Humanomics

Reviving the Islamic economic system through shariah-based public policy

Mohd Mahyudi
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Mohd Mahyudi , (2015),"Reviving the Islamic economic system through shariah-based public policy",
Humanomics, Vol. 31 Iss 4 pp. 415 - 429
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Reviving the Islamic economic Reviving the

Islamic
system through shariah-based economic
system
public policy
Mohd Mahyudi 415
Department of Economics, Kulliyyah of Economics and Management Sciences,
International Islamic University Malaysia, Kuala Lumpur, Malaysia
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Abstract
Purpose The paper aims to revive the Islamic economic system discourse given the increasing
interest in the moral economy agenda.
Design/methodology/approach Proponents of Islamic economics theorise that the Islamic system
presents the ideal form of a socio-economic order. However, the reported huge gap between theoretical
construct and real activities seems to support the critics claim that it is a mere utopian state that directly
challenges the viability of the Islamic economy idea.
Findings The fact of the matter is that homo economicus is overpowering homo Islamicus despite the
presupposed position of homo Islamicus as the mainstay of Islamic economics.
Research limitations/implications To manifest the Islamic economic system notion further, it is
argued that a shariah-based values infusion policy (VIP) needs to be formulated to actualise the
predominance of homo Islamicus.
Practical implications Owing to the overarching and holistic nature of the proposed public policy,
the operations of individuals, firms and state agencies should have the tendency to reflect the expected
behaviour of homo Islamicus better than the present state of affairs.
Social implications The success of the VIP would include the enhancement of social integration
and cohesion.
Originality/value The link between moral economy, homo Islamicus and public policy is clearly
established. Thus, this research guides policy makers in promoting the Islamic economic system as a
universally-aspired moral economy project.
Keywords Moral economy, Comparative economic systems, Homo economicus, Homo Islamicus,
Islamic countries, Shariah-based public policy
Paper type Conceptual paper

1. Introduction
Societal trust in a particular set of rules, procedures, norms and institutions that
solidifies a consistent and comprehensive economic order displays intriguing evolution,
especially in recent times. The contagious crises spread by capitalist models are
showing worrying trends as the global reach of trade and finance networks is at its
historical peak. While technology is the most important enabler for this trend, the great
leap of faith in the capitalist order was definitely triggered by the breakdown of
institutions, working rules and political structure that had supported the rigidities Humanomics
within socialist states in the early 1990s. Intriguingly, the more frantic turbulence in Vol. 31 No. 4, 2015
pp. 415-429
growth trajectories and the lagging effects of remedial policies tend to pave way for the Emerald Group Publishing Limited
0828-8666
revival of the New Traditional Economy[1]. DOI 10.1108/H-06-2015-0037
 H Within the discourse on comparative economic systems, Islamic economic system
31,4 possesses the most prominent and the most fully developed form of system among the
New Traditional Economy (Rosser and Rosser, 2004)[2]. Looking at the literature on
Islamic economics and finance in the database of the International Islamic University
Malaysia Library alone reveals the existence of close to 5,000 publications from 1994 to
2005 (Muqorobin, 2008)[3]. The breadth and depth of discussion in this nascent
416 discipline is most probably unsurpassed by the other types of the New Traditional
Economy such as Buddhist, Confucian and Hindu economics. Notwithstanding
Choudhurys (2012) valid critique on the failure of Islamic socio-scientific intellection to
fully adopt the Tawhidi methodology as its methodological worldview, this
commendable progress in the intellectual domain is indicative of the monumental
impact of the intellectual revolution referred to as the Islamisation of knowledge (IOK)
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sparked during the early 1970s (Barom et al., 2013). Over the four decades of the IOKs
life span, numerous advocators and naysayers to the Islamic socio-economic order
proposition have been honing each sides arguments and, consequently, directly
enriching the discourse in comparative economics.
Basically, the identification of a coherent set of decision-making behaviours depends
entirely upon the observed practices by societys predominant economic agents. This
convention guides economists in classifying different economic systems. Despite the
fact that all countries are mixed-economies at varying degrees, the USA, Japan and
mostly other developed countries are usually treated as economies that are
representatives of the capitalism ideology, whereas Cuba and North Korea are the
common examples of socialist economies. This is perfectly acceptable because their
operative economic actors, whether in the form of individual consumers or private firms
or governments, make resource allocation decisions that seem to closely manifest their
inherent presumptions on ontological aspects of the universe, society and, especially,
man[4].
