Building a Moral Economy on Islamic Foundations
The teachings of Islam transformed ignorant and backward Bedouin into world leaders, and launched a civilization which dazzled the world for more than a thousand years. These teachings have the same power today. Islamic Economics is a branch of these teachings which tell us about how to organize economic affairs of a society. These teachings are radically different from those of Capitalism, the economic system which dominates the world today. We will begin our study of this subject by a discussion of my paper entitled “The Crisis in Islamic Economics”, which has been summarized in a sequence of seven posts listed below. The five minute video provides some background and introduction to the talk:
CIE1: The Islamization of Knowledge: Our minds are shaped by the education we receive. Because of global dominance of the West, today we all receive educations designed to glorify the achievements of the Western Civilizations, and to nullify the achievements of all other civilizations. As a result, we are educated to believe that the only knowledge of value is that which has been produced by the West in the past three centuries. Since we look to the West for guidance, we cannot benefit from the guidance of the Quran, which remains as revolutionary today as it was 14 centuries ago. While a Western education systematically blinds us to the truth and beauty of the guidance from God, it contains elements of knowledge essential for the modern world. The only solution to this dilemma is to recreate Western knowledge on Islamic foundations, taking what is useful and necessary, and discarding harmful elements in conflict with the final message of God to mankind. This project is called the “Islamization of Knowledge”
CIE2: The Crisis in Second Generation Islamic Economics: At the beginning of the 20th Century, about 90% of the Islamic world was colonized. The two World Wars sapped the strength of European colonizers, enabling liberation movements to succeed around the globe. First generation Islamic economics was born with the ambition of providing genuinely Islamic economic systems to the newly liberated colonies. The vision was to create a system with economic justice, which would provide equal opportunities to all, and take care of basic needs of the weaker segments of society. However, after liberation, the Westernized classes which came to power continued the extractive policies of the colonizers, and resisted all attempts at revolutionary changes in the economic and political systems. By the 1970’s, a pragmatic second generation of Islamic Economists decided that revolutionary change was impossible, and decided to tinker with Capitalist economics systems, making minor modifications to make them compatible on the surface with Islamic law. This compromise between opposites made Islamic Economics appear to be a variety of capitalism, which remains the dominant view today. However, this approach has failed to produce anything of value for the Ummah. As a result, an emerging third generation of Islamic Economists is going back to the revolutionary vision of the first generation.
CIE3: Four Flaws of Modern Economics: This section of the paper explains that modern Economics is built on deeply flawed foundations. A genuine Islamic Economics must be built on sound Islamic foundations. Second generation attempts to combine Islamic Economics with modern Economics have failed because of fatal flaws within the structure of modern Economic theory itself. The flawed theories which led to the global financial crisis in 2007 have not been corrected. The claim that Economics is a “science”, and the laws of supply and demand have the same validity and the laws of gravity in Physics, is wrong. However, this claim deceived Muslims into accepting modern Economics without close examination of the toxic moral foundations upon which the entire structure of this theory has been constructed. To create a genuine Islamic Economics we must recognize and abandon these foundations. Then, we need to rebuild the entire discipline from ground zero, on foundations provided by Islamic traditions.
CIE4: Two Puzzles About Islamic Economics: This section answers two questions: (1) Why was Islamic Economics born in the 20th Century, not earlier? And (2) How can a 20th Century subject be part of the original teachings of Islam, from 14 centuries ago. To understand the answers, we must study how history shapes our thoughts. After rejecting Christianity, Europeans were forced to find alternatives to religion as a means of organizing their society. Modern Economic theories describe lessons of European historical experience in arranging economic affairs of a secular society, without any moral or religious basis. Thus, economics should be understood as a religion which replaced Christianity in Europe. The pillars of faith of this new religion are pursuit of pleasure, profits, and power, without any moral or social constraints. These toxic ideas were spread throughout the globe by global colonization, which is enabled by conquest of minds, via the educational process. First generation Islamic Economists isolated the teachings of Islam in the Economic dimension, and presented them as the revolutionary Islamic alternative to the materialist philosophies of Capitalism, Communism, and Socialism, which dominated the world in the early 20th Century.
CIE5: The Revolutionary Islamic Alternative: First Generation Islamic economists sought to build alternatives to capitalism on Islamic moral foundations. They were able to see through the pretense of modern Economics to be a “science” — a set of universally valid laws, applicable to all societies, and without any subjective value judgements. To build an Islamic alternative, we must first recognize that the moral foundations of modern economics are greed, competition, individualism, and hedonism. This insight enables us to rebuild the entire discipline on the opposite principles of generosity, cooperation, social responsibility, and striving for success on the Day of Judgement. This leads to radically different social, political, and economic institutions for an Islamic society.
CIE6: Pragmatic Objections to Visionary Third Generation Islamic Economics: Pragmatic second generation Islamic Economists raise many objections to the radical views of third generation Islamic Economists, which go back to the ideals of the revolutionary first generation. The main objection is that the lofty ideals of Islam cannot be realized in the modern world. Hence, we should abandon these ideals, accept the dominant systems as being the only practical and viable possibility today. We should work within the broad framework of capitalism, and seek to make minor modifications, wherever possible, to Islamize this system, instead of replacing it. The answer is that Islamic teachings launched a revolution 14 centuries ago, transforming the early Muslim societies, and changing the world. The final message of God to mankind provides us with the complete and perfect guidance required to launch this same revolution today.
CIE7 Challenge & Opportunity for 3rd Generation Islamic Economics: The discussion above shows us the way forward. The failure of modern economics has been made obvious to all by the Global Financial Crisis of 2007. Wealth is becoming increasingly concentrated in the hands of the already wealthy, while the conditions of the masses — the bottom 99% — are becoming increasingly worse. Furthermore, the greed to exploit planetary resources has put the future of humanity at risk, just to provide additional wealth to the massively rich corporations running the planet today. The toxic moral foundations of capitalism are the unrecognized root of the problems facing humanity today. This provides us, as third generation Islamic Economists, with a gold opportunity. Islam has provided us with complete theoretical foundations for an ideal economic system, adapted to human nature. This was made into a living reality be the Prophet SAW and his companions. The challenge facing us today is to recreate living examples of a society based on Islamic moral foundations.
This seventh section concludes the paper. Some links to related materials are given below.
- Crisis in Islamic Economics: http://bit.ly/cie1iok
- The Grand Deception: Social Science http://bit.ly/AZgdss1
- Reviving the Promise of Islamic Economics: http://bit.ly/AZRPIE
- The Deadliest Weapon: Fabricated History: http://bit.ly/AZDeadly
- Homepage for book: Islamic Economoics: Polar Opposite of Capitalism: http://bit.ly/iepoc
- Weekly Mailing List for Islamic Economics: http://bit.ly/AZIEML