletin of Islamic Area Studies 3-2 (March 2010)

institutions for governing the distribution and allocation of resources, i.e. the market and
the government, which are alternatively referred to as the private and the public sectors. In
the Capitalist model, the private sector is characterized by the forces of demand and supply,
price and profit motive, and the public sector, i.e., government or state, acts as a corrective
mechanism and as a supplement to protect the motives of the private sector. The Socialist
economic model reverses these roles, i.e., public sector or state is the prime allocative and
distributive mechanism while the private sector acts as a minor partner. Both economic
models suffer from serious flaws and consequently fail to solve the fundamental economic
problems of mankind. Another sad aspect of Capitalism is that the overall global movement
in the present phase of capitalism is from physical economy to financial economic expansion,
with the result that in last 20 years by and large, there has been an enormous expansion in
financial assets not commensurate with the physical expansion of the economy. The whole
business of dealing and derivatives is not in value-added or the creation of real assets, but
trading in claim of the financial nomenclatures. This trading is taking place at everywhere;
a financial expansion is taking place as its result which is leading towards greater financial
instability all over the world, making rich a few and poor in abundance. How can one investor
make hundred billion dollars at the cost of shaking the economy…What type of distribution
of wealth and power is taking place through this process? [Ahmad 1997: 23].

3. Foundation of Islamic Economics

Modern Islamic economists such as Khurshid have developed a multidisciplinary and

multidimensional approach that forms the conceptual foundation of Islamic economics where
ethical and moral standard of Islam are firmly integrated with economic motive. Opposing
to conventional economics, this modern Islamic approach presents a socio-ethical vision of
economics for solving the economic problems of human. Modern Islamic economics aims to
developing a new system based on the following features:

(i) Islamic economics is a sub-system of a larger domain of religion of Islam, hence it

sources are derived from the fundamental sources of Islam;

(ii) It deals with all economic matters and activities as in the case of prevailing economic
systems; and

(iii) It obliges individuals to constrain their choices within the Islamic ethical limits.

Khurshid defines: “Islamic Economics deals with the economic problems of man from
a new perspective, spelling out an approach for solving the society’s problems that draws

222
 Islamic Approach of Economics

upon the sources of Islamic faith, culture and tradition, while availing itself of the whole
experience of humanity in the field, past and present. The uniqueness of the Islamic approach
lies in the integration of moral and material, spiritual and mundane, ethical and socio-physical
aspects of life. Islam stresses the development of humanity with social values, instead of only
materialistic development” [1986: 339–40].
Khurshid’s assertion of Islamic economics is founded on the following conceptual
axioms, which is entirely different than Capitalism and Socialism:

(i) Tawĥid (unity and sovereignty of Allah);

(ii) Rububiyyah (that Allah is the provider and sustainer of creation);

(iii) Khilafah (man as vicegerent of Allah and is accountable in front of Allah); and

(iv) Tazkiyah (the purification, sacrifice, charity i.e., Infaq).

・Equality of ・Distributive
Individuals Justice

Tawhid Rabubiyyah

Tazkiyah Khilafa

・Mutual Prosperity
& Triquality
throughCharity &
Sacrifice [Infaq] ・Accountablitiy

Philosophical Foundation of Islamic Economic Approach

Islamic worldview is based on Tawĥidic axiom: the absolute monotheism is the essence
of Islam; the belief that Allah is omnipotent, omnipresent Lord of the universe, creator and
sustainer of the world. This axiom correlated to next axiom of equality; all humans are
His creation and are equal by inherent. The next axiom of Rububiyyah refers to “divine
arrangements for nourishment, sustenance and directing things toward their perfection” [Ahmad
1979: 12]. Khilafah explains that human is the vicegerent and trustee of the bounties of Allah

223
Kyoto Bulletin of Islamic Area Studies 3-2 (March 2010)

in the creation, and holds the central position on this Earth. All humans are equal in their
essence and man is responsible for establishing peace, justice, prosperity and tranquility on
earth, he is accountable for his deed before God. Khilafah include the conception of universal
solidarity, best possible application of resources and having freedom to conduct his private life.
The axiom of Tazkiyah is concerned with and growth towards perfection through purification,
sacrifice, charity i.e., Infaq. This axiom directs the individual towards self-development, which
leads to prosperity in economic and social dimension in a harmonized way. “The result of
Tazkiyah is Falaĥ, prosperity in this world and hereafter” [Ahmad 1994: 20].
Khurshid further express that: “economics in its materialistic meaning is a discipline for
living in society. Man needs the following two elements for the proper development of human
life:
a. The economic resources to maintain life and to fulfill the material needs of the
individual as well as society; and

b. Knowledge of human doctrine to maintain, peace, justice and tranquility in society.7

Islam provides the said human doctrine, where social, educational political, economic,
and culture aspects are described clearly and are interconnected with each other and also
to the central philosophy of Islam. Hence, Islam provides the framework incorporating the
principles, value-judgments and ethical limits for the functioning of economy, where the usual
economic and financial decisions are made.
Development of human is the central issue in Islamic assertion. Islam considers that
well-being and prosperity of human is connected with moral, social, political and economic
factors. The ultimate objective of Islamic approach is the well-being of mankind through
a mere interaction and integration of social norms, ethical values, economic and political
factors and demographic standards of the society. This objective is in stark contrast to the
neoclassical economic theory where humans are solely motivated by self-interest and greed,
while the Islamic economic approach is based on the philosophy of mutual-cooperation with
shared responsibilities and common objectives. This view is based on the belief that man is
the vicegerent of Allah and will be held responsible for all his worldly deeds on the Day of
Judgment.
Khurshid is not agreeing with the prevailing assertion that Islamic economics would
unite the strengths of capitalism with those of socialism; overcoming their weaknesses. In
his opinion the aim of Islamic Economics is not to find some space within the paradigm of
conventional economics, or to become part of its matrix or simply to add one more feather
in its cap. It represents a revolutionary departure from the dominant paradigm —— aiming
  Notes from Interview

