ISLAMIZATION OF ECONOMICS?

The Islamization of economics seems to be done ‘dichotomously’ between the conceptual (theoretical) and the empirical dimensions.

•   In the conceptual part, Islamic economists attempt to find Islamic justification based on Quranic verses over certain theories.

•   While in the empirical part, Islamic economists just utilize and apply the common statistical methods into an Islamic/Muslim case, assuming no contradiction to Islamic heritage.

Syed Farid Alatas (2006) observed, Islamic economics as empirical theory has not done  much. It remains within the fold of Western modernist discourse in terms of theoretical concerns and methodology, and has therefore failed to offer alternative princples to modernization and dependency on the dominant paradigm.

Sardar (1988; 2002)  also warned that, “Islamic economics is little more than one huge attempt to cast Islamic institutions and dictates, like zakāh and prohibition of interest, into a western economic mould. The dominant models guide the analysis and shape the inquiry: everything is compared and contrasted with capitalism and socialism, highlighting the fact that there is an underlying apologia at work.”

 Islamic economists often get trapped into the conventional paradigm. They may actually be contributing to the ‘westernization of Islam’, by fitting Islamic teachings into the neo-classical framework rather than the opposite.

(Haneef, 2005) At most, the current development of Islamic economics is working within the boundaries of neoclassical theory, with some adjustments to incorporate teachings/norms/values that reflected certain requirements of Islam.

Choudhury (1999, 1) also argues that: “In recent years when Muslim scholars wrote on Islamic economics, they had to turn to mainstream economic theories and clothe these up with a palliative of Islamic values. But no new challenge was posed on the epistemological beginnings of a new field of analytical and scientific study. There was no demand from the Muslim scholars to well-define a distinctive field of Islamic economics. The Muslim scholars thus approached the study of Islamic values in neoclassical economic models of behaviour and resource allocation without questioning either the value-orientation of neoclassicalism or the possibility of treating Islamic values in such otherwise value-free models of economic behavior, pricing and allocation.”

As a result, Islamic Economics has become almost a sub-discipline of conventional neoclassical economics, without Islamic justification.

References : methodology of Islamic economics :Overview of present state and future direction. International Journal of Economics, Management & Accounting 19, no. 1 (2011): 1-26

CHARACTERISTICS AND PURPOSES OF USUL AL-IQTISAD AS THE METHODOLOGY OF ISLAMIC ECONOMICS

-include knowledge of areas such as the Islamic worldview, its Islamic economic vision, philosophy, including its ontology, axiology, and especially epistemology (including methodology) relevant for Islamic economics and other social/human sciences (Haneef and Furqani, 2007).

USUL means “origin”, “roots”, “principles”, “fundamentals”, “rudiments” or “elements” of a particular thing.

IQTISAD literally means “moderation”, “in the middle” and also means economics. Nowadays, economic science is translated into Arabic as ilm al-iqtisad.

1. Usul al-iqtisad is an integration of methodology developed in our Islamic heritage (including usul al-fiqh and other usul of sciences developed in our heritage) and contemporary economics (which may involve the whole spectrum of conventional economics and not just the neoclassical school).

•     Usul al-iqtisad would have to deal with the primary sources of Islam (naqliyyah/revealed); Qur’ān and Sunnah as well secondary sources ( aqliyyah/reason); reasoning, experimentation and observation of both our legacy and of modern economics.

2. As a methodology of Islamic economics, usul al-iqtisad aims at delineating the principles that could be used to appraise Islamic economic theories. 

• It would have to develop principles that would have to deal simultaneously with both types of knowledge, naqliyyah and  aqliyyah. Rather than treating the heritage and modern economics separately, these principles must be integrated through a methodological dialectic and creative synthesis.

3. One thing should also be noted is that Islam has revealed sources (Quran and Sunnah) and non revealed sources, such as analogical reasoning (qiyas), consideration of public interest (istislah), juristic preference (istihsan), presumption of continuity (istishab), and so forth. Whereas the revealed sources may have clear injunctions and command permanent validity, their interpretation via usul al-iqtisad and its non-revealed sources are not permanent, for they are mainly the product of an ijtihad.

