Islam’s Gift: An Economy of Spiritual Development

[bit,do/ajes] My paper with the title was recently published in American Journal of Economics and Sociology, Vol 78, Issue 2, pp 443-492, March 2019.  A pre-print can be downloaded from: SSRN, Scribd, or OneDrive. More than a decade ago, I was motivated to write “Islamic Economics: A Survey of the Literature” by the realization that the vast majority of Islamic Economics was just an imitation of Western economics, and an attempt to fit as much of it as possible into an Islamic framework. My paper attempted to explain why this was so, and to recognize and highlight the unique insights which came from genuine Islamic perspectives on our economic affairs. My current paper “Islam’s Gift: An Economy of Spiritual Development” represents a culmination of the search for formulating a genuine Islamic alternative to Western economics. This paper explains how Islam teaches us how to sell our lives and wealth to purchase the pleasure of Allah, which is more precious than all the material wealth on the planet. Obviously, such an approach to economics shares little in common with Western approaches, according to which accumulation of wealth is the goal of our personal and collective lives. Some essential background information, required to read and understand the paper, is covered briefly in the six points given below. A viewable pre-print of the paper itself is linked at the bottom of the post.

  1. Social Science is the study of human experience. From this, it follows that study of human behavior and societies would rely on our experiences. Since modern social sciences were developed in the West, they must be based on the study of Western historical experiences. If we want to develop social sciences of relevance and value for Islamic societies, then we should study the historical experiences of Islamic societies and derive lessons from them. This point, and its implications have been explored in “On Improving Social Science Education in Pakistan”.
  2. Social Sciences in general, and Economics in particular, claim to be universal and objective. In contrast to the first point, economic theories claim to be universal laws about human behavior, which are valid across time and space, without reference to historical, social, cultural, and political context. This creates a puzzle: If the laws of economics are just like the laws of physics, then they would work equally well in Islamic societies and in Western societies. In that case, Islamic Economics must accept the universal scientific laws discovered by Western economists, and build a discipline around these laws which makes minor modifications required by Islamic principles. However, if economics theories are only applicable to the particular historical, social, cultural, and political context in which they were born, then we would need to develop an entirely different set of theories for Islamic societies, based on our own historical experiences. For more details about this point, see “The Origins of Western Social Sciences
  3. Modern Economics derives from European historical experiences, but falsely claims to be universal. We resolve the puzzle created by points one and two above by showing that modern economics originates from Western historical experiences. Furthermore, this fact is obvious and apparent, and has been noted by many authors. Then the mystery is: why do economists deny something which is patently obvious, claiming a universality for economic theories, which is easily proven wrong? For example, is it true that human behavior everywhere, across time, space and culture, corresponds to the homo economicus model of economic theories? The Quran tells us that we should give away the things that we love most, and feed the poor even if we are ourselves hungry, for the sake of the love of Allah. The shock-and-awe of West has poisoned our hearts, so much so that many Islamic economists have accepted this model of human behavior as being universally valid – see “The Fourth Poison: Homo Economicus” for an extended discussion. This set of observations create a double mystery, which the paper attempts to resolve.
  4. Mystery 1 “why do economists claim universal truth for theories which are obviously false?”. Part one of this mystery is to understand that behavioral economics decisively rejects economic theories of human behavior. For overwhelming empirical evidence on this matter, see my post on “Behavioral Versus Neoclassical Economics.” Part two is to understand how strongly the economists refuse to accept empirical evidence, and cling to theories which are flatly contradicted by observations. For evidence, see “Quotes Critical of Economics” and also “Economic Theory as Ideology”.  Resolving this mystery requires a deep study of the progression of European thought from its origins in the Enlightenment of Europe. Furthermore, this study needs to be an external study, not a Eurocentric one. European paint their own intellectual history as one of progress, where they gradually learned to think better and better, and understand more and more, so that currently they are at the apex of intelligence. We need to create a counter-narrative, to understand how their ability to think and conceptualize about the social sciences, the world we human being lives in, has actually become worse and worse over time. A suitable counter-narrative is constructed in the paper.
  5. Mystery 2 “Why do Islamic economist accept repulsive human behaviors as being universal laws, and attempt to justify this acceptance using Quran and Hadeeth?” The name “Social Science” itself is a deception – it borrows authority by using the word “science”. For Muslim economists, awe of Western achievements in the physical sciences leads them to automatically grant the same authority to Social Science. Muslims are so much in awe of the West that when they see a flat contradiction between some economic principle and verses of the Quran, they rationalize and re-interpret the Quran, in order to be able to accept the economic theory. For examples and illustrations of this, see “Rejecting ALL of Economic Theory?”. As I have explained in “A Spiritual Obstacle to Genuine Islamic Economics”, the lack of confidence in our Deen, displayed by our preference for Samuelson over the Quran, prevents us from acquiring a genuine understanding of the message of the Quran. The early Mu’tazila went astray because they became overly impressed with Greek Philosophy, and wanted to accept as being on par with the Quran and Hadeeth. Today we face the problem of The Modern Mu’tazila, who value Western teachings over and above the Quran.
  6. The Counter-Narrative: Intellectual History of Disastrous Approach to Social Science in Europe. My papers on “Origins of Western Social Sciences” and an earlier post on “EuropeanTransition to Secular Thought” provides detail of how Europeans stopped believing in Christianity. According to their own accounts, this was because they learned to reason, and saw the religion was just superstition, but the reality is very different. Loss of faith in God and Religion was a source of serious shock and trauma. Most European philosophers who contemplated this seriously suffered from psychological breakdowns of various types. One of the consequences of this trauma of loss of faith was the rejection of heart and soul of man as a source of knowledge. It is our hearts which testify to the existence of God. European historical experience taught them that this testimony of the heart is wrong, and they vowed not to trust their hearts, but only their head. This is why their theories of human behavior reject the existence of feelings, emotions, vision, ideals and higher purposes of human existence. Instead, all rational human beings just maximize the pleasure they get from the life on this earth. Anyone who thinks about afterlife and higher goals of existence is “irrational” because here-and-now is all that we have. It becomes easier reject modern economics once we understand that contemporary economic theory is based on denial of God and Afterlife, and consequently attempts to create heaven on earth by maximizing wealth and pleasure. A more detailed explanation of this counter-narrative is provided in the paper linked below.

A viewable & downloadable pre-print of the paper on SCRIBD is linked below:

 

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GFC 2007: Causes and Consequences

[bit.do/gfc07] The consequences of the Global Financial Crisis 0f 2007 are still unfolding. Economic theory is the central faith, the religion, of modern times. The cruel deception of its promises for prosperity to all was clearly revealed by the GFC ‘2007. For an illustration os the widespread realization of the complete failure of conventional economic theories, see “Quotes Critical of Economic Theory“.  People are searching for alternatives, which do not routinely cause financial crises which throw millions out jobs, leading the widespread homelessness and hunger. This is what creates a unique opportunity for us in the Islamic world, to create a new model based on generosity and cooperation, the core values of Islam, as an alternative to the greed and competition of capitalist economies.

Twentieth Century Economics

The human tragedy of the Great Depression has been graphically depicted by John Steinbeck in his moving novel, The Grapes of Wrath. The crisis it created for economic theory is not so well known. Leading economists kept forecasting prosperity and quick recovery, creating embarrassment for the profession as a whole. In 1927, Keynes had flatly stated that “there will be no more crashes in our time.” The shock of the Great Depression led him to create an entirely new economics. The Keynesian revolution created the field of Macroeconomics which gave a vital role to the government in removing unemployment.

At the dawn of the twentieth century, Laissez-Faire economics was the dominant school of thought. Laissez-Faire economics says that free markets without government intervention automatically lead to the best possible economic outcomes. The folly of this position was made obvious to all by the Great Depression. Paul Samuelson and other disciples of Keynes were the only economists with quantitative and, apparently, rigorous answers to questions about the Great Depression. They enjoyed a monopoly on the field of Macroeconomics until the 1970’s. Then things changed.

The OPEC countries imposed an oil embargo to retaliate for USA support of Israel in the Yom Kippur War in 1973. The sudden rise in energy prices led to “stagflation” – unemployment and recession occurring simultaneously with inflation – in the US economy. This was contrary to the central tenets of Keynesian economics which held that only one or the other (unemployment or inflation) was possible. The damaged prestige of Keynesian economics allowed a counter-revolution to be launched. Surprisingly, most of these new macroeconomic theories went back to the laissez faire ideas of pre-Keynesian economics.

Milton Friedman and his followers, labeled Monetarists, lost no time in re-interpreting the Great Depression along lines which would suit laissez-faire theories. On this re-interpretation, the Great Depression was actually caused by inept government policies related to the money supply. Many economists have remarked that theories so violently in conflict with facts became acceptable in the late 70’s only because the generation which had experienced the Great Depression had passed away.  Regardless, the old wine of laissez-faire was presented in new bottles, and rose to prominence once again. Reagan in USA and Thatcher in UK implemented these bold ‘new ideas’ by tax cuts and reduced spending to minimize the role of the government. The failure of Thatcher’s economic policies eventually led to her forced resignation.  It is a puzzle that the same policies were apparently quite successful at reducing unemployment and creating growth in the USA under Reagan.

