Talk explains how the social sciences emerged as a replacement for Christianity, and are built on moral foundations in dramatic conflict with Islamic values. We go on to explain how we can develop alternative teaching methodologies within the Islamic world. Agent Based Modeling provides a general purpose tool which we can use to redo standard Economic theory models, and create alternatives.
Imposing Eurocentric Patterns on Islamic SocietiesAsad Zaman
{ writeup: bit.ly/AZiepi }This is part 1 of a talk on "Rebuilding Economics on Islamic Foundations". In this part, we discuss how social sciences are lessons extracted from the historical experiences of European societies. These cannot be generalized to all societies. In particular, Islamic societies are built on frameworks given by the Quran and Sunnah, which are in dramatic conflict with the foundations on which European social sciences are built. This makes it necessary to rebuild the social sciences on foundations provides by Islamic teachings, and on patterns in use for more than a thousand years in Islamic societies.
The Great Transformation from a traditional Christian society to a Capitalist Society in Europe reversed the priorities between market and social relationships. As Polanyi says, society became embedded within markets, rather than the other way around. This has been enormously destructive, and the only hope lies in reversing this transformation. Slides show how we can go about doing this.
For Associated Videos and Writeups, see: http://bit.ly/na2ie04 - A capitalist economy cannot function except within a market society. Capitalist education is designed to teach us our roles and responsibilities within a market society, and to ensure that we consider the system as the best possible, within human limitations.
To create an Islamic Economy, we must recognize the restrictions on our thoughts placed by living in a market society, and learn to think outside of these boxes.
This is lecture 4: How Capitalism Shapes Our Minds and Hearts, of A New Approach to Islamic Economics. Complete Lecture – all nine segments, with videos and writeups, can be accessed from: http://bit.ly/na2ie04
{writeup/video: http://bit.ly/AZfoie1} This talk explains how we can create an Islamic Economic system in Pakistan. The first part of the talk explains that one of the main obstacles to this project is the vast number of misunderstandings created by orthodox economic theory. In particular, a critical misconception is the idea that capitalism can be converted to an Islamic economy by minor modifications, such as setting interest rate to zero. Interest is integral to financial capitalism and cannot be set to zero without major modification in other economic areas. The second part of the talk explains that to create a zero interest economy, we must first create a zero inflation economy. Both are possible within a theoretical framework given by Modern Monetary Theory. This provides the policy prescriptions needed to create full employment and zero inflation, together with a zero interest rate. These are very close to an Islamic Economy ideals, which provides equal opportunities, basic needs and economic justice for all members of the community. The talk also discusses practical steps that we need to take in Pakistan, to achieve economic independence, as a first step towards an Islamic Economy.
Teaching Third Generation Islamic EconomicsAsad Zaman
6th Lecture of Workshop on teaching 3rd Gen IE provides nitty gritty details of what we can do in our classrooms subject to the constraints we face. The politics of Knowledge
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
Imposing Eurocentric Patterns on Islamic SocietiesAsad Zaman
{ writeup: bit.ly/AZiepi }This is part 1 of a talk on "Rebuilding Economics on Islamic Foundations". In this part, we discuss how social sciences are lessons extracted from the historical experiences of European societies. These cannot be generalized to all societies. In particular, Islamic societies are built on frameworks given by the Quran and Sunnah, which are in dramatic conflict with the foundations on which European social sciences are built. This makes it necessary to rebuild the social sciences on foundations provides by Islamic teachings, and on patterns in use for more than a thousand years in Islamic societies.
The Great Transformation from a traditional Christian society to a Capitalist Society in Europe reversed the priorities between market and social relationships. As Polanyi says, society became embedded within markets, rather than the other way around. This has been enormously destructive, and the only hope lies in reversing this transformation. Slides show how we can go about doing this.
For Associated Videos and Writeups, see: http://bit.ly/na2ie04 - A capitalist economy cannot function except within a market society. Capitalist education is designed to teach us our roles and responsibilities within a market society, and to ensure that we consider the system as the best possible, within human limitations.
To create an Islamic Economy, we must recognize the restrictions on our thoughts placed by living in a market society, and learn to think outside of these boxes.
This is lecture 4: How Capitalism Shapes Our Minds and Hearts, of A New Approach to Islamic Economics. Complete Lecture – all nine segments, with videos and writeups, can be accessed from: http://bit.ly/na2ie04
{writeup/video: http://bit.ly/AZfoie1} This talk explains how we can create an Islamic Economic system in Pakistan. The first part of the talk explains that one of the main obstacles to this project is the vast number of misunderstandings created by orthodox economic theory. In particular, a critical misconception is the idea that capitalism can be converted to an Islamic economy by minor modifications, such as setting interest rate to zero. Interest is integral to financial capitalism and cannot be set to zero without major modification in other economic areas. The second part of the talk explains that to create a zero interest economy, we must first create a zero inflation economy. Both are possible within a theoretical framework given by Modern Monetary Theory. This provides the policy prescriptions needed to create full employment and zero inflation, together with a zero interest rate. These are very close to an Islamic Economy ideals, which provides equal opportunities, basic needs and economic justice for all members of the community. The talk also discusses practical steps that we need to take in Pakistan, to achieve economic independence, as a first step towards an Islamic Economy.
Teaching Third Generation Islamic EconomicsAsad Zaman
6th Lecture of Workshop on teaching 3rd Gen IE provides nitty gritty details of what we can do in our classrooms subject to the constraints we face. The politics of Knowledge
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
Name Date Memo NoTexts AnalyzedSummary of Text .docxroushhsiu
Name:
Date:
Memo No:
Texts Analyzed:
Summary of Text:
Main Assumptions:
Questions or comments for discussion (e.g. What was unclear/unconvincing/could be explored further? What seems unrealistic, given assumptions you mentioned?):
Chapter 2 Theories of Development.html
Introduction
In 2007, the former UK prime minister Gordon Brown made a speech at the University of Greenwich on the importance of education:
And I believe that … we must confront head on three assertions that I believe have held our country back for too long. The first is an assumption that there is only limited room at the top, that there is no point in educating everyone as far as their talents will take them because the economy simply needs only a few who are trained for the top. Now I think the fast changing global economy has decisively defeated that argument. Even if in the past there might have been national limited room at the top, now there is clearly global room at the top. Indeed there are millions more skilled jobs and opportunities in our country and round the world for people with skills and qualifications.
