PROPHECY, PIETY, and PROFITS a Conceptual and Comparative History of Islamic Economic Thought
Total Page:16
File Type:pdf, Size:1020Kb
PALGRAVE STUDIES IN ISLAMIC BANKING, FINANCE, AND ECONOMICS PROPHECY, PIETY, AND PROFITS A Conceptual and Comparative History of Islamic Economic Thought AYMAN REDA Palgrave Studies in Islamic Banking, Finance, and Economics Series editors Zamir Iqbal World Bank Potomac, MD, USA Jahangir Sultan Bentley University Boston, MA, USA Mehmet Asutay Durham University Durham, United Kingdom The aim of this series is to explore the various disciplines and sub-disciplines of Islamic banking, finance and economics through the lens of theoretical, practical, and empirical research. Monographs and edited collections in this series will focus on key developments in the Islamic financial industry as well as relevant contributions made to moral economy, innovations in instruments, regulatory and supervisory issues, risk management, insurance, and asset management. The scope of these books will set this series apart from the competition by offering in-depth critical analyses of conceptual, institutional, operational, and instrumental aspects of this emerging field. This series is expected to attract focused theoretical studies, in-depth surveys of current practices, trends, and standards, and cutting-edge empirical research. More information about this series at http://www.palgrave.com/series/14618 Ayman Reda Prophecy, Piety, and Profits A Conceptual and Comparative History of Islamic Economic Thought Ayman Reda Economics The University of Michigan - Dearborn Dearborn, MI, USA Palgrave Studies in Islamic Banking, Finance, and Economics ISBN 978-1-137-56824-3 ISBN 978-1-137-56825-0 (eBook) https://doi.org/10.1057/978-1-137-56825-0 Library of Congress Control Number: 2017959725 © The Editor(s) (if applicable) and The Author(s) 2018 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover design by Will Speed Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Nature America, Inc. The registered company address is: 1 New York Plaza, New York, NY 10004, U.S.A. To my parents, who prove, every day, that theory and practice can be one. PREFACE This is a book about prophets and prophecy. It is a humble attempt at reconnecting with a tradition that is gradually losing its intellectual and practical relevance in a world that refuses to have a past. This tradition is one of “knowledge and wisdom,” as the Prophet’s hadith tells us, and not of “gold, silver, or property.” By prophecy, therefore, we mean revelation and scripture, or a direct testimony of divine will. Prophets, as such, refer to the long lineage that extends from Adam to Muhammad. Though the secondary meaning of prophecy, defined as the ability to predict the future, is of little relevance to our inquiry, one can easily invoke the term to describe the ambitious agendas of the secular prophets of modernity. This is also a book about faith and piety. If prophecy signifies the theoretical dimension of religion, piety represents its practical element; neither part is feasible without the other. Finally, this book is about profits, profits in this world and the next. It is a modest call to reconsider what is truly profit- able, what is of real value and worthy of our sacrifice. With regard to methodology, this book is a study in the history of ideas, or more specifically, in intellectual history. According to Warren Samuels, “economic thought is a branch of intellectual history,” and it is in this spirit that we approach our subject matter. We do believe, however, that this work represents a rare attempt at examining the position of Islamic economic thought within this broader intellectual discourse. Our choice of concepts, therefore, was intended to provide a rather broad and thor- ough view of Islamic economic thought in comparison to the views of other traditions and schools of thought. vii viii PREFACE In Part 1, we present an Islamic response to the predominant paradigm of scarcity. This response is based on the Islamic “first principle” of human vicegerency. This forms the basis for the Islamic view of wealth and poverty discussed in Part 2, where the nature of the relationship between wealth and poverty is thoroughly examined. The Islamic solution to poverty, embodied in a life of piety and charity, is examined in Part 3, with a special emphasis on the Quranic contrast between charity and usury. This contrast is