1) The document discusses the influence of religion on economics from both Western and Islamic perspectives. Western thinkers like Marx saw religion as determined by economics, while Weber saw a positive relationship between Protestantism and capitalism. 2) It outlines the Islamic worldview which sees this world as preparation for the afterlife. The Islamic view covers both the physical and metaphysical, beyond just scientific observation. 3) Core elements of the Islamic worldview include: God as the owner and provider; man as both rational and spiritual; and the aim in life as falah (success) in this world and the afterlife, rather than just utility maximization.

1. Islamic World View and
Islamic Economics
DR. ABIDULLAH KHAN

2. Can a religion dictate or influence
economics?
Should there be any role of religion in
shaping economics?

3. Western Perspective on Economics and
Religion
 Karl Marx (1818-1883)
 All cultural phenomena, including religion, are fundamentally determined by the evolution of
economic forces.
 Religion is not a divine origin, but rather, a man-made coping mechanism use to tie people to
their current state of poverty, thus preventing them from realizing ‘true’ happiness.
 Max Weber (1864-1920)
 There appeared to (be) a paradoxically positive relationship between ascetic religious belief
and economic enterprise.
 Weber asserted that modern capitalism emerged not simply by inner economic necessity, but
by the religious ethic of Protestantism, and particularly of Calvinism.
 Economic welfare depends on religion since at that time economic welfare was seen as a
metric that determined the condition of one’s faith.

4. Other Philosophical ideologies
1. Secularism
 Both religion and the governing authority of the region must be separated.
 The religion must not interfere in the affairs of the state.
 The secularism later gained more popularity after European enlightenment in 18th
Century.
 Suppressed Church activities to one’s personal affairs.

5. 2. Materialism
 The separation of religion from state’s affairs led to materialism.
 Something only truly exists if it can be proved through sense experience or scientific
observation.
 Scientific Revolution occurred.
 Religion has metaphysical existence and cannot be measured or tested empirically and
hence, cannot be included in scientific domain.

6. 3. Utilitarianism
 One’s decisions are influence by the benefit or value derived from economic transaction
as it maximizes individual’s satisfaction.
 Focus on materialistic definition because economic epistemology and methodology
both are mathematical in nature.
 Mainstream economics lacks religious dimension.

7. Religion and Economics
 Islam  salim (submission) or Salam (peace)
 Siddiqi (2013) five strategies to develop Islamic economics from scratch
1. The need to ensure that family institutions are the focal point of economic analysis
rather than market institutions.
2. The need to ensure that cooperation play a greater role in the economy,
complementing competition.
3. Financial Markets should focus on real transactions and debt market should play a
secondary role in financial market.
4. The elimination of interest bearing instruments that aid money creation.
5. Maqasid based thinking that replaces analogical reasoning in Islamic economics.

8. If Islam and economic system are inseparable then how Islamic values are manifested
within an economic system?

9. World views and Economics
 World View
 A set of presupposition which we hold about the makeup of our world. Or a person’s
general perception of reality.
Reality  about existence, truth and morality, ethos about God, religion and creation, ideas about
communal life etc.
 Islamic view and secular view or any other based on set of presuppositions.
 Secular view – existence a purely material phenomenon that include anything that is
scientifically observable or perceived through senses.

10. Islamic World View
 Life in this world is a preparation of the afterlife hence, the hereafter has the final
significance however, the worldly affairs is not to be neglected as essential
prerequisites of the hereafter.
 Islamic world view covers both physical and metaphysical realms of existence.
 Islamic world view extents beyond scientific observations and sense-experience.

11. Core Elements of Islamic World View
1. God
 The concept of Oneness of Allah (tawhid) and Lord the Creator of the world is the basic
essence of Islamic world view.
 He is al-malik (the owner) – the owner of everything in the universe.
 One’s role is reduced to stewardship.
 Follow the rules of al-malik in every affair of life.
 Also in private ownership and trade.
 Private property must be acquired through halal means.
 Fair trade free of manipulation or deceit.
 Paying of zakat
 He is al-razzaq, the provider of rizq (substanance)

12. 2. Man and his Rationality
 Conventional Economics – Man is a rational being (self-interest).
 Islamic view – Man is a rational and spiritual being.
 Khalifah on earth and abd (servant)
 has two inclination – material one and spiritual one, both should be balanced.
 Not limited to market and trade transactions but also include social relationships of gifts
(exchange relationship) , charity, benevolent loan etc.

13. 3. Aim in Life
Successful in Life
Satisfied or Happy with
life
Islamic View
Falah in this world and
the hereafter
Secular View
Utility maximization
More is
better
Peace
and
content
ment

14. 4. Nature
 Economic good – have utility and scarcity and has opportunity cost
 Non-economic goods – in abundance, free and no opportunity cost
 Scarcity – resources are limited and wants are limitless
 Relative Scarcity – natural resources are sufficient but the availability depends on the
level of human efforts.
 God has provided abundance of resources however, the availability depends on responsible
usage of these resources as well as the efforts to discover new ones.