13 Islamic Economics: A Survey of the Literature Part III
The Role of Islamic Institutions
True piety does not consist in turning your faces towards the east or the west —
but truly pious is he who believes in God, and the Last Day, and the angels, and
revelation, and the prophets; and spends his substance — however much he
himself may cherish it — upon his near of kin, and the orphans, and the needy,
and the wayfarer, and the beggars, and for the freeing of human beings from
bondage; and is constant in prayer, and renders the purifying dues; and [truly
pious are] they who keep their promises whenever they promise, and are patient
in misfortune and hardship and in time of peril: it is they that have proved
themselves true, and it is they, they who are conscious of God (Qur’┐n 2: 177).
There are certain uniquely Islamic institutions, based directly on Islamic law
and/or well-established historical Islamic practices, which have a strong
influence on economic structures within an Islamic society or state. Many of
these institutions became defunct or marginalized in a long and complex
historical process of decay. The ‘modern’ expectation that all societies will
travel along the same path, so that the Islamic heritage is only of historical
value, has proven to be unfounded. An active search to rediscover the spirit of
Islamic institutions and revive them is going on in the Islamic world (the
Qur’┐nic verse cited above shows that the spirit of piety is of the essence while
the forms can vary). There is also the challenge of adapting them to
contemporary requirements, or creating new institutions which conform to
Islamic laws while meeting modern needs. It is the tension between Islamic
ideals and goals and the existing unsatisfactory mélange of colonial/
modern/Islamic structures which gives impetus to Islamic movements all over
the world. Below we treat Islamic financial institutions, insurance, waqf (trusts