In the same vein, the components of the Islamic economic system should be
traceable within Islamic economics paradigm (Asutay, 2007a). Hence, the onus is on
its proponents to cogently build the blocks of this much-aspired ethical
socio-economic order that stems from a worldview entirely different from the
secular worldview, viz, the premise for Western sciences, including economics, that
was born out of the Occidental experiences (Al-Attas, 1993). While the edifice of this
Islamic economic system is purportedly solid, it is undeniable that the real challenge
lies in detailing out the institutions and working rules, both formal and informal,
which are true to the values, norms and motives subscribed by the participants or
operative economic agents of the referred system (Angresano, 1996). Crucially, the
validity of the presumptions about homo Islamicus behaviour becomes the focus of
our deliberation for it lends credibility to conjectures on expected patterns in
consumption, production and distribution practices that set the Islamic economic
system distinct from the other commonly contrasted economics systems; namely
capitalism and socialism[5].
Unfortunately, it is noticed that many Muslim economists have overlooked this
presumption issue as a whole (Zarqa, 2003). The following critiques on this papers
subject matter certainly underline the necessity for applying the correct preconceived
assumptions when promoting the Islamic economy idea:
 Islamic economics does not offer a comprehensive framework for a modern economy; for all its Reviving the
grand claims, it presents a package of loosely connected policies rather than a complete
blueprint for reform (Kuran, 1995, p. 170).
Islamic
economic
The picture we have drawn of an Islamic economy gives an impression totally different from system
the functioning of a modern industrialised economy. This is principally due to homos
islamicus (sic), who knows that he lives on this earth, not to obey his Nafs, but to control it
(Shams, 2004, p. 9). 417
This paper argues that the blueprint mentioned by Kuran (1995) is incomplete partly
because Islamic economists have started with the wrong presumption, specifically on
the nature of the active agent. Taking cue from the study by Shams (2004), it is
imperative for us to properly identify the actual operative who continuously tries to
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solve the economic problems faced by the society. Thus, we seek to answer this string of
questions related to one aspect of the microfoundations of Islamic economics, that is,
homo Islamicus: what is the central issue in linking homo Islamicus and the Islamic
economic system? How can homo Islamicus help explain the divergence between the
theory on Islamic economy and practice of Muslim economies? What is the implication
on public policy to establish a functioning Islamic moral economy?
The paper consists of five sections. Section 2 examines the importance and pertinence
of homo Islamicus in the existing Islamic economic system discourse. Section 3 puts the
gap between theory and practice in the right perspective. Section 4 attempts to
incorporate the main conclusion from the preceding section with public policy. Section 5
concludes the paper by reinforcing that economists, Muslims and non-Muslims alike,
must redress Islamic economics microfoundations en route to its practical and
comprehensive expressions in the real economy.

2. Homo Islamicus and the Islamic economic system

It is not the intent of this conceptual paper to repeat the salient features mentioned by
participating academics on the philosophical foundations, operational principles,
mechanism and goals of the Islamic economic system. This is by no means to say that
those discussions are not important. Instead, the relevance of their intellectual
contribution on framework paradigm, value system, foundational axioms, operational
mechanism, specific method and functional institutions, which have been associated
with the Islamic economy hitherto, is rather limited to the objectives of this paper.
Nonetheless, their in-depth debates, commentaries and analyses are very much born out
of their tentative understanding of the economic agent who interprets mans resource
allocation problems, exhausts every means possible in search for the most feasible
solution and executes the selected solution with a state of mind ready to rectify any
repercussions from that chosen course of action. In brief, this section investigates the
central issue pertaining to the link between this man and the economic system in focus.
All this while, elaboration on the Islamic economic system is conditional upon the
workings of homo Islamicus to project the characteristics of that system. This has led to
the conception of economic ideas, practices, policies and institutions that revolve around
the ideals of how the Islamic economic order should be. Notwithstanding the appeals
proffered by these ideals, this approach is argued to be misguided because it makes the
proponents of Islamic economics guilty of unfair comparison against the available
classification of economic systems, which lie along the spectrums of market capitalism
 H and command socialism. Kuran (1995, p. 170, emphasis in the original) is right to cry foul
31,4 over this lopsided situation when he criticises:
The analytical weaknesses of Islamic economics also show up in its comparisons of alternative
systems. The Islamic economists tend to contrast the actual practices of the systems they want
to discredit with the ideal operation of their favored alternative.
418 In their attempt to claim legitimacy, many Islamic economists have embarked on the
path of discovering the most pristine elements, character and roles for homo Islamicus.
While juxtaposing the methodological postulates of conventional neoclassical
economics and Islamic economics, Asutay (2007b, p. 171) describes the behavioural
norm expected of homo Islamicus as:
[] socially concerned God-conscious individuals who in seeking their interests are similarly
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concerned with the social good, conducting economic activity in a rational way in accordance
with the Islamic constraints regarding social environment and hereafter; and in trying to
maximise his/her utility seeks to maximise social welfare as well by taking into account the
hereafter.
