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JOURNAL OF BUSINESS MANAGEMENT AND ECONOMICS
Homepage:http://innovativejournal.in/jbme/index.php/jbme
Ummah Economic Remedy: Between Islamic Economics and Islamic Political Economy
Mohd Syakir Mohd Rosdi
Centre for Islamic Development Management Studies (ISDEV)
Universiti Sains Malaysia, Pulau Pinang
E-mail: [email protected]
DOI: http://dx.doi.org/10.15520/jbme.2016.vol4.iss01.169.pp38-46
Abstract: This article aims to find a form of holistic economy that is capable of identifying the source of problems and providing remedies for
Ummah (Islamic nation) economy. The available options are Islamic economics and Islamic political economy. Islamic economics refers to
economy based on Islam, while Islamic political economy refers to the interaction between Islamic economy with Islamic politics and the
implication of the influence of one field on the other. Most scholars to date concentrated only on Islamic economy, not Islamic political
economy. The question is, is Islamic political economy capable of providing remedies for Ummah economic problems? Is Islamic economy
holistic when it is concentrated only in the production and consumption of goods and services without considering its relation to politics? This
paper attempts to find the answers to these questions. Based on literature review and textual analysis, this paper firstly re-evaluates the status of
Islamic economics, which does not take into account the political dimension; secondly, analyses the extent of the holisticity of Islamic political
economy in comparison to Islamic economics; and thirdly, summarizes the choice between Islamic economics and Islamic political economy as
a holistic field in overcoming problems and providing solutions for Ummah economy.
Key Words: Holistic Economy, Islamic Economics, Islamic Politics, Islamic Political Economy
INTRODUCTION
Islamic economics is considered an important field of
studies in developing Ummah economy. The importance of
Islamic economics had caused Islamic scholars to
concentrate on this field (Muhammad Nejatullah Siddiqi,
1989), rather than Islamic political economy. The question
is, can Islamic economics identify and provide remedies to
the problems in Ummah economy? Is Islamic economy
holistic when it only concentrates on production and
consumption of goods and services without considering its
relationship with politics? To answer these questions,
Islamic economics as well as the holisticity of Islamic
political economy are re-evaluated. This discussion is
achieved through literature review and textual analysis to
then be able to choose between Islamic economics and
Islamic politics; which one is holistic in providing remedies
to Ummah economy?
Islamic economics balances individual interests with that of
the public.
The above statement regarding Islamic economy was also
discussed by many world scholars including some from
Malaysia. Among the international scholars were Fazlur
Rahman (1969), Muhammad Baqir al-Sadr (1971), S. M.
Hasan-uz-Zaman (1979), Timur Kuran (1986), Khurshid
Ahmad (1992), Muhammad Nejatullah Siddiqui (1996),
Muhammad Anas Zarka (2003), Asad Zaman (2005),
Monzer Kahf (2008), M. Umer Chapra (2010), and
Muhammad Akram Khan (2013). While in Malaysia, among
them are Jomo Kwame Sundaram (1993), Kamal Salih
(2013), Sudin Haron (1996), Ungku Aziz (1959)1*i, Syed
Othman al-Habshi (2010), Abdul Halim Ismail (1985) and
Nik Mustafa Nik Hassan (2000).
RE-EVALUATING ISLAMIC ECONOMICS
The discussions of these scholars can be summarised into
three subject matters. First, the definition of Islamic
economics; second, the approach in Islamic economics; and
third, school of thoughts regarding Islamic economics. All
three subjects of discussions only concentrated on Islamic
economics, without exhibiting any discussion towards or
including the dimension of Islamic politics. This is proven
through the opinion of M. Dawam Rahardjo (1999: 3-4) that
there are three definitions of Islamic economics which are
the science of economics, economic system, and
economization of the Muslims. For example, the science of
economics is defined as an economy based on the values or
teachings of Islam. According to Muhammad Akram Khan
(1994), the science of Islamic economics aims to study the
prosperity (al-falah) of human that can be achieved through
Islamic economics, according to Sarizah Soed and M. Nazri
Zakaria (2005), is a system based on the Quran and Hadith
as the complete guidance. The discussion about Islamic
economy comprised of economic activities performed based
on shariah (Islamic law) (Fazlurrahman, 1994: 36; H.
