THE ROLE OF ISLAMIC lJTIHAD IN THE REGULATION AND CORRECTION OF CAPITAL MARKETS

Abstract

I am hesitant to speak on the role of ijtihiid in an Islamic capital market,
because this topic requires understanding two important but difficult
areas whose primary sources are in different languages. The first area is
ijtihiid which is connected withfiqh issues; the majority of its sources are
in Arabic. The second area is economics which is connected with the
analysis of capital markets; the majority of its sources are in European
languages. Linking ethics and economics is necessary but difficult.
Necessary, because every economic choice has a spiritual dimension.
Difficult, because secular economics severs the link, by reducing values
to tastes and arguing that different ethical values do not change the
method of choice. Therefore, properly linking ijtihiid and economics is a
difficult task, requiring determined effort to refute the secular separation
of ethics and economics. I spent over 100 hours thinking, reading, and
analyzing the essential points of both until I could establish common
ground between them.
Ijtihad is of central importance in usul al-fiqh, and concerns the
method of implementing the spirit of the sacred texts in any environment.
Since the third century A.H., ijtihd has been the main theme of
dialog between the different schools of fiqh. To this day scholars debate
the issue.
Economics is an important science in our time, influencing several
other sciences. Since the capital market is a significant topic in economics,
it is important to understand the strengths and weaknesses of the neoclassical
analysis of capital markets' in developing an Islamic capital
market. We must also understand the history of economic thought, how
capital markets became an important part of it, and why many ...