Research Handbooks in Business and Management series
Edited by Abbas J. Ali
In this chapter, we attempt to juxtapose the principles of Islamic humanism against the practices of Islamic finance to uncover potential tensions and offer ways in which these tensions may be resolved. In order to do so, we first survey the existing instruments of Islamic finance as they are being practiced in various parts of the world. We then articulate the principles of economic justice as articulated in various Islamic texts, notably the Holy Qur’an. We then offer a friendly evaluation of the state of Islamic finance, suggesting ways in which it can be oriented toward social justice issues. Islam as a religion is characterized by a fierce commitment to social justice. The Qur’an abounds in verses that extol the virtues of charity, proscribe hoarding and warn against usurping the rights of the poor and dispossessed. Similarly, there are several Hadith traditions ascribed to the Prophet Mohammed exhorting Muslims to make the agenda of social justice the cornerstone of all economic and trading activity. It should follow, therefore, that all commercial activities that aspire to Islamic standards should focus on reducing inequality and utilizing commerce for social welfare rather than on profiteering. As the economic principles of capitalism become increasingly hegemonic in the world, they come into conflict with the economic principles and traditions of Islam. It becomes increasingly necessary, therefore, for Islamic economists, organizational theorists and social scientists to offer a way forward for Muslims engaged in commerce.
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