Veithzal Rivai and H. Andi Buchari, 2013). Among Islamic
law regarding economy are produced goods must be goods
which are allowed in Islam; the quantity of goods should
depend on demand and supply, goods wastage has to be
avoided; goods distribution should depend on income
distribution; and concurrently, monopoly is absolutely
forbidden in Islam. Similarly, oppression is forbidden as
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Mohd Syakir Mohd Rosdi al, Journal of Business Management and Economics, 4 (01), January, 2016,
managing the world resources through cooperation and
collaboration. Likewise, M. Umer Chapra (1999) said that
Islamic economics is a branch of knowledge that aids the
realisation of human prosperity from a place and the
distribution of world resources in accordance with maqasid
syar’iah (the purpose of shariah). It is done without
restricting individual freedom, creating a prolonged
imbalance between macroeconomics and ecology, or
weakening family and social unity as well as community
moral network.
approach. This recitative approach involves a discussion of
Islamic texts regarding fiqh (the study of Islamic law),
theology, and economics ethics. Third, the Utopian
approach. Utopia ii is the image of the world we wish for.
This approach is achieved by proposing human model. For
example, the term homo economicus, or altruistic human
was introduced. Similarly, in Islam, the term “Baldah alThayyibah wa Rabbun Ghafur” was introduced in a Quranic
verse. While the fourth approach is the adaptive approach.
This approach is achieved through the method of selfadaptation based on local environment and history of
Muslim. For example, the socialism ideal adapted in Islam is
named the ‘Islamic socialism’. When this term is changed to
suit people’s struggle, it is called ‘populist socialism’, and
when adapting to democratic governance, it is termed
‘democratic socialism’.
The discussion of these Islamic scholars showed that Islamic
economics is only focussed on the process of supply and
demand, income distribution and spending, as well as
finding solutions to avoid economic oppression. In fact, all
of these focuses are important in order to strengthened
Ummah economy. However, is thinking of the economic
dimension alone, without considering another dimension,
i.e. politics, which also plays an important role in
strengthening Ummah economy, enough?
Based on all four approaches of the science of Islamic
economics, none clearly link economics with politics.
Although the third and fourth approaches seemed to state
that economy is influenced by politics, which is adjusted
according to the adaptation by the government, the
relationship between economy and politic is still unclear.
Akram Khan (1994) and M. Umer Chapra (1999) actually
attempted to include the aims of state politics such as
welfare, unity, moral, individual freedom and creating
balance between macroeconomics and ecology, however,
the discussion was not directly related to the political
dimension. This understanding led to the Islamic economic
goals, where in the opinion of Joni Tamkin (2007) is justice,
property ownership, and ethical values. The question is, how
can the goals of Islamic economics be worked out and
considered complete if they are not influenced by Islamic
political elements, when these goals are also the goals of
Islamic politics?
The third subject matter which is the Islamic economics
school of thoughts can be summarized into three sects.
Firstly, the Baqir al-Sadr sect; secondly, the mainstream
sect; and thirdly, the alternative-critical sect (Adiwarman A.
Karim, 2010; H. Veithzal Rivai and H. Andi Buchari,
2013:208).
As for the Baqir al-Sadr sect, it is founded by Baqir al-Sadr
himself (1971) through his work entitled Iqtishaduna (Our
Economy). This sect considered that the conventional
science of economics cannot be in line with Islamic
economics. Conventional economic remains conventional
economics while Islamic economics remains Islamic
economics. Both cannot be combined since they differ in
philosophy. This difference is not only exist in Islamic
economics, in fact it is also stressed upon in the study of
Islamic development by Muhammad Syukri Salleh (2003)
that Islamic-centric development is different than common
development because of its difference in philosophy and
tasawwur (worldview).
