Book of-islamic-economics

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Book of-islamic-economics

  1. 1. Lectures on Islamic EconomicsCourse OutlineLecture 1: Principles of Islamic EducationLecture 2: Origins of Western Social ScienceLecture 3: Islamic and Western Conceptions of ScarcityLecture 4: Limits to Market EconomyLecture 5: Rebuilding Islamic SocietiesLecture 6: Contrasts between Islamic and Western Economic ViewsLecture 7: Roots of European ThoughtLecture 8: Legitimization of Pursuit of WealthLecture 9: The Evils of Interest
  2. 2. Lecture 10: The Normative Foundations of ScarcityLecture 1: Principles of Islamic Education1. Islamic Approach to Knowledge:51:56) ‫)وما خلقت الجن والنس إل ليعبدون‬ ِ ُ ُ ْ َ ِ ّ ِ َ ِْ َ ّ ِ ْ ُ ْ ََ َ َ 51:56 I created the jinn and humankind only that they might worship Me.Every act in the life of a Muslim should be an act of worship. It is stated in a Hadeeththat those who get to paradise will have no regrets, except for the moments theyspent in neglect/forgetfulness of Allah. As a teacher, my teaching should be an act ofworship. As a student your study should be an act of worship. How can we make thishappen?There are three major requirements for an act of worship (and many minor ones).The first is the intention. All acts are judged according to intentions, and even thegreatest ones, like acquisition of knowledge, or the sacrifice of ones life, or wealth,can fail to be worship if the intention is not purely the pleasure of Allah Subhanahuwa T’aala. Similarly, a small act, like giving a date in charity, can be of great value inthe eyes of Allah if done with the pure intention of pleasing Allah. Secondly, theaction must be done in obedience to the commandments of Allah. Thirdly, the actionmust be done according to the Sunnah of our prophet Mohammad s.a.w.It is clear to all that the Ummah of the Muslims is in great difficulty on many fronts,including spiritual, social, political and economic. All Muslim leaders have beenconcerned with the issue of how these problems can be solved. However, errors in
  3. 3. diagnosis have led to the pursuit of the wrong remedies, which have aggravatedproblems instead of solving them. In fact, our Deen Islam is the greatest gift of Allahto humankind and is complete and perfect. It contains the methods needed forsolving our current problems. Unfortunately, some of the core teachings of Islamhave been forgotten by Muslims as a whole, and there are no living instances ofIslamic societies (with all institutions -- political, economic and social – based onIslamic principles ) currently in existence. Since Islam is a way of life, and not aphilosophy or an intellectual enterprise, the prophecy of our prophet Mohammads.a.w. that “Islam came as a stranger, and will soon become a stranger” has cometrue. In this course, we will show how the teachings of Islam can solve our economicproblems in ways far superior to those that leading experts in Western economicsknow of, or those contained in contemporary textbooks.In delivering this lecture, it is my intention to become part of the struggle for theestablishment of the Deen of Islam. This has been ordained by Allah as a duty uponall Muslims, and was the main task carried out by our prophet Mohammad s.a.w..The establishment of the Deen requires co-ordinated action on many fronts,including the spiritual, social, political and economic. By the grace of Allah, manyMuslims are actively engaged in this effort in the many dimensions required. Makingthis intention places the burden of a great responsibility upon me. I must make surethat everything I teach is relevant and significant for this purpose. Not only must Ifilter out irrelevant information, but I must prioritize so that the most importantknowledge relevant to the achievement of this goal is delivered to the student.I ask my students to make the same intention. Do not sit with the intention ofmemorizing materials to pass the course requirement for a degree, which will allowus to get a job and make money. Instead, make the intention of using the knowledgeacquired in this course to serve the Ummah of our prophet Mohammad s.a.w. LikeIbraheem alaihissalam, say: (6:162) ‫قل إن صلتي ونسكي ومحياي ومماتي ل رب العالمين‬ َ ِ َ َ ْ ّ َ ِ ِ َ َ َ َ َ ْ َ َ ِ ُ َُ ِ َ َ ّ ِ ْ ُ ّ6:162 Say: Lo! my worship and, my sacrifice and my living and my dying are forAllah, Lord of the Worlds.It is natural for those who do not believe in the hereafter to concentrate on thepleasures of this world. Because they currently dominate the world, the messagethat life is about accumulating wealth, pursuing power, and enjoying the luxuries ofthis world, is being spread via powerful media throughout the world, including theMuslim lands. All of the great Muslim leaders throughout the centuries have ledsimple lives, free of ostentation and luxury. According to a Hadeeth, “No doubt,(true) luxury is the luxury of the Akhirah”. Hazrat Umer r.a. used to eat coarse breadmade from unrefined flour. When a guest asked him why, he explained that noteveryone among the Muslims could afford refined flour. This feeling of responsibilityfor all, and of refraining from luxury (Israf or Tabzeer) out of consideration for others,was an important ingredient in the construction of the Ummah, the Muslim
  4. 4. community. Revival of this spirit among the Muslims today would go a long waytowards solving economic problems which face us. It is also directly opposed to theheart of conventional Western economic theory, which is based on the idea thatevery man cares only for himself, and would maximize his consumption even if hisneighbor is starving. In addition, economic theory suggests that this state of affairs –maximization of individual selfish utilities – leads to optimal economic outcomes forthe society as a whole.Since Allah T’aala has purchased our lives and wealth in return for Jannah, it followsthat we are not free to do as we please. Instead, we must devote our lives to Allah, inthe way shown by our prophet Mohammad s.a.w. One of the central elements in thecharacter of our prophet Mohammad s.a.w. was compassion and concern for allhuman beings. The suffering of the believers weighed heavily upon him: (9:128) ‫لقد جاءكم رسول من أنفسكم عزيز عليه ما عنتم حريص عليكم بالمؤمنين رؤوف رحيم‬ ٌ ِ ّ ٌ ُ َ َ ِ ِ ْ ُ ْ ِ ُ ْ ََ ٌ ِ َ ْ ّ ِ َ َ ِ ْ ََ ٌ ِ َ ْ ُ ِ ُ َ ْ ّ ٌ ُ َ ْ ُ َ ْ َ َ9:128 INDEED, there has come unto you [O mankind] an Apostle from amongyourselves: heavily weighs -upon him [the thought] that you might suffer [in the lifeto come]; full of concern for you [is he, and] full of compassion and mercy towardsthe believers.He was also deeply concerned about the fate of the unbelievers, so much so thatAllah T’aala consoled him about this, asking him not to kill himself with sorrow. 1) ‫فلعلك باخع نفسك على آثارهم إن لم يؤمنوا بهذا الحديث أسفا‬ ً َ َ ِ ِ َ ْ َ َ ِ ُ ِ ْ ُ ْ ّ ِ ْ ِ ِ َ ََ َ َ ْ ّ ٌ ِ َ َ َّ ََ18:6 (Asad) But wouldst thou, perhaps, torment thyself to death with grief over themif they are not willing to believe in this message?If we emulate our prophet, and develop concern and compassion for all humanbeings in our hearts, we will lead lives of service to mankind, instead of lives devotedto fulfillment of personal desires and wants. We will also be in violation offundamental axioms of economic theory, and living proofs of its failure.Unfortunately, it is not enough to point to our books or our history to show thatpeople can act according to Islamic ideals. It is necessary to implement Islam in ourlives to show that this is the case. This is the challenge facing the Muslims: to live upto demands that Islam places upon us. The Quran praises those who give to otherswhile they themselves are poor:
  5. 5. ْ ََ ْ ِ ِ ُ َ َ‫َ ّ ِ َ َ َ ّ ُ ّ َ َ ِْ َ َ ِ َ ِْ ِ ْ ُ ِ ّ َ َ ْ َ َ َ َِ ْ ِ ْ َ َ َ ِ ُ َ ِ ص ُ ِ ِ ْ َ َ ً ّ ّ ُ ُ َُ ْ ِ ُ َ ع‬‫والذين تبوؤوا الدار واليمان من قبلهم يحبون من هاجر إليهم ول يجدون في ُدورهم حاجة ممللا أوتللوا ويلؤثرون َلللى أنفسلهم وللو‬َ ُ ِْ ُ ْ ُ ُ َ ِ َْ ُ َ ِ ِ ْ َ ّ ُ َ ُ َ َ ٌ َ َ َ ْ ِ ِ َ َ‫كان بهم خصاصة ومن يوق شح نفسه فأولئك هم المفلحون‬59:9 But those who before them, had homes (in Medina) and had adopted the Faith,-show their affection to such as came to them for refuge, and entertain no desire intheir hearts for things given to the (latter), but give them preference overthemselves, even though poverty was their (own lot). And those saved from thecovetousness of their own souls,- they are the ones that achieve prosperity.Can we give to others, while expecting no compensation from them, and only waitingfor our reward from Allah? Islamic Economics is one aspect of the struggle to bringabout the inner spiritual transformation required for this purpose in ourselves and inall human beings.2. A Unique Historical Event: The most important episode in the history of mankind is the coming of ourProphet Mohammad s.a.w. with the message of Allah for mankind. The historicalperiod during which he arrived is referred to as the “Jahilliyyah” or the “Age ofIgnorance” (darkness). Syed Abul Hassan Ali Nadwi has described this period ofhistory in much greater detail in his book “ Briefly, the central characteristic of theage of Ignorance was that the ability to differentiate between good and evil hadbeen lost. The exploitation and oppression of the poor and weak by the rich andpowerful was commonplace and accepted as natural by all parties. Cruelty, torture,free sex, drugs, gambling and other behaviors not worthy of human beings, werepopular and widespread. The law of the jungle prevailed. Justice was unknown, andthe rule was to support your kin, whether he was in the right or in the wrong. Our prophet Muhammad sallalaho alaihe wassalam brought two things to theworld which changed the course of history.One was the Deen of Islam, which was the message of Allah for mankind.5:3) ‫)اليوم أكملت لكم دينكم وأتممت عليكم نعمتي ورضيت لكم السلم دينا‬ ً ِ َ َ ْ ِ ُ ُ َ ُ ِ َ َ ِ َ ْ ِ ْ ُ ْ ََ ُ ْ َ ْ ََ ْ ُ َ ِ ْ ُ َ ُ ْ َ ْ َ َ ْ َ ْToday have I perfected your religious law for you, and have bestowed upon you thefull measure of My blessings, and willed that self-surrender unto Me shall be yourreligion.
