ABSTRACT
Tawhid, meaning oneness of God and of the divine law (monotheism), is the worldview of ‘everything’ in Islam. This epistemic precept is extended by the meaning and application of the epistemology of unity of knowledge. The episteme forms the true foundational praxis of Islamic thought and world-system.
The episteme of divine oneness as law and its application is introduced in the contrasting development of the participatory nature of development-financing portfolio against the prevailing idea of shari’ah- compliance in so-called financial product choice. The prevailing Islamic development financing instruments have no organic meaning of interrelationship between them. They individually form distinct legal contractual instruments. On the contrary, the generalized development-financing instrument is grounded in the participatory portfolio theory. It ties up development-financing in accordance with the precept of unity of knowledge conceptualized and applied across interacting and integrating systems. This is done first, by integrating the various financing instruments into a diversified wholeness. This allows financial resources to flow freely between the diversified instruments without legal restrictions. Second, the generalized diversified development-financial portfolio also overarches across economic, social, and ethical values as derived from the law of Tawhid in the epistemological sense of systemic unity of knowledge. The wellbeing criterion, as opposed to the maximizing objective, becomes the governing focus of the ethico-economic type portfolio.
As an important application in the field of Islamic economics and finance, the episteme of oneness and rationalist methodology are used to understand two distinct development-financing sets of instruments. The Islamic development-financing instrument derived here is unique; it has not been perceived either in Islamic scholarship or by Islamic financial institutions. The proposed instrument is different from the usual profit-sharing (mudarabah), equity-participation (musharakah) and cost-plus pricing (murabaha) and mudarabah bonds, and the so-called Islamic bonds (sukuk) as financing instruments now being theorized and practised in Islamic economics, finance, and banking within the rationalist lens. The contrast is due to the gap in knowledge of the monotheistic law in action within the general-system approach. This chapter fills this gap.