In order to enable the implementation of the goals,
Patmawati Ibrahim (2008) said that in the field of Islamic
economics, zakat (alms) is considered as one of the
important sources to the Islamic community in improving
their socioeconomic status. The execution of trust and
improvement of socioeconomic status through zakat is
capable of balancing the physical development with spiritual
development. This balance is important in order to avoid the
development of social problems such as youth moral
decadence and others. When the management of zakat is
discussed further, zakat is found to be managed not only by
Islamic economics experts, but also politicians who play a
role in deciding policies in zakat management (Muhammad
Syukri Salleh, Mohd Salleh Abdullah and Zahri Hamat,
2011; Zahri Hamat, 2013). It is clear that there is a void in
the discussion of ilahiyyah (godliness) assets relating to
zakat and wakaf (benefaction), as it is not discussed in
relation to political role.
Baqir al-Sadr (1971) also rejected opinions that stated that
natural resources are limited and human needs are not
because according to them, in Islam, resources are unlimited
and human needs are limited. Their Dalil (proof) the Quran
was taken from surah al-Qamar verse 49. Allah said:
“Indeed, all things We created with predestination.”
The need of all creation has been predestined and made
sufficient by Allah. Among the example given is that human
will stop drinking once the thirst is gone. From these
arguments, they came to the opinion where the belief of
human needs being limitless is rejected.
Asides from the summary on the definition of the science of
Islamic economics, there is also a summary regarding the
approach of the science of Islamic economics. For example,
according to Nienhaus (1982), there are four main approach
in the study of Islamic economics. First, the pragmatic
approach. This approach looks at the tendency to reject
economic ideologies through synthesis or eclectic process.
This process is performed by combining various notion and
theories that are considered impractical to execute. This is
the tendency that is often used. Second, the recitative
All theories developed by the conventional science of
economics are rejected and removed from the Baqir al-Sadr
sect. Instead, this sect strived to compile new economic
theories extracted from the Quran and Sunnah. Other than
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Mohd Syakir Mohd Rosdi al, Journal of Business Management and Economics, 4 (01), January, 2016,
Muhammad Baqir al-Sadr, the sect figures are Abbas
Mirakhor, Baqir al-Hasani, Kadim al-Sadr, Iraj
Toutouchian, Hedayati, and others (Adiwarman A. Karim,
2010).
this sect attempted to put forward true theories based on
Islam despite facing the dominant conventional theory.
Apart from these three sects, another school of thought
which was a little different had emerged. It was founded by
Muhammad Syukri Salleh (2003:71). It proposes that human
needs are unlimited, however, it can be overcame by four
things. First, the concept of rizq (provision); Second, the
method of resource redistribution; third, the concept of
barakah (blessing); and fourth, natural resources utilisation.
The concept of rizq means that every human provisions are
guaranteed by Allah. Next, the rich are responsible to
redistribute his wealth to the poor through sadaqah
(donation), zakat, gifts, taxes, and other means of resources
redistribution. While the concept of barakah is based on
Allah’s grant of provisions through His grace and mercy so
much so that the recipients are content even when given so
little due to their qanaah (contentment) character.
Secondly, the mainstream sect. This sect differed in opinion
with the Baqir al-Sadr sect (1971). It agreed that economic
problems had arisen due to the limited resources and
limitless human needs. The sect viewed that limited
resources existed and acknowledged in Islam. Among the
dalil used is in surah al-Baqarah verse 155. Allah said:
“And We will surely test you with something of fear and
hunger and a loss of wealth and lives and fruits, but give
good tidings to the patient,”
While the limitless human needs were considered ‘alamiah
(natural). Allah said:
“Competition in [worldly] increase diverts you, until you
visit the graveyards. No! You are going to know. (Surah alTakathur, 102:1-3).
As for natural resources utilisation, when human needs can
be restricted, consumerism will be limited, production
surplus will increase, and finally redistribution can be
performed more dynamically (Muhammad Syukri Salleh,
2003: 75-76). According to him, the unlimited human needs
can be restricted by using the consumerism based on needs
instead of desires. It can be divided into four stages. First,
the stage of fulfilling basic needs (dhoruri) such as clothing
and food; second is the stage of fulfilling lifestyle needs
such as cars; third is the stage of luxury such as owning
multiple cars; and fourth is the stage of jewels and beauty.
The first and second stage is allowed in Islam compared
with the third and fourth which should be avoided.
