Corona Virus Pandemic and Religion

Salman Ahmed Shaikh

Some scientists create an unnecessary tussle between religion and science in society. Reading about science, contributing to science and using scientific knowledge and technologies does not contradict with religion nor does religion stop from such endeavours.

Religion allows economic endeavours and scientific endeavours to achieve economic livelihood and convenience. It does not ask one to sit idle and expect to be fed naturally or automatically. It does not ask to avoid medicines and cures to treat illnesses. It does not discourage intellectual and scientific pursuits to discover cause and effect relations in the universe and make use of such knowledge. Even in religious knowledge, religion does not feed religious knowledge in brains automatically, but it asks to seek that knowledge by reading, deciphering, thinking and reflecting. Seeking knowledge is regarded as an obligation rather than fed as an effortless gift in humans. In fact, every endeavour which brings comfort, convenience, social good and welfare is an act of virtue and religion encourages one to cooperate in virtuous endeavours. Thus, in pursuit of livelihood or finding cure of a disease, religion does not prescribe some religious rituals alone.

Religion guides about ethics and morality in all human endeavours including scientific endeavours. For instance, religion would not allow using technology to kill someone, harm others and destroy resources and environment. As a matter of fact, 200 million people died in 20th century wars alone, which is equal to all of human population on earth living at the time of Jesus (PBUH). WWF reports that humans have destroyed half of all animal life in the last 40 years alone. Humans just make up 0.01% of all life but have destroyed 83% of wild mammals, according to a report published in the Proceedings of the National Academy of Sciences. Scientists had termed the current age ‘Anthropocene’ due to the unprecedented loss caused by human activities in the modern age. In this kind of involvement of religion in scientific endeavours, religious values play a positive role in emphasizing responsibility, care, preservation and cooperation.

The second possible point of contact between religion and science can come in answering questions of origin, existence and meaning. These questions do not come in the domain of science. Nonetheless, still some scientists who do not believe in Creator and hence any divine religion tend to argue for their held beliefs from some scientific theories. It is conveniently forgotten that any scientific theory has no concern whatsoever with the ‘will’ behind material cause and effect relation. Science can explain chemical processes, physical processes and biological processes involving material causes and effects. But, science does not concern with the purpose behind material processes.

Growing crops through chemical processes can be explained through science, but what end they are used for does not come under the domain of science. Chemistry can help in increasing productivity of food crops as well as making chemical weapons. Abortion of a baby without putting life of mother at risk can be explained through biology, but science does not answer whether it is right or wrong. Weapons of mass destructions can be made through knowledge of disciplines like nuclear physics, but using this knowledge to decimate entire human population in a city or country is a decision whose correctness or incorrectness cannot be judged or answered from science.

If there is a will to produce something or make something happen, then as long as the process of production involves material process, then it can be explained through science. If not all such material processes are comprehensible through science, they still potentially can be with advancement of science in future. However, the will and purpose to start the whole process does not come under the purview of science.

From where did all the initial matter and material processes through which we explain the recipe of life come from? All that we have done through science is to use the pre-existing matter inside the universe in ways that benefit us by exploiting the cause and effect relations from observation and experimentation.

When we play video games, through experience, we learn the rules of the game and make progress to the advanced stages. We do not infer from this experience that the game was not developed by someone. We know that someone will have made the rules. If we come across a computer software or application, then after observation and careful thinking, we can decipher how it was made. By having grasp of computer programming, we can identify the recipe – the code and algorithm – which is behind that computer application. However, it does not mean that discovering the programming code and algorithm of an existing computer program proves its self-existence without any developer. Inadvertently, some scientists even go on to accept the simulated hypothesis, but do not question in the first place that who would have made the rules of the video game in which we find ourselves in.

In our conscious experience, we do not find ourselves like other inanimate objects in the universe. Our bodies might be having the same inanimate matter that is also part of non-living objects, but we have consciousness. Other life-forms also have consciousness.

We know that we are not our creators. If we had the power to create ourselves, why would we be not able to avoid pain, illness and death? Another alternate conjecture is that we have come to exist in this universe by accident. But, science has shown that it is next to impossible to have life by accident in its most sophisticated manifestation as we see it, experience it and then die after few million breaths under the sun. Life exists on a knife’s edge. Other life-forms and inanimate objects are also composed of the elements that exist in universe and their existence cannot be explained through self-creation.

Furthermore, we humans in particular have conscience apart from consciousness. We have ability to differentiate right from wrong. We have self-awareness. If we are result of genetic mutations alone without any Creator and we have come to exist as the fittest species, then is there any harm or anything wrong if we mutate or destroy other life-forms. If water is scarce and we do not want to change our lifestyles and industrial production of unnecessary goods, then what is wrong if we kill few thousand camels instead? For that matter, even human populations. Why is that wrong in the evolutionary biology story where we start from inanimate matter and then decompose into a debris of matter again eventually.

In fact, we have only speeded up extinction in the last 50 years when the science has been on its peak. Morals do not come from evolutionary biology. Towards that end, it is the depressing story of survival upon survival through destruction upon destruction. No wonder we are now seeing tremendous loss to ecology, environment, bio-diversity and forests after setting aside values and morals.

Another question that always strikes a person in every age is the purpose and meaning of life. This is also a question which is outside the domain of science. When some scientists not believing in God relate their atheistic philosophical viewpoint with evolutionary biology, they are making a philosophical conjecture. It is not the domain of science or any scientific theory to discuss ‘will’ and ‘purpose’ behind material cause and effect relation. Science is concerned with the recipe (how), not the purpose (why).

Religion explains that this universe had a beginning and it was created. After a long period of time, humans inhabited the planet earth in this universe. Humans were created and given this life by the Creator in order to test who among them live a virtuous and ethical life. During this life, there will be temptations to achieve short term material benefit, but unethical conduct will make humans deserve punishment in life hereafter. In contrast, virtuous actions of justice, fairness, generosity, kindness, cooperation and sacrifice will deserve deterministic rewards in life hereafter. Since this life is a trial, one cannot get deterministic rewards in this life. But, every intentional act will get deterministic justice in life hereafter. That is the basic essence and message of religion. It does not matter whether life on this earth came to exist by whichever material process. Religion informs about the ‘will’, the source and the purpose behind creation of humans.

A reflective human mind would look at the pandemic and will be reminded that this life will end one day for him from one or the other material cause. But, it does not matter whether it will be due to any disease or accident. However, his life and life of others is not meaningless. Doctors and nurses who fight hard to save lives might lose their own in the process. But, if they believe in life hereafter, then their virtuous acts will earn them rewards in life hereafter which will begin for never ending again. Unlucky patients who die from this pandemic and those who die from other reasons may have been denied what they deserved in this life. Those who got killed, robbed, denied justice and discriminated against will get deterministic justice and rewards in life hereafter if they had lived virtuous lives given their circumstances in this life. The lucky ones who survive this pandemic will also die one day. If they had helped the ones who were ill, who were hungry, who were deprived, who were unfortunate and who needed help, then their acts of kindness, generosity, sacrifice and devotion will transcend this world and will give those people rewards in life hereafter which will begin for never ending again. A reflective mind will keep in mind the scientific and historical evidence that death is as much a fact as is life. The belief in life hereafter completes the cause and effect puzzle even in moral sphere of life. In life hereafter, everyone will get deterministic reward for intentional acts in this life based on the ability and freedom in the circumstances which one faced in this life, no matter whether rich or poor, white or black, male or female, strong or weak and elite or commoner. That makes life of everyone meaningful rather than a constant struggle of survival in one form of matter to the other form of matter where survival instinct is the only moral code.

