Tuesday, June 16, 2009

Can Islam Save The Economy? – Part 1

By Nathan Schneider
http://www.religiondispatches.org

In the midst of a global financial crisis one sector has yet to suffer the fate of the rest. Islamic finance, or Sharia-compliant banking, offers strict moral guidelines for dealing with money. Trading debt and risky speculation are off-limits, as is investment in immoral enterprises like gambling, prostitution, and war profiteering. It might be time to get the muftis on the phone.

Governments worldwide are struggling to manage the global financial crisis, with no end to the downturn in sight. But at least so far, one sector has been unscathed: the $1 trillion-and-growing business of Sharia-compliant banking.

That’s right, Sharia. The same combination of medieval Islamic law and modern post-colonialism that makes the terrorist clique supposedly so hateful of Western freedoms. Where finance is concerned, most muftis—Islamic religious scholars—agree that God prohibits charging any amount of interest on loans. Trading debt and risky speculation are off-limits too, as is investment in immoral enterprises like gambling, prostitution, and war profiteering. Transactions should be highly transparent and risk, as well as return, should be shared by all parties. You can’t trap people into owing more than they can pay. Basically, most everything that caused the current mess isn’t allowed. “Given their constraints, they actually don’t hold any conventional debt or conventional mortgages,” explains Samuel Hayes, emeritus professor of investment banking at Harvard. “They don’t have any of these derivatives or outright subprime loans. There’s no doubt that they have weathered this better than the conventional banks.”
For a world in need of fast, creative solutions to a cascading crisis, might this financial subculture offer a way out? Duke University economist Timur Kuran calls for caution. “I think it’s going to be a year or two before we have enough data to really know if it is the case that the banks are doing better and what explains it.” One way or another, says Bill Maurer, an anthropologist at UC Irvine who studies alternative economies, “this is a really interesting moment for Islamic banking.”
Sharia-compliant banks began appearing in the 1970s, but the concept dates to mid-century in South Asia and the Middle East, as Muslims newly independent from European rule sought to create an Islamic identity that would permeate all aspects of life, public and private. The first banks were small partnerships and development initiatives. In 1975, the Islamic Development Bank was founded by 23 Muslim countries (now 56), combining a World Bank-style mission with interest-free loans to member governments. It lent legitimacy and visibility to the approach. That decade’s oil boom gave a jump start to a new crop of commercial Islamic banks, particularly in the Persian Gulf states. By the ’80s, Pakistan, Sudan, and Iran were making efforts to Islamize their entire economies.
In the last decade, the industry has expanded dramatically. Dow Jones now offers an Islamic index for tracking halal businesses. Networks are growing among the religious scholars who sit on the banks’ regulatory boards. The Sharia-compliant line of financial instruments continues to grow, each known by its Arabic name: takaful insurance and sukuk bonds are already feeding the construction boom in the Gulf states. Islamic banks are opening across the Muslim diaspora, in places like London and Pasadena, California. Even big conventional banks are feeling the Islamic fever. Citicorp, Deutsche Bank, and HSBC have all opened Sharia-compliant subsidiaries. Recently, the British government has announced plans to issue sukuks of its own.
Meanwhile, governments that fear the power of Islamist movements, such as Egypt and Tunisia, have been reluctant to put their support behind the industry. There are some loose connections to radicalism. Sayyid Qutb, a hero of Osama bin Laden’s, was an early advocate. In Iraq, Muhammad Baqir al-Sadr, the father-in-law of Muqtada, made important theoretical contributions on the Shia side of the movement. The fledgling Islamic banks in the United States have come under increasing official scrutiny since 9/11. But aside from the cadre of vigilantes whose sense of purpose depends on seeing a never-ending “Islamofacist” threat, observers agree that there’s no credible link between these banks and Al Qaeda-type bad guys. Read the founding theorists of Islamic economics, in fact, and you’ll find a decidedly pacifist tone.

A Golden Age, in Theory

From the view of Islamic law, writes Umar Chapra, a leading economist in Saudi Arabia, “while economic growth is essential, it is not sufficient for attaining real human well-being.” Rather, we depend on “spiritual health at the core of human consciousness, and justice and fair play at all levels of human interaction.” Much more than a business model for specialty banks, he and many others believe that Islamic economics offers a much wider vision. The conventional view of the homo economicus—super-rational, selfish utility maximizer—dehumanizes people, denying the divine stamp on our nature. A truly Islamic economic theory, they believe, should restructure consumer preferences, ensuring that basic necessities are plentiful and luxuries come only after everyone is provided for. People should feel motivated to work by knowing that they share equitably in the produce of their labors. Sharia guidelines for inheritance distribute wealth among families in ways that prevents too much accumulation. More than an economics in the usual “dismal science” sense, this is a comprehensive rulebook for playing well with others. It also claims its authority from God.
The theory has something in mind for governments as well. They are responsible for administering the zakat tax, one of the Five Pillars of Islam. Though often translated as “almsgiving,” it literally means “that which purifies.” Though believers are encouraged to give over and above, the classical jurists developed a system of minimum annual requirements for a person’s accumulated wealth. The rate of zakat varies depending on the resources one owns; it can range between 2.5% and 20%. These funds should be directed primarily toward redistributive purposes, to soften the market’s burden on the poor. However, they can also be used to fund religious causes, a fact which medieval regimes sometimes used to usurp zakat funds for expansionary warfare. But modern Islamic economists, by and large, discourage military spending wherever possible.
The distribution of charitable giving is one of the many high hopes Islamic economists have for government. There is, in the literature, expectation for a kind of elixir effect. “The question of dishonest practices in the case of zakat is quite unexpected,” writes the Pakistani economist M.A. Mannan, “because of zakat’s religio-economic character.” This, at least, is an impression they share with the Taliban and the ayatollahs: if you make the society religious in name and appearance, it automatically becomes religious in character. With corruption so widespread across the Muslim-majority world, it isn’t hard to see the appeal of such a pious panacea.
Islam, the theorists believe, offers a distinct alternative to the other big-picture political economic options, capitalism and communism. By incorporating both markets and redistribution, they see it as the best of both worlds. After the two mega-ideologies spent the Cold War fighting over the allegiances of Muslim countries, the Soviet Union collapsed and now global capitalism is grinding to a halt as well. Islamists suspect that the reason Muslim countries remain impoverished is a fundamental incompatibility between these Western economic systems and the values that Muslim cultures hold dear. Now, perhaps, is the time for a third option to have its chance.
At the very least, suggests Boston University anthropologist Robert Hefner in a recent essay, these theories “provide a fascinating point of entry into the thoughts of Muslim leaders on global capitalism.”