  6. 6. This was the perfect way of life for all human beings, the greatest gift of God tomankind.The Second was the method by which this Deen was to be spread, to enter andtransform the lives of people. These methods were extremely effective and powerful.People who used to bury their own daughters, kill each other over trivial disputed,and generally behave in ways which showed no mercy or compassion for others,changed drastically. The companions of the Prophet gave help to others, even whenthey were themselves hungry. They made tremendous personal sacrifices for thewelfare of others. They absorbed the message of Islam fully, and also absorbed themethodology required to transmit this message to others. As a result, within a shortperiod of time they changed the course of human history.It was a unique event in the history of mankind that the Muslims spread over theworld and conquered two major empires, not for the sake of power or riches, butsolely to bring the benefits of Islam to all human beings.Thee na kuch taigh zany apni hukumet kay liaySar bakaf phirtay thay kya Dahr main doulat kay liay? – IqbalWe did not bring out our swords for the sake of conquest and government.Nor did we risk our lives for the sake of acquiring loot and wealthHodgson writes that “ Muslims succeeded in building a new form of society, which intime carried with it its own distinctive institutions, its art and literature, its scienceand scholarship, its political and social forms, as well as its cult and creed, allbearing an unmistakable Islamic impress. In the course of centuries, this new societyspread over widely diverse climes, throughout most of the Old World. It came closerthan any had ever come to uniting all mankind under its ideals.”QUESTIONS: 1. What were the characteristics of Jahilliyyah? Also, what were the characteristics of Rome, Persia and China at the time of the coming of our Prophet s.a.w.? For a detailed answer on how all of these civilizations were enveloped in darkness, see the book by Syed Abul Hassan Ali Nadvi entitled: 2. List some of the changes that occurred among the people who accepted Islam, in terms of personal character.
  7. 7. 3. List some major differences between pre-Islamic Arabian society, and post- Islam Muslim society that emerged after the teachings of prophet s.a.w. Had been absorbed by the Muslims. 4. List some the characteristics of the Prophet s.a.w. which were crucial to the success of his mission to change the people and through them the world. 5. List some of the methods used by the prophet which were used to bring about the tremendous social transformation that occurred as a result of his mission. 3.An Important Current Debate Among MuslimsAn extremely important question to ponder is: What was there in the message ofIslam which changed the course of human history? Does this message have thesame power, relevance and importance today as it did fourteen centuries ago?As we have seen, non-Muslim historians acknowledge the power of the message ofIslam, in its historical context1. However, they believe that this power was availablein simpler times, and is no longer relevant to the complex modern world. The simplemessage of Islam no longer has the power to radically transform human lives andliving experience, and to change the course of history.Sadly and unfortunately most Muslims have also come to agree with this westernanalysis. They believe that progress of Muslims today depends on masteringChemistry, Biology, and Physics, and on acquiring democratic governance,industrializing, and generally imitating developments in Europe over the past threecenturies or so. It would be useful to formulate these two positions as opposingpoints of view in a debate:Majority Position: An inclination towards monasticism (rehbaniyat) forbidden in theQuran but encouraged by Sufis led the Muslims to ignore worldly progress. In themeantime, the unbelievers made spectacular progress in learning the worldlysciences, and left us far behind. The only way to reverse this is for Muslims toacquire these worldly sciences, which is also strongly recommended and encouragedby our Deen,Minority Opposition: The message of Islam has the same power to revolutionize theworld as it did fourteen centuries ago. The core teachings of Islam deal with spiritualdevelopment, and it is this spiritual development which is the greatest need of theMuslims today. If Muslims could learn the lessons of Faith (eeman), Trust (Tawakkul),Courage, Generosity, Compassion and Concern for others, Character (Ahklaq) andcommunity (becoming one body: the Ummah), which are contained in the Quran andHadeeth, we could change the world as we did in earlier times.1 See Hodgson quote earlier. In his book entitled The 100:A Ranking of the Most Influential People in History,historian, Hart, ranks our prophet Mohammad as the single most influential person in all of human history.
  8. 8. The Majority Position leads to the following formulation of the problem of“Islamization of Knowlege”: •Progress of Muslims depends on acquisition of European knowledge. •There are many areas where European knowledge conflicts with Islamic views. • Resolving these conflicts will enable us to assimilate the European ideas without abandoning Islam, and allow for progress.This then, is one set of motives for the project of Islamization of knowledge.The Minority Opposition considers the over-valuation of Western knowledge as partof disease. The Quran asks us to rejoice in what has been given to us of the Deen inthe form of the Quran and the Hadeeth, and consider it as superior to the wealth ofunbelievers: َ ُ َ ْ َ ّ ّ ٌ ْ َ َ ُ ْ ُ َ ْ َ ْ َ َ َِ ِ َ ِ ِ َ ْ َ ِ َ ّ ِ ْ َ ِ ْ ُ ‫قل بفضل ال وبرحمته فبذلك فليفرحوا هو خير مما يجمعون‬Q10:58 Say: "In this bounty of God and in His grace (that is, the Quran), then, letthem rejoice: it is better than all that they may amass!"The same idea is expressed in a Hadeeth narrated by Sa`eed ibn Sulaym radiyal-laahu `anhu: "If a person who has acquired knowledge of the Quran considersanother person who has been gifted with something else to be more fortunate thanhimself, he has shown disrespect to the blessings of Allah ta`aalaa bestowed on himon account of his learning of the Quran." The problem of Islamization of Knowledgefrom this point of view is that of putting Western knowledge in its proper place asuseful, but not central to human pursuits. Accomplishing this task still requires amastery, and even a going beyond mastery of the Western knowledge.The minority position will be clarified and considered in greater detail in asubsequent lecture. In todays lecture, we will consider some arguments for andagainst the Majority Position.There are many reasons why Muslims have come to believe that Islam by itself is notsufficient for their needs in the current times, and that we must make serious effortsto acquire contemporary Western knowledge in order to progress. We will now listthese reasons, and explain why these are wrong. 3.1 Is Progress the Acquisition of Worldly Goods?OBJECTION (to the idea that Islam is the answer to our current problems)Manifestly, the West is far ahead of us both in terms power and in terms ofpossession of material goods. To compete with them, we need to learn how theycame to dominate the world and to follow their strategies, which have provensuccessful.ANSWER:Allah Taala has said in the Holy Quran:َ ِ ْ ِ ْ ُ َ َ َ ِ ّ ُ َّ َ َ ّ ّ ُ َ َ‫ل يغرنك تقلب الذين كفروا في البل‬
  9. 9. 3:196 LET IT NOT deceive thee that those who are bent on denying the truth seem tobe able to do as they please on earth:In a long narration (see Chapter 3, Story 2, Hikayatus-Sahaba, Fazaile Amal), UmerR.A. asked the prophet to pray for ample provisions, like those give to the Romansand Persians. The prophet rebuked him saying that ease and comfort in thehereafter are much better than ease and comfort of this world, and latter was for theunbelievers while the former was reserved for the believers.Abu Hurairah narrated that: “Said the Prophet (sallallaho alaihe wassallam): Whenmy Ummah begins to attach more importance to the world, and to regard it as asource of glory, the awe and importance of Islam will vanish from their hearts.(continues)”This is the key: if we attach importance to the world, and define progress as theconsumption of luxury goods, then we will no longer consider Islam to be important.This is exactly what has happened. Under the influence of the hegemonic West,Muslims learned to think of progress as acquisition of worldly goods, and neglectedthe deep teachings of Islam on the spiritual level. Within the western worldview,spirituality is meaningless, and hence knowledge about methods for making spiritualprogress is not important.LESSON: If we think that progress lies in acquisition of the riches of this world, as allthose who deny the Akhirah do, then we will think it is necessary to follow westernways. However, Islam teaches us to seek the pleasure of God, and to compete whicheach other for doing the best deeds (the ones most pleasing to Allah), instead ofcompeting for worldly goods. For those who seek the Akhira, Allah Taala will alsogive them the mastery/domination of this world. 3.2 Has Islam Failed Us?OBJECTION (to the idea that Islam is the solution to our current problems)During the process of colonization, nearly all Muslim lands were conquered byEuropean powers. If Islam had the same power as it did fourteen centuries ago, thenthis would not have happened.ANSWERThe answer to this is that on countless occasions, barbarians have overwhelmedpeople who were at a far greater level of culture and civilization. The Huns sacked
  10. 10. Rome, the Vandals and Visigoths, Mongols and Tartars were energetic tribes whoraided and destroyed peoples who had far more complex and advance cultures. It isuniversally acknowledged that European Crusaders who conquered Jerusalembehaved barbarically towards the native Muslims, while Muslims behaved in a muchmore civilized way during the re-conquest of these territories. Similarly, the Mongolconquest of Baghdad is not a testimony to the failure of Islam. It is no doubt true thatcomfort and luxury had led to overall relaxation in the practice of Islam in generalamong Muslims. As is usual, religion becomes reduced to a set of rituals and spiritbehind them is lost. It was this weakness which led to the losses of Muslims toenemies. 3.3 Are Muslims Already Practicing Islam?OBJECTION (to the idea that Islam is the solution to our current problems)Muslims are already practicing Islam. So further progress in that direction is notneeded. What we lack is the western technologies and education, and that is whereefforts must be made.ANSWERIslam is a way of life, not just a belief or a philosophy. Islam covers all dimensions ofhuman existence. Everywhere in the Islamic world today, our political, social,economic, and educational systems are all extremely far from Islamic ideals.Because the living reality of Islam cannot be seen anywhere, it is immediate thatMuslims as a whole are very far from Islam. Islam is not only a set of teachings forindividuals, it is also a methodology for changing the world we live in. If Muslimswere living Islam, they would be engaged in a strenous effort to spread to good andto prohibit the evil all over the world, at the sacrifice of personal comforts, as well asfamilies and businesses. This is what the Quran explicitly asks of Muslims: to preferthe struggle for the Deen over and above all worldly pleasures:9:24 Say: "If your fathers and your sons and your brothers and your spouses andyour clan, and the worldly goods which you have acquired, and the commercewhereof you fear a decline, and the dwellings in which you take pleasure - [if allthese] are dearer to you than God and His Apostle and the struggle in His cause,then wait until God makes manifest His will; and [know that] God does not graceiniquitous folk with His guidance.It is clear that as a whole, Muslims are far from this explicit requirement of the Quranto prefer the struggle for establishing the Deen to their personal pleasures.FURTHER READING:
  11. 11. Zaman, Asad (2006): Developing an Islamic world view: An essential component ofan Islamic education. Published in: Lahore Journal of Policy Studies 1 1 (2007): pp.95-105.Downloadable from:http://mpra.ub.uni-muenchen.de/9231/Lecture 2: Origins of Western Social ScienceDistinguishing between Right and Wrong ّ ِ َ ُ ِ ْ َُ ِ َ ُ ْ ِ َ َ ْ َ ْ ََ ِ ُ ْ َ ْ ِ َ ُ ُ ْ َ ِ ّ ِ ْ َ ِ ْ ُ ٍ ّ ُ َ ْ َ ْ ُ ُ ‫كنتم خير أمة أخرجت للناس تأمرون بالمعروف وتنهون عن المنكر وتؤمنون بال‬3:110 YOU ARE indeed the best community that has ever been brought forth for [thegood of] mankind: you enjoin the doing of what is right and forbid the doing of whatis wrong, and you believe in God.At the beginning of each action (amal), we renew our intention to make our worshipand struggle and living and dying purely for the sake of Allah. In our study of today,we make the intention of serving Allah, by carrying out the duty of taking hismessage to all of humanity. This duty has been explicitly assigned to the Ummah ofthe prophet Mohammad, s.a.w. in the Quran.1. PreliminariesSUMMARY: An inferiority complex generate by defeats on battlefields, colonization,as well as awe of technological achievements leads us to undervalue our own Islamictraditions, which is a big spiritual problemEven if we try very hard, we will be unable to count the blessings of Allah upon us.Among the greatest of these blessings is the Deen of Islam. The knowledge given tous Muslims in the form of this Deen is deep, sophisticated, essential to spiritualdevelopment, and unknown to the rest of mankind. Unfortunately, the vast majorityof Muslims today are ignorant of their intellectual heritage:Ganwa di ham ne jo aslaf say meerath pay thi, surraya say zamin par asman nayham ko de mara.We wasted the treasures inherited from our ancestorsAnd were thrown to the ground from the skies where we used to flyThe books of our ancestors do not even burden our shelves with their weight; theyare confined to dusty libraries while shiny new western texts occupy our minds andhearts.
  12. 12. The problem of Islamization of knowledge is the problem of integrating these twotraditions: the Islamic intellectual tradition with the knowledge acquired by the westin the past few centuries. This is stated below as the central problem to ponder inthis lecture:Integrating Two Intellectual Traditions: Throughout the Islamic world, twosystems of education are operating in parallel – A western secular education, and anorthodox Islamic education. The two have almost nothing in common, and createdifferent types of skills, worldviews, and even personalities, leading to many conflictsin Islamic societies. Can these two traditions be merged, so that all types ofeducation fit harmoniously within a single Islamic paradigm?Today many Muslims have the idea that learning how to build refrigerators, cars,atom bombs and rockets to the moon is superior to learning Taqwa, Tawakkul,Khushoo in Salat, humility, integrity, courage, honesty, compassion, trustworthiness,and generosity. This lack of respect for our traditions creates spiritual problems:Since Western knowledge is concerned solely with affairs of this world, according itimportance will cause the awe and importance of Islam to vanish from the hearts:Abu Hurairah narrated that: “Said the Prophet (sallallaho alaihe wassallam): Whenmy Ummah begins to attach more importance to the world, and to regard it as asource of glory, the awe and importance of Islam will vanish from their hearts.(continues)”Envy of the West, valuation of their material possessions and meager worldlyknowledge above the promises of the Akhira and our own religious heritage runs intoconflict with many ayat of the Quran and the Hadeeth, some of which were cited inthe first lecture. The point under discussion is rather subtle, and worth statingcarefully and clearly, as below:The Spiritual Problem: It is not the acquisition (or failure to acquire) westernknowledge which is our current problem. It is the inferiority complex acquired bymore than a century of losses on the battlefield, and colonization, which leadsMuslims to value Western knowledge over and above the Deen of Islam, and toaccord it much more respect than it deserves. This attitude creates the greatestobstacle to the project of Islamization of knowledge2. A Historical ParallelSUMMARY: Absorption of alien bodies of knowledge into the Islamic frameworkrequires discrimination: the ability to sort out the right from the wrong. Awe of alienachievements leads to indiscriminate adoption of all alien ideas many of which maybe wrong.A similar problem has occurred once before in Islamic history, and it is veryinstructive to consider the parallels. This problem occurred when the books of the
  13. 13. Greek philosophers were translated into Arabic around the time of Haroon Al-Rasheed. The depth and sophistication of some of these writings impressed someMuslim intellectuals greatly. These scholars wanted to assimilate this stock of Greekknowledge into Islam. They argued that “Reason” (by which was meant Greekphilosophy) was on par with Wahy or revealed knowledge, as expressed in the Quranand Hadeeth. This group was called the Mu’tazala. They were very influential andsucceeded in winning the Khaleefa to their views. It is only the promise of Allah toprotect the Deen that preserved the Ummah from adopting these views. SomeUlema of integrity made great personal sacrifice and stuck to the position that Wahywas superior to all human intellectual efforts. With the help of Allah, they ultimatelyprevailed.Had the Mu’tazilah been successful, Greek philosophy would have been accepted asbeing part of the religion of Islam. Concepts like the Earth is the center of theuniverse, and many other Greek ideas which have since been proven wrong, wouldhave become part of Islam. Then, we would have suffered from the same problem ofconflict with Science that the Catholic Church (which did accept Greek teachings)had. The battle between science and Christianity that took place in Europe wasultimately lost by Christianity and this had a tremendous impact on both belief inChristianity and the attitude of European scientists towards religion. This conflict is avery important source of the problem of Islamization of knowledge. Europeanscience is taught in way which has built in prejudice against religion, created by thishistorical conflict. In Muslim countries, when science is taught following Westerntextbooks and methods, this (hidden) prejudice is communicated to the students,and creates doubts about faith in Islam.It was the Taqwa of the Ulema which preserved Islam from the encroachments ofGreek philosophy. An extremely important element in the intellectual battle was thebook “Tahafatul-Filasafa” by Imam Ghazali. This book turned the tide against Greekideas. In it Imam Ghazali showed up the many errors of the philosophers, whileaccepting the little bit that was correct. The key to note here is that Imam Ghazaliwent beyond the Greeks – he mastered their philosophy, and analyzed it, andaccepted the good and rejected the bad.Today we are faced with a similar problem with respect to Western knowledge. Bothan inferiority complex and a lack of mastery leads one to accept many western ideaswithout necessary critical examination. As just one simple example among manythat could be provided, western economic theory argues that people “maximizeutility” – that is, they maximize their personal pleasure from consumption, withoutany concern or regard for others. Accepting this theory uncritically, some Muslimshave also argued that Islam says the same thing. There exist verses in the Quranand hadeeth which describe the selfish tendencies of man, and these can be used tobuild such an argument. However, the Quran and Hadeeth describe thesetendencies as evils to be overcome, in striving to achieve goodness:ٌ َِ ِ ِ ّ ّ َِ ٍ َ ِ ْ ُ ِ ُ َ َ َ ّ ِ ُ ّ ِ ْ ُ ِ ُ ّ َ ّ ِ ْ ْ ُ َ َ َ‫لن تنالوا البر حتى تنفقوا مما تحبون وما تنفقوا من شيْء فإن ال به عليم‬
  14. 14. 3:92 [But as for you, O believers,] never shall you attain to true piety unless youspend on others out of what you cherish yourselves; and whatever you spend -verily, God has full knowledge thereof.This shows that good Muslims must spend from what they love on others, exactlythe opposite of the utility maximization described in Economics textbooks. Thestruggle to achieve piety and righteousness requires fighting certain built-intendencies, and the extent to which we are successful is also the extent to whichwestern theories will fail to describe Muslim behavior. The point we want to makehere is only that western theories conflict with Islamic views, but some Muslimscholars did not recognize this conflict and accepted western views uncritically andsought to show that Islamic views were in harmony with these western views.3. False Claims of Western Science:SUMMARY: While there are many useful ideas in the body of knowledge developed inEurope, and known as “science,” there are also many ideas which are wrong,harmful, and in conflict with Islamic views.During the colonial period, Ulema in British-India observed how western educationserved to weaken the faith, and some of them forbade it. Even though it seemedimportant to advance in the world, acquire prestige status and power, preservationof faith was more important than all of these.Today, we cannot avoid engaging with the problem of Western knowledge, and howto assimilate it within an Islamic framework. To engage with it, one must first learnthe contents of the Western intellectual tradition. To learn this tradition, one muststudy as a student or an apprentice in Western academic institutions – currentlythere are no alternatives available to this approach. A student must necessarilyaccept the claims of his teacher for the most part. If he questions everything ateacher says, he will never succeed in learning the subject matter. Therefore, in theprocess of study, students are forced to accept certain basic Western claims aboutthe nature of Western knowledge which are in fact false. Acceptance of these claims,many of which are in conflict with Islamic views, leads to many difficulties in theIslamization of knowledge. The first of these claims is the following:FALSE CLAIM NUMBER 1:Western knowledge (physical and social sciences) is factual and objective. It isuniversal and a-historical.We provide a more detailed explanation of these charms that western scientificknowledge claims for itself:1. Factual: This means that, like 2+2=4, the claim of western science are true, andverifiable by anyone.