A deeper look into the difference between what Reagan said and did can resolve this puzzle. Tax cuts for the rich were balanced by increased taxes on the poor.  Large reductions in government expenditure on social security and welfare were more than made up for by massive increases in defense expenditures. What was advertised as a reduction in the role of the government led to a quadrupling of the government budget deficit. Reagan restored the tarnished reputation of Laissez Faire economics by using traditional Keynesian methods of expansionary fiscal and monetary policy, labeled as free market economics.

The collapse of communism further enhanced the prestige of the Laissez Faire economists. The IMF and World Bank enforced the Washington Consensus all over the globe. The poor results of these free market policies disappointed even Williamson, the economist who invented the term. However, instead of rethinking the underlying paradigm, failures were attributed to the wrong sequencing of the economic reforms, and the lack of institutional structures necessary to support the free market. Thus Laissez Faire economics was again the dominant paradigm at the dawn of the 21st century. Economists were just as unprepared for their encounter with reality in the form of the Global Financial Crisis of 2008 as their predecessors had been for the Great Depression. The mistaken overconfidence of Keynes prior to the Great Depression was replicated by Robert Lucas, in his 2003 presidential address to the American Economic Association. Lucas declared that the “central problem of depression-prevention [has] been solved, for all practical purposes” just a few years prior to the Global Financial Crisis of 2008, which provided an empirical refutation of his Nobel Prize winning theories on rational expectations.

Historical Roots

The current crisis in economic theory has deep historical roots. To understand it, we must go back to sixteenth century Europe. Continual warfare and bloodshed among different Christian sects led to the search for a secular basis for society. How can we achieve cooperation in a society composed of religious groups with different goals? Secular thinkers promoted freedom and wealth as the core values of a secular society. One could expect different groups with conflicting goals to agree to these as common goals for the society. Freedom and wealth would provide each group with the possibility and material means to pursue whatever goal they desired.

Considerable effort was put into promoting freedom and wealth as desirable collective goals. Efforts of secular thinkers led to the transition from the Biblical maxim “the love of money is the root of all evil” to its opposite: “lack of money is the root of all evil”. Duty to society takes precedence over individual liberty in traditional society. Secular thinkers created a political theory which put individual freedom above claims of the social order. These momentous changes were fundamental in creating the modern world.

Secular thinkers disagreed about effects of allowing individual freedom and pursuit of wealth on society.  The disagreement was about the nature of human beings. Jean-Jacques Rousseau felt that human beings were naturally good, and hence advocated anarchy – no rules or regulations of any kind were required. On the opposite extreme, Thomas Hobbes thought that human beings were naturally evil. Without strong government enforcement of extensive laws, life would be “nasty, brutish and short,” if people were allowed complete freedom to act as they desire. John Locke took an intermediate position, finding society and government necessary, but with minimal rules acceptable by all.

The debate between Locke and Hobbes continues to this day in various guises.  The Hobbesian view was that extensive government control and regulation in all spheres of life is required for a stable social order. Followers of Locke argued that minimal control would suffice. A very important ingredient in the victory of minimal government views was the “invisible hand” argument of Adam Smith.  He argued that even though people are selfish, society would benefit by allowing them freedom to pursue their own self-interest. This provided a counter to the Hobbesian idea that selfish individuals would destroy society unless there was extensive government control.

Laissez-Faire economics is based on intellectual grounds prepared by Locke and Smith. It argues that one should allow maximum freedom to individuals in the economic sphere. We are witnessing today the outcomes of a social experiment spanning two centuries. Whereas traditional societies warn strongly against pursuit of pleasure and wealth, secular thinkers thought that these baser tendencies of humans could be harnessed for the betterment of society. As long as the institutional frameworks of politics, justice, and society were sound, allowing freedom for pursuit of wealth would enrich society.

All religions and cultural traditions have asked individuals to sacrifice selfish pleasures to fulfill social obligations, and frowned on pursuit of wealth.  The outcomes of this social experiment make clear why this is so. Contrary to the expectations of secular thinkers, individualistic pursuit of wealth and pleasure did not remain confined to the narrow domain of economic activities. When profits were permitted to trump compassion, the odious actions of Shylock the Jew became socially acceptable. Bankers threw millions out of their homes for nonpayment of interest after the financial crisis of 2008. On the family front, placing pleasure over duty has led to ever increasing divorces, infidelity, and illegitimate children. According to a recent UK report entitled Fractured Families, “the fabric of family life has been stripped away.”  This is social disaster, since children are trained in families, and societies are shaped by how children are trained. More than a third of children in the USA and UK are being brought up in broken homes. The tragic consequences are documented in many studies. Selfish pursuit of pleasure has led to the highest divorce rates in the world, millions of unwanted teenage pregnancies, record rates of alcohol and drug abuse, depression and suicide, and alarmingly high percentages of lying, cheating and theft among high school students. As we will show later, one of the economic consequences of promoting selfish pursuit of profits as a virtue has been the Global Financial Crisis of 2008.

The New Millenium

Karl Marx was deeply moved by the plight of the exploited laborers in industrialized England in the late 19th century. He theorized that the dynamics of capitalism would lead to increasing exploitation, until the laborers revolted against the system. After the revolution, the laborers would create a new economic and political system, which would be far more equitable than capitalism.  This Marxist prophecy was wrong, but did contain one core truth: increasing exploitation of workers did lead to a breakdown of capitalism during the Great Depression. The same dynamic has repeated itself in creating the Global Financial Crisis of 2008. The parallels between the two are clearly evident and dearly shocking.

We can partition the economy into a real sector and a financial sector. The real sector is where production takes place: these are the farms, factories, and other industries which produce real goods and services directly beneficial to human beings. The financial sector is based on activities which are not directly productive, such as lending money for interest, speculating on stocks, foreign exchange, and using derivatives and insurance contracts to gamble on the outcomes of real activities. In the “Roaring” 20’s, wild appreciation in stock prices led to a situation where it became substantially more profitable to gamble on stocks than to invest in real productive activities. Increasing shares of wealth in the hands of gamblers and decreasing returns to productive activities could not be sustained for long, and eventually led to a collapse of the real sector, now known as the Great Depression.

The collapse of the real sector led to massive unemployment and human misery on a large scale. It is correctly said that Keynes rescued capitalism from the fate Marx had prophesied. Conventional economic theory holds that market forces of supply and demand will automatically eliminate unemployment. Keynes revolutionized economics by repealing the law of supply and demand in the labor market, and urging the government to intervene to help the unemployed laborers. The Keynesian compromise provided relief against the ravages of the Depression, and prevented the more radical changes suggested by Marx.

In her brilliant book, The Shock Doctrine, Naomi Klein has provided a detailed picture of how a counter-revolution was planned and executed by a small segment of society which was unhappy with the Keynesian compromise. An opening was provided by the 1970’s oil crisis which led to stagflation in the USA, contrary to central premises of Keynesian theories. The monetarist school of Chicago was quick to stage a comeback. They argued that the Great Depression was caused by government mismanagement of the money supply, rather than a failure of the free market.  Using strategies described by Klein, these free market theories were applied all over the world.

Reagan and Thatcher implemented these free market policies in the USA and UK with predictable results. From 1980 to 2006 the richest 1% of America tripled their after-tax percentage of the nation’s total income, while the share of the bottom 90% dropped over 20%. Between 2002 and 2006, it was even worse: an astounding three-quarters of all the economy’s growth was captured by the top 1%. The same pattern of sharply increasing inequality holds globally: the wealthiest 250 people have more than the poorest 2.5 billion people on the planet.

Superficially, Laissez-Faire or no interference in markets seems like a fair and equitable philosophy – let everyone do whatever they want. In fact, it is highly inequitable. The poor do not have choices, while the rich and powerful take advantage of this liberty to extract money from the less rich. Financial wheeling and dealing is used to transfer money from the real sector to the financial sector, which is controlled by the wealthy. A simple method is the leveraged buy-out, which allows the wealthy to purchase a real productive business for peanuts, and extract all profits for themselves. More complex methods like CDOs (Collateralized Debt Obligations)“… may not be properly understood even by the most sophisticated investors,” according to financial wizard George Soros. Just before the global financial crisis, the value of financial derivatives (which represent different types of complex gambles) alone was 10 times the GDP of the planet. The worth of the financial sector was more than 50 times that of the real sector. This illustrates the increasing inequity that arose between the real productive sector and the financial sector which ultimately broke the backs of the working people. Many people ranging from religious scholars to financial wizards have correctly traced the roots of the Global Financial Crisis to the limitless greed of capitalists. Removal of traditional restraints to this impulse have led to an extraordinary concentrations of wealth combined with extraordinary exploitation and injustice.

The Future

The Global economy remains in enervated state. Growth has yet to reach pre-crisis levels and the Euro Crisis is causing jitters throughout the world. But there is a far greater sense of optimism now with established economies bouncing back slowly, and emerging economies showing much potential. Yet policy makers have not learned the lessons of the Great Depression and the Global Financial Crisis. The ongoing debate on austerity or stimulus to kick-start the global economy masks the systematic flaws within the Laissez-Faire economy. The idea that “greed is good,” and that selfish individuals can drive an economy to better performance has led to breakdown of communities and families, a steep rise in loneliness, as well as multiple financial and economic crises. The message of Islam transformed the Arabs from an illiterate and uncivilized people, to humane and compassionate leaders of the world. Today the whole world is desperately in need of this transformation. The challenge for the Ummah is to rise to the occasion by showing how societies and economies can be built around generosity and cooperation, instead of the greed and competition which is the basis of capitalist society.