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Questions in Islamic Economics: Connecting Spiritual Growth to Economic Theory

Saif Ali

I recently read a status update on LinkedIn by a disappointed man who found himself in a shared taxi with two professional managers. He heard one of them complain to the other about the loss of productivity due to employees taking religious holidays. When he could not take it anymore, he turned around and said: “Be human before being manager.”

Many professionals today experience a dilemma where they must make a choice between being good humans and being good at their job. They are left to wonder how the principles of love, generosity, fairness, reciprocity, and trust that they know to be true about life in general, do not apply at work. Some resort to the unfortunate conclusion that cold selfish behaviour is “natural” for human beings in economic situations. This is false. One of the prime reasons for moral listlessness at the workplace lies buried in mainstream economic theory.

Economists, managers, consultants and the ilk go through a program of indoctrination where they are taught that when it comes to business, it is war, not love. They learn to “let the numbers talk.” This has resulted in a cultural movement of “hard” economics in which people who are believers, empathetic, dreamers, and hopeful are brushed under the rug as being “touchy-feely.” The Graduate School of Business at Stanford University runs a course that is informally known as “touchy-feely” in which management students are taught the value of interpersonal dynamics in business. It has been voted the top elective course for 45 years running. Unfortunately, statistics of this sort have not really shaken the economists out of the delirium of utility-maximization. The curriculum of the overwhelming majority of economics programs across the world remains unmoved by facts. Is it possible that there is really no need to separate love and business – those two momentous human ventures? In this article, I want to ask the following question: Can Islamic economic theory provide the critical missing link between spiritual growth and economics and what are the obstacles in this path?

Have you ever performed an act of kindness even though it meant incurring a personal loss? If your answer is yes, your behaviour is not explainable by modern mainstream economic theory and you are considered a deviant from the norm of rational behaviour. Modern economic theory is founded on the neutrality of the marketplace from higher ideals like altruism, compassion, love and cooperation. The way economic theory is taught and professed, it is subtly fed to the minds of students that these higher ideals do not operate or are relevant in the market. The name given by the theory to a human being in the market is homo economicus – economic man, a behavioural specie that is entirely self-interested with no regard for spiritual growth.

How did this theoretical schism between markets and morality arise? Is it true that one simply cannot mix matters of the heart with business? These questions are critically important for Islamic economists because it is incumbent upon anyone who chooses to connect morality with markets to define how the two are related. I explore four questions that shed light on this subject.

Is spiritual growth relevant to economic theory? Why or why not?

If we ask this question with mainstream economic theory in mind, the answer is no. To see why, we have to turn to a period in European history that witnessed the politico-religious movement called the ‘Reformation’. It was a time of violent fighting between the Catholics and the Protestants. The relentless sectarian conflict led to disillusionment with the idea of religion altogether. The philosophical movement which is known as the ‘Enlightenment’ followed. Through this movement, Western Europe ideologically eliminated religion and the associated concepts of God and the spirit from public life. The separation of Church and State was founded on the division of human life into two spheres, the socio-economic sphere on the one hand and the spiritual sphere on the other. Under such a system, the economic realm is outside the confines of religion and is governed entirely by market concerns. Economic theory therefore needed to only be concerned with the totally self-interested man, homo-economicus, because the altruistic, generous, compassionate and spiritual man never enters the market.

Surprisingly, all economic theory is based on the assumption of selfish self-interested human behavior, even though it has been manifestly proven false by huge amounts of empirical evidence.

Does Islamic economics offer a way to link spiritual growth to economic theory?

The spiritual development of the individual and the society are central to economics from the Islamic perspective. Islamic economists have thus far shown a deferential attitude towards all ideas proposed by Western economists on account of the awesome scientific achievements of modern Western civilization. This has led to a situation where instead of rebuilding ideological foundations from scratch, they have taken Western ideas as given and tried to reconcile them ex-post with Islamic principles. A good example is the idea of the “free” market. Technically, Islam allows free markets but the free markets of Islam strike a balance between profit and purpose in contrast to the free market of modern economic theory where profit reigns supreme. In the free market of Islam, acquiring wealth at the expense of others is not allowed and destroying the environment to make profits is not allowed. In contrast, there are no such stipulations in Western economics. The central difference is that Islam puts social responsibilities above individual freedom, while Western economic theories do the opposite. What is needed is not the Islamization of economic knowledge but a complete ideological reversion in which social responsibility and individual liberty occupy their correct places.

The effects of unchecked profit maximization on the society and the environment are obvious to everyone except for some economists who are applying the same theory that is the cause of the problems to come up with the solutions.

Why then does modern economic theory continue to be accepted and taught?

While the advancements in science and technology are undeniable, the failure of modern economic theory is obvious to all. During the global financial crisis, the Queen visited the London School of Economics to ask them why they were not able to anticipate the collapse of the economic system. Yet, the very same theory that failed completely during the financial crisis continues to enjoy great prestige and what is more puzzling is that governments continue to run their programs based on it! Why is this so? The reason is that it is in the interest of power and against the interest of the disempowered.

The fundamental theorem of welfare economics implies that self-interested behaviour and free markets are actually good for society and therefore should not be regulated. It is easy to see how this serves the interest of the powerful. It gives them a license to continue their quests for domination while maintaining a narrative of the greater common good. Modern economic theory is an instrument of gaining the consent of the weak and powerless to opt into their own exploitation. Michel Foucault talked about “power knowledge,” the idea that the most lethal weapon of the powerful is not guns but the shaping of minds.

Why do some Islamic economists continue to justify modern economic theory using the Quran and Sunnah?

The answer again is the perceived infallibility of the West. People who send rockets to the moon cannot make mistakes. Take the example of scarcity – a central idea in modern economics. The first generation of Islamic economists, the likes of Maulana Mawdudi, completely rejected the notion because they had only been trained in the Islamic tradition and they knew from the Quran that the rizq (provision) of every human being is promised by Allah. The second generation of Islamic economists received Western education and succumbed to the indoctrination. They tried to figure out ways in which the Western notion of scarcity could be fitted into the traditional Islamic framework. As it stands, the field of Islamic economics is largely (i.e. not wholly) dominated by ideas that are really the accommodation of Islam to Western perspectives. As Islamic economists, we must work to develop consensus that there is a principal conflict between Islam and the modern economic theory in that Islam orients man towards spiritual growth at the expense of material wealth whereas modern economic theory, as embodied in homo economicus, does precisely the opposite. There is no way to reconcile exact ideological opposites and Islamic economics can only proceed from here on by rebuilding ideological foundations ab initio. Modern economics idealizes worship of nafs as the epitome of rational behavior, and to construct a genuine Islamic Economics, this must be rejected.

This article is based on a Radio Islam interview with eminent economist Dr. Asad Zaman.

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Corona Virus and Free Market Economics

Salman Ahmed Shaikh

Corona Virus can transmit from one person to another person. To avoid exponential growth in the spread of Corona Virus cases, social distancing is suggested. Father of Monetarist School of Economics, Milton Friedman said that one thing which a person can always be sure of is that everyone would put his or her self-interest before others.

Apparently, it is realized by governments that this is perhaps not the right thing to expect and put faith in at the moment. Private choices in pursuit of self-interest and invisible hand were deemed to be less reliable in current situation. Lockdown was considered necessary by governments in everyone’s individual and collective interest.

