An Islamic Critique of Neoclassical Economics
CRIT7.doc is the original submission to Javed Akbar Ansari.
Zaman, Asad (April 2012) Pakistan Business Review, Vol 14 No. 1, pp. 9-62
IslCritNCE.doc is the revisions based on his comments, plus some updating. (attached below Oct 2, 2011)
accepted on 8 Dec 2011 via email from Shahzad Ali
This paper is an adaptation of "Contrast Between Western and Islamic Economics" an earlier draft -- which has also be revised, edited and chopped into different parts.
Published Version is attached at bottom of page as: ICNEinPBR.pdf
The founders of Islamic Economics had a vision of a superior and spiritual alternative to the injustices and exploitation of materialistic Western systems. Unfortunately, as Chapra writes: “… Islamic economics has been unable to come to grips with … the problems faced by Muslim countries.” Siddiqi (2008) writes that “All is not well with Islamic economic(s) … The grand idea of providing an alternative to capitalism and socialism … has yielded to a desire to join the flock.” The idea that, contrary to the insights of early authors, Islam does not have a distinct economic system, has been adopted by many authors; for example, Usmani (1993). While proponents are analyzing reasons for this failure to realize the grand vision, and counseling patience, critics have been much harsher. For example, Behdad (1994) sums up the Iranian experience with Islamizing economics as “It has become apparent that Islamic Economics is not capable of presenting a viable social alternative.”
In Zaman (2008), I have surveyed the literature on Islamic economics, and spelled out several dimensions along which Islamic economics is radically different from neoclassical theories. The tremendous prestige of Western knowledge has prevented us from rejecting ideas which conflict with Islamic teachings. But the attempt to put the ideas and methodologies of neoclassical economists in the same basket with dramatically different Islamic conceptions about economic affairs, is bound to fail. This makes the task facing us much more difficult than the “Islamization of knowledge,” proposed by Al-Attas (1984) and Al-Faruqi (1982). Nasr (1991) has recognized this problem, stating that 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 the ease and comfort of borrowing Western theories with minor modifications, which has been an important obstacle to progress in Islamic economics. Despite daunting difficulties, the only path to progress in Islamic economics is to take up the challenge of initiating a new discipline from the ground up. Some potentially fruitful directions have been highlighted in my survey of Islamic economics, Zaman (2008) cited earlier. The vision of the founders is true: there is an alternative to the capitalist system, which is radically different from, and far superior to the Western economic system. Realization of this vision requires effort, teamwork, faith in the fundamentals of Islam, and the self-confidence to reject erroneous conceptions, even when they are put forth by Nobel prize winners.
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