This sect views on economic issues were similar to that of
the conventional economy. The limit of resources is the
cause to the emergence of economic problems. But, the only
difference between the conventional and Islamic economics
in the mainstream sect is the solutions of the problems. In
looking for the solutions, the sect was known for modifying
Western science into Islamic science in a method called the
Islamization of knowledge.
Thirdly, the alternative-critical sect. The founders of this
sect are Timur Kuran (Director of Institute for Economic
Research on Civilisations, University of Southern
California), Jomo (Yale, Cambridge, Harvard and
Malaysia), Muhammad Arif, and others (Adiwarman A.
Karim, 2010). This sect criticised the previous sects. The
Baqir sect was criticised as a sect that strived to attain novel
knowledge that had actually been discovered by others.
Likewise, they destroyed old theory and then, replaced it
new. While the mainstream sect was criticised for taking
created knowledge or copying from neoclassical (modern)
economics only by removing the variable of riba (usury)
and inserting the variables of zakat (alms) and niat
(intention).
Ummah economic remedy through various school of
thought is actually inadequate without any relation to
Islamic politics. Theories are merely theories without
implementations by the government as the economic policy
maker. This theories are according to the view of Muchtar
Ahmad (1991:9) who said that there are only five focus in
the study of Islamic economic so far. The first focus is the
study of Islamic economics in the normative circle. This
circle attempted to explain the philosophical basis or
normative of an economic study that is suitable with the
Islamic requirements based on al-Quran and Hadith. The
second focus is the Islamic economic study of the result of
the critical thoughts or research of fuqaha, economic and
sociology experts, and etc. such as Ibnu Khaldun, Ibnu
Taimiyah, Abu Yusuf, Umer Chapra and others. The third
focus is the comparative study of the behaviour of Islamic
economic implementers with the theoretic concept of
Islamic economy. In this matter, the researcher had put
forward a question, can Islamic economics steer the
behaviour of Islamic economics implementer towards
Islamic values? The fourth focus is a comparative study
between the concepts of Islamic economic and capitalist or
socialist system as well as the current economic
development. Fifth, the thought comparison between the
Islamic economists themselves, such was done by Mohamed
Aslam Haneef (1995) in his book "Contemporary Islamic
Economic Thought: A Selected Comparative Analysis".
This was a critical sect. They believed that critical analysis
should not only be performed on socialism and capitalism,
but also on Islamic economics. They believed that Islam is
certainly true, but the Islamic economic is not since it is a
product of human interpretation of the Quran and Sunnah as
the Islamic economic epistemology. Proposals and theories
advanced by Islamic economics should always be verified
such as done for conventional economics.
From the discussion on the approach of all three sects, the
approach of Baqir al-Sadr and alternative-critical sect
seemed to attempting to return to the true core of Islam. It
was seen that way for two reasons. First, these sects
attempted to propose new theories that conflicted with the
conventional theory based on Quran and Hadith. Secondly,
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From these five focus, it is clear that none had tried to link
economics and politics or include the political dimension in
Ummah development.
While as for the emphasis on Islamic political economy by
Islamic scholars, opinions of a few Islamic scholars, who
discussed economics and related it to politics, are brought
forward. These scholars are Ibn Khaldun, Ibn Taimiyyah,
Ibn Qayyim, al-Ghazali, Syatibi, al-Maqrizi, and Shah
Waliyullah (Iu Ruslina and Husni Shabri, 2009).
Muhammad Hilmi Murad (1962) for example, specifically
wrote an academic book entitled Abul Iqtishad:Ibnu
Khaldun. This can be translated as The Father of
Economics:Ibnu Khaldun. In his writing, Ibnu Khaldun was
proven academically as the first founder of the empirical
science of economics. The theories proposed by Ibnu
Khaldun (1958) in the science of economics are the theory
of production, theories of value, money and prices, and
theory of distribution.