Can Islam Save The Economy? – Part 2

By Nathan Schneider
http://www.religiondispatches.org

In the midst of a global financial crisis one sector has yet to suffer the fate of the rest. Islamic finance, or Sharia-compliant banking, offers strict moral guidelines for dealing with money. Trading debt and risky speculation are off-limits, as is investment in immoral enterprises like gambling, prostitution, and war profiteering. It might be time to get the muftis on the phone.

Are the Fundamentals Sound?

The most tangible outgrowths of Islamic economic thought, the banks, tend to be rather quiet about the visionaries’ grand ambitions. Their spokespeople sound like bankers anywhere: optimistic, practical, and fond of jargon (in this case, specialized Arabic terms mixed in with the English vocabulary of international finance). By peppering business deals with the language of the Qur’an, the transaction seems to take on the endorsement of a higher power. Preachers play the role of advertisers by exhorting their congregations to purify their savings from interest. “Is ‘Islam’ merely a sort of brand name attached to products for marketing to a Muslim niche?” asks Bill Maurer in his book, Mutual Life, Limited.
If it is, the brand has its consequences. “In their investing options and the lack of diversification that they have to live with,” Samuel Hayes says, Islamic investors “pay a price, no doubt about it.” On a large scale, risk-sharing arrangements mean slower growth and, potentially, less short-run security for individual depositors. In one Muslim country, Jordan, the central bank has been reluctant to approve many new Islamic institutions for fear that they might add an unstable element to the burgeoning financial industry. The banks that already do exist there have poor reputations. Because of cases like this, most observers doubt that Islamic finance will broaden its appeal beyond the pious. But according to Mohammad Ismaeel, the Director of Global Marketing for HSBC’s Islamic arm, this may be changing. He claims that more than half of his bank’s customers in the Asian market are non-Muslim Chinese. “They haven’t come to us for Islamic reasons,” he insists, “but because it is a sound financial product. They’ve taken it on for those reasons and those reasons only.”
In the process of becoming competitive, though, Islamic banks may have lost some of the values they claim to be founded on. The theorists’ original hopes for fostering more ethical consumer preferences hasn’t taken hold in the banking culture. Bill Maurer, who has studied Islamic banks in South Asia and the United States, says these institutions aren’t much different from other banks, despite some conspicuous signs of piety like prayer rooms and conservative clothing. Working at one doesn’t mean joining a monastery. “A lot of the time,” adds Maurer, “it’s the same kind of drudgery and tedium that any old bank employee is dealing with.”
Among those in the West who have been following the progress of Islamic finance, Turkish-born Timur Kuran is the most skeptical. “Endeavoring to implement Islamic economics,” he writes in his book Islam and Mammon, both bankers and governments inevitably “recognize its unrealism.” While the earliest experiments depended on genuine partnerships and risk-sharing, the bulk of today’s Islamic transactions use instruments that differ only in name from what a conventional bank offers. In one of the most popular and long-practiced of these, murabaha, the bank buys an item for the client, who then in turn buys it from the bank, along with a premium that cleaves suspiciously close to the conventional interest rate. Religious scholars agree that the transaction is acceptable, even if the bank owns the item for just a millisecond. Pure in God’s eyes, perhaps, but there is nearly no difference in economic terms. Kuran and others have also pointed out that during the medieval period, when the Sharia guidelines for commerce were developed, nothing resembling a modern bank existed. There was no legal provision for such an institution to outlive individual owners, as nowadays a bank of any scale must.
In light of the Islamic sector’s competitive disadvantage, and even questionable adherence to its own ideals, Kuran advocates making its target audience more aware of the risks. Potential customers should know, he believes, that “its political importance and symbolic importance is more important than its economic essence.” But symbols and politics are never far from the machinations of economy. One need look no farther than the vagaries of investor confidence or the political imperatives that shaped the bailout plan this past fall.

From Constraints to Creativity

Kuran nevertheless suspects that there is something to learn from the experience of Islamic finance and that the current crisis would be a good time to start. “It may be possible through Islamic banking, or something similar to it,” he says, “to reach out to the subprime borrowing population in a safer way, in a way that makes the risks more transparent and allows better risk diversification.” With or without the utopian theories, the constraints imposed by interpretations of a bygone religious law have given rise to a laboratory for different ways of doing business. Because of its religiously-obligated client base, Islamic banking remains insulated, in part, from the conformity that competition enforces on the rest of the financial industry.
Maurer agrees, but he doubts that anybody from the Federal Reserve will be calling up the muftis. “What I think will happen,” he says, “is that people in the conventional finance world are going to arrive at things that may look more like Islamic banking as it has already been practiced.” Advocates of Islamic finance will probably celebrate the change as triumph for their convictions, even if the resemblance is coincidental. “Depending on where you stand, they’re right, or not.”
Maybe it is time to get the muftis on the phone after all. In the United States, at least, religious leaders and politicians have deferred some of society’s most pressing ethical concerns to the wisdom of the market. Calls that the “end of history” lies with neoliberal capitalism are being heard as far as the People’s Republic of China. Not without reason, the 20th century’s question of why free markets has been replaced, especially in the developing world, with how to get there. But last year’s collapse is one more reminder that the market won’t be our brother’s or our sister’s keeper for us. The shock waves of harm spread through global markets in ways that “love thy neighbor” doesn’t seem to equip us for. Now is a good time to tinker with alternatives, and keeping an eye on models that already exist at the fringes of the global economy are a good way to begin. Peculiar conditions give rise to possibilities that couldn’t develop on their own in the mainstream. Looking more closely at what Islamic economic thought has to offer, too, opens the door to more of the elusive “dialogue among civilizations” that leaders talk about but rarely do.
“Certainly asking questions about the ethical boundaries of finance is in order,” says Ibrahim Warde, a professor of political science at Tufts University. There are any number of ways to think about economy in terms of right and wrong, but the Islamic case is different in an important sense. “Unlike other pockets of ethical finance,” he points out, “it does exist in institutions,” which are competitive enough to survive and available for study.
Warde makes sure to add, “We should not go overboard, though.”

