Writeup/Video: bit.ly/cie7gop: The failure of modern Western Economics became obvious for all to see with the Global Financial Crisis. The current state of global economy is a disaster on all fronts - wars, ecocide, destruction of society, reduction of human beings to human resources. In this situation, Islamic Economists have the golden opportunity to provide radically new solutions to problems facing mankind, rooted in the teachings of Islam. No one else has anything close to the knowledge provided by the complete and perfect final message of God to mankind. Slides: bit.ly/SS3GIE7

1. CIE7: The Challenge
& The Opportunity
Section 6 of Crisis in Islamic Economics
Writeup/Video: bit.ly/cie7gop
These Slides: bit.ly/SS3GIE7

2. Outline
1. GFC 2007 made failure of modern economics obvious to all.
2. Modern economics is built on foundation which made radical
change impossible
3. Massive challenges face humanity on every front – as in Jahilliyya
4. The ONLY solutions lie in Islam
5. This creates a GOLDEN opportunity for us to launch a revolution –
parallel to the revolution created 14.5 Centuries ago.

3. Deep Discontent
with
Conventional
Economics
Global Financial Crisis made this
failure obvious to all.
Economics as Religion
Worship of Gold

4. Queen of
England to LSE:
Why did no
one see it
coming?

5. US Congress appoints committee to
investigate failure of economic theory!
Not only did economists not warn us, they re-assured us that crisis was
not possible!
Prepared Statement by Robert Solow, Professor Emeritus,
MIT for House Committee on Science and Technology
Investigations and Oversight, “Building a Science of
World” July 20, 2010
(On the use of DSGE models for policy); A thoughtful person, faced
with the thought that economic policy was being pursued on this basis,
might reasonably wonder what planet he or she is on.

6. Nobel Laureates admit crisis in Economics
Krugman: The profession as a whole went astray, because the mistook
the beauty of mathematics for truth.
Solow: Lucas and Sargent are like madmen … their theories are so crazy,
they should not be taken seriously.
Paul Romer: Profession has gone backwards. Macro Theories are are
beyond reality!
Olivier Blanchard: Modern Macro makes assumptions profoundly at
odds with what we know about consumers and firms.
See: QUOTES CRITICAL OF ECONOMICS: http://bit.do/azquo

7. Inability of
Western
Economics to
Change
Momentum, Mindset, Secular Modern
Thought

8. Axiomatic Methodology
• Start with CERTAINTY in axioms – deduce using logic – no possibility
of mistakes, corrections.
• Confronted with facts in conflict with theory, economists argue that
theories should be built on bizarre assumptions.
• Milton Friedman: “Truly important and significant hypotheses will be
found to have “assumptions” that are wildly inaccurate descriptive
representations of reality, and, in general, the more significant the
theory, the more unrealistic the assumptions.”

9. Dramatically wrong theories;
failures on every front
Behavioral Economics: No utility maximization
Firm theory: No profit maximization
Price theory: No supply and demand determination of prices.
Neutrality of Money (No Banking & Finance in Macro!)
Steve Keen :How anybody can think they can analyze capital while
leaving out Banks, Debt, and Money is a bit to me like an ornithologist
trying to work out how a bird flies whilst ignoring that the bird has
wings…

10. Trapped in wrong
fundamental beliefs
• Massive inertia of existing
ways of thinking, protected by
establishment.
• Theories of knowledge aligned
with power structures.
• Rejection of Heart, Spirit, Soul
as sources of knowledge

11. Challenges
Facing
Humanity
Crisis on every front
Environmental, Political, Social,
Economic

12. Environmental
Crisis
• The Sixth Extinction: Millions of
species of plants and animals
destroyed.
• Land, Sea, Air, polluted.
• Polar Ice Caps Melted
• Forests, Lakes, Coral Reefs
• Entire planet undee threat!

13. Political Crises
• Continuous Wars
• Millions of Innocent Lives
Destroyed
• Injustice, Oppression

14. Economic Crisis:
See through the DECEPTION of
scarcity
• Increasing Inequality – 50
people own half planetary
wealth, Billions live under
poverty line
• Resources VASTLY MORE
than enough to comfortable
feed, house, clothe, educate,
and provide healthcare for
entire planet.
• BUT Economics built on
SCARCITY!

15. Social Crisis
Economics is built on greed,
competition, individualism,
hedonism
TOXIC messages for the soul.
Breakdown of families,
communities, sense of
connection with humanity and
universe.
PREVENT spiritual progress
Source of all problems today:
Spiritual STUNTING caused by
excessively materialistic
education

16. Personal Crisis
• Theft of Identity: Turning
human beings into human
resources
• Goal of Life: Pursuit of
money, luxury, power,
prestige, career
• Learn how to be a Human
Being instead of Human
Resource.
Human Resources

17. The Revolutionary
Solutions Offered
by Islam
Brotherhood, Cooperation, Generosity,
Environment as Trust, Justice

18. Seven Revolutionary Messages –
No Match to Western Teachings
1.Excellence in Conduct. The best Muslim is the one who has the best
conduct.
2.Mercy to all Nations: We have the welfare of the entire humankind in
our hearts. This is the responsibility entrusted to the Ummah of
Muslims.
3.All men and women are brothers and sisters, born of Adam and
Hawwa. We are all equal, and we are responsible for each other.
4.Power is given to us to HELP the oppressed, not to oppress.
5.Wealth is given to us so that we can help the needy, not to flaunt it
like Qaroon
6.The leader of a nation is the servant of the people.
7.All creation is the family of God. The way to get near to God is to be
of service to the Creation

19. The Golden Opportunity
Islamic teaching provide the UNIQUE basis on which an alternative vision for
future of humanity can be built

20. Circumstances today Resemble Jahilliya
Flaunting luxury when billions are poor and hungry
Wars for power
Leaders boast about killing millions of civilians
Corporations routinely killing millions for profits
Spiritual Stunting – makes it impossible to SEE evil

21. Islam Launched a Revolution 14 Centuries
Ago
• The revolution of Islam was a revolution of KNOWLEDGE
• Islam came as a stranger and will become a stranger
• You will follow the ways of the Jews and Christians, crawling into
lizard-holes after them.
• Teachings of Islam are just as revolutionary today, as they were 14
Centuries ago.

23. Complete Sequence of Posts in this lecture:
The Crisis in Islamic Economics
CIE1: Islamization of Knowledge – http://bit.ly/cie1iok
CIE2: Crisis in 2nd Generation Islamic Economics – http://bit.ly/cie2cri
CIE3: Four Flaws of Modern Economics – http://bit.ly/cie3fce
CIE4:Two Puzzles about Islamic Economics – http://bit.ly/cie4pie
CIE5:The Revolutionary Islamic Alternative – http://bit.ly/cie5ria
CIE6:Pragmatic Objections to Visionary Ideals – http://bit.ly/cie6obj
CIE7:Challenge and Opportunity for 3rd Gen IE – http://bit.ly/cie7gop

24. Links to related materials
Completing the Circle: From Great Depression 1929 to Global Financial
Crisis 2007 -- http://bit.ly/gd29gfc
Flawed Foundations of Social Sciences -- http://bit.ly/rsia10a
Ecological Suicide -- http://bit.ly/EcoSui
Re-Enchanting the World -- http://bit.ly/AZrtW
The Ghazali Project for Revival of the Deen -- http://bit.do/azgt6
Launching an Islamic Revolution in Economics -- http://bit.do/azai4