Not surprisingly, the discourse on Islamic economic system warrants the operations of
homo Islamicus to manifest the perfect working of both public and private institutions
characterising that ideal system. However, this paper agrees with the authors who are of
the view that the approach taken by proponents of Islamic economics so far is rather
simplistic to the extent that the Islamic economic system is widely criticised as a mere
utopian state of economic affairs for the present Muslim majority polities to create its
semblance (Mills and Presley, 1999; Warde, 2000; Farooq, 2011). This seriously puts into
question the viability of the Islamic economy idea while putting extra pressure for
governments of the day to cope with the high demands of contemporary identity
politics. The elaboration on this stark reality will come later in this paper.
At this juncture, this paper manages to zoom in on one central issue, which is best
covered by the following exposition. Mohamedy (2013, p. 559) crucially points out that
there are proponents of Islamic economics who assert that an Islamic economic system
is an egalitarian and classless society, eschews the accumulation of wealth and instils
in its adherents a strong sense of compassion, mercy and care for others. These are
contributors who are inclined towards the ideals of socialism and perceive them to be in
tune with the socio-tropic conception of the Islamic economic man. On the other extreme,
there are Muslim scholars who avow their fondness to the rationality and maximising
aspects of the homo Islamicus behavioural traits; hence, favouring Islamic capitalism as
opposed to Islamic socialism. Perplexingly, there exist contrasting views on the nature
of the Islamic economy despite referring to the same economic actor[6].
Therefore, that homo Islamicus is conceptualised as a paragon of virtue is an
accepted notion by all economists, both by proponents and opponents of Islamic
economics. However, we opine that while the conceptualisation exercise is
straightforward, to articulate the homo Islamicus actual stand on property
ownership, allocation mechanism and other institutional framework details to
substantiate the meaning of an economy is a very complex matter[7]. This is because
to operationalise the Islamic economic man, economists have not reached a
consensus on how the properly conceived behavioural norms would take their
expressed forms in a functioning economy.
 3. Muslim societies and the Islamic economic system Reviving the
In this section, we are interested in understanding the realities of economic behaviour in Islamic
its natural setting, i.e. Muslim societies. The motive is to explore the true essence of
economic actions manifested through buying, selling, financing and other productive
economic
undertakings. As a result, the actual practices of the economic actor become the subject system
of analysis. Apparently, the focus here is on this economic agent.
In as much as homo economicus is formalised as the mainstay of capitalistic 419
economic order, homo Islamicus is the mainstay of the Islamic economic system.
Hosseini (1992, p. 111) explains, Islamic economics, as claimed by its proponents,
replaces Homo economicus with Homo Islamicus, while Mohamedy (2013, p. 562)
critically observes that:
Islamic economists are at pains to emphasise that homo Islamicus would behave in a manner
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more amenable and conducive to the goals of realising a prosperous society than his cousin
homo economicus would.
Thus, it is gratifying to exercise self-reflection along the line of this vital question: are
Muslim societies behaving in a manner parallel to the presumptions associated with this
homo Islamicus?
The incentive in any honest thought provoked by the above question is best said by
Pryor (1985, p. 217):
By more detailed consideration of particular issues of the Islamic economic system, many
important problems in general economics, as well as comparative economic systems, can be
resolved. As in past centuries, Islam has much to offer the West.
Alas, realism is the key success factor for any economic order, Islamic or otherwise. To
assess on how Islamic economic theories are embraced in practice, this paper looks at the
collective nature of market behaviour among Muslim countries population[8]. In a way,
this assessment will allow us to address another pertinent matter: is it fair for Farooq
(2011, p. 54) to overtly state, Islamic authors often push the altruistic model of Islamic
economics to an utterly utopian level?
To that end, we now turn our attention to the well-documented critique on the social
achievement of Islamic banking and finance industry (IBF). This approach finds its
support from Asutay (2007b) who treats IBF as the operational side of Islamic
economics. Shinsuke (2012) seems to concur with Asutay (2007b) when he positively
views the practice of Islamic finance to have a significant place in the annals of modern
Islamic economics history. Furthermore, after analytically reviewing the extensive
literature on Islamic economics, Mohamedy (2013) finally concedes that IBF has become
the avenue for the expression and operationalisation of the normative assumptions of
Islamic economics.
The IBF initially started with the noble aims that are in tandem with the conception
of homo Islamicus and its corresponding behavioural norms alluded to in the previous
section. Accordingly, Asutay (2007b, p. 172) highlights that In its alternative system
understanding, IBF was assigned an important role: economic development with the
objective of human well-being and social justice. Over nearing four decades of practice,
market participants of IBF have been in an exuberant mood for its continuing
double-digit percentage growth in commercial banking and takaful (Islamic insurance)
sectors despite the volatility in the global financial scene. Nevertheless, noticeable to
most academics, there is a sad story lurking behind that enviable progress. This bleak
 H picture has been mainly painted by the IBFs limited ability to make significant waves
31,4 of change in the way the banking business is run and impacting the real economy.
