Islamization of Economy in Pakistan (1977-88): An Essay on theRelationship between Religion and Economics

The Martial Law regime which came into power in Pakistan onJuly 5, 1977 after a political crisis undertook a comprehensive schemeof Islamizing the political, legal, economic and educational areas ofthe Pakistani society. Ordinances and Laws on Zakat (poor-due), ‘Ushr(tithe), elimination of riba (interest/ usury), profit and loss scheme,mudaraba (profit-sharing), and twelve modes of Islamic finance, werepromulgated with the avowed aim of transforming the Pakistani economyinto an Islamic economic system. In this article we shall confineourselves to an examination of the Islamization of the economy only;that is, the article shall focus on the relationship between religionand economics in general, and Islam and economics in particular. Sincethe times of Adam Smith (1720-1790), and especially after the works ofLionel Robbins (1898-1984) the modern economy is generally taken by theeconomists as an autonomous economic system and modern economics, animportant branch of the social sciences, has gradually becomeindependent from religion. In both capitalist and socialist versions,economics is generally defined as the “study of the social lawsgoverning production and distribution of the material means ofsatisfying human needs” [Lange (1963)].