In the first installment of a two-part article, Dr. Ahmed A. El-Ashker, professor of finance at the Prince of Songkla University, Thailand investigates some aspects of Islamic economic theory
Islamic economic concepts and principles are perceived as being based on an Islamic philosophy that emanates from two sources of Islam: primary sources, the Qur'an and the Sunnah; and a secondary source, the jurisprudence which incorporates the views of early Caliphs and later on the jurists of the day. As addressing a comprehensive way of life, these sources deal with two distinctive issues: Worshipping Allah (SWT), ibadat; and business/economics transactions, Mu'amalat. The former organizes the relationship between human beings and God (SWT), while the latter arranges economic decisions and business activities including those between the individual and himself, the individual and others and the individual and the surrounding environment as embracing other of God's creatures.
But in their zeal to provide sufficient evidence to show that Islamic economics can offer an alternative answer to economic problems that is workable instead of, though in parallel to, that of western economics, Muslim economists went to considerable lengths to analyst western economic concepts and ideas from an Islamic perspective. While the intention was to provide supporting evidence to the Islamic theory, on the one hand, and highlight conceptual differences between the two theories, on the other, the ultimate objective was to re-mould western economic concepts into the forum of Islamic teachings. Though the endeavor has been a success, it has lead to generating a considerable amount of Islamic economic literature in the form of western economics 'from an Islamic perspective'. While the benefits of doing so are numerous, the danger is that this may lead to alienating both Islamic economics as an independent discipline that ought to have its own identity and built-in means of survival, and Muslims as the main supporters and agents of Islamic economics institutions.
Influencing factors
Various factors could be said to have contributed to building up the conceptual framework of the Islamic economic theory in a parallel fashion to that of the Western theory.
The following are some examples:
The great urge for modernization and the strong belief that the western way of thinking was the major impetus for economic development and capital formation in the west
The strong belief of Muslim writers that Islam is capable of providing an alternative to the western model economically, socially and politically in parallel to the western theory and, hence, their feeling that this has to be demonstrated thoroughly
The urge of writers to find a compromise between the two theories, the well established western and the well advocated but not yet tested Islamic, in dealing with society's economic problems
A feeling of vulnerability perhaps on the political hegemony for so long that led to political subjugation and cultural suppression
As a result of the inherent vulnerability, there seemed to be an implicit intention on the part of the writers to justify and defend the call for a valid Islamic economic system to western economists rather than focusing on what Islam can offer from within
The availability of an already existing stock of knowledge in the western economic literature that was difficult to ignore or discard as useful guidelines in theorizing for Islamic economics
An academic curiosity on the part of the writers to explore the compatibility of Islamic teaching to western economic thoughts particularly by those writers of western educational background. All these factors and perhaps more have lead to, initially, comparing and borrowing, then adapting and adopting, and, later, modifying and converting western economic concepts and ideas in formatting an Islamic economic theory that aimed to show that it could also deliver
Nevertheless, the factors of the past need not be the forces of the future. While in building up support and providing clarification to Islamic economics in its defense as an independent discipline with the purpose of portraying it as compatible, if not competitive, to the well established western economic theory, comparability and adaptability might have been a necessity in the past that does not have to be the case for the future. Islamic economics has passed its infancy stage and while theorizing it for the present and preparing it for the forthcoming challenges of tomorrow, Islamic economists may not have to rely on borrowed ideas to examine from an Islamic perspective. Some pioneering writings have already been initiated in basing the methodology of Islamic economics on the philosophy of Islam, but the flow of writing in that direction has not continued, giving way to the more common line of shaping the subject in parallel to western economic theory. This article contributes to a reverse of that direction. It utilizes what has so far been written in the existing literature and adds to it in an attempt to provide a most needed continuity in building up an Islamic theory of Islamic economics.
The theory
In a simplified form, a theory can be said to be a conceptual framework that is made of a set of rules and principles, based on certain premises and qualifying hypotheses, that explains how things work, or ought to work, and that shows the inferred consequences that may result from its failure to operate the way it is expected to do. In Islam the economic theory is based on a set of rules that emanate from the primary sources of the religion, the Qur'an and Sunnah, as well as other derived rules incorporated in the body of jurisprudence, as stated earlier.
From these sources a set of economic concepts are derived that in its turn generate a set of principles upon which the Islamic economic system is based. Similarity in some concepts may exist between Islam as a religion and other divinely inspired religions as they all have the same divine source.