Trendspotting in Islamic finance literature indicates the emergence of maqasid
al-shariah (objectives of the shariah) discourse so as to reinvigorate the social welfare or
maslahah agenda within the ambits of Islamic financial intermediaries operations
(Dusuki and Abozaid, 2008; Laldin and Furqani, 2013).
420 This paper tends to agree with those social scientists who view that IBFs promising
growth serves as an immediate proof for the quiet unpleasant image of homo
economicus trampling on homo Islamicus. Expectedly, Farooq (2011) does not even show
an iota of belief that homo Islamicus is operating in IBF. He furnishes two lines of
argument to support his stance. First, he argues that the time value of money concept is
widely applied in Islamic banking products; whereas, some Islamic economists do
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suggest that homo Islamicus does not recognise that concept. Second, the inability for
Islamic financial institutions to express their innate preference for risk-sharing schemes
over risk-transfer ones are symptomatic to the fact that homo Islamicus is inflicted by
the murabahah syndrome, that is, the over-reliance on risk-transfer instruments when
the theories of IBF project the use of risk-sharing modes of financing as the dominant
method to be utilised[9]. This to him is a tacit admission that Islamic morality is not
reflected in actual modern business environment, thus, creating a formidable gap
between the rhetoric and reality (Farooq, 2011, p. 58).
In addition, Asutay (2007b) convincingly exposes the social failure of IBF. He avers
that the preference for risk-transfer or debt-based instruments is in itself a departure
from the IBF founding fathers-drawn path that supposedly leads to the attainment of a
significant social impact. Implied in this preference is the Islamic bankers and shariah
advisory committee members reliance on a more pragmatic approach to offer higher
dividends over a shorter span of time to the respective financial institutions
shareholders. Unfortunately, this short-cut exercise is taken up at the expense of
long-term financing and developmental financing in real-economic sectors such as
agriculture and manufacturing. Choudhury and Hussain (2005, p. 210) put it plainly,
Equity participation and profit-sharing have remained distant minimum in the total
allocation of resources. The same scenario is observed for social lending because the
size al-qard al-hasan (benevolent loan) is reported to be negligible. As a whole, these
arguments echo the attack made by Warde (2000) on the status of Islamic banks affairs
and their blatant disinterest for the original aspirational aims of social justice, balanced
economic development and an equitable distribution of income and wealth.
To relate the social failures to the imperative of a truly Islamic economy, this paper
emphasises that these patterns of economic behaviour have resulted in the continuous
sidelining of the poor and critical enterprises. Choudhury (2008, p. 263) puts it bluntly,
Most Islamic financial institutions have succumbed themselves to this catching up
fervor in capitalist globalization. However, the more alarming fact is that these
so-called Islamic institutions claim legitimacy, operate daily and survive progressively
based on a mechanistic understanding of the Islamic law, and at the expense of the
distinctive and universal paradigm of Tawhid (Oneness of the Divine Law) (Choudhury
and Hoque, 2013). Certainly, the existing framework of complementary relations
between social well-being of stakeholders and financial efficiency of the Islamic banks
acts as, yet, another obstacle in the realisation of an economy that is based on the
Tawhidi paradigm (Choudhury and Hussain, 2005).
 Irked by all these unfortunate course of events implicating the Islamic economic Reviving the
system proposition, Shams (2004, p. 10) laments: Islamic
The question arises if there is an empirical basis for such an economy. There exist of course economic
many Islamic countries on our planet, but one could hardly argue that they represent true system
examples for such a theoretical concept. Most of them have along their historical development
line, especially since the beginning of the colonization period, accepted the western patterns of
living i.e. the picture of the human being as one of satisfying unlimited wants and maximising 421
profits according to the maximising principle of rationality. It is therefore not easy to study the
empirical validity of an Islamic economy referring to the currently existing Islamic countries.
Shinsuke (2012, p. 124) concurs with the scathing remarks of Shams (2004), and this
position is obvious when we consider this comment of his:
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Both outcomes of the commercial practice of Islamic finance and the comprehensive
Islamization of the economy raised questions about the feasibility of the theoretical
suggestions by Islamic economists.
