This is just to keep a record of the email discussion in a more permanent and easily accessible place. For the previous emails, see Discussion of Mabid Al-Jarhi’ Syllabus for Islamic Economics
An edited and UPDATED version of my email response (given below) was posted on the Islamic WorldView Blog as: Questioning ALL of Economic Theory? This post also provides links to the previous discussion.
Dear Brother Anas Zarka Assalamo Alaikum — In response to your previous message:
Here is a link to a post by David Ruccio, a leading heterodox economists, who argues that we need to question the ENTIRE EDIFICE of mainstream economics: (Utopia and Macroeconomics)
Recognizing how narrow the existing discourse has become means we need to question the entire edifice of mainstream macroeconomics, including its utopian promise of full employment and price stability.
Only then can we begin to recognize how bad things have gotten under both the successes and failures of mainstream macroeconomics and to imagine and invent a radically different set of economic institutions.
Many other mainstream, leading economists have said similar things, such as: (!) The entire profession went astray because it mistook the beauty of mathematics for truth; (2) Macroeconomists completely ignore conflicts between reality and their theories, so much so that we need to create a new word for this: I suggest POST-REAL economics. (3) Economists suffer from a Pretense-of-Knowledge syndrome — they pretend to know things about which they have no idea. (4) X-Gov FRB USA: Currently we do not have working theory of inflation — he examines more then seven existing theories, and show how the reality contradicts all of these theories. These (4) quotes are just an illustrative sample. Books like Debunking the Naked Emperor are FULL of chapters showing the failure of core propositions of economic theory. Are only Muslims forbidden from wholesale criticism of modern Economics or does this restriction apply to heterodox, Marxist, Institutional, and Word-Systems theorists as well?
ISLAM OFFERS a radically different set of ideas and institutions which the whole world is currently looking for. However Islamic economists have been unable to clearly explain and describe this alternative, because they have become trapped in the blind alleys of mainstream economics, and have been unable to recognize the stark contradictions between mainstream economic theory and Islamic teachings.
The Samuelson textbook states that economists must “try to fulfill all wants, whether they are genuine or contrived”. All conventional economists take the same position, says that wants are EXOGENOUS, and a good economic system must try to full all desires backed by money — demand.
“Have you seen the one who takes as his god his own desire?” [Al-Qur’an 25:43] And “He followed his own desire. So his example is like that of a dog: if you chase him he pants, or if you leave him, he [still] pants.” [Al-Qur’an 7:176] And about the person who controlled the passion of his soul/self God says: “But as for he who feared the standing before his Lord and restrained the soul from [his] desire, then indeed, Paradise will be his refuge.” [Al-Qur’an79:40-41]
It seems to me that we have to CHOOSE between Samuelson and Quran. Either we should try to fulfill all desires, regardless of what their origin is, OR we should RESTRAIN ourselves from fulfilling idle desires, and also do Amr Bil Maaroof by encouraging others to do so. According to Quran, those who are SAVED from following their desires are the successful ones, whereas according to Samuelson, those who succeed in fulfilling their desires are the successful ones.
Another concept CENTRAL to Economics is directly opposed to Islamic teachings. According to Consumer Sovereignty principle, which is central to modern economics, all people know what is good for them, and when free to choose, they will automatically make the choices which maximize their welfare. According to the Quran, it may be that you like something, but it is not good for you, and also it may be that you dislike something but it is good for you. If this is true than we must go for REGULATING the market — we cannot allow people to make freely choices which harm them and society, without being aware of this. Many Muslim Economists have CONFUSED the dramatic difference between an UNREGULATED market (capitalism) and a REGULATED market (Islamic markets with HISBAH), and therefore considered the two be almost the same.
The main reason for our confusions is the CONQUEST OF KNOWLEDGE. As Ibne Khaldun remarked, defeated nations try to imitate the victors in all ways. Three centuries of defeat on numerous battlefield between the West and East have created a defeated attitude and mentality among Muslims, which has led to mindless imitation of everything West has to offer, instead of a critical analysis. The post linked explains how there are THREE major mistakes in the European intellectual traditions that have persisted for centuries, and it is highly unlikely that the West will be able to see and rectify these errors. Therefore, it is up to us Muslims to create an “Economics for the 21st Century” by rejecting these errors, and replacing them with the right concepts which are readily available within the Islamic traditions.
These are my fallible opinions and Allah T’aala knows best. I am happy to listen to any advice or corrections regarding my thoughts as expressed above.
wassalam
Asad Zaman
Vice Chancellor, PIDE
Short Posts on Diverse Topics: LinkedIn
On Sun, Apr 29, 2018 at 7:37 AM, Anas Zarka <anaszarka@gmail.com> wrote:
Dear All
Part II of Zarqa comments
on
Zaman paper
“Third Generation Islamic Economics”
This is Part-II of my comments on Dr Asad “3rd Gen IE”. I Part-I entitled “ Zarqa comments on Zaman paper..” was posted earlier.
I agree with several points and insights in the paper which I shall spell out a later Part, after discussing points of disagreement.
Abbreviations: Conventional economics (CE), Islamic economics (IE).
False dichotomies
- In Part-I of my comments, I presented detailed arguments to support my conclusion that:
Sharia’s approach to human knowledge, including (CE) , is to take a case‑by‑case middle course where, after due analysis, an element is either adopted, modified or rejected.
- To approach CE as a necessary choice in a dichotomy ( e.g.: look either to the Quran or Samuelson,) is not compatible with that Sharia approach which calls for taking a critical detailed look at human knowledge and getting all that is true and useful in it.
Rigid dichotomies are gross tools unsuitable for applying this Sharia approach, specially in socioeconomic issues where the good and bad, the true and false are often mixed.
The normative/positive distinction
Ignoring the difference between positive statement and normative statements is a methodological mistake. How more serious it is to reject that distinction. Such rejection cannot be logically justified by a fact (noted by Dr Asad) that economic theorizing cannot escape the influence of the worldview and values of the theorists.
