Reconceptualizing Islamic Economy

This is part 2 of a talk on The Foundations of Islamic Economics. The first part was Unlearning Economics, a necessary preliminary to learning IE

RECAP of first part of talk: The Islamization of the economy is a natural and intuitive process. Modern economic theory is the religion of capitalist societies, which replaced Christianity in Europe. This theory actively prevents individuals from understanding the real issues facing the economy and finding solutions. Therefore, it is necessary to unlearn economics in order to learn how to Islamize the economy.

In Part 2, we will discuss some of the conceptual obstacles to IE and how to overcome them. It is important to remember that the obstacles we face today are far less than the obstacles faced by Prophet Mohammad, who was able to transform ignorant and backward Bedouins into world leaders. The final message of God to humanity is complete and perfect guidance for all times and is just as revolutionary today as it was 14 centuries ago.

The central obstacle we face is the colonized mind. Western education teaches us that the most valuable knowledge was produced by the West over the past three centuries in fields such as physics, chemistry, biology, political science, economics, and mathematics. This idea is automatically created by Western education, which teaches only these subjects, and makes no mention of the Quran. To decolonize minds, we must recognize that the most important knowledge was given by God to humanity 14 centuries ago. Part of this knowledge also tells us how to conduct our economic affairs. Because Islam defines knowledge differently, the substance and method of an Islamic education differs radically from Western education. See (beta-test) free online course: Principles of Islamic Education.

A Western education is rooted in rejection of Christianity, and denial of God and Judgment Day. Thus, Economics teaches that the goal of life is to maximize pleasure in this life. In stark contrast, Islam teaches us that real success is on the Day of Judgment. Economic theory states that society should try to maximize GNP per capita, while Islam teaches that the life of this world is the pursuit of an illusion and that Allah T’aala created us to see who can do the best of deeds. Differing goals lead to great differences in social organization, reflected in economic institutions. For some of the key differences see CIE5 The Revolutionary Islamic Alternative

Whereas capitalism makes wealth the goal of life, Islam teaches us to use wealth for spiritual progress. This requires simultaneous efforts on two fronts: the nights for engagement with God, and the days for engagement with the world (as shown by Surah Muzammil). The point is the spiritual progress is achieved by struggling to implement the order of God in the world, not just by meditation in isolation. See Islam’s Gift: An Economy of Spiritual Progress

A secular society is built on the idea that individual goals clash, making collective action at local level impossible. The government is the only source of collective action. In Islam, communities are the building blocks of society – meso-economics, not micro or macro. Creating strong communities is a key aspect of the Islamization of the economy. Families are building blocks for communities. Hollywood spreads powerful propaganda prioritizing personal pleasure over social responsibility.We need to protect families and communities from these acids of modernity. On the financial side, community banks can play an important role in strengthening communities. Models are available in Germany. models and the first Islamic bank in Egypt, Mit Ghamr, play a central role in providing credit to worthwhile investments in the future, which is very different from the role of banks in financial capitalism.

One of the greatest obstacles to creating an Islamic Economy is the concept of the “Nation”. This was invented in Europe after the dissolution of the concept of a united society. It is an “Imagined community” which unites and separates. It is the greatest of the new Gods created by mankind, which has caused enormous amounts of bloodshed, unparalleled in history. In contrast, the concept of Ummah, or the Muslim community, embraces all of humanity, while assigning a special role to the Muslims. Building an Islamic Economy requires us to think beyond national boundaries, to the needs of the Ummah as a whole. Since this Ummah has been created for the benefit of mankind, we must also take up this role, of serving the creation of God. This requires thinking beyond an economics and a “trade theory” which puts nations into economic competition with each other. Wael Hallaq’s book on the Impossible State shows clearly how the very concept of a nation-state is in conflict with Islamic ideals, and how we must learn to think beyond it, for an Islamic Revival.

End of Part 2.