The above line of attack does seem to expose the bovarism of the Islamic economic
system proponents. However, this paper opines that it is not strong enough to nullify the
entire legitimate attempt of making the Islamic economy to be the outcome of an eclectic
task to unite the strengths of capitalism with those of socialism, while overcoming their
weaknesses (Kuran, 1995, p. 155). Rather than dismissing the Islamic economic system
idea, we propose that the idea be supported by identifying the main hindrance in the
progress of that noble motion. Interestingly, we believe that the root cause for this
undesirable state of affairs can be extracted from this criticism by Kuran (1995, p. 170),
the agents that populate these models are replicas of homo economicus, the bte noire of
every general treatise on Islamic economics. This paper goes even deeper than Kurans
by opining that at a more micro-level analysis, learning from Choudhury (2012), the
undeniable real cause is the widespread failure amongst economic agents to understand
and express the underlying epistemological meaning of all Islamic economic principles,
theories and policy proposals. In other words, Muslim nations need homo Islamicus who
are imbued with the right Tawhidi core as their populace. Thus, when there is possibly
an effective way that may result in homo Islamicus overpowering homo economicus, this
possibility must be explored further, owing to the invaluable moral elements of the
Islamic economic order.
In view of the reported huge gap between theoretical construct of the Islamic
economic system and real activities in Muslim societies, this paper rejects the
presumption that homo Islamicus is dictating the way resources are allocated in the
Muslim economies. This bifurcated nature of the Islamic economy is truly
disheartening, and it is now clear that this problem emanates from the absence of homo
Islamicus. Therefore, what is the implication on public policy in attending to this serious
issue?

4. Homo Islamicus and public policy

Before addressing the crucial question raised in the previous section, we ascertain
further its validity by pondering upon the following perspective. Kuran (1995), Maurer
(2005) and Asutay (2007b) are in agreement that Islamic economics has its place in
economic thought due to identity politics more than the actual imbalances, injustices or
 H inequalities related to the economic side of Muslim societies worldwide[10]. The Islamic
31,4 resurgence that marked the 1970s breathed life to this identity politics that:
[] aims to construct a modernized Islamic civilization based on the ideas of Islam established
in the Prophets era; modernized Islamic civilization implies neither the recycled design of
Western modernization nor the revival of pre-modern Islamic traditional civilization
(Shinsuke, 2012, p. 117).
422
Here, this paper predicts that insofar as Muslims are the majority in any country, this
societal desire will persist and with it comes the high demands to re-establish the glory
days of the Islamic civilisation. Apparently, the Islamic economic system discourse will
remain to be a part and parcel of any referred polity. Therefore, it is indeed wise to deal
with the absence of homo Islamicus in the economy problem head-on with the direct
assistance from any suitable public policy.
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Generally, protagonists in this inchoate field of Islamic economics do share the view,
either implicitly or explicitly, that homo Islamicus is the precondition to operationalise
the envisaged Islamic economic system. For instance, Furqani (2012, p. 263) avers that
The actual behavior of an individual is very much influenced by the promotion of
Islamic values and a well-functioning Islamic economy can only be achieved if the
economic-ethical link is in place. The critical importance for the presence of homo
Islamicus, who is supposed to establish this economic ethical link in the moral
economy, would be better appreciated when one contemplates on this honest remark by
Mohamedy (2013, p. 568):
[] proponents of Islamic economics have consistently emphasized that the founding of the
science is not merely an intellectual exercise, but has its ultimate objective the realisation of an
Islamic economic order.
This implies that the success of the entire Islamisation of economics project rests upon
the presence of homo Islamicus. Thus, we wish to address this pivotal concern here.
Frankly, it is quite a surprise that Muslim economists have not gone beyond
acknowledging the truism alluded in the above paragraph. Perhaps, they are
constrained by the scope that defines the economics discipline as shaped predominantly
by Western economists; hence, they self-screen themselves from venturing into topics
that are deemed to be outside of economics as economists know it. Nonetheless, learning
from the Father of Economics, Ibnu Khaldun, and other past Muslim scholars, the way
forward for many polemical discourses is to plunge into multidisciplinary domains of
discussions[11]. Intriguingly, public policy debates have always required the coalescing
of a multitude of knowledge disciplines that include politics, psychology, sociology, law
and economics, depending on specificities of the problem at hand. Thus, public policy
acts as a legitimate recourse that enables this paper to elucidate in atypical fashion.
Before going deeper, it is highlighted that one germane takeaway from the previous
section is that the overpowering of homo Islamicus by homo economicus adds more
weight to the concern identified in the preceding paragraphs. It is also relevant to not
only give life to this Islamic economic agent but also to ensure that he has the resilience
to counter the inner impulses that would effectively stop homo economicus from
trampling on homo Islamicus in every occasion, where he has a tinker at his next
consumption, production and distribution decision.
In cognisant of the zeal for the moral economy, this paper underlines the need for a
broad-based public policy. This policy must be formulated with the sole aim of
 continuously transforming, facilitating, monitoring and motivating the professed Reviving the
Muslims in Islamic countries to be homo Islamicus without resorting to coercive Islamic
methods. With these features in place, the carefully crafted public policy is bound to
cascade down from the state agencies to the private sector and the commoners.
economic
Because public policy formulation is for the benefit of the whole nation, policy system
makers in these Muslim-led lands should find inspiration from the drafted constitution
and enacted laws of the country. To cite an example, Part 1, Article 3 (1) in The Federal 423
Constitution of Malaysia (1957) stipulates, Islam is the religion of the Federation; but
other religions may be practiced in peace and harmony in any part of the Federation.
