Quran Versus Samuelson

Contrast between Islamic and Conventional Economics

The theme of this collection of writings is as follows. Conventional Economics is stated to be a positive science – that is a collection of facts about economic behavior. Economic theories are not factual and objective, as is claimed by Western economists. Many of my writings are devoted to proving that economic theories are wrong. Some of these writings also explain WHY they are wrong, in the sense of providing a historical explanation of what led European economists to make these mistakes. These writings, which provide a thorough critique and refutation of Western economic theories, are listed on a separate page: [Critiques of Conventional Economics]

Muslim economists have on the whole, accepted the idea that western economic theories are factual and objective. The Quran contains many statements which conflict directly with these economic theories. In cases of such conflicts, Muslim economists who believe in the factuality of western theories tend to mis-interpret the Quran, in order to remove the conflict. This common error of preferring Samuelson to the Quran, even though Samuelson is wrong and the Quran is right, has led to a crisis in Islamic Economics. The goal of this collection of essays is to show that the way forward lies in rejecting Samuelson in favor of the Quran. Articles listed below discuss some of the errors made by Muslim economists in their quest to create an Islamic economics. They also provide solutions to the problems, and methods to make progress in this area.

  1. Islam Versus Economics:

In this paper, I have argued that the fundamental message of economics is that economic growth is the solution to all problems of man. I show that tremendous economic growth has taken place in various regions over various period of time without solving economic problems. In fact, oppression, increasing inequality, poverty, massive environmental damage, damage to communities and societies, and many other kinds of evils can be directly attributed to growth oriented policies. In almost every dimension of human life, Islam offers superior alternatives to dominant capitalist institutional structures.

  1. Crisis in Islamic Economics: Diagnosis and Prescriptions.

This paper argues that progress in Islamic Economics can only be made by rejecting Western economic theories and starting from scratch on the basis of Islamic principles. This article was published in Journal of King Abdul Aziz University recently, together with comments by Mohammad Nejatullah Siddiqi, Seif Tag-el-Din, Shameem Siddiqui, and Masudul Alam Choudhury. A rejoinder to the article is also due to be published in the next issue of the Journal. The original article, and the comments and the rejoinder are all downloadable from the page linked to above.

  1. An Islamic Critique of Neoclassical Economics:

This paper picks out the many issues on which teachings of Samuelson are diametrically opposed to the Quranic teachings, and shows that in each such case, the Quranic teachings are far superior. Whereas critiques based on communist or socialist ideas are readily available, this essay is a critique of conventional economics based on Islamic teachings.

  1. “Towards a New Paradigm for Economics,” Journal of King AbdulAziz University: Islamic Econ., Vol. 18, No. 2, pp. 49-59 (2005 A.D/1426 A.H).

This paper shows that a technical mathematical assumption of neoclassical economics makes it impossible to differentiate between the poor and the rich, and between basic needs and idle desires. Changing just this one assumption allows us to use the neoclassical axiomatic framework to create a theory far more in line with Islamic ideas, where the society has a collective responsibility to help the poor.

Comments were made on the paper by four respondents: Nejatullah Siddiqi, Masudul Alam Choudhury, Seif Tag-el-Din, and Habib Ahmed. A rejoinder to the comments was published, as indicated below. The version linked to is the original, unedited version, of the published rejoinder

Response to Comments on “Towards a New Paradigm for Economics,” Journal of King AbdulAziz University: Islamic Econ., Vol 20, No. 1,p. 73-82 (2007 AD/1428 AH)

Earlier versions of this same idea are available in earlier papers of mine:

“Microfoundations for the Basic Needs Approach To Development: The Lexico-graphic Utility Function.” Pakistan Journal of Applied Economics, Vol. 5, No. 1, pp. 1-11, 1986.

“Towards Foundations for an Islamic Theory of Consumer Behavior,” in Readings in Microeconomics: An Islamic Perspective, edited by Sayyid Tahir, Aidit Ghazali, and Syed Oman Syed Agil, Longman Malaysia, Kuala Lumpur, 1992.

