ISLAMIC ECONOMICS: WHAT IT IS AND HOW IT HAS DEVELOPED OVER THE CENTURIES
Dr. M. Umer Chapra
Islamic Research and Training Institute
A paper written for EH. NET’s
Online Encyclopedia of Economic and Business History (http://email@example.com)
Sponsored by the Economic History Association (US),
Economic History Society (UK), Cliometric Society, and the History of Economics Society
Prof. Robert Whaples (firstname.lastname@example.org)
Phone: (966) (2) 646-6139
Islamic economics has been having a revival over the last few decades. However, it is still in a preliminary stage of development. In contrast with this, conventional economics has become a well-developed and sophisticated discipline after going through a long and rigorous process of development over more than a century. This raises a number of questions, some of which are: Is it necessary to have a new discipline in economics? If so, what is Islamic economics, how does it differ from conventional economics, and has it made any worthwhile contributions over the centuries? This paper tries to briefly answer these questions in four parts.
IS IT NECESSARY TO HAVE A NEW DISCIPLINE?
A universally recognized fact is that resources are scarce compared with the claims on them. However, it is also simultaneously recognized that the well-being of all human beings needs to be ensured. Given the scarcity of resources, the well-being of all may remain an unrealized dream if the right strategy is not developed for this purpose. The strategy that any society has is conditioned by its worldview, which may be either secular and materialist or spiritual and humanitarian.
The Role of the Worldview
The secular and materialist worldviews attach maximum attention to the material aspect of human well-being and assume that such well-being can be best realized if individuals have unhindered freedom to serve their self-interest and to maximize their wealth and want satisfaction. Such worldviews rely primarily on reason and do not recognize any role for revelation or Devine Guidance in the allocation and distribution of resources. In contrast with this, religious worldviews give attention to both the material as well as the spiritual aspects of human well-being. They do not necessarily reject the role of reason in human development. They, however, recognize the limitations of reason and wish to complement it by revelation. They do not also reject the need for individual freedom or the role that the serving of self-interest can play in human development; they, however, emphasize that both freedom and the pursuit of self-interest need to be toned down by moral values so as to ensure that everyone’s well-being is realized and that social harmony and family integrity are not hurt in the process of everyone serving his/her self-interest.
Material and Spiritual Needs
Even though none of the major worldviews prevailing around the world is totally materialist and hedonist, there are, nevertheless, significant differences among them in terms of the emphasis they place on material or spiritual goals. While material goals concentrate primarily on goods and services that contribute to physical comfort and well-being, spiritual goals include nearness to God, peace of mind, inner happiness, honesty, justice, mutual care and cooperation, family and social harmony, and the absence of crime and anomie. These may not be quantifiable, but are, nevertheless, crucial for realizing human well-being. Resources being limited, excessive emphasis on the material ingredients of well-being may lead to a neglect of spiritual ingredients. The greater the difference in emphasis, the greater may be the difference in the economic disciplines of these societies. Feyerabend (1993) has frankly recognized this in the...
References: Abu Yusuf, Ya ‘qub ibn Ibrahim (1352AH), (d. 798), Kitab al-Kharaj (Cairo: al-Matab‘ah al-Salafiyyah, 2nd ed., 1352 AH). This book has been translated into English by A. Ben Shemesh (1969). Taxation in Islam (Leiden: E. 2. Brill, Vol. 3).
Baeck Louis, (1994), The Mediterranean Tradition in Economic Thought (London: Routledge).
Blanchflower, David, and Andrew Oswald (2000), “Well-being Over Time in Britain and US” NBER, Working Paper 7487.
Blaug Mark (1985), Economic Theory in Retrospect (Cambridge: Cambridge University Press).
Chapra, M. Umer (2000), The Future of Economics: An Islamic Perspective (Leicester, UK: The Islamic Foundation).
Diener E., and Shigehiro Oshi (2000), “Money and Happiness: Income and Subjective Well-being” in E. Diener and E. Suh, eds, Culture and Subjective Well-being (Cambridge, MA: MIT Press).