That influence, I say, need not change a positive into a normative statement. Nor does it make all economic theorizing normative. That influence (mostly through choice of topics and variables ) makes the resulting conclusions only partial, describing part of the truth about economic life.
It is useful to recall here the parable of several blind men trying to describe an elephant. Are their separate positive statements about the part of elephant each blind man touches false? Of course not; but they are biased, each truthfully describing part of the elephant. The same may be said about conventional economics: it provides mixed economic elements, many of which are partially true and locally insightful. A major duty of IE is to access each element, then put it within the balanced and wholistic worldview of Islam, thus revealing its normative Sharia weight.
Comparing IE and CE
IE has two source of knowledge: the human source for positive knowledge ( same source for CE ) , and the Divine source for normative knowledge as expressed in Sharia (The Holy Quran and authentic tradition of the Prophet). This Divine source is unique to IE.
Conventional economics draws on the human source for both its positive and normative components, and generates pieces knowledge and tools to analyze and understand complex economic reality.
Viewing CE as an alternative religion generates another false dichotomy ( either CE or Islam ), hence diverts attention from the proper Sharia approach to CE.
IE is a professional synthesis of its two sources that takes several theoretical and applied forms.
( To be continued insha Allah ).
Salam to all,
Anas
On Wed, Apr 25, 2018 at 5:24 PM, Asad Zaman <asad.zaman@alumni.stanford.edu> wrote:
Dr. Mabid Al-Jarhi proposed a syllabus for Islamic Economics, based on a mixture of Western economic theories and some Islamic elements. In this note, I will discuss an alternative approach, which recognizes Islamic Economics as a polar opposite of Capitalist Economics, rather then a branch of it. IE is best for public welfare, while CE promotes inequality and favors the rich and powerful. This proposal for an alternative syllabus sketches some initial foundational concepts for IE. I have developed these in much greater detail in courses that I have taught based on these ideas. See for example, Advanced Microeconomics: An Islamic Approach.
We must begin by recognizing that the fundamental economic problem in Islam is radically different from the one taken as central by Western Economists. According to Samuelson and Nordhaus, the economist must strive to fulfill all wants – whether genuine or artificial. Note that this task is impossible, since wants keep increasing as you fulfill them, so the problem of scarcity can never be resolved. In contrast, Islam forbids us from fulfilling idle desires (=artificial wants), and ask us to urge the feeding of the poor. Since basic needs are satiable, scarcity is not a problem, and the central problem becomes ensuring re-distribution from those with excess to those who are in need. Focusing on basic needs leads to an entirely different economic theory, as I have discussed in my paper on First Fundamental Economic Problem: Feeding the Hungry.
Another important way to distinguish an Islamic approach is to focus on the fact that, even though economists deny it, conventional economic theory is mainly a normative theory – it posits “rational” behavior, perfect competition, profit maximizing firms, zero transaction costs, full information, and many other idealistic assumption never actually fulfilled in reality. When you attempt to uncover the hidden norms within conventional economics, you find that the theory is the moral philosophy of the wealthy. I have explained in “ET1%: The Blindfolds created by Economics” how economic theory has an appearance of objectivity, but conceals a strong normative preference for the wealthy. In particular, it advocates that the wealthy have absolute rights to enjoy their wealth in any manner they please, without any regard for others. In contrast, Islam says that wealth is given as a test, and should be used in the path of Allah, to help those who are need. In general, Islamic principles strongly protect and defend the welfare of the general public, so we can say that Islamic Economics is ET90% — an economic theory which advocates the interests of the bottom 90%. As my paper on Third Generation Islamic Economics shows, Islam is directly opposed to mainstream economics with respect to each of the following eight central concepts:
Scarcity
Pareto Efficiency
The Invisible Hand
The Production Function
GNP per Capita
Separation of Economics from Politics/Power
Private Property
Utility Maximization
I have explained the conflict between Islam and Economics in short separate posts on “The Illusion of Scarcity” and “The Pareto Efficiency Swindle” recently. I am also in process of writing up the remaining six topics, plus a ninth topic of “Comparative Advantage”. As I have explained in several articles, Islamic position is directly opposed to conventional economic theory in so many dimensions that it is hard to list them all. See in particular my papers on Islam Versus Economics, and also An Islamic Critique of Neoclassical Economics. This leads to some important strategic considerations in terms of how we should proceed in terms of creating a new discipline of economics, which is line with Islamic concepts rather than capitalist concepts.
There is no chance of acceptance within capitalist heartlands of an economic theory that provides a significant alternative, one which favors public welfare and adversely affects the wealthy and powerful. Second Generation Islamic Economists have sought acceptability and respectability within mainstream Western economics academia and journals, and this goal is not compatible with the goal of building a genuine Islamic economics, true to the spirit of Islamic teachings which created a revolution in world history. This is what I have called the “Cruel Choice” in a previous discussion of Dr Mabid Al-Jarhi’s 2nd Generation Syllabus of IE. The attempt to create Islamic Economics in a format that would be acceptable to Western Economists has been extremely costly. We have been unable to use the natural language of discourse continuing in the 1400 year old intellectual tradition of Islamic Scholars, since this language would be be acceptable to secular modern mindsets. It is only after we abandon the ambition to occupy a corner room in the annual meetings of the American Economic Association that we can begin to think about constructing a genuine science of economics, based on Islamic perspectives.
Mainstream Capitalist Economics is firmly entrenched in the heartlands of capitalism because it serves the interests of the rich and powerful; see ET1%: The Blindfolds of Economic Theory. Our natural audience is those who suffer from the effects of capitalism — the bottom 90%. Similarly there are many intellectual dis-enchanted with modern economics — such as heterodox economists, behavioral economics, complexity theorists, evolutionary economists, institutional economists, and many others — who would be interested in alternatives to mainstream capitalist theories, which are intellectually stifling. However, it is very hard to appeal a diverse group like this. Even though a rainbow coalition of people with very diverse ways of thinking would be necessary to form an effective counter to the ravages of capitalism, I believe that initial steps in constructing an Islamic Economics must be restricted to a Muslim audience in Islamic countries. Some reasons for this are spelled out in my post “Is Islamic Economics for Muslims Only?” However, the most important reason is not mentioned there: launching an intellectual revolution requires energy and sacrifice, and also strong focal points of agreement and group cohesion. Several movements against capitalism, such as the recent Occupy Wall Street, floundered due to lack of intellectual coherence and group cohesion. The required energy is available from the Islamic source materials which command widespread consensus among Muslims, at least in terms of the broad principles. It is only these broad principle which are needed, and which are sufficient to form the basis for a thorough-going revolution in Economics.