Monday, June 15, 2009

Teaching Islamic Economics - Part 1

The first leading university in the area of teaching Islamic economics as an academic subject is Al-Azhar University. This teaching is administered in two faculties : The Faculty of Commerce (Within the curriculum of the fourth level of the Bachelor’s program), and the faculty of Sharia (within the curriculum of the Legal Politics degree in the graduate program).

This subject matter has been introduced only recently by virtue of law no.102 issued in 1961 on the restructuring of Al Azhar and its constituent institutions. This development occurred quite late, in spite of the long-established existence of Islamic economics which is as old as Islam itself and whose emergence took place fourteen centuries ago. It also occurred quite late in spite of the opinion expressed by Moslem and non-Moslem theologians, and pertaining to the fact that Islamic economics, on the one hand, is unique and enjoys a separate identity and on the other hand, that the foundations and principles that underlie it meet the needs of modern times and guarantee man’s happiness on earth and in the Hereafter. Furthermore, the introduction of Islamic economics into school curricula was started quite late in spite of the enthusiasm shown by the Moslem peoples and their leaders towards the application of the precepts that contain the principles of Islamic economics.
It seems that the issue involves a missing link. We shall try to clarify this in the following three sections :
1. The novelty of Islamic economics as a subject matter.
2. Neglecting the teaching of Islamic economics as a school subject.
3. Neglecting the application of Islamic economics.

3.1. The Novelty of Islamic Economics

3.1.1.Islamic Economics is as Old as Islam Itself


As it has been indicated earlier, Islam is not simply a religious faith; it is also a political, social and economic system for the Islamic society. That is what is intended by the phrases that describe Islam as “a religion and a code of life”, and as ‘a faith and Sharia”.
Islam was not revealed to man for spiritual guidance, as was Christianity which advocates the principle of "Give to Caesar what belongs to Caesar and to God what belongs to God”. Instead, Islam came in order to organize man’s life in all its aspects, whether they are political, social or economic. The Messenger Mohammad, may Allah’s prayer and peace be upon Him, was not only a Prophet but also an executive judge.

Thus, Islamic economics is as old as Islam itself.

3.1.2.The Novelty of Islamic Economics as a Subject Matter

Although Islamic economics dates back to, the emergence of Islam fourteen centuries ago, its introduction into teaching curricula as a separate subject is a flew development. Besides, the research and the areas of study pertaining to this subject are still limited.
Our objective is not to explore the reasons for this failure or that contradiction. Suffice it to point out that Islam has brought new principles and unique foundations in the area of economics. The study of Islamic economics knew its heyday in the early Islamic era, to the extent that several old books are full of original ideas that compare favorably with the modern concepts and theories of economics. More than that, the first world scientifically-oriented books of economics did not appear until the Seventh century (Gregorian), in the light of Islam and through the creativity of Arab writers (See Salah, 1932, Nachaat, 1944 and Mourad, 1952). Subsequently, the study of Islamic economics declined following the cessation of the Ijtihad in the fourth century (Islamic calendar). Since that time, there has been almost no research on Islamic law and, consequently, the studies on Islamic economics have ceased to face the changing needs of society.
This state of affairs has caused the study of Islamic economics to lag behind to such an extent that the content of this subject matter has. been forgotten even by the Moslems themselves and faded out of the minds of their own theologists. Several intellectuals still do not imagine the existence of an Islamic economic system which can meet the needs of modern society and compare favorably with the two dominant economic systems of capitalism and socialism.

3.1.3.Type of Effort Required in the Subject Matter of Islamic Economics

There may now be strong calls for going back to Islam, with the view of applying its economic principles and involving it in the solution of the world problems. However, before doing so, we need to clearly show these economic foundations and the manner in which they can be applied for the benefit of each society and in accordance with the conditions of time and space.
The true enthusiasm and the sincere calls in favor of Islamic economics will be wasted if no efforts are made to highlight the political social and economic precepts of Islam in the Language of modern times, and if no explanations are given as to how these precepts can be applied in such a way as to further the changing interests of society. If such conditions are met, instead of seeking the adoption of the Islamic precepts through mere talk and dogmatism, these godly precepts will impose themselves not only to the Islamic countries but to the whole world, for it is in all times and places the road to salvation. peace and happiness for all humanity.
From the above we can realize the necessity of economics as a scientific and separate subject which lends itself to wide ranging research studies on the economic problems of our times and which finds the Islamic solutions for them.

3.2.Neglecting the Teaching of Islamic Economics

3.2.1.World’s Aspiration Towards Islamic Economics

As it has been indicated earlier, Islamic economics is an independent system which enjoys a separate identity. It is a self-contained system with its own economic policy which encompasses all the different interests - (whether private or public material or spiritual)-, takes into consideration the variations in time and space and, in the final analysis, achieves all the advantageous results and avoids all the inconveniences.
Several foreign and international voices cry out in order to stress the fact that Islamic economics is the hope for the salvation of humanity from the extremist positions adopted by each of the two dominant economic systems capitalism and socialism.

