Book Review by Dr Asad Zaman
Book: The Future of Economics: An Islamic Perspective. Markfield, Leicester: The Islamic Foundation, 2000/1420.
Pp. xxvi + 446. ISBN 0-86037-276-6 (PB). ISBN 0-86037-275-8 (HB)
An essential element of this pathbreaking work by M. Umer Chapra is the broad multidisciplinary and historically grounded approach to the subject of Islamic Economics. The book rises above many limitations of the existing works on the subject and provides an excellent basis on which a dialogue, oriented towards founding a new discipline, can be started. In particular, the book avoids presenting Islamic economics as an interesting/curious appendage to neoclassical economics, a trap which is difficult to escape since the dominant economic discourse is neoclassical.
Before discussing specific aspects of the book, it is important to raise a fundamental point: what is Islamic Economics? On page 50, Chapra writes that “Islamic economics would give … humanitarian goals … a prominent place” and this is taken as the key and defining feature of Islamic Economics. Such a definition begs the question: ”why introduce the prefix “Islamic” before economics”? Chapra answers this question by saying that this is an effective strategy for creating consensus among Muslims. He also says that if conventional economics moves towards introducing moral values and justice into its analysis, the two modes of analysis might converge and the prefix “Islamic” may lose its significance. I believe that we need to consider the ‘strategic’ use of the Islamic prefix further, and also compare it with other possible strategies.
There is no doubt that in the West, economics was divorced from morality in the course of a long process which cannot be sketched here. It is also clear that this divorce has been the source of many policies and principles which have directly led to an increase in human suffering – deliberately naïve applications, of the “invisible hand” principle have been used to formulate policies which have led to greater poverty and suffering throughout the world. Indeed, any human being would find morally abhorrent a situation in which there is more than enough capacity to produce sufficient food for everyone, yet that fact remains that there are starving children, malnutrition, hunger, and disease. Similarly, it is abhorrent that the amount of money spent on luxury items in advanced countries is more than what is enough to eliminate hunger in the entire world. It seems dear that Chapra’s goal of reintroducing morality and justice into economic analysis is laudable and eminently worthwhile. There are three potential strategies for achieving such a goal.
Strategy 1: There is sufficient consensus about moral values so that one need not appeal to Islam for this purpose. Large social security programmes in Europe reflect the general secular consensus on the need to help the poor. Thus one could initiate a movement to reintroduce moral values into economics on purely secular grounds, without necessarily referring to “Islam”. Indeed, Marxism and Socialism appealed to large numbers of people precisely because they invoked concepts of justice and urged people to fight against oppression. Chapra cites several non-Muslim authors who have urged the inclusion of moral values into economic analysis, showing that a purely secular approach is possible as a strategy for moving towards “Humanitarian Economics”. Strategy 1 is a perfectly viable strategy towards achieving a “humanistic economics”, but it cannot serve the needs of the Muslim countries as the current consensus on morality, which includes a laissez.-faire attitude towards sex and other moral improprieties, could never command a consensus in Muslim countries.
Strategy 2: Instead of using the human values on which there is general agreement, we could use Islamic values as the basis for morality, and attempt to introduce these into the neoclassical economic framework. If we tread carefully, justifying Islamic values on universally acceptable moral grounds, we can hope to make the arguments palatable to non-Muslims and thereby produce an analysis which might appeal to both Muslims and morally-inclined secular economists. This is the strategy implemented by Chapra.
Strategy 3: We could explicitly address a purely Muslim audience. Principles of economics would be derived from the Qur’an, the Sunnah), and the practice of early Muslims. We would not need to refer much to the writings of atheist philosophers to justify Islamic policy measures; indeed, we can not safely do so. Chapra mentions, with approval, the Islamic precedents of borrowing useful innovations from other civilizations. However, it is one thing to borrow the technology for cannon-making, and to keep systems for taxation and irrigation in place without change, and quite another to borrow alien moral philosophies. To the extent that neoclassical economics is built on a secular and positivist worldview, as recognized clearly by Chapra, Muslims cannot adopt it without essential modifications.