What we can observe here is an underpinning rationale for education: namely, that it provides individuals with the skills they need to succeed in work and by extension that economic growth is brought about by the investments that countries and individuals make in their skills. This view corresponds to that of human capital theory, one of the key frameworks that have driven international education practice over the past fifty years. That Gordon Brown did not cite human capital theory – or indeed whether he is even aware of it – is beside the point. This and many other theories orient practice and policy, whether or not they are invoked explicitly or used consciously.
This chapter outlines some of the major theories of international development that have influenced the work of supranational agencies, national governments and local actors since the end of the Second World War. It is not intended as a comprehensive overview of development theory but instead a treatment that focuses on the principal types of theory (by political and epistemological orientation) and those that have had most relevance for the field of education. In each case, the major characteristics of the theory are outlined, as well as some of its well-known proponents and its implications for education. (Some of the implications of these theories for research specifically are also drawn out in Chapter 5.)
Yet two questions need to be addressed before turning to the specific theories: first, what exactly is ‘theory’, and second, why – given the apparently practical nature of the task of development – should we be interested in theory at all? In relation to the first of these questions, we might distinguish between what might be called ‘big T’ theory and ‘little T’ theory. There are theories that present themselves as ‘theory X’, have a coherent body of literature – usua ...
{Writeup/Video: bit.ly/cie3fce} Modern Economics cannot be Islamized because it is fundamentally flawed, beyond the possibility of repair. Four Flaws are discussed in these slides: (1) The idea that European economic models are universally applicable to all societies, (2) A quantitative and mathematical approach to human behavior, (3) The assumption that human welfare is based on material sources, rather than spiritual, psychological, and social. (4) The pretense of objectivity created by concealment of a toxic moral framework within the codeword of "rationality"
The Methodology of Polanyi's Great TransformationAsad Zaman
Three radical components of Polanyi's methodology are described. Focus on groups/communities instead of individuals. Focus on how theories shape history and vice versa -- historical context is of extreme importance. Also social, political, economic and environmental spheres of our existence are interlinked and cannot be analyzed in isolation
Social Theories can only be understood within their historical context. First Generation Islamic Economics was developed as part of the struggles to achieve liberation from colonization. It stressed the superiority of Islamic Economic System over Western economic systems of capitalism, communism, and socialism. Efforts to launch the political revolution required to control the state and create a macro level Islamic Economic system failed. As a result, 2nd Generation Islamic Economists took an evolutionary approach, and sought to modify capitalism in a step-by-step approach, to move towards and Islamic system. However, this approach failed to bear fruits, and disastrous shortcomings of capitalism became obvious to all in the Global Financial Crisis of 2007. This has led to efforts to build 3rd Generation Islamic Economics on the revolutionary foundations of the 1st Generation, while incorporating many lessons of historical experience, as well as many insights from the 2nd Generation.
Improving Our Educational Systems Part 2Asad Zaman
Rejection of Christianity led to a radical change in Western epistemology. Religion was replaced by science as the foundation for knowledge. This involved a shift from study of internal life experience to the external reality. Loss of understanding of character, spirit, heart, lead to a seriously defective education, which provides students with the skills to build bombs, but not the compassion and understanding of human suffering which is the basis for morality. By abandoning Western models, and shifting to the educational methods of the Prophet, we can create dramatic improvements in our educational outcomes.
Challenge & Opportunity for 3rd Gen Islamic Economists (7/7)Asad Zaman
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
Twenty Years of European Business Ethics– Past Development.docxmarilucorr
Twenty Years of European Business Ethics
– Past Developments and Future Concerns
Luc van Liedekerke
Wim Dubbink
ABSTRACT. Over the past 20 years business ethics in
Europe witnessed a remarkable growth. Today business
ethics is faced with two challenges. The first comes from
the social sciences and consultants who have both
reclaimed the topics of business ethics, regretfully often at
the loss of the proper ethical perspective. The second
comes from the remarkable rise of corporate social
responsibility which has pushed aside the mainstream
business ethics methodology with its emphasis on moral
deliberation by the individual. These challenges can be
tackled by an institutional transformation in business
ethics that links up to the long-standing European tradi-
tion of institutional analysis of the market. The second
remedy is an enlargement of the research agenda in
business ethics by coming closer to other parts of applied
ethics where the business ethics view is at this moment
grossly neglected.
KEY WORDS: business ethics, corporate social respon-
sibility, Europe
From Europe to America and back:
the invention of business ethics
Both the greatest critics and the greatest advocates of
the free market often point out that the ‘‘moral
viewpoint in business’’ is an oxymoron. Morality does
not, should not or cannot have any business in busi-
ness because man is greedy beyond redeem or because
systemic pressure is relentless. Only strong (govern-
ment) regulation can and should curtail business in
order to safeguard our fundamental rights. Any
business ethicist, who was confronted with this type
of remarks, knows how to rebut these comments as a
mantra learned by heart. Even if man has fundamental
rights, these rights do not overrule morality, but
presuppose it. And if the last 50 years have given us
any macro-sociological truth, it is that ‘the state’ or
‘the system’ is not going to save us – at least not
without humans helping them and helping them-
selves. What is more, systemic power is not com-
pletely beyond societal control and not so relentless
that the actor perspective becomes completely trivial,
as man cannot be reduced to greediness, even if self-
interest can become at times quite dominant.
As much as business can never do without ethics,
‘‘business ethics’’ as an academic discipline is a rare
breed. It is in a sense surprising that it could develop
in Europe at all (van Luijk, 2006, p. 7). In the 60s and
70s many people were quite critical of ‘‘the corporate
interest’’ and the ‘‘profit motive’’ as such. Societal
problems such as pollution, structural poverty and
over-consumption were squarely blamed on business
but ‘‘business ethics’’ was not seen as part of the
solution by these critics. On the contrary, it was
perceived as a cover up meant to lure the public into
believing that the market and the businessman could
add something positive to society. Conversely,
business peopl ...