predicated on a more fundamental distinction, that of justice and self- interest, which represents the topic of Part 4. In this chapter, we offer an Islamic critique of economic rationality and the Rational Choice paradigm, by appealing to the Islamic notion of rationality and justice. Finally, we examine the practical considerations of these conceptual distinctions in Part 5, in the context of markets and utopias. We present an Islamic case for ideal markets, where compassion and justice can naturally thrive. A major issue that this book grapples with concerns the intellectual’s constant effort to bridge the elusive gap between theory and practice. But this never seemed to be a problem for my parents, Mohamed and Wafaa, to whom this book is respectfully dedicated. Their lives have epitomized a remarkable union of theory and practice, a union that continues to inspire my work and ideas. As such, this book is as much a dedication to them as it is an attempt at expressing my love and gratitude. My love and gratitude are also due to my wife and best friend, Malak, and our children Zeina, Mohamed, and Ali for their support and patience over the last few years. Malak’s faith in this book never wavered, despite the many distractions and difficulties I faced along the way, insisting on being the “invisible hand” that brings this book to fruition. In this endeav- our, as with everything else, she never ceased to give, expecting nothing in return. In addition, my children’s excitement for the book was always invigorating, and often reminded me of the joys of writing when the task seemed almost insurmountable. I have also enjoyed the support of several colleagues along the way. I am especially indebted to Ross Emmett for his efforts at organizing an informal discussion of the book in the summer of 2016, at James Madison College, Michigan State University. I am thankful to the many comments and sug- gestions of the participants: Jeff Biddle, Jordan Ballor, Dylan Pahman, and Waseem El-Rayyes. I am also thankful to the comments I received from several participants at two sessions of the 2017 History of Economic Society Conference in Toronto. I am also thankful to the support and encouragement PREFACE ix I received from the editorial team at Palgrave-Macmillan. I am especially thankful to Elizabeth Graber, Sarah Lawrence, and Allison Neuburger. Finally, my gratitude, though utterly finite and weak, is to Him who is Infinite in His love and bounty. If it were not for His mercy, this book would never be. Dearborn, MI, USA Ayman Reda CONTENTS Part I Abundance and Scarcity 1 1 Abundance and Scarcity: Introduction 3 2 Abundance and Scarcity: Greek Economic Thought 9 3 Abundance and Scarcity: Christian Economic Thought 15 4 Abundance and Scarcity: Classical Economic Thought 35 5 Abundance and Scarcity: Neoclassical Economic Thought 51 6 Critiques of the Scarcity Paradigm 59 7 Abundance and Scarcity: Islamic Economic Thought 75 Part II Wealth and Poverty 109 8 Wealth and Poverty: Introduction 111 9 Wealth and Poverty: Greek Economic Thought 115 xi xii Contents 10 Wealth and Poverty: Christian Economic Thought 131 11 Wealth and Poverty: Classical Economic Thought 153 12 Wealth and Poverty: Neoclassical Economic Thought and Its Critics 161 13 Wealth and Poverty: Islamic Economic Thought 171 Part III Charity and Usury 187 14 Charity and Usury: Introduction 189 15 Charity: An Intellectual History 191 16 Usury: An Intellectual History 211 17 Charity and Usury: Reunified 235 Part IV Self-Interest and Rationality 257 18 Self-Interest and Rationality: Introduction 259 19 Self-Interest: An Intellectual History 263 20 Self-Interest and Rationality: The Modern Connection 291 21 Islam, Rationality, and Self-Interest 303 Part V Utopias and Markets 337 22 Utopias and Markets: Introduction 339 23 Utopias 343 Contents xiii 24 The Market as Utopia: The “Invisible Hand” Thesis 355 25 Markets in Islam 361 References 385 Index 395 PART I Abundance and Scarcity CHAPTER 1 Abundance and Scarcity: Introduction There is much disagreement among historians of economic thought on the precise origins of economics as a distinct intellectual discipline, and even more disparity on the question of the genesis of economic analysis. While the majority of economists recognize the seventeenth century as a legitimate point of departure, some believe, “[t]he roots of modern eco- nomic analysis extend much further back in time” (Gordon 1975, xi).