Strategy 3 appears the most effective way of building consensus in Muslim societies. In this case, a lot of tortuous formulation required to justify and explain Islam lo the potential secular audience can be done away with. For example, almost at the bottom of page 60, Chapra justifies the use of moral motivation as a way of reducing the “burden on the government for safeguarding social interest”. Zakat is described as a “social self-help measure”. Substantial effort can be saved since we no longer need to take the time to justify Islam to non-Muslims in our discussion of Islamic economics. Also our discourse will be more authentically Islamic if it is anchored in Islamic history and tradition and follows the Muslim intellectual tradition.
Strategy 2, the one adopted by Chapra, is superficially attractive, as it offers the option of combining the best of both worlds. However, I believe this strategy falls between two chairs. The use of the term “Islam” effectively excludes the vast majority of secular scholars. All except a tiny minority will never regard Islamic Economics as more than a curiousity. Also they are effectively excluded from participating in the dialogue because they do not accept our fundamental assumptions and are typically ignorant of Islam. At the same time, the vast majority of the Muslims will identify the Western style discourse and will intellectual heritage of Islamic economics with their colonial heritage of oppression and distrust it instinctively. Western-trained intellectuals like ourselves (with rare exceptions, anyone who can read and write English falls into this category) are fond of building bridges between the East and the West. This seems necessary for our survival with the resent that we are forced to harmonize two intellectual traditions even though they are fundamentally contradictory. We do not have a sufficiently clear awareness that the vast masses of Muslims are perfectly content with their own tradition and, “with good reason, distrust Western ideologies.
To summarize, I believe that as a strategy for appealing to secular but morally oriented economists, Chapra has provided many secular style arguments and has referred to many secularly oriented writers to provide justification and support for essentially Islamic positions. However, I do not consider this a good strategy in view of the danger of alienating large numbers of ordinary Muslims. This consideration does not reduce the value of the arguments presented in the book. It only emphasises that they should be packaged differently. We now proceed to a chapter-by-chapter description.
Chapter I: “Conventional Economics”. The book opens with this chapter which consists of a sugar-coated, albeit trenchant critique of conventional economics. Although Chapra acknowledges the “towering accomplishments” conventional economics, he also lists its failings on several counts. At the most fundamental level, the goals of economics policy are normative (reduction of poverty, just and/or equitable income distributions, etc.), while the positive and materialistic worldview on which modern economics is built not provide any support for moral considerations. The approach is conciliatory and is designed to provide a platform for secularly oriented economists to participate in the dialogue on the subject. The critique is sufficiently sharp so that one would be justified in saying that conventional economics fails on critical grounds of according essential importance to human well being and hence should be abandoned. The new framework suggested, a framework which incorporates moral values and justice, can be considered a radical shift of paradigm, which indeed it is. This is a strategic decision. As I have suggested earlier, this radical approach does alienate secular economist but is much more likely to succeed and create consensus among the Muslim majority.
Chapter II: “The Islamic Paradigm Through History”. This chapter described the ideals of the Islamic economic system, and the difficulties faced in achieving these ideals throughout Islamic history. The chapter describes how Islamically accepted economic goals conflict with the fundamentals of neoclassical theory such as Pareto Optimal or the quest for positive, morally neutral knowledge. The chapter raises the issue that Islamic ideals, while extremely desirable, have rarely been realized in Islamic societies, but defers the discussion for this to a later chapter.
Chapter III: “Can Science be built on a Religious Paradigm?” In Europe, widespread corruption in the Church led to a revolt against Catholic Christianity. One of the forces which emerged in the aftermath was Science, as a replacement for sacred knowledge. In his book Does God Exist? Catholic historian Hans K ng has examined the conflict between Science and Religion that arose, and explained it as a result of bad decisions on part of the Church leaders (for example, the decision to persecute Galileo). Chapra also starts this chapter with the premise that there is no necessary conflict between science and religion. Just as historical circumstances in the West led to such a conflict, so quite different historical circumstances in the East also led to such a conflict.