  15. 15. 2: Objective: This means that the knowledge is the same for all human beings anddoes not vary from person to person.3: Universal: This means that the knowledge remains the same across time andplace.4: A-historical means that the particular history of Europe does not affect theknowledge, which is independent of particulars of human history.If this claim is accepted as true (and unfortunately, most Muslim who have studied inWestern institutions do accept this claim), then the problem of Islamization ofknowledge takes a very different form from the position that we will take. It makesno sense to try to Islamize facts like “2+2=4” or to reject the law of gravity becauseit was discovered by a Christian. If something is a fact than all must accept it. If thereappears to be a conflict with Islamic teachings, then we must re-interpret the Islamicteachings to make the conflict disappear – we cannot have Islamic teachings inconflict with facts. Nor should we try to change the facts to make them fit Islamicviews. We will now argue that all four of these claims of Western science are false.Are Scientific Laws factual and objective?There is a huge literature under the name of “philosophy of science”. The goal of thisfield of study was precisely to establish these claimed virtues for science, and ALSOto deny this same validity to religious knowledge. It is impossible to cover this field ina few short paragraphs. We will just give a few pointers to the problems of factualityand objectivity in scientific knowledge:Problem 1: Induction Is Not ValidScientific laws are based on extrapolation of an observed pattern. For example, afterobserving sunrise daily for 1000 years, one might conclude that this is a universalpattern which will continue forever. This is called the problem of “induction” in thephilosophy of science. Given a large collection of facts/observations all of which fitinto one pattern (law), can we conclude that the law is universally valid? Althoughmany have wrestled with this problem, none has solved it, and it has finally beenconcluded that it cannot be solved. There is no finite collection of observations suchthat one can validly derive a universal law from them.Problem 2: Falsification of PopperBecause of failure of induction (problem 1), many philosophers of science came tothe realization that scientific laws could not be proven true. However, they can beproven false, if we find an exception to the pattern on which the law is based. Basedon this idea, a famous philosopher of science, Karl Popper came up with the followingwidely accepted ideas about the nature of scientific theories:
  16. 16. 1. A scientific theory must be falsifiable. That is, there must be some observable phenomenon such that if we see them, we will reject the theory. If the theory is compatible with all possible observations then it cannot possibly explain any observation, and hence is not a scientific theory. 2. Powerful scientific theories are those which are easily falsifiable. Many observations will conflict with them and cause rejection. If a powerful theory survives for a long time, then it is a good theory. Because nature has been given a lot of chances to reject the theory but it failed to do so.These ideas, which are widely accepted by philosophers of science, clearly showthat scientific theories are not established facts, and indeed can never beestablished beyond a shadow of doubt.Problem 3: Scientific Revolutions of KuhnMost people have the following idea about the progress of science. We start with asmall amount of scientific knowledge, and it grows gradually in the light of ourexperience. As it grows, we will eventually learn everything significant and useful.Analysis of the history of how science has progressed led to a startling discovery byThomas Kuhn. His book which describes this discovery is called “The Structure ofScientific Revolutions” and is one of the most important and influential books of thetwentieth century. Kuhn showed that most of the time science does follow the“normal” pattern of gradual growth, increase and accumulation of knowledge.However, from time to time there are “revolutions”. In these revolutions, the entirestock of previous scientific knowledge is discarded, and a new start is made afreshfrom fundamental principles which have nothing in common with the previousscientific theories. This means that the idea of gradual growth towards knowingeverything is wrong. Also, in light of this picture, it is entirely unclear which theory istrue or objective. Kuhn showed that choice among theories is not made on the basisof which is “better” objectively, but on many other more subjective grounds. Againthis creates doubts about the objectivity and universality of scientific knowledge.Kuhn’s investigations also revealed the historicity of western science: how context,and history influenced the development of ideas. This aspect will be discussed ingreater detail in later lectures.4. Conquest Songs of VictorsSUMMARY: Western Science contains some extremely useful facts as well as someextremely harmful and wrong philosophy. It is essential to separate the two and tounderstand the difference, in order to successfully integrate this body of knowledgeinto an educational curriculum founded on Islamic teachings.There is no doubt that science and technology have led to spectacular gains inknowledge in the west. Evidence of this is before our eyes in the form ofautomobiles, computers, aeroplanes, electrical gadgets of all sorts, as well asincredible advances in the sciences of life – medicine, biology, as well as thesciences of death – war technology, weapons of mass destruction etc. Scientific and
  17. 17. technological developments have had an impact on nearly all dimensions of humanexistence.Despite all of these impressive achievements, it does not follow that all claims madeabout science by Europeans are true. Nor does it follow that their theories arereliable in all areas. If a Nobel prize winning physicist gives advice about what makesa marriage last, this is not likely to be better than the advice given by an uneducatedold man with experience in human relations.The phenomenon we wish to discuss in the section is summarized by the saying thathistory is the conquest song of the victors, and cannot be trusted to provide anaccurate picture for the reasons of victory. In general, if we ask someone who issuccessful why he has been successful, there is no reason to expect that we will geta good answer. o If we ask a person who has lived for more than a 100 years the secret of his longevity (which may be due to good genes) he might give an answer which has no relation to his long life. o A successful business may not have any clue as to why they are hugely successful. If they later fail using the same methods, they might be equally clueless about the reasons for failure. A LUMS professor of business strategy conducted a series of interviews with successful business CEO’s in Pakistan. His results were startling. ALL of the successes were due to luck, and none were due to skilful strategic planning of some type. o Winners of big prizes in lotteries are often interviewed about how they won the big prize. Almost no one attributes it to pure luck (even thought this is the right reason). They always find some reaons for the luck – they did something which created the luck, or were wearing some lucky color, or stroked a rabbit’s foot etc. etc. o Because the Allies won World War II, accounts of the leaders and generals like Churchill celebrate their achievements. Lloyd George Memoirs of the War show how most of these people were extremely incompetent, and made blunders which cost millions of lives. Worse, they covered these up and did not learn important lessons. The reason they won was because there was even greater incompetence on the other side.From this general analysis, I would like to distil only one lesson:Western science has been tremendously successful.On the other hand, Western Philosophy of Science, which provides answers to thefollowing questions, has been a tremendous failure.What is Science? How does it progress? Why it is reliable?Unfortunately, as science is taught in the west, both of these are mixed up andtaught at the same time. This leads to the problem of Islamization of knowledge. Thephilosophy which is explicitly and implicitly contained in the syllabi of science astaught in the west is wrong, and must be cleansed in order to be able to bring theseinto the ambit of an Islamic syllabus. This job has not yet been accomplished byanyone.
  18. 18. Here are some of the claims which are made explicitly or implicitly by philosophersof science. These claims are wrong, and conflict with Islam, but are absorbed bystudents of western sciences, in process which is damaging to the faith. These claimsare all the more dangerous because they are often hidden, and not actuallydiscussed but assumed without question in the course of study: 1. Science provides the only reliable guide to truth. 2. Science will eventually be able to solve all human problems. 3. The concept of “God” was invented by man to explain natural phenomenon like rain, lunar cycles etc. Now the science provides the correct explanations, God is no longer necessary.There are many other such erroneous ideas, but the main ones listed above shouldsuffice to explain what I am trying to say here.The critical problem faced by those who would Islamize knowledge is that we need tobe very precise about what is accepted and what is rejected from the body ofWestern knowledge. Very accurate discrimination is needed. Just as we cannot affordto accept wrong ideas, so it would be erroneous to reject the correct ones. Forexample, some Muslim scholars rejected the idea of men landing on the moon,saying that the Quran states that55:33 (Picktall) O company of jinn and men, if ye have power to penetrate (all)regions of the heavens and the earth; then penetrate (them)! Ye will never penetratethem save with (Our) sanction.They argue that the unbelievers would be given the permission to penetrate heavensby Allah, and so the lunar landing was a hoax. Similarly, other scholars have arguedthat the Earth is flat, on the basis of misinterpretation of other Quranic verses.We cannot afford wholesale rejection of Western ideas. At the same time, we cannotafford wholesale acceptance either. To discriminate between the good and the badrequires a level of expertise in the western sciences. Only a select few among theMuslims have been able to achieve this level which is required for success in theproject of Islamization of knowledge. Fortunately, once the dimensions of theproblem are understood, it should be possible to carry it through to a successfulcompletion. This is our hope and goal with respect to economic theory in this set oflectures and course. All fields of knowledge will require separate study by their ownexperts to carry through this project. May Allah resolve the difficulties which theUmmah is facing on fronts, and help us become part of the solution to theseproblems.FURTHER READINGS:Read the articles, designed to provide an antidote to the myth of Europeansuperiority.