How the Culture of Economics Stops Economists from Studying Group Behavior an...hacyard
'Today, wealthy individuals and well-organized business and financial groups exercise their power by means of costly public relations, advertising, and lobbying activities.
By “investing” in the promotion of their interests, private financial interests have largely captured the major political parties in most democratic countries as well as the news media that communicate political events and debates to the public.
When the news media seek economists to provide commentary and insight into economic issues, more often than not they interview economists who work for business or financial firms, not independent universities or impartial
research organizations...'
Article Link:
http://wer.worldeconomicsassociation.org/papers/how-the-culture-of-economics-stops-economists-from-studying-group-behavior-and-the-development-of-social-cultures/
basics of economics helps learners to understand the definition of economics, concepts of economics, division of economics and relationship of economics to other sciences.
Decolonization of Education: Islamic Perspective - HBKUAsad Zaman
Meeting the intellectual challenge created by Eurocentric knowledge is the central task facing the Muslims. This requires decolonization of education, via a modern day Ghazali Project.
Decolonization of Education: Islamic PerspectiveAsad Zaman
For detailed writeup, see tinyurl.com/AZdeco The talk explains that colonized mindset created by Western education is the biggest problem currently facing the Islamic Civilization. We have no good alternatives available. Western education develops a Eurocentric perspective which glorifies achievements of the West, and erases those of other civilizations, including Islam. We need to develop an alternative which teaches skills essential for the modern world, but within a framework compatible with the Islamic worldview. In particular, our education should show that the Quran, the final revelation of God to mankind, is superior to any knowledge which could possibly be created by human beings
Name Date Memo NoTexts AnalyzedSummary of Text .docxroushhsiu
Name:
Date:
Memo No:
Texts Analyzed:
Summary of Text:
Main Assumptions:
Questions or comments for discussion (e.g. What was unclear/unconvincing/could be explored further? What seems unrealistic, given assumptions you mentioned?):
Chapter 2 Theories of Development.html
Introduction
In 2007, the former UK prime minister Gordon Brown made a speech at the University of Greenwich on the importance of education:
And I believe that … we must confront head on three assertions that I believe have held our country back for too long. The first is an assumption that there is only limited room at the top, that there is no point in educating everyone as far as their talents will take them because the economy simply needs only a few who are trained for the top. Now I think the fast changing global economy has decisively defeated that argument. Even if in the past there might have been national limited room at the top, now there is clearly global room at the top. Indeed there are millions more skilled jobs and opportunities in our country and round the world for people with skills and qualifications.
What we can observe here is an underpinning rationale for education: namely, that it provides individuals with the skills they need to succeed in work and by extension that economic growth is brought about by the investments that countries and individuals make in their skills. This view corresponds to that of human capital theory, one of the key frameworks that have driven international education practice over the past fifty years. That Gordon Brown did not cite human capital theory – or indeed whether he is even aware of it – is beside the point. This and many other theories orient practice and policy, whether or not they are invoked explicitly or used consciously.
This chapter outlines some of the major theories of international development that have influenced the work of supranational agencies, national governments and local actors since the end of the Second World War. It is not intended as a comprehensive overview of development theory but instead a treatment that focuses on the principal types of theory (by political and epistemological orientation) and those that have had most relevance for the field of education. In each case, the major characteristics of the theory are outlined, as well as some of its well-known proponents and its implications for education. (Some of the implications of these theories for research specifically are also drawn out in Chapter 5.)
Yet two questions need to be addressed before turning to the specific theories: first, what exactly is ‘theory’, and second, why – given the apparently practical nature of the task of development – should we be interested in theory at all? In relation to the first of these questions, we might distinguish between what might be called ‘big T’ theory and ‘little T’ theory. There are theories that present themselves as ‘theory X’, have a coherent body of literature – usua ...
{Writeup/Video: bit.ly/cie3fce} Modern Economics cannot be Islamized because it is fundamentally flawed, beyond the possibility of repair. Four Flaws are discussed in these slides: (1) The idea that European economic models are universally applicable to all societies, (2) A quantitative and mathematical approach to human behavior, (3) The assumption that human welfare is based on material sources, rather than spiritual, psychological, and social. (4) The pretense of objectivity created by concealment of a toxic moral framework within the codeword of "rationality"
The Methodology of Polanyi's Great TransformationAsad Zaman
Three radical components of Polanyi's methodology are described. Focus on groups/communities instead of individuals. Focus on how theories shape history and vice versa -- historical context is of extreme importance. Also social, political, economic and environmental spheres of our existence are interlinked and cannot be analyzed in isolation
Social Theories can only be understood within their historical context. First Generation Islamic Economics was developed as part of the struggles to achieve liberation from colonization. It stressed the superiority of Islamic Economic System over Western economic systems of capitalism, communism, and socialism. Efforts to launch the political revolution required to control the state and create a macro level Islamic Economic system failed. As a result, 2nd Generation Islamic Economists took an evolutionary approach, and sought to modify capitalism in a step-by-step approach, to move towards and Islamic system. However, this approach failed to bear fruits, and disastrous shortcomings of capitalism became obvious to all in the Global Financial Crisis of 2007. This has led to efforts to build 3rd Generation Islamic Economics on the revolutionary foundations of the 1st Generation, while incorporating many lessons of historical experience, as well as many insights from the 2nd Generation.
Improving Our Educational Systems Part 2Asad Zaman
Rejection of Christianity led to a radical change in Western epistemology. Religion was replaced by science as the foundation for knowledge. This involved a shift from study of internal life experience to the external reality. Loss of understanding of character, spirit, heart, lead to a seriously defective education, which provides students with the skills to build bombs, but not the compassion and understanding of human suffering which is the basis for morality. By abandoning Western models, and shifting to the educational methods of the Prophet, we can create dramatic improvements in our educational outcomes.