Also, there might be a further resemblance between these concepts and others which are based on, and extracted from, an ethical code of conduct that is not necessarily religious as these intend to utilize the common factors of good and to reject the forces of evil. But what characterizes Islamic concepts as being unique to Islam and hence to Islamic economics as an independent discipline is that (a) all concepts ought to be taken in whole as an unbroken one bundle of concepts with no separation between, or isolation of, some in favor of others, the methodology of Islamic economics is unique in creating a built-in system that is mainly featuring Islamic teachings, and (c) attempts to water down Islamic norms and ideals that are categorically embodied in the Qur'an and Sunnah, as the prime sources of the religion, under the claim of innovation or for the sake of modernization will be at odd with Islam, will not be long-lived and are not to be permitted.
A differentiation should be made between rules embodied in the Qur'an and Sunnah and other judicial rulings derived by Muslim jurists after the Prophet's time. While variation from judicial applications as incorporated in the Islamic body of jurisprudence may be allowed, any variation from the ruling of the prime sources should be regarded as violation of these rules and ought not be permitted. Otherwise, the uniqueness of Islamic economics as an independent order may be fading away.
Basic foundation
Emanating from the Islamic doctrine, the Islamic economic theory could be viewed as being constructed of three main components: concepts, principles and application. The concepts which lay the foundation for the Islamic economic philosophy are three main concepts: the concept of unity, Tawheed, the concept of vice-regency, Khilafah, and the concept of free will and responsibility, Amanah.
The concept of unity has three main implications: the unity of the identity of God (SWT) as the sole creator of the universe, Zatuhu, the unity of His characteristics, Sifatuhu, and the unity of his works, A'maluhu (SWT). This leads to an overall implication: the integration of God's work and His creation in one, the unity of Wujud. The consequence of this implication is that economic actions as taken by economic agents should be, at best, in harmony and, at worst, in no-confrontation with each other. No harm should be intended to either the interest of others in society or the structure of universe, i.e. the environment. This would help, or ought to help, create harmony in society by minimizing conflicts among economic agents as their economic activities would reflect, or should reflect, cooperation of integration with very little, or none at all, of confrontation. The favorable effect on the environment could be also conceived as a result of the same 'unity' concept. A violation of this rule renders a violation to the spirit of the concept of unity.
The effect of the concept of Khilafah is that when human beings manage the affairs of the universe they do so as deputies of God on earth. The concept of Khilafah also demonstrates that when human beings own economic resources they own them on the basis of ownership-by-trusteeship and as such they should use these resources responsibly. In other words, in their economic activities they ought to abide by the rules of surety and agency in acting on behalf of God.
The concept of free will and responsibility, Amanah, would, on the one hand, guarantee human beings the ability to choose and select their courses of actions, including the economic ones, but on the other, hold them accountable to these actions, which, as a consequence, attracts a reward or punishment in this life and the hereafter.
Based on the above three main concepts, three main Islamic economic principles may be established: the principle of moderation, I'tidal, the principle of economic efficiency, no Israf nor Tabzeer, and the principle of social justice, Adalah Ijtima'iyyah. First, moderation necessitates that human behavior, economic and non-economic, should be void of extremism. Second, the Islamic economic efficiency is unique in differentiating between Israf, that is the extension of the use of resources that may render them too thin, and Tabzeer, the misuse of these resources that may lead to their wastefulness. The two are not the same. While the former may bring extra utility with it, the latter may not, as it will lead instead to unnecessary squander of these resources. Third, justice is a well embedded value in Islam, and the third principle highlights this value in relation to socio-economic aspects. The principle of social justice has particular implications for the distribution of income and economic justice.
The above concepts and principles would be reflected in the application of this basic Islamic economic philosophy. The focal point of application, hence economic analysis, in this philosophy is the economic resources as created by God in His wisdom to make them available to human beings and in making human beings His deputies in utilizing them. The economic analysis therefore may look into the economic resources from six main angles: (1) definition (2) ownership, (3) development, (4) spending, (5) allotment, and (6) the role of the state, all in relation to these God's created economic resources. These six areas of analysis are not random. Their classification intends to reflect the stages of economic activities on earth and in projection of the sequence of God's creation.
Next month Dr. Ahmed El-Ashker investigates the parity and disparity of Islamic economics and western theory, and the benefits of rethinking the Islamic economic model.
© Banker Middle East 2006
