The Concept of Money in Islamic Economics: A Synthesis of Classical Muslim Scholars' Thought and Its Contemporary Relevance

Abstract

Money serves as a fundamental instrument in economic activity, functioning as a medium of exchange, a unit of account, and a store of value. However, the evolution of conventional economic thought has transformed money into a tradable commodity, enabling interest-based transactions that contradict Islamic economic principles. This conceptual article synthesizes the perspectives of classical Muslim scholars—Abu Ubaid, al-Ghazali, Ibn Taimiyah, Ibn Khaldun, and al-Maqrizi—on the nature and function of money within an Islamic framework. Through a comprehensive literature review and qualitative analysis of primary and secondary sources, the study identifies three core characteristics of money in Islamic economics: money as a flow concept (rather than a stock), money as a public good, and money's primary function as a medium of exchange and unit of account. The findings reveal that Islamic economics fundamentally rejects money as a commodity due to its lack of intrinsic utility, its independence from quality differentiation, and its non-specificity in transactions. The study contributes to the literature by providing a systematic framework for understanding monetary policy from an Islamic perspective, distinguishing between Islamic and conventional approaches to money, and offering policy implications for contemporary Islamic financial institutions. The findings have significant implications for monetary policy formulation, the regulation of Islamic financial institutions, and the development of ethical financial systems that prioritize real economic activity over financial speculation.