Spiritual Aspects of Islamic Economics

Presidential Address at 34th AGM, PSDE, 12-14 Dec 2018

By: Asad Zaman, VC PIDE, Writeup: https://bit.do/az34agm Video: https://bit.do/az34pr

The tragedy created by the Global Financial Crisis, which made millions jobless, homeless, and hungry, was caused by false economic theories which lulled economists into complacency even though clear warning signs of impending crisis were present. We cannot calculate the cost of the enormous amount of damage caused by these false theories, which have polluted the land, air, and the sea, destroyed the environment, created massive inequalities, and have caused misery for billions of humans living beneath the poverty line. While the need for a revolution in economics is obvious to many, the direction which it must take is not clear. This essay explains how Islamic Economics offers a radical alternative.

The teachings of Islam created a revolution in world history 1450 years ago, catapulting the ignorant and backwards Arabs from the depths of darkness to positions of world leadership within a short period of time. The early Muslims launched a civilization which enlightened the world for a thousand years, and gave shape to distinctly Islamic forms of literature, poetry, philosophy, as well as the natural sciences. It was the light of knowledge contained in millions of books in the libraries of Al-Andalus, acquired via the re-conquest of Spain, which ended the dark ages of Europe and brought about the European Enlightenment. The effects of this revolution are still with us today in the form of billions of adherents of the faith, as well as in the origins of all the physical and social sciences known today. The burning question for us today is: Are these teachings still relevant for us today? Does Islam have the same capability to launch a revolution today which it demonstrated 1450 years ago?

My thesis is that even though these teachings are just as powerful today as they were 1450 years ago, Islam has become a stranger to the Muslims (as prophesied) and hence Muslims do not recognize its revolutionary potential. The reasons for our failure to grasp and benefit from the teachings of Islam lie in the process of colonization and Western hegemony, which has shaped our minds in conformity with Eurocentric frameworks for understanding the world. At the beginning of the 20th century, people of European origin controlled 85% of the planet, and this power was directly reflected in the conquest and colonization of Muslim minds, from which the Ummah has yet to recover.

An effective antidote to the shock and awe created by European domination is learning to laugh at some of the ridiculous and absurd notions which are central to the Western Social Sciences. For instance, a little introspection immediately reveals the falsity of the idea that my behavior is predictable via mathematical formulae, or that the desire for goods and services is my sole and strongest motivation. The idea that the purpose of our human lives is to maximize the pleasure we obtain from consumption of goods and services is not only contrary to Islamic teachings, but is also a deep mis-understanding of human motivation across cultures and religions. We can label economic theory as the “Coca-Cola theory of happiness”: a hot and thirsty man experiences a jolt of pleasure from the cool and sugary drink, and comes to the conclusion that he has found the formula for a lifetime of happiness.

Similarly, a lot of the discussion and debate within economics takes place on notions which are so absurd that serious engagement dignifies them; instead, we should just laugh at them. For example, consider the prisoner’s dilemma. In societies where the poisonous philosophy of individualism has not destroyed communities, overcoming the impulse to betray someone in our social sphere for personal gain is part of childhood training. For economists to puzzle over why everyone does not behave in an infantile, immature, and short-sighted way is itself a puzzle. The concept of subgame perfect equilibrium is similarly disgusting. It requires us to ponder over all over social commitments made in the past, and break any one of them if it suits our present interests. Economists take this as the norm of ideal rational behavior and are deeply puzzled by the findings of psychologists and behavioral economists that human beings generally stand by their commitments even when this conflicts with their individual selfish interests.

There is a two-way barrier of mutual incomprehension between economists and normal human beings. Economic theories cannot understand honesty, integrity, commitments, love, compassion revenge, gratitude, fairness, and host of other human emotions, while normal human beings cannot understand how one can be human and fail to understand these drivers of human behavior. At the source of all the catastrophes created by economic theory listed earlier is this cruel and inhuman model of human behavior. This complete disregard of human experience in construction of theories of human behavior is not at all natural, and can only be explained by certain unique aspects of the European historical experience. In the interests of brevity, we compress this complex story spanning centuries into a single paragraph.

The flagrantly immoral behavior of a sequence of sixteenth century popes, led to the protests of Martin Luther, and the reformation of the Church. The extremes of violence and cruelty between Christian factions, and the misery inflicted by religious wars, led to a general dis-enchantment, and eventually, the rejection of religion in Europe. This loss of faith in God, and in an ordered and meaningful universe, was a traumatic experience for European intellectuals. All major European philosophers grappled unsuccessfully with the question of how to find meaning in life, in absence of religion and God. The depths of this trauma are reflected in writings of many leading European philosophers. Most 19th century European social thinkers suffered from nervous breakdowns. Nietzsche talks about the madman who rushed out into the streets crying that “we have killed God”. Durkheim talks about how the meaninglessness of life makes suicide the only serious philosophical question. Nihilism, absurdity, Da-daism, were just a few of the reflections of this loss of purpose on literature, philosophy and the arts in the West. Most important, and directly relevant to the puzzle of how economists came to believe in absurd theories of human behavior, is the effect of the trauma of loss of faith on the father of Western philosophy, Rene Descartes.

Let us reflect on the enormity of the statement “I think, therefore I am”. Normally, human beings would find it absurd to ponder ‘whether or not I exist?’. The question itself reflects the depth of trauma – having lost faith in our deepest certainties about God and Creation, we can even question our own existence. Now suppose that some deep existential tragedy led me to question my own existence. How would I re-assure myself? When I reflect on myself, I am directly and immediately aware of my breathing, my heartbeat, the tingling of my skin, and a thousand other sensations which show me that I am alive. But, the traumatized Descartes refuses to trust his own direct and lived experience. After all, it was this experience that misled him. It was his heart that told him to trust in God, and this turned out to be a lie. Henceforth, we will no longer trust our own inner experiences, and we will only trust in our faculty of reason, and the objective realities, visible and sensible in the external world. It is this rejection of our own inner lived experiences as a source of knowledge which is the basis for the catastrophically wrong foundations of modern Western social sciences.

We are now in a position to explain both why Islamic Economics provides a radical alternative, and also why those indoctrinated into Western conceptions of knowledge are unable to see this alternative. Islam gives central importance to the heart as an instrument of cognition – our hearts can know God, and the purpose of our lives is to purify our hearts. There are many verses in the Quran which mention the eyes, the ears and the heart, showing that all three are sense organs. The following verse is very explicit:

(22:46) So have they not traveled through the earth and have hearts by which to reason and ears by which to hear? For indeed, it is not eyes that are blinded, but blinded are the hearts which are within the breasts.

If our hearts are blind, then we will be unable to see the signs of the presence of God. The entire edifice of Western social science rejects the conception of the heart as a sense organ, as a valid producer of knowledge about the external realities. It is for this reason that the social sciences of the West are blind to the nature of human beings, that they have hearts and souls. Rejecting the heart and soul as integral components of human beings leads to current Western (mis)conceptions about human beings and societies which lie at the foundations of the modern social sciences. Rejection of God and Faith is intimately related to rejection of heart as an instrument of knowledge.

It is this firm denial of heart and soul which leads to absurd theories of human behavior, and a complete misunderstanding of human societies, purpose, and welfare, which form the basis of modern social scientific theories. Economic theories assume that human beings are cold, calculating and callous – they have no emotions, they have no compassion, sympathy or love for others, and that they make decisions purely on the basis of rational calculation about maximum profit or pleasure. Whereas the greatest sources of human welfare lie in social realm, and with appropriate training of the heart in terms of love, gratitude, contentment, etc., economists believe and teach that human welfare lies in maximization of pleasure obtained from consumption of goods and services. This leads them to a disastrously wrong understanding of the purpose of our lives as being the maximization of consumption. This leaves economists extremely puzzled when confronted with realities of human experience, such as the Easterlin Paradox. This shows that massive gains in material welfare have not had any significant impact on human happiness.

Islamic theories are founded on the understanding that the heart is the central driver of human actions. The value and effect of our actions depends on the purpose within our hearts. To understand the tides of human history, we must look into the hearts – that is, the motivations which shaped human actions. Throughout history, drivers of great changes have been changes in the heart. The greatest developmental episode in human history was the rise of Islam. The source of the revolutionary effect of Islam was the spiritual development of the early Muslims, created by the purification of the hearts. Just as the lowly atom has the capability to explode and destroy entire cities, so the heart of man is built with the potential of changing the entire external world. The Quran attests to this potential when it call the saving of a life as being equivalent to the saving of the entire humanity. The drivers of great transformations throughout history have been changes in the hearts of people, which created the passion and drive to struggle against tremendous odds. Weber and Tawney have both emphasized how religion played a central role in the development of modern capitalism.  Similarly, far-sighted thinkers predicted the fall of the West due to the increasing indulgence in hedonism and individualism, and the rise of East Asia due to the revival of the spirit of Confucianism. The ethos of Islam provides a far more powerful basis for regeneration of the Islamic Civilization, if it can be revived in the pure form it took at the origin. Confirming the idea that internal change is driver of external change, the Quran states that

13:11: God does not change the conditions of a people, unless they strive to change themselves.