224
 Islamic Approach of Economics

not for a shift within the existing paradigm but seeking the development of a new prototype
to resolve the economic problems of man from a different value perspective. Khurshid
emphasizes that “Islamic economy is not capitalism minus interest plus Zakat. Nor does it
resemble a socialistic system after making a few corrections here and there. Islam does not
aim at the abolition of private property and enterprise. Instead, it has changed the system by
transforming the rights of ownership into the revolutionary concept of trusteeship, making
the individual and the society conform to the norms of moral behaviour laid down by God
and His Prophet (peace be upon him) and by developing a system of social regulation and
accountability”[1983: 248].
Khurshid characterized Islamic economic as a ‘three-sector economy’ where these
three sectors will be entrusted to work together: (i) The Private Sector, motivated by profit,
“the Market”, (ii) The Altruistic Sector, motivated by moral values and social welfare of the
people, without any profit motive, i.e., “the Volunteer”, and (iii) The Public Sector, or “the
Government or State”. All these sectors will work in mutual accordance and within the limits;
private ownership rights will assure with the caveat of social responsibilities, price mechanism
and the law of market will work within the coherent boundaries. Where serving of self-interest
will emphasized with the moral obligation of moral restraints and brotherhood. “There is
nothing wrong in private firms attempting to seek profit, under a perfect competition, because
that does not necessarily lead to exorbitant profit or exploitation, but if there is a monopoly or
oligopoly then the firm may get an abnormal profit. This implies that under an Islamic system
private monopolies would not be tolerated” [1997: 13–15].

4. Socio-Economic Order: Khurshid’s Response to the Western Worldview

Khurshid regards Islamic economics as an integral part of the Islamic socio-economic order
and any effort to establish the Islamic socio-economic order calls for uniform changes
in all spheres of society on the principles of justice, equality and mutual prosperity; the
whole milieu of society; economic policy, development planning, instruments of taxation,
fiscal & monetary management, parameters of incomes & wages and investment, housing
policy, education policy and patterns of consumption, need to be re-fabricated into Islamic
domains. Khurshid emphasizes that the objective of the Islamic socio-economic order is
to eliminate poverty and deprivation, exploitation and injustice from society rather than to
create substantial materialistic growth. In Khurshid’s view, if all countries were to mutually
implement the Islamic injunctions within their societies, it would work as an affective device
for transcending economic disparity, political divisions, and religious disputes, and lead to the
development of economic co-operation between them.

225
Kyoto Bulletin of Islamic Area Studies 3-2 (March 2010)

4.1 Significance and Importance of Socio-Economic Order

The philosophy of Islam is based on the principles of justice, equality, brotherhood, mutual
prosperity and collective development; it enjoins justice in all areas of human interaction
including economic, political, cultural, educational, and social spheres. All the prophetic
efforts were to enable each individual to appreciate the　significance and importance of
the rest of mankind, to establish justice and to hold the promise of eliminating all forms of
exploitation, oppression and injustice from society. According to Islam, all the rights and
obligations relating to human beings are based on the principle of ‘mutual good’; hence
distributive justice through materialistic means and resources is a key component of Islamic
socio-economic order. The Islamic socio-economic order has the following noteworthy
features, the establishment of which is the responsibility of the governing body:

1. The moral aspect that individual and collective economic motives are constrained by
the moral bounds demarked by Islam.

2. Fulfillment of the basic needs of all the inhabitants of the state, which implies the
complete eradication of absolute poverty from society. The Islamic view in this
regard is very clear and is directly associated with the Islamic concept of economic
ownership, i.e., Allah alone is the Creator, the Planner and Provider of all the needs
of all the beings He has created. The human being’s role is only that of vicegerent and
trustee of the blessings of Almighty Allah. Allah has placed on Earth all the necessary
resources to provide every human being’s basic needs. It is man’s duty to optimize
these resources in a just way that will supply the basic needs of life to each and every
individual on the planet.

3. The human dimension is the main aspect of economic enterprise in Islam. Islam wants
to establish a ‘Balanced and Just Distribution of Income’ which implies that: for
achieving the basic needs of all human beings, Islam enunciates the principle of the
poor having the ‘right to share’ in the excess wealth of the rich by means of Zakat.
According to Islam, all humans are equal in respect of their origin; they were all are
generated from Adam and Eve and there is no discrimination on the basis of race,
color and pedigree. Hence, each one has an equal right to acquire their sustenance
from Allah’s bounty. However, if someone, for whatever reason, fails or loses his
ability to acquire sufficient provisions, he has a right to share in the earnings of others.

4. Along with private and public sectors, where Islam permits the right of private
ownership to individuals and government plays its role a moderator, Islam stresses

226
 Islamic Approach of Economics

voluntary activities to maximize the moral and social welfare of people, with no
individual economic motives. In this regard, Zakat and Waqf are major institutions
with far reaching economic repercussions on the society.