I have now made substantial progress in developing courses which replace traditional mainstream courses with Islamic alternatives. These are not courses which start with Bismillah and end with Dua, while teaching conventional subject matter in between. An Islamic approach completely changes the subject matter, because even the definition of knowledge is different. My lecture on “An Islamic Approach to Knowledge” spells out some of the differences. I will provide further explanation of the detailed differences later. For the moment, I just provide a short list of the courses which I have developed. These are currently available for use by any teacher who would like to adopt an Islamic approach to teaching conventional economics subjects:
Experimental Economics (2012) Course highlights the failures of conventional game theory to understand real human behavior in games, and shows how Islamic concepts provide useful insights.
Advanced Microeconomics I (2017): This course starts by using the Hill & Myatt Anti-Textbook to familiarize the student with conventional economic theories, and explain their failings. Then it proceed to construct alternatives which reject the optimization and equilibrium paradigm which traps and constrains conventional economics.
Advanced Microeconomics II (2018): Currently ongoing course based on Holt & Davis text on Experimental Economics, it examines conventional micro within an experimental framework. By being subjects in experiments and by running experiments themselves students learn the vast differences and contradictions between economic theories and real world markets. Course provides students with deep intuition about real world economics which is not available by studying formulas as in conventional courses.
Capitalist Economics (an Islamic Approach): This course treats economic theory within its historical and cultural context. The course covers Karl Polanyi’s The Great Transformation: Historical and Political Origins of Our Times, and relevant theoretical materials.
Mini-Course on Macro-Economics: A sequence of 8 lectures on Macroeconomics covering major macroeconomic concepts in historical context, focusing on the controversies between Keynes and the Chicago School, as well as the role of Money, Money creation, and an Islamic version of the Iceland Plan for Monetary Reform.
Descriptive Statistics: An Islamic Approach: This basic course on descriptive statistics explains that numbers cannot be analyzed in isolation from their real world meanings and application context. Once real world context, and “useful knowledge” is taken into account, then Islamic concepts play an important role. See post on “Statistics: An Islamic Approach?” for further explanations.
Fundamental Probability Concepts: An Islamic Approach. Focusing on what is USEFUL, as opposed to theorem/proof/axiomatics, is like focusing on driving, instead of teaching how the car engine works. This set of six lecture teaches basic concepts of probability theory for one variable case at the level of Mood, Graybill and Boes, using the bare essential mathematics required. A second set of lectures on the multivariate case is planned.
Econometrics for Muslims: Focusing on materials which useful in applications, and excluding many standard topics which have theoretical value but no application creates an unusual approach to econometrics.
Applied Regression Analysis: This unusual course focuses on a large number of aspects of regression models which are crucial for practice, but not taught in standard textbooks. Because researchers are unawared of these issues, typical regression analysis in applied papers is seriously defective in several dimensions. These flaws are explained, and remedies are taught.
Bayesian Econometrics: Existing textbooks are too complex, and require very heavy math background. This course teaches the essentials of Bayesian methodology assuming minimal mathematical background, and explains the types of data analysis where this method is useful for inference.
Finally, it is important to explain that these courses are all half-way houses — temporarily useful because of contemporary knowledge. They all have a three part structure — A: Explaining Conventional Concepts, B: Explaining why these are wrong are flawed, C: Taking steps towards creating superior alternatives. EVENTUALLY, A and B will both become un-necessary and we will only need to do part C. However, for the moment we need to engage with what is currently being taught. This is similar to the Ilm-ul-Kalam that was invented to deal with theological problems arising out of Greek philosophy. When Greek philosophy became discredited and obsolete, there was no longer a need to learn how to refute it. However, this knowledge was essential when it was the dazzling and dominant paradigm.
Finally, I would like to say that experience tells me that the biggest objection to the proposals above will be the idea of restricting the courses to a Muslim audience. People respond with shock and horror to this narrow-minded medieval thinking, and give me extensive lectures, full of Quran and Hadeeth, on the universality of Islam and how the message is meant for all humanity. I have a lengthy and complex answer to this type of questions, but this message has already exceeded by far the maximal length of reader tolerance, so I will leave that for a later post. Some crucial aspects of the answer are discussed in the follow 90m first lecture of one of my courses, but many additional factors which led me to this decision are not discussed here:
Vice Chancellor, PIDE
Short Posts on Diverse Topics: LinkedIn
Previous emails in this chain.
================================================
On Fri, Apr 20, 2018 at 9:32 AM, Asad Zaman <asad.zaman@alumni.stanford.edu> wrote:
The difficulty that I have with the approach of Dr. Mabid Al-Jarhi is that there is no answer to the question posed by Dr. Mahmoud El-Gamal: why do we need to use the word “Islamic”? The economics being done is purely from Western sources, whether orthodox or heterodox, and the emphasis on math and analytics is a purely Western emphasis, which has no contact with Islamic teachings. Some Islamic topics like Fiqh and others are to be tacked on as an almost superfluous and un-necessary adjuncts – exactly as Cliff Cobb recognizes in his email: “you have indicated a desire to develop an endogenously developed Islamic economics, one that is not simply a response to or adjunct of neoclassical thought.” Unless we can put Islam at front and center, we cannot call it “Islamic Economics”. Here is how I propose to do so, in my Third Generation Islamic Economics paper.
