philosophy of islamic economics...philosophy of islamic economics by mohamed aslam haneef professor,...
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Philosophy of Islamic Economics
By
Mohamed Aslam Haneef
Professor, Department of Economics
IIUM
Presentation at Islamic Economics Winter Course,
Bogor, Indonesia Oct 14th 2019.
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3 Definitions of ‘Philosophy’
1. ‘Philosophy’ as an academic discipline
2. ‘Philosophy’ as a set of beliefs or worldview
3. ‘Philosophy’ as a study or inquiry
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As a Discipline…..
You need to be in a formal ‘philosophy programme’.
For those who are interested to read more about the
technicalities of Philosophy of Islamic Economics,
please read PhD Thesis of Dr Hafas Furqani
completed in Department of Economics, IIUM)
Dr Hafas discussed in detail the three main areas of
philosophy of economics- ontology, epistemology
and axiologyIE Winter Course Bogor Oct 2019 3
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This ‘winter’ course presentation will focus
on philosophy as worldview (2) and a mode of
inquiry (3)
No discipline is value free- ultimately stems from
one’s beliefs or worldview
Based on this worldview, we undertake a process to
develop our conceptual framework and
behavioural framework according to modes and
ways in line with our sources of knowledge
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This process means ‘generation’ of new ideas
and also ‘evaluation’ of those Ideas
In Islamic scholarship, our sources of knowledge are revelation and universe
In Islamic approach, generating new ideas (or the conceptual framework) requires the use of ‘aql(intellect) to ‘interpret’ both revelation and the universe
This is the Integration/Islamization of Knowledge (IoK) agenda
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Contemporary Islamic
Economics & Finance
Turath Modern
Knowledge
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Contemporary Islamic
Economics & Finance
Via
‘Integration’
Turath
Needs
Relevantization
Modern Knowledge
Needs
Islamization
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Critical Approach is part of
IoK Agenda
• IoK requires us to undertake critical evaluation of
modern knowledge based on our Islamic
worldview- Islamization i.e. genuine Islamization
• IoK requires us to also undertake a critical
evaluation of our turath since not all may be
‘relevant’ due to time-space factors- In IIUM we
call this ‘relevantization’
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Philosophy of Economics
Critical thinking in three areas
a.The content of the body of knowledge (including its subject matter, its scope and developing the subject matter) (Ontology)
b.Epistemology/methodology- how we acquire knowledge and how we know our knowledge is correct and why we say so
c.Axiology- values relating to what is good or otherwise
Systematic approach to developing the body of knowledge and its value orientation………..
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Worldview and Economics: Why
a Value-Based Economics is
Imperative
Axiology and Ontology of Islamic Economics
(Value Orientation in the subject matter of
Economics)
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Is There A Need for Value-Based
Economics and Finance?
• During a briefing by academics at the London
School of Economics on the turmoil on the
international markets (Nov 2008) the Queen
asked:
"Why didn’t anyone notice it coming?”
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Many Causes of 2008
Financial Crisis
• Some are ‘economic’ such as
artificially low interest rates that
allowed people to borrow to buy
houses that they really could not
afford……….
• High levels of debt……….
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Another group of factors deal with
IDEOLOGY/WORLDVIEW
• The ‘belief’ that all was well, that our
economics cannot be ‘wrong’……..
• The assumption that markets would solve
everything…….
• Accepting/Recommending ‘man’s greed’
as a ‘good’ trait in economics and
finance……
• That it was ethically ok to transfer risk in
order to maximise your own gains……
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J.S. Mill (1836)
Political economy, therefore, reasons
from assumed premises which might
be totally without foundation in fact,
and which are not pretended to be
universally in accordance with it.
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Different Economics –
Natural and Legitimate
1. Many of the assumptions made in economics ‘may not be true’ and are probably ‘not universal’
2. Economists may differ in opinions because of their differences in their sources of knowledge.
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Ultimately….
• Differences in assumptions made
about man, the universe, the
economic agent, the assumptions
underlying economic models and
theories stem from our…..
worldview.
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Worldview
refers to the cluster of beliefs a person
holds about the most significant concepts
of life-such as God, the cosmos,
knowledge, values, man/humanity, and
history.
These beliefs form a big picture, a general
outlook, or a grand perspective on life
and the world.
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Worldview
More than just an interpretive lens, a
worldview perspective shapes, influences,
and generally directs a person's entire life.
Because people behave as they believe, their
worldviews guide the development of the
values that inform their decisions and
actions.
