Central to Islamic teachings are justice, mercy, and compassion. An Islamic moral economy aims to establish social equality and preserve human well-being by safeguarding faith, life, intellect, family, and wealth. It prohibits interest and excessive uncertainty based on teachings from the Quran, Bible and hadith. Modes of finance should include profit/loss sharing and equity investment through mudarabah and musharakah to create real assets and shared risk/reward rather than debt-based financing. However, today's Islamic finance industry focuses on debt and imitates conventional banking rather than establishing an ethical system as originally intended.

1. Islamic Values

2. Justice

3. Central to the Qu’ranic teaching is the promotion
of justice, which leads to peace and harmony.

4. Kamali says that the purpose of the Prophet’s mission
was not only mercy to mankind, but to all of God’s
creatures.

5. He says that in order to attain these objectives,
which constitute the component parts of mercy,
we must educate the individual, establish
justice, and realize benefit (maslahah) for the
people.

6. Equity

7. Social Equality

8. Compassion

9. Human
Kindness

10. Are not Found in the Islamic Finance project today.
Today, Islamic Finance is primarily based on debt-
finance.

11. However, when the Islamic Finance Project was
launched, it had intended to create an Islamic moral
economy.

12. The reality of competing in a neo-classical framework
choked the ideals of Islam in Islamic finance. We must
be self-serving, selfish, wealth-maximizing individuals
to survive in the capitalist jungle that we were born
into.

13. The Dunya

14. What is an
Islamic Moral
Economy?

15. Preserve the well-being
of Humanity and Prevent
Harm

16. Based on the Shari’ah and Maqasid (Objectives) of the
Shari’ah: SAFEGUARD
• Faith (din)
• Lives (nafs)
• Intellect (aql)
• Posterity (nasl)
• Wealth (mal)

17. Prohibition-Based
Some socially agreed restrictions are necessary on
individuals to ensure that they do not trespass the
rights of others and jeopardize their well-being.

18. Islamic Finance Project based in the Tawhid (One-God)
Framework (Which recognizes the teachings of Moses
(p.b.u.h.), Jesus (p.b.u.h.), and Muhammad s.a.w.), the
Torah, Bible, and Qu’ran and Sunnah.

19. Risalah: (God’s prophets as the source of Divine
Guidance) (Moses p.b.u.h, Jesus p.b.u.h., Muhammad
(p.b.u.h.).

20. The mission of all of the Prophets including Moses
(p.b.u.h.), Jesus (p.b.u.h), and Muhammad (s.a.w.) was
to perform tazkiyah (purification plus growth) of an
individual in her relationship with God, with other
people, and with the environment, society, and the
state. This purification process would lead to the
purification of the capitalist system into a moral
economy.

21. Purification of Capitalist System into a Clean Economy,
which serves the will of God rather than the will of
Man.

22. Divine resource allocation rather than serving markets.

23. Accountability to Allah (Through remaining accountable
to Allah, we act through a moral filter cleansing our
psyche of the desire to do inflict harm).

24. Preparation for the Hereafter (Doing Good Deeds).

25. Vice-regency on earth to carry out the will of Allah
(Fulfill your assigned task).

26. Social
Equilibrium

27. Amanah (Trusteeship) (You are only a guest on earth).

28. Peace on Earth

29. Spread of Wealth Across Society including the Orphan,
the Wayfarer, and the Needy.

30. Serve Allah and join not any partners with Him: and do
good – to parents, kinsfolk, orphans, those in need,
neighbors who are near neighbors who are strangers,
the Companion by your side, the wayfarer (ye meet),
and what your right hand possess. (4:36)

31. Following the Rules on Counter-Values.
Both counter-values must be certain and may either
occur both at the time of transaction or one now and
one later, however, not both in the future.

32. Waqf
(Charitable
Trust)

33. Zakat (Charity)

34. Gold Dinar and Silver Dirham (Money as Medium of
Exchange and Measure of Value)
In Islam, it is permissible to trade money for
commodity, commodity for commodity, however, not
money for money as this produces interest (riba). In
order to purify the economic system of this Money to
Money occurrence (interest), the basis of transaction
should be commodity such as gold.

35. No Riba (Interest)
In the case of riba, the variance in certitude between the two
counter-values, the interest on the one hand and the
opportunity cost on the other hand, constitutes the essence of
the injustice of imposing interest on loans.
The increase over the principal, the common form of which is
bank interest, is certain and its amount is known whereas the
yield resulting from investing the loan by the creditor is not sure
to materialize and if it does, its amount is not ascertainable in
advance.

36. Limited Gharar (Uncertainty)
In a contract, which contains gharar, such as a contract
based on speculative activities, the contract may
include a counter-value, which is not only of uncertain
value, but may not be realized at all.

37. Asset-Backed Finance:
Transactions are asset-backed creating a real economy
rather than one based on false money or credit.
Financing in Islam is based on illiquid assets, which
creates real assets and inventories.

38. Interest-based financing does not necessarily create real assets,
therefore, the supply of money through the loans advanced by
the financial institutions does not normally match with the real
goods and services produced in the society, because the supply
is increased, and sometimes multiplied without creating real
assets in the same quantity. This gap between the supply of
money and production of real assets creates or fuels inflation.
Since financing in an Islamic system is backed by assets, it is
always matched with corresponding goods and services.

39. Equity rather
than Debt
Finance

40. Asyraf Wajdi Dusuki states that (2010): ‘In contrast to debt-
financing, equity-financing utilizes a profit-loss sharing
mechanism based on the contribution of capital in the project or
investment.’ Dusuki says that (2010): In equity- based financing,
both the borrower and lender share profits and losses as
compared to the case of debt- financing, where one party is
made to take all the risk.’ Dusuki explains that (2010): It also
promotes expansion of the economy including the development
of small- to -medium sized businesses in addition to large
enterprises and promotes stability in the economy and society at
large.’

41. Equity- financing fulfills the essence of Shari’ah
requirements in Islamic banking and finance as it
fulfills the counter- value (iwadh). For a contract to
be valid, there should be Iwadh or counter-value
present. Three elements of iwadh that should exist
are risk (ghorm), work and effort (ikhtiar) and
liability (daman). In the majority of debt- financing
contracts, one or more of these elements of Iwadh
are missing. If there is no risk, effort and liability,
then such a contract cannot be considered to
contain any element of justice.'

42. Musharakah (Bank acts as participatory co- Investor in
Joint-Venture) Musharakah is a word of Arabic origin,
which literally means sharing. In the context of business
and trade it means a joint- enterprise in which all the
partners share the profit or loss of the joint-venture.

43. Mudharabah (Rabb ul Mall invests, Mudarib Manages)
(restricted, unrestricted forms).

44. Profit-and-Loss
Sharing

45. Share Equally in
the Risk and
Reward

46. Bank as Finance
House rather than
Loan House

47. Centralized
Shari’ah Board

48. Regulation

49. Dispute
Resolution

50. The Islamic Banking and Finance Industry, which exists today is a sham.
There is nothing moral about it. It does not encompass any of the ideals of
the Islamic moral economy and has become just another branch of the
conventional banking system, imitating its products and services and dishing
out interest in disguised forms. It is debt-based and produces similar
outcomes as interest-based financing. Shari’ah is not the base and the
Tawhid (One-God) Framework is not being utilized. The modes of finance are
not musharakah and mudharabah and thus a participatory superstructure in
society does not result. The debt finance base of Islamic finance and banking
creates the same debt-trap superstructure encapsulating the neo-classical
individual in his own misery, which exists in the conventional economy. The
bank remains a loan house rather than finance house to the detriment of the
well-being of humanity.