Chapra casts the Mu’tazilites in the role of rationalists in Islam, and suggests that by grabbing power and dictating their views to others, they alienated the common Muslims. This was supposedly a great loss to the Muslims, since it led to an abandonment of the rationalist tradition. This view has been espoused by other writers as well, but it appears fundamentally wrong for several reasons. Historically, the movement arose at a time when works of Greek philosophers (Socrates, Aristotle, etc.) had been translated into Arabic, and had caused a great deal of intellectual excitement. A group of thinkers wanted to elevate these works to the status of the Qur’an and Hadith, maintaining that “reason” was on par with Revelation. However, to these thinkers, later termed Mu’tazilites, “reason” was equivalent with Greek philosophy. Scientific progress took place in the West following the rejection of the idealistic Greek philosophy. Nearly all of the core concepts of Greek natural philosophy were subsequently proven wrong. Had the Mu’tazilites succeeded, it would have been a tragedy for Islam – we would have been saddled with a whole set of erroneous ideas about nature which would be regarded as being on par with Revelation. Indeed, much of the opposition of the Church to the new science in Europe took place because of the Church’s implicit acceptance of Greek ideas and the harmonization of Greek philosophy with Christian ideas espoused by a number of leading Catholic scholars.
Many inventions, discoveries, intellectual accomplishments (such as in Islamic Spain) testify to the fact that the loss of the Mu’tazilites in no way closed the door on reason in Islam. It is no doubt true that with the passage of centuries, there has been a certain amount of rigidity, ossification, and resistance to new ideas among the ‘ulama’. This has been one of the contributing causes of the Muslim decline. However, it appears entirely incorrect to relate this in any way to the Mu’tazilah.
Chapter IV: “Islamic Economics: What Should It be?” Here Chapra spells out an ambitious set of goals for Islamic Economics and for Islamic economists. The chapter is extremely awkward because of Chapra’s adherence to Strategy 2 discussed above. Whole sections are devoted to why it is permissible to use divinely ordained goals and values and to take these from the Qur’an. This is unnecessary for Muslims, and cannot succeed with non-Muslims. A section on “Faith” and its importance attempts the impossible: it tries to justify faith on secular grounds to the faithless. In Europe, the advance of a triumphant Science in face of a retreating Christianity led to a literature known as “apologetics” which attempted to find new justifications for Christian belief using scientific tools. This chapter is a valiant apology, extremely well done, but ultimately fruitless.
Chapters V and VI: “Socio-economic Dynamics of Classical Islamic Economics” and “The Causes of Muslim Decline”. These are the strongest chapters of the book. Chapter 6 spells out a theoretical framework developed by Ibn Khaldun to analyse the rise and fall of societies. In an interesting and original analysis, chapter 7 applies this framework to the current Muslim decline. The global and integrated perspective provided by Ibn Khaldun is a refreshing change from overly materialistic monocausal theories for historical decline common in the West (the latest being Kennedy’s The Decline and Fall of Great Powers).
Chapter VII: “The Recent Revival: A Survey”. This is a knowledgeable and informed survey of recent development in the Islamic world, with a focus on issues related to banking, finance and economics. It looks at the current practice, and compares it with Islamic objectives and ideals. The contrast is glaringly obvious. Nonetheless, there are clear-cut achievements and some progress has indeed been made. The key issue is: “Why does the Islamic vision fail to be realized in the present-day Muslim world?”
Chapter VIII: “The Future Course of Action”. This chapter makes a well rounded set of suggestions for action which most Muslims would agree with. One of the principal suggestions is the need to make a peaceful struggle for political reform. Here Chapra uses the buzzword “democracy” as a desirable goal, and has indicated elsewhere in the book that one of the reasons for Muslim decline was a lack of democracy. I believe that decentralized-decision making which is responsive to the needs of the people is essential for progress. Currently “democracy” is often taken to mean free elections, and we have considerable historical experience that freely elected rulers can be extremely exploitative and unresponsive to the needs of the masses. The use of the word democracy tends to highlight the wrong set of issues and should be avoided. Developing quality institutions in response to the genuine public needs and avoiding those ‘foreign experts’ who have quick magic fixes will be essential to ensure the success of the Muslim ummah.