Islamic provides both legal measures and moral exhortation to the Islamic administration
for achieving the objectives of its socio-economic order in order to ensure the basic needs
of life to its inhabitants and to eliminate absolute poverty and deprivation from society. The
philosophy behind the insertion of Islamic ethical and moral considerations in the economic
domain of an Islamic community is to develop a sense of social responsibility in order to build
the essence of accountability among its inhabitants. This implies that individuals who own
property should regard their material success as both a blessing and a test from God, view their
ownership status as that of a trustee only, and not hesitate to share their hard-earned wealth with
the needy and poor of their community on an ethical and social basis. However in reality, moral
checks and ethical values are not good enough to prevent individuals from misconduct, and
they are likely to succumb to the human vices of excessive greed and selfishness. In this case,
Islam entrusts the government to play its role to counter this problem and take the excessive
wealth from the rich and redistribute it among the less fortunate. Hence Islam protects the right
of private ownership on the one side and demands the owner to pay his dues in the cause of
humanity and ethics on the other. The state’s position is in the middle, upholding justice. It is
neither laissez-faire as in the capitalist model nor totalitarian like the Socialist model.

4.2 Prerequisites for Realizing the Socio-Economic Order

Recent outcomes of global economy shows that market fundamentalism with virtual
withdrawal of the state from the economic affairs failed to achieve what was so confidently
and loudly proclaimed by the Washington Consensus, embodying neo-liberal principles. Now
a new sense of awareness has emerged which support the active role of state, and demand
the state to come with stimulus package to pull up the economy from its systemic crisis.
Khurshid considers the needs to re-fabricate the whole framework of the economy and society
for realizing the Socio-Economic Order and establishing an Islamic society. If one segment
of society, e.g. the political sector, or education has been Islamized, while the judiciary and
legislation are remained unchanged, the overall result will be void. For this purpose the
change should come from the top to down and the state legislature should take a bold initiative
by inducting Islamic provisions into the constitution and judiciary and eliminating un-Islamic
elements from the judiciary and legislative codes of the country. Khurshid opines that political
authorities exercise a tremendous influence on the individual, directly or indirectly. Thus,
he argued that it was the foremost duty of the parliament to Islamize the existing financial
system of the country. He stated that the state lacked the political will and was neglecting

227
Kyoto Bulletin of Islamic Area Studies 3-2 (March 2010)

the work that had already been done for the transformation of the existing banking structure
into an interest-free system. He appreciated the work of the Council of Islamic Ideology and
suggested Profit and Loss Sharing (P&L. S) system as an ideal method for ensuring economic
development and growth and the distribution of justice and stability, while the interest-
based economic system had only encouraged exploitation. “We would have to tolerate some
kind of a co-existence of the two systems. It would be a policy objective to introduce the
new system so as to replace the old one, as far as Muslim countries are concerned. A modus
vivendi would be worked out for dealing with the outside world” [Ahmad 1981: 14–15]. In
Khurshid’s assertion state has to come with stimulus package of measures to implement the
said model. A forceful policy package with gradual but multidimensional approach is need for
the implementation of this order.
Khurshid states that the contemporary socio-political milieu of the society to be
imperfect for establishing a true Islamic Order and calls for the complete re-fabrication of
prevailing societal norms and suggests the implementation of religious injunctions. This,
he believes, requires a clear recognition of the impact of the sociopolitical environment in
which Islamic principles are to be articulate. He considers the Islamic economic system
as an integral part of the Islamic Socio-Economic Order and considers that any effort to
establish the Islamic order or any aspect of it without aiming at the restructuring of the whole
prevailing sociopolitical setting is not going to deliver the goods. He desires to reconstruct
Islamic society in the image of Madinah, established by the Prophet (peace be upon him).
Khurshid wants to develop a new paradigm in which individual gain should take place in the
context of collective well-being; freedom must be coupled with responsibility, profit should
be tempered with equity, competition must be supplemented by cooperation and there should
be a happy balance between the operations of private enterprise, voluntary civil society actors
and institutions and the public sector [2006: 10].
Khurshid asserts that almost all economies have to face the following four economic
problems on a larger or smaller scale while confronting the economic problems: (i) Scarcity
of Resources (ii) Allocation of Resources (iii) Distribution of Output and (iv) Economic
Development. In his proposal, the government would apply fiscal and monetary measures
in such a way as to achieve economic growth, financial stability and societal prosperity at
same time. Islamic fiscal policy is unique and distinguished from the norm on the basis of its
objectives and function. On the application side, it would ensure a strict prohibition on interest,
gambling, uncertain incomes and speculation. At the same time it would ensure that each and
every individual in the society could acquire the basic needs of his life and that the circulation
of wealth would be in a wider domain. For this purpose not only taxes but also Zakat, ‘Ushr,
Khums and other levies would be applied. “It will be the objective of governments to apply
  Notes from Interview.