EVALUATING THE HOLISTICITY OF ISLAMIC
POLITICAL ECONOMY
From the evaluation of Islamic economic presented
previously, it was proven that the majority of Islamic
economics scholars only discussed Islamic economics,
without linking it with Islamic politics. Islamic politics was
only deemed important in its role in the science of
government such as management and state economic policy
decision. So, a step to relate the two fields was proposed so
that they can function as one holistic field that encompasses
both economics and politics. This new field was called
Islamic political economy. Islamic political economy can be
defined as the combination of the philosophies of Islamic
economic and Islamic politics that are implemented based
on the concept of justice and welfare, amar makruf nahi
mungkar, the concept of ubudiyah and uluhiyah as well as
the responsibility as the caliph and servant of Allah with the
final goal of mardhatillah (Mohd Syakir Mohd Rosdi, 2014:
34).
Ibnu Khaldun (1958) studied economic issues by viewing it
from the perspective of the society and country in details
and thus explained the economic phenomena accurately.
Muhammad Nejatullah Ash-Shiddiqy (1976:261) wrote an
important fact out of Ibnu Khaldun’s (1958) research on the
science of economics in his book, as follows:
“Ibnu Khaldun had widely discussed various types of
economic issues including the subjects of value, work
delegation, price system, supply and demand, consumption
and production, money, capital formation, population
growth, macro-economy from taxes and public spending,
trade cycles, agriculture, industry and trade, ownership and
prosperity, and others. He also discussed various stages
experienced by society in economic development.”
Islamic political economy is more holistic than Islamic
economics for at least three reasons. Firstly, Allah
emphasized the Islamic political economy relationship;
secondly, the emphasis by Islamic scholars on Islamic
political economy; and thirdly, the history of the science of
Islamic political economy. As for the first reason which is
Allah’s emphasis on the field of Islamic political economy,
it is mentioned in a few verses of the Quran. Among the
discussions in the verses of the Quran is Allah’s emphasis
on the position of mankind in this earth as His caliph (Surah
al-Baqarah, 2: 30) carrying the burden of His mandate
(Surah al-Ahzab, 33:72) to create prosperity and peace
(Surah Hud, 11:61). Mankind should not be afraid of the
nature since it is created to facilitate them (Surah alBaqarah, 2:29; Surah al-Jaathiyah, 45:13). They should not
sit passively, but actively strive and work (Surah alJumu‘ah, 62: 10 ; Surah al-Ra’du, 13:13). They should look
for provisions that are halal. They should prioritize honesty
in their endeavour (Surah al-A’raf, 7:85) by volunteer, not
compulsion (Surah al-Nisa’, 4:29) in the fields that are
allowed by shariah and not in vanity (Surah al-Maidah,
5:3). Although they are free to obtain and own the yields of
their struggle, they have to observe the social function of
their hard-earned wealth for the good of those who are less
fortunate (Surah al-Hasyr, 59:7; Surah al-Taubah, 9: 34;
Surah al-Ruum, 30:30). They should also be economical and
efficient in spending their wealth (Surah al-Israa, 17: 26;
Surah al-Furqaan, 25:67) (Muhammad Iswadi, 2007:50).
This opinion was reinforced by Boulokia (1971:1106-1113)
who said that:
“Ibnu Khaldun had discovered various important ideas and
thoughts in economics, a few centuries before its “official’
birth (in Europe). He discovered the importance of work
delegation principle before Smith and the value of work
principle before Ricardo. Ibnu Khaldun had described a
theory on population before Malthus and emphasized on the
role of government on economy before Keynes. In fact,
more than that Ibnu Khaldun had utilised this concepts in
developing a dynamic system where the economic
mechanism was indirectly steered towards long term
changes of economic activities.”
Boulokia (1971) also conveyed political economic theory of
Ibnu Khaldun such as higher government spending lead to
better economy. Ibnu Khaldun (1958) reminded that
government spending should be focused on the public needs.
From these theories, the balance of community development
in terms of materialistic and spiritualistic development
became the basis of avoiding social issues. According to
Ibnu Khaldun further, a government and economy based on
divine laws is better in order to achieve prosperity in this
world and the hereafter.
From the discussion of these Quranic verses, it is shown that
Allah’s dalil are not limited to economy, but also related to
politics. Politics here referred to the method of managing
and administrating the universe as well as possible.
Economics existed to smoothen this in the scope of human
financial so that no wastage and exploitation can occur. The
inseparable ties between the dalil of economics and politics
are clearly displayed in the verses above. Both dimentions
play important roles in the prosperity of this world.