  19. 19. 1. Failure of Modernization Theories 2. Ways of the Eagles 3. Dark Side of the Enlightenment Project 4. European Transition to Secular ThoughtThese are available from:https://sites.google.com/site/asaduzaman/goals/publications-1/newspaper-articlesSee Also:https://sites.google.com/site/zamanislamicecon/extra-creditLecture 3: Islamic and Western Conceptions of Scarcity1. Introduction“Scarcity” is at the heart of economic theory. If there is an abundance of all materialwealth, then there would be no need to discuss economic issues. After agreement onthis fundamental issue, Islamic economics and conventional Western economics partways. The Western analysis of the causes of scarcity, how to handle the problem,and the consequences of solving the problem are radically different from Islamicviews. The purpose of this note is to discuss these differences and argue that theIslamic views are superior, and in accordance with observations.As discussed in Zaman (2007), a fundamental problem facing the project ofIslamization of Knowledge is the lack of confidence among Muslims due to over acentury of defeats on the battlefield. Ibn-e-Khaldun remarked on the tendencies forthe defeated nations to emulate the victors in all ways. In fact, barbarians have oftendefeated more civilized nations historically. In recovering from defeat, one mustanalyze carefully the causes for defeat and seek to remove them, rather thanuncritically accepting the superiority of the victor in all dimensions. In the context ofeconomic theory, Zaman (2008, An Islamic Critique) discusses how flawed Westerneconomc theories conflicting with Islamic views have generally been accepted byMuslims. In this paper, it is our aim to show that the Quran and Sunnah offer fargreater wisdom on management of economic affairs than is currently available withthe leading experts from the West. In particular, the Quranic analysis of thefundamental economic problem of scarcity is deeper and more sophisticated thanstandard Western analysis. Thus we do not stand in need of borrowing Westerneconomic theory.3: Selfishness and Greed, or Cooperation?Economic textbooks teach us that men behave purely selfishly. Islam teaches us thatmen have both the tendency towards evil, and the capability of being good. Whenwe look at the world, we observe very large amounts of charitable, compassionateand self-sacrificing behavior, which violates the teachings of economics theory.Because of the wrong predictions of economic theory, economists are almost alwayssurprised by the results of the ultimatum game, which show that human being oftenchoose to take a loss rather than be treated unjustly (Camerer 2003). Thus, empirical
  20. 20. evidence strongly favors Islamic views over those taught in current conventionaleconomic texts.3.1 Consumer Behavior: Islamic ViewThe Quran tells us that man has the tendencies towards greed, acquisitiveness, andlove of worldly things: (Q3:14) Fair in the eyes of men is the love of things they covet: Women and sons; Heaped-up hoards of gold and silver; horses branded (for blood and excellence); and (wealth of) cattle and well-tilled land. Such are the possessions of this worlds life; but in nearness to Allah is the best of the goals.However, the Quran warns us not to pursue these goals, but instead to turn to Allah.The Quran teaches us that man has the potential to rise higher than the angels, andalso the potential to be worse than the beasts. As the Quran states: (Q95:4) “Wehave indeed created man in the best of forms, Then do We abase him (to be) thelowest of the low.” This means that human can be greedy, selfish and acquisitive,but they can also be kind, charitable and generous. The Quran praises those whogive to others, even though they are themselves poor: (Q39:9) “who love all that come to them in search of refuge, and who harbour in their hearts no grudge for whatever the others may have been given, but rather give them preference over themselves, even though poverty be their own lot for, such as from their own covetousness are saved - it is they, they that shall attain to a happy state!”3.2 Comparison with Neoclassical Views Economics textbook agree with the idea of men being motived by the love ofworldly possessions expressed in verse (Q3:14). However, neoclassical textbooks donot mention the possibility of (Q39:9) – that men may be generous enough to give toothers even while being poor themselves. Money donated to charities forms asignificant component of the GDP in most countries, and charitable behavior is animportant element of the social safety network for the poor. The Quran places greatemphasis on spending for the needy, but there are no chapters on charity inneoclassical textbooks. Because of their single minded focus on selfishness, someeconomists have even attempted to explain altruism as emerging from selfishmotives (if we help others, they will help us in times of our need). Which of the two visions offers us better understanding of human behavior,both as a consumer and in other domains? All over the world, children are taught toshare, not to be selfish, and generosity receives praise. Studies of human behaviorcontradict the idea of Adam Smith that bakers are motivated solely by profit. People
  21. 21. find meaning in their lives from serving others, professional pride, and many othernon-economic motives. The tunnel vision of neoclassical texts which confines humanmotivation to selfish greed does not help us understand economic behavior – rather,it hinders such understanding. The Quran offers us much deeper insights, which areconfirmed by experimental studies of human behavior in many domains.4. The Needs/Wants Distinction.We show that Islam makes a clear distinction between needs and wants, andencourages fulfillment of needs, but discourages fulfillment of idle desires.Conventional economics does not make such a distinction. The Islamic view matchesobserved behavior and is essential for sustainable development. This is because theluxurious lifestyles currently being pursued by the rich are causing tremendousamounts of environmental damage and can neither be sustained into the future, norcan they be shared with the masses. Thus Islamic views offer greater wisdom than iscontained in current conventional economic textbooks.4.1 Islamic Views on Needs and DesiresThe Quran encourages us to fulfill our legitimate needs: Q7:31 O Children of Adam! wear your beautiful apparel at every time and place of prayer: eat and drink: But waste not by excess, for Allah loveth not the wasters.However, excess and waste is discouraged. Islam is a religion of moderation, andasks us to be neither stingy nor profligate. Wealth which is beyond our needs shouldbe spent on others less fortunate than us: Q2:219 They ask thee how much they are to spend; Say: "What is beyond your needs." Thus doth Allah Make clear to you His Signs: In order that ye may consider-This clearly shows that human needs are limited. On the other hand, wants ordesires are unlimited, as the following Hadeeth indicates: Al-Bukhari: Volume 8, Book 76, Number 447: Narrated Anas bin Malik: Allahs Apostle said, "If Adams son had a valley full of gold, he would like to have two valleys, for nothing fills his mouth except dust (of the grave). And Allah forgives him who repents to Him."
  22. 22. The Quran strongly discourages pursuit of idle desires: 45:23 Hast thou seen him who maketh his desire his god, and Allah sendeth him astray purposely, and sealeth up his hearing and his heart, and setteth on his sight a covering? Then who will lead him after Allah (hath condemned him)? Will ye not then heed?Those who restrain themselves from following their based desires will attainParadise: 79:40 But unto him who shall have stood in fear of his Sustainers Presence, and held back his inner self from base desires, 79:41 paradise will truly be the goal!To summarize, needs are limited, and we are encouraged to fulfill them. The Prophets.a.w. told a man with disheveled hair to display of the wealth which Allah hadbestowed upon him. At the same time, wants are unlimited, and we are told not topursue them.4.2 Neoclassical Theory Rejects Needs/Wants Distinction. Complex historical processes starting with the corruption of the Catholic Church,subsequent emergence of Protestant sects, and their violent fights with each other,led eventually to the rejection of faith in Europe. In accordance with the Hadeeththat the life of this world is a prison for believers but heaven for the unbelievers, oneof the high priorities of secular thought has been to build heaven on earth, bypursuing wealth and desires as much as possible. There is a tension between pursuitof selfish desires and social harmony, and resolving this was one of the major issuestackled by secular political philosophy in Europe (see Tawney 1926, for a detaileddiscussion). While religious thought condemns selfish behavior, a secular worlddemanded a philosophy to justify freedom to pursue self-interest so as to be able toenjoy a heaven on earth (which would replace the heaven in afterlife promised byreligion. The ‘invisible hand’ was the first such philosophy, which suggested thatselfish behavior would lead to socially optimal outcomes. Subsequent developmentshave also been motivated by the need and desire to justify the maximum amount offreedom for all economic agents. As Galbraith recognized: “The modernconservative is engaged in one of mans oldest exercises in moral philosophy; that is,the search for a superior moral justification for selfishness.” In economic, political, and social domains, secular Western thought has beendriven by the idea of giving as much freedom to individuals as possible. Withineconomic theory, justification of free markets has been a central concern. TheChicago school and Austrian economists represent a polar extreme in defending free
  23. 23. markets even in the presence of monopolies, externalities and other marketimperfections. The Great Depression of 1929 led nearly everyone to the clearrecognition that free markets can lead to catastrophic performance and misery formillions, and made socialist and communist solutions to economic problems appearattractive to many. Keynes rescued the free market by providing a theory whichsuggested that free markets would function well as long as the government ensuredfull employment by fiscal or monetary policy. A more detailed discussion of theEuropean historical experience and its impact on formation of social sciences ingeneral, and economics in particular, has been given in Zaman (2008, IslamicEconomics: A Survey) and in Zaman (2009).` It is only in light of this history that we can understand why, despite itsobvious importance and relevance to economic issues, no mainstream Westerneconomics textbook mentions the needs/wants distinction. Taking the differencebetween needs and wants into account would highlight the failings of the freemarket, and frustrate the main intent of neoclassical theory. Western style freemarkets are ideally suited to fulfilling idle desires of the wealthy for luxury, and notwell suited to serving the needs of humanity. According to a recent report entitled“World Hunger: Twelve Myths” prepared by the California based Institute for Foodand Development Policy, there is food in abundance in the world, so much so that inthe developing world, 78% of all malnourished children aged under five live incountries with food surpluses. The USDA report, Household Food Security in theUnited States, 2004, says that 38.2 million Americans live in households that sufferdirectly from hunger and food insecurity, including nearly 14 million children. Thatfigure is up from 31 million Americans in 1999, a five year period over which GNP percapita increased by roughly 10%.A situation where the money spent on idle desires by a small number of rich peopleis enough to feed all the millions of hungry people on the planet cannot beconsidered ‘optimal’ by anyone. Nonetheless, economists justify this by invokingPareto optimality. They argue that it is impossible to make interpersonal comparisonof utility, and hence we cannot say that the society benefits by taking away the thirdglass of wine from a rich person to give milk to a hungry infant. Modern economictextbooks do not differentiate between needs and wants. They argue that the goal ofthe economic system is to fulfill all desires of all consumers (without differentiatingneeds and wants), and that the free market accomplishes this goal in an efficientway. Islam teaches us to fulfill needs, but not to pursue idle desires. Unbridledpursuit of luxurious lifestyles by small numbers of wealthy has led to increasinginequality, rapid depletion of scarce natural resources, and environmental damageon a scale to threaten all life on this planet. An uncritical acceptance of Westerntheories of social science has been an obstacle to adoption of deeper insights offeredby Islam, which offer far greater potential for Islamic societies, as discussed inZaman (2008, Improving Social Science Education).5. Causes of ScarcityOne Western diagnosis for the reasons for scarcity is that there are too many people.This was initiated by Malthus, and the idea continues to guide policy to this day. TheQuran explicitly denies this idea, and states that God sends sustenance for all hiscreation. We show in this section that misguided Western policies based on the ideaof ‘surplus’ people have caused tremendous damage, as well as degrading and
