Modern Economics and the Islamic Alternative: Disciplinary Evolution and Current Crisis

  • Mujeeb Hussain Gattoo Higher Education Department, Government of Jammu and Kashmir
  • Muneeb Hussain Gattoo Aligarh Muslim University


Mainstream economics has come under scathing criticism from various circles of thought. Within the territory of the discipline, there is a contestation. While one faction (supporters) considers economics a science, engaging with the real world, providing tools for solving fundamental problems to guide policy, another faction (critics) considers it to be under the sway of ideology (of capitalism and free markets) in which arid mathematical formalism is regarded as an end in itself, having no or harmful practical policy implications. Various communities of scholars have emerged that advocate alternative heterodox approaches to the subject, Islamic economics being one among them. In this context the present paper will attempt to provide an account of the recent history of modern economics and shed light on the present state of its crisis. The paper will also attempt to enquire into recent progress and the present state of Islamic economics as an alternative paradigm to mainstream economics. We attempt to answer the question that irrespective of the crisis in mainstream economic thinking, why did the alternative perspective of Islamic economics fail to make a long-lasting mark in academic circles and why did a Kuhnian paradigmatic shift fail to occur within economics? Lastly the paper will point out various theoretical and methodological roots of the present crisis of mainstream economics, which should not be ignored by Islamic economists when formulating the basis of Islamic economics.


Al-Ghazālī, Abū Ḥāmid Muḥammad ibn Muḥammad. Al-Mustaṣfā fī ‘Ilm Al-Uṣūl. Beirut: Dar al-Kutub al-’Ilmiyah, 1406/1986.

Al-Shāṭibī, Abū Isḥāq Ibrāhīm ibn Mūsā. Al-Muwāfaqāt. Beirut: Dār Al-Ma‘rifah, n.d.

Amadae, S.M. Rationalizing Capitalist Democracy. Chicago: Chicago University Press, 2003.

Atkinson, A.B. Inequality: What Can Be Done? Cambridge, Massachusetts: Harvard University Press, 2015.
Backhouse, R.E. The Puzzle of Modern Economics: Science or Ideology. New York: Cambridge University Press, 2010.

Backhouse, R.E. “United States, Economics in (1945 to present).” In The New Palgrave Dictionary of Economics, Second Edition, edited by Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008.

Backhouse, R.E., and B.W. Bateman. Capitalist Revolutionary: John Maynard Keynes. Cambridge Massachusetts: Harvard University Press, 2011.

Basu, K. Beyond the Invisible Hand. Princeton: Princeton University Press, 2010.

Becher, T., and P. Trowler. Academic Tribes and Territories: Intellectual Enquiry and the Culture of Disciplines. Philadelphia: Open University Press, 2001.

Bernanke, B.S. “The Great Moderation.” The Federal Reserve Board.

Boettke, P., and S. Horwitz. “The Limits of Economic Expertise: Prophets, Engineers, and the State in the History of Development Economics.”History of Political Economy 37, no. S1 (2005): 10-39.

Bowles, S. The New Economics of Inequality and Redistribution. Cambridge: Cambridge University Press, 2012.
Bullock, P. “Friedman Economics: Is Fed chairman Ben Bernanke a follower of John Maynard Keynes or Milton Friedman?”Reason Magazine, September, 2009.

Castells, M. Rise of the Network Society, the Information Age: Economy, Society and Culture. Malden, Massachusetts: Blackwell Publishers, 1996.

Chang, H.J. Economics: The User’s Guide. New York, NY: Bloomsbury Press, 2014.

Colander, D., Hans Föllmer, Armin Haas, Michael Goldberg, Katarina Juselius, Alan Kirman, Thomas Lux, and Brigitte Sloth. “The Financial Crisis and the Systemic Failure of Academic Economics.” Workshop proceedings with University of Copenhagen Dept. of Economics Discussion Paper No. 09-03 (2008).

Credit-Suisse. Global Wealth Report 2016. Credit-Suisse, (2016, November).

El-Ashker, A.A.-F., and R. Wilson. Islamic Economics: A Short History. Leiden: Brill, 2006.

Frank, R.H. The Economic Naturalist: Why Economics Explains Almost Everything. London: Virgin, 2008.