Similarly, in Chapter One of The Tunisian Constitution (1957), Article 1 clearly
mentions, Tunisia is a free, independent and sovereign state. Its religion is Islam, its
language is Arabic and its type of government is the Republic. In view of the fact that
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the constitution is the fountainhead of sovereign power, such provisions would

definitely serve as an internal motivation and a dependable reference point in dispute
and conflict resolutions. Regarding the laws of the land, the Malaysian case has, among
others, the Islamic Financial Services Act 2013, Competition Act 2010 and Intellectual
Property Corporation of Malaysia Act 2002 to fervently carry the message that the
country despises individuals and businesses that demonstrate low standards of ethics,
morality and integrity. Viewed positively, the constitutional and legal frameworks of a
sovereign state could provide the impetus for the introduction of public policies that
prepares for the coming of homo Islamicus.
For all intents and purposes, policy makers should also consider the impending
challenges in fulfilling their heavy responsibilities. Note that the global economic
growth instability phenomenon is one of the underlying reasons that support the
increasing clamour for a moral economy in mainstream economic discourse. This trend
is expected due to the identification of moral failure as one important diagnosis related
to the financial crisis contagion that first hit the USA in 2007 (Siddiqi, 2008; Chapra,
2008). Only by internalising this universal concern that Muslim majority countries
would have a head start in championing the notion that the world must develop ethical
members of the society to successfully see this moral economy idea materialised. In
short, public policies that promote homo Islamicus may act as a good testament to the
strong commitment of Islamic economies to furnish alternative solutions to the real
problems faced by humanity at large.
The enormous potential of broad-based policies that develop positive attributes in
the citizens of a country is clear for all to see. Unlike the oil-rich Middle Eastern
countries, the narrative of Malaysias rise in the international arena has in it the
introduction of a public policy that promoted the evolution of homo Islamicus. In 1982,
the Inculcation of Islamic Values Policy (IIVP) was enforced in Malaysias
administration when Prime Minister Mahathir Mohammad was at the helm of national
leadership[12]. The concerted effort taken by the state apparatus from federal to local
government levels, from ministries to state-linked agencies, from official to less formal
events and the strategic use of state-controlled mainstream media has created a
spill-over effect onto the social scene too. Moreover, the indefatigable activism of various
Islamic reformist groups like Angkatan Belia Islam Malaysia worked in parallel with
IIVP and, consequently, further enhanced the quality of the intended outcome for that
policy. Notably, in 1983, the momentum sparked by IIVP had culminated into the
establishment of Malaysias first Islamic public institute of higher learning, namely the
 H International Islamic University Malaysia, and premier Islamic financial institution,
31,4 Bank Islam Malaysia Berhad[13]. The amalgam of these favourable political, social and
economic developments created an organic ecosystem for religious tenets to be an
integral element in everyday topic of discussion among the populace. Now, it is an
open-secret that this broad-based public policy had triumphantly made themes and
concepts such as trustworthiness, sincerity, dedication and diligence to intrinsically
424 transform the work ethics of the nations labour force, both in public and private
sectors[14].
This particular exemplary experience should be persuasive enough to influence
policy makers and political leaders to have a predilection for that type of broad-based
public policy. Hence, this paper also suggests one. For ease of reference, we tentatively
name the proposed shariah-based public policy as the values infusion policy (VIP)[15].
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The encompassing impact of VIP makes it of a bigger importance than those that are
tailored to deal with some identified economic problems of the society, because VIP
could set the psychological base on which the effectiveness of those specific policies
rests upon. Take an example of a policy to eradicate poverty. This policy usually has the
tendency to give too much emphasis on the specific mechanics in achieving the
minimum targets. This leaves the more crucial aspect of mindset unattended to or given
less focus. Therefore, if the poor do not erase in their mind the belief that they are
predestined to remain in poverty and do not fully embrace the truism that frontiers of
success depend directly on ones undying effort, the specific policy would end up with
limited achievements[16]. Arguably, the VIP, which attempts to develop the traits and
character of homo Islamicus, could prevent such setbacks, provided that it is translated
into well-planned and well-executed programmes, strategies and initiatives[17].