It is only after all this preliminary work, we can turn to the main question, posed at the very beginning of this essay. How can we use the teachings of the Quran to launch a revolution today, like the revolution that these teachings created 1450 years ago?

As already discussed, modern economic theory creates misconceptions about the nature of human beings which are obstacles in the path of understanding the Islamic solutions. The first of these is the concept of homo economicus, the idea of man as a robot, who mechanically seeks to maximize pleasures from consumption during his lifetime. To oppose this, Islam offers a normative ideal which some have called homo Islamicus.  This ideal was personified by our Prophet Mohammad SAW –

107 of Surah Al-Anbya “And We have not sent you, [O Muhammad], except as a mercy to the worlds.”

Al-Ahzab verse 21, “Verily you have in the Prophet of Allah an excellent model.”

Even though conventional modern economics claims to be descriptive and positive, behavioral economists have established conclusively that homo economicus does not describe actual behavior of people. In fact, it is proposed as an ideal form, a standard for perfectly rational behavior. What economists think of as rational behavior is actually the behavior of the lowest of the low, a person who pursues only the desires of the Nafs, without thinking of the higher goals of our existence. Both homo economicus and homo islamicus are polar extremes, ranging the lowest form of behavior to the highest form. As the Quran says:

(95:4,5) We have created the human being in the best form Then we reduced him to the lowest of the low.

Actual human behavior ranges between these two extremes. Islam provides us with the training required to make spiritual progress from the lowest of the low – homo economicus – towards the highest of the high – home islamicus. It is important to note that Islam does not measure success by arrival at the destination; no one can actually hope to achieve the ideal form. Rather, it is to make our maximal efforts, to strived to achieve the ideal form that is demanded of us. In contrast, conventional economics assumes every human is forever stuck at the bottom stage of spiritual development, with no hope of progress.

Taking the heart and soul of man into account changes our understanding of the supposedly central concept of “scarcity”. As our prophet SAW said, “True richness is contentment of the heart”. Deep studies of human behavior, welfare, show that human beings are amazingly adaptable – they can become content in amazingly difficult circumstances. Scarcity is really an attitude, a state of the heart where the glass is always half full. A recent Harvard survey of 4000 millionaires showed that they were generally quite unhappy. Even in terms of money, 75% of them felt financially insecure. Our prophet demonstrated abundance thinking – being contented with whatever we have been given creates generosity. Under the influence of his training, the companions gave to others while being themselves in need, earning the praise of the Quran (76:8) And they feed, for the love of Allah, the indigent, the orphan, and the captive.

 

 

The famous Easterlin paradox affirms the Quranic admonition that:

(57:20) Know that the life of this world is but amusement and diversion and adornment and boasting to one another and competition in increase of wealth and children … And what is the worldly life except the enjoyment of delusion?.

As Easterlin and other researchers have shown, overwhelming increases in wealth and material comforts have not brought about corresponding increases in happiness, or feeling of satisfaction and welfare. The Easterlin paradox reflects something which we all understand intuitively. Except at low levels where it satisfies basic needs, additional consumption brings pleasure only in relation to others – the competition, referred to in (57:20) above. The pursuit of growth and riches is an illusion – if everyone increases their consumption, happiness levels remain the same as before, because the standard for comparison rises.

A deeper understanding of capitalism shows that massive over-production is at the heart of the system. The only way to sustain the perpetual growth it requires is to create idle desires, and to make people consume vastly more than they need. Conspicuous consumption, and envy, both prohibited by Islam, are at the center of the consumer society created by capitalism. This mad pursuit of growth which brings misery to billions and concentrates wealth in the hands of a handful of people, is stripping the planet of resources at an unsustainable rate, putting the future of humanity into peril.

Understanding the insight of the Quran, that the pursuit of riches is just the enjoyment of a delusion, leads to radical changes in our economic policies. Islam prohibits us from pursuing idle desires, whereas economics encourages us to do exactly that. We can achieve happiness by pursuing simpler lifestyles, as per Islamic teachings. There is plenty of resources to amply satisfy the needs of everyone. Environmental economists are recommending de-growth as the only way to save the planet; this is exactly in accordance with the Islamic principles of simple living. Also, Islam teaches us not to envy others, and not to be deceived by the appearances of pomp and luxury. These principles of training the heart are needed to combat the desire for more and more that capitalism strongly encourages and requires. The fundamental economic problem of scarcity can be solved by the Islamic strategy of simple living with no envy and generosity – those who have more than what they need should give to others who are in need.

A central element of the inner transformation that revolutionized the world was the creation of unity among the Muslims. As the Quran testifies:

And hold firmly to the rope of Allah all together and do not become divided. And remember the favor of Allah upon you – when you were enemies and He brought your hearts together and you became, by His favor, brothers.

Today the weakness of the Muslims is due to the divide-and-rule strategies being so effectively used against us. The Quran (8:46) warns us not to dispute with each other “lest you lose your courage, and your strength departs … ”

While modern economics is based on competition and greed, the economics of an Islamic society is organization along the lines of cooperation and social responsibility, compassion, caring and generosity. For a thousand years, there was no concept of paying for education, or for health care. It was understood that the society as a whole was responsible for all the children and all those who were unable to take care of themselves.

Because the concept of purpose and meaning was lost in the Western Social Sciences, the fact that the institutional structure of a society reflects the collective social goals has been lost from sight. The collective social and individual goals of an Islamic society are radically different from those of modern capitalist society, which are focused on accumulation of wealth, power, and pleasure at individual and social levels. We can illustrate the different spirit at the heart of the structures for a few institutions.

Accumulation of wealth is the spirit of capitalism, which is reflected in the banks designed for this purpose. Islam, on the other hand, asks us to spend excess wealth on others. This is reflected in the Waqf, an institution used by Muslims to promote social welfare. About one third of the registered lands in the Ottoman empire were Waqf properties for social causes like education, health, taking care of orphans etc.  When firms are motivated by service, then a guild which collectively serves the needs of the society is socially beneficial. Collective provision of service makes for greater efficiency, as demonstrated by the vibrant guilds of the Ottoman Empire, as well as Al-Andalus. However, when firms are motivated by profits, than a monopoly can squeeze maximum profits out of the public and competition is a better structure to protect the consumer from their greed. The difference in spirit and purpose is reflected in all institutional structures of the society, from family to judiciary, government, social, political and economic structures.

To conclude this essay, it is important to note that the external structures are just stepping stones to the internal transformations and spiritual progress that is the goal of all our struggles. All our struggle and sacrifice and living and dying is solely for the sake of Allah, and the only success is the success of the hereafter. Once this is understood, we engage lightly with this world and live like a traveler, passing through. We give away the things we love most, to purify our hearts of the love of material things, and fill it with the love of Allah, His Prophet, and His Deen. Obviously, the economic system that would emerge as a result of the cleansing of the hearts and spiritual progress would be radically different from the capitalist system.

Important Message for Students

Grading a homework from my course in Advanced Macroeconomics II, I became aware that the majority of the students did not understand the course materials — they replicated the materials in the textbook or taken from the internet, without displaying any understanding of the words, sentences, and concepts, they were using. This cause me heartbreak and pain, because my passion is to try to pass on the knowledge that has been given to me as a gift from God. Allah T’aala is the One who gave us knowledge of that which we did not know, and this knowledge is the greatest gift of God to mankind.
(39:9) Are those who have knowledge and those who have no knowledge alike? Only the men of understanding are mindful. 
I would like to see many more students who understand what is being taught. The material that you are being taught is at the frontiers of the field, much more important and relevant than what is being taught at Harvard and MIT today. Furthermore, the subject matter is VERY EASY compared to what is taught in standard Macro textbooks today, which involves heavy and incomprehensible mathematics. What I am teaching is simple, common-sense stuff.
SIDE-ISSUE: Of course, an immediate question that arises is: IS THIS the knowledge being referred to in the Holy Quran? The idea that there are domains of knowledge outside the purview of religion is “The Second Poison: Secular Knowledge“. Seeking knowledge, when acquired for serving the creation of God, for the sake of the love of God, is a form of worship. If we study economics to protect the Ummah from the likes of John Perkins — “The Confessions of an Economic Hit-Man” — then we are performing act of service to humanity, which suffers greatly due to faulty economics which has led to the global financial crisis, as well as environmental collapse of the planet, and also widespread immorality.
Coming back to the MAIN THEME — how can students become better at the acquisition of knowledge — learning to understand what is being taught. I provide a diagnosis first:
Failure to understand is partly my fault. I have been only lecturing, and I have not had time to conduct question and answer sessions. This is essential, because students do not understand until they raise questions, and think about material. Unfortunately, I have serious time constraints. If I stop for Q/A, I will be able to cover only half the material. And you NEED to know all of this material in order to be able to write a good Ph.D. thesis in Economics. However, as I have explained in “Teaching Fish to Fly“, a real education requires personalized attention to each student, and tailoring the content to the capabilities and interests of the student.
Failure to understand is also partly the fault of the METHOD of teaching that you have been accustomed to in the past. It only focuses on making you memorize things without understanding them. You have not learned to pick up concepts, ideas — you have only learned to IMIITATE without understanding.
Failure to understand is also partly YOUR fault — you have not put in the EFFORT – blood, sweat, and tears — required to understand. You have not put in this effort, because you DO NOT KNOW the value of knowledge — This is a paradox. If you do not know that it is of value, then you will not put in the effort. But if you do not put in the effort, you will not find out the value of knowledge. This is why the first (and maybe the ONLY) JOB of the teacher is to inspire and motivate students — the students cannot be TAUGHT anything, they can only learn by their own efforts, but how to make the students realize that it is WORTH it to make the effort? This is the job of the teacher. This is why I frequently give talks to students trying to inspire and motivate them. Students need emotional energy in order to put in the efforts required to master the subject. They also need to overcome the Fear of Failure, which has been created by a hopelessly bad educational system. Students have been taught huge amounts of matter at levels far beyond their current capabilities, and have absorbed the WRONG lesson that they are too stupid to really understand the subject matter. The truth is that the subject matter has been inappropriately chosen, in a one-size-fits-all manner, and no attention has been paid to TRYING to get the students to understand, by taking them from their current level of understanding in a step-by-step way, to where they need to be taken. So we need to RESTORE the confidence in the students that they CAN learn, and previous failures to learn have been due to bad teaching, not due to their own incompetence.
Some of the posts below address the issues raised above in greater detail. Some of the talks below are in Urdu (when I need to communicate to my students in a heart-to-heart way, then Urdu is essential). Others are in English. If any one would like to see translations (either written or spoken, and in either direction), please mention it in the comments on this post, and I will try to provide, if I see high demand for something. ALSO, please JOIN the Islamic WorldView blog, by clicking on the JOIN button which appears on the homepage for the blog.
Secrets of Success: Lessons from my life experiences — recent video-lecture in Urdu (1hr 45m), farewell to my PIDE students as VC PIDE, giving them the essence of what I have learned about the pursuit of knowledge from a lifetime spent entirely in teaching and learning.
Reaching Beyond the Stars: English post, explaining why we should not sell our lives cheaply, for jobs and money. Instead we should set very high goals, even going beyond the stars.