Frost, G. Anthony Fisher: Champion of Liberty. London: Profile Books, 2002.

Fullbrook, E. A Guide to What’s Wrong With Economics. London: Anthem, 2004.

Furqani, H. “Foundational Challenges in the Construction of an Islamic Economics Discipline.” International Journal of Pluralism and Economics Education 6, no. 4 (2015): 324-39.

Gattoo, M.H., and M.H. Gattoo. “The Puzzle of Modern Economics: Science or Ideology? by Roger Backhouse.” IASSI-Quarterly 32, no. 3 (2013):132-42.

Gorton, G. Slapped by the Invisible Hand: The Panic of 2007. New York: Oxford University Press, 2010.

Harford, T. The Logic of Life: The Rational Economics of an Irrational World. New York: Random House, 2008.

Harvey, D. A Brief History of Neoliberalism (Reprinted). Oxford: Oxford University Press, 2011.

Haneef, M.A. “Preliminary Thoughts on Diagnosing Some Methodological Issues in Developing Islamic Economics.” In Essential Perspectives in Islamic Economics and Finance, edited by Haniza Khalid, Mohd. Nizam Barom and Nasim Shah Shirazi, 27-49. Kuala Lumpur: Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia, 2016.

Irfan, H. Heaven’s Bankers: Inside the Hidden World of Islamic Finance. London: Little Brown Group Book, 2014.

Kay, J.A., and R. Beale. Everlasting Light Bulbs: How Economics Illuminates the World. London: Erasmus, 2004.

Khan, M.F. “Revisiting the Foundational Concepts and Thoughts in Islamic Economics: Where Islamic Economics Should Originate in Terms of Theoretical Content.” In Islamic Economics: Basic Concepts, New Thinking and Future Directions, edited by Taha Egri and Necmettin Kizilkaya, 12-57. Newcastle upon Tyne, U.K.: Cambridge Scholars Publishing, 2015.

Khan, M.A. Islamic Economics, Annotated Sources in English and Urdu. Leicester, U.K.: Islamic Foundation, 1983.

Khan, M.A. “Reconstruction of Economics Based on the Paradigm of Tawhid: Present Challenges and Future Prospects.” Keynote Address at the First World Congress on Integration and Islamicisation of Acquired Human Knowledge, International Islamic University Malaysia, Kuala Lumpur, Malaysia, August 2013.

Klein, P.A. Economics Confronts the Economy. Cheltenham: Elgar, 2006.

Krugman, P. The Return of Depression Economics and the Crisis of 2008.London: W.W.Norton & Company, 2008.

Krugman, P. “How Did Economists Get It So Wrong?” New York Times, September 2, 2009.

Kuhn, T.S. The Structure of Scientific Revolutions. Chicago: University of Chicago Press, 1996.

Landsburg, S.E. More Sex is Safer Sex: The Unconventional Wisdom of Economics. London: Free Press, 2008.

Levitt, S.D., and S.J. Dubner. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. New York: Harper Perennial, 2006.

Mahomedy, A.C. “Islamic Economics: Still in Search of an Identity.” International Journal of Social Economics 40, no. 6 (2013): 556-78.

Mahyudi, M. “Rethinking the Concept of Economic Man and its Relevance to the Future of Islamic Economics.” Intellectual Discourse 24, no. 1 (2016): 111-32.

Marglin, S.A. The Dismal Science: How Thinking Like an Economist Undermines Community. Cambridge, Massachusetts: Harvard University Press, 2010.

Maududi, S.A.A. The Economic Problem of Man and its Solution in Islam. Lahore, Pakistan: Islamic Publications (Pvt.) Limited, 1941/1992.

Mirowski, P. Machine Dreams: Economics Becomes a Cyborg Science. New York: Cambridge University Press, 2002.

Mirowski, P. Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown. New York: Verso, 2013.

Mirowski, P., and D. Plehwe. The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective. Cambridge, Massachusetts: Harvard University Press, 2009.

Phelps, E.S. “Phillips Curves, Expectations of Inflation and Optimal Unemployment over Time.” Economica 34, no. 135 (1967): 254-81.