It was decided that everyone cannot be allowed to pursue self-interest and intervention is necessary. After the lockdown, when markets become less active, the subject of mainstream economics faces another tough ground. There are millions of poor people who do not have work. When lockdown happens, a great many people find resource markets stalled where they used to get income. This includes not only the poor people but a lot of other workers including factory workers, transporters, cab drivers, rickshaw drivers, salespersons, porters, loaders, delivery workers, construction workers, retailers, goods suppliers, mechanics and those working on daily wages in bakeries, restaurants, petrol pumps and gas stations, for instance. In normal circumstances, most of these people are non-poor, i.e. earning more than the subsistence level of income. But, because they earn income daily, they are now also vulnerable and at least for the lockdown period, most of them are effectively poor.

If the government or third sector does not intervene, then these people do not have the purchasing power to afford essential purchases. Even if it is disliked or abhorred by free-market enthusiasts, governments are now intervening in price regulation, supply management, subsidies and influencing the previous long term contracts like employment and financing between private agents. All of that is deemed necessary now.

More than ever, such crises necessitate the flow of resources from the haves to the have-nots. But, frozen goods and resource markets cannot help much, especially the poor and vulnerable people. That is where, pro-social behaviour and beyond-market distribution of resources is necessary.

However, mainstream economics treats altruism as ‘impure’. It looks at altruism in the paradigm of pursuing self-interest. Economists like Andreoni reason that altruism can be explained through the ‘warm glow’ effect. People feel good to help others as they gain personal and private comfort. They might be doing it because of social pressure, to gain fame, to improve social image, to exhibit status or to avoid the guilt of saying no to a cause in public. The paradigm of self-interest is neutral between a person’s decision to help others or to not help others. If fear and uncertainty make people more short-sighted, self-centric and engage in hoarding cash, withdrawing from banks, disinvesting their savings in capital markets and buying essential goods in bulk, then there is no drive, urge or impetus that economics can offer to suggest otherwise. It is neutral between these choices and the choice for altruism.

In poor countries like Pakistan, people with surplus resources are engaging in charity, donations, and volunteering. Empirical evidence in Pakistan in multiple research studies has found that faith is the biggest motivation behind charitable donations and it encapsulates and is associated with other humane motives. This trend is also seen in other parts of the world. But, economics is largely silent and irrelevant when it comes to exchange, allocation and distribution of economic resources outside of markets.

Self-centrism creates another problem on the response side. The problem with commercially motivated technological change is that if it does not make good business, the idea does not see its growth. Sanitation and clean water is still a problem in localities where everyone has 4G connection and mobile wallet accounts. Commercially motivated research is more intensely pursued than socially urgent ones. Technological improvements to ease sanitation, bring clean water and achieve recycling are given less attention than telecommunication and digital financial services which are commercially more profitable ventures.

Education geared to industry demands has also got into the trap of producing commercial technologists for corporations. These corporations are not built for social responsibility in free-market capitalism. Milton Friedman said the biggest and only responsibility of a corporation is to increase shareholders’ wealth. If these corporations do research and find a vaccine eventually that costs $1,000, then those who are not able to afford it would be regarded by mainstream economists as having less willingness to pay. For the poor, it is not the choice, but a helpless situation. But, poor having less budget for essential needs is a problem that we do not start our economics textbooks with.

In the earlier era, the subject of economics was geared to human needs. Now, the prime emphasis is on market behaviour and market outcomes based on choices under uncertainty and scarcity. The emphasis on choice behaviour subtly and inadvertently makes economics and most of its contents largely irrelevant for poor people.

In basic microeconomics textbooks, even when welfare gets attention, it is in the domain of efficient outcomes. Redistribution through taxes is first introduced as a big ‘no go’ domain with concepts of deadweight loss.

However, inefficiency out of market behaviour and market outcomes is plainly ignored and overlooked. Approximately, $600 million daily is needed to feed every extremely poor person, yet about $2.75 billion value of food is wasted every day (Source: FAO). Consequently, 10 million people die every year from hunger while one-third of all food is wasted. This gross inefficiency in economic resources is not captured or discussed. Food per capita availability has increased globally since the 1970s. But under capitalism, the market allocates goods including even food to only those who can pay its price. It does not make a difference whether the willingness to pay is less than the price due to ‘preference’ or due to ‘poverty’. Yet, mainstream economics claims consumer sovereignty.

When welfare is discussed in microeconomics textbooks, it is only in the domain of economic exchange in markets. The discussion in such places sets total welfare maximization as the virtuous end or criterion. In first-degree price discrimination adopted by a monopolist, there is no welfare loss. However, there is no consumer surplus either despite having optimal efficiency. Economics is neutral between desirable or undesirable equilibrium from the point of view of equity.

Mankiw’s famous quote was ‘People react to incentives, all else is just explanation’. However, poor people are helpless. They do not have or face a willingness to pay choice in helpless scenarios. A literal application of definition of demand would imply that the poor people do not have demand. Their wants are not backed up by purchasing power. Economics does not differentiate between essential and non-essential wants. If a rich person demands golf course in a locality near a big population of homeless people, then, it will be made first if he can afford it. Are poor willing to give fewer dollar votes by choice to buy the essential needs? Is it their conscious and sovereign decision?

However, we do see people, institutions, and governments trying to help the poor and vulnerable people. However, any policy decision to achieve equity, fairness, social good, and public welfare is largely ‘ad hoc’ and does not emanate from the more emphasized terminologies of Pareto efficiency, consumer sovereignty and invisible hand that we teach at length and treat as sacred virtues in economics textbooks.

The impetus for pro-social behaviour in human beings can be increased if the right values are inculcated and adopted. Concept of the oneness of Creator dismantles any basis of anthropogenic (human-centric) superiority among all creations, whether it is animated living species of animals and humans or the inanimate non-living objects in the environment.

Explaining consciousness and conscience does not come in the domain of science. Like animals, humans also have consciousness, but they also have a conscience which gives them the ability to differentiate right from wrong. But, why we should do right and not wrong actions. Dawkins said that it is necessary for survival. But, Dawkins needs to be asked that haven’t we evolved through mutations in the game of survival of the fittest. Rawls said ignorance of the veil shall be a guide to behave in a way so as not to be on the wrong side of someone’s prior irresponsible or unjust action. But, living in any age, we exist and we do not come back again. In the lottery of who comes first in the world, we have already won and are here. Then, what can motivate preferences to act rightly and avoid wrong actions permanently and as a well-grounded behaviour, norm, and habit? The biggest motivation to act on the call to conscience is when there are deterministic rewards. The concept of deterministic rewards in life hereafter on the criterion of sincerity in virtuous and upright conduct in life by each person according to one’s ability and by each person according to personal circumstances makes every living moment in this life meaningful.

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Reflections on the Outbreak and Effects of Corona Virus

Salman Ahmed Shaikh

Corona Virus has now hit every country. More than 1.2 million people got infected and 65,000 people have died in just few weeks and experts think that the damage is still far from over. As expected, the reaction has come in the form of fear. People are stockpiling essential goods and are seeking advice from every source to follow in order to survive and be safe.

The crisis also invites us to take deeper lessons and engage in introspection about how reckless we have been with environment. How we left people in Gaza, Kashmir and Uyghur in unnecessary isolation and lockdown. The crisis also explains how Riba (Usury) can have disastrous effects as it gives lender who lends surplus resources a license to demand return on money lent irrespective of any crises and its negative economic and humanitarian impact.

We made progress in science, yet there are many diseases we can not cure. We cannot defy death. We became proud. We used military strength to annihilate our enemies. We divided one human race into 200 nation states and built pride about national identity which people are not born with. It created unnecessary distance and distinction of ‘us’ and ‘them’ among the same humans. We hurt other species and made life extinct for thousands of different types of life forms on planet earth. Since 1970, about half of all animals have become extinct. We kill our own race. In 20th century wars, 200 million people died. This was roughly the size of overall human population on earth at the time of Jesus (pbuh).