The Ways of the Eagles: This lecture explains to the students that our current education teaches us to be crows, to feed on dead matter, which weighs us down. To soar like Eagles, we must change our vision, and aim high.

Urdu: Unlock Your Infinite Potential – Short ten-minute convocation speech urges students to realize their hidden potentials. Brief summary of main points of talk is provided in English in the post.

Exploding Myths which Block Our Minds: English post explains how certain myths are implanted in our minds which make us think we are human resources, for sale in the market for labor. These myths prevent us from realizing that we are unique creations of God, and the gift of life we have been given is of infinite value, if we can learn how to use it well. So we must avoid turning into a part of a money-making-machine, and instead learn how to be real human beings.

Talk/Discussion with PIDE Students: Post provides a brief English Summary and a link to video of the urdu talk. The topic of “Stop making excuses, and start taking responsibility” explained how, instead of making excuses for failure, we should have the courage to try and fail. Success comes from determination to succeed — to keep trying after multiple failures, without giving up hope. The talk explained the obstacles that arise due to false indoctrination via our Western education.

The Search for Knowledge: (English video & summary) This was a training on Research Methods at PPMI. I explained that the concept of “Knowledge” is very different in Islamic and Western traditions. Because knowledge itself is differently defined, methods of SEARCHING for knowledge (research methods) must be different in Islamic and Western traditions. What these differences are, and how we can do research which would be beneficial for us and be of service to humanity — these topics are discussed at length.

Farewell to IIIE Students: (urdu) Some five years ago, when I left IIIE, IIUI for PIDE, some students organized a farewell party, and I gave them some words of parting advice.

The Central Importance of Knowledge: To be motivated to learn, we must understand how vital knowledge is to the business of living. Unfortunately, since we been bombarded by completely useless knowledge in our Western education, we have learned the OPPOSITE lesson — the knowledge is of no use except to pass exams. To correct this understanding, we must re-learn the Islamic concept of knowledge, instead of the Western concept.

Is Islamic Knowledge Relevant for Modern Business?: Apparently the West has been extremely successful at business, acquiring huge amounts of wealth, while we in the Islamic world have been left far behind. So it would seem that Islam is an OBSTACLE and a HINDRANCE for learning to do business, instead of being relevant and useful. This is an illusion, created by the idea that our goal in life is the accumulation of wealth. If we want to lead meaningful and rich lives, we must change these goals. The deadly nature of current business – complete destruction of planet and humanity, due to exploitation for wealth — has become obvious to those who are at the center of Western business. Islam offers us the solution to the problems of today.

How to Inspire and Motivate Students: A writeup for teachers explaining how we must change both the substance and the style of our teaching, in order to inspire and motivate our students. The style means that we must view all of our students as having the potential to change the world, and we must take very seriously the responsibility we have been given, in being given a chance to nurture, nourish and develop this potential. The substance means that we must make efforts to make sure that what we teach is relevant and important for solving problems in our personal and social lives.

Guidance for Research for M.Phil/Ph.D. Students: This post provides practical advice on how students can choose research topics and writeup research proposals for M.Phil. and Ph.D. in light of Islamic views about knowledge and the search for knowledge.

There is a lot of material here. I always emphasize that we should take small steps and keep working with patience over a long period of time. There are no shortcuts to the acquisition of knowledge. It requires long run sustained efforts. You should select a pace at which you can continue for a long period of time, instead making a huge effort, and then getting tired and giving up. You — my students — are my hope for the future. Your success gives me the greatest pleasure, and your failures make me sad. All my prayers are with you — May Allah T’aala enable you to realize the tremendous potential which you were born with, and use you to change the future of the Ummah and all of mankind.

Development: Myths & Truths – Materialism Versus Idealism

Part of Lecture 5 of Islamic Economics 2019 at IIIE, IIUI [shortlink: bit.do/azdmt ] – For full paper, see: Development: Myths and Truths & also: Is Development Accumulation of Wealth? Islamic Views.

The main theme that runs through all of my articles is that the message of Islam, which changed the course of history 1450 years ago, is just as powerful today. However, Muslims fail to realize its power, and think that today our path to development lies in following the West. WHY do Muslims fail to realize that their own religion contains the keys to the revolution and success that the Ummah is looking for today? This is a HUGE puzzle.

The key to solving this puzzle is to understand that Europeans colonized the world and had control of nearly the entire globe (Europe conquered all but five countries ) by the beginning of the twentieth century — Most  importantly, we do not realize that colonization is, in the first place, colonization of the mind (see History: Conquest Song of the Victors). In order to be colonized, and made to serve as useful subjects, we must learn to think of the world in the conceptual frameworks furnished by the colonizer. One of the central ideas of the colonizers is to justify their conquest by presented the Europeans as superior to us in all ways, and our own civilization and heritage as inferior and contemptible (see The Conquest of Knowledge). Our own traditional educational systems were systematically destroyed, and replaced by Western institutions which were designed to create a deep seated inferiority complex.  These educational systems continue to function today, and continue to poison our minds with the idea that development is what the colonizers defined it as — namely accumulation of power and wealth. Once this myth is planted in our brains, then it becomes impossible for us to realize the power of the message of Islam — because we evaluate the message to see if it will give us power and wealth, instead of looking at the radically different definition of development that Islam offers. Islam provides us with the means of self-transformation, realizing the hidden capabilities of excellence that all human beings are born with. This inner transformation leads to an external transformation of societies and the world.

The first step requires a radical alteration of mindsets, a paradigm shift. This involves cleansing our minds of the myths implanted by our colonizers, and replacing them with truths which Islam gave us 1450 years ago. My article on Development: Myths and Truths discusses a dozen myths which we must replace a dozen truths. Three of these myths can be classified under the heading of “Materialism Versus Idealism”. These three myths are the subject of this post. A video talk in Urdu, which was part of Lecture 5 in Islamic Economics 2019 at IIIE, IIUI is linked below – this is part 1,and part 2 will be provided in a later post.

Materialism Versus Idealism

Human beings are made up of body and soul. The materialistic philosophy which we have absorbed in our Western education teaches us to give great importance to the BODY and ignore the soul. The fact is that without the soul, the body is dead. Material by itself is dead, and only our ideas make it useful. It is the power and the energy of our hearts and mind, ideas and passion, which brings about change. A Western education teaches us the opposite lesson in many different ways. We discuss three myths which poison our minds, and prevent us from realizing the full potential given to us by God.

Myth #1: Materialistic Determinism

Materialism is a philosophy which gives primacy to material circumstances as determinants of history. That means that the fate of nations is determined by material circumstances – if they have good geographic location, natural resources, and other favorable materials, then they will progress. Lack of development is explained by inadequacy of natural resources. On this view, nations are undeveloped because they lack material resources.

Throughout human history, it has been IDEAS which have changed the course of history. The tiny country of Japan has virtually no resources except one INVISIBLE resource — this was ONE of the four countries which was never conquered by the west. As a result, their MINDS remained free of colonization, and they were able to become world leaders and overtake the USA and the richest Western countries in many dimensions.

Another easy way to see that the idea of material determinism is wrong is the following. It can be checked that in terms of material resources, USA, Russia, Brazil and India were roughly on par in the early nineteenth century. Yet all four have had drastically different development trajectories. If the theory of material determinism was even roughly correct, then this should not have been the case. Political and Social structures, shaped by ideological and material struggles, matter immensely for development.

