Capitalism is founded on greed, competition, individualism and hedonism. Islam builds societies on foundations of generosity, cooperation, social responsibility, and the struggle for success in the Akhira. Obviously the two are radically different. This talk spells out some of the details of how these differences arose, and what they imply for economics

1. Capitalism Versus Islamic
Economics
Dr. Asad Zaman
Invited Lecture by The New Visionaries, Quaid-e-Azam University
Friday 18th Aug 2023, 8:00pm
Download these slides from: http://bit.ly/SStnv

2. Radically Different Foundations
Capitalism is built on: Greed, Competition, Individualism, Hedonism
Islamic Economic Systems are built on: Generosity, Cooperation, Social
Responsibility, Striving for Success in Akhira instead of this World.
Fundamental Principles of the two systems are diametrically opposed
to each other.
It is not possible to mix the two. See: The Crisis in Islamic Economics:
http://bit.ly/cie1iok
Islamic Economists have been trying to build IE as a mixture of
capitalism and Islam since 1970s, and have failed completely.

3. Historical Origins of Capitalism
This Economic System has been a huge disaster for mankind.
However, it has been painted as a huge success. The method for doing
this is to count all gains, and ignore all costs.
The primary cost is wars, which have killed millions over the past
century – far more killings than in all human history.
The combined defense budget of the world is more than sufficient to
bring great prosperity for all the people living on the planet.
Wars are directly linked to the capitalist economic system. This fact is
systematically hidden by divorcing politics from economics.

4. Karl Polanyi: The Great Transformation:
Political and Economic Origins of Our Times
Among the top ten most influential books written in the 20th Century.
Presents a deep analysis of how traditional society – based on
generosity, cooperation, and social responsibility – was transformed to
a market society, based on greed, competition, individualism and
hedonism.
Critical Lessons from the book are summarized in: http://bit.ly/AZGTET

5. Tawney: Religion and the Rise of Capitalism
Christianity: Love of Money is the Root of All Evil
Capitalism: Lack of Money is the root of all evil
How did this transition take place?
http://bit.ly/AZtawney5

6. What is Economics?
A Branch of Moral Philosophy
What should be produced? How should it be produced? Who should
the produce be distributed?
All three are moral questions, and answered differently by Islam and
Capitalism. For example:
1. We should produce to satisfy basic needs of the population – food,
housing, energy, education, health.
2. We should produce goods which bring us maximum profit when
sold in the marketplace.
“Economics: Normative Judgments Disguised As Objective Reality”
http://bit.ly/aznf4s

7. Is Economic Theory Universally Valid?
Does Economic Theory, as developed by Samuelson in post WW2 USA,
apply to Pakistan? Is the theory of trade valid across time and
geographical region, without regard to politics?
Obviously Not.
Consider the trade war between China and USA. The low level of trade
between Pakistan and neighbors reflects politics, not economics.
DEEPER QUESTION: Why does Economic Theory CLAIM to be
universally valid, when this is obviously false? See: The Puzzle of
Western Social Science: http://bit.ly/AZpss

8. Economic Theory => Lower Growth
Violations of Economics => High Growth
The East Asian Miracle: Documents how East Asian economies violated
all the rules of free market in order to create miraculous growth –
consistent 7% maintained for 3 decades.
Dani Rodrik: Goodbye Washington Consensus, Hello Washington
Confusion. Documents failure of Washington Consensus policies,
imposed by the World Bank, around the globe. These same policies are
currently being followed in Pakistan, and are prescribed by leading
economists, both inside and outside Pakistan.