We start by considering the diversity of human purpose – Inna Sa’yakum la Shatta. Human behavior is driven by the desire to achieve goals (which are diverse) and to understand it, we need to understand human purpose. Neoclassical economists believe that all rational humans have only one purpose – maximizing the pleasure they obtain from consumption. This is obviously wrong, and so using Islamic ideas would be an obvious improvement. In my short note on “A Methodology for Islamic Economics”, I spell out how we must found this on three elements – the positive or descriptive, the normative or ideal, and the transformative, the method to move from the current reality towards the ideal. The third element, creating change, was obviously part of the mission of the Prophet Mohammad SAW. Emphasizing these three elements would distinguish Islamic Economics from any of the currently available approaches, whether orthodox or heterodox, and, being firmly grounded in Islamic traditions, would justify the label “Islamic”.
In many papers, I have spelled out how Islam is diametrically opposed to Economics; for example, see “Islam Versus Economics”. The second generation of Islamic Economists have spent more than three decades overlooking the conflicts and striving to harmonize conventional economics with Islamic teachings, to the extent of even accepting utility maximization as a valid principle. A genuine Islamic economics can be built only if we reject “TheIllusion of Scarcity” as a foundational principle of economics. Instead, the first priority of an Islamic economic system would be to provide for the basic needs for all members of the society, and ensure access to equal opportunities for education for all. Making these the CENTRAL problems of economic would lead to a radically different kind of economics, which would justify a distinct and distinguishing name like “Islamic Economics”.
To summarize — if we wish to create an “ISLAMIC ECONOMICS” then the FOUNDATIONS for the discipline must come from Quran and Hadeeth. Current versions of second generations Islamic Economics have foundations in Samuelson, and trimmings from Islamic ideas — this approach is not acceptable. I think Dr Mabid Al-Jarhy’s proposed syllabus also falls into this category. How we can create a discipline which is founded on Islamic teachings is spelled out in my papers on Re-Defining Islamic Economics, and in Reviving the Promise of Islamic Economics. Modern Economic theory is DEEPLY FLAWED. If we have the COURAGE to do so, we can launch a revolution. Just as Islamic teachings created a revolution 1400 years ago, they have exactly the same potential today. However, today unfortunately, islam has become a stranger, and the Ummah is crawling into lizard-holes after the Christians and Jews.
PS: I have taken the liberty of adding a few names whom I thought would be interested in this discussion. Furthermore, the issues under discussion are of universal interest, wherever Islamic Economics is being taught. So I have copied the first twenty emails into a webpage linked below, and hope to update it later, so that a record is available for use by others. The link to the history of this email conversation is as follows:
Vice Chancellor, PIDE
Short Posts on Diverse Topics: LinkedIn
On Thu, Apr 19, 2018 at 4:50 AM, Dr. Mabid Ali Al-Jarhi <mabid.al.jarhi@gmail.com> wrote:
Well-taken proposals. Much obliged.
On Thu, Apr 19, 2018, 2:46 PM Mahmoud El-Gamal <elgamal@rice.edu> wrote:
Dear Dr. Mabid:
A few suggestions:
- A “dose of fiqh” would benefit from a counterbalancing dose of “Law and Economics” and Economic History. Otherwise, students may inherit the misconception that medieval minds somehow had greater access to divine-inspired wisdom.
- Criticism of mainstream Economics are fine, but they make little sense without learning history of economic thought (which does, indeed, originate mostly in the Scottish version of Calvinism, but not entirely), which should also be understood within the context of economic history.
Most US programs no longer teach economic history or history of economic thought, and this is very unfortunate. Reinserting those in the curriculum would produce better informed students.
- Finally, on quantitative methods, I think that those are also best taught by statisticians and applied mathematicians (e.g. for numerical analysis) with the one caveat that applied econometricians tend to obsess over endogeneity issues that statisticians often don’t care about due to their discipline’s origin. So, some econometrics still needs to be taught by economists, but otherwise, just as with mathematics, you don’t want your students to learn their statistics and numerical analysis second hand from economists.
Best,
Mahmoud.
_________________________
Mahmoud El-Gamal
Rice University
On Apr 19, 2018, at 4:15 AM, Dr. Mabid Ali Al-Jarhi <mabid.al.jarhi@gmail.com> wrote:
The latest response of Dr. Assad takes us much closer to a common denominator in teaching Islamic economics. The formula is now complete. Conventional economics would be taught using the latest conventional writings that provide alternative construction to the neoclassical model. Islamic economics would be purely analytical avoiding as much as possible Fiqh and historical analysis. Math, especially real analysis and stochastic differential equations would be taught by mathematicians not economists. Quantitative methods would prepare students for rigorous testing of the many untested hypothesis in the field. A Fiqh and Shari’ah dose would be provided, preferably in Arabic. Ultimately, we would have graduates with double major in both economics and Islamic economics as well as finance and Islamic finance.
Let us focus on the program content and cut down on digressions.
Warmest regards,
On Thu, Apr 19, 2018 at 11:29 AM, Asad Zaman <asad.zaman@alumni.stanford.edu> wrote:
What I have not been able to express clearly in this discussion is that I now HAVE an alternative to standard Micro, Macro, Econometrics, and Math — I have developed courses which are radically different from (and dramatically superior to) what is currently being taught in the leading universities in the West. When I say the modern game theory approach is all wrong, it is not a nihilistic rejection of everything from the west — it is based on the observation that in very simple games, understanding what people ACTUALLY do, as opposed to what economic theory says they should do, requires taking human emotions like reciprocity, desire for justice, revenge, etc. into account. It is based on the observation that the concept of a subgame perfect solution requires us to believe that human beings cannot make binding commitments, and cannot be trusted to carry them out. I will provide some more details on the courses which I have developed, which — if adopted in Islamic countries — would create revolutionary impact. Why only Islamic? Because, having assessed the strength of the opposition exactly like Dr. Mahmoud El-Gamal, these courses have no chance of survival in the heartland of orthodoxy — USA, Europe, Austraiia. The power of the neoclassicals is too strong to allow deviant courses like this to be taught in the mainstream — I start out with the Hill and Myatt Anti-Textbook of MicroEconomics, in which each chapter takes one of the central concepts of Micro and explains it with clarity, and then explains why it is wrong. After about 12 or 13 lectures explaining why micro is wrong, and why the tools of maximization and equilibrium are hopelessly far from the truth, I proceed to explain how we can develop alternatives. Mathematics is TOO SIMPLE to describe human behavior — if we want to study complex systems, we must resort to computer simulations in agent based models. etc.