We have achieved exemplary economic growth, but economic growth, richness and military strength do not matter for our and other species survival if ecology and balance is disturbed in environment. We have more food per person every year since the last 50 years, yet 10 million people die of hunger every year. Our collective conscience remains silent on 10 million deaths from hunger, mainly in poorer countries. Yet, rich countries take Riba (Usury) on loans which often exceeds the amount of aid they give to poor countries.

It is also useful to reflect on why life and what it means to us even if we survive this pandemic. We may survive this crisis, but we are going to die someday. 150,000 people die everyday. Such calamities combine death in one place and event. They are signals and reminders to reflect on what is the purpose of life.

Neoclassical economics suggests that humans are driven by self interest. Andreoni gave the idea of ‘warm glow’ to explain altruism. People engage in altruism to have warm glow effect. Sometimes, they engage in pro social behaviour to satisfy ego, gain fame, get social appreciation and build good social rapport.

But, the doctors and nurses who have risked their lives to treat patients have defied these explanations and proved that altruism can be genuine. The idea of selfish self-interest needs revision. John Nash gave the idea that everybody does what’s best for him and the group. Referring to humans as a group, Dawkins think that Selfish Gene has no inherent morals and only has survival instincts. Morality is then just an instrument to achieve survival of the fittest.

However, conscience is there in all humans which has clear ideas of good and evil. Call to conscience brings sacrifice and selfless choices. But, the life ends for many people without them getting fair reward or punishment.

Oneness of God gives us an anchor to see us as part of a universal clan of creatures. All life forms do not create or control breath in themselves or others. We inhabit universe collectively and are equal in sharing it.

Consciousness is there in animal life. Beyond animal instincts, humans also have inherent recognition of good and evil in their conscience. We like to do good and like others to do good to us. Belief in deterministic justice and rewards in afterlife fulfils our aspiration to have true and fair reward to every tiny act of goodness and evil in afterlife. Every moment of a nurse and that of a cured or dead patient is not meaningless if one believes and prepare for afterlife by achieving excellence in morals.

Imam Ghazali wrote that wealth is useful till we die, relatives till we are put in grave and only good deeds will be the currency on judgement day. If we have good deeds to take in next life, then we can have everlasting happiness that is not infected and affected by any Corona Virus.

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Issues in the Implementation of Ushr in Pakistan

Syed Hassaan Ali

Ushr is the financial obligation levied at the rate of 10% on agricultural output in Islam. There are several hurdles and issues which are hampering its successful implementation in Pakistan. This article attempts to discuss those issues and a few recommendations to overcome them.

The major issue is that the government has not been active in the collection of Ushr. Furthermore, historically, it never achieved its true potential in terms of the amount collected due to the trust deficit between the government and the landowners. It is also a fact that some greedy landlords try to evade it. On the other hand, poor knowledge about Ushr among the landowners results in the meager collection of Ushr at the national level.

Furthermore, corruption is also a major hurdle in exacerbating trust deficit between the government and the landowners. People tend to think that if they would pay their religious financial obligations to the government, then, they might be spoiled or misused.

Another problem is that usually landowners are not aware of the commandment of Ushr. There is a lack of initiatives for public awareness regarding Ushr. In the poverty alleviation programs, the government ignores the potential of Ushr collection as a tool for poverty reduction. Even if there is no agricultural income tax levied by the government, Muslim landowners engaged in agricultural production are required to pay Ushr on their agriculture produce. But, many of the landowners are not aware of this requirement and the procedure to determine their true financial obligations and the mode of payment.

On the other hand, low levels of collection of wealth Zakat and Ushr in the Muslim countries is due to the fact that governments have resorted to taxation and have pretty much disengaged from the central collection of wealth Zakat and Ushr. Now, a person defaulting on tax can be penalized, but a defaulter on Islamic financial obligations is not penalized by the government. Another reason of low central collection is the administrative hassle in the government departments which entice people to pay their financial obligations privately and without having to disclose their wealth and income status to the tax officials.

To change matters, some recommendations are listed below:

  • Raising awareness about the obligation of Ushr at the grass-root level in rural areas using different local platforms, such as Friday Sermons.
  • Moreover, the governments of Muslim majority countries may provide tax credits to those who pay Zakat and Ushr. Targeted subsidies in the procurement of seeds, fertilizers, tube-wells, pesticides and agricultural financing can also be provided to incentivize commitment.
  • Ensuring the transparent collection, monitoring, reporting and disbursement in the overall system of Zakat and Ushr administration is vital.
  • In the long term, when it becomes a tradition and a well-known financial obligation, then defaulters of Ushr should be penalized.
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Significance of Recycling for Environmental Sustainability

Dr. Dalia Shebl Said

Associate Professor in Architecture & Urban Department, 

Faculty of Engineering – Kafr Elshiekh University

The recycling process has become a core and essential element of sustainable development. Nonetheless, economic analysis of recycling relegates environmental concerns to mere externalities, which are un-priced costs and benefits that accrue to individuals outside of private transactions. Examples of positive externalities include decreased air pollution and greenhouse gases from incineration, reduced hazardous waste leaching from landfills, reduced energy consumption, and reduced waste and resource consumption, which leads to a reduction in environmentally damaging mining and timber activity.

The United States Environmental Protection Agency (EPA) has concluded in favor of recycling, saying that recycling efforts reduced the country’s carbon emissions by a net 49 million metric tons in 2005. In the United Kingdom, the Waste and Resources Action Programme stated that Great Britain’s recycling efforts reduced CO2 emissions by 10–15 million tons a year. Recycling is more efficient in densely populated areas where there are economies of scale since investment in environmentally efficient technology requires an upfront fixed cost.

Approximately 1.3 billion tons of Municipal Solid Waste (MSW) are generated globally every year and are expected to increase to approximately 2.2 billion tons per year by 2025. In fact, the amount of waste produced per person per day also depends on the economic status of the community concerned. The rates of MSW growth are fastest in Arabian countries and the Middle East.

Construction activities generate a large amount of waste compared to other industries. It accounts for up to 30% of the total waste output in the world. Construction and demolition waste management have become one of the major environmental problems in many countries. For example, in EC countries, about 200 to 300 million tons of construction and demolition waste is produced annually, which translates to roughly a 400 square kilometer area covered with demolition debris one meter high (Source: US Green Building Council, 2001).

In the Islamic framework, there is an emphasis on conservation, preservation and responsible use of resources. There is a discouragement for excessiveness, extravagance, lavishness and wastefulness in the use of resources. These norms are especially needed in the present times to foster a healthy, livable and sustainable ecosystem. In 2019 alone, humans have used up resources for the whole year within 7 months according to World Economic Forum. Thus, we are disturbing the ecological balance beyond repair and regenerating capacity and thus causing serious concerns for sustainability.

If we glean over the past, Muslim engineers over the past centuries were keen to use sustainable materials and achieve recycling in lifestyles. For example, the operational system of the “Hammam” public bathroom in Muslim cities was a successful sustainable model of recycling and management of resources and disposal of waste. Now, it is high time that we adopt norms, lifestyle and technology which ensure ecological balance and sustainability.

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Islamic View on Scarcity of Resources

Maher Kababji

Socialists claim that economic problems arise from the extraction of surplus value by the Capitalists in the production process. On the other hand, Capitalists urge that scarcity of resources is the basic economic problem which restricts output growth because wants are innumerable, but the resources for satisfying those wants are limited.

Nonetheless, the empirical evidence does not support that resources are scarce for legitimate and compulsory economic needs. The excess of the world output growth over the growth of the world population provides evidence that scarcity of resources does not exist at the global level. Food per capita availability has actually increased in recent decades as per Food ad Agriculture Organization.