9. Economics is a Religion, Not a Science!
http://bit.ly/AZroe
Code Words: “Rationality” and “Efficiency”
Rational Behavior is maximizing pleasure we get from consumption of
goods and services.
This involves rejecting God, Afterlife, and Judgment Day.
Quran:
Ye will not attain unto piety until ye spend of that which ye love. And
whatsoever ye spend, Allah is Aware thereof.
Give what you love most in charity – minimize utility in this world to
maximize reward of the Akhira

10. Modern Social Science:
Built on Hidden Moral Foundations
More than a century of religious wars leads to rejection of Christianity
as a basis for building society.
This leads to creation of Western social sciences: lessons extracted
from historical experience of European societies. These lessons are
radically in conflict with lessons from Islamic experience.
See: Rebuilding Social Sciences on Islamic Foundations
Part 1: http://bit.ly/AZrss1 and Part 2: http://bit.ly/AZrss2

11. Uloom-ul-Umran: Ibn-e-Khaldun’s original
approach to social science
3D approach to social science: http://bit.ly/AZUUU
Descriptive: Describe the ground realities, the situation as it exists.
Prescriptive: Describe the ideal – the good society
Transformative: How do we take current situation and transform it
towards the ideal?
Ideals of Capitalism: Society is a jungle of fierce competition governed
by survival of fittest, where everyone acts for their personal interests.
Ideal Islamic Society: Generosity, Cooperation, Social Responsibility,
Striving for success in the Akhira via sacrifice of worldly pleasures.

12. Central Difference: Islam versus Capitalism
Islam: Social Relationships have priority over Market Relationships
Question: Often Asked in Interviews for Medical School.
Does Doctor have right to withhold treatment to dying patient, if
patient does not have money to pay for it?
Market Society: YES market relationship have priority over social.
Islamic Society: NO human relationship has priority over market.
Lecture 6: Drivers of Social Change: See my ongoing sequence of
lectures on Islamic Economics: http://bit.ly/IslamicEcon2023

13. Building An Alternative: Islamic Economics
Rethink from ground up. Reject Micro and Macro distinction. This is
grounded in European historical experience.
Religious warfare led to conception of a secular society. Everyone free
to follow their own religion. BUT, religion has no role in public sphere,
in shaping society.
Individualism: Everyone determines their own goals – Microeconomics.
There are no communities (Thatcher: There is no society)
Collective action only occurs at state level.
In Islam, social networks are critical. Family, Community, Social
Organizations, play a central part in economic organization.

14. Normative Ideals of An Islamic Society
We have created man in the best form, and reduced him to the lowest
of the low.
Man has the potential to rise higher than the angels, and also to be
worse than the worst of the beasts.
Goal of Society: to enable each individual to reach his/her maximum
potential.
Every seed has the potential to become a tree. Goal of society is to
provide a nurturing environment, which enables growth.
Human Development, NOT accumulation of wealth.

15. First Priority: Basic Needs
And they feed, for the love of Allah, the indigent, the orphan, and the captive,
Ensure that basic needs of everyone in society are met.
Complementary: No Israf & Tabzeer – excessive consumption, far
beyond needs level.
Spend what is in excess of your needs on others.
How to do this: Strengthen social relationships.
A believer loves, and is loved!

16. Normative Foundations of Scarcity
https://ssrn.com/abstract=1554202
Diagnosis: People are hungry and homeless because there is not
enough production. Solution: Produce more.
Wrong Diagnosis leads to wrong solution.
Amartya Sen: Poverty and Famine. Famines occur because economic
theory asserts that only those with money are entitled to food – this is
a moral position. At the height of the Bengal famine, food was being
shipped out of Bengal to places where people could pay for it.
CRITICAL to SCARCITY: putting market relationships above social
relationships. Putting wants of the rich above needs of the poor.

17. Fact: There is
more than
enough food

18. There are many ways to end hunger
Combine Defense Budget sufficient to bring prosperity to the planet.
No scarcity – main economic problem is warfare.
World Spending on cosmetics is sufficient to end hunger.
No scarcity – just excess and wasteful spending. Israf & Tabzeer.
Within Pakistan, we have sufficient resources to wipe out hunger and
end malnutrition.
Why do we not do this? Economic theory does not MENTION hunger. It
states that economic growth (MORE production) is the solution to all
economic problems.