3.2.2.Islamic Universities’ Neglect of Teaching Islamic Economics

In spite of all that, the majority of the universities in the Islamic world itself provide courses on the capitalist and socialist economic systems but not on the Islamic one.
In Egypt, we have created specialized faculties of economics, such as the Faculty of Economics and Political Science, without any mention of the study of Islamic economics. Worse than that, we have set up specialized institutes for Arabic and Islamic studies such as the Institute for Advanced Arab Studies. in which we do not provide any teaching on Islamic economics as a separate subject and yet it is the area of Arabic and Islamic studies that is most worthy of our attention and care.
As was indicated earlier, Al-Azhar University, especially its Commerce and Sharia faculties, is the first leading university in the teaching of Islamic economics as an independent and scientific subject following a law related to the restructuring of Al-Azhar and issued under number 102 in the year 1961. Then there was King Abdulaziz University (Faculty of Economics) in Jeddah Which became the second leading university in the teaching of Islamic economics by virtue of its statutes issued in 1374H/1964 Later. the Seventh Conference of Moslem Ulema held in Cairo in September 1972. issued a resolution on the necessity to teach Islamic economics in the different institutes and universities of the Islamic world. Unfortunately this resolution has not found its way to application until after the First World Conference on Islamic economics which was held in Holy Mecca in February 1976.
Today, Islamic economics has almost become one of the prescribed subjects in several institutes and universities of the Islamic World. especially in the Kingdom of Saudi Arabia, although it has been harmed by some faculties by including it within the subject of Islamic culture.
Some Islamic universities and their specialized institutions may excuse themselves for not teaching Islamic economics as an independent subject by arguing that it is a new study area whose components have not been clearly delineated and about which there are limited basic references. However, is this not one more reason why Islamic universities and institutions should have set up departments and professorship chairs that are specialized in this subject matter ? Such an action will attract interested students and will consequently generate the relevant research, activate the study of the subject and foster its existence, thus imposing it on human thought. It will also play an effective role in the service of Islam and in the guidance of Moslems’ life.

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Teaching Islamic Economics - Part 2

3.2.3.The Mission to be Accomplished by the Leaders of Islamic Economics

When departments and chairs are created for Islamic economics, occupants will have numerous difficult responsibilities, especially the following :
1. Preparing studies on Koran and Sunna texts that relate to Islamic economics, showing how these texts can be implemented in ways that are consistent with the conditions of time and space, and suggesting Islamic solutions for the different economic problems of the time.
2. Conducting comparative studies between the Islamic and other economic systems showing the extent to which the differences in their respective applications are a result of differences in the systems themselves, and providing an evaluation of each system.
3. Consulting the volumes written by the experts on Islamic Sharia, extracting their detailed opinions on questions of economics and expressing them in terms used in the current economic literature along with the presentation of relevant commentaries.
4. Keeping abreast of the developments in the economic thought among the Islamic thinkers through out the different Islamic eras and countries, identifying the differences among them, and determining the bases of each opinion and presenting an evaluation of it.
5. Supervising the setting up of a scientific library which contains the volumes research studies, dissertations and specialized journals that deal with economics in Islam.
6. Encouraging the writing of master’s and doctoral dissertations in Islamic economics and providing for the training of young researchers who combine the two cultures the first being one of Islam and Fiqh (Islamic jurisprudence) and the second being one of technical economics.
7. Studying the economic situations in the Islamic world investigating the underdevelopment that it suffers from, and drawing plans for the setting up of Islamic economic structures which will ensure cooperation among Islamic countries and their complementarily, and will benefit humanity.
We are not being unrealistic in our recommendations. We look forward to the setting up within the Islamic world of centers or institutes that are specialized in Islamic economics.
[Note: The First World Conference on Islamic Economics which was convened by the Kingdom of Saudi Arabia and organized by Kint Abdelaziz University in Holy Mecca in Safar 139 February 1976 led to he creation of the World Center for Research on Islamic Economics (as a part of King Abdelaziz University). Similarly. the First World Conference on Fiqh which was convened by the Kingdom of Saudi Arabia and organized by Imam Mohamed Ibn Saoud University in Ryad in Do Lqiada. 1396/November 1976 led to the creation of a department of Islamic Economics in the Sharia faculties. The department is intended for the study of Islamic economics in four complete years and started operating in the academic year 1399-1400 AH. Later this department became a separate Faculty of Islamic Economics. In addition to the above. the Commerce Faculty of the AI-Azhar University took the initiative of setting up the "Sheikh Abdellah Kamil Center for Research and Studies on Islamic Commerce” which delivers, in the name of AI-Azhar University master’s and doctoral degrees in Islamic economics.]
Economy is the vital context which reveals the material and spiritual strength of Islam and through which the Islamic Ummah can achieve its cohesion, strength and universal mission.

3.3. Neglecting the Application of Islamic Economics

3.3.1.Gap between Belief and Reality

Nobody doubts the Moslems’ faith in Islam and nobody questions their belief in the soundness of the principles that constitute the basis of this religion, especially in the context of the organization of society in its political. social and economic activities.
Several voices cry out at different official and non-official levels some die out in insistence while others burst out in anger calling for the application of the foundations and the principles of Islamic economics. Sometimes, these voices find attentive ears and a strong echo among the people in charge as well as a sincere response and a confirmed interest on the part of the peoples and their leaders. However, the response stops there.

3.3.2. The Reasons for not Applying the Principles of Islamic Economics

Although the Moslem peoples and their leaders adhere to Islam and experience the application of the Sharia, they, nonetheless, seek the solutions to their different economic problems outside Islam and thus, we see their societies swinging awkwardly between the capitalist and socialist systems, neglecting their Islamic economic system.
This state of affairs does not mean the forsaking of Islam or doubt about its economic principles. Neither does it mean negligence on the part of Moslems or atavism (reversion) on the part of the leaders. The reason for not applying the principles of Islamic economics is that the solutions which are presented in the name of Islam for the problems of our modern times (and they are complex economic problems) are simplistic and unpractical. In fact these solutions are suggested by some men of religion who are not specialized in economic matters, relying in doing so on some old time religious leaders or theologists. In doing so, they ignore some important matters which are as follows :

