The history of the disciplinary development of economics is characterized by debates about the scientific or social science nature of economics. The pursuit of the classical economic school of thought advocates for the development of economics along the lines of physics as an exact science. This approach has led to countless crises and repercussions in society and even led to wars. The rise of Keynesian economics in the 1930s' Great Depression lent a final blow to classical economics by emphasizing its social science nature. While the classical economists appraised the idea of no government role in the economy, the Keynesians perceived government intervention as central for general socioeconomic stability.

Economic development also involved a more general discourse between the capitalist and socialist systems. Those disappointed with the capitalist decentralized instabilities saw socialist-centralist planning as the means toward greater socioeconomic welfare. While the capitalist system prevailed on the global stage, neither of the two systems proved self-sufficient or without major flaws. The socialist system is characterized as communist and fascist or right-wing party rule, but the capitalist system is just increasingly serving the enrichment of the dominant minority classes. Although the capitalist neoclassical economic paradigm set the standard in practice and theory, many of its proponents criticized it for its extreme failure to ensure economic and financial market stability, minimum unemployment and the general socioeconomic welfare of the majority. The socioeconomic aspects of the capitalist system proved ineffective. Some of the European welfare states, i.e. the Scandinavian or German social market economies, represent great models for replication, but they also suffered from the same issues as the leading capitalist United States and others. Thus, alternatives to such a system have long been the focus of intellectuals within the movements of post-modernism or post-structuralism. A more distinct opposition to conventional or orthodox economic thought is heterodox economists. While heterodoxies severely opposed the models and general philosophy of the orthodox economic system, none appraised alternative sound philosophical foundations. One of the heterodoxies that use an alternative economic approach rooted in sound philosophical foundations is Islamic economics.

Reform and renewal

Within the general movements of iṣlaḥ (reform) and tajdid (renewal) over the centuries, Muslims of the 20th century awakened from the colonialist shadows to systematize an interest-free economic system with unique socioeconomic characteristics. Literature surveys by traditional Muslim religious and economic thinkers and reputable scholars since the early decades of the 20th century supported deliberations over the Islamic challenges of modernity and the inevitability of socioeconomic collapse if Islamic civilizational socioeconomic practices are ignored or abandoned. The intellectual discourse on the welfare and socioeconomic objectives of an Islamic economy was driven by the rich waqf legacy, zakat (alms giving) and sadaqat (charities). Although these institutions and acts of giving for public welfare were targets of colonialist powers, whole cities built via waqfs maintained the impact of such socioeconomic institutions and practices in the psyche of Muslims and non-Muslims. No country in the 21st century can claim as much pride in waqf institutionalization, besides that of zakat and sadaqat, as Turkey. It is a fact that about two-thirds of the whole Ottoman Empire was financed via socioeconomic institutions like waqfs, zakat, sadaqat and even other taxes. Hence, the potential of Islamic socioeconomics and finance in contemporary times necessitates reminders about the uncounted benefits the applications such reasoning could provide.

From generation to generation

Muslims even today narrate stories of generations who were born, raised, sustained, educated, worked, retired and died in waqfs. The apparent reflection of a social mindset through the institution of waqfs instills faith, security and autonomy in an economy. Moreover, waqfs catered to the educational needs of the whole caliphate, represented transitional homes for travelers and offered healing for the sick, homes for the homeless, as well as kitchens for the needy, hungry and guests. The public wealth that such an Islamic socioeconomic and financial institution represents long concealed the potential to address some of the most pressing humanitarian catastrophes of our times. The coronavirus pandemic emphasized the incumbency of greater social autonomy. Thus, the shareholders and stakeholders saw that their separate competition for interests before the pandemic greatly impacted profitability and redefined the mutual dependency upon each other's welfare. Contingent steps taken to rescue the public amid the pandemic were perceived as future common welfare business plans.

The pursuit to strengthen and develop Islamic socioeconomic institutions in contemporary times has gradually revealed the solution for future generations’ welfare and raised the sense of mutual responsibility. The role of fintech via blockchain technology, artificial intelligence (AI) and other platforms exponentially elevates the impact and eases the scaling of such Islamic socioeconomic and financial institutional development. The increasing role of technology in our lives and greater social responsibility complement the undertaken global agenda of sustainable development goals or more specifically, environmental, social and corporate governance goals and the global push for greater Shariah (Islamic law) compliant economic and financial products and services.

It must be noted that Islamic socioeconomic and financial institutions, or the so-called Islamic third-sector economy, are deeply entrenched in religious teachings and Islamic philosophical foundations. For instance, waqfs are not public properties but endowed properties owned by God. Once a property is endowed as a waqf, its ownership rests permanently with God. This is clearly defined by the example of the Prophet Muhammad and inculcates within individuals the Islamic worldview. The philosophy of the Islamic third sector is an inalienable factor that constantly maintains the beneficiaries' consciousness and links it with notions of tawhid (belief in one God). Thus, the beneficiaries strive to maintain, protect and develop the third sector institutional infrastructure within a purposive framework of attaining religious objectives of Islamic law, i.e. falah (grace in the hereafter), better education, quality lifestyle, infrastructure, health care, halal food and everything else required or invented within a comprehensive eco-system. Fostering the development of Islamic socioeconomic and finance infrastructure contributes to a much more resilient and sustainable Islamic economic system and as such is the rationale to name it the alternative economic system for the contemporary neoclassical era.