228
 Islamic Approach of Economics

all the flexible and elastic revenue and expenditure systems, i.e., progressive taxes on income
and expenditure as well as social security payments to ensure the provision of basic needs to
all citizens, equitable income and wealth distribution in the society, and the stabilization of the
economy collectively and at an individual level” [Salama 1986].
Zakat is regarded as the most significant tool in the Islamic economy for equal income
distribution and the elimination of poverty and economic exploitation from society. It creates
awareness in the individual of his responsibility towards the upholding of, justice and the
welfare of his fellow men. Zakat is a broad term of which Zakat al-Mal is one component.
Ushr, Khums, Kharaj and other levies are also an integral part of this Islamic fiscal tool.
Islam fully recognizes private ownership of property and the government is not permitted to
forcibly confiscate one’s property. Khurshid opines that the state should be empowered to
levy additional taxes or even can take the idle money of rich by force or can ask the people for
contribution if there are chronic disparities of income and wealth, in order to establish social
equity and a more dynamic equilibrium [Ahmad 1981: 14–15]. The role of the state should be
as a caretaker and safeguard of the system and it should use its power only when absolutely
necessary. In conformity with the broad concepts of a stable economy, prosperity, and the
redistribution of income and wealth, Khurshid favored giving broader powers of taxation to
the government. However this latter point should not be misunderstood, and in this regard the
state should not exceed the limits set by the Shari‘āh.
The Proposed Structure of the Society for realizing the Socio-Economic Order

Islamizing the
Economy
[Elimination of unjust and
Establishment of Islamic
Economic Institutions]

Islamizing the
Institution Islamic Society
of Hisbah Socio-Economic
Order [Education, Politics,
Rituals, Culture]

Islamizing the
State
[Constitution, Judiciary,
Legislation andPolicies]

229
Kyoto Bulletin of Islamic Area Studies 3-2 (March 2010)

5. Self-Reliance: Khurshid’s Approach for Economic Sovereignty

Khurshid condemned the resulting contrast between wealth and poverty and says that the
humanity has been plunged into number of dire problems as a result of the forcible imposition
of the Judeao-Christian economic and political framework, where, for the interests of skillful
riches, keeping the poor nations remains in a number of problems becomes a cliché or policy
per se. He strongly advocates the self-sufficiency and confidence in Islam as a role model and
rejects the capitalist and socialist models because of their exploitative nature, value-neutrality
and unjust outcomes. “Muslims are fed up with all the models of imitation; they want to have
something that is their own, something that is unique; something that represents their own
historical and cultural flowering. That is why establishment of the Islamic social order, revival
of the Shariʻah and unity and solidarity of the Ummah constitute the rallying points in all the
parts of the Muslim World.”
The world has become a global village and all countries and territories are its elements.
No country can be self-sufficient in all matters, nor can it be isolated. But for the sake of a
nation’s sovereignty and honour, Khurshid demands freedom to control the disposal of its
own resources and output and set its own economic and political priorities. He states that
“Self-reliance signifies the capacity and capability of the country to face any crisis on the
basis of internal strength. It implies self-confidence and the capacity for autonomous goal-
setting and decision-making, rejecting all forms of dependence, invited or imposed” [1995:
182–183].
Khurshid observed that foreign development assistance and aid-based development
efforts over many decades had not been able to produce the expected results in Pakistan. As
foreign aid by developed countries is being utilized as a means to direct policy in developing
countries, hence it is being recognized as a misnomer. In fact there is only a small part which
comes in the nature of a justifiable grant, and the rest is tied to specific instructions from
the donor countries as to its use. Once the instructions, costs and barriers tied with the ‘aid’
are taken into account, one discovers that the net contribution of an aid grant is minimal and
the net aid is a mere trickle of the entire contribution. In December 1990, with this fact in
mind, Khurshid was appointed as chairman of a committee with the objective of developing
a strategic report for self-reliance in economic as well as other sectors. The committee
made a serious and systematic effort to draw up an alternative framework for economic
development and policy-making, and made a second supplication for the elimination of
Riba. The committee concluded that the suspension of foreign (especially US) aid could be
a blessing in disguise, and urged for the evaluation of the net contribution of what the Third
World countries in general and Pakistan in particular had been receiving in the name of aid
  Notes from Interview.

230
 Islamic Approach of Economics

and in return what they were suffering as a result of that aid. Khurshid asserts that “Doubtless
we should have friendly relationships with all countries, yet we must not remain dependent
on aid….Islam is very sensitive about independence, sovereignty, honour and self-respect.
Islamic community is a witness on mankind, and if you are dependent on them economically,
intellectually, technologically, scientifically and financially, self-reliance seems the only way
(out)” [1995: 183].

5.1 Methodology and Approach for Self-Reliance

Khurshid critically asses the past efforts and plans for economic development and self-
reliance and not only points out the cause of illness but also suggests the true cure. He asserts
that “when we look at the five-year plans, even the first five-year plan said that within 25
years Pakistan would be self-financing; self-sustained,…But after 40 years we are more
dependent than (we were when) we started. This type of gradualism is not going to work…
the nation should adopt self-reliance as a national covenant, the fundamental principle of
the socioeconomic policy and the basis for individual life in the national context. …Debt
based development and interest-based loans are not the only means of economic cooperation
between individuals, enterprises, corporations and governments”. In this respect, Khurshid, as
chairperson of the government committee, criticized the gigantic size of the ruling government
body and demanded a significant reduction in the number of civil servants and more control
over spending. He further suggested the restructuring of existing development plans and
proposed the decentralization of a number of functions from the federal administration to
regional offices. He asserted that the government should take a positive role and should take
measures to safeguard fair play in the private sector, which has an important function in
the industrialization of the country. The committee proposed recommendations for a more
powerful tariff commission, and a long-term tariff policy. The committee also stressed the
need for a thorough revamping of the taxation system.
Khurshid is realistic enough to accept that the state plays the central role in the welfare
of individuals and has various administrative responsibilities, such as collecting income taxes
as necessary. He stressed the need for better resource mobilization, and a fundamental change
in the taxation system. He considered the elimination of Riba to be an essential requirement
for the Islamic economy and an integral attribute of self-reliance. However, he stress that the
mere elimination of Riba is not going to either achieve the objectives or even produce a just
system; the elimination of Riba should take place in the context of a movement towards a
different economic model having clear socio-economic and moral objectives, i.e. to maintain
social welfare, to establish a just society and to ensure fair-play for all. He suggested a
gradual approach for the induction of Islamic injunctions into the society. However, having a
fundamentalist Muslim view on the prohibition of Riba, he considered it to be unacceptable in