Truth #1: Visions and Ideas are Powerful

The history of mankind is the history of visionaries and idealists, men committed to grand ideas who gave their all and changed the course of history. The greatest example for us is our Prophet Mohammad S.A.W. who took the Arabs from the bottom to the top fourteen centuries ago. At the time, the Arabs were primitive and illiterate nomads in a world which had advanced civilizations like Roman, Persian, Egyptian and Chinese. Historians like Hart (2000) have correctly identified our Prophet Mohammad S.A.W. as the single most influential person in human history.  His life changed the course of human history forever, and his work has deeply influenced the lives of more than a billion people on the planet today, fourteen centuries after his passing. What material changes did the Prophet bring about which created this revolution? The answer is NONE. He did not introduce new weapons, techniques of warfare, or any new industry or technology. He gave a new vision to the Arabs, in the shape of Islam, and this vision re-shaped the world.

Throughout history, it has been men of vision who have brought about the greatest changes, unconstrained by material resources. Karl Marx was dismayed by the exploitation of laborers by capitalist as a result of the industrial revolution in England. His vision of an egalitarian world where each would be provided for according to their needs captured the imaginations of many. It changed the course of history in Russia and China; no material means were involved. It is ironic that Marx himself was one of the greatest advocates of material determinism, since the impact of his ideas furnishes such a strong counterexample to his own theories in this regard. In a similar way, it has always been leaders with visions which have, for better or worse, changed the development trajectories of their nations.

It is important to clarify that ideas by themselves cannot directly impact the real world – they must always be translated and implemented via material means.  This means that there will always be an apparent material cause, which allows us to ignore the vision and idea behind the material cause. For example, materialists might argue that the atom bomb led to the US victory over Japan. This ignores the ideas which led to the conception  of the atom bomb, as well as the ideas which made it morally permissible to kill millions of innocent civilians as a demonstration of power.

Lesson #1: De-colonizing the Mind

If material circumstance will not determine our development trajectory, then what will? My main contention in this article is that the greatest obstacle to development is the vast number of wrong ideas which we have absorbed due to a western education. Removing these blindfolds from our heads will enable us to clearly see the pathways to progress. This must be the first step, though certainly it will not be enough by itself. It is essential to see the goal clearly, before one can take steps towards achieving it.  In particular, development will not be achieved by any of the popular nostrums – such as privatization, liberalization, good governance, democracy etc. – being touted as the remedy for our ills. Another important consequence of unlearning material determinism is the importance of people. Human beings like you and I have changed the course of history by learning new and powerful ideas. Thus our ignorance is responsible for current conditions prevailing on the planet, and knowledge will guide us to the efforts required to change them. The understanding that we can change things is one of the most powerful ideas that is required to make changes. The oft-expressed despair that we are locked into a bad condition, and there is nothing we can do to change things, is a powerful obstacle to progress. We have to learn that WE CAN MAKE A DIFFERENCE, if we try hard to do so.

Myth #2: The World is built of Stones, Mountains and Rivers

The materialist world view tells us that we live in a world constructed out of mountains, rivers, oceans and continents. There are physical laws which bind every particle to a determinate trajectory. These are concrete hard realities, written in stone, which constrain the scope of our possible actions. As individuals, we have very little power to change things. An individual weighing 80 Kilograms cannot make much of a dent in a world massing thousands of metric tons.

While no one can deny the existence of the world out there, it is also true that we all have a picture of this world in our own minds. This picture is a very rough approximation of the true reality out there. When we think about the world, we have no access to the “true reality” – we only have access to the mental representation of this reality within our minds. Nearly all the furniture in my mental landscape — Hiroshima, Africa, the Mongols, the Steam Engine, Red Indians, Baghdad – consists of accounts that I have read and absorbed, rather than experienced reality. Our lives and actions are far more strongly influenced by this mental representation of the world, than by the real world.

The materialist world view is based on the idea that the mental representation of reality is a close and accurate match to the true reality. If this is true, then our IDEA of reality is the SAME as reality and so the material reality completely determines our picture of the world out there. The truth is that our picture of the world is VERY DIFFERENT from the real world, and this picture is built by our own ideas based on our ideological frameworks. For example, a Hindu and a Muslim living in Indo-Pak subcontinent will have very different conceptions of history — one will think that his land was invaded by foreigners, while the other will trace his roots to the advent of Islam 1400  years ago. Yet both live in exactly the same material reality.

As Keynes (1936,p 383) said:

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

We have a large number of ideas about the world we live in. We are used to thinking in binaries – this idea is true and that one is false. We also believe that there is only one set of true ideas which describes accurately the world we live in. A collection of ideas which shapes the world we live in may be called a worldview. There are many alternative worldviews possible, all of which provide explanations of the facts we see. We have a free choice among worldviews, which is not constrained by facts. Choice among worldviews must be made on other grounds. Believing that there is only one possible view which is factual, objective and concrete leaves us in ignorance of other frameworks and worldviews. When we are not aware of the extremely important choice of how to organize the world we see into a coherent and understandable reality, then this choice is imposed upon us by others. That is, without any conscious awareness of having made a choice, we accept a worldview implicit in the ways that the world is described to us by others. In support of these ideas, Eribon (1992, p. 282) quotes Foucault:

There are more ideas on earth than intellectuals imagine. And these ideas are more active, stronger, more resistant, more passionate than “politicians” think. We have to be there at the birth of ideas, the bursting outward of their force: not in books expressing them, but in events manifesting this force, in struggles carried on around ideas, for or against them. Ideas do not rule the world. But it is because the world has ideas (and because it constantly produces them) that it is not passively ruled by those who are its leaders or those who would like to teach it, once and for all, what it must think.

Truth #2: The World is Shaped by Human Choices

In opposition to the materialist view, we would like to argue that the mental representation of the world we live in is extremely important. The world out there is not “knowable”. The geography and history of this world is far too rich and complex to be grasped by any mind. This means that the materialist ideal of a perfectly accurate model of reality is impossible to achieve. This corresponds to the Quran[17:85]: “And of knowledge, you (mankind) have been given only a little.” Our experience of the world we live in will be strongly influenced both by the small number of facts that we know, and also by the large number of facts that we never learned during our lives. This places tremendous premium on learning the important facts, since we can never know all of them. But how can we learn what is important, and what is not, without knowing all of them? This is the dilemma of human knowledge.

Our mental models of the world, and our normative conceptions of the good and the bad determine the choices we make in the course of our lives. Our lives are far more deeply affected by the collection of human choices than by the material forces around us. It is stated in a Hadeeth that Allah T’aala creates circumstances in response to human actions – if we make good decisions, then good outcomes results. The Quran (30:41) (see also 42:30) shows that bad actions lead to bad outcomes:

30:41  corruption has appeared on land and in the sea as an outcome of what men’s hands have wrought

Our ideas about the meaning and purpose of life, as well as appropriate strategies for achieving these goals influence our actions.  A huge portion of the world we live in is constructed by social conventions – human ideas about how we should live which command consensus of large communities.  For example, we live in Pakistan. Pakistan is an imagined community; it does not exist, except in the minds of men. Suppose that we could achieve consensus tomorrow that nations should not exist, and that mankind should live in harmony and peace with no artificial national boundaries. Then nations would cease to exist tomorrow. The mental representation of the world does not consist purely of rocks and stones which are concrete and unchangeable. It also consists of powerful ideas, which have acquired concreteness and substance through our consensus and acceptance. Changing our mental models can change the world we live in.

Imagine a world in which all human beings are kind, considerate, compassionate, truthful, responsible, and have the characteristics described as good in the Quran. Alternatively imagine a world in which people are selfish, competitive, ruthless, power hungry, and have the characteristics praised by Machiavelli, Friedman and Samuelson.  Which world would you rather live in? Would it make a difference if there was a huge amount of wealth in the second world, while people lived simply in the first one? Clearly our lives are strongly shaped by the choices, good or bad, that people in our society make. Islam teaches us to prefer the simple life of our Prophet and the Companions, over the luxury and ostentation of Qaroon and Fir’own. The Quran (3:196) tells us not to be deceived by the apparent luxury of the unbelievers. This is in opposition to dominant western teachings which place selfish pursuit of luxury above any concern for the fate of the poor and the oppressed.  These teachings influence humans to choose evil courses of action leading the current state of the world, where tremendous amounts of wealth concentrated in the hands of a few co-exists with huge amounts of misery and poverty for the masses of people. Islam teaches us to care for others over and above our self. The Quran (59:9) praises those who feed others, even though they themselves are in need.  The Prophet Mohammad S.A.W. demonstrated that teaching people to make the right choices can change the course of history and the nature of the society we live in.

Lesson #2: Choosing the Good

To build a better world, we do not need more factories and fertilizer. Rather, we need to change the choices that human beings are making during the course of their lives. The Quran (90:10) states that Allah T’aala  has  “shown him the two highways [of good and evil]”. That is, this world is a test, and man has a choice between good and evil. The Prophet Mohammed S.A.W. came to teach mankind good and evil, and how to make good choices in preference to evil ones. Today, the world is in a bad state because humans are constantly choosing evil over good. The Quran exhorts us to prefer the good, even though our desires favor the evil. To improve the state of the world, we must carry out the mission of the Ummah to spread the good and prohibit the evil.