Dimashqi, Abu al-Fadl Ja‘far ibn ‘Ali al- (1977) (d. 1175), Al-Isharah ila Mahasin al-Tijarah, Al-Bushra al-Shurbaji (ed.), (Cairo: Maktabah al-Kulliyat al-Azhar).
Duri, A.A., (1986), “Baghdad”, The Encyclopedia of Islam, (Leiden: Brill), pp. 894-99.
Easterlin, Richard (1974), “Does Economic Growth Improve the Human Lot?: Some Empirical Evidence” in Paul David and Melwin Reder, eds., Nations and Households in Economic Growth: Essays in Honour of Moses Abramowitz (New York: Academic Press).
Easterline, Richard (1995), “Will Raising the Income of all Increase the Happiness of All?”, Journal of Economic Behaviour and Organization, 27:1, pp. 35-48.
Easterlin, Richard (2001), “Income and Happiness: Towards a Unified Theory” in Economic Journal, 111: 473 (2001).
Essid, M. Yassine (1995), A Critique of the Origins of Islamic Economic Thought (Leiden: Brill).
Feyerabend, Paul, (1993), Against Method(London: Verso, 3rd ed.).
Fischel, W.J., (1992), “Djahbadh” in the Encyclopedia of Islam, Vol. 2, pp. 382-3.
Friedman, Milton, (1953) Essays in Positive Economics (Chicago: The University of Chicago Press).
Groenewegen, P.D., (1973), “A Note on the Origin of the Phrase, Supply and Demand”, Economic Journal, June 1973, pp. 505-9.
Hausman, Daniel, and Michael McPherson (1993), “Taking Ethics Seriously: Economics and Contemporary Moral Philosophy”, Journal of Economic Literature, June, pp. 671-731.
Ibn Khaldun, Muqaddimah, (n.d.), (Cairo: Al-Maktabah al-Tijariyyah al-Kubra) See also its translation under Rosenthal (1967), and selections from it under Issawi (1950)..
Ibn Taymiyyah, (1961-63), (d. 728/1328), Majmu‘ Fatawa Shaykh al-Islam Ahmad Ibn Taymiyyah, ‘Abd al-Rahman al-‘Asimi (ed.), (Riyadh: Matabi‘ al-Riyad, 1st ed).
Issawi, Charles (1950), An Arab Philosophy of History: Selections from the Prolegomena of Ibn Khaldun of Tunis (1332-1406), (London: John Muray).
Jahiz, Amr ibn Bahr al-(1983) (d. 869), Kitab al-Tabassur bi al-Tijarah (Beirut: Dar al-Kitab al-Jadid).
Kenny, Charles (1999), “Does Growth Cause Happiness, or Does Happiness Cause Growth?”, Kyklos, 52:1, pp. 3-26.
Koopmans, T.C. (1969), “Inter-temporal Distribution and ‘Optimal’ Aggregate Economic Growth”, in Fellner et. al., Ten Economic Studies in the Tradition of Irving Fisher (John Willey and Sons).
Mahdi, Mohsin (1964), Ibn Khaldun’s Philosophy of History (Chicago: University of Chicago Press).
Mawardi, Abu al-Hasan ‘Ali al- (d.1058), (1955), Adab al-Dunya wa al-Din, Mustafa al Saqqa (ed.), (Cairo: Mustafa al-Babi al Halabi).
Misri Rafiq Yunus al- (1981), Al-Islam wa al-Nuqud (Jeddah, King Abdulaziz University).
North, Douglas C. (1981), Structure and Change in Economic History (New York: W.W. North).
North, Douglas C., (1994), “Economic Performance Through Time”, The American Economic Review, June, pp. 359-68.
Oswald, A.J. (1997), “Happiness and Economic Performance”, Economic Journal, Vol. 107 (445), pp. 1815-1831.
Pifer, Josef (1978), “Scholasticism”, in Encyclopedia Britannica, 1978, Vol. 16, pp. 352-7.
Rawls, John (1958), “Justice is Fairness”, Philosophical Review, Vol. 67, pp. 164-94.
Please join StudyMode to read the full document