231
Kyoto Bulletin of Islamic Area Studies 3-2 (March 2010)

any form and kind, unlike a number of modernists who considered that only the charging of
interest should be prohibited.
Khurshid suggested a strategy of “radical-changing” or “economy-shocking” course of
action for eliminating interest from the economy instead of a long term amnesty period, and
he took an unwavering fundamentalist attitude wherever the rule of necessity had no place.
He strongly criticized the past measures to eliminate Riba as devices to avoid any serious and
sustained efforts to bring the system into conformity with Islam. He claimed that they were
used as a cloak for inactivity and inaction, and stressed the need for a radical departure from
the practices of the past. “In my submission while the domestic economy may be cleansed of
all forms of Riba within a period of one year or so, international transactions may take longer
…in the past such time-based transitional paths have been misused and even abused…some
kind of shock treatment to the economy is required” [1995: 184]. He suggested eliminating
interest in two stages, first from the domestic economy and then from the external economy,
where individuals and governments were to be treated differently. He suggested that a
mutual fund for “Debt Liquidation” should be created, and deadline should be fixed for the
elimination of individual interest. For foreign debts, he suggested the idea of renegotiating and
restructuring loans. He was confident of the success of this objective as these countries also
realized that interest-based loans were becoming an unbearable burden for the Third World
countries [1995:188]. Khurshid proposed that the government, if necessary, should appeal
to the public to make a charitable contribution towards the costs of eliminating Riba, and a
“National Self-Reliance Fund” should be created for the collection of donations from people
within the country and particularly from Pakistani expatriates. For collecting donations from
Pakistani expatriates the export of manpower was suggested. The proposal was successfully
adopted and applied in the country, but the political overturn in the country wiped out all their
efforts.
Although, the policy to transform the financial and banking sectors at once could not
bring about the desired results, most of the measures adopted either supported the birth of new
Islamic banks or accelerated the Islamic Banking Industry in Pakistan, and the Islamization of
the banking and financial sector in Pakistan encouraged other countries in the world to make
advances in this process.

6. Economic Development: an Imperative issue of State Policy

“Economic growth (development) is a necessity. Without enlarging the cake,

we cannot have better distribution.” [Ahmad 1995: 88].

232
 Islamic Approach of Economics

Islam is deeply concerned with economic matters, but it deals with these matters within the
human development paradigm; it covers all aspects of economic development within the
framework of total human development and never in a form divorced from this perspective.
Khurshid asserts that “Islam is deeply concerned with the problem of economic development
but treat this as an important part of a wider problem, that of human development….The
first premise which we want to establish is that economic development is a goal-oriented and
value-realizing activity, involving the confident and all-pervading participation of man and
directed towards the maximization of human well-being in all its aspects” [1978: 178–179]
Khurshid’s economic development model encompasses all aspects of human life,
intertwining individuals and the society in an eternal way, and he considers total social
reconstruction within an Islamic set of assumptions as an essential prerequisite for economic
development. To achieve this objective, he proclaims that prevailing social fundamentals are
to be replaced and that constitutional, political as well educational paradigms are subjected
to restructuring in a gradual democratic framework. His economic development model is
inter-connected with the moral, spiritual and social aspects of man and has no similarity to
capitalist and socialist models. “Development would mean the moral, spiritual and material
development of individuals and society leading to maximum socio-economic welfare and the
ultimate good of mankind”. Since the Islamic concept of economics is founded on moral and
ethical values with an overwhelming emphasis on humanity, brotherhood, equality, justice and
the improvement of the individual, it is entirely different from the concepts of both capitalism
and socialism. Thus, neither of these concepts can help Muslims actualize the Islamic
visualization of economic development. Instead, Khurshid advocates the idea of economic
development in a way that would ensure material prosperity on the one hand and spiritual
development, on the other. Islam creates a divine relationship between individuals, and from
whatever angle we look at Islam its final thrust is on human development and welfare. All
the five pillars of Islam generate the spiritual strength to achieve human well-being through
social, economic, political and spiritual aspects. “Islam does not admit any separation
between ‘material’ and ‘moral,’ ‘mundane’ and ‘spiritual’ life, and enjoins man to devote all
his energies to the reconstruction of life on healthy foundations. It teaches him that moral and
material powers must be welded together and that spiritual salvation can be achieved by using
material resources for the good of man, and not by living a life of asceticism” [Ahmad 1960: 8].

233
Kyoto Bulletin of Islamic Area Studies 3-2 (March 2010)

Khurshid’s Model of Economic Development

The Objective of Economic Development

Reconstruction of an economy commensurate with the developed world, with a rapid growth
rate in economics productions, faster reduction in poverty, and helping to bridge the divides
of different dimension (classes) in the society

Prevailing Economic Development Approaches in many Developing Countries

(Trickle-down theories)
1. Harrod-Domar Approach: Industrialization=Import Substitute
2. Kalecki-Lange Approach: Investment in Development Projects

Both theories have failed to achieve distributive justice, created disparities and distortions of
various dimensions in the society and accentuated the sense of insecurity in the individuals.

