Few different aspects of Islamic history, but it's people usually hide it. (Homosexuality) ISLAMIC ECONOMIC??

Few different aspects of Islamic history, but it's people usually hide it. (Homosexuality) 

ISLAMIC ECONOMIC??

PARADIGM, DISCIPLINE AND INDEPENDENCE:

Is Islamic economics independent from economics? Does it make a paradigm of its own? Does it depend of a set of assumptions and analytical tools that is different from economics? Does it make a discipline of its own?

Many Islamic economists have an undoubted affirmative answer. They argue that it is independent and they take upon themselves the task of attempting to invent an “appropriate set” of tools to understand the behavior of Muslim consumer, firm, macro numbers. The fervor of this attitude was very apparent when the world of economics had two-part Apartheid: communism and capitalism. In fact, communist writers also attempted to identify theirs as an independent paradigm while the capitalist have hidden their agenda under the plain name of “economics” for a long time.

To the Islamic religion and ideology, capitalist and communist thinking stem from a common utilitarian ideology that looks only at the human as a “homo-economicus.” It is therefore natural that many Muslim economists would view a multi-dimensional motive in the behavior of women and men and would rise against the purely utility motivated man as a basic assumption of economics. This would certainly call for a paradigm that is completely different from the paradigm of economics! But although the majority of capitalistic economists hide their real assumptions behind a thin layer of “a purely rationalist science of economics,” economics itself grew out of their shell to develop studies on altruism, philanthropy and other non-utilitarian motives.

Ibn Khaldun, the real founder of Economics as a branch of social studies, established his newly invented science on an absolute human basis and aimed to understand the individual and collective behavior of human beings “as they are” without imposing on them any pre-structured ideological, religious or societal assumptions. He did not have a “stigma” of distinctiveness that would have required him to “alienate himself from the rest of the human race, infidels or fidels alike. He even did not need to add a prefix “Islamic” in every sentence and before every variable and tool of analysis, although he recognizes the Divine Revelation as the Major source of knowledge. He also did not have an urge to “Islamize” the heritage of knowledge as it is handed over from one nation to another throughout history.

If we were to extend Ibn Khaldun to the subject of our debate today, we would find him discussing “economics” without being afraid to loose his identity; he would accept or reject theories and assumptions on their own merits and according to their reflection of the behavior of women and men, in their individual endeavors (micro) as well as in their association together (macro) on the basis of the “totality” of human beings without departmentalization or segmentation; he would also be able to criticize the established or accumulated ‘economics’ on the basis of its deficiency of its basic utilitarian assumption that ignores other intrinsic human motives.

From the point of view of the Khaldunian social science, Economics is itself Islamic Economics without having to use the “prefix” and without shying from criticizing the established capitalist wisdom (and/or the communist quasi-wisdom) as being partial and inadequate.

THE DISCIPLINE:

On the other hand, the looseness of our economic jargon gives room for terms like ‘capitalist economics,’ ‘socialist economics,’ ‘communist,’ ‘welfare’ and what-not economics. These are in fact studies of branches of economics that make a subset of the whole but they have their own assumptions and peculiarities. They include the study of an economic system within certain ideological and legal framework and the study of the individual and collective behavior of the units within the system.

Islamic economics is also looked at as the study of the individual behavior of units and of the macro variables within the legal and ideological framework created/envisioned by Islam.

Some people may like to question whether Islam has a legal and ideological framework of a society. I take this issue as outside the scope of this meeting and put it in the following form: Islamic economists, along with a great number of Muslims believe that Islam set forth a socio-political-cum-legal framework of a society in addition to is ideological foundation based on the belief in the Oneness of God and the imperative nature of His Revelation.

Accordingly, Islamic economics is a branch of economics that studies the units and variables within the Islamic legal and ideological framework, actual or assumed.