1. Islam does not have a place for men of religion as such for all Moslems are men of religion. However, it does have a status for men of knowledge. Nowadays, it is not enough for a person to be educated in the large domain of Fiqh in order to be able to formulate legal opinions about modern complex economic matters. Rather. it is necessary for him, in addition to that, to have a specialized knowledge that comprises the foundations and the details of the economics science.
2. The judgments by Ijtihad made by the old time Islamic leaders and theologists, in spite of their great importance, cannot be taken in their absolute meanings. since they are essentially opinions. Added to this is the fact that most of these judgments were formulated in a period and in conditions which are not ours and on problems which are not ours. Today. We are called upon to make serious attempts as the old time theologists did in order to reveal Islam's judgments on the new financial transactions and economic problems.
3. Several writers on Islamic economics limit their studies to subjects that relate essentially to the questions of riba and the prohibiting of interest insurance companies, banking transactions ,as if Islamic economics were limited to these questions. Even in their dealing wit h these topics and in the conclusions of prohibition and unlawfulness that they usually reach (without making any distinction between different banking or insurance operations). most of these writers do not present to us a detailed study on the practical alternative to what they prohibit. This ends up in cutting short the investigation for the required solution.
Some people make the confusion between Islamic economics and Islamic financing science. They entitle their works Islamic economics and inside they deal with the topics of the ‘fifth” (khumus). the “tenth” part (a’ouchour), land-or poll-tax (kharaj) body and face partnerships (sharikat al’abdan and sharikat lwujuh). Although the majority of these topics have acquired historical importance. they nevertheless present no serious studies that can be reliably related to the reality of our modern world.

3.3.3.The Cause of the Problem and it Solution

In the final analysis, the cause of the problem is that we do not have enough specialists in Islamic economics.
There lies, in my opinion. the ill that we are suffering from and there lies too the missing link.
Modern economists lack the thorough knowledge of Islam. and therefore they spontaneously get weary of studying the economic foundations for the economic problems of our time. On the other hand our theologists lack training in modern economics, a fact that makes them unable to do well in revealing the economic foundations of Islam and using them in ways that are consistent with the requirements of our time and with the reality of our current complex economic world.
This state of affairs has led the Moslems of today, common people and leaders alike. to turn in a vicious circle, aspiring to Islamic economics and calling for Islamic solutions to their problems while, at the same time, dividing themselves between the capitalist and the socialist Systems and applying the solutions of this or that system about which they do not feel comfortable or secure.
The only choice for the solution of this problem or the escape from this vicious circle is to train specialists in Islamic economics, who combine “the rich Islamic culture” and “the contemporary modern economic culture".
This will be achieved not through call for determination and appeals to theologists for seeking specialization, but through the creation of departments and chairs for this subject matter in the Islamic universities, administration institutes, faculties of commerce and law, etc. This will lead to the constitution of a specialized student body for this subject matter.
Through this systematic approach, we will highlight the economic foundations of Islam with the spirit of contemporary life, and show the possibility of applying them in a way that is consistent with the changing needs of society. It is only with this approach that we will be able to put an end to all kinds of blind fanaticism and empty appeals, and that we will enable Islamic economics to develop and flourish. and thus contribute to the solution of world problems and the fostering of world peace.
This is a cry from the depth of my heart, which I am addressing to all Moslems, especially the economists and theologists for the sake of knowledge and truth, and for Islam and Moslems, The rationale is that Islamic economics is the material and spiritual strength of Islam, and that it provides the means for the achievement of the Islamic Umma’s cohesion, strength and world mission.

I have conveyed the message. May God be the witness.
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Saturday, June 6, 2009

Quantum Politics

The theory of quantum mechanics has been of great use lately for all sorts of new world views and paradigms. With its alleged holism, indeterminism and complementarity it has been said to contain great similarities with eastern philosophy, environmentalism and The New Age. According to this book it also happens to have immense and world shaking implications for political science. And why not?
We all know that people's thinking is often influenced by science. Just think of what Copernican astronomy, Newtonian physics, genetics, Darwin, modern ecology and economics have done to our world view. Still, there is room for scepticism when it comes to mixing such diverse fields of knowledge as atoms and politics.
The main thesis of most of the contributors of this volume is that politics and/or political science (it is a bit unclear which is meant) will greatly improve by studying quantum physics. The old politics, and political science, are far too attached to Newtonian physics. And since science has moved from that old mechanistic, atomistic and deterministic paradigm to a new one in physics, then it is high time that political scientists do the same.

There are many arguments along these lines and I will only mention a few to show the general trend:

(a) The new QM emphasizes relational qualities more than atomic properties. This leads to the insight that relation is of greater explanatory and practical value in modern societies, where we cannot view individuals as isolated atoms.
(b) In QM the state of the system is dependent on how it is observed. In a similar way social facts are dependent on the observer and his, or her, background knowledge.
(c) QM teaches us that everything is dependent on everything else in the sense that many-particle systems must be viewed as wholes (the wave-function as a superposition of states). This is also what "greenl>olitical philosophy tells us.
(d) The quantum world is chance-like. So are human societies, and we ought therefore to have self-regulating institutions to make them work.

Unfortunately these arguments raise many more objections than they were intended to disarm.

For example, (a) is meant as a criticism against the classical liberal order which the authors see as typical of the Western World. But in order to view this as an argument for a new social order one has to accept 1) that the classical liberal order is "Newtonian" with respect to properties and relations, 2) that there: really is such a difference between Newton's mechanics and QM as assumed, and 3) that the QM-revolution in physics has any implications for what one should, or should not, do in politics. However, both Newtonian and quantum mechanics contain both non-relational properties, such as mass and charge, and relational ones, such as velocity and potential energy. Assumption (3) is of course fundamental to all the arguments (a) to (d), and indeed to the whole project. Seeing the obvious objection to (3) most authors explicitly reject any such normative claims. But if this is so, then why make such a big fuss over the fact that QM is new and Newton's theory is old and rejected?
Argument (b) is partly based on a mix up between the quantum phenomenon that measurement instruments physically interact with the measured system and the old philosophical and psychological insight that all observations are theory-dependent. The quantum world is sometimes said to be holistic as assumed in (c). But so is the Newtonian world since all material bodies are instantly connected with each other through the gravitational force. In this sense, Newtons mechanics is just as "green" as modern physics. In the Copenhagian interpretation, QM is also said to be chance-like as stated in (d). But statistical predictions can be made there with high precision. Besides, do we really need modern atomic theory to come up with the idea that there may be chance phenomena in the social and political spheres?
It might be objected that I do not give due credit to the social and political theories that are actually presented in the book. I agree, I do not do that. But the main theme of the book, and what motivates putting these papers together, is the alleged implications of quantum theory for social science. And that thesis simply does not hold. What may be done, and what in fact has been demonstrated, is that a handful of social scientist have felt inspired by quantum mechanics. Some of them have also been inspired by the theory of relativity and classical thermodynamics. So be it. I have no objections to that. I have even heard of scientists who got their inspiration from looking into the fire or sitting in the garden watching apples falling to the ground.