Although Islamic Economists are still chiding me for my wholesale rejection of modern Economic theory, heterodox western economists are very interested in the development of genuine radical alternatives. The alternatives built on Islamic ideas would have a much deeper, sophisticated and complex theory of human behavior than is currently available, especially in economics, which uses a ridiculously primitive theory. Here is a recent letter I received from the editor of American Journal of Economics and Sociology, requesting me to write a paper for a special issue of their journal. The letter and responses are reproduced below. In the context of this conversation, it is important to note that Cliff Cobb starts out by noting that Economics is a RELIGION, exactly as I have claimed in earlier email.
Email of Clifford Cobb, editor AJES, to me:
Dear Dr. Zaman:
I am planning an issue of the journal I edit (American Journal of Economics and Sociology, founded 1941) on the ways in which religious traditions offer the potential for new paradigms in economics. The starting premise is that neoclassical economics represents a particular theology (originally Calvinist, but now nihilist) and that treating it as a universal instrument of secular salvation is, in itself, a form of neocolonialism. In the past, colonialism was a product of the Bible and the gun. In the new world order, all that is really required is to convince Western-trained elites that neoclassical economics and other branches of Western social science are culturally neutral and therefore safe to adopt.
I invite you write an article for this issue. You have indicated a desire to develop an endogenously developed Islamic economics, one that is not simply a response to or adjunct of neoclassical thought. That is is precisely what I am looking for. To make sense of why the world needs Islamic economics, it seems to me necessary to reflect critically on the damage caused by liberal individualism, which explicitly denies the possibility of any purposes outside the self and yet offers no explanation for the source of individual purpose. If the problem can be named clearly, then even skeptics may begin to understand the value that Islamic economics can play.
Since economics plays a subsidiary role in any theologically-based concept of how to realize a good society, I recognize that your approach might not conform to a model that takes up a standard set of issues in economics, such as banking, markets, public finance, and the like. In my experience, the quintessential question is how the nature of property rights relates to the nature of human existence. Capitalism envisions a self protected by an almost impenetrable wall, and communism envisions a self without boundaries. Both of those ontologies fail, and yet there is remarkably little work that aims to define the nature of a self born into a world of social obligations and with an aspiration toward self-transcendence. What kinds of laws and institutions will serve to promote that sort of self? The chief problem with societies organized around social obligations in the past is that they tend toward parochialism. How did Islam function to overcome that problem during its golden age? Another problem that most societies have faced in the past is feudalization, in which patron-client relationships grow to the point of creating barriers to more fluid social relations. The growth of corporations today is having that effect once more, shrinking the sphere of res publica and expanding the sphere of private governing structures. Has Islam found a way to counter that tendency? Those are the sorts of historical problems that I regard as the primary appropriate subject matter of economics, even though that falls far outside the parameters of standard positivist views of the function of economics. I particularly like your statement: “The fundamental economic problem is a normative one: what should an individual (and a society) do with surplus wealth?” That is a much more important question than how to achieve allocative efficiency.
The questions I would like you to address may not be possible to answer at this stage. But I am not looking for final definitive answers, just plausible claims. The strongest claim in favor of Adam Smith’s version of capitalism is that it offers a method of self-regulation. The question that capitalism fails to address is how to maintain the conditions under which self-regulation functions properly. Those conditions seem to require attention to the character of citizens and their leaders. No one has yet proposed a method of making that aspect of the “economy” self regulating.
If you agree to write an article for this issue, I would expect much of it to draw from your earlier work, such as the literature survey on the history of Islamic economics that you published nine years ago. The amount of original material in the present article would be up to you. The length of the article should be at least 8,000 words and no more than 25,000 words.
The deadline for the article is September 1, but that can be negotiated if you are interested in writing but would have difficulty meeting that deadline.
Please let me know if this interests you.
Cliff
Clifford W. Cobb
Editor,
American Journal of Economics and Sociology
ajeseditor@gmail.com, cliff.cobb@gmail.com
phone: 916-448-6460
=====My response to Cliff================
On Tue, Apr 10, 2018 at 5:27 PM, Asad Zaman <asad.zaman@alumni.stanford.edu> wrote:
Dear Cliff
Thanks for your interest in my work. I am very interested in your proposed project. As a matter of fact, I recently presented a paper at a workshop on Islamic Economic in Istanbul which fits your requirements very nicely. I already have a draft ready, and should be able to send you a more polished version in a week or two.
Asad
PS: Given your interest in my work, you might enjoy reading my short post (600 words) on “The Coca-Cola Theory of Happiness” which lies at the foundations of modern economics.
======Cliff’s response to mey acceptance=========================
Dear Asad (if I may),
Thank you for agreeing to provide a paper for this issue of the journal. There is certainly no hurry. I am in the middle of editing the current issue. But I welcome your contribution at any time.
Regarding the Coca-Cola Theory of Happiness, I certainly agree with your critique. The shrinkage of the presumed motivation that guides human action into self-destructive hedonism has been accelerating since economics began in the 18th century. I am currently reading a book written by Quesnay about China, which he regarded as the closest approximation to the physiocratic ideal in his time. The elements of that book that deal with what we would now classify as “economic” are relatively sparse. Quesnay certainly understood that political economy is part of much larger cultural whole. Adam Smith and the other philosophers of the Scottish Enlightenment also recognized the comprehensive character of political economy, but by the time of Ricardo, much of that had been lost. There has thus been a steady erosion of the potential to approach social problems with wisdom. But this is true of all academic disciplines, in large part, I think, because of the hubris of intellectuals since Kant. All thought is now human-centered. The leap from Kant to “revealed preferences” is really not so great, although Kant seemed to have thought that the brain alone was sufficient–no need for mouth and stomach. I think it is no accident that all of the great social thinkers of the late 19th century in the West had a nervous breakdown. Weber’s “iron cage” of rationality is more oppressive than ever and yet seemingly more invisible to the majority of Americans, who still look to technology as the source of salvation.