  24. 24. devaluing human beings. Islamic views accord with the empirical data which showsthat food supplies have kept up with population, despite tremendous increases inpopulation.5.1 Western views: Malthus and his followers Malthus was afraid of the possibility that the population would increase fasterthan the food supplies, in contradiction to this verse. Malthusian ideas have had,and continue to have, a tremendously negative impact. In a book tracing the ideaswhich led to the ‘Final Solution’ of Hitler, Schrieber (1926) writes that: Malthus created an atmosphere which not only prevented a real solution to the social problems, but also promoted the repressive legislation which worsened the conditions of the poor in England. It was reasoned that better conditions for the poor would only encourage them to further propagate, putting those who were capable of work at a disadvantage. Malthusianism then moved forward to achieve its greatest triumph in 1834 with a new law providing for the institution of workhouses for the poor, in which the sexes were strictly separated to curb the otherwise inevitable over-breeding. This type of thinking has an inherent devaluation of human life through fear that the ever increasing population of lower classes will devour the more civilised or "better" people. This kind of philosophy, of course, urged the calling forth of drastic measures to handle the problem. The first resurgence took place a hundred and fifty years after his death, resulting in the birth-control movement, a principle which is based on Malthusianism. Following the Second World War, the idea was again taken up and today receives new momentum in the "population explosion" campaigns.Modern followers of Malthus founded the Club of Rome, about which Rolf Witzsche writes as follows: The first official presentation of a global depopulation policy occurred 1969 with the founding of the "Club of Rome" by officials of NATO and the Travistock Institute of British Intelligence. The club was founded to promote the "no-growth" (genocidal) Malthusian ideology which later became known as the "post-industrial society" program. In 1972, three years after its founding, the Club of Rome published its infamous "Limits to Growth" doctrine which demanded the immediate termination of industrial development throughout the Third Word. "The Limits to Growth" book, based on this doctrine, turned out to be a fraudulent document. It was later admitted by one of the clubs own directors to have been based on a fraudulent computer study. Nevertheless, the publication of the book was hailed as a necessary "shock treatment" of all of the worlds governments that were still committed to the principle of technological progress which stood in the way of the advance of poverty. Then, on Aug 26, 1974, during the first U.N. sponsored International Conference on Population in Bucharest Romania, the the Club of Romes population reduction program was introduced and formally accepted. 1974 was also the year when the Club of Rome introduced its "Mankind at the Turning Point" declaration which said: "The World has Cancer, and the Cancer is Man." This grinding down towards radical depopulation by policy, created the policy atmosphere in which Henry Kissinger prepared his most infamous document, the National Security Study Memorandum 200 (MSSN200), which states that Third World population growth is a threat to U.S. control of raw materials. The document cites 13 developing nations as recommended depopulation targets for the U.S. government. Henry
  25. 25. Kissingers policy for selective depopulation by overt means was formally adopted in 1975. Henry Kissinger warned, however, at this time, that the imperial reason behind the U.S. population reduction efforts must be strictly concealed.However, data shows that despite the tremendous increase in population, foodsupplies have kept pace. Although there is a large amount of poverty, hunger, andmalnutrition in the world, it is not due to lack of resources. As documented above,tremendously harmful policy decisions have been made because of wrongassumptions in contradiction to Quranic advice.5.2 Islamic View: God is BountifulThe Quran tells us clearly that we need not fear that population will exceed the food supplies: 17:31 Hence, do not kill your children for fear of poverty, it is We who shall provide sustenance for them as well as for you.Many verses testify to the bounty of God. 17:20 All [of them] -these as well as those -do We freely endow with some of thySustainers gifts, since thy Sustainers giving is never confined [to one kind of man]. 27:73 Now, verily, thy Sustainer is indeed limitless in His bounty unto men - but most of them are bereft of gratitude. 57:29 And the followers of earlier revelation should know [52] that they have no power whatever over any of God’s bounty, [53] seeing that all bounty is in God’s hand [alone]: He grants it unto whomever He wills - for God is limitless in His great bounty.Islamic scholars have concluded from these, and other verses, that there is noscarcity at the level of needs, contrary to the views of Malthus and his followers. Thisis also in accordance with the data, which shows that the food to population ratio hasremained remarkable stable, despite tremendous increases in population. Meninformed by the Quranic vision would not have made the policy mistakesdocumented in the previous section, which continue to adversely affect the worldtoday.Even more remarkable is the Nobel prize winning analysis of famines by AmartyaSen (1983). Because it was frequently the case that famines followed crop failures, itwas widely believed that shortage of food supplies led to famines. However, detailedanalyses by Sen showed that this was not the case. The most vulnerable class werethe landless laborers, who could not find jobs when crop failures occurred. It wastheir inability to earn a wage, as opposed to shortage of food that led to famines.Sen wrote that the society did not consider them ‘entitled’ to food, since they couldnot earn a living. He documents how, at the time people were dying of hunger, foodwas being shipped out of the famine areas – outsiders had money to pay for the foodwhich the hungry people did not have.
  26. 26. As already discussed earlier, the Quran says that God provides sustenance for all,and therefore denies the idea that famines occur due to shortages of food: Q11:6 There is no moving creature on earth but its sustenance dependeth on Allah.The Quran pinpoints the nature of the problem, and gives the exact solutionrequired:Islam creates entitlement for the poor, ordaining that: "In their wealth there is a known right for those who ask for it and those who have need for it." (Q70:24-25)The problems of hunger, famine, and deprivation are created because the wealthydo not acknowledge the right of those who are needy for a share of this wealth. TheQuran narrates the story of the owners of a Garden who sought to avoid sharing thefruits of the harvest with the poor, and how their Garden was destroyed because ofthis (Q68:17-27). Poverty researchers have shown that just 0.7% of the GNP of therichest 22 countries would be enough to eliminate all hunger in the world. Similarly,very small amounts of money, readily available from many sources, would beenough to eliminate the worst kinds of misery and deprivation from the world. Theproblem is not the lack of resources; the famous ‘scarcity’ of economics. Theproblem is that the Qaroon’s of this world feel that they have a right to all the wealththey have earned by their own cleverness, and do not feel the need to share it withanyone. The right diagnosis is crucial for determining the right remedy. If theeconomists diagnosis of ‘scarcity’ is correct, then we must work on increasing thematerial resources. This is the direction being pushed by many internationalinstitutions and people. However, given that existing resources are already adequateto remove poverty, as pointed out by Sachs (2006) and others, the problem lies in adifferent direction. It is in the lack of compassion for the poor, and the failure of thewealthy to share with the less fortunate. The Quran identifies this as the problem,and explains the strategies to be used for the solution, as we shall see.6. Solving the Problem of ScarcityThe Western view on how to solve the problem of scarcity is by the accumulation ofwealth. As discussed below, Keynes thought that encouraging selfishness and greedin the society would lead to rapid accumulation of wealth. With enough wealth, allsocial, political, and even moral problem of man would be solved. This has not turnedout to be the case empirically. The Islamic view is that there is no scarcity at thelevel of needs. There are enough resources for everybody, but problems arisebecause the wealthy do not acknowledge the right of the poor to a share of theirwealth. The solution is to encourage compassion, sharing, and to enjoin the good.Wants are unlimited, and scarcity cannot be removed by trying to fulfill idle desires –desires increase as wealth increases. Therefore the Islamic solution to scarcity at thelevel of desires is to limit desires. Strategies for doing so are provided in Islamicteachings.
  27. 27. 6.1 Western Solution to ScarcityAs belief in religion and afterlife diminished in the West, it was natural for them toturn to the pursuit of the pleasures of this world. Lack of sufficient material resourceswas the biggest obstacle to this pursuit, and ‘scarcity’ became the central problemfor man. The Bible states that “It is easier for a camel to go through the eye of aneedle, than for a rich man to enter the kingdom of God.” Tawney (1926) hasdescribed the historical process in which Europeans went from believing in theBiblical “Love of money is the root of all evil,” to Shaw’s “Lack of money is the rootof all evil.” Quite apart from the fact that sufficient wealth would enable thefulfillment of all desires, it came to be widely believed that removal of scarcity wouldsolve all problems, social, political and moral. With enough wealth, people would bekind and generous, and social conflict and strife would be eliminated because therewould be nothing left to fight for. Nelson (2001) has detailed how economics becamea religion in the West. One of the most clear sighted statements of Western concepts in this directionhas been given by Keynes. He thought it was temporarily necessary to “pretend thatfair is foul, and foul is fair” for “foul is useful, and fair is not.” By pursuing wealthusing foul means of avarice and greed, mankind should free itself from the economicproblem, so as to be free to turn to higher pursuits (cited in Khan 2004): When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease ... But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.Note the clear statement that for two hundred years, the West has exalted ‘the mostdistasteful of human qualities [love of money] into the position of the highest ofvirtues.’ Keynes, and his followers, the neoclassical economists, feel that this isnecessary to acquire wealth. Once enough wealth has been accumulated, then mancan afford to be moral.6.2 Islam Denies the Validity of the Western SolutionThe Quran denies that accumulation of wealth will solve the problems of man.
