Islamic Economic Markets and Reconstruction of Community

Hideko Sakurai
Professor, Faculty of Policy Studies, Chuo University
Areas of Specialization: Middle East studies, Islamic social thought, Islamic economics

Islam as a Code of Living and Conduct

What do you think of when you hear the word “Islam”? First, perhaps, the word “fundamentalism” pops into your head, followed by frightening, repulsive images of conflict, terrorism and discrimination against women. It is true that from the end of World War II up to the present day genuine peace has not been realized in the Middle Eastern Islamic world. In fact, the situation in the Middle East is more critical now than ever before. It would be no exaggeration to say that the major cause of this crisis is the interventions made by powerful outside countries to reorganize the region and create new divisions. This is evident in the use of the expression “Second Sykes-Picot Agreement*” to describe the situation.

On the other hand, however, there is a tendency for people to buy into an illogical line of reasoning that goes something like this: “They’re Muslim, which means they’re fundamentalists, which means the crisis will never end.” Behind this way of thinking lies the equation of Islam with religion, with the implication that “religion” here means a bigoted system of beliefs with no rational basis. Imagined in this way, “religion” seems like a magical black box that makes people feel as if they immediately understand the situation, when in reality it represents an intellectual dead end that offers no clues for resolving the problem.

What is important here, however, is to first dispel such biased assumptions and then think about why the Middle Eastern Islamic region is always being divided up. What emerges from this is the aspect of Islam as a code of living and conduct and, implicit in that aspect, the powerful influence it has on structuring society—in other words, the potential power of Islamic civilization. This potential is gradually emerging in a form that defies the modern state system and neoliberal globalization. And one of the most remarkably powerful forces in this development is the Islamic economic market.

Islamic Economic Markets

Islamic economic markets are places where economic transactions are made in compliance with the principles of Sharī’a (Islamic law). In an Islamic market, investments are made and goods are bought and sold in accordance with Sharī’a law. Japanese companies, too, have been entering the markets for Sukūk (Islamic bonds) and halāl-certified products. The Islamic economy is based on the real economy where receiving of interest and other forms of virtual profit are prohibited. For this reason, methods of investing based on the real economy are being developed in the Islamic financial market. The Islamic financial market has been growing rapidly over the last ten years, and it has been said that its policies, which confine transactions to the real economy, have minimized the repercussions of the Lehman Shock in 2008. Moreover, while “halāl” literally means “permissible according to Sharī’a,” it also refers to a system that has been adopted, particularly in the commodity market, to certify products that do not use alcohol or pork, which are prohibited in Islamic law, and have been produced in accordance with Islamic laws and guidelines.

The expansion of these Islamic economic markets reflects Muslims’ daily practice of their beliefs. By engaging in economic activities in compliance with Sharī’a, Muslims are moving, step by step, toward the restoration of Islamic social relations to their original form and the reconstruction of Islamic community. Practicing correct investment, production and consumption as defined by Islamic law, however, is not enough. As I argue in my book Islamic Finance: Understanding a System in Which Gift-Giving and Exchange Coexist [Isuramu Kin’yuu: Zoyo to Kokan, sono Kyouzon no Shisutemu wo Toku], charitable distribution of wealth and market exchange are to be practiced side by side like two sides of the same coin. Economic activities that are not accompanied by interdependent relationships with others, built through a balance of gift-giving and exchange, are not considered to be in line with the principles of Islamic economy.

In the Midst of Neoliberal Globalism

Since 1990, as neoliberal policies have spread across the world, markets have been converting to a single system based completely on exchange. Relations based on gift-giving and reciprocity have been declining and disappearing, and Islamic societies are no exception to these changes. The gap between rich and poor has become wider than ever before, and some say the situation has devolved to the point where the socially disadvantaged are being mowed down and cast aside. These conditions reflect a decline in the community-building power that Islamic economies should be exerting. As I mentioned earlier, making money in ways that accord with Sharī’a law is encouraged in Islam. This is conditioned, however, on the requirement that the profits one earns be used in a proper way. One of the most important principles is to circulate profits into the nonprofit sector and among the socially disadvantaged; in Islam, this is done through almsgiving.

There are various forms of almsgiving in Islam; one of these forms, the donation of real estate, is called waqf. Waqf is a key factor in preserving the balance of gift-giving and exchange in Islamic societies, where public facilities such as mosques, bazaars, schools, hospitals, libraries and drinking fountains have been maintained through waqf donations. The purpose for which a waqf is donated, indicated in its charter, cannot be easily changed in Islamic law, and the duties of managing public assets dedicated to God and keeping social welfare services running are passed down to later generations of Muslims. In Islam, public property is not managed by the state or market. The public realm represented by waqf is managed and run by ordinary people acting as agents of God; consequently, it offers a place of refuge—an asylum—free from the pressures of markets developed by neoliberal policies.

Cross-cultural research is like looking into a mirror that reflects back the image of one’s own culture. Research on Islamic economies illuminates the status of our own society, where most of the asylums that have been cultivated by local communities are being dismantled, where we are becoming caught in a trap of our own making due to a kind of obsession with the idea that the stability and growth of the market should take precedence over everything else.

*Sykes-Picot Agreement: A secret agreement made between the United Kingdom and France in 1916 on how they would divide up the territory of the Ottoman Empire.



Hideko Sakurai
Professor, Faculty of Policy Studies, Chuo University
Areas of Specialization: Middle East studies, Islamic social thought, Islamic economics

Graduated from the Faculty of Business Administration, Kobe University in 1981. Completed the Master’s Program at the Graduate School of International Relations, International University of Japan in 1985. Received her Doctorate in Business Administration from Meiji University.
Worked at the International University of Japan as an assistant and lecturer, at The Institute for Humanities and Cultural Studies of Ministry of Higher Education in Iran as a visiting researcher, and at Sakushin Gakuin University as an assistant professor and professor, before assuming her current position in 2009.
Books: Islamic Finance: Understanding a System in Which Gift-Giving and Exchange Coexist [Isuramu Kin’yuu: Zoyo to Koukan, sono Kyouzon no Shisutemu wo Toku] (Shinhyoron, 2008), and others.
Translated Works: Ali Sharī’ati, Sociology of Islam (Persian) [Ali Sharī’ati, Isuramu Saikouchiku no Shisou] (Ohmura Shoten, 1997; translated into Persian).
Articles: “Islamic Companies in the Post-Corporation Era,” [“Posuto Koporeishon Jidai no Isuramu-teki Kigyou”] Transcultural Management Review (Vol. 8, 2011), and others.


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