But Weber, like so many others, was more prescient in his critique than in the formulation of any sort of constructive response. Socialism was a constructive response to capitalism, but it is subject to many of the same pitfalls. The only real hope lies in traditions with deep roots, which can anchor responses that are tied to the past and that creatively invent new aspects of those traditions.
Cliff
Clifford W. Cobb
Editor, American Journal of Economics and Sociology
ajeseditor@gmail.com, cliff.cobb@gmail.com
phone: 916-448-6460
Asad Zaman
Vice Chancellor, PIDE
Short Posts on Diverse Topics: LinkedIn
On Tue, Apr 17, 2018 at 10:44 AM, TKhan <tariqullah.khan@gmail.com> wrote:
Dear All
In the attached presentation I am suggesting a framework for innovating pedagogy to transform our higher education system to focus on solving our problems.
In the PhD level course on Applied Econometric we are trying to benefit from the advise of Prof. Asad Zaman. In the PhD we also tried to add a number of new courses – Applied Maqasid, Circular Economy, Ethics, Entrepreneurship and Sustainability etc.
Our MSc Islamic Finance and PhD Islamic Finance and Economy programs are linked at the end of the presentation. Kindly please view the attached presentation and indeed we will benefit from your feedback.
Thanks and regards
Dr. Tariqullah Khan
Professor and Program Coordinator, Islamic Finance
College of Islamic Studies – Hamad bin Khalifa University
P.O. Box: 34110
Doha – Qatar
Tel: +974 44546569 Fax: +974 4454 6602
tkhan@hbku.edu.qa
www.hbku.edu.qa
Formerly,
Visiting Scholar Stanford University
Visiting Scholar Harvard University
Division Chief and Co-Lead Global Islamic Finance Development Program, Islamic Development Bank Group
https://www.linkedin.com/in/tariqullahkhan/
On Sun, Apr 15, 2018 at 6:33 PM, Mahmoud El-Gamal <elgamal@rice.edu> wrote:
Dear Asad:
This could potentially evolve into a very interesting debate. We each understand exactly where the other is coming from: After all, we share the common experience of a modicum of mainstream academic success, but only as statistical technicians with carefully circumscribed roles, but we both obviously have much broader intellectual interests that were not possible to entertain in that role.
Please allow me to respond to some of the main points of agreement and difference in the current thread. I am not sure that email is the ideal medium for this type of debate, but it is the most convenient.
Let me start from the end of your last email.
On Al-Ghazali and tafaqquh:
We obviously share an admiration for Ghazali’s written corpus, especially his ‘Ihya’. Interestingly, the latter starts with a devastating attack on the fuqaha and speculative theologians (mutakallimun) of his time. Indeed, the entire program of the ‘Ihya’ seems to be precisely to replace what he saw as the defective fiqh of the fuqaha and theology of kalam with a better alternative (possibly the best available for his time, hence the well deserved recognition to this day).
On Philosophy (falsafa), however, which is separate from fiqh and kalam, we have to go to his Tahaful Al-Falasifah to find his critique mainly of Al-Farabi and Ibn Sina. In this book, Al-Ghazali made it very clear that he thought Philosophy (mostly translated from Greek by commissioned Christian and Jewish scholars and clerics, and then elaborated upon by a few Arab and mostly Arabic-writing Persian scholars) was the best path for secular knowledge. He gives several examples in the Tahafut about calculating the circumference of the earth as a sphere (so much for people thinking that 11th Century Muslims thought the earth was flat :-), the orbits of the planets, etc.
It is only the theological implications of Philosophy that Al-Ghazali attacks in the Tahafut. And when he does, the reader is compelled to believe that although he was brilliant in the fields of speculative theology (kalam) and fiqh in which he was trained by non other than Imam Al-Haramein Al-Juwaini, his training and understanding in Philosophy is extremely lacking. For example, his argument against the infinitude of the world, which was a very popular subject for argumentation at his time, relies on a sophomoric argument against the concept of infinity, because, he says, every number must be odd or even, but infinity always allows you to add one, and then the odd becomes even and the even odd, and so on…
Perhaps Ghazali should have left Philosophy alone to those who were better trained to study it, as Ibn Rushd showed in his Tahafut Al-Tahafut. However, there is also the possibility that he was disingenuous in his attack of the Philosophers, and used the logically weak methods of speculative theology (kalam) on purpose. Francis Bacon famously said that a little bit of philosophy drives people to atheism, but more philosophy brings them back. It is possible that Ghazali was trying to protect the commoners who would lose their religion once they got “a little bit of philosophy.”
I must go back, though, to the main point, and say again that Al-Ghazali was very clear that secular sciences are best studied using the logical methods of Philosophy (rather than the exegetical and religious-sciences methods of applying revelation), from which natural science and then other areas of inquiry emerged during the European Enlightenment. This is not to say that he would have approved wholesale of today’s Economics, and neither should we, and neither do most economists, but this is another issue to be discussed under another heading.
In my defense, I must also say that by criticizing fiqh, I am not saying that tafaqquh is subordinate to secular knowledge. On the contrary, to paraphrase what Coveyu said about random number generation (it “is too important to be left to chance”; he was obviously referring to pseudo and quasi RNG), I would say: Fiqh is too important to be left to the fuqaha.
On tolerance for heterodoxy:
I must first point out the irony of Muslims (including myself) complaining that Economics exhibits extreme intolerance of heterodoxy. It is a valid point, and the point that it is a “religion” (in the broader sense) that primarily serves the interests of the richest is one that I and most economists would not dispute. Classical (excluding the Marxian thread) and Neo-Classical economists would argue that it also serves the interests of most other members of society (in an admittedly unappealing Utilitarian way, which we may discuss under a separate heading). Their response is always: show us something that performs better.