Qur’an emphasizes the abundance of natural resources at the macro level:

(قال تعالى : وَجَعَلْنَا لَكُمْ فِيهَا مَعَايِشَ ” (الحجر 15 : 20

  • Meaning: The Almighty said: “And We have provided therein means of living”.

(قال تعالى : وَمَا مِن دَابَّةٍ فِي الْأَرْضِ إِلَّا عَلَى اللَّهِ رِزْقُهَا ” (هود 11: 6

  • Meaning: The Almighty said: “And no moving creature is on earth but its provision is due from Allah”.

(قال تعالى : وَأَنبَتْنَا فِيهَا مِن كُلِّ شَيْءٍ مَّوْزُونٍ” (الحجر 15 : 19

  • Meaning: The Almighty said:” and caused to grow therein all kinds of things in due proportion”.

(قال تعالى : وَإِن مِّن شَيْءٍ إِلَّا عِندَنَا خَزَائِنُهُ وَمَا نُنَزِّلُهُ إِلَّا بِقَدَرٍ مَّعْلُومٍ ” (الحجر 15 : 21

  • Meaning: The Almighty said: “And there is not a thing, but with Us are the stores thereof. And We send it not down except in a known measure”.

In some regions, the available resources may differ from the resources needed to satisfy the requirements of the community sometimes like in the case of famine. But, international trade as well as philanthropy helps exchange of resources and essential commodities.

Qur’an recognizes the differential in resources at the micro level:

قال تعالى : ” وَهُوَ الَّذِي جَعَلَكُمْ خَلائِفَ الأَرْضِ وَرَفَعَ بَعْضَكُمْ فَوْقَ بَعْضٍ دَرَجَاتٍ  ” (الأنعام 6: 165)

Meaning: The Almighty said:” the one who has made you the earth, and has raised some of you above some degrees “.

This differential is meant to test the spirit of sacrifice, cooperation and philanthropy among the rich and resourceful persons in society. But, it is different from the scarcity which results in deaths from hunger in the world. Such scarcity is driven by inequitable distribution of resources. Islam emphasizes on feeding the hungry and looking after the poor people through Zakat (compulsory charity), Infaaq (charitable giving) and Waqf (endowments). Furthermore, the state and its executive head is made responsible for ensuring basic needs of the living beings including even the animals in the Islamic social framework. Lastly, the prohibition of hoarding of essential commodities for raising their prices also ensure that disruptions in supply due to greed are contained.

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Using Mainstream Asset Pricing Models in Shari’ah Compliant Stocks

Salman Ahmed Shaikh

One issue that arises in using asset pricing models developed in mainstream financial economics literature is that can one use these asset pricing models in the security analysis of Islamic equity investments. It must be acknowledged that asset pricing models do not prescribe a particular rate of return to an investment project or in financial contracts. They are just an ex-ante means of analysing investment options available to the investors. Hazny and Yusof (2012) discuss the assumptions of Markowitz’s Mean Variance Analysis and CAPM from the Shari’ah perspective and conclude that some of these assumptions are simplistic only for the purpose of facilitating analysis. Rosley (2005) and Hazny and Yusof (2012) argue that Islamic principle of Al Ghunm bil Ghurm means that returns are justified by taking risks. Furthermore, Al-Kharaj bil Dhaman bases the entitlement to profits on corresponding liability for bearing losses. These maxims are broadly consistent with the positive ex-ante relationship between risk and return in investment literature. In addition to that, divisible investments are possible in real Islamic financial assets through Sukuk, Islamic mutual funds, and Shari’ah compliant common stocks. Thus, the assumption of marketability and divisibility of investment assumptions are also tenable.

Other assumptions which apparently look conflicting with Shari’ah can be modified for bringing consistency with Islamic capital market norms and practices. For instance, the risk-free rate can be replaced with Sukuk profit rate or to the benchmark with which Sukuk profits are linked. Iqbal (2002) argues that the assumption of short selling might be solved by assuming complete markets. In recent developments in Islamic capital markets, Bai Salam, Bai Arboun and Ready Buy Deferred Sale products have facilitated Islamic investors and Islamic capital markets to reach equilibrium price level through liquid transaction possibilities in over-priced and under-priced stocks.

In conventional finance, the interest rate on sovereign debt serves as a proxy for risk-free rate (Askari et al. 2011). Hanif (2011) suggests that inflation rate can be included in place of the risk-free rate in Islamic security analysis. Nonetheless, Ayub (2007) cites the Fiqh Academy of the OIC which has ruled out indexation of a lent amount of money to the cost of living indicators. Furthermore, in actual practice, there are no products in either conventional finance or Islamic finance in Pakistan which guarantee inflation-protected returns.

El Ashker (1987) suggests using Zakāt rate in place of risk-free rate. As per this proposal, investors would demand at least 2.5% return to keep intact their net value of the investment after payment of Zakāt. A question arises that can the investment companies or the government offer such a particular return on investment. As per Islamic injunctions, Zakāt is due on Muslims who own assets and resources equal to at least the minimum value of Nisāb. Risk-free rate implies return on safe investments; whereas, Zakāt is a religious obligation to pay a part of wealth and produce provided that the aggregate sum of wealth in ownership exceeds the value of Nisāb. Zakāt on wealth is on the stock of Zakāt eligible resources rather than on flow.

In searching for a better alternative for risk-free rate in Islamic capital markets, the return offered by the government on its sovereign Sukuk could be a suitable choice. Financial claims to the government have the highest security in terms of default risk. For market competitiveness, the ex-post return on Sukuk and interest based Treasury securities can be closely linked; however, the underlying structure of the transaction is different in both. Treasury bills involve loaning of money on interest. On the other hand, the government pays rent on the assets which are owned by investors in the commonly used Ijarah Sukuk structure. Investors owning a proportionate share of the assets get periodic returns in the form of rents. In fact, Sukuk are safer than Treasury bills for investors since investors have recourse to the real assets underlying the Sukuk. Schoon (2011) argues that as sovereign Sukuk issuance rises across countries, the rate of return on Sukuk solves the problem of the alternative of risk-free rate in security analysis for Islamic investors.

On the other hand, Hakim et al. (2016) argue that Zero-beta CAPM does not require a security paying fixed return. Thus, Zero-beta CAPM could also be applicable for Islamic capital market. On the other hand, the multi-factor models which use internal factors of the company to explain ex-post returns are empirical models based on facts without strong assumptions. The choice of factors in multi-factor models depends on observed relationships between internal factors of the company and the ex-post realized returns on stocks. By delinking interest as fixed return on investments, Islamic risk-sharing philosophy in financial investments is more aligned with the approach of focusing on internal factors of the company for financial decision making. Factors which represent financial standing of the company in terms of capitalization, book value to market equity, profitability and investment style focus on the nature and quality of companies in which investments are contemplated. Therefore, some of the mainstream asset pricing models can be used for security analysis in Islamic equity investments from the Shari’ah perspective. However, the choice of particular asset pricing models in practical use must depend on their ability to better explain returns on Shari’ah compliant stocks.


Askari, H., Iqbal, Z., & Mirakhor, A. 2011. New Issues in Islamic Finance and Economics: Progress and Challenges (Vol. 753). John Wiley & Sons.

Ayub, M. 2007. Understanding Islamic Finance. England: Wiley.

El Ashker, A. A. 1987. The Islamic Business Enterprise. London: Taylor & Francis.

Hakim, S. A., Hamid, Z. and Meera, A. K. M. 2016. Capital Asset Pricing Model and Pricing of Islamic Financial Instruments. Journal of King Abdul Aziz University: Islamic Economics, 29(1): 21 – 39.