References : methodology of Islamic economics :Overview of present state and future direction. International Journal of Economics, Management & Accounting 19, no. 1 (2011): 1-26

ANALYSIS OF SCHOLARS’ APPROACH TO MODEL/THEORY BUILDING AND ITS IMPLICATIONS FOR METHODOLOGY OF ISLAMIC ECONOMICS

There might be some common ground where

• (some) conventional theories might be accepted as long as they are not in conflict with the logical structure of the Islamic worldview (Chapra, 1996)

• They are not against the explicit or implicit injunctions of Islam (Mannan, 1984)

• They do not contradict with the principles of Islamic teachings and should be evaluated within an Islamic framework and using Islamic criteria (Haneef, 1997)

 Integrative approach of Islamization of economics.

Anwar (1990) proposes to contrast the components of conventional economic theories with components of an Islamic corpus and nucleus in order to “classify” the components of conventional economic theories into Islamic and neutral elements and to then “accept” the Islamic economic theories while ‘rejecting’ the un-Islamic theories. 

Kahf (2003) proposes takhliyah, (identification and isolation of the biased postulates of conventional economics) and tahliyah (incorporation in economics of positive postulates derived from Sharīah) in order to revise the conventional economic theories.

Zarqa (2003)  argues that if we replace those values on which the science of economics should be based by Islamic values, and if we ‘add’ to the secular statements, then Islamic economic theories can be produced. 

Hasan (1998) accepts the positives ideas of conventional economics so long as “the process of Islamization may take conventional economics in manageable segments in the same vein: it can be sifted, pruned, and modified, where possible, to conform to the Sharīah tenets”. 

Naqvi (1981) opines that Islamic economics should integrate what relevant knowledge is already available and then transmute it into a ‘new frame of thought’ where Islamic economics can selectively assimilate elements in modern economics that are not contradictory to Islamic economic axioms. 

Choudury (1992) starts with developing original concepts, with unique meanings that represent a ‘reality’ that encompasses both the physical and spiritual realms. A new math, a new symbolic logic and formalism is needed. 

The implication for the development of Islamic economics 

the integration of Islamic economics and conventional economics will be in two areas of the discipline

(1) the substantive dimension of the discipline, which includes economic concepts, principles and theories in modern economics and economic teachings or views on economic matters in the Islamic heritage.

 (2) the technical dimension of the discipline, which includes methodology of modern economics and ulul studies in the Islamic heritage (Haneef and Furqani, 2007).

References : methodology of Islamic economics :Overview of present state and future direction. International Journal of Economics, Management & Accounting 19, no. 1 (2011): 1-26

METHODOLOGY OF ISLAMIC ECONOMICS: WHAT AND WHY?

Methodology can be seen as a specific part of that branch of philosophy called epistemology.

Definition of methodology according to:

Blaug (1993) defines the methodology of economics as the branch of economics where we study how economists justify their theories, and the reasons they offer for preferring one theory over another.

Safi (1996) - is the field of scientific inquiry into the justification, description, and explanation of the rules and procedures which constitutes scientific methods.

Fox (1997) - sees methodology as dealing with theory appraisal.

Haneef (2005) - views methodology of economics as including discussions and analyses of the process of building models, developing theories, testing hypotheses (where necessary), as well as establishing and using criteria to evaluate the process.

 Reasons why methodological knowledge of Islamic economics is important

a) Without a proper methodology of Islamic economics task could not be done properly.

b) Distinguish between what is false and true in appraising and evaluating Islamic economic theories.

c) Concerned about formulation of theories that are workable and can be applied in real life.

d) Important to link the ontological aspects of Islamic economics, which constitute the ideals and principles of Islamic economics, to the axiological aspect (ethics) that is a practical application of Islamic economics.

e) Aims to lay down the scientific operational process of Islamic economics as a discipline so that the ‘gaps’ in Islamic economic studies — as termed by Siddiqi (1982), Khan (1989) and Zarqa (2003) — between those who are well-versed in Islamic legacy but lack modern economics on the one hand, and those who have understanding of modern economics but are lacking in Islamic legacy, could be eliminated.

References :  methodology of Islamic economics :Overview of present state and future direction. International Journal of Economics, Management & Accounting 19, no. 1 (2011): 1-26

MASUDUL ALAM CHOUDHURY- ISLAMIC ECONOMICS AS SOCIAL SCIENCE

It can be summarized as below...

