Methodology of Economics: Secular Versus Islamic

View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Munich RePEc Personal Archive MPRA Munich Personal RePEc Archive Methodology of Economics: Secular Versus Islamic Waleed A.J. Addas International Islamic university Malaysia (IIUM) 15 January 2008 Online at https://mpra.ub.uni-muenchen.de/8264/ MPRA Paper No. 8264, posted 5 May 2008 13:49 UTC “A Comparative Study of Economics: From Self-Interest to ‘God’s Interest’” WALEED A.J. ADDAS INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA Published by: International Islamic University Malaysia Press First edition, 2008 © International Islamic University Malaysia Press All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without any prior written permission from the publisher. Perpustakaan Negara Malaysia Cataloguing-in-Publication Data Waleed A.J. Addas Methodology of economics : secular vs Islamic / Waleed A.J. Addas Includes index Bibliography: pg 137 ISBN 978-983-3855-28-5 1. Economics. 2. Economics development. I. Title 331.132 Printed by: Ampang Press Sdn. Bhd. 6 Jalan 6/91, Taman Shamelin Perkasa Batu 3½, Jalan Cheras 56100 Kuala Lumpur, Malaysia Tel: 603-92849448 Fax: 603-92849105 e-mail: [email protected] Contents Preface vii Acknowledgements ix Chapter 1 Introduction 1 Chapter 2 Literature on Methodology: An Overview 17 Chapter 3 Worldview Differences 45 Chapter 4 Sources of Knowledge 61 Chapter 5 Values and Economics 73 Chapter 6 The Question of Methods 87 Chapter 7 Economics: Its Nature and Significance 101 Chapter 8 Concluding Remarks 123 Bibliography 137 Index 147 v Note on cover design Islam has succeeded by overwhelming its predecessors; a church turned into a mosque in the same vein as the methodology of economics from an Islamic perspectives encompasses the secular methodology and does not let it go out of its sight. Second, the demolishing of the church symbolizes the collapse of the Received View in the philosophy of science today. Islam, in my opinion, has all the answers to today's social and economic problems. Moreover, within the courtyard of the mosque lies the Dome of the Tresaury-another example that shows how in Islamic economics, money and wealth creation are an integral part of the religion. The principles that inspired this cover design derive to a large extent from the insights of my daughters and I also wish to record my gratitude to Mrs. Karim Allaoui of Cambridge university who has helped in proof-reading and final checking on the colours, etc. Preface This book is based on the thesis that I submitted in August 2006 to the International Islamic University Malaysia in partial fulfillment of the requirement for the award of the PhD degree in Economics. It was a difficult topic but this reality dawned on me only after I had already crossed the point of no return. I found the area hazy and controversial in mainstream economics. In the case of Islamic economics the situation was even worse. Methodology was invariably confused with a research design or work plan. The subject in a formal form did not even exist. Whatever was available in the literature was part of discussions on Islamic economics or Shari’ah issues. Usually, the discussion was of a ‘touch and go’ nature. The writers were seldom found coming to grips with real issues in the area let alone reaching any worthwhile conclusions. Much confusion and controversy in the methodology of economics essentially centered on the efficacy of criteria, rules, and procedures that have to be observed for evaluating the performance of economics – secular or Islamic. In fact, until today there has hardly been a common view or a clear understanding among the Islamic scholars as to whether Islamic economics itself has a separate existence independent of its mainstream counterpart let alone having a methodology to assess and oversee it. In this dark and un-chartered area, I have tried to show that Islamic economics is both epistemologically ‘linked’ to and is also ‘independent’ of secular economics. To be precise, methodology of Islamic economics is and would broadly be the application of the Shari’ah norms to mainstream dispensation with a view to assessing their compatibility with the Islamic faith and the position of the Shari’ah on the many and divergent micro and macro economic issues. We shall find in the following discussion that the subject under the name ‘Islamic economics’ is presently no more than the result of applying the Islamic rules and injunctions, i.e. Islamic fiqh, to secular economics: Islamic economics is not yet, contrary to what some scholars would want us to believe, a discipline that replaces secular economics. vii METHODOLOGY OF ECONOMICS: SECULAR vs ISLAMIC In Islamic educational institutions worldwide, curricula and teaching programs are dominated – even if out of necessity – by course structures and reading materials appropriate for