The Role of the Muslim Leader in Shaping Economic Policies

Abstract

This study underscores the unique mandate of a Muslim sovereign in the formulation of an Islamic economic policy which must defend the ummah's collective welfare, identity, and financial independence. This paper relies on classical Islamic concepts of dār al-Islām, dār al-‘ahd, and dār al-ḥarb and suggests that contemporary Muslim-majority countries must morally defend and protect one another's economic relationships, regardless of the divided political boundaries. The study draws on a variety of Islamic sources, including on the economic stewardship of Prophet Yūsuf (A.S.), and highlights the importance of quwwah and amānah as the fundamental characteristics of Islamic leadership. The study examines the consequences of the IMF and World Bank as principal global financial and economic institutions, exposing their policies of economic marginalization and Muslim states' dependency, which is a result of interventions geared toward interest rates. The study contrasts these consequences with an Islamic vision of economic justice and welfare, which aims to protect and preserve wealth, so that Muslim policymakers can ethically pursue the formulation of Shariah-compliant policies. This study attempts to demonstrate that for Muslim societies to be economically free, a reversal from the transformation of an inherently interest-based system is required to the fundamental principles of Islamic economics.