Hanif, M. 2011. Risk and Return under Shari’ah Framework: An Attempt to Develop Shari’ah Compliant Asset Pricing Model (SCAPM). Pakistan Journal of Commerce and Social Sciences, 5(2): 283 – 292.

Hazny, M. H., & Yusof, A. Y. 2012. Revisiting Markowitz’s Mean Variance Analysis: A Review from Shariah Perspective. International Conference on Statistics in Science, Business and Engineering (ICSSBE), Langkawi, 2012, pp. 1 – 6.

Iqbal, Z. 2002. Portfolio Choices and Asset Pricing in Islamic Framework, in ed. Ahmed, H. Theoretical Foundations of Islamic Economics, pp. 167 – 189.

Rosly, S. 2005. Critical Issues on Islamic Banking and Financial Markets. Kuala Lumpur: Dinamas Publishing.

Schoon, N. 2011. Islamic Asset Management: An Asset Class on its Own?: An Asset Class on its Own?. Edinburgh University Press.

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Early Analytical Studies on Consumption in Islamic Framework

Salman Ahmed Shaikh

Muslim economists have employed the mainstream economics tools to explicate consumption in the Islamic framework. Kahf (1980) uses indifference curves and budget lines. Ahmed (2002) uses utility framework to incorporate Islamic injunctions in the model assumptions as well as parameters. Some economists in the Islamic economics literature argue that the utility function itself should include social caring spending utility (El Ashker and Wilson 2006; El Ashker 1985; Khan 1986). The problem with that approach is that if one introduces self-less spending in the utility function as a choice variable, then it is imperative to include its price as well. Price comes from the market and which requires a supply side too. Therefore, such an approach would not lead to the general equilibrium theory or interaction with other markets. Moreover, due to the fact that Islam encourages pure altruism alone, it is better to understand altruistic behaviour in a non-utilitarian, non-commercial and non-market context. This approach can help in modelling the market and economic behaviour of Muslim households with suitable modifications in the mainstream framework. Secondly, this approach would also help in understanding the nature, dynamics and characteristic features of altruistic behaviour and choices inductively through primary data without imposing the neoclassical deductive framework to pure pro-social and altruistic choices by the Muslim households.

In another attempt to discuss consumption behaviour in the Islamic framework, Zarqa (1992) presents a diagrammatic representation of Islamic worldview using indifference curves. In the diagrammatic model, the consumption is analysed from the moral perspective. However, the model is inadequate for applied analytical analysis as it leaves out any economic determinant of consumption including wealth, income and income distribution from the analysis. The use of subjective concepts like sufficiency threshold and prodigality frontier is suitable for conceptual mapping; however, this alone does not provide a solid analytical framework for empirical analysis.

Hassan (2017) emphasizes that the consumer can decide how and how much to spend on permissible goods the amount he/she eventually decides to spend on self. The mainstream economics framework can be employed as a tool with suitable modifications to understand Muslims’ economic consumption behaviour. Khan et al. (2012) use this approach by taking altruistic and religiously motivated social spending in the budget constraint rather than bringing it in the utility function.

Hasan (2005) provides a review of early studies on consumption in Islamic economics literature. Hasan (2005) notes that some initial efforts employed basic macroeconomic models in the Keynesian tradition and they incorporated some key Islamic variables into the models, such as the works by Khan (1986) and Iqbal (1985). Khan (1986) argues that Islamic injunctions of moderation in consumption and constrained consumption choices due to moral filters would raise overall savings, especially in the long run. Iqbal (1985) concludes that the injunctions on moderation might restrain consumption. On the other hand, transfer of resources from low-MPC rich households to high-MPC poor households might increase consumption (Ghassan, 2016). Iqbal (1985) argues that the net effect would be an empirical question which will depend on several parameters. As against the prevalent opinions, Iqbal (1985) reasons that the net effect of Islamic injunctions on the marginal propensity to consume will be neutral i.e. MPC will not be significantly different from a comparable secular economy. This conclusion by Iqbal (1985) highlights the importance of further empirical studies and for taking a flexible approach in attempting to understand Muslim consumption behaviour with regards to the methodological choice in the descriptive studies.

Hasan (2005) appraising these efforts concludes that there are conceptual mistakes and overdrawn conclusions in these pioneer research efforts in theoretical models. Hasan (2005) raises a pertinent point that monetary value of consumption basket in certain cases can be higher than the value of consumption basket without any moral filters. For instance, if prohibited food and financial services are cheaper than Halāl alternatives, then the value of consumption expenditure can be higher for the Muslim consumer who prefers Halāl goods. Nonetheless, he/she would still be more satisfied since Harām goods despite having lower prices may provide no or negative utility to him considering all the physical, spiritual and psychic effects.  Hasan (2005) emphasizes that income distribution and proportion of poor people in the population would also determine the net aggregate outcomes. Two of the key limitations of these early works are that they used the Keynesian framework without building micro foundations and they did not model the behaviour in an intertemporal context.


Ahmed, H. (2002). Analytical Tools of Islamic Economics: A Modified Marginalist Approach. Theoretical Foundations of Islamic Economics: 123 – 143.

El Ashker, A. A. (1985). On the Islamic Theory of Consumer Behaviour: An Empirical Inquiry in a Non-Islamic Country. Center for Middle Eastern & Islamic Studies, University of Durham, Durham.

El Ashker, A. A, & Wilson, R. (2006). Islamic Economics: A Short History. London: Brill.

Ghassan, H. B. (2016). A Consumer and Social Welfare Model based on the Writings of Shibani (750-805 AD, 131-189 AH). PSL Quarterly Review, 69(278): 235 – 266.

Hasan, Z. (2017). Consumption and Islam: Micro Foundations and Macro Modelling. Journal of Economic and Social Thought, 4(1): 108 – 118.

Hasan, Z. (2005). Treatment of Consumption in Islamic Economics: An Appraisal. Journal of King Abdul Aziz University: Islamic Economics, 18(2): 29 – 46.

Iqbal, M. (1985). Zakah, Moderation and Aggregate Consumption in an Islamic Economy. Journal of Research in Islamic Economics, 3(1):  45 – 61.

Kahf, M. (1980). A Contribution to the Theory of Consumer Behaviour in an Islamic Society. In K. Ahmad (ed.). Studies in Islamic economics, International Centre for Research in Islamic, Economics, King Abdulaziz University, Jeddah, Saudi Arabia: 19 – 36.

Khan, M. F. (1986). Macro Consumption Function in an Islamic Framework. Choudhary, M.A. Contributions to Islamic economic theory. New York: St. Martin Press, Inc.

Khan, Z., Farooq, M. & Asmat Ullah (2012). Optimization of Consumption in Divine Context: Basic Principles and Extension. Al-Idah, 2(2): 33 – 49.

Zarqa, M.A. (1992). A Partial Relationship in a Muslim’s Utility Function. In Tahir, S., & Ghazali, A. (ed.). Readings in Microeconomics: An Islamic Perspective, Kuala Lumpur: Longman Malaysia.

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Methodological Framework for Studying Consumption in Islamic Economics

Salman Ahmed Shaikh

There is considerable debate in Islamic economics literature on what shall be the correct response and attitude towards mainstream economics methodology. There are three varied responses among Islamic economists regarding the issue. The first response is to use the methodology of mainstream economics in Islamic economics as is. The second response is to modify it according to the needs and the context of Islamic framework. The third response is to discard it altogether and devise a new methodological framework from scratch. Haneef and Furqani (2011) raise a pertinent point that the choice of methodology shall depend on whether the purpose of the analysis is to understand, explain and predict or to persuade and transform the individuals.