Theodore L. Becker, (New York, Praeger Publishers, 1991).
Ingemar Nordin, Linkiping University, Sweden.

Friday, June 5, 2009

Islamic political philosophy: Al-Farabi, Avicenna, Averroes Part 1

Islam is based on the Koran (a revelation from God to the prophet Muhammad) supplemented by the sunnah (a set of traditions about Muhammad's words and deeds). Muslims recognise Judaism and Christianity as revelations from God (just as Christianity recognises Judaism), but hold that the revelation made to Muhammad completes and supersedes earlier revelations. Muslims reject the Christian doctrines that Jesus was God and that God is in three persons (Father, Son, Holy Spirit); they believe that Jesus was a prophet and that God is one.

Islam spread rapidly from its birthplace in Arabia. In part its spread was due to jihad ('holy war' - see Encyclopaedia of Islam (ref/DS37.E523), vol. 2, pp. 538-40, art. 'Djihad'); non-Muslims defeated in battle were offered the choice of conversion or death. An exception was made for Jews and Christians, who were allowed to continue their religious observances provided they acknowledged Muslim political authority and paid a tax. In this way there came to be in Muslim lands many communities of Christians and Jews, who sometimes acted as intermediaries in cultural exchange between Muslims and the Greeks and the Latins. Thus Arab Christians were among the translators who (about A.D. 800) translated the works of Plato and Aristotle into Arabic, and Arabic-speaking Jews were among the translators who (in the 12th century) translated Greek and Arabic works of science and philosophy from Arabic into Latin. The bulk of Aristotle's works became known in Europe first in translations of Arabic translations from Greek (though translations were soon made direct into Latin from Greek) and were accompanied by translations of the Arabic writings of Muslim philosophers. Abu Nasr Muhammad al-Farabi, Abu 'Ali al-Husayn Ibn Sina and Abu al-Walid Muhammad Ibn Ahmad Ibn Rushd were well known in the universities of medieval Europe under the Latinised forms of their names, Alfarabi, Avicenna and Averroes.

The works on politics written by the Islamic philosophers were based especially on Plato, with influence also from Aristotle's Ethics; Aristotle's Politics was not well-known, though Aristotle's other works were. Greek Neo-Platonists (Plotinus, Porphyry, Proclus and others) had tried to combine the philosophies of Plato and Aristotle; they held that these philosophies were fundamentally in harmony. This view was passed on to the Islamic philosophers, who expounded a more or less Platonized Aristotelianism.

Islamic political philosophy: Al-Farabi, Avicenna, Averroes Part 2

Al-Farabi (ca. 870-950 A.D.)

The following is based on extracts in R. Lerner and M. Mahdi, Medieval Political Philosophy (JA82.L4) from Al-Farabi's 'Book of Agreement between the ideas of the two philosophers, the divine Plato and Aristotle'. Two key ideas: (1) Aristotle's idea of Nature as a source of development toward a mature state; (2) Aristotle's distinction between demonstrative argument and merely persuasive argument - i.e. between argument that gives genuine knowledge and understanding and argument that induces the hearer to believe a conclusion without understanding the fundamental reason why it is so (see Aristotle, Analytica Posteriora, 71 b19-23).

According to Al-Farabi, human beings, like any natural species, have a perfect state toward which their actions tend.

[H]e cannot labour toward this perfection except by exploiting a large number of natural beings and until he manipulates them to render them useful... [A]n isolated individual cannot achieve all the perfections by himself and without the aid of many other individuals. It is the innate disposition of every man to join another human being or other men in the labour he ought to perform... Therefore, to achieve what he can of that perfection, every man needs to stay in the neighborhood of others and associate with them... which is why he is called the social and political animal (p. 60).

Compare Plato, Protagoras, 322. Republic 369-371, Aristotle, Politics, I.2.

[P]olitical association and the totality that results from the association of citizens in cities correspond to the association of the bodies that constitute the totality of the world... Just as in the world there is a first principle, then other principles subordinate to it, beings that proceed from these principles, other beings subordinate to these beings, until they terminate in the beings with the lowest rank in the order of being, the nation or the city includes a supreme commander, followed by other commanders, followed by other citizens, who in turn are followed by other citizens, until they terminate in the citizens with the lowest rank as citizens and as human beings. Thus the city includes the likenesses of the things included in the total world (p. 61).

Hierarchy, order, is a characteristic neo-Platonic theme; cf. Augustine.

Human beings differ in their natural capacity to acquire the virtues required in a ruler. Therefore

not every chance human being will possess art, moral virtue, and deliberative virtue with great power. Therefore the prince occupies his place by nature and not merely by will. Similarly, a subordinate occupies his place primarily by nature... This being the case, the theoretical virtue, the highest deliberative virtue, the highest moral virtue, and the highest practical art [politics] are realised only in those equipped for them by nature: that is, in those who possess superior natures with very great potentialities (p. 69).

Cf. Aristotle, Politics, I.5; Plato, Republic, 415a.

The person with the most superior natural capacity and acquired virtue must realise these perfections in nations and cities. There are two primary methods: verbal instruction, and the formation of character by making certain modes of action habitual.

Instruction in the theoretical science should be given either to the imams and princes, or else to those who should preserve the theoretical sciences... [T]hey should be made to pursue a course of study and form the habits of character from their childhood until each of them reaches maturity, in accordance with the plan described by Plato [in the sections of the Republic on the education of the guardians]. Then the princes [leaders] among them will be placed in subordinate offices and promoted gradually through the ranks until they are fifty years old. Then they will be placed in the office with the highest authority... [T]hey are the elect who should not be confined to what is in conformity with unexamined common opinion. [For all of this cf. Plato's Republic.] In the earlier stages they should be instructed by means of persuasive arguments and similitudes [as contrasted with demonstrative arguments and knowledge of the thing itself] (p. 70).

