THE DEVELOPMENT OF ISLAMIC ECONOMICS IN THE MODERN PERIOD
In the 1970s, after Islamic banks developed in various countries, the implication was that
the Islamic economy was "reborn" in the modern period. Even Islamic economics is not only
represent, but some of its teachings criticize conventional economics that separates the positive
and normative aspects. Islamic economics is called normative because it discusses economic
phenomena or what should happen that is based on certain values or norms, explicitly or
implicitly.32 A model similar to the "scholastic" period combined with Smith's classical period in
the context of "individual and market freedom" but controlled by Keynes's model which provides
space for the state to intervene which in Islamic economics is called "at-tadahul. "Dichotomistic"
in the method of understanding the economy that is positive and normative. Positive economics
or commonly called conventional economics only discusses the reality of economic relations
with something empirical. The implication is that economic facts are something independent of
norms, there is no causality between norms and facts so that they are objective and universal.33
Meanwhile, Islamic economics still ignores the aspects of objectivity and rationality while still
acknowledging the existence of causality between norms and facts.
However, in the development of theories and definitions of Islamic economics, there are
many different opinions according to the point of view from which Islamic economics is
explained, and some still associate implicit or explicit with conventional economics. Mannan
explained that Islamic economics is a study of the material point of view or the most urgent study
in the current era, where economics rarely touches the aspects of justice and society. Therefore,
Mannan defines Islamic economics as a social science that studies the problems of the people's
economy inspired by Islamic values and teachings.34 There are also opinions that explain
Islamic economics from a methodological aspect that combines quantitative-objective and
qualitative-subjective. This kind of understanding as explained by Naqvi that Islamic economics
is an effort to validate philosophical ideas
Islamic economics has many challenges to provide solutions to the demands of
individuals as economic "creatures". Conditions in which every individual is forced to engage in
economic activities, on a micro scale in the form of meeting needs, creating production, looking
for job opportunities, managing family finances, as well as on a micro scale in the demands of
each individual to encourage the state revenue sector through income and income tax (PPH), and
others. There are many crucial sectors in human life that are related to economic elements such
as meeting needs, fluctuations in the price of goods, controlling inflation, the benchmark interest
rate of banking and financial markets, national income tax, and others that are influential in
social activities and life as well as the sustainability of a nation. The study of Islamic economics
in the current era which is very complex and full of various social evolutions is based on the
scientific and technological revolution such as the term industrial revolution era 4.0 (internet of
things era) which is suddenly present around us and has entered small spaces and corners even
in slums even in the form of smartphone technology. Not to mention the deep infiltration,
understanding, and appreciation of what the meaning, essence, and benefits of the industrial
revolution era 4.0 really are, the phrase society 5.0 has emerged again which was initiated by
Japan since 2019, where the main component is humans who are able to create new value
through technological developments and can minimize the gap in humans and economic
problems. It is from humans who create, design,
This means that in every life, humans will be involved in politics, even at certain times
humans are only "benefits" or worse as political victims. Laswell explains politics as who gets
what, when, how.39 Surbakti explains that "getting what" means getting values. "When" means
the measure of influence used to determine who will get the most points. "How" means how one
obtains values.40 The definition of politics that explains the meaning of "power" and "policy" was
written by Morgenthau who explained politics as a struggle for power,41 and David Easton who
defined politics as the study of the making of public policy.42 In some references, politics is
defined as all activities that affect wisdom and the way in which it is 43 From some of the
definitions above, it can be combined that politics is an activity of citizens (Aristotle) to obtain
values (Laswell) through power struggles (Morgenthau) in the form of policies (Easton). However,
some of these political definitions also stand as political disciplines without containing
economic dimensions
From the understanding of al-Jauziyah, it shows that the understanding of Islamic politics
is not just about power and policy as explained by conventional thinkers, but is a process in
creating peace and eliminating strife and damage. To achieve this goal, the political principles
developed do not always have to be textually mentioned in the Qur'an and hadith. For example,
the discussion of elections and the ideal form of government, it could be that it is free for every
country with a Muslim population to choose the model and system adhered to. This is allowed as
long as it is still to create peace and eliminate hostility and evil. Meanwhile, Nawal El Saadawi
(Egyptian writer and writer) criticized that there is no Islamic state because the country is not
religious, which is human. In other words, it can be interpreted as "there is no Islamic politics"
because politics is also not religious.49 In the current context, what El Saadawi explained is a
debate in the midst of the rapid rise of Transnational Islam that dreams of the presence of a global
caliphate model. However, from the rational aspect and political calculations, of course, El
Saaduawi's opinion is commonplace, because basically the goal of Islamic politics is the
creation of a nation's governance that does not negate the religious dimension, especially Islam,
in the aspect of teachings and practices. As for Islamic ideology that is explicit or implicit in the
constitution of a nation and state, of course
Political economy is a cluster of theories based on an understanding of the
interdependence between politics and economics. In which, economics and politics interact
with many methods and analyses in the context of resource allocation, income distribution, and
stability.50 The most important difference between the approach of political economy and pure
economics is in its view of the power structure in society. Political economy believes that the
structure of power will affect economic achievement, whereas the purely economic approach
assumes that the power structure in society is given.51 Then political economy is used by some
thinkers to refer to the relationship between the market and power.52 From this understanding,
the study of political economy will build a framework of thinking and analysis about the study of
economics or market forces that have been considered free from elements of political
intervention or the state becomes no longer valid, because there is a connection and
dependence between the two.