On the array of strategies for VIP, this paper tries to assuage the criticism raised by
Mohamedy (2013, p. 563), when he says, despite the primacy of the Human-God
relationship in Islam there is almost no discussion on how this relationship is manifested
in both belief and action with specific reference to economic behaviour. In our opinion,
this situation stems from a misunderstanding on the complete package of the Islamic
teachings. Therefore, this paper stresses that VIPs action strategies should give the
right balance of emphasis to all tripartite components of Islam, namely aqidah (faith),
shariah (law) and akhlaq (noble conduct), to activate the endogenously (reflexive)
learning by unity-of-knowledge processes in the Tawhidi worldview (Choudhury, 2008,
p. 264)[18].
As a matter of principle, the correctness on this balance of emphasis caveat is
determined by the actual context of the situation faced by the different nations.
Nonetheless, from a simple observation on the Muslim community in Malaysia, too
much exposure is made on fiqh (legal ruling), which are related to the shariah
component. This has resulted in the intended, necessary and positive effect of making
people aware about the technicalities regarding the dos and donts of ritual and
non-ritual activities. However, to actualise the holistic knowledge on Islam, we posit that
the akhlaq component has a lot to contribute because its objective and scope are
specifically about the application of good behaviour in godman, manman and man
universe relations. Furthermore, there is an extremely close proximity of the traits of
homo Islamicus to the content of topics that jointly form the subject matter of the akhlaq
discipline. Effectively, this akhlaq orientation proffers the added value of meeting the
economic ethical link condition identified by Furqani (2012) above. Thus, the akhlaq
 dimension deserves to be given a wider coverage than normally conceived by the Reviving the
person-in-charge for VIPs implementation at the multi-layered governments offices, Islamic
state-controlled religious institutions and other affected organisations. economic
To intensify VIPs impact on the society, historical and sociological factors must not
be ignored. In the context of Malaysia, for instance, the action plans should take into system
account that its mainstream Islamic thought is very much entrenched, over centuries
long process, behind ahli sunnah wal jamaah thought that is rooted in al-Ashairah and 425
al-Maturidiyyah for aqidah, al-Shafiiyyah for fiqh and al-Ghazali for akhlaq aspects
(Stapa, 2014). Ample consideration for these type of details is beneficial for it renders the
least of friction when VIP takes full swing, hence, allowing the highest level of
acceptance and effectiveness among the target audience of any strategy initiatives. Only
then, this broad-based public policy would be on the right track to leave tremendous yet
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sustainable impact to the society and at the same time, strengthening the sense of unity
amongst its members.
Apart from advocating social integration and cohesion, another probable
contribution of VIP is its potential to reduce the tension observed in the intellectual
scene. We are optimistic about the VIPs ability to function as a reconciliatory path to
bridge the aspiration-oriented school with the reality-oriented school of Islamic
economic thoughts, as identified by Shinsuke (2012). The divide between these two
schools owes its existence to the absence of homo Islamicus, and this point has been
delineated in the previous section. Thus, a policy that promotes economic actors to
possess the character and personality of homo Islamicus would inspire the creativity to
embrace the ideal while giving due consideration to the practical constraints besetting
innovation in Islamic finance firms and institutions.
Essentially, the spirit of VIP is one that embodies the accidence of social engineering.
While the normal process of social engineering tackles the physical construct of social
and economic activities, this nationwide policy may evoke internal change within the
societys moral conscience. It tends to awaken an individuals mind to instill the right
attitude that would then shape his behaviour. Once this chain of events takes place, it
would snowball into becoming the collective norm of the society. This should not be
misunderstood as an expression to degrade the form of a typical social engineering
exercise. Instead, we put it to task for the executive arms of the state to operationalise
this VIP by adopting the approach of social engineering, such as the one applied in
Malaysias New Economic Policy (1970-1990), as it necessitates the VIP to be more
grounded on the realities surrounding the malaise of the population. In other words, this
proclamation is justified, for ones every action is a mere reflection of his mind and
attitude towards the responsibilities entrusted upon him.
Notwithstanding all sorts of domestic and international impediments, the gains
for introducing this type of public policy are in tune with the basics of a moral
economy espoused by contemporary economists. This prophecy is shared by many,
if not all, Islamic economists, and it is succinctly expressed by Mohamedy (2013,
p. 560):
A society populated with homo Islamicus participants would act both individually and
collectively within the framework of certain ethic-politico-legal norms, for example, justice,
benevolence, self-sacrifice etc. Such behaviour, it is argued, would lead to economic outcomes
that are just, equitable and optimal.
 H Herein also lies this studys unwavering assertion on the need for the proposed VIP so as
31,4 to bring substantive meaning to the faade of the Islamic economy archetype.