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Islamic Economic Worldview
vs
Mainstream Economic Worldview
To show that there is a basis for alternative
economics and finance, we make brief
comparison between the above on
Religion
Man
Nature
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Religion
Culture
Education WORLDVIEW
History
Geography
Technology
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Islamic world view - based on the
RELIGION/DEEN of Islam;
However, do we understand the same
thing when we use the word
‘RELIGION’
i.e.
Is the meaning of ‘religion’ the same
for everyone??
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Religion
To the Occident
Montgomery Watt (1979)
… means a way of spending an hour or so on Sundays in
practices which give him some support and strength in
dealing with the problems of daily life, and which
encourages him to be friendly towards other persons and to
maintain the standards of sexual propriety; it has little or
nothing to do with commerce or economics or politics or
industrial relationships … or may even look on religion as
an opiate developed by exploiters of the common people in
order to keep them in subjection.
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To the Occident
religion reduced to a private matter between andindividual and his/her God(s)
no role to play in determining public affairs
science replaced religion as authority
religion for infantile man; science formodern/nature man
This understanding of religion is not necessarilyapplicable to all societies and civilizations.
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Elliade in Encyclopedia of Religions
(1987)
… this dichotomy between the religious and the
remainder of human life is a western product and
concern … This distinction between the sacred
and the profane, between religion and other
aspects of human endeavour is a result of the
process of secularization that has been the
experience of Christian/Western civilization
especially since the 17th century.
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Religion in
Islam denoted by DEEN
Watt (1979)whole way of life … covers both the private and
public/societal lives of man, it permeates the
whole fabric of society, and includes theological
dogma, forms of worship, political theory and a
detailed code of conduct, including even matters
which the European would classify as hygiene or
etiquette …
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• no shunning this world
• din is for this world
• use this dunya to achieve akhirah;
• no purely secular activity as all connected to
our life in the hereafter
• Al-Qasas : 77
“But seek with the (wealth) which Allah has
bestowed on thee, the home of the Hereafter,
And do not forget thy portion in this world.
But do good as Allah has been good to thee
and seek not mischief in the land, for Allah
loves not those who do mischief
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Unfortunately, Muslims may have
also been infected by the
secularization process
According to Al-Attas, many use
Al-nazrat al Islam li’l kawn
We should use
Al-Ru’yah al Islam li’l wujud
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Other Important components of
worldview relevant for discussion
today are
• Man
• Nature
• Aim in life
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1. Man
The notion and view of man as the subject
of study in economics has changed over the
decades and centuries…..both from a
worldview perspective and also affected by
the changing environment of the times…..
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Economic Man ‘evolved’
• Smith 1776
“However selfish soever man may be
supposed, there are evidently some
principles in his nature, which interest him
in the fortune of others, and render their
happiness necessary to him, though he
derives nothing from it except the pleasure
of seeing it” (TMS I.i.1.1)…… via
sympathy.
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• “It is not from the benevolence
of the butcher, the brewer or
the baker, that we expect our
dinner, but from their regard
to their own interest. We
address ourselves, not to their
humanity, but to their self-
love” (WN, 27).
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But is man just interested in
himself?
• Does man not think of others and of the
environment when he makes his decisions?
• Does economics just promote selfish
individualistic behaviour?
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In Modern Economics
-Rational economic man of modern
neoclassical economics as ‘representative
agent’:
-Self interested (selfish) maximizer of
material satisfaction
-Others’ welfare and environment not
included in formal models in economics
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Modern Economic Man
• The nature of human being in this
regard is reduced to an
autonomous/atomistic individual.
The human being is considered as a
purely earthly creature, divorced and
cut off from the Divine source, master
of nature, but responsible to no one
but himself (S.H. Nasr, 1982)
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Man in Islamic Worldview
• Insan; fitrah good but is one who ‘forgets’
• given Caql and knowledge (Al-Baqarah : 31)
And He taught Adam the names of
all things …
• best of creations (Al-Tin : 4)
We have indeed created man in the
best of moulds
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Man having dual roles as Cabd of Allah and
khalifah on earth
Al-Dhariyat : 56
I have only created Jinn and Man that they may serve me
Al-Baqarah : 30
Behold! Thy Lord said to the angels : I will create a
vicegerent on earth …
cannot be khalifah unless you are first and
foremost an Cabd
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Nasr (1990)
• There is no more dangerous
creature on earth than a
khalifah Allah who no longer
considers himself to be anCabd Allah.