Compartmentalization of Knowledge in Western Social Sciences

- The field of social sciences comprising in the main the disciplines of economics, political science, sociology, anthropology, but secondarily also of social psychology, religion, law and history, is a product of the eighteenth century

-  The Physiocratic school upheld the primacy of agriculture as the principal productive activity of the nation. The ethical meaning in it are as follows ;
 a) satisfaction of basic needs was the primary goal of the social economy.

 b) it showed that agricultural production was upheld in favor of maximizing employment and use of labor intensive technology.

 c) sectorial linkages with agriculture would result in price stability in the product and factor markets.

 d)  full capacity utilization in labor intensive production with the primacy of agriculture, meant stable wages for the producers.

Continuing Insulation of the Social Science Disciplines in the Twentieth Century
-  there has been specialization in the area of developmental-ism, explaining the social and economic developmental processes; there have been works in the direction of developing social systems and interaction-ism.

The Evolution of Economics as a Social Science in the Twenty-First Century: The Mixed Economy and the Re-emergence of Political Economy.

A mixed economy is defined as the environment conducting the distribution of wealth and resources under menus of production and consumption that are either evolved in the market system or the command type economic system.

The factors that gave rise to the emergence of the mixed economy are:

(1) the importance of government investment, planning and control of large sectors of the economy.

(2) the changing role of profits in relation to economic growth.

(3) labor and capital market imperfections in the hands of powerful labor unions and stock markets.

(4) the existence of the welfare state in Western nations; (5) the international division of labor and sharing of resources.

The emergence of the mixed economy points to the dawn of a re-emergence of political economy.

Political economy is defined here as the integrated study of social phenomena in their widest variety, with the assumptions, social and moral conditions, and methodology, capable of providing both an analytical as well as an institutional examination of the social problems.

Difference in definition from textbook is due to two factors 


a) There is the absence of a predetermined causal relation in Marxist Dialectic.

b) In the institutionalize framework there is the absence of analytical requirement of the underlying methodology, within which the study of institutions is to be subsumed.
Future Evolution of Economic Science


- The treatment of the study of economics in the future as a mixed economy, investigated within the methodology of political economy.

- In the field of economics, institutional economics, mixed economy and political economy are penumbras of each other with a common core.
https://www.emeraldinsight.com/doi/pdfplus/10.1108/03068299010006367

THE ECONOMISTS- HOW SCIENCE GOES WRONG?

Here are few points that i'd like to extract from -

- " But success can breed complacency. Modern scientists are doing too much trusting and not enough verifying- to the detriment of the whole of science, and of humanity" . It makes sense to me. Modern scientists nowadays are of few new findings and they seem to just support the evidence of old research and refute them. Hence, they need to produce new findings.

- competitiveness of science. 

- careerism encourages exaggeration and the cherry picking of results. Only most striking findings have the greatest chance.

- failure to prove a hypothesis are rarely even offered for publication,let alone accepted.

- research protocols should be registered in advance and monitored in virtual notebooks.

- most enlightened journals are already becoming less averse to humdrum papers.

Read here for more - https://www.economist.com/news/leaders/21588069-scientific-research-has-changed-world-now-it-needs-change-itself-how-science-goes-wrong

ISLAMIC ECONOMICS- definition, methodology, usul al fiqh

Test yourself about usul al-fiqh down below !

www.quizyourfriends.com/take-quiz.php?id=1804141704401493&lnk&

• Al-Qur’an and as-sunnah
• Consensus of opinion (ijmà’)
• Analogical deduction, qiyàs 
• Istihsan (Juristic preference) 
• Public interest, maslahah or istislah, 
• Custom or 'urf

Islamic economics

1. aims at the study of human falah achieved by organizing the resources of earth on the basis of cooperation and participation (Akram Khan,1404)

2. knowledge and application of injuctions and rules of Shariah that prevent injustice in the application and disposal of material resources in order to provide satisfaction to human beings and enable them to perform their obligations to Allah and society (Hasanuz zaman, 1404)

3. study of Muslim behavior who organizes the resources, which are trust, to achieve falah ( Muhammad Arif,1405)

HOW ISLAMIC ECONOMICS WORKS??