Challenge & Opportunity for 3rd Gen Islamic Economists (7/7)Asad Zaman
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
Twenty Years of European Business Ethics– Past Development.docxmarilucorr
Twenty Years of European Business Ethics
– Past Developments and Future Concerns
Luc van Liedekerke
Wim Dubbink
ABSTRACT. Over the past 20 years business ethics in
Europe witnessed a remarkable growth. Today business
ethics is faced with two challenges. The first comes from
the social sciences and consultants who have both
reclaimed the topics of business ethics, regretfully often at
the loss of the proper ethical perspective. The second
comes from the remarkable rise of corporate social
responsibility which has pushed aside the mainstream
business ethics methodology with its emphasis on moral
deliberation by the individual. These challenges can be
tackled by an institutional transformation in business
ethics that links up to the long-standing European tradi-
tion of institutional analysis of the market. The second
remedy is an enlargement of the research agenda in
business ethics by coming closer to other parts of applied
ethics where the business ethics view is at this moment
grossly neglected.
KEY WORDS: business ethics, corporate social respon-
sibility, Europe
From Europe to America and back:
the invention of business ethics
Both the greatest critics and the greatest advocates of
the free market often point out that the ‘‘moral
viewpoint in business’’ is an oxymoron. Morality does
not, should not or cannot have any business in busi-
ness because man is greedy beyond redeem or because
systemic pressure is relentless. Only strong (govern-
ment) regulation can and should curtail business in
order to safeguard our fundamental rights. Any
business ethicist, who was confronted with this type
of remarks, knows how to rebut these comments as a
mantra learned by heart. Even if man has fundamental
rights, these rights do not overrule morality, but
presuppose it. And if the last 50 years have given us
any macro-sociological truth, it is that ‘the state’ or
‘the system’ is not going to save us – at least not
without humans helping them and helping them-
selves. What is more, systemic power is not com-
pletely beyond societal control and not so relentless
that the actor perspective becomes completely trivial,
as man cannot be reduced to greediness, even if self-
interest can become at times quite dominant.
As much as business can never do without ethics,
‘‘business ethics’’ as an academic discipline is a rare
breed. It is in a sense surprising that it could develop
in Europe at all (van Luijk, 2006, p. 7). In the 60s and
70s many people were quite critical of ‘‘the corporate
interest’’ and the ‘‘profit motive’’ as such. Societal
problems such as pollution, structural poverty and
over-consumption were squarely blamed on business
but ‘‘business ethics’’ was not seen as part of the
solution by these critics. On the contrary, it was
perceived as a cover up meant to lure the public into
believing that the market and the businessman could
add something positive to society. Conversely,
business peopl ...
How the Culture of Economics Stops Economists from Studying Group Behavior an...hacyard
'Today, wealthy individuals and well-organized business and financial groups exercise their power by means of costly public relations, advertising, and lobbying activities.
By “investing” in the promotion of their interests, private financial interests have largely captured the major political parties in most democratic countries as well as the news media that communicate political events and debates to the public.
When the news media seek economists to provide commentary and insight into economic issues, more often than not they interview economists who work for business or financial firms, not independent universities or impartial
research organizations...'
Article Link:
http://wer.worldeconomicsassociation.org/papers/how-the-culture-of-economics-stops-economists-from-studying-group-behavior-and-the-development-of-social-cultures/
basics of economics helps learners to understand the definition of economics, concepts of economics, division of economics and relationship of economics to other sciences.
Decolonization of Education: Islamic Perspective - HBKUAsad Zaman
Meeting the intellectual challenge created by Eurocentric knowledge is the central task facing the Muslims. This requires decolonization of education, via a modern day Ghazali Project.
Decolonization of Education: Islamic PerspectiveAsad Zaman
For detailed writeup, see tinyurl.com/AZdeco The talk explains that colonized mindset created by Western education is the biggest problem currently facing the Islamic Civilization. We have no good alternatives available. Western education develops a Eurocentric perspective which glorifies achievements of the West, and erases those of other civilizations, including Islam. We need to develop an alternative which teaches skills essential for the modern world, but within a framework compatible with the Islamic worldview. In particular, our education should show that the Quran, the final revelation of God to mankind, is superior to any knowledge which could possibly be created by human beings
The Ghazali Project: Countering Enlightenment EpistemologyAsad Zaman
Centuries of Religious Wars led Enlightenment Philosophers to seek to build society on secular foundations, to achieve peace. This required an epistemology which would be acceptable to all. This led to the idea of objective knowledge, based on facts and logic, which would be equally acceptable to all. This also led to the exclusion of subjective reality, the heart, the soul and the lived experiences of human beings, as sources of knowledge. This was an enormous error, which has led to knowledge being built on the wrong foundations for the past few centuries. The Ghazali Project is an attempt to counter this mistake, to rebuild human knowledge on sound foundations, and to create an alternative to toxic educational systems currently in use globally.
Pragmatic Objections To Visionary Islamic Economics (6/7)Asad Zaman
{writeup/Video bit.ly/cie6obj} Is Islam Utopian and Impractical? 2nd Gen IE's abandoned the revolutionary ideals of the 1st Generation for pragmatic reasons. They swallowed the idea that modern economics is objective truth, and hence cannot be contested on ideological grounds. They recognized that Western economics focuses on wealth, not humans, but felt that we must first acquire wealth. Only then can we afford to pay attention to human development. Thirdly, they felt the utopian ideals of Islam are out of reach for us in the modern world, and so we must settle for less. These objections are discussed and answered in these slides: bit.ly/SS3GIE6
The Revolutionary Islamic Alternative (5/7)Asad Zaman
{Writeup/Video: bit.ly/cie5ria} Part 5: As an antidote to Capitalist Economics, this post provides four revolutionary teachings of Islam: (1) Instead of pursuing material wealth, we should pursue human development, (2) Power and Wealth is given to us to help the powerless and poor, not to exploit them and pursue luxuries, (3) Society is built on cooperation, not competition, (4) Instead of pursuing pleasure and power, we should seek to serve humanity selflessly, in hope of rewards in the Akhira
Two Puzzles About Islamic Economics (4/7)Asad Zaman
{Writeup/Video: bit.ly/cie4pie} This part discusses two puzzles: (1) Why did Islamic Economics emerge as a distinct subject in the 20th Century? (2) Islamic knowledge is founded upon source materials of Islam. How can a modern subject and approach, not found within intellectual heritage of Islam, claim to be Islamic? The solutions lie is the study of complex and tangled historical origins of the subject
Crisis in 2nd Generation Islamic Economics (2/7)Asad Zaman
{Writeup/Video: bit.ly/cie2cri} While the first generation of Islamic Economists saw it as a revolutionary alternative to capitalism, the 2nd generation thought of Islamic Economics as a variant of capitalism. They attempted to "Islamize" capitalism. This is impossible because capitalism is built on foundations of overproduction and overconsumption, and focuses on acquistion of pleasure and wealth in this world. These values are strongly opposed to Islamic ones and the two economic systems cannot be combined. This is why 2nd generation attempts to create Islamic Economics failed, leading to a crisis.