The virtue or art of the prince is exercised by directing those who have the lower virtues or arts, whom he uses to instruct and form the character of the various categories of citizens - some by persuasion, some by compulsion (including holy war - the prince needs 'the faculty that enables him to excel in organising and leading armies and utilising war implements and warlike people to conquer the nations and cities that do not submit to doing what will procure them that happiness for whose acquisition man is made', p. 71). In using persuasion, the prince should go back to the things he studied demonstratively and look for persuasive arguments and similitudes and devise methods of political oratory. [Cf. Plato, Statesman, 303e-304a, 309cd; Phaedrus, 271b, d; Laws, 719e-720e, 722d-723d]. Since it aims at the perfection of all mankind, philosophy seeks political power. 'To be a truly perfect philosopher one has to possess both the theoretical sciences and the faculty for exploiting them for the benefit of all others according to their capacity. Were one to consider the case of the true philosopher, he would find no difference between him and the supreme ruler' (p. 76). [Cf. Plato, Republic, 473cd.]

Now when one... receives instruction.., if he perceives their ideas themselves with his intellect, and his assent to them is by means of certain demonstration, then the science that comprises these cognitions is philosophy. But if they are known by imagining them through similitudes that imitate them, and assent to what is imagined of them is caused by persuasive methods, then the ancients call what comprises these cognitions religion... Therefore, according to the ancients, religion is an imitation of philosophy. Both comprise the same subjects and both give an account of the ultimate principles of the beings. For both supply knowledge about the first principle and cause of the beings, and both give an account of the ultimate end for the sake of which man is made - that is, supreme happiness - and the ultimate end of every one of the other beings. In everything of which philosophy gives an account based on intellectual perception or conception, religion gives an account based on imagination. In everything demonstrated by philosophy, religion employs persuasion - (p. 77).

'It follows, then, that the idea of Imam, Philosopher and Legislator is a single idea' (p. 78).

It will be noticed that the implication is that Muhammad is the philosopher-king, but that the philosophers are superior to those who are merely religious.

Islamic political philosophy: Al-Farabi, Avicenna, Averroes Part 3

Avicenna (980-1037 A.D.)

The extracts in the Readings come from Avicenna, The Healing, 'Metaphysics', Book X (translated M.E. Marmura, in Lerner and Mahdi, p. 99 ff).

Read Chapter 2 (pp. 99-101).

Compare Plato, Protagoras, 322. Republic 369-371.

'The First Principle': God.

'xvi, 102' and the like are references to the Koran.

'He ought not to involve them': religious knowledge does not include everything that philosophers should know.

'Nor is it proper... vulgar': This explains why Muhammad never indicated that parts of the Koran were to be interpreted allegorically.

Read chapter 3, pp. 101-3.

Thus Avicenna finds philosophical reasons for the practices of religion.

Read chapter 5, pp. 107-110

'Caliph' means 'successor', i.e. of Muhammad. 'Imam' means 'leader'.

'If a city other than his has praiseworthy laws': This and the rest of the paragraph seem to be intended to explain why Jews and Christians are to be treated more leniently.

'Acts that harm the individual himself': Avicenna, like J.S. Mill much later, thought that people should not be legally compelled for their own good.

Averroes, 1126-1198 A.D.

Al-Farabi and Avicenna lived in the eastern part of the Islamic world; Averroes lived in Spain, at that time partly under Muslim control. He was a judge in the city of Cordova. He wrote a series of commentaries on the works of Aristotle, which were translated into Latin and were very influential in the universities of medieval Europe.

In Islamic culture 'philosophy' (in the sense of a continuation Greek philosophy) was somewhat suspect. It never gained a foothold in publically supported educational institutions, it was never well connected with any profession (in contrast with western Europe after the 12th century, where philosophy was the main subject in Arts faculties of the universities). The subject best established in medieval Islamic education was the study of the law (i.e. of the religious law). The extracts from Averroes in the Readings are from The Decisive Treatise Determining the Nature of the Connection between Religion and Philosophy, in which Averroes tries to show (with a readership of lawyers primarily in mind) that philosophy is a legitmate study for Muslims - indeed, that it is the highest form of religion. Like Alfarabi, and like Plato, Averroes envisages a state in which philosophers are the elite. The extracts are from the translation by G.F. Hourani in A. Hyman and J.J. Walsh, Philosophy in the Middle Ages (B721.P48), p. 287 ff)

Read chapter 1, pp. 287-291.

The headings in small print (e.g. 'What is the attitude of the Law to philosophy?', 'If teleological study... then the Law commands philosophy') are not part of the original text but have been supplied by editor or translator.

'teleological': in terms of purpose or end (Greek telos, 'end').

'The Artisan': God, the maker of the world.

'LIX, 2' and the like: references to the Koran.

'Demonstrative', 'dialectical' and 'rhetorical' reasoning: According to Aristotle 'demonstrative' reasoning gives certainty and understanding by showing the reasons why the thing is and must be so. 'Dialectical' reasoning shows that it is probably so by reasons that give no understanding or certainty (e.g. arguments from what is commonly believed, or analogies). 'Rhetorical' arguments induce the listener (perhaps by some emotional appeal) to believe that the thing is so. (Plato used 'dialectic' for the highest form of reasoning; Aristotle gave the word a less favourable meaning.)

'The lawyer': i.e. the student of the religious law of Islam.

'Syllogisms': arguments.

'regardless... shares our religion': Averroes' great antagonist, Al-Ghazali, held similarly liberal views on this topic. 'If we adopt the attitude of abstaining from every truth that the mind of a heretic has apprehended before us, we should be obliged to abstain from much that is true' (Al-Ghazali, in Hyman and Walsh, p. 273).

'Those ancients who studied these matters before Islam': that is, the Greek philosophers.

'For the natures of men are on different levels': This was also the view of Al-Farabi and Avicenna, who also inferred that philosophy was for the elite and religion for the masses.