Other than Ibnu Khaldun, other Islamic academic figure,
who also discussed economics and tied it to politics, is Ibnu
Taimiyyah (1976). Among his discussions was market
mechanism including fair pricing, fair trade, the concept of
fair profit, and fair wages. Fairness became the economic
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goal in a society. For example, this concept of fairness is
discussed in exchange transaction and other connections
with the member of society. These economics concepts is
tied in with politics as a guidance for the government to
protect the society from various exploitations. For examples,
Ibnu Taimiyyah (1976) applied the concept of fairness to the
trader. It involved no compulsion to sell their goods at a
price that causes the loss of their usual profits. The basic
aim for fair pricing is to protect the interest of the employee
and the employer as well as preventing them from exploiting
each other.
showed the holisticity of Islamic political economy and its
significance for nowadays practice.
As for contemporary scholars, only Masudul Alam
Choudhury (1990a; 1990b; 1992; 1997a; 1997b) wrote
about Islamic political economy. He also work together on
publications with other researchers. For example, Masudul
Alam Choudhury with Malik (1992); Masudul Alam
Choudhury with Uzir Abdul Malik (1992); and an article
editing by Masudul Alam Choudhury with Abdad and
Muhammad Syukri Salleh (1997). The holisticity of Islamic
political economy can be seen through the definition given
by Masudul Alam Choudhury (1990a; 1990b; 1992; 1997a;
1997b) which is a science that studies the relationship
between the government (syura) and market sub-system.
This definition shows that Islamic political economy is a
holistic interaction. The interaction develops human
understanding towards shariah institution and social
acceptance in human behaviour.
Ibnu Taimiyyah (1976) also discussed the connection
between government and the function of money. Currency
devaluation and bad currency will drive out good currency.
Ibnu Taimiyyah (1976) said that bad quality money will
drive out good quality currency from distribution. He
associated this issue with the responsibility of government.
He explained as follow:
“When authority cancels a certain currency and prints
another, it will be a loss for the rich who own money
because the old currency devaluates into just item. The
authority acted unjustly by depriving them the high value
that they should have own. In addition, when the intrinsic
value of the currency is different, it will become a source of
profits for the criminals, who collect these bad currencies
and exchange it for good currencies and then bring these to
another area to exchange them with bad currencies and
finally bring the obtained bad currencies back to the starting
area. Thus, community value of goods will be destroyed.”
According to Masudul Alam Choudhury (1997b) further, the
epistemology of Islamic political economy is based on
Quranic epistemology. The Quranic epistemology is the
basic principle of Islamic political economy. While Ghosh
(1997:43) underlined three important characteristics in
Quranic epistemology that exhibit its holisticity. Firstly, it is
a total divine epistemology; secondly, it is a holistic system,
which not only involved a unity of knowledge but also
knowledge continuity; and thirdly, it can be summarised as a
dialectic evolutionary process by any Quranic-Sunnatic
normative premise that can appear as a synthesis, followed
by the anti-synthesis Shuratic-ijtihad that finally lead to the
synthesis on the Ijma'-Ahkam stage.
In the context of national revenue, according to Ibnu
Taimiyyah (1976), the only ones that are in accordance to
shariah are ghanimah, zakat and fai'. Faí' includes jizyah
(taxes) levied on the Jews and Christians, war booty, gifts
presented to the king, entry tax on enemy state-owned
commodity, fine, and kharaj. Kharaj involved the tax on
agricultural land. According to him further, when the state
revenue is inadequate, taxing policy can be issued. National
requirements in regards to the people are concerns for the
poor, jihad war and defence funding, law and justice,
pension fund and government officers’ wages,
infrastructures development and public safety.
Masudul Alam Choudhury (1997b) explained that the
Quranic epistemology is planted through universal
behaviour. This behaviour is based on interactive and
integrative approach in the process of management and
institutionalization. It is also called the Shuratic process by
Masudul Alam Choudhury (1997b). To him, the Shuratic
process is alternatively called circular causation and
continuity model of unified reality. In simple words, the
basis for Islamic political economy epistemology is tauhid,
and this process emerged as the result of interaction and
integration between behaviour and institution. This method
is based on the agreement reached through shura.
