A Review of the Transformative School in Islamic Economics

This paper analyzes some critical issues in the methodologies of Islamic and mainstream economics.
It also presents an analytical account of different methodological approaches suggested in Islamic economics literature for use in building the theoretical foundations of Islamic economics.
In particular, this paper reviews the transformative school as a distinctive methodological approach.
It analyzes the different propositions put forward in the transformative school.
It calls for a problem-solving approach and methodological pluralism by separating economic choices made with economic resources and non-economic choices also made with economic resources.
The former can be analyzed in an integrative framework after certain required modifications.
The latter shall not be studied under the mainstream tools since the mainstream analytical tools are not suitable and capable of analyzing such choices.
Inductive and empirical studies can be carried out with statistical and econometric tools where they are appropriate without having ideological constraints.
It is argued that homo-Islamicus is not required to adopt monasticism.
Homo-Islamicus is a human being who desires to live within the norms and rules of his faith.
.However, he has economic as well as spiritual needs
KEYWORDS: Islamic economics, Neoclassical economics, Behavioral economics,
.Methodology of economics, Utility maximization, Profit maximization