Islamic Economics and Economic Policy Formation in Post-Revolutionary Iran: A Critique

Abstract

The nature and character of Islamic law and the divine ordinances of the Shari'a furnish additional proof of the necessity for establishing government, for they indicate that the laws were laid down for the purpose of creating a state and administering the political, economic, and cultural affairs of society. -Ayatollah Ruhollah Khomeini After the advent of the Iranian revolution in February 1979, the theocratic Islamic state launched a comprehensive program known as Islamization. In its economic dimension, the objective of the program was to lay the foundation of an Islamic economic system in Iran. More than 10 years later, the practical obstacles of establishing an Islamic economic order are now more discernible. It is the purpose of this study to analyze the process of economic policy formation under the Islamic Republic of Iran during the early stages of the revolution. It is hoped that it will reveal some of the difficulties associated with the idea of establishing an Islamic economic order in other areas of the world, such as Algeria, Sudan, Egypt, and the emerging Muslim republics of the former Soviet Union, where Islamic revivalism is presenting itself as an alternative socioeconomic order to those of the West. The author is the Executive Director of the Bennington Corporation. This article is based on his 1991 doctoral dissertation titled Islamization of the Economy: The Iranian Experience at The American University in Washington, D.C.