{Writeup/Video: bit.ly/cie1iok} First of Seven sets of slides explains that 2nd Generation Islamic Economics was constructed as an Islamization of Knowledge project: We take Western knowledge of economics, and Islamize it. This project has failed, for reasons to be explained. The 3rd Generation alternative proposed is to reject Western Economics, and replace it by a radically different discipline built on Islamic foundations.
1450 years ago, the message of Islam changed the course of human history. It transformed ignorant and backward Bedouin into world leaders, and created a civilization which enlightened the world with knowledge for more than a 1000 years. Today, Muslims around the world are again wrapped in ignorance and darkness, but they are looking West for guidance, instead of looking at the Quran. This lecture explains why the last message of God for mankind is just as revolutionary today as it was when it was first revealed. It offers us complete and perfect guidance for our modern problems today.
Origins of Modern Money: Insufficiency of GoldAsad Zaman
This is part of a series of lectures on Islamic Economics - for the full set, see: bit.ly/IslamicEcon2023. This lecture explains the origins of the modern monetary system in 18th Century England. Gold was insufficient for the rapidly increasing needs of commercial and industrial activity. As a result, credit money, only partially backed by Gold, was created. This proved extremely useful tool to finance the industrial revolution, as well as wars. It also led to shift in emphasis from gold as money to commercial activity as the backing and basis for money. This lecture provides many details about theory of money which are not available at all in conventional economics courses.
{bit.ly/IslamicEcon2023} Lecture 8 on Islamic Economics explains that Wants are unlimited, and increase if we fulfill them. Thus, more production cannot solve the problem of scarcity. Islam offers an alternative. Fulfill needs, but DO NOT fulfill wants. It turns out (Easterlin Paradox) that fulfillment of wants appears to be attractive, but leads to increasing misery for the entire society. Instead of growth, we need to pursue degrowth, both for our personal and social welfare, and also to avert the climate catastrophe that looms.
Economic Crisis in Pakistan & Solution: Islamic PerspectiveAsad Zaman
The crisis is caused by continued exploitation of the masses using poor economic policies, designed to benefit the rich by exploiting the poor. Proposing good policies will not affect power structure, and so these policies will not be implemented. The way out lies in halls of knowledge - universities. By teaching the truth, to combat the lies which support existing power configuration, we can create revolutionary changes.
5th Lecture of A New Approach to Islamic Economics - course website: bit.ly/IslamicEcon2023 This lecture explains that a market society is built on a network of relationship which centralize the market, and make social relationships peripheral. A market society is required for capitalism to function. To create an Islamic Economy, we must rebuild the social relationships at the heart of an Islamic society, and transform the market relationships into social ones. The lecture slides outline how we might do this.
How Capitalism Shapes Our Minds and HeartsAsad Zaman
{bit.ly/SSnaie2} The origins of capitalism go back to the industrial revolution, which created massive amounts of surplus goods. This necessitated the rise of a consumer society. Colonization was also a consequence, since it created markets for the surplus. Capitalism is based on making markets central to our lives, and also on creating a labor force, so that human lives are for sale in the market. The net effect of this is to get us to think of ourselves as human resources, and to think of making money as the goal of life. To liberate ourselves, we must learn how to be human beings. All human beings have infinite potential for excellence, and we must make our goal the development of this potential to the maximum, instead of wasting our lives in the pursuit of material goods and comforts. For ZOOM talk video, based on these slides, see: http://bit.ly/YTnaie2 - A writeup of the talk will eventually be posted on bit.ly/AZnaie2
A Western education is highly Eurocentric, but pretends to be objective and universal. In particular, social sciences are lessons extracted from European historical experience on how to organized society. The false claim, embodied in the word "science", is that these are universally applicable. Shock and Awe of Western technological prowess has led to unquestioning acceptance of this claim. In turn, this has led to the attempt to shape all societies around the world on European patterns. This has caused massive harm, as these European conceptions of society are in dramatic conflict with local cultures. There is an urgent need to recognize and reject Eurocentric Social Science, and rebuild the study of diverse societies on broader intellectual bases. Islamic epistemology provides such alternative foundations, which are discussed in this set of slides
Creating Alternatives to Western EducationAsad Zaman
Talk at MAJU on 21 Feb 2023 - A Western education creates a Eurocentric worldview, which teaches us that all valuable knowledge was created by the West in the past three centuries. Further, the Quran and Hadeeth, and the Islamic intellectual tradition has nothing of importance to contribute to the modern world. These ideas are deadly wrong, and directly in conflict with the message of Islam, which teaches us that the final message of God to mankind is the most valuable knowledge given to humanity. To resolve this problem, we need to recognized the defects in Eurocentric epistemology, and rebuild the entire stock of Western knowledge on Islamic foundations. In particular, it is essential to build an Islamic alternative to Western education.