This is always the problem with any system that has some degree of success, including early Muslim civilization. Accumulation of knowledge and success builds on the constancy of worldview and institutions. Then, we get set in our ways, and too vested in the knowledge that we already have. Take for example the extreme animosity to Al-Shafi`i in Egypt, for daring to diverge from the opinions of Malik that were so revered there. Then the Shafi`is exhibited the same degree of animus toward the Hanbalis, some of whom terrorized populations in today’s Syria, and so on. Ultimately, closer to our day, the larger body of Muslim thought would not admit that the West had devised institutions and methods of thought that were superior to theirs… until they lost market shares and many wars, eventually getting colonized for a couple of centuries.
I don’t think that I need to mention how little intolerance for heterodoxy exists within heterodoxies, for example Marxists, Post-Modernists, etc. all develop their own “religions,” and persecute those who do not play by the rules of their respective clubs. The same is true of Islamic Economics, Islamic Finance, etc. Dare to tell someone in those camps that early Muslim history is nothing to be proud of (three of the four “Guided Caliphs” killed, civil wars that started during the life of the Prophet (p), and only became more vicious after his death, glaring inequalities and impieties during the age of Muslim Empires, and the list goes on).
As `Ali famously said to the kharawarij, who defied him for “arbitration to men rather than scripture,” he said: “We are arbitrating to Scripture. But Scripture are words written on lines between two book covers. They do not speak, but men speak with their authority.” How we understand revelation in light of our accumulated secular knowledge is the issue at hand.
But before I continue to debate what you mean by “Islam is complete and perfect,” I need to be given safe passage :-).
On whether Muslims are hedonists:
Dr. Mabid contested my claim that most Muslims are reasonably well modeled, at least to a first order approximation, as utility maximizers (and, indeed, I claimed, the frequent reference to heaven and hell in the Qur’an and Islamic teaching suggests that the way to convince Muslims to forego some utility in life is through promise of reward and threat of punishment in the hereafter… perhaps utilizing a Ghazali-Pascal wager argument). A second order of approximation may be boundedly-rational utility maximization, for which a number of Bank of Sweden (in honor of Nobel) prizes have been awarded. So, behavioral economics has clearly become part of the mainstream, and the Qur’an and Islamic teachings obviously contain numerous references to the bounded rationality of humans.
Dr. Mabid referred instead to the ideal of a believer. I feel compelled to mention that Allah (s) instructed the Prophet (p): و ما أكثر الناس و لو حرصت بمؤمنين (and the majority of people, no matter how much you care and try, will never be believers). Shari`a, therefore, was not revealed for ideal Muslims, but for the lying, cheating, and greedy folks with whom we deal most of the time. Fiqh is likewise full of reminders about guarding against subversion, although it has often itself become a powerful tool of choice for subversion of the intent of Shari`a. In this regard, as a significant mufti remarked in recent years, against those who challenged his fatwa: من أراد التقى و الورع فله التقى و الورع، و من أراد الفتيا فهذه فتواي (to those who want God-consiousness and piety, they may have God-consiousness and piety; but for those who want a fatwa, this is my fatwa).
This does not mean that I concede Economics to Utilitarianism, with or without bounded rationality, even at the individual level, and most certainly at the social/public-policy level. The reason I advise bright Muslim economists not to work on Islamic Economics is the same as the reason I wouldn’t advise them to work on Islamic Psychology or Islamic Physics. Secular knowledge is a human endeavor, and we can only contribute to its advancement by engaging with others working in this enterprise, which means speaking the same language, etc. The rebuttal that social sciences are different from natural sciences is unconvincing: Consider for instance Muslims who wish to work in the biological sciences. They will have to work within the existing paradigm, thus accepting evolution as the organizing principle. Whether or not they agree with the theological implications of this work, in terms of the nature of creation and beyond, is irrelevant. Trying to establish Islamic Biological Sciences as a separate discipline would be just as counterproductive as trying to establish Islamic Economics as a separate discipline.
On the (un)desirability of revolution:
Let me close this email by referring briefly to the issue of “revolution,” which both Dr. Mabid and Dr. Asad have mentioned at multiple occasions in this thread. I would go further than what Dr. Asad said (about me not wanting to start a revolution). I may have had a successful career had I been content with not wanting to start a revolution. In the event, I think that it is important for Muslims who venture into the intellectual arena to work to prevent revolution. The latter is always destructive, no matter how romantic it may seem in retrospect or imagination. I would argue that the Prophet (p) was not a revolutionary, but a reformer. He said “I was sent to perfect the best of human character,” i.e. building on what came before and what others already knew to be “good.” This was the mission commanded in the verse: خذ العفو و أمر بالعرف و أعرض عن الجاهلين (accept what comes easily to people, command them to do what they already know to be good, and stay away from the ignorant). The Egyptian-Turkish “Prince of Poets” Ahmad Shawqi summarized it best in his poem on the Prophet’s (p) birth:
داويت متئداً و داوو طفرةً … و أخف من بعض الدواء الداء
(You administered your medicine gradually, and they administered it suddenly; and sometimes the disease is less harmful than the medicine).
Now, I recognize that Dr. Mabid and Dr. Asad were both referring to intellectual revolutions, not to the violent social kind to which I refer. However, we recognize that the latter oftentimes comes as a consequence of the former (e.g. Rousseau and the French Revolution, Marx and the Bolshevik Revolution, Mawdudi and Islamism, and so on).
Best,
Mahmoud.