Myth #3: Objective History is Possible

Another important way in which our mental models influence our lives is in our choice of history, which shapes our identities. The materialist view holds that there is only one unique objective history. In contrast, I would like to argue that history cannot be understood without a point of view. All points of view are automatically biased, and there is no such thing as an unbiased point of view.  As a Muslim, I identify with Muslims who came to India to spread the benefits of the religion of Islam to the people living here. However, this same history could be entirely different if told from the point of view of the Hindus, Buddhists, or neutral third parties. What Indians call the war of independence of 1857 was a rebellion from the British viewpoint, and it could be called a battle between British and Indians from the Chinese viewpoint. The crucial point here is that there are no neutral, objective, and factual standpoints available. To minimize or legitimize British atrocities committed during the war is to deny validity to the native point of view. To fail to understand that exigencies of war necessitated harsh measures is to deny validity to the British point of view. Understanding requires simultaneous comprehension of alternative conflicting and contradictory narratives, and not that of a single unbiased and objective history. This is radically different from the conventional perspective that there is only one “true” and objective history.

History can never be objective because of many reasons. The complete historical record of all events that have occurred since the dawn of time is beyond the capacity of any human being to absorb and comprehend. Only a tiny portion of this history has been recorded, and there is strong evidence that only partisans record historical events – those to whom it matters. Even if we select and learn a hundred thousand facts, these will be a small and insignificant portion of the available historical record. There is no chance that such a small collection of facts will be representative, or provide some sort of an objective picture of the totality, which will remain forever inaccessible to humans. Typically we can know or learn only a very tiny percentage of relevant historical facts within the span of a lifetime. As a result, our knowledge of history is automatically biased, and this is a problem which cannot be remedied.

Truth #3: We Choose Our Past, which Shapes Our Future

It is only after giving up hope of achieving a perfect, objective and complete record of history that it becomes possible to understand what history is about. Our past is not engraved in stone and unchangeable, as we imagine it to be. Rather, we choose the stories we will tell about our past. There are so many stories that it is impossible to tell them all. We are free to choose the stories we tell about our past, and our choices create the world we live in – they become part of our mental representation of the world. The vast majority of what I consider my history is events that I have read about, not ones I have experienced. So we choose our past by choosing what to learn about our past. The stories we tell about our past will determine what we consider worth striving for, and also delineate the space of actions open to us.

We find three different schools of thought regarding Islamic history – all three believe in the possibility of objective history, and hence dispute among themselves as to which is the “true” history. One school of thought projects the past glories of Islamic civilization, and refuses to look at the dark side. Another school of thought finds only darkness, and virtually no saving grace. A third school believes that objectivity requires that every time we tell a good story about the Islamic past, we must balance it by telling a bad story.  Which is the right approach? To answer this question we must consider why we want to tell stories about our past.

A naïve answer is that we want to tell the “true” story of the Islamic civilization. As already discussed, this is impossible. It is not humanly possible to present the true story of fourteen centuries of an infinitely diverse and complex set of social, cultural, economic and political interactions within the vast Islamic empires. The available materials are too vast to be studied within a lifetime of any human being, and what is not known is far greater than what is known.

Going beyond the simplistic “search for truth,” history serves a varied and complex set of purposes which we cannot adequately summarize in a few paragraphs. Instead, we will just focus on a few points of relevance to what follows. History serves to define our relation to other human beings, and to the large scale human projects and visions which shape the world we live in. It provides meaning to our lives, by putting them in the context of a bigger picture. It provides a purpose and direction for our struggles.

Lesson #3: History as a Tool and Weapon

To understand the functions of history, imagine forgetting our history for a moment. Then we become just one anonymous individual, a drop in the ocean. History is what ties us to the past and connects us to the future, giving our life meaning beyond its finite span. To give a concrete illustration, consider the following summary of Islamic history by Marshall Hodgson (1977, p.71 ):

Muslims are assured in the Quran, ‘You have become the best community ever raised up for mankind, enjoining the right and forbidding the wrong, and having faith in God.’ Earnest men have taken this prophecy seriously to the point of trying to mould the history of the whole world in accordance with it. Soon after the founding of the faith, Muslims succeeded in building a new form of society, which in time carried with it its own distinctive institutions, its art and literature, its science and scholarship, its political and social forms, as well as its cult and creed, all bearing an unmistakable Islamic impress. In the course of centuries, this new society spread over widely diverse climes, throughout most of the Old World. It came closer than any had ever come to uniting all mankind under its ideals.

… Those who have undertaken to rebuild life in Islamic terms have ventured on an enterprise with a high potential reward – that of winning through to the best that is open to mankind; but with correspondingly great risks of error and failure.

Understanding and absorbing this history makes us a part of an enormous enterprise to spread the good to the entire human race. This enterprise has spanned centuries and taken billions of people within its fold. We can identify with its successes and feel sorrow at its failures. Such a history provides courage, vision, perspective, and allows us to be philosophical, put up with short term defeats without losing hope. This is radically different from the bleak perspective of the single individual without history, who is necessarily confined to a single lifetime of experiences with no past and no future.

This is why we must tell stories of heroism and valor, instead of despair and defeat, so that our generations have the courage to face adverse circumstances. We must tie in our lives to bigger projects of mankind so that they acquire meaning. To select exceptional stories from our past, extraordinary examples of good behavior, is not “biased” history. This must be done to create inspiring role models; to allow us to persist in enjoining the good even against overwhelming odds. It is our tremendous good fortune that Islamic history has such extraordinary events. Our ancestors have done things which no other civilization can match. We just give one example, out of a thousand and one possibilities. The way that our Prophet Mohammad S.A.W. forgave bitter enemies, and celebrated the conquest of Mecca with humility, and a night of worship at Ka’ba, has been an inspiration for all Muslim conquerors. It stands in stark contrast with the idea that “all is fair in love and war,” and the rapine and loot associated with conquest that is considered part of human nature by some writers.

End of Part I of a dozen myths about development. This part covers the first 3 myths Later parts will cover the remaining nine.  All of the twelve myths were covered in Lecture 5 of Islamic Economics 2019 at IIIE, IIUI by Dr. Asad Zaman. The first half of this portion of the urdu lecture is linked here: Development: Myths and Truths, Part I.  Related lectures about development are also linked below.

RELATED Posts and Videos on Development —

  1. The Third Poison: The Meaning of Development: A Western education teaches is that development means the accumulation of wealth and power. This makes it impossible for us to recognize and understand the value of the teachings of Islam.
  2. Re-Defining Development: Because human beings strive to achieve goals, how these goals (development) are defined has a tremendous effect on our actions. We show that the meaning of development has varied substantially over time, and human efforts, both individual and collective, have been directed towards achieving “success” according to how “success” is defined by society. Thus the nature of our efforts can change substantially, by re-defining what we call development. In particular, Islam gives us radically different goals to strive for.
  3. Spirituality and Development: Part I — Lecture to students at Cambridge University. Since modern ways of thinking say that there is no such thing, the first part of the lecture explains the meaning of spirituality to a secular modern Western audience.
  4.  Spirituality and Development: Part II: The second part of this lecture explains how taking human spirituality into account has radical impact on how we understand development. As already discussed, changing the meaning of development changes the nature of our individual and collective efforts.
  5. What is Development?: Similar to (2) above, the lecture explains that human beings are the greatest creation of God, and development of the hidden potential within us is the real meaning of development. When the Muslims understood this correct meaning, then they changed the world. Now, because Muslims have forgotten the meaning of development, they are ignorant and backwards.
  6. The Quest for Prosperity: Culture and Economy: Our culture defines the meaning of prosperity, and we all make efforts to achieve it. If defined incorrectly, our lives are wasted in pursuit of an illusion. Therefore it is of vital importance to understand the meaning of prosperity, to ensure that all our efforts do not go in vain. Different definitions of prosperity are discussed and analyzed toward this goal.
  7. Colonial Atrocities: The myth that Europeans are “developed” and we in the colonies are “under-developed” can be debunked by looking at the way in which Europeans looted the world in order to achieve their current wealth. The barbarism and violence they inflicted upon all other inhabitants of the world is almost un-imaginable, and shocking beyond belief. Just a few of the examples are given in this article. This is useful for un-learning western models of development.
  8. The First Lesson: Before we can do anything else, we must answer the First Question: What is the purpose of my life? Only after we have an answer to this question, we can assess what we need to do in order to achieve this purpose. A Western education never discusses this question, leaving us with the (unstated) answer that life has no purpose. This is a dangerously false deception, which leads us to waste our lives on meaningless pursuits. This urdu lecture discusses the purpose of our lives.
  9. The Marginalization of Morality: There has been a gradual loss of moral values in Europe, and morality was removed from the syllabus of a college education in the twentieth century.  Thus, even though the west has increased in material prosperity, there has been substantial decline in morality. According to European conceptions, they have progressed because of increasing wealth, but according to Islam, decline of character and morality means that they have been declining. Adopting the Islamic worldview will allow us to see through the illusion of Western progress.
  10. The Conquest of Knowledge: When Europe colonized the world, it also colonized the minds of people all over the globe. Everyone learned to think of the Europeans as superior, civilized, advanced, and paragon of all virtues. In order the break the invisible chains which enslave our minds, we must become aware of false knowledge that we have absorbed via our Western education, and replace it by the realities of the savage and brutal colonization of the globe.
  11. Achieving High Growth: This post shows that if we change our conception of development, then the methods we need to use to achieve progress also change dramatically. Achieving high growth requires first liberating our minds from colonized and enslaved thinking, so that we can visualize the paths to freedom and high achievements.

