Constituting Islamic Corporate Governance Theory through Islamic Moral Economy

religious doctrine or metaphysical concept as it enumerates a comprehensive ideology and philosophy of life (Khan, 2012:9). Khan (2012:9) looks at Tawhid from three different levels: individual, socio-cultural, and politico-economic. According to him, the individual level Abdullah, Hanimon & Asutay, Mehmet (2021). “Constituting Islamic Corporate Governance Theory through Islamic Moral Economy”, in T. Azid, M. Mukhlisin, N. Akbar and M. Tahir (eds.), Monetary Policy, Islamic Finance, and Islamic Corporate Governance. London: Emerald. 9 is a revolutionary concept requiring the liberation of man from all desires and temptations, thus fully submitting oneself to God. On the socio-cultural level, he sees Tawhid as freeing man from the superimpositions of other men (Khan, 2012:9). Similarly, on the politico-economic level, Khan (2012:9) views Tawhid as seeking to liberate man from the political oppression and economic injustice of other men. Choudhury (1993:6) views the Quranic concept of Tawhid from three perspectives: psychological, moral, and social phenomena, which assume the principle of integration. Meanwhile, Asutay (2007) regards Tawhid as a vertical horizon to equality, in which everyone is equally close to God and where everyone is part of the whole system that allows economic activities to take place. The second axiom, ad’l, ensures that everyone receives what they deserve. It refers specifically to equilibrium. Mawdudi (2011), however, does not see it as referring to equality. Different from Tawhid, he says that everyone is only equal with regard to their claim to resources. However, for this to work, al ad’l (justice) must be supported by al-ihsan (Naqvi, 1981). This, together with Tawhid, helps create balance in the system by fulfilling the needs of people and society. This translates to a quality of life via the equitable distribution of wealth used for growth through the making of suitable policies. The third axiom, fard (mandatory action) means that everyone has obligations they must fulfill. This means that performing social good is meant to be a compulsory part of the religion rather than a voluntary action (Asutay, 2007). Thus, Islam fixes western concepts of individualism and capitalism by establishing concepts of fard ‘ala al-ain (individual responsibility) and fard ‘ala al-kifayah (collective responsibility) (Naqvi, 1981). Ikhtiyar, another foundational axiom, is about the free-will of humans. This freedom is entirely unrestricted and up to the human’s discretion (Naqvi, 1994). It constitutes functional norms of economic activity in Islamic economic systems by actualising justice through its given individual freedoms (Asutay, 2007:7). Rububiyyah, another axiom of Islamic micro-foundations, refers to the development path of all things in either a personal, social, or natural context (Ariff, 1985), thus implying the integration of economic and social components. As an axiom, it suggests a divine arrangement for nourishment, sustenance, and directions to perfection (Ahmad, 1979:12), implying that everything has a ‘development’ path through which to grow. Thus, human beings, the Abdullah, Hanimon & Asutay, Mehmet (2021). “Constituting Islamic Corporate Governance Theory through Islamic Moral Economy”, in T. Azid, M. Mukhlisin, N. Akbar and M. Tahir (eds.), Monetary Policy, Islamic Finance, and Islamic Corporate Governance. London: Emerald. 10 biological environment, and the social environment all have to develop through identified paths for sustenance and perfection (Asutay, 2007:8). Tazkiyah, an important moral axiom, is implicative of purified growth in trying to attain falah (a fortune in the world and the hereafter). It deals with growing towards perfection through the purification of attitudes and relationships (Ahmad, 1994). Tazkiyah operationalises the fundamental axioms and principles of the Islamic economic system. It is a result of the integration of Tawhid, ad’l, fard, and rububiyyah in order to make humans move towards selfdevelopment and hence social and economic development (Asutay, 2007). Khilafah refers to how humans are accountable before God as human freedom and accountability are parts of khilafah (Naqvi, 1981). The role of humans as vicegerents on earth is considered the only reason for their worldly existence. Ahmad (1979) asserts that this axiom leads to such unique concepts as individual trusteeship alongside various rules of social organisation. This implies that the khilafah axiom includes notions of universal solidarity, sustainable consumption in pursuing a humble lifestyle, and freedom to lead a life (Asutay, 2007:8). Asutay (2007) further explains that khilafah also relates to social accountability in terms of being aware of the consequences of the hereafter in all human actions. As a methodological paradigm, maqasid-al-shari’ah, a process-oriented concept meaning ‘the objective of Shari’ah’ with ‘the objective’ defined as human welfare, is achieved when institutions aim to maximise human welfare. It operationalises institutions in which there are Islamic economic systems by providing them with the working mechanism’s nature. In other words, maqasid-al-shari’ah is associated with shari’ah objectives, in the sense that it provides the structure for conducting economic activity. Furthermore, it is also a form of instruction and helps to draw the line between licit and illicit sources of income as defined by the Shari’ah. As mentioned by Asutay (2010), IME determines the economic value system’s structure, its foundational and operational dimensions, and how individual Muslims are to behave normally. Asutay (2010) regards IE as a discipline to interpret and solve economic problems using Islamic sources of knowledge. As mainstream economics was deemed inadequate in dealing with issues of uncertainty, the Islamic economic paradigm was created as a response to that