<Special Feature: Accountability in Islamic Economy: Transforming Religiosity and Religious Experience in Muslim Societies> Islamic Finance Confronting Capitalism and Encountering Post-Capitalism

Abstract

Islamic finance has evolved to address various adverse effects associated with capitalism and to establish a distinctive economic framework. However, a review of its nearly 50-year history reveals that Islamic finance was not developed solely from Islamic doctrine. Instead, it has often engaged with capitalism by selectively adopting capitalist institutions, functions, and products to facilitate its growth. This study examines the evolution of Islamic finance within the context of its interaction with capitalism, particularly through the development of Islamic financial products. Although Islamic finance has experienced significant growth in the 21st century, its pursuit of expansion has occasionally resulted in a loss of originality, leading to criticism for its assimilation into capitalist structures. In response to the criticism, Islamic finance is redefining its identity by adopting new practices, especially considering the emerging post-capitalist trends and the evolving dynamics of global capitalism in the early 21st century. One of the pioneering practices is to collaborate with emerging global financial practices driven by FinTech. The collaboration of Islamic finance with FinTech can be seen as a return to its foundational ideals of decentralization and traceability. However, it goes beyond mere reclamation. By collaborating with FinTech to develop an alternative financial system, Islamic finance has transformed from a mechanism for socioeconomic development based on Islamic principles into a global force seeking a better future for all. The knowledge produced by Islamic finance has thus become a universal intellectual asset, no longer confined to the Muslim community. This flexibility and universality of Islamic finance are its defining characteristics. As the global future remains uncertain, Islamic finance will likely endure by leveraging its flexibility and universality. In this context, Islamic finance may take an essential first step towards realizing a post-capitalist society.