Islamic Approach to Sustainable DevelopmentAsad Zaman
{writeup/video: bit.ly/AZSusDev } Paper explains how the conventional approach to Sustainable Development fails to address the root cause of the problem - namely exploitative behavior. An Islamic approach ties the external environment to the internal character and conduct of man. Instead of external superficial solutions, which cannot work within a capitalist economy, Islam provides us with deeper solutions which address the source of the problem - namely, how to create compassion within hearts of people
Talk explains how Western Social Sciences Originated with Rejection of Christianity, and are a replacement for the functions of religion in the public sphere. To understand this requires a deep examination of European History. Since Social Science is a European religion, it is not compatible with Islam. A Sketch of how to build an alternative is presented.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
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Tele gram: @Pi_vendor_247
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how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
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Message: @Pi_vendor_247 on telegram.
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when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
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Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
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Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
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If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
1. Rebuilding Economics on
Islamic Foundations
Dr. Asad Zaman
Monday 24th July 2023
International Institute of Islamic Economics
International Islamic University of Islamabad (IIIE, IIUI)
Download THESE slides from http://bit.ly/SSreif
2. The Puzzle of Western Social Sciences
Social Science is the study of human society.
But WHICH society?
The term “science” makes the misleading suggestion that there are
universal laws which apply to all human societies.
This is easily proven to be false. Economic, Political, and Social
structures have been extremely different in different societies.
See: http://bit.ly/AZpss
3. Why is term “Social Science” used?
Science applies to external world, which behaves subject to laws.
Human beings are free. Our behavior cannot be predicted by any
mathematical laws.
Societies have evolved and changed dramatically, in the past century,
before our eyes. There are no universal “scientific” laws applicable to
all of them.
All of this is VERY EASY to prove. Despite all of this, there are “social
science” departments in universities all over the world. WHY?
4. The Origins of Western Social Sciences
• More than a century of devastating wars between Protestants and
Catholics in Europe. One third of population wiped out in certain
regions. All of European population affected.
• Scholastics built social science on Biblical foundations. This was
rejected by all thinkers – Christianity leads to wars.
• Necessity to rebuild all of social sciences without invoking Christianity.
• The Enlightenment Project: Create a science of society which allows
different religions to live together in peace.
5. New Answers to Fundamental Questions
1. How was the Universe created?
2. What is the purpose of our lives?
3. How should we behave towards each other? (ethics)
4. What should be the institutional structure of society? Politics
5. How should we arrange for production and distribution of goods
and services? (economics)
See: http://bit.ly/IR3owss
6. Even more fundamental question:
What is knowledge?
How can we know if something is true? Or false?
Christian Answer: All knowledge is founded on the Bible.
Islamic Answer: Quran and Sunnah are foundation for all knowledge.
Enlightenment Answer: Knowledge comes from senses and reason.
Reject authority and tradition, and rebuild knowledge from ZERO.
Descartes: I think therefore I am.
7. Foundations of Western Social Sciences
• There is no God, or Creator (no empirical evidence!)
• Universe was created by chance events.
• Man is just another type of animal, created by the evolution process.
• Life is a jungle. Survival of the fittest is the only moral code.
• Purpose of our lives is pursuit of pleasure and power.
ALL of the above assumptions are embedded within the concept of
“rationality”!
8. Enlightenment Conceit: There is no one like us!
Enlightenment thinkers thought of themselves as revolutionaries.
Dismissing all accumulated human knowledge as ignorance and
superstition, they sought to rebuild the entire stock of human
knowledge on solid foundations of empirical evidence and reason.
They thought that they had created a unique civilization – unparalleled
in human history – and that all of mankind would follow in their
footsteps, once they learned to reason!
Immanuel Kant – the greatest moral philosopher of Europe – thought
that only white males were rational. Females, and other races were
defective in their ability to reason.
9. Why Social “Science”?
Derived on basis of empirical evidence and reason (rationality) –
therefore, same for all rational human beings.
Institutional pattern for the most advanced human society – Europe –
and therefore valid as an ideal goal for all other (primitive) societies.
Above are all Eurocentric prejudices, accepted as truths by colonized
minds.
See: Recep Senturk: Decolonizing the Social Sciences http://bit.ly/RSdss
10. Lesson: Social Sciences are the “DEEN” which
replaced Christianity (Scholastics SS)
This DEEN is based on rejection of God, and hence make pursuit of
pleasure and power the goal of life.
There are no moral values in this DEEN.
Both of these lessons are at the foundations of Economics.
Utility theory: it is rational to maximize pleasure = Nafs-e-Ammara
Game Theory: it is rational to betray commitments if you get benefit
from doing so.
See: Rebuilding Social Sciences on Islamic Foundations: Parts 1 &2
http://bit.ly/AZrss1 and http://bit.ly/AZrss2
12. The Central Problem Facing the Ummah:
Western Education
Western Education teaches us that all useful “knowledge” was created
by European intellectuals over the past three to four centuries.
The Quran, Sunnah, and the entire Islamic intellectual tradition has no
relevance or importance for the modern world.
For “guidance” out of ignorance and darkness – spread over the Islamic
world – the SOLE path is through Western knowledge, NOT through the
Quran.
All these are dramatically wrong, yet widely believed throughout the
Islamic World.
13. The Ghazali Project (http://bit.ly/Ghazali1)
Counter to the Modern Mu’tazila (see: http://bit.ly/AZtmm )
1. Al-Munqid min al-dalala: Deliverance from Doubt.
2. Tahafat al-Falasaf: Incoherence of Western Knowledge (Economics)
3. Ihya-Uloom-ud-Deen: Revival of the Religious Sciences.
Step 1 Our Deen provides complete and perfect guidance for society,
including Economics. See: http://bit.ly/IslamicEcon2023
Step 2: Critique of Western Economic Theories.
Step 3: Rebuilding Economics on Islamic Foundations.
14. A Concrete Plan: Agent Based Modeling
This is a theoretical tool which allows us to rebuild all of modern
Economics on new foundations.
The tool is NEUTRAL, not Islamic. It is based on SIMULATIONS of
economies, where we can program any type of behavior into our
agents.
In particular, we can create economies where agents behave Islamically
or otherwise, as well as mixed economies with both types of agents.
We simply OBSERVE what happens in our simulations, and compare
with real world situations.