Read chapter 2, pp. 292-4

Note the argument that on theoretical matters it can never be shown that there has been unanimity, since some of the experts may have believed that they should not communicate their knowledge to the public.

The next few pages are omitted, since they go into controversies on technical questions of philosophy.

Read Chapter 3, pp. 301-6.

'Abu Hamid': Al-Ghazali, whose book The Incoherence of the Philosophers was an attack on philosophy.

'Accidentally certain': i.e. 'happen to be certain'. A dialectical argument uses as premisses common beliefs, and there is no guarantee that commonly held beliefs are true; but it may happen in some instance that they are true.

The rest of the chapter is clear enough.

Like Al-Farabi, Averroes holds that philosophy and Islam are in harmony, that superior intellects ought to philosophise but not in public, that ordinary people should be taught by means of the Koran and the traditions without trying to turn them into philosophers. (Compare Plato's city, where ordinary people are ruled by philosophers who know what is good for them better than they do themselves.) Note that these Muslim philosophers do not suggest (and presumably did not believe) that the Koran and the traditions are in any way false: by a miracle, God has provided a book that is both perfectly accessible to ordinary people and a true guide.

Further Reading

Encyclopaedia of Philosophy (ref/B41.E5), art. 'Islamic philosophy'; R. Lerner and M. Mahdi, Medieval Political Philosophy (JA82.L4).

Monday, June 1, 2009

How Islam Influenced Science

During the Middle Ages the Islamic World had a very significant impact upon Europe, which in turn cleared the way for the Renaissance and the Scientific Revolution. In the Medieval age, Islam and Muslims influenced Europe in a number of different ways. One of the most important of these subjects was Science.
Ever since Islam was born, Muslims had made immense leaps forward in the area of Science. Cities like Baghdad, Damascus, Cairo and Cordoba were the centers of civilization. These cities were flourishing and Muslim scientists made tremendous progress in applied as well as theoretical Science and Technology. In Europe, however, the situation was much different. Europe was in the Dark Ages. It had no infrastructure or central government. To the Muslims, Europe was backward, unorganized, carried no strategic importance and was essentially irrelevant. This considering the time period was in fact true. Nevertheless the Catholic Church (which at the time was the strongest institution in Europe) successfully convinced Christian Europe that the Muslims were infidels. This caused Europeans to think that Muslims were culturally inferior to Europe and thus Europe was unable to benefit from the new scientific discoveries being made in the Islamic lands before the 1100’s. By doing this Europe kept itself in the Dark Ages while from China to Spain Islamic Civilization prospered. During the Crusades there was limited contact between Muslims and Christians and not much was transferred. As A. Lewis explains, "The Crusaders were men of action, not men of learning". The real exchange of ideas which led to the Scientific revolution and to the renaissance occurred in Muslim Spain.
Cordoba was the capital of Muslim Spain. It soon became the center for all light and learning for the entire Europe. Scholars and students from various parts of the world and Europe came to Cordoba to study. The contrast in intellectual activity is demonstrated best by one example: ‘In the ninth century, the library of the monastery of St. Gall was the largest in Europe. It boasted 36 volumes. At the same time, that of Cordoba contained over 500,000!’.
The idea of the college was a concept which was borrowed from Muslims. The first colleges appeared in the Muslim world in the late 600's and early 700's. In Europe, some of the earliest colleges are those under the University of Paris and Oxford they were founded around the thirteenth century. These early European colleges were also funded by trusts similar to the Islamic ones and legal historians have traced them back to the Islamic system. The internal organization of these European colleges was strikingly similar to the Islamic ones, for example the idea of Graduate (Sahib) and undergraduate (mutafaqqih) is derived directly from Islamic terms.
In the field of Mathematics the number Zero (0) and the decimal system was introduced to Europe, which became the basis for the Scientific revolution. The Arabic numerals were also transferred to Europe, this made mathematical tasks much easier, problems that took days to solve could now be solved in minutes. The works of Al-Khwarizmi (Alghorismus) were translated into Latin. Alghorismus, from whom the mathematical term algorism was derived, wrote Sindhind, a compilation of astronomical tables. He, more importantly, laid the ground work for algebra and found methods to deal with complex mathematical problems, such as square roots and complex fractions. He conducted numerous experiments, measured the height of the earth's atmosphere and discovered the principle of the magnifying lens. Many of his books were translated into European languages. Trigonometric work by Alkirmani of Toledo was translated into Latin (from which we get the sine and cosine functions) along with the Greek knowledge of Geometry by Euclid. Along with mathematics, masses of other knowledge in the field of physical science was transferred.
Islamic contributions to Science were now rapidly being translated and transferred from Spain to the rest of Europe. Ibnul Hairham’s works on Optics, (in which he deals with 50 Optical questions put to Muslim Scholars by the Franks), was translated widely. The Muslims discovered the Principle of Pendulum, which was used to measure time. Many of the principles of Isaac Newton were derived from former Islamic scientific contributions. In the field of Chemistry numerous Islamic works were translated into Latin. One of the fields of study in this area was alchemy. The Muslims by exploring various elements, developed a good understanding of the constitution of matter. Jabir ibn-Hayyan (Geber) was the leading chemist in the Muslim world, some scholars link the introduction of the ‘scientific method’ back to him. A great number of terms used in Chemistry such as alchohol, alembic, alkali and elixir are of Islamic origin.
Medicine was a key science explored by Muslims. Al-Rhazes is one of the most famous Doctors and writers of Islamic History. Every major city had an hospital, the hospital at Cairo had over 8000 beds, with separate wards for fevers, ophthalmic, dysentery and surgical cases. He discovered the origin of smallpox and showed that one could only acquire it once in one's life, thus showing the existence of the immune system and how it worked. Muslim doctors were also aware of the contagious qualities of diseases. Hundreds of medical works were translated into Latin.
All of this knowledge transferred from the Muslims to the Europeans was the vital raw material for the Scientific Revolution. Muslims not only passed on Greek classical works but also introduced new scientific theories, without which the European Renaissance could not have occurred. Thus even though many of the Islamic contributions go unacknowledged, they played an integral role in the European transformation.

by Macksood Aftab
Managing Editor of The Islamic Herald, March 1995.
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