In its free translation, political economy is the branch of science of a statesman or
lawmaker and a guide to the wise management of the national economy, or as John Stuart Mill,
the last great classical economist, said, political economy is the science that teaches a nation
how to become rich. These thinkers emphasized the wealth of the nation, and the term "politics"
was as important as the term "economy". The term political economy is used in two contexts.
First, it is used to denote a multidisciplinary field of research in which political scientists,
economists, legal scholars, and other social scientists investigate the relationship between the
political sphere (especially the state) and the economic systems of different societies at different
points in time. Second, social scientists, journalists, and other observers sometimes use the
term political economy to refer to observable political and business interactions in society
Countries that wish to advance must trade with other countries. In mercantilism the
policy emphasized is that the result of the export surplus will be a source of power.57 In practice,
however, only merchants are involved in trade, thus harming the farmers.58 In another source,
mercantilism has created a monopoly of some merchants who are close to the ruler, so that they
are given the freedom to trade abroad. In return, merchants gave bribes, dividends, loans, or
taxes.59 This made the model or notion of mercantilism disliked by Quesnay, who later gave rise
to physiocraticism. The physiocrats who gave birth to physiocraticism (physic=nature, cratos =
power) consider that the source of wealth is natural resources. Nature was created by God full
of harmony and cosmopolitan harmony (anytime, anywhere, in any situation)
Must be mastered as the economy as the main source of power compared to political
power in the sense of the state or government. Thus, there is a fundamental difference in the
understanding of political economy in the period of mercantilism is more dominant in the role of
the state in development through trade between countries, while the period of physiogratism
understands that the flexibility of power can mean "market" or "state" in the control of natural
resources as the main source of the economy. In another source, it is explained that the term
political economy was first used in the 16th century by Antony Montchetien (1575-1621) in Trate
de, L economic Politique (Treatise on Political Economy). It was later developed by Sir James
Steuart (1712-1780)61 in his work In equiry into the Principles of Political Oeconomy, (in his
original book it was indeed written oeconomy). The book An Inquiry into the Principles of Political
Oeconomy published in MDCCLXVII (1767) and divided into 3 volumes can be said to be the first
systematic treatise on economics. In one of the volumes, namely the first volume, the book
material is divided into five chapters, Book One on Population and Agriculture, Book Two on Trade
and Industry, Book Three on Money and Coin, and Book Four on Credits and Debts, and Book Five
on Taxes, and of the Proper Application of their Amount.
In the historical context, it will be explained that the emergence of Islamic civilization in
the 7th century was the initial paradigm in the formation of Islamic-style political economy. The
development of Islamic political economy, which once influenced and formed a new civilization
after Rome and Persia, was consecrated by some orthodox Muslims who accepted absolutely
that the normative axiom of Islam was an autocratic and conservative political regime and that
this condition had become a "myth" as something that had created glory and peaceful politics.