_________________________
Mahmoud El-Gamal
Rice University
On Apr 15, 2018, at 12:41 AM, Asad Zaman <asad.zaman@alumni.stanford.edu> wrote:
Dr Mahjmoud El-Gamal has spelled out very clearly and accurately the nature of the choice we face, in attemptingh to construct an Islamic Economics. The mainstream orthodoxy is EZXTREMELY intolerant of any type of diversity or dissent. In the recent past, I know of two leacing heterodox economists who have been forced out of their respectable univwersity jobs by dirty tricks. The marginalization of al forms of heterodxy, regardless of how emp;iricallly eaccurate they are, is a well known fact. Even Keynes has been kicked out because his views are not in line with Chicago school free market thought. A recent study looked at whether or not there has been some change in syllabus after the Global Financial Crisis. One would expect to see more Keynes, Minsky, Behavioral explanations, etc which would be able to explain why the GFC occurrred. However, the study showed that business as usual continues. The ARCH GARCH models which performed disastrously in the GFC continue to be used for risk prediction etc. Models like DSGE, which have been blamed for their blindess to the possibilty of crisis, continue to be used at Cdentral Banks all over the world.
To understand why this is the case, why there is such strong resistance to change, we have to understand the nature of economic theory.. As I have explained in my recent post ET1%: Blidfolds Created by Economic Theory,, Economic theory is a branch of moral philosophy which is designed to justify how capitalism works to enrich the wealthy. It does so by creating illusions and deceptions about the nature of the systgem, In other words, it is thed rligioun of the rich. Note that Global Financiial Crises hurt the population, but they actually help the rich entrenchtheir power, so they have nothing to lose from repeats, unllike the botton 90%. — a topic which receives no attention in mainstream economic theory (this is left to the trickle down).
That leads to the cruel choice — if we want to share in the wealth and power of the rich, we can join the club of the middle 9%, who preach the moral philosophy of the wealthy (economics) to innocent stuidents. In thjis case we can enojjoy perks and privileges, and live in comofort and peace. I But we must renouncer all ideas of a revolution. Altgernatively, if we wish to create a revolution, we must renounce the academia and economic theory. We will be treated as crackpots, not get pulshed in kjopurnals, not get jobs in western ac ademia, and many other horrible things that could be expeted to happen if we recognize economics for what itis — the rlieigon of the wealthy. Quite sensible, Dr Mahmooud has made the choice not to launch a revolution, and he also advises his students to do the same. If was was in Western acadmia, I would also have exac tly the same choices. However, there is a way out of this dilemma, which is what I have chosen. If we stop seeking popularity or connections with Western economics, THEN we can launch a revolutin ONLY in the Islamic countries. We have to restrict and NARROW our audience. We cannot be UNIVERSAL, because our Islamic message WILL NOT APPEAL to the economists and their followers in the West.
Ibelieve that the message of Islam is completew and perfect, and it provides a solution to all the problems fac ing the Ummah today. The message which catapulted ignorant and bhackarwds Arabs to world leadership 1440 years ago has the same power today. However, vast omajoirty of the Ummah has lost this trust, and believes tghat the message needs to supplements by Samuelson to be effectiv today. This is the real souirce of sour problems.
As brother Anas Zarka wroth, in the times of Imam Ghazali, there was a gooup who was so impressed with Greek phjilosophy that they accepted all of it uncrictically. Today, we are facing the same problem with respect to Western knowledge. A Vast group of Muslims today think that a PH.D. from Haravard would have more knowledge about how to solve the economic problems facing the Ummah, then someone with Tafaqquh in the teachings of the Deen.
Asad Zaman
One the nature of economic thoery, as the moral philosphy for justification of wealth is understtood, we can understand that it would be extremly hostile to any Islamic prinicplies, since Islam is all aoboput helping the poor
Vice Chancellor, PIDE
Short Posts on Diverse Topics: LinkedIn
On Thu, Apr 12, 2018 at 10:36 PM, Mahmoud El-Gamal <elgamal@rice.edu> wrote:
Dear All: AA
My apologies for joining the conversation late. I have now reviewed the introductory document that Dr. Mabid has sent, explaining the philosophy of his intended programs. I agree with his approach, but wonder if the label “Islamic” is warranted anymore — unless we reverse the long-standing concept of fiqh as a parallel legal system, as discussed at the end of this email. For most Muslim economists, they should just be economists, period: I know a number of brilliant young Muslim economists now holding senior positions and major Economics departments and Business Schools, with whom I had the pleasure to converse when they were graduate students. My advice to them was not to waste any time or effort on “Islamic economics,” but to try to be the best economists that they can, and that there is plenty of room within Economics for them to inject Muslim perspectives and sensibilities without marketing them or hiding behind the “Islamic” label. Their work, both empirical and theoretical, has surpassed my expectations, and only those who read it with some knowledge of the students’ outside interests would see that what they choose to study and how they study it are clearly influenced by their desire to be good Muslims.
In contrast, Dr. Asad’s approach is authentic to the Mawdudist paradigm — which some, including myself, think has proved to be a disastrous failure, but we cannot predict that he and others who share his view will not succeed. Nonetheless, the likelihood of their success must be deemed rather low, based on past experience. More importantly, though, this approach fails to speak the language of Economics, and, therefore, fails to engage the profession in any reasonable conversation. Even those of us who have been trying to speak that language but who were not as talented as the younger generation that I mentioned above have failed to contribute to the conversation despite our best efforts. Because intellectual inquiry and advancement is always a collective effort, cutting ourselves off the mainstream makes the probability of success infinitesimal to zero.
On the specifics of Dr. Mabid’s proposal, I will add this: If there is to be an “Islamic Economics” at all, it should be a discipline to reformulate law and fiqh, not the other way around. The idea that “religious scholars” should have independent authority from secular sciences and political authority to determine a parallel legal system should be abandoned. There is nothing to stop economists (Muslim or otherwise) from doing work for Muslim societies, and its analyses should be reflected in the laws and regulations of those countries adhering to contemporary Islamic conceptions. In other words, “Islamic Economics” as “Economics for Muslim societies” would make sense to me, and may be what Dr. Mabid has in mind in his curriculum, although I fear that he is still conceding too much power to people who qualify as “fuqaha” in terms of historical methods of accreditation, but not in the original sense of fiqh as “understanding” of scripture and tradition in light of social realities and secular sciences.
Best,
Mahmoud.
_________________________
Mahmoud El-Gamal
Rice University
—
Dr. Mabid Ali Al-Jarhi