Islamic WorldView: Central to Islamic Education

An Islamic Worldview: An Essential Component of an Islamic Education,” Lahore Journal of Policy Studies Vol. 1 No. 1, p95-106, June 2007. [post shortlink: bit.do/iwcie] – Urdu Version of Talk (with some additional materials: Urdu Islamic WorldView

First part of Lec 04 in Islamic Economics at IIIE, IIUI, by Dr. Asad Zaman, VC PIDE, on 8th March 2019. The lecture explains that a Western education creates a Eurocentric WorldView, according to which human history begins with 16th Century Europe, when mankind first learned to reason. All good things known to man were invented in Europe over the next few centuries. After realizing that the entire world was in darkness and ignorance, the European spread out over the whole world to share the wonders of their advanced civilization with barbarians and savages inhabiting the rest of the world. For example, Lord Cecil Rhodes (1902) declared that “… we are the finest race in the world and that the more of the world we inhabit the better it is for the human race.” He thought that non-Europeans were “the most despicable specimens of human beings”, and needed to be governed by the English to learn to be civilized. Unfortunately, these poisonous ideas of European superiority, and our inherent inferiority have been absorbed by many, leading to a “Deep Seated Inferiority Complex.”  The only way to overcome this problem is to replace the Eurocentric WorldView by and Islamic Worldview. This is explained in some detail in the half-hour lecture linked below. 

An OUTLINE of the talk, and a 2300 word summary of the paper is given below — Full paper is also linked at the bottom of this post

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Islamic Econ L03 Learning to Live and Grow to be Human

This is the audio recording of the third lecture on Islamic Economics, delivered on Friday 1 March 2019 at IIIE, IIUI by Dr. Asad Zaman, VC PIDE. This lecture was split into three parts, which are briefly described below. An audio recording of the full lecture is also linked below

First Part (L03 p1): Intentions — [download Audio: MP3]

Question: With what intention are we sitting here? The students should reflect upon this, because this ties up with the more fundamental question: what is the purpose of our lives? Generally speaking, without thinking about it, we have been conditioned to think that the purpose of an education is to get a degree, and the purpose of a degree is to enable us to get a job, and a job is necessary for us to live a decent and comfortable life. Furthermore, the purpose of our lives is to make money, in order to enable us to enjoy the comforts and pleasures this worldly life has to offer. This effective brainwashing is performed without any actual discussion of whether or not this is a worthy purpose on which we should spend our lives. Now my first purpose, as a teacher, is to make you students aware that you have been brainwashed. This was the main focus of the previous lecture, which discussed how foreign ideas, which conflict with our own natural beliefs, have been implanted in our minds via a Western education.  My second purpose is to make students aware that this life is a unique opportunity. Every human being is infinitely precious — the Quran teaches us that saving one life is like saving all of humanity — billions of lives. But how can this be? How can one life be equivalent to billions. The answer lies in the potential — just like one seed has the potential to become a tree (and more seeds, with millions of trees) — so every human being has been create with an enormous amount of potential. My job is a teacher is to nourish and nurture that potential, and to allow it to grow. The potential is already present inside the seed, which has been given the DNA which contains full instructions on how to grow. My job is to provide the right environment, and the water, soil and nutrients to allow the seed to grow. But the first job is to remove the poisons which have been placed in your hearts and minds by a Western education; it is only after cleansing these poisons that growth becomes possible. The strongest of these poisons is the IDEA that our lives are can be purchased for money, that we are commodities for sale in the market. This idea has to be replaced with the realization that every human life is so precious that all the gold on the planet cannot pay for one minute of our time.  How can we do this? This requires a lot of work on different fronts. But one key tool is to understand IDEAS — what they are, how they operate, how we learn to believe them, and how we can separate our identities from the ideas that we have. This last is especially important, because one effect of false ideas is to give us a false sense of identity — we are students, professors, engineers, doctors, — all commodities in the labor market. The fact that as human beings, we were created by God, and we made promises to God which we must fulfill, and that we will return to God, does not figure prominently in our identity — this is a big mistake, since the real success will depend on our knowing this, and living with this knowledge in our daily lives. In order to overcome the effects of this brainwashing, which teaches us to sell our lives for money and materials, we have to learn to reject these ideas, and learn to set very high goals for ourselves: “Reaching Beyond the Stars”.

Second Part of Lecture: The Labor Market  —

[download audio: MP3]

“De-programming” is the process of cleansing our minds and hearts of false ideas which have been implanted by a Western education. One of the strongest of these is the idea that the purpose of our lives is to make money and enjoy pleasures of this worldly life, and that our lives can be purchased for money, as in the labor market. One very useful tool for de-programming is to study this idea itself – when it arose, who first said it, what were the other ideas that were used against it, how this idea came to be dominant, which groups does this idea favor, and whose interests are hurt by this idea. The idea that the value of human life can be measured in monetary terms gained strength and became dominant in the process of the Great Transformation in European thought that took place between the sixteenth and eighteenth century. It is very important for  us to study this great transformation, because the ideas of the Europeans have spread all over the world due to their colonization of the world, and the spread of Western educational system. Understanding their roots and analyzing these ideas puts us in a much better position to cleanse our own minds, and also to combat these ideas which dominate the world scene today. For this purpose, two books are very important.

One of them is by Karl Polanyi: “The Great Transformation: The Political and Economic Origins of Our Time” . This book describes how industrialization led to the possibility of massive over-production far above and beyond the needs of the society. Traditional societies (including pre-industrial Europe) valued self-sufficiency and did not prize wealth or excess consumption. The possibilities of over-production gave power to the producers, who produced armies and grabbed wealth, and then became able to shape thoughts and politics. They created a major social transformation, which turned values of traditional society upside down. To find markets for surplus, Europeans colonized the world, destroyed self-sufficient societies, and created the concept of comparative advantage to teach the colonies to produce only raw materials, so that they would provide markets for the industrial products of England. An essential element of the Great Transformation was the creation of a “market for labor” so that people would sell portion of their lives to enable mass production in industries. The deeper point here is that in order to create a capitalist society, compatible with excess production, it was necessary to transform traditional ways of thinking and replace them with new ideas like consumerism and “human resources” for use in factories. Understanding this historical process creates the possibility of liberating ourselves from the thoughts that have been forced upon us. See also “Breaking the Chains of Colonial Thought”.

The second book which is of great relevance in understand how ways of thinking of the Europeans changed from Christian to Secular is R H Tawney: Religion and the Rise of Capitalism. This book starts by noting that in the sixteenth century, European society was Christian, and believed in the Biblical maxims that “Love of money is the root of all evil”. But over the course of two centuries, this idea was discarded and replaced by the saying of George Bernard Shaw that “LACK of money is the root of all evil”. How did it happen that the accumulation of wealth went from being undesirable, to becoming the goal of life? This change in thought processes is very important to understand, especially because the same process is currently under way in Islamic societies. For more details on this transition, see “The Pursuit of Wealth”. It is worth noting that it is only after the pursuit of wealth became socially acceptable that the institution of BANKS — which permit people to accumulate wealth — arose in the West.

Third Part of Lecture: Essential Knowledge for Our Times

[download audio:MP3]

The knowledge that the West has to offer teaches us how to sell ourselves for a higher price in the labor market. In contrast, the knowledge of the Quran and Hadeeth, teaches us how to learn to be human. How to develop the capacities that are hidden inside the hearts of all human beings. A real human being cannot be purchased for all the gold in the world. How can we acquire the real knowledge which will allow us to grow? The first step is to change our ways of thinking — to learn what is of value, and to reject the illusions. As Allah T’aala has said in the Holy Quran: Do not be deceived by the apparent success and luxury of those who reject the message. The first step towards learning to be human is to change our internal values — learn to view the world differently, by thinking of eeman as precious and this world and its glories as temporary and trivial. It is only if we value the treasures of knowledge that were revealed to the Prophet Mohammad SAW, that we will be given the understanding we need. Today our eyes have been dazzled by shine of Western knowledge, and so we cannot understand and appreciate the deep wisdom of the teachings of the Quran.  See “The Great Divide: Heart and Head” which explains how the message of the Quran addresses our hearts and souls, while Western knowledge is only for the head — it cannot create the inner spiritual transformation that is the goal of Islamic teachings.

To achieve the desired change, to realize the unlimited potential for excellence that Allah T’aala has placed within each human being, we must work on three fronts. One is the normative — learn about and understand the ideal standards of behavior, written in the Islamic traditions, and demonstrated in the life of our Prophet Mohammad SAW, and his companions. Two is the descriptive front — understand our current state of mind, heart, and soul, and diagnose the spiritual sickness that has been created within us by our Western education. Three is the transformative front, which is about how we can change ourselves from our current situation towards the ideal. In this effort, it is very important to have both the knowledge and the guidance from good companions, who are also travelling on the path towards God. Allah T’aala sent both the Book, and the Teacher of the Book for our guidance. Similarly today, we need both the traditions, and a guide who can teach us and who can demonstrate the teachings for us in his life.  See also: “The Quran: Complete and Perfect Guidance”.

The recordings of the three parts, in urdu, provide much more detailed discussion of the issues summarized briefly above.