As for al-Maqrizi, Perwataatmadja, Karnaen and Anis
Byarwati (2008:173) said that al-Maqrizi (766-845 H)
explained that political administration nowadays were
getting weaker and problematic. Officers were put into
positions through bribery and not for their capability. In
order to reach a position via the mean of bribery, they
needed money. So, taxes were raised and as a result,
producers protested for their loss of profits. Besides that,
there are two reasons of inflations as told by al-Maqrizi. The
first reason is ‘alamiah (nature); and the second is human
error. The ‘alamiah problem can be related to natural
disaster. Inflation caused by human error is due to bribery
and disorganized administration, high burden of taxes, and
the abundance of banknotes.
Besides that, Mohd Syakir Mohd Rosdi (2010:46) said that
Islamic political economy was formed through the
combination of three philosophies, which are the
philosophies of Islamic sociology, Islamic economics, and
Islamic politics. To him, this field is more comprehensive
and holistic since it encompasses all three main fields of
study i.e. Economics, politics, and social. Out of the three
field, the characteristics and implementations of Islamic
political economy were formed. The characteristics are
socio-political development, socioeconomic development,
balanced community development, public interest, and
human resource management. While the implementation
included the emphasis on the concept of justice and welfare,
amar makruf nahi mungkar, based on the concepts of
‘ubudiyah and uluhiyah, and responsibility as a caliph and
servant of Allah. In this implementations, there is the
It is clear that the discussions by these scholars were linking
economics and politics in solving Ummah economics
problem. The scholars’ emphasis on economics and politics
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concepts of Ummah reformation, which is a form of
community reformation and change that can be seen in
terms of economics, politics, and social. This reformation
has to be implemented within the limit of Islamic shariah.
The Islamic political economy implementation final goal is
mardhatillah.
economics and Islamic politics. Although they were able to
sit together, they kept on separating the science of
economics from the science of politics.
Thus, in 1975, the International Development Bank (IDB)
was built in Jeddah. Similarly, higher education institutions
that developed the study of Islamic economics were
established in the West and Middle East. Among them are
University of Wollongong in Australia, Islamic Society of
North America (ISNA) in United States of America, as well
as Loughborough University, Harvard School of Law,
University of Durham, and University of Wales, Lampeter
in United Kingdom. Harvard University also held Harvard
University Forum each year to debate on Islamic economics
(Agustianto, 2006). Islamic politics was introduced through
most universities in the Middle East and Asia as siyasah
syar’iah. It was introduced in the majority of university that
offered religion courses such as Al-Azhar University in
Egypt.
The holisticity of Islamic political economy can also be seen
in terms of its historic development, starting from the 2nd
century Hijrah. Since that century, the science of Islamic
political economy had been discussed by a few well-known
economic theorist. For example, according to Muhammad
Nejatullah Ash-Shiddiqi (1976:264), the success of Islamic
civilization and its influence oh world history for 1000 years
cannot be achieved without the economics and political
ideas (ideology). From Abu Yusuf in the second century to
Thusi and Waliyullah, there were strong knowledge
continuation regarding taxes, government spending,
household economy, currency and trade, work delegation,
monopoly, price monitoring, and etc. However, it was a loss
when there was no serious attention given to this valuable
intellectual treasure by academic institutions in the
economics and politics departments.
Simply put, the science of Islamic economics and the
science of Islamic politics initially were discussed
collectively, then they were separated because of the
differences in methodology, and finally they were
recombined although remained disjointed. Similarly, the
science of Islamic political economy was indeed used since
early hijrah through discussions of scholars including
Islamic economics and Islamic politics, only to be separated
later on due to differences in methodology and manhaj.
Therefore, Western ideologist Adam Smith (1776) had taken
the opportunity to further study political economy. Adam
Smith (1993) was said to refer and edit the work Abu Ubaid
(838 M), Al-Amwal (H. Veithzal Rivai & H. Andi Buchari,
2013). The work of Abu Ubaid had also been referred to by
Islamic scholars regarding political economic based on
Islam. So, Islamic political economy was considered to be
holistic since at the time, it influenced economics and
politics, which were introduced much earlier before the
work of Adam Smith became famous. At this time, politics
and economics were fields of study under Islamic political
economy.