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2. Nature/Universe
In Modern Economics
Part of secularization process viewed
the universe or natural resources as an
object to be exploited according to
man’s wants and choices.
For a science, only this visible world
is real and relevant- to be used by
man ( as he sees fit)
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Nature/Universe in Islam
creation of God for man
Al-An’am : 95 - 103
Talks of vegetation and fruits, night and day, heavens
and earth, human beings, rain
material world and world of ghayb
man as trustee to manage nature according to Allah’s
guidance
nature as a sign of Allah’s existence
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3. ‘Aim in Life’
In Modern Economics
In secular modern economics, we talk about economic goals/aims i.e.
the goal for rational economic man is to maximize individual material gain in this world.
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Aim in Life in Islam
ibadah to achieve falah (ultimate success)
develop earth to achieve God’s pleasure
requires means
al-nafsiyyah - iman, character
al-jismiyyah - health, strength, long life
al-kharijiyyah - wealth, influence, family
al-tawfiqiyyah - divine grace
• To attain falah we must have knowledge
and action……..Islamic economics….
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Worldview at the base of Islamic
Economics
Worldview at the base of
conventional mainstream
economics
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To solve our economic problems,
we require guidance…………..
Al-Shari’ah:
Source of Knowledge and Action in
Islam
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In Islam, we have the central position
of revelation i.e. the Qur’an (and
Sunnah) as the ultimate authority
the Qur’an is also known as al-Furqan
or the criterion to distinguish between
values
how do we use the Qur’an in the
process of developing Islamic
economic and finance?
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Solving Economic and Finance
Problems:
The link between Ijtihad, Shari’ah, Fiqh
and Usul al-Fiqh
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To interpret and apply shari’ah we must
use our Caql and follow the methodology in
Islam. Also requires knowledge of higer
objectives of shari’ah. Also requires
knowledge of the modern context
This process is ijtihad.
Ijtihad
shari’ah fiqh
(requires knowledge of usul Al-Fiqh)
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Some major issues
• What is shari’ah- in current popular
understanding and practice it is narrowed to
mean ‘law’- Al- Attas’ ‘Corruption of
Knowledge’
• Who will carry out ijtihad? Emphasis on the
fuqaha’- but in reality need scholars who
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How Will Man as ‘Abd-Khalifah
Make A Difference?
• Man is at once both ‘abd of Allah and
khalifah on earth.
• Both roles have to be played
simultaneously for man to perform ibadah.
• Ibadah here is not just a set of ‘religious
rituals’ but a true submission to our Creator
in all aspects of our life.
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If we have man as ‘Abd- Khalifah, his economic
behavior must be reflect the behavioral norms
related to consumption, production etc…..and
must be done with humility, modesty, absolute
obedience, and other properties that are
demanded of a servant
- halal/haram
- No extravagance/miserliness- iqtisad
- Priorities in consumption/production
- Concerned about environment and others
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Challenges to Islamic Economics and Finance
• We have not yet created the ‘abd-
khalifah!!
• We do not understand Islam and its worldview-
Al-Attas’ ‘corruption of knowledge’
• Cannot developed a values based finance without
due attention to economic foundations of finance
• Cannot develop economics without due attention to
philosophical foundations of economics
• Philosophy is important……………..
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In order to develop a genuine
contemporary Islamic economics and
finance in the 21st century will require
the scholars, intellectuals and
intelligentsia who have mastered
both Islamic heritage and modern
knowledge and its philosophy and
who are able to integrate the two.
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Concluding Comments
1. To develop contemporary IEF- we need to understand the
philosophical foundations of both our turath and modern
knowledge- teaches us to be ‘critical’
2. Modern economics has foundations that must be critically
evaluated- then we can ‘de-westernise’ and integrate
based on Islamic worldview
3. Islamic view of God, Man, Religion, Nature/Universe
and Aim in Life- present a different foundation for
Islamic economics
4. Philosophy of IE sees ‘man as abd-khalifah who will
act/make economic decisions according to
shari’ah..different ethical economics.
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Selected References
1. Al-Attas, Syed Muhammad Naquib (1978), Islam and
Secularism, Muslim Youth Movement of Malaysia, Kuala
Lumpur.
2. Haneef, Mohamed Aslam, Mohd Nahar Arshad and
Mustafa Omar Mohammed (2020), Foundations of
Islamic Economics, IIUM Press/IIIT ESEA, forthcoming.
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