Western social setting and values designed as they are on the assumption of an impersonal market environment. The Islamization of Knowledge program in economics follows what one may call a ‘step-by-step approach’ for developing the subject. This de facto means that there has been no attempt to replace the mainstream concepts and theories completely with the pure Islamic ones: the initial plan has been just to modify and integrate them with what Islam would allow or could modify to fall in line with the Shari’ah tenets. When the subject itself was in a state of infancy, one need not wonder if its methodology were all the more found confused and patchy. However, it is this messy state of methodology that lends reason and significance to the present work. It fills a gap, however imperfect it might look: I am aware of its limitations. The main issue relevant to our discussion in this exploration was whether reality adjusts to doctrine or that doctrine conforms to the reality or one finds a mutual interaction between the two in the field of economics. What methodological affinities or divergences, if any, are between them? Also, we attempted to see whether prediction could or should be the hallmark of a theory in social sciences as is currently believed in economics at least, or the tractability of events, their analysis, and human prescription were of greater importance. It will be satisfying if the readers could find this small work light bearing on these and related issues. viii Acknowledgements Praise be to Allah Subhanahu Wata’ala but for whose blessings and guidance I could not have undertaken or completed this humble work Among others, my heartfelt gratitude goes to my main supervisor; Professor Dr. Zubair Hasan This work bears on almost every page the imprints of his enlightening lectures on Islamic Economics I attended during my PhD course work program. His scholarly views on methodological issues scattered over his numerous writings referred to in the work have been of immense value while writing the thesis. I owe much to his patience and paternal attitude in correcting for improvement several drafts of the work including the editorial assistance he extended in formatting it for publication. I am indebted to him for all the knowledge, wisdom and experience he shared with me during my studies at the IIUM. That process of sharing, encouragement and support continues unabated. Thanks are also due to Professor Dr. Mohammad Aslam Haneef and Associate Professor Dr. Muhammad Arif Zakaullah, members of the supervisory committee, for their help at different stages of writing the dissertation. The work would not have been what it is but for their constructive criticism and useful suggestions. I am grateful for their unreserved encouragement that helped me much in completing the research on time. In addition, my thanks and profound respect goes to the IIUM administration, especially to Professor Dato’ Dr. Azmi Omar, the Deputy Rector for Academic Affairs, for his unwavering assistance and support during my stay as a postgraduate student at the IIUM, the great seat of learning in the Muslim world. Last but not least, I express my sincere gratitude to my wife Tahani and daughters who spared me time from family duties over the years I was working on my thesis. Also, I cannot forget my loving parents, their unceasing prayers, I am sure, contributed to my successes in life, including the present one. May Allah shower His blessings on them all here and in the hereafter Ameen. Waleed A.J. Addas Jeddah March 2007 ix Dedication I dedicate this work to my loving mother Mufida (Umwaleed), my guiding father Ahmad, and my caring wife Tahani and also to all my four daughters, Asmaa, Walaa, Nidaa and Tala CHAPTER 1 Introduction They said: “O Shu’aib”! Does your salat (prayer) command that we give up what our fathers used to worship, or that we give up doing what we like with our wealth? Verily, you are the forbearer, right minded! (they said it sarcastically). Surat Hud Verse 87* Disciplined knowledge is the result of man’s cognitive explorations. The exploration is invariably directed to find ways for making life more comfortable and rewarding, including the spiritual solace. It is an ongoing process that continually adds to the existing stock of human knowledge. With the passage of time, the tree of knowledge grew into distinct branches essentially because of the limitations of the human mind to absorb the fast expanding totality of the phenomenon. The roots of the tree – belief, reason and convention – though have hardly changed they continue to serve basically the above stated purpose in all its ramifications. Methodology: Role and Nature Every branch of knowledge deals with the wider issue of human well- being from a particular angle and seeks to resolve issues as they emerge in achieving its agreed goals.

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