Over Statements

It is natural in any new endeavor to see some professionals carried out to different kinds/levels of exaggeration. In Islamic economics, we have our full share of overstatements. You find such things in writings that deal with the factors of production where terms such as ‘Islamic capital’ ‘Islamic labor’ Islamic land and ‘Islamic production function’ are used. You also find writings that deny renting of land and physical capital because as an extension of the prohibition of interest, being pre-determined fixed return on capital. You will also find overstatement of the uniqueness of the Islamic market on the ground that it is a market that is pure of cheating, fraud and monopoly, not realizing that any reasonably competitive market is also void of such practices. These kinds of exaggeration are usually short-lived as they cannot stand critical evaluation.

ISLAMIC ECONOMIC SYSTEM:

In the short history of contemporary Islamic economics, we also encounter two other interesting phenomena: an overstatement of the uniqueness of the objectives of the Islamic Economic system, and a mix up or confusion of principles and tools of analysis.

Driven by a sense of idealism, some of us attribute a special status to the general objectives of the Islamic economic system: Full employment, satisfaction of basic human needs, economic-cum distributive justice, development or improvement in the quality of economic life, economic power, etc. But a closer examination of these objectives indicates us that they are the same for each and all economic systems as usually expressed in their econo-political rhetoric throughout the human history. More specifically, these objectives are also the core objectives of socialism, communism and capitalism even anarchism and all or “isms.” The same also arises with regard to the institutions of market, factors of production and the principle of government intervention whereby some Islamic economists try to draw a so called “Islamic” picture that is very different from the conventional wisdom that is common to other economic systems.

This is not to deny a certain uniqueness of the Islamic economic system. This uniqueness is founded on the principles of Islam as a revealed religion as they strike a balance way of life that is not tilted in either direction. A uniqueness that lies essentially in two things

The explicit acceptance of the Divine Revelation as a source of knowledge and certain detailed pivotal institutions such as the prohibition of Riba (interest), the private-public mix of property/ownership, the spiritual-material mix of success, Zakah, Awqaf, etc. in other words, while the general objectives and the tools of analysis of Islamic economics are the same in economics itself, the some aspects of the institutional setting of the Islamic economic system are different, or the means this system uses to reach the common goals are not exactly the same as in other system the utilitarian capitalist which is generally given the name economics and the utilitarian communist which is dictatorial by definition.

Another important area of uniqueness of the Islamic economic system must be brought out explicitly. It is the moral characteristic of its articulation, on both the principles’ level and the level of the practical rules and regulations. This moral characteristic makes a boundary of the accessible set of actions/decisions/ behaviors of the economic unit. The economic unit in the Islamic system is equipped with the ability to judge possible courses of action on moral grounds, the same way one finds in all societies and systems but to this the Islamic system adds an external screen apparatus that is manifested in the set of morally-based rules of do and dot to do that takes the form of the Shari’ah or the Islamic law. Some of Islamic economists call this characteristic “the moral internal and external screening.” We must realize, however, that the Shari’ah based morality includes items that are not conventionally taken as moral matters such as ‘pork production’ but we must also realize that the contemporary moral standards of the capitalist utilitarian societies is subject to an accelerating dynamism that associate relativity to all conventional morals.

Moreover, the Islamic economists also argue that because of it is sourced out in the Divine Revelation, the Islamic economic system is balanced in a way that brings it closer to the human nature (al Fitrah). Accordingly, you will find in it apparent similarities to certain aspects of other economic systems because undeniably the latter are the product of human mind/experience mix.

Consequently, it is normal that the means to reach the common goals, in the Islamic economic system, include a free market-exchange with emphasis on honoring consensual contracts (some will see it as à la capitalist free market), prohibition of monopoly (à la interventionism), great concern about the satisfaction of the basic human needs and about economic justice (à la socialism) and assignment of a substantial chunk of natural resources to the whole society as represented by its government (à la communism). Add to it all, the prohibition of interest that denies any rewardability to most of the purely financial transactions unless it is formed as means of production and thus deprives them from the functionality that is conventional in the capitalist framework.

Extracts from:

Islamic Economics, what went wrong?

by Monzer Kahf

[Monzer Kahf is a Syrian American professor of Islamic economics and finance. He received his Ph.D. in economics from University of Utah in 1975 and lives in Westminster, California.]