Journal on Policy & Complex Systems Volume 1, Number 2, Fall 2014 | Page 48

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In keeping with this positivist trend in Islam , Warde has identified a convergence between the principles of Islamic economics and the neo-liberal Western model . For him , the growing influence of liberal orientated education upon Muslim scholars has created a process whereby the justifying of “ private property , free enterprise and the sanctity of contracts in Islamic terms has enabled the ushering in of privatisation and deregulation ” ( Warde , 2005 , p . 47 ). From a developmental perspective , this implies that despite the appealing nature of an Islamic response based on rejuvenation of the community , and a general recognition that there was no quick fix or short cut to “… reach the desired level of economic development more quickly ” ( Al-Sadr , 1982 , p . xxi ), Islamic thinkers ( and states ) have increasingly acquiesced and conformed to the same deterministic methods evident in the current political-economic paradigm .
This has resulted in an inability to adapt to the real economic landscape and a failure to find solutions to poverty within countries of Islamic tradition . Some theorists have related these conditions to the lack of adaptability in Islam caused by juristic “ laziness ” ( Iqbal , 1984 , p . 141 ) or even closing the ‘ door to ������� ’ after the tenth century , culminating in the stagnation of Islamic jurisprudence ( Vernardos , 2006 , pp . 36-37 ). Alternatively , Springborg ( 2009 ) in referring to the Middle East and North Africa ( MENA ), suggests the lack of political freedom in society has restricted the creation of an Islamic model , and therefore the neo-liberal Western model supplies the most viable economic method for development given the lack of consensus with other political economies ( such as the Beijing model ) ( p . 246 ). It has become apparent then that in trying to implement a new economic order , greater preference for imitation ( ������ ), reasoning ( ��� ) 2 , and analogy
( ����� ) 3 have not only challenged the true meaning of ������� but restricted innovation by merely justifying the contemporary order .
Although financial equity laws did exist under the Ottoman Empire , 4 the current Islamic financial sector has more in common with conventional practice . As Hefner ( 2006 ) writes , “ this is to say that the broader legal framework on which Islamic banking depends actually owes more to Western civil law than it does to classical Islamic precedents ” ( p . 18 ).
It is therefore common for states , even with a majority Muslim population , to adhere to the laws initiated by organizations such as the World Bank and IMF , thus assimilating either consciously or sub-consciously with the underlying neo-liberal framework . To maintain the system , intergovernmental institutions such as the Bank for International Settlements ( BIS ), the Basel Committee on Banking Supervision ( BCBS ), and even advisories like the International Financial Reporting Standards Foundation ( IFRS Foundation ) provide the necessary regulations and information to coordinate financial practice . To ensure continuity exists , these policies have also been transferred to the Islamic finance sector via the creation of internationally recognized Islamic institutions such as the Accounting and Auditing Organization for Islamic Financial Institutions ( AAOIFI ), which serves to provide “ accounting , auditing , governance , ethics and Shari ’ a standards for Islamic financial institutions and the industry ” ( AAOIFI , 2012 , para . 1 ) and the Islamic Financial Services Board ( IFSB ) “ which issues standards for the effective supervision and regulation of Islamic financial institutions ” ( Sole , 2007 , p . 5 ). These bodies aim to harmonize banking practice between conventional and Islamic methods , exemplified by the Islamic Development Bank ,
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