Piketty, T. Capital in the Twenty First Century. Cambridge, Massachusetts: Harvard University Press, 2014.

Plehwe, D., and B. Walpen. “Between Network and Complex Organization: The Making of Neoliberal Knowledge and Hegemony.” In NeoliberalHegemony: A Global Critique, edited by Bernhard Walpen, Dieter Plehwe, and Gisela Nuenhöffer, 27-70. London: Routledge, 2006.

Qutb, S. Social Justice in Islam. Oneonta, N.Y.: Islamic Publications International, 1948/2000.

Samuels, W.J. Erasing the Invisible Hand: Essays on an Elusive and Misused Concept in Economics. New York: Cambridge University Press, 2011.

Sardar, Z. Islamic Futures: The Shape of Ideas to Come. London ; New York: Mansell, 1985.

Sardar, Z. The Future of Muslim Civilization (2nd ed.). London ; New York: Mansell, 1987.

Sardar, Z. “Islamization of Knowledge: A State-of-the-Art Report.” In An Early Crescent: The Future of Knowledge and the Environment in Islam, edited by Z. Sardar, 27–56. New York: Mansell, 1989.

Sardar, Z. “Education Reform – From Islamization of Knowledge to Integration of Knowledge”. Paper presented at Reform of Education in Muslim Societies Seminar, International Institute of Islamic Thought (IIIT), Wilson Center, Washington D.C., 9-10 December 2013.

Screpanti, E., and S. Zamagni. An Outline of the History of Economic Thought (2nd ed.). New York: Oxford University Press, 2005.

Schlefer, J. “There is No Invisible Hand.” Harvard Business Review, 10 April, 2012.

Siddiqi, M.N. Muslim Economic Thinking: A Survey of Contemporary Literature. Jeddah: Leicester, U.K.: International Centre for Research in Islamic Economics, King Abdulaziz University; Islamic Foundation, 1981.

Siddiqi, M.N. “Obstacles of Research in Islamic Economics.” Journal of King Abdulaziz University: Islamic Economics 21, no. 2 (2008): 81-93.

Siddiqi, M.N. “Islamic Economics between Aspirations and Realities.” March 2013.

Siddiqi, M.N. “My Life in Islamic Economics.” 2015.

Sindhi, U. (n.d.). Afkar-i Waliullah, Shaoor-o-Aghahi: Ifadat-i imam-i- inqilab Maulana ‘Ubaidullah Sindhi. Lahore: Aziz Publications.

Skidelsky, R. Keynes: The Return of the Master. New York: Public Affairs, 2009.

Smith, A. The Wealth of Nations (Reprinted). London: Penguin Books, 1776/1999.

Steger, M.B., and R.K. Roy. Neoliberalism: A Very Short Introduction. New York: Oxford University Press, 2010.

Stadler, G.W. “Real Business Cycles.” Journal of Economics Literature 32, no. 4 (1994): 1750-83.

Stiglitz, J. “There is No Invisible Hand.” The Guardian, Higher Education Section, December 20, 2002.

Stiglitz, J. Freefall: America, Free Markets, and the Sinking of the World Economy. New York: W.W. Norton & Company, 2010.

Stiglitz, J. The Price of Inequality. New York: W.W. Norton & Company, 2013.
Veblen, T. “Why is Economics not an Evolutionary Science?” The Quarterly Journal of Economics 12, no. 4 (1898): 373-97.

Zaman, A. “Islamic Economics: A Survey of the Literature.” Working Paper no. 22 (2008), University of Birmingham: Religions and Development Research Programme.

Zaman, A. “Islam versus Economics.” Pre-publication (Draft) in Handbook on Islam and Economic Life, edited by M. Kabir Hassan and Mervyn Lewis, Edward Elgar Press, 2015.
How to Cite
GATTOO, Mujeeb Hussain; GATTOO, Muneeb Hussain. Modern Economics and the Islamic Alternative: Disciplinary Evolution and Current Crisis. International Journal of Economics, Management and Accounting, [S.l.], v. 25, n. 2, p. 173-203, aug. 2017. ISSN 2462-1420. Available at: <>. Date accessed: 19 sep. 2017.