5. Conclusion
The Islamic economic system idea is a legitimate and valid test to demonstrate the
practical expressions of Islamic economic theories in the real economy. Hence, it is
426 imperative to have homo Islamicus operating in the present Muslim countries. Our
cursory reference to the constitutional, legal, psychological, historical, sociological and
intellectual aspects vis-a-vis the suggested VIP is made with the hope to increase the
motivation of policy makers and the populace in Muslim countries to actualise the
societal change required for the functioning of a true Islamic economy. The unequivocal
appreciation to these preceding points should be sufficient enough for policy makers to
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have a preference for any public policies that systematically assist them to appease the
high demands from the concerned and educated Muslims within the community. Thus,
this paper emphasises on the formulation of a broad-based public policy that could
easily serve as the overarching strategy to see the evolution of homo Islamicus in the
nation.
To put it differently, the pietistical claims embedded in the Islamic economic system
discourse rest upon the adoption of public policies that promote the accidence of this
homo Islamicus being; one who is imbued with the Tawhidi worldview. The increasing
presence of homo Islamicus within the community would consequently trigger the
required institutional reforms, provide operational vitality and ensure science-led
sustainability over the long-term horizon. Therefore, this paper concludes by
reasserting that the VIP has every potential to be the main policy that eventually allows
proponents of Islamic economics to boldly display, in due course of time, that their
works on the Islamic economic order is not an otiose endeavour to establish a
universally-aspired moral economy.

Notes
1. Rosser and Rosser (2004, p. vii) defines the New Traditional Economy as the effort to embed
a modern economic system into a traditional socio-cultural system, usually one tied to a major
world religion.
2. Following Pryor (1985, p. 198), we use the terms Islamic economic system and Islamic
economy interchangeably where both terms mean a theoretical construct of a future
industrial economy whose members follow the Islamic faith. This is contrasted to the term
Muslim economy where it refers to a Muslim majority country.
3. With the advent of Islamic banking and finance, around 40 per cent of this collection of
publication is on that topic. Other Islamic economics topics include fiscal and monetary
policy, trade, economic history, properties and development.
4. This paper adopts Zarqas (2003) reference to these assumptions as presumptions that
function as the philosophical foundation that defines the respective economies.
5. While Tahir (1989) describes three economic agents for an Islamic economy; namely
consumers, investors and government; our discussion in this paper confines it to just one since
the analysis is more on the broad category of economic man.
6. The house of Islamic economics does not seem to be in proper order because of diverging
positions on fundamental concepts in the economics discipline. As another example,
 Wahbalbari et al. (2015, p. 136, parentheses added) report that Some of them (i.e. Islamic Reviving the
economists) deny scarcity whereas others accept it as a fact and reality.
Islamic
7. Rosser and Rosser (2004, p. 5) state that There is an endless variety of aspects of these economic
institutional frameworks that can be considered in classifying economic systems. However,
allocation mechanisms and forms of ownership are perhaps the most useful ones in
system
distinguishing economic systems.
8. This approach is inspired by Pryor (1985) and Farooq (2011) who identify realism of the 427
behavioural assumptions as the backbone of the Islamic socio-economic order as one topic
that deserves a more thorough investigation.
9. This forms the basis for Shinsuke (2012) to classify two distinct schools in Islamic economics.
In contrast to the aspiration-oriented school, the reality-oriented school is receptive to the
murabahah syndrome.
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10. Kuran (1995) attributes Sayyid Abul Ala Maududi for popularizing the term Islamic
economics in the wake of the cultural and political struggles besetting India and Pakistan in
the 1940s.
11. Mohamedy (2013) aptly associates the Father of Economics title to Ibnu Khaldun for his
tremendous contributions to economics and civilizational thought, especially in his magnum
opus Al-Muqaddimah.
12. To his credit, Prime Minister Abdullah Ahmad Badawi attempted to continue with his
predecessors broad-based policy by rebranding it to Islam Hadhari. However, Othman and
Fadlillah (2012) explain that; unlike Mahathirs IIVP, the implementation and response of
Islam Hadhari was deemed weak by Islamic NGOs due to its lack of concrete ideas.
13. For a list of impressive accomplishments under IIVP, see pp. 488-489 in Noon (2005).
14. In addition to the four listed in the text, the other 7 Islamic values emphasized in IIVP were
accountability, moderation, cleanliness, discipline, cooperation, nobleness and gratefulness.
15. Arguably, the Islamic perspective on value pluralism is a prerequisite for selecting the values
to be infused. For a preliminary reading on the debates in value pluralism, Mason (2011) may
come in handy.
16. This is a highly probable scenario since according to Ismail (2010, p. 149), Beliefs act as
self-fulfilling prophecies that influence all our behaviours.
17. For an example of creative ways to instil Islamic moral values, see Sawai et al. (2009).
18. This paper believes that the aqidah, shariah and akhlaq components must be fairly covered to
properly promote the correct appreciation on the central concept of Tawhid; that naturally
functions as the epistemic reference in all three components despite the distinct dimensions
addressed by these necessary and fundamental parts of Islam.

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Corresponding author
Mohd Mahyudi can be contacted at: mohdmahyudi@gmail.com

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