  1. “Islamic Economics: Problems and Prospects,” Market Forces, Journal of Management, Informatics and Technology, Vol 2 No. 1, pp. 46-53 April 2006

This paper is an earlier attempt of mine to explain why Islamic Economics has been a failure, and what can be done about this. It shows that the issues being pursued by neoclassical economists (the pursuit of wealth) are not the economic issues addressed by Islamic teachings. Islamic teachings focus on removal of poverty, guarding against the concentration of wealth, dignity of work, and many other concepts not within the realm of conventional economics. It urges Muslim economists to chart out new pathways, in line with Islamic concepts, rather than imitating western research agendas.

Comments on this paper were made by several respondents:Javed Akbar Ansari, Mohammad Nejatullah Siddiqi, Professor Khursheed Ahmed, The rejoinder to these comments is listed and linked below.

Response to Comments on “IslamicEconomics: Problems and Prospects,” Market Forces, Journal of Management, Informatics and Technology, Vol 2 No. 3 pp. 233-240, October 2006

  1. “Critical Mission of the Muslim Economist,” La_Riba, Jurnal Ekonomi Islam, Vol 2, No. 1, Juli 2008, Universitas Islam, Indonesia, also in Pakistan Management Review, 2nd Qtr. 2009. Both are versions of: Comments on “Contributions of the Last Six Conferences,” by Dr. Munawar Iqbal, Proceedings of the 7th International Conference in Islamic Economics: Thirty Years of Research in Islamic Economics. 2008, pp. 109-114

This article argues that the founders of Islamic Economics said that Islam offers a new paradigm which would provide economic justice, equity, relief from oppression and poverty, and other social benefits not available in Capitalism and Socialism. However the current generation of Islamic Economists has abandoned these high goals and compromised with conventional economic theories, and given up on the idea that Islam offers genuine alternatives. Suggestions on how to revitalize the efforts of construction of the ideal economic system of Islam are given.

  1. “Islamic Economics: A Survey of the Literature,” Religion and Development Research Programme, Working Paper 22, Univ. of Birmingham, 2008, to appear in Islamic Studies, IRI Journal, 2010

This survey paper provides a condensed summary of the conflicts between Islamic and Western views across a wide spectrum of economic issues. It starts by arguing that both economic theory and the institutional framework embodying this theory have evolved within the European historical context. Thus economic theory has been strongly shaped by historical forces, but this is not acknowledged in conventional textbooks, which claim a positive, objective and factual status for western economic theory. Islamic civilization has had different economic experiences which lead to different theories.

  1. Review of The Future of Economics: An Islamic Perspective by M. Umer Chapra. Islamic Studies, Vol 40, No. 1, Spring 2001

  2. Comments on “Obstacles to Research in Islamic Economics,” by Dr. M. Nejatullah Siddiqui, Proceedings of the 7th International Conference in Islamic Economics: Thirty Years of Research in Islamic Economics. 2008 15-18

    1. Contrasts between Western and Islamic Economics:

      1. There is substantial disagreement on the main features of Islamic Economics, on its subject matter, goals, appropriate methodology, etc. To address this difficulty, in a recent survey of the literature (Asad Zaman 2009-2010), the author has presented the key distinguishing features of Islamic economics, focusing on the contrast with conventional neoclassical economics. In this essay, we present in detail some of the background which necessitates this differentiation between conventional and Islamic economics. We believe that development of the discipline has been substantially hindered by writers who have sought to create conformity between the two. In the words of Nasr (1991), Islamic Economics has “failed to escape the centripetal pull of Western economic thought, and has in many regards been caught in the intellectual web of the very system it set out to replace.” It is our hope that this delineation and demarcation will create greater consensus on the nature of Islamic economics, and focus future efforts in more fruitful directions.

  3. What is Islamic Economics? Present a new definition: Islamic Economics is the Struggle to implement Islamic laws at the individual (micro), community (meso) and Ummah (macro) level. Defend it against existing ideas.