Islam & Mammon The Economic Predicaments of Islamism By Timur Kuran (Princeton and Oxford: Princeton University Press, 2004. 194 pages.)

Abstract

In this brilliant contribution, Timur Kuran weaves six chapters into a
sound critique of the assumptions and practices of Islamic economics. In essence, he attacks the very foundation of Islamic economics, the prohibition
of interest, and then extends his critique to whether Islam’s traditional
redistributive instruments in achieving contemporary economic goal
is feasible. The author’s intention is not simply to critique Islamic economics,
but to bring the ideas espoused by the discipline into the realm of
mainstream social sciences and encourage serious scholarly consideration.
The first two chapters summarize the basic tenets of Islamic economics
while grounding the discipline in two central claims: that existing economic
systems have failed and that Islamic history proves the Islamic system’s
superiority over others. Kuran dismisses the latter by revealing that
modern economic problems had historical counterparts, that many concepts
and methods utilized by Islamic economists originated outside the
Islamic world, and that applying ancient solutions to present problems is
an inadequate approach.
Islamic economics’ material expression has been confined to Islamic
banking, for which prohibiting interest is the sine qua non, and redistribution
efforts. Profit and loss sharing techniques, namely, mudarabah and
musharakah, have been derived from classical Islamic jurisprudence in
order to avoid interest. These terms refer to practices whereby an individual
entrusts an entrepreneur or an investor with an amount of capital that will
yield a specified return. Kuran attacks these practices, asserting that they
remain mechanisms for charging interest on the grounds that since modern
banking is based on profit and loss sharing, these classical methods simply
allow bankers to avoid using the term interest ...