15. Keynesian Revolution: Undone by Lucas
See: Keynesian Revolution and Monetarist Counter-Revolution
http://bit.ly/KRMCR
Central Problem Facing Keynes: Long and Persistent High
Unemployment following the Great Depression.
IMPOSSIBLE according to classical economics: Supply and Demand for
Labor would ensure full employment. All unemployment is
VOLUNTARY: laborers do not WANT to work at going market wage rate
– they would like higher wages.
This did not conform to observed labor market situation.
16. Three Keynesian Insights:
• Complexity or Emergence: The system as a whole is not a simple sum
of the parts.
• Unpredictable Future: prices in future cannot be predicted today. This
means profit maximization is impossible.
• Money Matters, in short run and in long run.
These insights DESTROY conventional micro and macro.
Macroeconomics cannot be built on micro foundations. Single Agent
Macro models are wrong. Money stores value from present to future,
but value of money is unpredictable. This makes money non-neutral.
17. Practical Implication
ALL of economic theory we teach is completely irrelevant to
understanding the real world.
FURTHERMORE, it leads to dangerously wrong policy prescriptions.
I used this insight to supervise more than a hundred Ph.D.’s and
M.Phil.’s
There is no need to understand economic theory. Just take a real world
economic problem, and use common sense to try to solve it.
Historical and Qualitative methods work much better than
econometrics and data analysis building on wrong theories.
18. One Illustration of Complexity
Consider a very simple isolated economy.
Firms hire labor from Households, and pay them wages. Firms produce
products, and sell them to Households.
Profits to Firms MUST come from reductions in Money Holdings of
Households.
Profits of Firms PLUS Household Savings = ZERO!
Increases in total money occur when Government Spends Money.
Government Deficit = Firm Profits PLUS Household Savings.
19. Practical Strategies
• Teach Micro, Macro “lightly” – do not focus on the mathematics,
focus on the conceptual framework.
• Explain why this conceptual framework is wrong. Use my lectures on
Islamic Economics for this purpose: http://bit.ly/IslamicEcon2023
• Use the Anti-Textbooks of Rod Hill and Tony Myatt – this will develop
very deep understanding of central Micro and Macro concepts, far
better than conventional textbooks.
20. The Microeconomics Anti-Textbook:
A Critical Thinker's Guide
• Mainstream textbooks present economics as an objective
science, free from value judgements. The Microeconomics Anti-
Textbook demonstrates this to be a myth – one which serves to
make such textbooks not only off-puttingly bland, but also
dangerously misleading in their justification of the status quo
and neglect of alternatives.
In this fully updated and expanded edition of their celebrated
book, Professors Rod Hill and Tony Myatt lay out the essentials
of each topic in the standard texts in a clear and concise way,
before presenting an 'anti-text' analysis and critique.
Challenging the assumptions, arguments, and models, Hill and
Myatt provide the essential guide to decoding the textbooks,
and show that real economics is far more interesting - and
subversive - than the simplistic version presented to students.
21. The Macroeconomics Anti-Textbook:
A Critical Thinker’s Guide
In this much-needed companion volume to the popular Microeconomics
Anti-Textbook, Tony Myatt reveals how the blind spots and
methodological problems present in microeconomics continue to exert
their influence in mainstream macroeconomics. From a flawed
conception of the labour market, to a Pollyana view of the financial
sector, macroeconomic principles as they are set out in conventional
undergraduate textbooks consistently fail to set out a realistic, useful,
or equitable framework for understanding the world.
By summarising and then critically evaluating the major topics found in
a typical macroeconomics textbook, the Anti-Textbook lays bare their
sins of omission and commission, showing where hidden value
judgements are made and when contrary evidence and alternative
theories are ignored. The Macroeconomics Anti-Textbook is the
student's essential guide to decoding mainstream macroeconomic
textbooks, and demonstrating how real-world economics are much
more interesting than most economists are willing to let on.
22. Agent Based Models
Very simple and intuitive: Create “agents” within an economy, which
play roles of firms, consumers, government, etc. Provide them with
simple rules of behavior. SIMULATE to see what happens.
Why was this not done earlier? Computing capabilities were not
present.
Instead – VERY ARTIFICIAL assumptions were made to enable
computation. Like Cobb-Douglass production functions.
Because foundations were created in artificially simple mathematical
models, economics continues on this artificial basis. We can launch
revolution by replacing these foundations.
23. Simulations are a powerful tool
I also taught econometrics and statistics via simulations – this avoids
massive amounts of heavy mathematics, and allows students to
intuitively and visually understand very complex statistical techniques.
24. ABM is a powerful tool.
We can use it to investigate ALL economic problems.
Even though this is a natural tool, it has been HEAVILY resisted by
economics profession in USA/Europe.
This is because results are strongly in conflict with mainstream
economic theory.
Just like behavioral economics, ABM and Evolutionary Economics has
been shunted aside.
We can therefore do Leap-Frogging – just like the Japanese Steel
industry. USA/Europe are stuck in obsolete methods.
25. Supply and Demand: ABM Analysis
Goal: To bring out clearly the ASSUMPTIONS underlying S&D analysis.
To show that these assumptions are wrong.
To show what happens when we change these assumptions to more
realistic ones.
To demonstrate a flexible tool (ABM) which can be used to analyze
nearly all economic problems.
In particular, ABM handles heterogeneity, complexity, non-equilibrium
dynamics, non-optimization behaviors – all of which are realistic, but
impossible to handle via conventional economics.
26. Mankiw’s Housing Rental S&D Model
There are ten identical houses:
H1, H2, …, H10: House H(j) wants to rent for minimum of 100 x j USD
There are ten students:
S1, S2, …, S10: Student S(k) has maximum rent budget of 100 x k USD
OBVIOUS Solution: Assign H(j) to S(j) – all houses are rented, and all
students have housing. This solution is NOT equilibrium and is NOT
efficient according to economic theory. WHY NOT? What will happen if
we start out here?
27. Critical Assumption: Law of One Price
If identical housing units are for sale, then they all must have the same
price IN EQUILIBRIUM.
First objection: Housing units are rarely identical.
