Justification and the four-step vicious circle of "Islamic finance"

I payed attention to "Islamic banking" when it first appeared in Egypt during my college years (1979-82), then again starting in the mid 1990s, and much more vigorously starting in 1998 when I took the "Chair in Islamic Economics, Finance and Management" at Rice University. In all those years, I have observed participants in this industry go (in circular fashion) through four main steps:

1. Utopianism: Driven by ideological, religious, and social concerns, they seek economic and social answer in the vague financial commands of the Qur'an and Sunnah (the Qur'an does not explicitly say what the forbidden riba is, and doesn't mention gharar, the Sunnah gives some examples of forbidden riba and gharar, but not sufficiently to give unequivocal definitions thereof). We trust the "Scholars" (back in the late 70s and early 80s Egypt, that included household-name scholars such as Al-Sha`rawi, Al-Qaradawi, and most accomplished Azhari scholars).
2. Engagement: As consumers, practitioners, or consultants, the Utopians start to engage the industry, either directly or through closer observation.
3. Disenchantment: The engaged Utopians discover that the practice of Islamic banking and finance does not go beyond replicating what was already there, at ridiculously higher interest rates (for example, here in the U.S., "Islamic" auto-loan structures in the 1980s were offered at 22 to 25%, when the going market rates were below 10%.) They become disenchanted. Some disengage, but others remain engaged for one of two reasons: (i) residual Utopianism and dreams of eventually changing the industry through continued engagement (the "young industry" fallacy), or (ii) their livelihood as bankers, lawyers, consultants, etc., has become entangled with the industry, the have become used to higher incomes and living standards and recognize that they have been shut out of the conventional sector because of their "Islamic" identity.
4. Justification: Those still engaged in the industry pick up the hobby of themselves criticizing the industry that they have participated in creating (it started with some bankers and lawyers, but now even "Shari`a scholars" who are the second-largest financial beneficiaries after lawyers, and who legitimized the industry by leveraging religious-legal authority, including Taqi Usmani and others, have joined the fray). A new narrative emerges, about the need for a different benchmark to replace LIBOR, new structures that are closer to the "Islamic ideal," etc. Those assertions help to shape a new Utopian vision of "true Islamic finance," which revives Utopianism (if cynical) within the engaged community (serving thus as justification for their continued engagement) and attracts a new wave of Utopians, leading back to step 1.

Those, like myself, who have decided to disengage and say that the entire enterprise is incoherent, are deemed "controversial." Recently, a very smart young man was seeking my advice on getting an advanced degree in Islamic finance and joining the industry. I told him that as it stands, all justifications in step 4. notwithstanding, engagement with the industry can only lead to one of two outcomes: (i) co-option and corruption if one remains engaged and perpetually engaged through incoherent justifications, or (ii) frustration, demoralization, and eventual disengagement.

Neither is a good outcome. So, for all fresh-minted Utopians out there: Keep your distance, and keep Utopian dreams where they belong.