Alternative Approach to Economic Development (suggestion)

Inclination and Sympathy (Politico-Economic dependence) = Beggar and Rich Relation
(Donor and Recipient Relationship: where poor nations always ask the developed nations for
AIDS for being able to live in the world and never become self-sufficient in any aspect of life.)
OR
Khurshid Ahmad’s Proposal
Economic Development= Human Development + Social Justice + Equality + Mutual Prosperity
Human Development= Self-Recognition as Khalifa and Tazkiyah

“Economic Development is an integral and indivisible part of Human Development within the
norms and values of Social Justice, Equality and Mutual Prosperity. Islam does not allow any
form of development which harms the norms and values of humanity.”

Khurshid’s concept of development is based on the notion of Tazkiyah, which directs

man to Falaĥ —— success in this world and the Hereafter. Therefore development means
development of the physical and socio-cultural environment. For achieving this objective the
optimum use of all human and material resources, with the best application of justice, fairness
and equal opportunities for all members of society becomes mandatory. A person becomes an
active agent in society only after being inspired by certain values and ideals derived from the
Divine Will, after which he seeks not only his own welfare and prosperity but also the welfare
and tranquility of his community. It is through this multi-pronged approach that it would be

234
 Islamic Approach of Economics

possible to change the entire face of society and established a civilization which could be
just and about which once again the historians might record that people were searching for
someone to give charity to but could not find anyone in need. Islam on the one hand mobilizes
and motivates the individual and on the other hand, emphasizes the administrative institutions
responsibility to uphold the Divine Will. He suggests applying his strategy in step by step,
in a continuous but not overcautious manner because, since the 18th century, the Western
approach has permeated to the grass roots of society and people are used to this system, so a
sudden and substantial change would harm the whole societal and economic structure.

Conclusion

Khurshid is advocating the Islamic reforms as a remedy for all the human problems since his
very early academic career lectures, editorial work, speeches, dialogues and seminars which
have recognized beyond boundaries. Though he has not written as extensively as many others,
contemporary Islamic and conventional economist did, whatever he produced is convincing
and reflects his intellectual capability. Unlike others legists and thinkers of contemporary
Islamic economics, those merely attempted to justify the specific cases on the basis of
precedent and their works are only theoretical and have never been recognized for practical
implications or could not brought significant movement in the Islamic world, Khurshid had
developed a systematic attempt for developing Islamic economics as an applied discipline.
Khurshid is actively involved in the establishment of Islamic Economics as an independent
and distinct, discipline both at the domestic and international level. He earnestly undertook
the responsibility of serving as the vice-president of First International Conference on Islamic
Economics (held at Makkah on 21–26 Feb. 1976), and there he presented his approach
to economic development from an Islamic perspective. This conference later became
the landmark for the emergence of Islamic banking and financial institutions worldwide.
And when in 1979, the Islamic Council of Europe organized the “International Economic
Conference: The Muslim World and the Future Economic Order”, Khurshid advocated the
Islamic approach and perspective of life. Khurshid served as chairman of the International
Institute of Islamic Research (IIIR) at the International Islamic University, Islamabad
(established in 1980). IIIR developed a strategic plan for eliminating riba (interest) from
the economy of Pakistan, together with the Islamization of the financial system. Khurshid
established a distinct thinktank; Institute of Policy Studies, Islamabad, dedicated to research
in the Islamic discipline. IPS succeeded in organizing the second International Conference on
Islamic Economics (6–10 Jan. 1981). The conference revealed a comprehensive and viable
approach for establishing an Islamic Financial and Monetary system. Khurshid rendered
valuable assistance and patronage towards introducing an Islamic economic system to this

235
Kyoto Bulletin of Islamic Area Studies 3-2 (March 2010)

and other forums. Khurshid is serving as member of executive and advisory boards to many
national and international Islamic research centers and serving as president of the International
Association for Islamic Economics.
Khurshid along with his associate activists, has been successful in combining his
theories, based on the Islamic standard derived from the Qurʼān and Ĥadith, into recognition
and developed a worldwide Islamic economic movement. The role of Islam in Pakistan in
late 1970s, having been eclipsed during the Ayub K. and Z.A. Bhutto era, had once again
become a vital issue in the economic, social, political and legislative spheres of the country.10
Perhaps, this was one of the reasons that when Zia-ul-Ĥaq proclaimed himself as Chief
Martial Law Administrator and later on president of Pakistan, and vowed to bring in a new
state apparatus based on Islamic law, Mawdudi and his companion rallied around him;
applauded the military’s intervention and soon joined the government as cabinet advisors,
four members of Jama‘at-e-Islami in 1978 became members of the Government and Khurshid
was appointed Federal Minister and Deputy Chairman for the planning commission. He was
actively involved in Pakistan’s experiment to introduce a more Islamically-oriented system
of government [Esposito, and J. Voll 1999: 43]. He was again on the vanguard position for
advocating the Islamic economy and with the collaboration of Islamic researchers, among
whom Muhammad Umer Chapra, Nejatullah Siddiqui, Ziauddin Ahmed, Ausaf Ahmed,
A. Rahman Yusuri, and Naqvi are prominent, started an Islamic economic movement at
both intellectual and practical levels for its realization. The later decades showed that their
endeavor was not only viable but also received appreciation all over the world. Khurshid is
of one of the original proponents for the successful establishment of Islamic banking. During
his administrative post in Zia régime, being an Advisory Member, Federal Minister and
Deputy Chairman for the Planning Commission. During this period Pakistan attempted the
experiment for establishing the Islamic banking and financial system and a comprehensive
“Islamization Program” was successfully launched. Pakistan was considered as one of the
pioneer countries trying to establish an Islamic economic system at the national level until the
sudden overturning of the political sphere retarded the process. The experiment was however
successful in that a wave of Islamic Banking and Financial institutions emerged worldwide
after this attempt. Today a strong ground swell exists in many Muslim countries to reassert
Islamic injunctions in the social, economic, and political spheres of life. At present there
are more than 400 Islamic banking and financial institutions working worldwide. Khurshid
10  For more discussions on this topic, please see, Parveen Shaukat Ali, (1997) Politics of Conviction:
The Life and Times of Muhammad Zia-ul-Haq (The London Centre for Pakistan Studies); Hassan Mir Zohair,
(1985). “The Politics of Islamic Revivalism: A Case Study of Pakistan under Z.A. Bhutto”, Ph.D. Dissertation
Presented to University of Pennsylvania; Mumtaz Ahmad, “Parliament, Parties, Polls and Islam: Issues in the
Current Debate on Religion and Politics in Pakistan”, American Journal of Islamic Social Sciences, Vol. 2,
No.1 (July 1985); Anwar Hussain S., (1982). Pakistan: Islam, Politics and National Solidarity (New York:
Random House).