There is no way to answer this objection within neoclassical economics.
If there is heterogeneity – every house is unique – then every house is
a market with only one object in it. This cannot be a competitive
market, and therefore S&D will not apply to it.
ABM can handle this issue easily. It is designed for heterogeneity.
28. How does law of one price emerge?
Walrasian Auctioneer: Calls out a rental price WRP, same for all.
All students who can afford houses at WRP indicate demand.
All houses who can afford to rent at WRP indicate supply.
If Supply matches Demand, we have equilibrium.
If Supply is greater than demand, then WRP must be increased.
If Supply is less than demand, then WRP must be decreased.
Approach to equilibrium requires RE-CONTRACTING – break existing
contracts, and make new ones.
29. Walrasian Model is not realistic
Critical Defect: There are no price makers, only price takers, in S&D
models. So WHO sets prices?
The Auctioneer does not exist in the real world.
Also, using an auctioneer is not aligned with ABM methodology – ABM
methodology sets micro-behaviors and observes macro results. But,
Auctioneer is a non-existent macro level agent.
Government can make institutions and rules and laws. Society can
create social norms. But active Macro and Micro inter-action with
agents is not ABM.
30. We can use ARBITRAGE to arrive at S&D
Look at top and bottom trades, and do arbitrage. Start with Student
with most expensive house:
S10 can afford 10,000 PKR and H10 has cost of 10,000 PKR.
But identical house is also available at PKR 1000, and this house is
currently rented to S1, who can only afford to pay PKR 1000.
If S10 is selfish (does not care about S1), he can offer PKR 2000 to H10.
Re-contracting must be possible, to get S&D equilibrium.
Now H1 will break current contract with S1, and enter into a new
contract with S10 at PKR 2000.
31. Next Arbitrage Step
Take House H2, currently rented for 2000 to S2. H2 notes that many
students are paying much more. So H2 goes to student S9, currently
paying PKR 9000, and says I can rent you my house for PKR 8000.
Again, S9 breaks original contract with H9, and re-contracts. So at end
of two steps of Arbitrage, we have:
H1 rented for PKR 2000 to S10
H2 rented for PKR 8000 to S9
H(k) rented for PKR k x 1000 to student S(k).
32. How can this arbitrage work in real world?
When House and Student enter into an agreement, this is agreement is
posted on Bulletin Board in University Housing Office, and does not
become final until 24 hours pass.
After making agreement, every student watches bulletin board. If he
sees a cheaper house, he makes a bid on it. Also, every homeowner
watches bulletin board. If he sees a student paying more rental, than
he offers his house to the student.
33. Final Result from Arbitrage
Equilibrium price must be between 500 and 600 – say 550.
At 550, H1, H2,…,H5 are willing to rent, while rest are out of market.
Also S6, S7, …, S19 are willing to rent, while rest are out of market.
So we have equilibrium.
So Arbitrage leads to economic equilibrium through many broken
promises and many broken hearts.
BUT, according to economic theory, market equilibrium is EFFICIENT.
WHY?
34. Market Equilibrium maximizes SURPLUS
Student S(k) is willing to pay k x 1000 PKR. If he rents at k x 1000, he
has ZERO surplus. If his budget is 10,000 and he rents at 5,500 then he
has 4,500 PKR surplus. This is extra money he can spend and enjoy.
Homeowner H(j) has costs of j x 1000 – if he rents for j x 1000, he just
covers costs and has zero surplus. If his costs are 1000 and he rents for
5,500 he gets 4,500 PKR surplus to enjoy.
Original Solution S(k) in house H(k) has zero consumer surplus and zero
producer surplus. It is the WORST solution according to economic
theory.
35. This ignores those who are out of market
Assumes that students and households who do not transact have zero
surplus.
But, this is false. Students out of market cannot go to the university – it
is too expensive for their budgets. Massive disutility corresponding to
complete change of life-plans.
Households out of market incur high costs from keeping houses empty.
Again, large costs which are not taken into account in Economic
Efficiency.
The matching equilibrium is MUCH BETTER than S&D equilibrium.
36. Many Possible ABM variations
Heterogenous Housing.
No re-contracting. Contracts are binding. This would lead to search
equilibrium – students may not rent first house that is acceptable.
Search equilibria are different from S&D equilibria. These can easily be
built into ABM models and explored via simulations.
Limited search in real-time would lead to outcomes different from
theoretical search models, assuming costless search.
37. Posted Prices
ABM model has negotiations between Houses and Students for rent.
In Posted Prices model, Houses must POST prices which are fixed and
cannot be changed.
The Oral Double Auction leads to convergence to S&D, but Posted
Prices does not.
How does a housing market with posted prices work? This is realistic
version of Mankiw’s theory, which leads to vastly different results.
Exploring variations of this model will lead students to deep insights
about S&D, far deeper understanding than conventional theory.
38. Concluding Remarks
ABM is the natural method for studying economics.
Mathematics required for studying ABM is much easier than the Alpha
Chiang textbook we teach for Mathematical Economics.
We should replace Alpha Chiang courses by course in programming. In
particular, Python and NetLogo are useful languages to learn for doing
simulations. This should become a required course for our students
(while dropping mathematics).
This methodology has been suppressed in USA/Europe because it
produces results in conflict with conventional economics.
39. Relation to Islamic Economics
• We can program our “agents” to have any kind of behavior.
• Some types of behaviors can be classified as homo economicus.
• Others can be called homo islamicus.
• We can also program intermediate types of mixed behaviors.
• Individuals can also behave in ways which are averages of community
behavior – this allows for change in behavior patterns as community
evolves.
• Evolutionary economics studies what kinds of behavior patterns lead
to long-run welfare for communities. Cooperation wins over
Competition, in many natural cases.
40. So what should we do?
• We have been programmed to be FOLLOWERS. We study what our
Western leaders are doing, and attempt to imitate to best of our
abilities.
• Launching a revolution requires thinking like leaders. There are no
textbooks which show how to do ABM-based Islamic Economics.
• We will explore these models together with our students, arrive at
insights, and write them up into textbooks, for use throughout the
Islamic world.