From all three reasons presented above, it is clear that the
science of Islamic political economy is more holistic than
economics. Actually, the majority of Islamic economics
scholars indirectly agreed that the basic principles of Islamic
economics are related to politics because it includes the
principles of justice and khilafah, which lead to five values.
First, tauhid (Islamic monotheism); kedua, ‘Adl (justice);
third, Nubuwwah (prophethood); fourtht, Khilafah
(government); and fifth, Ma’ad (result) (Mohamed Aslam
Haneef, 1995:2; M. Nejatullah Siddiqi, 1988; H. Veithzal
Rivai and H. Andi Buchari, 2013: 208). Khurshid Ahmad
(1980:178-179) also included the values of Rububiyyah
(lordship), Tazkiyah (purification) and M. Akhyar Adnan
(1996: 136-137) included Masuliyyah (accountability).
Then, the science of Islamic political economy was divided
into two separate sciences, which were Islamic economics
and Islamic politics. This division occurred as an effect of
the influence from the separation of knowledge in the West
(H. Veithzal Rivai and H. Andi Buchari, 2013). These
separation transpired because economics and politics in the
West employed different methods. Economics included
mathematical calculations involving important formulas. It
also concentrated on economic development of developing
and providing solutions for under-developing countries. The
focus were economic development, economic growth,
economic transformation, and economic system (Adelman,
1961).
CONCLUSION
From the discussions presented previously, it had been
identified that Islamic political economy is the chosen
holistic field for overcoming problems and providing
solutions to Ummah economy. Islamic economy only
discusses the theories and issues regarding economy,
compared to Islamic political economy that discusses both
politics and economics. The discussion of the principles and
characteristics of economy is related to politics such as the
principles of caliphate, justice and accountability. Similarly,
in discussing economy, the economic policies are inevitably
decided by government. Three reasons presented earlier
clearly showed the holisticity of Islamic political economy.
Firstly, Allah emphasized on the relationship of Islamic
political economy; secondly, the emphasis by Islamic
scholars on Islamic political economy; and thirdly, the
historical development of the science of Islamic political
economy.
From the arguments presented, Islamic
While the science of politics was not involving any form of
calculation, instead it studied the subject of administrative
management, current management, political party
oppositions, and conflict discussions in family, community,
country and the world. Politics usually discusses three main
subjects, which are political comparison, international
relation, and political theory (Kesselmen, 2010).
The separation between Islamic politics and Islamic
economics remained until the World War II (Mayer, 1987).
The war lead the Islamic scholars to sit together and
collectively discuss the issues surrounding Islamic
43
Mohd Syakir Mohd Rosdi al, Journal of Business Management and Economics, 4 (01), January, 2016,
economics cannot exist without politics and similarly,
politics is not strong without economics. Thus, it can be
concluded that Islamic political economy is more holistic
compared to Islamic economics in providing remedies to
Ummah economy.
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Concepts and Practices in Islamic Banks: The Cases of
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Indonesia. Tesis Doktor Falsafah yang diserahkan kepada
University of Wollongong, Australia.
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EndNote
• Mohd Syakir Bin Mohd Rosdi is a lecturer at the Centre for Islamic Development Management Studies (ISDEV),
Universiti Sains Malaysia. He was a Fellow of RLKA (Rancangan Latihan Kakitangan Akademik) in the department of
Islamic Development Management (PPI), Universiti Sains Malaysia.
• 1*According to Mohd Shuhaimi Haji Ishak (2011), Ungku Aziz carried out a few studies inquiring about usury in Islam by
seeking opinions of experts and Islamic scholars. From a comprehensive study on the issue of poverty and savings for
Hajj, he proposed the establishment of Tabung Haji. Hence, Ungku Aziz was one of the pioneers of Tabung Haji
establishment in Malaysia.
• ii Utopia is a concept of ideal society where all economic, political and social injustices are eliminated and the function of a
Nation is to create prosperity for the whole society (Nienhaus, 1982).
46