  28. 28. Q23:55-56 Do they think that because We have granted them abundance of wealth and sons, We would hasten them on in every good? Nay, they do not understand. Q104:2 [Woe unto him] who amasses wealth and counts it a safeguard, 104:3 thinking that his wealth will make him live forever!This also matches the empirical evidence. Lane (2001) and Layard (2005) haveshown that despite tremendous increases in wealth in the West, satisfaction,contentment, happiness, and the sense of well-being has not increased. This showsclearly how the pursuit of the riches of this world is an ‘illusion,’ as the Quran tellsus.The Quran also denies the idea, expressed by Keynes and many others, that men willbecome generous once they have enough wealth: (Q9:75-76) And among them are such as vow unto God, "If indeed He grant us [something] out of His bounty, we shall most certainly spend in charity, and shall most certainly be among the righteous!" But as soon as He has given them [aught] out of His bounty. they cling to it niggardly, and turn away in their obstinacy [from all that they have vowed]This has also been the Western experience. Accumulation of wealth andencouragement of greed has not led to the Utopia dreamed of by Keynes orSamuelson. Instead a society quite similar to the pre-Islamic Jahiliyya has arisen –see Mothers who Kill their Children by Meyer et. al. (2001) for just one of the strikingparallels. Nelson (2001) writes that after fifty years of preaching that wealth willsolve all problems, Samuelson is honest enough to recognize that his prophecy hasnot been fulfilled: “Great affluence has not brought about the slackening of economicambition,” and we live in a “ruthless economy.” Again, the reader is invited to judgefor himself whether we should follow the Quran or the leading Western economists.6.3 Islamic Solution to Scarcity: Needs Islam has a two-pronged approach to the problem of scarcity. Since there isno scarcity at the level of needs, the only thing necessary is to get those who havesurplus wealth to share it with those who are in need. The Quran condemns thosewho do not urge the feeding of the poor. [Q69.34] “Nor did he urge the feeding of the poor.”This verse tells us that not only must we feed the poor ourselves, we should alsourge it on others. In other words, we are required to campaign against poverty asMuslims. If we carry out our responsibility, which is part of the general command tothis Ummah of spreading the good and prohibiting the evil, this will solve theproblem of scarcity at the level of needs. How to carry out this command is also addressed by the Quran, which is full ofexhortations to spend in the way of Allah. A more detailed discussion of both the
  29. 29. encouragement for charitable spending, and the manner in which this is to be doneis given in Kahf (undated). Many books have been written by Muslims and a goodcollection of Ahadeeth and Quranic verses related to the subject are given in Fazail-e-Sadaqat. Some crucial elements of the Islamic strategy for accomplishing this goalare listed below.Compassion: The development of feeling for others is stressed in Islam. The Quranwrites about the Prophet s.a.w. that “heavily weighs upon him (the thought) that youmight suffer, full of compassion and mercy towards the believers.” In other verses,the Prophet is described as being “Mercy for all mankind.” The Quran praises thosewho feed others while being themselves hungry: (Q39:9) “who love all that come tothem in search of refuge, and who harbour in their hearts no grudge for whateverthe others may have been given, but rather give them preference over themselves,even though poverty be their own lot: [13] for, such as from their own covetousnessare saved - it is they, they that shall attain to a happy state!” The second caliph ofIslam, Umer Farooq R.A., ate coarse bread, because he felt ashamed to eat refinedbread when not all of the public could do so. It is the spread of sentiments like thiswhich can solve the problems facing the world today.Infaq: Tremendous emphasis is placed on spending money for the sake of Allah. This is the primarypurpose of acquisition of wealth. In the opening lines of the Quran, the believers are characterized asthose who spend on others: (Q2:2-3) THIS DIVINE WRIT - let there be no doubt about it - is a guidance for all the God-conscious. Who believe in [the existence of] that which is beyond the reach of human perception, and are constant in prayer, and spend on others out of what We provide for them as sustenance.Those who came to the prophet for advice about what to do with (surplus) money, were advised toinvest it in the Hereafter. Kahf (undated) writes that the word “Infaq” --spending for charity – ismentioned in the Quran 167 times, many more than the combined mention of the famous four practicalpillars of faith. The number of Ahadeeth which encourage spending for the sake of Allah is extremelylarge, and many collections of such Ahadeeth have been made in book form (for example, Fazail-e-Sadaqat). The emphasis in these is to change our ways of thinking to value the gains of the Hereafterover the gains of this world. For example: 2:261 The parable of those who spend their substance in the way of Allah is that of a grain of corn: it groweth seven ears, and each ear Hath a hundred grains. Allah giveth manifold increase to whom He pleaseth: And Allah careth for all and He knoweth all things.In Hadeeth, it is narrated by Ayesha r.a. that a goat was sacrificed, and the meat was distributed. TheProphet s.a.w. asked about what was left. Ayesha r.a. responded that only one shoulder of the goatremained. The Prophet s.a.w. said that everything remains except for this shoulder – that is, that whichhas been distributed has been permanently saved for the hereafter, while that which has not beendistributed has been lost to the hereafter.Avoidance of Waste: Spending more than necessary (Israf) is wasteful ofresources, and also deprives the needy. According to a 1997 study by USDepartment of Agricultures Economic Research Service (ERS) entitled "Estimatingand Addressing Americas Food Losses", about 96 billion pounds of food, or morethan a quarter of the 356 billion pounds of edible food available for humanconsumption in the United States, was lost to human use by food retailers,consumers, and foodservice establishments in 1995. Roughly 49 million people could
  30. 30. have been fed by these resources2. In presence of such statistics, showing wastageand resulting loss of efficiency, how can claims of “market efficiency” – that ismarket structures lead to efficient outcomes -- be taken seriously? Such claims aremade on purely theoretical grounds by economists, without any regard to theempirical side, or observations of market efficiency. It is clear that Israf, spendingmore than what is necessary, leads to massive inefficiency, loss of food that couldhave gone to feed the hungry, as well as creating an atmosphere of indifference tothe needs of the poor. Market institutions do nothing to resolve this problem, whichis addressed directly by Islamic teachings. I have not found any material related toIsraf in the heterodox schools of economics either. This supports my claim that Islamoffers solutions to economic problems which are needed by the world, rather thanour being in need of economic ideas from orthodox or heterodox economics.6.4 Islamic Solution to Scarcity: Limit Wants The second prong of the Islamic approach is the treatment of wants ordesires. Islam acknowledges the limitless nature of wants, as the Hadeeth fromBokhari cited earlier shows. Islamic teaching shows that accumulation of wealth ormaterial resources will not result in elimination of this ‘scarcity,’ because wants willexpand as the wealth increases. Thus the reason for ‘scarcity’ is not lack of wealth ormaterial resources (as per Western conception) but rather the limitless nature ofdesire. Thus, no amount of expansion of GNP will eliminate this scarcity. This Islamicpoint of view receives strong empirical support from recent research. Lane (2001)and Layard (2005) have shown that substantial increases in wealth have not led tocorresponding increases in satisfaction, contentment, wellbeing or happiness ofhuman beings. This is a clear sense in which the pursuit of worldly possessions is anillusion (Q3:185, Q57:20). Conventional economists, policy makers and plannersstudy policies to increase the rate of growth of GNP per capita, and spendtremendous amounts of energy to achieve goals which have no perceptible impacton human welfare. The Quranic solution to scarcity at the level of ‘wants’ is to ask people to leadsimple lifestyles, be content with what they have, not to envy others who have more.The Quran berates those who have taken their desires for their God (45:23), andstates that paradise is for those who fear God and restrict their desires (79:41-42).Allah teaches us not to envy luxurious lifestyles of those who do not believe in theday of Judgement, since all they have is the life of this world, which is pitifully smalland limited compared to the next.4:32 Hence, do not covet the bounties which God has bestowed more abundantly onsome of you than on others. Men shall have a benefit from what they earn, andwomen shall have a benefit from what they earn. Ask, therefore, God [to give you]out of His bounty: behold, God has indeed full knowledge of everything. 9:59 And yet, [it would be but for their own good] if they were to content themselves with what God has given them and [caused] His Apostle [to give them], and would say, "God is enough for us! God will give us [whatever He2 Source: “Statistics on poverty & food wastage in America” by Samana Siddiqi, available athttp://www.soundvision.com/info/poor/statistics.asp
  31. 31. wills] out of His bounty, and [will cause] His Apostle [to give us, too]: verily, unto God alone do we turn with hope!"The Prophet s.a.w. told us that real wealth is the wealth of the heart (i.e.contentment).Prohibition of Envy: Islam prohibits us to envy others, and teaches us strategies toprevent it. (Q4:32) And in no wise covet those things in which Allah Hath estowed His gifts More freely on some of you than on others: To men is allotted what they earn, and to women what they earn: But ask Allah of His bounty. For Allah hath full knowledge of all things.The Prophet told us to look at people less fortunate than us in wordly affairs, so thatwe would feel thankful for what we have. Making others envy us, via conspicuousconsumption, is also prohibited in Islam. From Veblen (1899) to Lane (2001) andLayard (2005), many have identified this as an important source of waste andunhappiness in capitalist economies. Western advertisements for luxury productsencourage consumers to be the envy of their neighbors, and be the first to own somenew product. In complete contrast, the Prophet taught us to keep a share for theneighbor in the fruit that we bought – if we could not afford to do so, then we shouldbury the peel of the fruit, so that the neighbor’s children would not see and feelregret.Our Prophet s.a.w. taught that “Do not let the smoke from your house botheryour neighbor” – that is, if your neighbor can smell your cooking, you should shareyour food with him. The rich should conceal their riches to prevent envy – the exactopposite of conspicuous consumption. At the same time, the poor are encouraged tonot envy the rich, but to be content with their lot. True richness is that of the heartwith a generous disposition. Implementing in our hearts this degree of concern forother would enable a small amount of material goods to go a long way towardsfulfilling social needs.Avoidance of Tabzeer (Q17:26,27): While Israf is spending more than what isneeded, Tabzeer is to spend on what is entirely unnecessary, illegal or Haram. Ifconsumers were to spend only on their needs, there would be a substantial fall indemand for consumer goods, and substantial increase in savings. This would lead tosubstantial funds being available for investment and welfare projects andcorresponding increases in growth and welfare of the poor. However, capitalistsocieties have mechanisms to prevent this reallocation of resources to usefulpurposes. Marketing is used to create feeling of need in consumers for entirelyunnecessary products (like “Pet Stones,” expensive “Barbie Dolls” and other faditems). Conspicuous consumption, first analyzed by Veblen, is to buy things so as tobe the envy of the neighbors, or to establish status, both of which are Haram inIslam. These lead to massively wasteful and inefficient market outcomes, which arenot recognized as such by conventional economists because of their assumption thatConsumer demand is the final judge of what is useful or not. As Muslims, we cannotaccept this assumption, which legitimizes consumption of the Haram as well.7. Concluding Remarks
