REGULATION AND DEREGULATION IN THE ISLAMIC POLITICAL ECONOMY: COMPARATIVE PERSPECTIVES

The much debated topic of economic regulation and deregulation in the perspectives of market transformation that is now gripping the global politico‐economic climate, is studied with the Islamic focus in it. In the attempt, comparative ideas in this area are taken up, particularly those propounded by Baumol with regards to regulation of firms to generate a semblance of competitive pricing. The Islamic firm is studied in reference to a knowledge‐based model of unification as complementarity among possibilities. Such a model is shown to be the crux of Shari'ah in the Islamic political economy as in the broadest sense of the socio‐scientific order, where process‐oriented as opposed to optimal models of equilibrium, apply. In reference to such a knowledge‐centered epistemological model of Divine Unity (Tawhid), it is argued that all kinds of regulation become redundant in the case of the Islamic firm. Such is a firm that complies with Shari'ah rules in the Islamic political economy. Here the socio‐economic transformation is guided towards realizing ethicized markets. The short‐run and long‐run cases are studied with regards to the problem of regulation. What is the nature of regulation for a modern Islamic firm in the face of a global market transformation process that is on? The answer to this question is to be sought first from the viewpoint of Islamic Law (Shari'ah) concerning economic regulation and the nature of goods, transactions, instruments and exchange in the market process. Secondly, the question of validity of some of the present days regulatory practices must be investigated. In this paper the above two points will be the focus of study.