19. Critical Economic Policy Prescriptions
• Produce enough food to feed our own population.
• Produce enough energy to suffice for domestic needs.
• Ensure just, fair, and equitable distribution.
Current Economic Crisis in Pakistan: Easy Solutions Blocked by Power
http://bit.ly/AZcecp1
Current economy is based on colonial institutional structure. The
people are exploited to provide luxuries for the rich. Food is exported
for dollars, to buy imports for the powerful elites.
Self-Sufficiency is required to avoid crises, but harmful to interests of
the powerful.

20. How to enable Human Development?
Islam’s Gift: An Economy of Spiritual Progress http://bit.ly/AZgift
Building strong families and communities, based on Islamic moral
foundations.
Families and communities are primary source of moral training.
Education is a secondary source.
Western education, especially economics, destroys morality.
Julie Nelson: Poisoning the Well: How Economics Destroys the Moral
Imagination.

21. How to Build Strong Families?
Reject Individualism and Hedonism being taught in Microeconomics
around the globe. This is reinforced by Hollywood movies, which have
far greater impact on public thought.
Utilitarianism was developed by Jeremy Bentham as an alternative to
Christianity. Morality – good and evil – was replaced by pleasure and
pain. This teaches both individualism and hedonism, contrary to Islam.
It is NOT rational to maximize pleasure from consumption of goods and
services. Rather, we should give what is above our needs to those who
are in need, for the sake of the love of Allah, for success in Akhira.

22. How does this affect families?
Marriage is a social contract: Two people make a life-long commitment
to create a family. Pleasure is a fringe-benefit which makes it easy to
put up with the hardships and sacrifice involved in fulfilling
commitments.
Individualism and Hedonism are very strongly anti-family. I will pursue
my pleasure, regardless of how it affects my spouse and children.
Purpose of marriage is also pleasure (not commitment). If I cease to
have pleasure from marriage, or find a more pleasurable alternative, I
will get a divorce.
YOLO: You Only Live Once. (Maximize Pleasure =/= Learn to Live)

23. Capitalism Re-shapes Our Identities
Capitalism
You are a human resource.
Value of your life is defined by the amount of money you can earn.
Islam
You are a human being – infinitely valuable in sight of Allah.
Value of your life is determined by your good deeds, and your spiritual
progress towards the love of Allah.
“Learn Who You Are!” http://bit.ly/AZwya

24. How to Behave in Economic Sphere
Earnings should be Halal.
Meta-Principle: seek to create more value for society than what you get
in terms of pay and perks.
(Allah T’aala) created life and death to see who does the best of deeds.
All of the creation is the family of Allah. And Allah T’aala loves best
those who are good to His family.
The best of deeds is to SERVE the creation of God, for the sake of the
love of God. (Radically different from selfish maximization of pleasure)

25. MMT meets Islam
MMT offers us a macroeconomic framework for an economy with zero
interest, zero inflation, and zero unemployment – all three desirable
objectives for an Islamic Economy.
For a two semester course on MMT based on latest MMT textbooks,
see http://bit.ly/TenCourses
Course 12: Advanced Macroeconomics 1 and 2.
Examine one aspect of MMT: The Job Guarantee.

26. Critical MMT Insight:
We can create Full Employment
Everyone should be able to contribute productively to society, to earn
what they need to live comfortably.
MMT: We can provide productive jobs to everyone without inflation.
Government prints money required to pay wages. Employed workers
add production to economy. More Money and More Production does
not lead to inflation.
This is the big picture. Many fine-tuning details are required to make
this work.

27. Critical Element: Motivation to Work
Max Weber: The Protestant Ethic and the Spirit of Capitalism
Capitalism is a very strange and un-natural economic system.
Accumulation of money is the goal – for individuals, corporations,
states. But money is to be accumulated for its own sake, NOT for use to
buy comforts.
How did this happen? One Protestant Faction thought that wealth was
a sign of the pleasure of God. This is explicitly denied in the Quran.