  32. 32. The Quran describes the human tendencies for greed and acquisitiveness withdisapproval: (Q89:20 And ye love wealth with inordinate love!) It also describes theconsequences of this greed graphically: 30:41 Corruption doth appear on land and sea because of (the evil) which mens hands have earned, that He may make them taste a part of that which they have done, in order that they may return.To me it seems that this verse hints at the environmental damage which would becaused by unconstrained greed and attempt to wrest wealth out of the earth viaexploitation. While the wrong Western diagnosis that lack of wealth is the source of‘scarcity’ leads them to pursue the wrong remedies, the Quran offers us the correctsolution to the problem. Instead of striving for more wealth, the Quran teaches us torestrict our idle desires, strive to lead simple lifestyles, and to spend on others lessfortunate than us. It also teaches us to be content with what we have, and not envythose who have more material wealth. We should also have compassion for others,and not seek to make them envious of our consumption, if we have more. Inparticular, ‘conspicuous consumption’ is not permitted in Islam. If we return to thesesimple formulae of Islam, Islamic societies would enjoy much more satisfaction withmuch fewer consumption goods than currently. As in the days of the Prophet s.a.w.where the level of contentment of the primitive Islamic community was much higherthan that of Roman and Persian communities with much higher standards of living. These teachings of Islam are the key to economic progress, in the sense thatif we follow them, it will not only increase welfare and satisfaction, but also lead torapid economic growth. These do not have parallels in Western economics. I haveonly outlined some arguments, which relate to a small and specific domain. Islamicteachings relating to economic affairs are much more vast and cover a substantiallylarger set of issues. It is sad that Muslims have neglected their heritage, and haveenvied that of others. It is not fitting for one who has been given knowledge of theQuran to envy those who do not have this; it is likely to arouse the anger and ire ofAllah, who says 3:196 LET IT NOT deceive thee that those who are bent on denying the truth seem to be able to do as they please on earth: 197 it is [but] a brief enjoyment, with hell thereafter as their goal - and how vile a resting-place! – In accordance with the Quranic teaching of “O believers, why do you say thatwhich you do not do,” (61:2) the main issue of Islamic economics is to bring theteaching of Islam into our lives and into the lives of our fellow Muslims. When westart practicing these teachings by leading simple life styles and caring for our fellowhuman beings, an Islamic economic system will come into existence. Muslimsocieties are distant from the practice of Islam (as witnessed by levels of Zakatcollection, for example), and so our priorities must be to restore the practice, whichwill lead to the desired theory. This means particularly that Muslim economists muststrive to put Islamic teachings of Islam in their own lives and demonstrate Islamiceconomics by being living models. May Allah give us the capacity to understand andobey his commands and plant our feet firmly on the path of Guidance.
  33. 33. 8. ReferencesColin F. Camerer, Behavioral Game Theory: Experiments in Strategic Interaction, Princeton UniversityPress, 2003.Christoph Jensen, “From Malthus to Eugenics to Racial Hygiene to Ethnic Cleansing”(see also R. Steiner Oct. 7th 1916: ‘Goethe and the Crisis of the 19th Century’)http://www.transintelligence.org/articles/From%20Malthus.htmMonzer Kahf, “Infaq in the Islamic Economic System,” Undated. Available frommonzer.kahf.com accessed 30 June 2007.Ali Khan, “Self Interest, Self Deception, and the Ethics of Commerce,” paper presented at IslamicDevelopment Bank (IDB), Roundtable on Islamic Economics: Current State of Knowledge andDevelopment of the Discipline, Jeddah May 26-27, 2004.Robert E. Lane, Loss of Happiness in Market Economies, Yale University Press, 2001.Richard Layard, Happiness: Lessons from a New Science, Penguin Press, 2005John O. Ledyard, “Public Goods: A Survey of Experimental Research,” in Kagel and Roth (eds. 1995).Seyyed Vali Reza Nasr, “Islamization of Knowledge: A Critical Overview,” Islamic Studies, Autumn1991, p. 387-400.Robert H. Nelson, Economics as Religion: from Samuleson to Chicago and Beyond, Pennsylvania StateUniversity Press, 2001.Jeffrey Sachs, The End of Poverty: Economic Possibilities for Our Times,Penguin, 2006Amartya Sen, Poverty and Famine: An Essay on Entitlement and Deprivation,OxfordUniversity Press, USA, 1983,Julian Lincoln Simon, The Ultimate Resource 2, Princeton University Press, 1998.Bernhard Schreiber, The Men Behind Hitler, translated by H. R. Martindale, 1960.[http://onlinebooks.library.upenn.edu/webbin/book/lookupid?key=olbp27908]R. H. Tawney, Religion and the Rise of Capitalism, New York: Harcourt, Brace & World, Inc., 1926.Rolf Witzsche, “Aids and The History of Depopulation Policies,” CygniCommunications, Canada, 1995. http://peace.rolf-witzsche.com/witzsche/aids1.htmlhttp://aidschristianscience.rolf-witzsche.com/aids_christian_science_2.htmlAsad Zaman, “Islamic Economics: A Survey of the Literature,” Religion andDevelopment Research Programme, Working Paper 22, Univ. of Birmingham, 2008.Asad Zaman, “Improving Social Science Education in Pakistan,” Lahore Journal ofPolicy Studies Vol. 2 No. 1, June 2008.
  34. 34. Asad Zaman, “An Islamic Critique of Neoclassical Economics,” draft June 2008,submitted to Islamic Studies.Asad Zaman, “ Developing An Islamic Worldview: An Essential Component of AnIslamic Education,” Lahore Journal of Policy Studies, Vol 1, No. 1, p95-108, 2007Asad Zaman, “Origins of Western Social Science” Journal of Islamic Economics,Banking and Finance, vol 5, number 2, 2009.Lecture 4: Emergence of Market Economies and SocietiesThe Market Economy and Its Limits By the “Market Economy,” we mean a method of organizing economic affairswithin a society so that an un-regulated market is the means for conducting nearlyall material transactions within the economy. In such economies, decisions aboutproduction of goods, valuation, trade, distribution, etc. are all settled by individualsor small groups acting with maximum possible freedom, and a minimal set of legal orsocial constraints. Since this is the dominant mode of organizing economic activitycurrently, it appears natural, and alternatives are hard to imagine. In fact, as Polanyi(1946) notes, “Previously to our time, no society has ever existed that, even inprinciple, was controlled by markets.” To understand the functions and effects of themarket economy, it is necessary to delve into the history of its emergence and riseto a global system. This analysis, undertaken below, leads to the followingconclusions: 1. A market economy requires supporting institutions, social structures, political structures, ideologies, and ways of organizing knowledge. Labelling all of these elements combined as a “market society,” we can say that market economies can only exist within market societies. 2. Social structures required for market economies conflict with traditional social mechanisms. This implies that transitions to market economies are accompanied by violence and destruction of traditional social norms. Recent history is a record of resistance and conflict between traditional society and market society. 3. The global dominance of market economies has led to glorification and praise of their virtues. The tremendous damage inflicted on the world and society by the emergence of market economies has been suppressed A realistic assessment shows that urgent action is needed to rescue man and society from the brink of disaster to which the market economy has brought all of us.Because of the damages caused to society by the market economy, Polanyi (1946) inThe Great Transformation forecast its demise following the largest crisis in his time,namely World War 2. The unexpected recovery and rise to global dominance of the
  35. 35. unregulated market, and its dreadful consequences have been documented by Klein(2008) in SThe Shock Doctrine: The Rise of Disaster Capitalism . Many of the centralelements of the analysis which follows are borrowed from these two sources,referred to simply as Polanyi and Klein hereafter.1. The Emergence of the Market Economy A confluence of historical forces led to the emergence of a market economy inseventeenth century England. The most important of these are the weakening of thehold of religion, and also the rise in the power of the landed aristocracy in England.Both of these forces are conveniently represented in the brief realm of OliverCromwell, who beheaded King Charles I, and also massacred large numbers of IrishCatholics.1.1: Rise of Secular Thought: The European experience of massacres, violence,and massive social disturbance due to religious conflicts led even religious leaders toagree to the use of secular principles to organize society for the sake of socialharmony. Release of the constraints of religion allowed the introduction of valuesand principles dramatically opposed to traditional values. The most important of alarge number of such changes was the replacement of the Biblical idea that “Thelove of money is the root of all evil” by Bernard Shaw’s sentiment that “The lack ofmoney is the root of all evil.” Traditional society honors those who renounce materialpossessions, values simplicity over luxury, and considers gluttony, avarice,covetousness, and greed as sinful characteristics. Market societies honor thewealthy, consider poverty as a vice, promotes luxurious lifestyles, and considergreed and selfishness as natural and socially useful.This transition of thought is in accordance with the Quranic verse (2:257) that thosewho deny God will move from the light into darkness.1.2: Rise of Landed Aristocracy: In the long standing battle between monarchsand aristocrats, kings had supported commoners against the nobles, to keep a checkon their power. Efforts of the aristocracy to gain complete control over theirlandholdings (the commons, in particular) had been successfully resisted for sometime, but Cromwell’s victory shifted the balance of power permanently in favour ofthe landed aristocracy. They wasted no time in putting up enclosures, whichprevented access of large numbers of the poor to grazing land and other means toeke out a living. The resulting social catastrophe has been described by Polanyi asfollows: The lords and nobles were upsetting the social order, breaking down ancient laws and custom, … by violence …. They were literally robbing the poor of their share in the common, tearing down the houses … ( of ) the poor. The fabric of society was being disrupted; desolate villages and the ruins of human dwelling testified to the fierceness with which

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