A sophisticated post-structuralism sociological approach is provided by the work of Pierre Bourdieu. Bourdieu provides a powerful account both of the features of legal reasoning (as discussed above regarding the tool ofijtihad) and of the requirements and processes of its production. This provides an explanation that avoids the dilemma between idealism and economism, in order to reconcile both of them (McCahery and Picciotto 1995: 180). The body of legal doctrine, as Bourdieu argues in his theory, is a symbolic order which at any moment could delimit what is possible. Nevertheless, legal doctrine appears, due to its autonomy, abstract and formal nature, to be a closed and coherent system, which generates outcomes from its own embedded internal logic; it does not process the principles of its own dynamics (McCahery and Picciotto 1995: 179).
Islam provides a full and comprehensive code of conduct covering all aspects of life including economics and finance (Naqvi 1981). Therefore, an analogy can be made between the Islamic approach and Bourdieu’s normativity theory as the basis for analysing a financial innovation theory from an Islamic perspective. Bourdieu’s normativity theory uses the normative practices that are embedded in a legal structure which is observed, enforced and supervised by a legal symbol. This theory could form the basis of an innovation theory from an Islamic perspective. This is
1The secondary sources of Shariah would includeMaslah(the consideration of public interest),
‘Aurf(custom) andIstihsan(approval of a good practice that does not contradict Shariah).
because of the similarity represented by the framework, which incorporates prin- ciples and requirements ordained by a divine authority, God, who sets those instructions.
This framework emerges from normative Islamic practices, to be embedded as part of the financial innovation cycle, rather than a man-made rules or laws for normative social practices in accordance with Bourdieu’s normativity theory. The theory framework for both has some congruencies however; the legal authority for each is different. Furthermore, the social practices and behaviour in one, the Islamic innovation theory, is derived from a firm religious belief in a divine authority while the other is derived from a legal authority, which is not necessary to be a form of firm belief in the law or conviction.
One may ask what the relation would be between Bourdieu’s theory and financial innovation. As mentioned above, the aim is to demarcate the financial innovation theory from an Islamic perspective. This is achieved by drawing on Bourdieu’s theory of generating normativity through social practices, which fits perfectly with financial innovation in the theory of Islamic economics.
This is largely, because the generation of innovation theory from an Islamic perspective must be based on the Islamic legal structure and law, which are derived from the main sources of legislation in Islam. These sources are the Qur’an and the Sunnah; the principles on which financial innovation theory can be outlined are derived from both of them, and then embedded in economic, social and cultural practices. Islam provides the legal framework for the conduct and practices that should be embraced by Muslims as part of their life, regarding economic activities and financial innovation. This approach, in relation to financial innovation theory, is considered to be inseparable part of any Muslim fulfilling the requirements and instructions ordained by the higher authority, God the creator. Islam has succeeded in establishing an inner consciousness, self-supervision and accountability in those individuals conducting economic and financial activities within society. For instance, there is not any legal body to enforce zakatand punish and imprison those who do not pay theirzakat, despitezakatbeing a compulsory obligation in Islam. Zakatshould be paid to the deserving poor and needy, as detailed in the Qur‘an and Sunnah, which set the criteria for those deserving the payment ofzakat, in an Islamic society. This is in contrast to the way civil law deals with those who do not pay taxes imposed by government. Muslims calculate their annual zakat payment due on their wealth, according to the applicable percentage (2.5%) and pay it as a religious duty without being supervised by a legal authority (Naqvi 1981).
Bourdieu (1987: 833) provides a very strong argument on how the legal sphere is constructed. However, he is less clear in his argument on why abstract formal rules play such an important part in the production of social relations. In his view, legal rationality provided by the system (in our case the system here is the divine injunctions as ordained by God) offers predictability and calculability. For Bourdieu, the power of law is derived from the effectiveness and authority of legal symbols in giving the‘seal of universality’to social practices (1987: 845).
Legitimacy is imposed in the social order through symbolic domination. Although 112 7 Financial Innovation Theory from an Islamic Perspective
Islamic jurists can provide competing interpretations, they must operate within the hierarchy of both institutions and norm-sources, which defines the authority of legal decisions (McCahery and Picciotto 1995: 179).
Bourdieu (1987: 818) stresses the notion of social practices of participants by introducing his key concept of his theory of the‘habitus’, which translates into durable differences in the outlook of differently situated groups. It provides an understanding of how humans internalise power structures and actively reproduce them. He explains this concept by stating that the juridical field tends to operate like an‘apparatus’to the extent that the cohesion of the freely orchestrated‘habitus’of legal interpreters is supported and strengthened by the discipline of a hierarchized body of participants (professionals), who utilise a set of an already established procedures.
In order to put this concepts into contexts and elaborate a little bit more, the habitus is defined as‘the system of dispositions to a particular practice, an objective basis for the regulation of behaviour, and hence for the regularity of modes of practice. Then, if practices can be predicated, this is because the effect of the habitus is that agents who are equipped with and will behave in a particular way in certain circumstances (Bourdieu 1990: 77, also in McCahery and Picciotto 1995).
Groups bring a different cultural understanding to existing power structures through an act of creative syncretism, through an institutional innovation. This symbolic action activates both of Laitin’s two faces of culture, as the change in symbolic works both signal different goals and to mobilise collective action to achieve them (Bourdieu 1989). This process of aligning ends and means through symbolic action is identified by Smith as strategic constructivism (2006: 26).
Bourdieu’s concept of habitus portrays actors as being quite conditioned structur- ally; for instance, he rejects exclusionary portrayals of cultural elites, arguing instead that they are simply expressing in cultural terms their true position in objective relations. Bourdieu’s formal name for his approach is structural construc- tivism (Bourdieu 1989).
Using symbolic power to align ends and means is clearly evidenced in the case of Islamic banking as an innovation of Islamic finance. Once the framework of Islamic finance is established, the mobilisation of capital within that framework is supportive of religious and cultural objectives (Smith 2006: 28).
Islamic finance deploys both of Bourdieu’s symbolic strategies; the subjective side represented in the application of Islamic law to finance that creates a distinction between it and the existing conventional finance. From an objective perspective, Islamic finance has become a powerful symbolic notion of identity that encouraged Muslims to re-evaluate their financial dealings. Also, Islamic financial institutions began to expand for a share in the market to meet the rising consumer demands (Bourdieu 1989).
Therefore, the repertoire of behaviour is structured and limited by the habitus, even though it permits a range of innovation, which follows a practical logic.
Bourdieu argues that, in order to avoid the twin charges of determinism and functionalism, the concepts of the field and of habitus must be understood as
interactive notions (Bourdieu 1992: 102–115). This raises a question of whether the Islamic theory of financial innovation would be compatible with the conventional counterpart.
As discussed in the previous chapter (Chap.6, Sect. 6.8) and is elaborated in Sect.7.7below, not all financial innovations have been beneficial to society not mentioning the negative effects on economy. Financial innovation from an Islamic perspective is limited and controlled by certain parameters and requirements that must be met and are by nature embedded as a habitus in the economic and social practices. This does not, in any way, suggest that it would be restrictive and limited because of these restrictions, as this view will be eliminated when we discuss these exclusions in innovation theory from an Islamic perspective, which would, poten- tially, be harmful to the society.