Islamic Economic

Topics: Economics, Early Islamic philosophy, Islam Pages: 29 (9657 words) Published: April 17, 2013
ISLAMIC ECONOMICS: WHAT IT IS AND HOW IT HAS DEVELOPED OVER THE CENTURIES

by

Dr. M. Umer Chapra
Research Adviser
Islamic Research and Training Institute
Jeddah

A paper written for EH. NET’s
Online Encyclopedia of Economic and Business History (http://eh.net/encyclopedia/eh.net/encyclopedia/whaples@wfu.edu)

Sponsored by the Economic History Association (US),
Economic History Society (UK), Cliometric Society, and the History of Economics Society

Edited by
Prof. Robert Whaples (whaples@wfu.edu)

Phone: (966) (2) 646-6139
E-mail: muchapra@isdb.org
Website: www.muchapra.com

Islamic economics has been having a revival over the last few decades. However, it is still in a preliminary stage of development. In contrast with this, conventional economics has become a well-developed and sophisticated discipline after going through a long and rigorous process of development over more than a century. This raises a number of questions, some of which are: Is it necessary to have a new discipline in economics? If so, what is Islamic economics, how does it differ from conventional economics, and has it made any worthwhile contributions over the centuries? This paper tries to briefly answer these questions in four parts.

I

IS IT NECESSARY TO HAVE A NEW DISCIPLINE?

A universally recognized fact is that resources are scarce compared with the claims on them. However, it is also simultaneously recognized that the well-being of all human beings needs to be ensured. Given the scarcity of resources, the well-being of all may remain an unrealized dream if the right strategy is not developed for this purpose. The strategy that any society has is conditioned by its worldview, which may be either secular and materialist or spiritual and humanitarian.

The Role of the Worldview

The secular and materialist worldviews attach maximum attention to the material aspect of human well-being and assume that such well-being can be best realized if individuals have unhindered freedom to serve their self-interest and to maximize their wealth and want satisfaction. Such worldviews rely primarily on reason and do not recognize any role for revelation or Devine Guidance in the allocation and distribution of resources. In contrast with this, religious worldviews give attention to both the material as well as the spiritual aspects of human well-being. They do not necessarily reject the role of reason in human development. They, however, recognize the limitations of reason and wish to complement it by revelation. They do not also reject the need for individual freedom or the role that the serving of self-interest can play in human development; they, however, emphasize that both freedom and the pursuit of self-interest need to be toned down by moral values so as to ensure that everyone’s well-being is realized and that social harmony and family integrity are not hurt in the process of everyone serving his/her self-interest.

Material and Spiritual Needs

Even though none of the major worldviews prevailing around the world is totally materialist and hedonist, there are, nevertheless, significant differences among them in terms of the emphasis they place on material or spiritual goals. While material goals concentrate primarily on goods and services that contribute to physical comfort and well-being, spiritual goals include nearness to God, peace of mind, inner happiness, honesty, justice, mutual care and cooperation, family and social harmony, and the absence of crime and anomie. These may not be quantifiable, but are, nevertheless, crucial for realizing human well-being. Resources being limited, excessive emphasis on the material ingredients of well-being may lead to a neglect of spiritual ingredients. The greater the difference in emphasis, the greater may be the difference in the economic disciplines of these societies. Feyerabend (1993) has frankly recognized this in the...

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