28. Islamic Work Ethic
This is very different from the Capitalist Work Ethic.
It stems from the desire to contribute productively to society – so as to
justify the benefits (including wages) that we derive from society.
This work ethic was destroyed by the process of colonization. People
were being made to work to provide profits to the colonizers.
Today, the masses are exploited to provide luxurious lifestyles to the
wealthy and powerful
Tariq Rehman: Denizens of Alien Worlds – There are two Pakistans, one
for the elites, and one for the masses. Same as colonial times.

29. To make MMT Job Guarantee succeed,
we must create Islamic Work Ethics.
To create Islamic Work Ethic, we need to undo mentality created by
colonization.
First Economic Priority: Provide Lives of Dignity to the Poor.
There is no scarcity, only lack of WILL to do this.
Lack of Will is created by the colonizers education – which creates
respect, admiration and awe of European intellectual
accomplishments, and a sense of inferiority, together with contempt
and hatred for our own indigenous culture, heritage and intellectual
traditions. ENGLISH language is key marker of the elite class.

30. So, What Do We Need to DO?
Action is required on many fronts.
I have summarized the issues in form of the Ghazali Project
Central Ideas of the Ghazali Project: http://bit.ly/Ghazali1
Three Steps:
1. Al-Munqid min Al-Dalalah Deliverance from Error
2. Tahafat al Falasafa Incoherence of the Philosophers
3. Ihya Uloom ud Deen Revival of the Religious Sciences

31. Diagnosis:
Ancient Mu’tazila were so impressed with Greek Philosophy that they
said that REASON (Greek Philosophy) is on par with or prior to
REVELATION.
Modern Mu’tazila: http://bit.ly/AZtmm are so impressed with Western
Sciences that they treat them on par with the Quran.

32. Deliverance From Doubt:
Build Faith in God
God has provided us with complete and perfect guidance until the end
of time.
This guidance led ignorant and backward Bedouin to world leadership,
and created a civilization which enlightened the world with knowledge
for more than a thousand years.
The message of God has the same revolutionary power today as it did
1450 years.
The knowledge given by God is superior to all human created
knowledge. See: The Complete and Perfect Guidance from God:
http://bit.ly/YTcpgg

33. Incoherence of the Philosophers
Break down the shock and awe of Western superiority, especially
intellectual superiority.
See: The Origins of Western Social Sciences http://bit.ly/IR3owss
Social Sciences are disastrously wrong. Evidence is failure of family and
society in West. Increasing rates of suicide among the prosperous.
Hunger and Homelessness even though there is more than enough
resources. Deadliest century in terms of wars killing millions. Climate
Catastrophe.
What about the Physical Sciences, Medicine, Technology – Put this
aside for the moment. Quality of Human Life has deteriorated.

34. Revival of the Religious Sciences
Social Science is the DEEN of the West. It is the way of life which
replaced Christianity – since Christianity led to perpetual warfare.
CRITICAL: Christianity – like Islam – has both components Religion and
Deen. Religion is private belief system. Deen is way of life. Christian
Deen was abandoned and replaced by Secular Social Sciences.
However, secular social science was not very successful at preventing
warfare.
We have our own Deen Based on the Shari’a. The Shari’a tells how to
go about building a good society in all dimensions. See: Decolonizing
Social Sciences: http://bit.ly/RSdss

35. The Politics of Knowledge and Power
Quran: Message starts with “READ – in the name of the Lord … who
gave man knowledge which he did not have.”
The revolution created by the Quran started with special knowledge,
which was very powerful.
The knowledge was implemented via a struggle. Those who struggle in
our cause, We will guide them to Our pathways.
When we struggle to create an Islamic society, we will be given the
knowledge we need to do so.
The true knowledge will be resisted (strongly) by false ideologies.

36. To Participate in the Struggle to Create an
Islamic Economic System
First Step: Sign up on the Islamic Economics Mailing List
http://bit.ly/AZIEML
Second Step: Go Through the Lectures on Islamic Economics on
website: http://bit.ly/IslamicEcon2023
Third Step: Join the WhatsApp Group of IEML for Active Planning on
how change syllabi and course materials in Economics programs within
the Islamic World. Link is on Home Page of Islamic Economics 2023
website.