236
 Islamic Approach of Economics

is of the view that the success of Islamic banks should not be evaluated only by the profits
they have earned. The emphasis should be on judging the extent to which their presence has
contributed to the realization of the Islamic goal of social justice. In recognition of his sincere
efforts for such goal, he is rightly being regarded among the “Fathers of Contemporary
Islamic Economics” and was awarded the prestigious King Faisal award for service to Islam
in 1990.
Khurshid Ahmad, with others, has played an important role in resurrection of Islamic
economic thought in contemporary world. He succeeded in arousing a sense of awareness
and solidarity among Muslims under the banner of Islamic economics in response to the
existing, forcibly imposed Capitalist and Socialist systems. Contemporary Muslim economists
succeeded in convincing the world that Islamic economic system is not only a viable and
scalable proposition but an improvement on the capitalist and socialist models. In results,
many countries of the world are proceeding towards a new horizon through robust interactions
with the Islamic world in an atmosphere of mutual consideration and equal respect, which just
a few decades ago would have been unimaginable.
Khurshid considers economic development to be an integral and indivisible part of
human development within the norms and values of the Islamic framework. He does not
accept any modification that would damage the norms and values of humanity, and considers
all human beings to have equal status in society; hence he emphasizes the need of distributive-
justice and equality as imperative prerequisite for development.
On the contrary, a fundamental question can be raised as to why, in spite of producing
volumes of influential scholarly work, having a powerful and convincing voice at national
and international forums, and having key positions in the ruling administrations in Pakistan,
Khurshid could not succeed in bringing about any significant restructuring in the economy
and society of Pakistan, thus solving the economic as well the social problems of its citizens?
In order to answer this question, one must take into account the years of prevailing
problems the country is facing since its independence. Pakistan was came into being on the
name of Islam as well as it was thought that the Muslim of India had a different identity and
want to establish their own ideal place where they can perform their lives according to Islamic
teachings, yet the reality of this notion is still far. Illegitimate and corrupt governments have
taken advantage for their own benefit, leading Pakistan into dire economic as well as political
problems and driving the nation farther and farther away from its destination, i.e., an ideal
Islamic country. In more than 60 years of history, Islam was used as a tool or an appliance to
grab and maintain power and to suppress the people of Pakistan. Besides this, Pakistan has
been plagued in the crisis of all sorts: it includes illiteracy and lack of awareness, absence of
democracy at grassroots on the one hand and moral laxity, political illegitimacy, anomie, and
the absence of a sense of accountability on the other. The struggle to realize socio-economic

237
Kyoto Bulletin of Islamic Area Studies 3-2 (March 2010)

reform without changing the socio-political framework of the society, where a number of
dreadful problems have prevailed over decades of degeneration and stagnation, is nothing less
than a utopian dream. As pointed out by Mawdudi, some sixty years ago, “Calling to Truth
and working for an Islamic Revival are time-consuming job, and a true believer should work
not only with great passion, but also constantly and patiently, just as a farmer does …then
after the years of waiting the tree will bear fruit” [Mawdudi 1950].

Bibliography

Interview with Professor Khurshid Ahmad held at IPS Islamabad, 30–31st January 2009.
Ahmad, Mumtaz. 1985. “Parliament, Parties, Polls and Islam: Issues in the Current Debate
on Religion and Politics in Pakistan,” American Journal of Islamic Social Sciences 2(1),
pp. 15–28.
Ahmad, Khurshid. (n. d.). “Contemporary Economic Challenges and the Islamic Response”
―――. 1960 & 1978. The Religion of Islam. Lahore: Islamic Publication.
―――.1979. Economic Development in an Islamic Framework. Leicester: Islamic
Foundation.
―――. 1980. “Economic Development in an Islamic Framework,” in Khurshid Ahmad and
Zafar Ishaq Ansari (eds.), Islamic Perspective: Studies in Honour of Mawlana Sayyid Abul
A‘ala Mawdudi. Leicester and Jeddah: Islamic Foundation and Saudi Publishing House.
―――. 1981. “Towards the Monetary and Fiscal System of Islam,” A Personal Report on Some
Pertinent Questions and Seminar’s Response to them, Based on Seminar on Monetary and
Fiscal Economics of Islam, held in Islamabad on 6-10 January 1981, pp.14–15.
―――. 1986. “Keynote Address,” in Ziauddin Ahmed, Munawar Iqbal and Khan F. (eds.),
Fiscal Policy and Resource Allocation in Islam, Islamabad: IPS. pp. 339–357.
―――. (eds.), 1993. Islami Nazriya-e-Hayat (Islamic Vision of Life). Karachi: Karachi
University.
―――.1994. Islamic Approach to Development: Some Policy Implications. Islamabad:
Institute of Policy Studies.
―――. 1995. “Self-Reliance and Elimination of Riba,” in Khurshid Ahmad (ed.), Elimination
of Riba from the Economy, Islamabad: Institute of Policy Studies.
―――. 1995. “Elimination of Riba: Concept and Problems,” in Khurshid Ahmad (ed.),
Elimination of Riba from the Economy, Islamabad: Institute of Policy Studies.
―――. 1997. “Poverty in the World: some Points to ponder,” in Mohibul Haq Sahibzada ed.
Poverty Alleviation in Pakistan. Islamabad: Institute of Policy Studies.
―――. 2003. “The Challenge of Global Capitalism,” in J.H. Dunning (ed.), Making