Hasan (2016) emphasizes that Islamic economics is a social science; it is not theology. Addas (2008) argues that Muslim economists who favour discarding neoclassical economics methodology altogether had by and large misunderstood the purpose of economic theorizing. According to Addas (2008), the purpose of economic theorizing is to provide a framework as a foundation for understanding demand and supply behaviour in markets. Thus, the mainstream consumer theory does not attempt to define the purpose of life in its objective function, but a framework to explain response in choice variables due to changes in some relatively more important and measurable parameters. Thus, it will be inappropriate to compare the economic objective defined for the purpose of description of specific choices and outcomes in markets with the lifetime objective advocated by the Islamic worldview. Shamim A. Siddiqui (2012) explains it further by arguing that demand and supply framework has remained a useful tool in guiding different sectors of the economy and economists. According to Shamim A. Siddiqui (2012), there is no alternative apparatus that provides a better explanation of exchange values in market economies. Ahmed (2002b) argues that no substantiated alternative analytical models have been developed despite the assertion of some Muslim economists that there should be one.

The difference of opinion is also partly caused by the varied understanding on self-interest and selfishness, i.e. whether all self-interested behaviour is similar to selfish behaviour or not. Hasan (2002) thinks that the pursuit of self-interest should not be equated with selfishness. According to Hasan (2002), self-interest can be pursued along with sympathy and benevolence. Hasan (2009) contends that self-interest can be pursued within the ambit of morality, whereas selfishness would always violate it. Nejatullah Siddiqi (2012) also shares this line of thought and maintains that self-interest does not necessarily imply greediness or selfishness.

Hasan (1985) contends that a rational consumer allocates income among various uses in such a way that his satisfaction is maximized. These uses may serve materialistic or ethical desires. In another work, Hasan (2002) contends that maximization, per se, is not un-Islamic; what is maximized, how and for what purpose are the real issues to investigate. He prefers to include moral values and social considerations of Islam in the assumptions of economic theorems, rather than in the objective elements of the model. Hasan (2002) thinks that maximization as a notion is value neutral and the indiscrete condemnation of maximizing behaviour in Islamic economics is untenable. Mahdi (1984) clarifies that according to modern theory, it does not matter whether a consumer is a miser, spendthrift or a hoarder. Also, it does not matter what cultural values or religious preference he/she has. For example, according to modern theory, a Muslim consumer whose marginal utility for Hajj is far greater than his marginal utility for a new car is perfectly rational by deciding to spend his money on Hajj rather than on a new car even though all his satisfaction is spiritual. One of the pioneer Islamic economists, Kahf (1996, p. 34), writing on this theme gives following suggestion:

“There are small matters which are common to all members of the human race regardless of their faith and views. These common matters must be treated as value-neutral. Consequently, many of the minute instruments and premises of analysis fall in the latter category and should be considered value neutral for all practical analyses.”

Nejatullah Siddiqi (2012) thinks that rejection of old knowledge has no basis in Al-Quran and Sunnah. Khan (1987) also argues that Islamic economics cannot discard the valuable insights of modern economics by a simple stroke of disgust. Khan (1987) maintains that some of the findings of Western economics are based on the study of human nature, which may be the same everywhere and for all times. Nejatullah Siddiqi (2001) reveals that the Islamic tradition in economics has always been free of formalism, focusing on meaning and purpose with a flexible methodology. In this regard, Rashid (1991) recommends that an empirical approach will broaden the scope of Islamic economics and increase its interaction with others. Tag el-Din (2012) also favours flexibility and thinks that contextual interplay of positive and normative statements is indispensable for the understanding and promotion of Islamic economics. Farooq (2011) thinks that there is a role for both normative standards toward which Islam calls mankind and the understanding of human behaviour as human nature from a positivist angle. Sharing the same line of thought, Hasan (2017) thinks that it is not enough to just take a puritan approach, assuming as if an Islamic socio-economic order is already in place.

Zaman (2005) argues that consumer sovereignty represents the resolve not to judge or to attempt to change these preferences. If the mainstream economics framework disregards ethical and moral choices or preferences, then it will be going against the very concept of consumer sovereignty. From the Islamic perspective, the consumer is not sovereign and has to follow the Islamic injunctions of avoiding prohibited goods, services, trades, contracts and behaviours like conspicuous consumption, envy and wastage. Islam encourages pure altruism, moderation, self-less spending of surplus endowments and choosing only the Halāl means of earning non-labor income from Shari’ah compliant financial investments. For the test nature of this worldly life in the Islamic worldview, humans do have a temporal choice given by Allah to behave in compliance with Islamic injunctions to a full, large, small or no extent. In this regard, when a study is conducted towards understanding the actual human behaviour in consumption, the anticipation for obtaining descriptive results should also be flexible. Khan (1985) argues that it is unrealistic to think that a community of saints can be attained. If such were the case, it would be possible for example to say that hoarding and luxury consumption cannot be problems since they have been forbidden by Islam. Saud (1992) emphasizes that even when all the Islamic laws are applied in every domain of life, the individual will still commit mistakes. The impulse towards less ideal behaviour which influences choice should not be belittled or denied.

Nejatullah Siddiqi (2014) writes in his critical evaluation of Islamic economics literature thus far that there was a clear tendency to overestimate the power of good intentions and to ignore the tenacity of material interests. Nejatullah Siddiqi (2014) concludes that the end result has been unrealistic utopias. Khan (1987) thinks that the idealism of Muslim economists has also done some harm to the scope of Islamic economics. Khan (1987) laments that since the analysis is perceived in ideal Islamic conditions, most of the real world problems are simply assumed away. Shafey (1983) thinks that Islamic economics in its primary concern with ‘what ought to be’ cannot ignore ‘what is’ the actual reality in a given time and place. One of the pioneer Islamic economists and IDB Laureate, Nejatullah Siddiqi (2008) is frustrated with self-imposed alienation in academic research on Islamic economics. Nejatullah Siddiqi (2008, p. 89) writes:

“Our fixation with a particular history not only alienates us from current reality, it also isolates us from the rest of humanity. It reinforces Muslims’ sense of being different from others to undue proportions, making frank, sincere outreaching and interaction almost impossible. The normal process of learning from others’ experiences and contributions is replaced by, at the least, indifference and apathy, and often by suspicion and hostility. No wonder we get the same in response.”

Khan (2013) is another staunch critic of mainstream economics and favours discarding mainstream methodology to replace it with a biological approach of harmonious interrelationships of different parts of the whole. His approach is another way to explain the ideation rather than the real world behaviour where one cannot ignore the encounter with frictions, disequilibrium, traps and transition paths. Khan (2013) argues that the mainstream economics tools are valid for analysing animalistic desires and degrade humans to lower order animals. Yousri (2013) in his response to Khan (2013) asks why or how satisfaction (or even maximization of human beings supposedly in a Halāl manner (within Shari’ah boundaries) would downgrade humans to lower order animals?

Other Muslim economists like Khan (1987) suggest that Islamic economics should not set aside the western economic thought which accumulated over centuries. Instead, with a modesty of a learner, one should cast a critical look on this pool of knowledge and should try to identify and isolate those components of thought which do not conflict either with the hard core of Islamic economics or with the rational and empirical criteria. He thinks that it would be the arrogance of the first order if Muslim economists and scholars dismiss the entire economic thought as un-Islamic.

One of the early writers in the Islamic economics literature, Kahf (2003) thinks that Islamic economists may have to redefine a few fundamental concepts of economic theory, but they do not need to negate its inductive methodology and tools of analysis on any ideological ground. Kahf (1980) sees a strong need for empirical studies which analyse the actual data to further contribute to research on economic potential and inter-linkages of Islamic institutions. Kahf (1992) argues that critical literature in Islamic economics on mainstream consumption behaviour is directed at the consumer values rather than at the tools of analysis. He reasons that tools can be used with alternate ideological basis.

