Islam and Economic Policy is an outline of essential Islamic teachings for public economic decision making along with their development, implications, and applications to Muslim countries. In the six chapters of part one of this book, Rodney Wilson presents his perspective on Islamic ideas, themes, and measures for economic philosophy, microeconomics, fiscal policy, development policy, international economic engagement, and banking regulation, monetary policy, and finance. In the six chapters of part two, he covers the recent application of these teachings, although somewhat differently from country to country, in Turkey, Iran, Egypt, Saudi Arabia, Pakistan and Bangladesh, and Malaysia and Indonesia.
Wilson should be applauded for emphasizing the important moral teachings in the Qurʾan and the interpretation afforded by the Prophet as to the scaffolding of Islam. He rightly extracts the key elements as the unity of creation, social justice, inclusiveness and sharing, poverty alleviation, and sound economic management. However, the coverage of all these themes and their implication for the six dimensions of economic policy mentioned above in only 92 pages was a Herculean task that was bound to shortchange a number of teachings and their implications. For instance, development policy, which should include the three interrelated developments of the self, the earth, and society at large, is given short shrift. The instruments of fiscal policy could have been expanded to embrace public–private partnerships, and asset linked securities with pass through returns or returns linked to the real sector. In the case of monetary policy, the authorities could buy and sell securities with returns tied to the real sector; they could focus open market operations on private holdings of securities and on investment bank portfolios instead of on fractional reserve bank balance sheets; and they could use reserve requirements as an instrument by requiring reserves for the investment-banking component of Islamic banks. But the abridged treatment is quite understandable given the limited space to cover these possibilities.
In part two, the impact of Islamic teachings on economic decision making in the eight Muslim countries is understandably not uniform. Recent developments, whether a revolution in Iran, the emergence of the AKP Party in Turkey or a military coup to overthrow the Muslim Brotherhood in Egypt, are so varied that Wilson focuses on what he sees as the special manifestation of Islam in the country under study at this time. His essential conclusion is that the Islamic teachings of the Qurʾan and through the life of the Prophet have had little effect on economic and financial decision making. Yes, there is lip service to such things as the prohibition of interest, yet with some differences; interest is charged and received in most facets of economic life in these countries. Yes, corruption is harshly admonished in the Qurʾan, yet it is alive and well in Muslim countries today. Yes, inconclusiveness and sharing are touted, yet income and wealth disparities are glaring. In short, it would be fair to say that Rodney Wilson sees a strong, if not total, disconnect between Islamic teachings and their application to economic and financial decision making in Muslim countries.
My only quarrel with this excellent book is that this glaring disconnect between Islamic teachings and their application and implementation in Muslim countries has not been placed in its proper context. Since about 2007, Islamicity Indices have been developed to precisely measure the extent and degree of this disconnect. More recently in 2014, the Jeddah-based Islamic Development Bank (IDB) sponsored two international conferences and dozens of professional papers to further develop Islamicity Indices, especially on the basis of shariʿa teachings in order to assess this disconnect in the realm of economic development and progress. These indices, some based on the goal of shariʿa (Maqasid al-Shariah), are designed to measure the extent to which countries implement Islamic teachings in a number of areas of economics, education, finance, legal institutions and governance, human and political rights, and international relations. The preliminary results of these indices confirm Rodney Wilson's conclusion. Moreover, they go even further, namely, the policy prescriptions and the results in non-Muslim countries of Northern Europe, in New Zealand, Canada, and Australia come much closer to the scaffolding of Islamic teachings than those of Muslim countries. Malaysia embraced and adopted its own longitudinal (or time series) economic development Islamicity Index in January of 2015 in order to monitor its progress in implementing Islam's moral teachings.
Leaving aside minor editorial shortcomings (such as units missing from a table on page 29), this book is an excellent and concise introduction to the range of Islamic teachings for economic decision making and their impact on economic policies in Muslim countries. It would be a highly informative adoption for an undergraduate course in Islamic economics.