238
 Islamic Approach of Economics

Globalization Good: The Moral Challenges of Global Capitalism. Oxford: Oxford

University Press.
―――. 2006. “Speech at the 22nd Convocation Ceremony,” on the Occasion of the
conferment of the Honorary Degree of Doctor of Philosophy (Islamic Economics) at
Kuala Lumpur (August 26–27, 2006).
Asutay, Mehmet. 2007. “A Political Economy Approach to Islamic Economics: Systemic
Understanding for an Alternative Economic System,” Kyoto Bulletin of Islamic Area
Studies 1(2), pp. 3–18.
Ahmad, Ziauddin, Munawar I. and Khan Fahim M (eds.), 1986. Fiscal Policy and Resource
Allocation in Islam. Islamabad: Institute of Policy Studies.
Chapra, M. Umer. 1992. Islamic and the Economic Challenge. Leicester: Islamic Foundation.
―――. 2000. The Future of Economics: An Islamic Perspective. Leicester: Islamic
Foundation.
Easterlin, Richard A. 1995. “Will raising the income of all increase the happiness of all?”
Journal of Economic Behaviour and Organization 27(1), pp. 35–48.
Esposito, John L. and John O. Voll. 1990. “Khurshid Ahmad: Muslim Activist-Economist,”
the Muslim World, 80(1), pp. 24–36. Also see in Ibrahim M. Abu-Rabi (eds.), Islamic
Resurgence: Challenges, Directions & Future Perspective, Islamabad: Institute of Policy
Studies, 1995, pp. 33–54.
Faridi, F. R. 1983. “A Theory of Fiscal Policy in an Islamic State,” in Ziauddin A. Iqbal M.
and Fahim K. ed., Fiscal Policy and Resource Allocation in Islam, Islamabad: Institute
of Policy Studies.
Gellner, Ernest. 1981. Muslim Society. Cambridge: Cambridge University Press.
Manzoor, Parvez. 1984. “Khurshid Ahmad: Faith Turned Into Vocation,” Encounter,
December, pp. 57–59.
Mawdudi, Syed Abul A‘ala. 1950. “Umeed aur Yaqeen key Beej Boiye [Sow the seeds of Hop
and Trust (faith)],” Tarjuman ul Qur’an 33(1), pp. 71–72.
―――. 1984. Economic System of Islam. Compiled and edited by Khurshid Ahmad, Lahore:
Islamic Publications.
―――. 1992b. Economic Problems of Man and Its Islamic Solution. Lahore: Islamic
Publications.
Mir Zohair, Husain. 1985. “The Politics of Islamic Revivalism: A Case Study of Pakistan
under Z.A. Bhutto,” Ph.D. Dissertation Presented to University of Pennsylvania.
Muzaffar, Chandra. 1986. “Islamic Resurgence: A Global View”, in Toufik A. & Siddiqui S.,
Islam and Society in Southeast Asia, Singapore: Institute of Southeast Asian Studies.
Rehman Khalil-ur K. 2008. Supreme Court’s Judgment on Riba. Islamabad: Shari‘ah
Academy.

239
Kyoto Bulletin of Islamic Area Studies 3-2 (March 2010)

Saeed, A. 1999. Islamic Banking and Interest: A study on the Prohibition of Riba and Its
Contemporary Interpretation. Leiden: Brill.
Salama, Abidin A. 1986. “Fiscal Policy of an Islamic State,” in Ziauddin Ahmad, Munawar
Iqbal and Khan F. Fiscal Policy and Resource Allocation in Islam, Islamabad: Institute
of Policy Studies.
Shafi, Mufti Muhammad. 1978. Islam ka Nizam-e-Taqseem-e-Dowlat (Distribution of
Wealth in Islam). Karachi: Idarat-ul-Muarif.
Shaukat Ali, Parveen. 1997. Politics of Conviction: The Life and Times of Muhammad Zia-
ul-Haq. London: The London Centre for Pakistan Studies.
Siddiqui M. Nejatullah. 1982. Recent Works on History of Economic Thought in Islam: A
Survey. Jeddah: King Abdul Aziz University.
―――. 1988. Muslim Economic Thinking: A Survey of Contemporary Literature. Jeddah:
King Abdul Aziz University.
Syed, Anwar H. 1982. Pakistan: Islam, Politics and National Solidarity. New York: Random
House.

240