Zarqa (2003) also explains that Islamic economics has a function distinguishable from that of Fiqh. It has a function to describe and diagnose real events, discover the relationships that link the various economic phenomena and to seek the economic rationale of Shari’ah rules. Zarqa (2003) does not hesitate to hold in error those who define Islamic economics in such a manner as to strip it from its descriptive content and make it synonymous to the jurisprudence of transactions. Saleem (2010) explains that the methodologies of Fiqh and Islamic economics also differ as the former focuses on prescriptions. It prescribes what an individual should do or avoid. In contrast, Islamic economics is more concerned with describing economic phenomena. Islamic economics in its search for finding the truth should rely on a methodology that suits its social and descriptive nature. Islamic economics can adopt methods of reasoning and analysis developed by conventional economics. Khan (2014) in his recent work suggests that Islamic economics should not feel shy of adopting and using tools of analysis used by conventional economics or other contemporary social sciences. These tools are available in the present form after centuries of thinking and experimentation and are a common heritage of the humanity.

Various Muslim economists recommend descriptive studies in the transitory stage of transformation rather than sitting content with only repeating the idealistic vision of Islamic teachings. Furqani (2015) argues that both microeconomics and macroeconomics become neglected and not properly explored as more resources, thinking and funding, have been mainly put in the sector of Islamic banking and finance.

Arif (1985) suggests that the human behaviour should be duly recognized as the basis of the micro foundations of Islamic economic system. Nejatullah Siddiqi (2008) thinks it will do no harm to know the current state of affairs thoroughly. That needs to be done with regards to individual behaviour in all aspects relevant to economics. Addas (2008) also sees no reason why Islamic economics should concentrate on normative goals to the exclusion of how the economy is in fact working. Addas (2008) contends that the failure to understand this has often led Islamic economists into rhetoric and a self-righteous mode. Azid (2010) thinks that Islamic economics system is not centrally planned and hence, it is very strongly affected by the behaviour of its individual economic units. Hassan (2017) argues that micro analyses of consumption provide the necessary foundation for dealing with the phenomenon at the macro level. Nejatullah Siddiqi (2014) holds it valuable if Islamic economists could explore the extent to which Muslims in various regions of the world are able to realize the Islamic economic goals. He thinks that even the instances of poor performance would have lessons to learn from. Jafari et al. (2011) agree that due attention shall be given to Muslims’ daily life practices in academic research. Finally, Hasan (2002) too wishes that an exploration of the life-cycle hypothesis or permanent income hypothesis for consumer behaviour from an Islamic viewpoint may prove to be rewarding. Hasan (2017) emphasizes that understanding consumption is of greater importance since production theory is more related to the use of technology and organization of factors of production.

What can be concluded from the above discussion? As argued by Haneef and Furqani (2011), the objective of the analysis is vital to know and determine beforehand. Table below discusses whether both the frameworks have any compatibility if the objective of the analysis is to understand the consumption behaviour.

Points of Compatibility in Intertemporal Consumption Framework

Mainstream Economic Framework

Islamic Framework

Desirability for consumption smoothing. Encouragement for Wasatiyyah (moderation), which in one sense is also consistent with smooth intertemporal consumption.
People plan and save for contingencies, post-retirement life and to leave bequests. Neutral towards the end-objective of saving. Can plan, save and leave bequests. Can also save for some religious acts like Hajj, Umrah, animal sacrifice and liquid savings to pay Zakāt by avoiding asset drawdown.
Desirability for variety and balanced consumption bundle. The desire for aesthetic tastes, variety and spending on comforts recognized.
Substitution effect of increased returns on financial investments increases savings. The instinct of substitution effect recognized. The total effect may still be altered by income effect.
Usually, a positive discount factor. The instinct of desiring immediacy recognized in intertemporal choice and exchange.
Preservation of wealth through profitable investments. Preservation of wealth recognized after payment of Zakah and by using Shari’ah compliant investment options.
Consumption on needs and beyond needs. Besides essential needs, consumption of Halāl comforts and convenience goods is recognized.


Distinctions Required for Integrative Framework

The discussion so far suggests that the mainstream economics framework can incorporate some of the distinctive characteristics of Islamic framework if the objective is to be able to understand and describe economic choices and outcomes. The concept of ordinal utility is a device to rank choices. The binary moral filter can help in deriving a restricted consumer choice set in which the ordinal preferences can be formed based on individual preferences. However, it shall be recognized that expenditure can be on self-consumption as well as on consumption of others including one’s dependents, family, neighbours, social circle and society in general. If the individual recognizes the ethical externalities, then it will reflect in preferences and captured in their choices. Chapra (1996) argues that if belief in God and the Hereafter can motivate consumers and producers to internalize moral values and moderate their pursuit of self-interest and thus facilitate the realization of the maqasid, then economists should take this factor into account. Mannan (1983) also argues that when moral preferences are revealed in choices, the descriptive theory and empirical studies shall accommodate such preferences and choices.

Table below looks at the difference in some of the values between Muslims and non-Muslims by taking data from World Values Survey 2014. Again, it could be conservatively said that value differences between Muslims and non-Muslims are somewhat significant with regards to some religious values, but not with regards to some other socio-economic values.

Therefore, in studying the behaviour of Muslim consumers, it is important to accommodate ethically charged behaviour whereby certain consumption goods are disregarded from the choice set and the budget is allocated on private goods for self-consumption as well as on spending for others. At the same time, it is important not to over-impose idealistic values and vision in a study of the actual economic behaviour of Muslim consumers.

 Socio-economic Values in Muslims and non-Muslims



Important in Life: Family 94.09% Muslims regard it ‘very important’ as compared to 89.94% non-Muslims.
Important in Life: Religion 70.61% Muslims regard it ‘very important’ as compared to 43.29% non-Muslims.
Thinking about Meaning and Purpose of Life 46.34% Muslims stated ‘often’ as compared to 39.05% non-Muslims.
Happiness and Income 39.24% high-income scale individuals stated ‘very happy’ as compared to 28.25% individuals otherwise.
Happiness and Religion 31.07% Muslims stated ‘very happy’ as compared to 32.69% non-Muslims.
Satisfaction and Income 85.59% high-income scale individuals stated ‘highly satisfied’ as compared to 65.22% otherwise.
Satisfaction and Religion 67.21% Muslims stated ‘highly satisfied’ as compared to 74.29% non-Muslims.
Important Child Qualities: Unselfishness 30.30% Muslims mentioned it as compared to 31.77% non-Muslims.
Important Child Qualities: Thrift Saving Money/Things 35.12% Muslims mentioned it as compared to 40.06% non-Muslims.
Membership: Humanitarian/ Charitable Organization 3.98% Muslims stated they are ‘active members’ as compared to 6.83% non-Muslims.
Membership: Self-Help/Mutual Aid 3.30% Muslims stated they are ‘active members’ as compared to 5.68% non-Muslims.
Richness and Money 12.87% Muslims stated ‘very much’ likeness to a person who strives for it than 7.73% non-Muslims.
Wealth Accumulation: Zero Sum Game 43.60% Muslims ‘agreed’ as compared to 40.30% non-Muslims.
Feeling Important to Do Good for Society 27.26% Muslims stated ‘very much’ likeness to a person who strives for it than 21.78% non-Muslims.
Feeling Important to Help Neighbours 16.39% Muslims stated ‘very much’ likeness to a person who strives for it than 15.35% non-Muslims.

Source: Calculations Based on World Values Survey Sixth Wave 2010-14


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