Three Generations

Link to Blog Post Containing Video: Three Generations of Islamic Economics: https://azprojects.wordpress.com/2023/11/26/november-2023-assorted-talks/ ; original talk in URDU at Allama Iqbal Open University,  2 Nov 2023.  The Original Urdu Audio recording is available from: AIOU Urdu Audio Recording.  

Later, the slides were re-recorded in English. The same slides were used for a Jakarta lecture on 26th Nov 2023 at BSI Scholarship-Islamic Economic Literacy program.   

Slides For the Video Available from: Slideshare: bit.ly/SS3GIE; OneDrive;

YT Description: Social Theories can only be understood within their historical context. First Generation Islamic Economics was developed as part of the struggles to achieve liberation from colonization. It stressed the superiority of Islamic Economic System over Western economic systems of capitalism, communism, and socialism. Efforts to launch the political revolution required to control the state and create a macro level Islamic Economic system failed. As a result, 2nd Generation Islamic Economists took an evolutionary approach, and sought to modify capitalism  in a step-by-step approach, to move towards and Islamic system. However, this approach failed to bear fruits, and disastrous shortcomings of capitalism became obvious to all in the Global Financial Crisis of 2007. This has led to efforts to build 3rd Generation Islamic Economics on the revolutionary foundations of the 1st Generation, while incorporating many lessons of historical experience, as well as many insights from the 2nd Generation. 

Brief Chat GPT summary of video transcript, followed by complete transcript:

This lecture traces how Islamic Economics has evolved through three distinct generations, each emerging in response to the changing historical circumstances of the Muslim world.

The talk begins by showing that modern social science arose in Europe after the rejection of Christianity, and that it rests on false assumptions about universal laws. Because societies differ across time and culture, the correct method for studying them is historical and qualitative—as pioneered by Ibn Khaldun in his Uloom al-‘Umran. The speaker contrasts this with the positivist, mathematical approach that dominates Western economics today.

The first generation of Islamic economists emerged in the early twentieth century, during the struggle for liberation from colonial rule. They envisioned Islam as a complete alternative to capitalism and socialism—an economy built on generosity, justice, and social responsibility, in contrast to Western systems rooted in greed and individualism. Their project failed politically because Western-educated elites inherited power after independence.

The second generation, beginning around 1976, adopted a reformist, evolutionary approach. They sought to “Islamize” capitalism by adding zakat and removing interest. This effort collapsed after the global financial crisis of 2007–08 exposed the bankruptcy of both capitalism and its Islamic imitation.

The third generation rejects capitalism altogether and seeks to rebuild economics on Qur’anic and Prophetic foundations. It emphasizes action without political power: developing micro-, meso-, and community-level institutions modeled on waqf, qard al-hasan, and bayt al-mal. These institutions can finance human development, strengthen families, and restore social bonds weakened by markets. The talk also introduces innovative ideas like the “triple-zero economy”—zero inflation, zero interest, and zero unemployment—derived from insights in Modern Monetary Theory.

The lecture concludes by linking this intellectual renewal to the Ghazali Project, whose goal is to rebuild all human knowledge on Islamic moral and metaphysical foundations, ending with a prayer for guidance out of darkness into light.