92 Perhaps this idea is currently being used by some Muslims in the world in various movements
in the name of "Islam" as a political struggle in the national and international context
Keynesian is a term of thought or political economy directed at John Mayned Keynes.108
Keynes was a liberal economic thinker but his thinking criticized many Smithian economic
theories. Keynesian political economy is a criticism of Smithian political economy which places
self-regulation market regulation as an instrument that is considered to be able to guide the
creation of the welfare of every human being
Marxian's approach to political economy broadly refers to the teachings of Karl Marx
(1818-1883). Marx's approach in political economy emphasizes the holistic nature, namely a
thorough analysis, regarding the importance of macroeconomic aspects of the economic system
and the political system. In addition, this approach has a model that has a comparative aspect,
namely trying to compare explicitly. In Marxian theory, the concept of economics emphasizes
state power and rejects the state only as an economic implementer of capitalist interests and a
handful of individuals who have interests. The state is seen as having its own ideological
interests, and the interests that the state wants to achieve is to maintain a certain social order
Milward in his book Introduction. In: Marxian Political Economy (2000) provides an
interesting abstract about why Marxian's political economy thought is still relevant to study
today. Because there is a theoretical "error" that is considered revisionism, Marx's value as an
important theorist and philosopher gives way to the idea that capitalism is far from on the verge
of collapse. But in reality, capitalism is currently the "only" system that can provide efficient and
effective allocation of resources in the framework of increased prosperity and "democracy".
According to Wilward, there is no alternative system
Referring to Milward's opinion, it can be understood that Marxian political economy can
be studied today in the context of "any criticism that is initiated" against capitalism, which has
historically been inefficient and increasingly far from reality. Because the countries that have
been representing Marxism have actually experienced political destruction, and some who still
survive in the economic system have begun to evolve into free trade and open capitalism. It could
be that only "North Korea" still uses the "Marxian" political economy model and is closed in the
trading system.
The desired characteristics of the rules, procedures and institutions used to make
collective decisions. Thus, the theory of positive public choice seeks to design an explanation of
the existing rules and electoral processes and examine their consequences.127 Yustika
explained more briefly, in the theory of positive public choice, there is a draft explanation for the
existing rules or electoral processes and examines the consequences. Or positive public choices
operate in the real world (das sein)
The import duty rate is high so that the price of the goods is high. The purpose of the policy
is so that a certain domestic company can increase the price of goods and remain in demand by
the public. Non-tariff barrier is a government policy on certain imported goods with quotas or in
total. With this policy, the domestic business world benefits because the price of imported goods
is automatically high so that people will buy domestic products. Thus, the profits will be
multiplied by companies close to power.136 During the New Order period, rent-seeking can be
traced to large business alliances (which enjoy monopoly facilities and import licenses) with
government bureaucracy. These private companies are mostly controlled by those with special
connections
Political Coalition Theory and Economic Interest In several books on political economy,
such as Caporaso and Levine, Deliarnov, Ahmad Erani Yustika, and Hudiyanto, the Political
Coalition Theory and Economic Interest is not explained much, or even in an exponential manner
it is not written at all. According to the theory of political coalitions and economic interests, policy
change requires broad coalition support from various economic groups. Policy changes create
winners and losers. Therefore, change is only possible if the coalition of winning groups
(candidates) is strong enough to force policymakers to implement certain policies
The theory of integration of religion, economics and politics is a process of developing
political economy theories that are still being developed by the main author (Ahmad Dahlan) and
have been explored in English articles in the American International Journal of Social Science
(2018), and in sub-theories in the book Political Economy of Islamic Banking in Indonesia (Irvine,
Boston, USA: Universal Publisher, 2021). The Theory of Integration of Religion, Economy, and
Politics was developed from several theories and writings; First, Ayubi explained that in political
needs, it is necessary to move a reform towards the realization of the 3D (dîn, dunyâ, daulah).
143 Dîn ( ا (meaning religious, dunyâ ( م ا (meaning secular or economic, and daulah
(و ا (or a country connoting siyasah or politics. Second, Mallarangeng who explained the
Theory of Political Coalition and Economic Interest (as already explained). Third, Caporaso and
Levine explain that political economy is the interrelation of various aspects of the economy and
political institutions in an economic policy.144 Fourth, Yustika explains that the most important
difference between the approach of political economy and pure economics is in his view of the
power structure in society. Political economy believes that the power structure will affect
economic achievement, whereas the purely economic approach assumes that the power
structure in society is a give.
