or nearly two decades on what direction the nation's economy should take, Iran has been crippled by a debilitating eight year war with Iraq, coupled with severe western trade sanctions engineered by the United States.
This paper will examine the major tenants of both Liberal and Tawhid Islamic economics. It will analyze how these theories have been applied in Iran as well as examine the conflict between the two schools which has virtually stymied governmental efforts to increase productivity, increase foreign trade, increase employment, streamline banking, and reduce inflation. This paper will also trace the history of the Iranian economy over the last two decades and describe the overall effects of applied Islamic economic theories on its condition.
Overview of the Theoretical Characteristics of Islamic Economics
Many of the tenants of Islamic economics have been in use in the Muslim world for nearly 1,400 years and are based on the teachings of The Koran. Today, proponents of Islamic economics generally agree that the most important objective of these theories is the self sufficiency of the Islamic world; culturally, socially, academically, and economically:
They [Islamic economists] take every opportunity to promote stronger social and economic bonds among Muslim communities, hoping that these will pave the way for an Islamic common market and, ultimately, a pan Islamic state. A complimentary objective of Islamic fundamentalism has been to weaken the prevailing commercial and industrial ties between the Muslim world and the West, in order to protect Muslims from un Islamic cultural influences (Kuran, 1996, 3).
It should be noted that there is not one homogenous Islamic economic movement. Instead there are a variety of schools all vying for dominance in the Muslim world. The two most prominent schools have been called the "liberal" Islamic economists and the radical or "Tawhid" Islamic economists. The difference...