Talk/Discussion with PIDE Students

On Thursday, Mar 22, PIDE Students group Pakistan Study Circle organized a talk by Dr Asad Zaman, VC PIDE on topic “Stop Blaming, and Start Taking Responsibility” followed by question/answer session. The talk and discussion were in URDU. Some of the key points covered in the talk were: (shortlink:

  1. Our current mindset: Strongly influenced by capitalist media. Thousands of wrong ideas about life have been planted in us. These false ideas poison our minds and hearts. Purification (Tazkiya) is needed.
  2. One of the biggest wrong ideas is that the purpose of life is to earn money. This is what turns us into wage-slaves. We are willing to be bought and sold for money, and we think that our lives can be paid for by someone who offers a high salary. We can do anything — even killing babies — for the sake of money. (see video lecture on Capitalism in Crisis)
  3. The antidote to this poison is to realize our true worth. Every human being is more precious than all of the gold and silver on this planet. We have hidden potential, amazing capabilities, that we need to develop. But we only have ONE chance to live. If we waste it in the false pursuit of money and pleasure, as the poisonous ideas that we have swallowed teach us to do, then we will destroy our lives. (For more explanation, see earlier post: The Ways of the Eagles).
  4. The second major misconception is about the value of different kinds of knowledge. We have been deceived into believing that Western Sciences are the most precious type of knowledge, and the traditional Islamic teachings are worthless. We have invested huge amounts of time and energy learning Chemistry, Physics, Biology, Economics etc. because we think that these subjects can create the change and progress that we seek. In fact, this learning is useless when it comes to building character, which is what is needed to transform our personal lives, and to transform the destiny of the Ummah. (see: The Marginalization of Morality)
  5. The antidote to this poison is to understand the Islamic teachings created a revolution 1400 years ago, catapulting ignorant and backwards Arabs to world leadership, and creating a civilization which dominated the globe for a thousand years. The surprising thing is that these teachings STILL have the same power. If we understand and implement them in our personal lives, they will create an inner transformation and revolution — unlike Western sciences, which have no relation to our personal lives, and deaden our hearts, and kill our spirituality. If enough people create an inner revolution, and learn to develop their potential for excellence buried within every human heart, they can create an outer revolution and change the destiny of all human beings. (for more details see: The Modern Mu’tazila)

The revolution created by the teachings of Islam has been well-described by Syed Abul Hassan Ali Nadwi in has famous book: “What the World Lost Due to the Decline and Fall of the Muslim Civilization” (links to English Translation)– this book, originally written in Arabic, has been translated into more than eighteen languages (Urdu Translation: Insani Dunya per Muslmanon Kay Urooj Aur Zawal ka Asar; A shorter, 30 page Urdu Summary). Unfortunately, one of the poisonous ideas we have swallowed is that today, the message of Islam is no longer relevant. Today we need to follow the West if want to progress. Actually, the challenge for us today is the same as it was 1400 years ago: If we can understand and implement the teachings of Islam, we can launch a revolution today, just as the early  Muslims did 1400 years ago.

The talk was followed by a question answer session. An audio recording of the whole 1hr 25m session is linked below.

See link for more writings on Islamic Topics.



My PTV Interview on Sky is the Limit

A few months ago, I was interviewed for this TV show called “Sky is the Limit”. The YouTube Link for the 54m Interview is attached. Shortlink:

For more personal information, see the “About me” section on my personal website:

Economic Theory: Normative Judgments Disguised as Objective Realities

Islamic Economics can serve as a tool of essential importance to the struggle for economic justice and equity, and for provision of water, food and basic needs to the poor. As many have realized, Knowledge and Power are different faces of the same coin. The Power of the 1% is closely related to Economic Theory, which is designed to propagate, perpetuate, and justify the disproportionate power they wield in the capitalist economic system. It useful to relabel conventional economics as ET1% to recognize the intimate link between the power of the top 1% and the Economic Theories which are used to implement and enforce this power.  Today, these disastrously harmful economic theories are currently being taught at universities throughout the world, including the Islamic world. These theories poison the minds and hearts of the muslim youth. This brief talk explains how theories which are normative value judgments which support the position and power of the wealthy — the top 1% — are presented as objective facts about economic realities:


It is essential for us to create a genuine Islamic Economics to counter this poison. Although the number of ways in which Islamic Principles can make a difference are too numerous to cover in a short article, we concentrate on the most important priority. This is to understand that NORMATIVE judgments are central to economics. Economics was and still is a branch of moral philosophy. Neoclassical economists deceive themselves, the general public, and unfortunately, Islamic Economists, into believing that their subject is descriptive, positive, factual, and does not involve normative judgments. In fact, it is impossible to do economics without normative evaluations. To see this clearly consider the concept of Pareto Efficiency. According to this almost universally accepted idea among economists, property rights are more important than basic needs. If one wealthy person has a trillion dollars, while thousands are starving, a redistribution of wealth would not be Pareto efficient. Islam prioritizes basic needs over rights to property and declares that the needy have a right in the wealth of the rich. There is no question of neutrality; any stance that we take on this is a moral position. We cannot avoid making moral judgments when we study economics. Many authors have shown how normative principles are hidden within apparently objective frameworks in economics. We briefly list five such authors, to provide a starting point for the crucial project of exposing the hidden norms. Once these norms are recognized, it would be possible to provide alternatives which provide for fairness, equity, and justice along more natural Islamic lines.

  1. Hausman & MacPherson: Economic Analysis, Moral Philosophy, and Public Policy
  2. Julie Nelson: “Poisoning the Well: How Economic Theory Damages the Moral Imagination”
  3. Robert H Nelson: Economics As Religion
  4. Hill & Myatt: Economics Anti-Textbook
  5. Asad Zaman: Normative Foundations of Scarcity

For each of these works above, we provide a brief selection of the norms they expose which are hidden within conventional economics.

Hausman and MacPhersonEconomic Analysis, Moral Philosophy, and  Public Policy, discuss how policy decisions inevitably and invariably involve value judgments. From the extensive set of moral implications of economic policies discussed in the book, we pick just one example. Economists assert that Utility Maximization is “Rational”, which is obviously a normative value judgment. This is neither descriptively accurate, nor is it useful as norm. There is enormous amounts of empirical evidence that people do not maximize utilities – see, for example: “Empirical Evidence Against Utility Maximization: A Survey of the Literature”. So utility maximization is NOT a positive theory, as it claims to be. It does not describe human behavior. As a normative theory, it is actually poisonous – the behavior recommended as rational would be extremely foolish, as Amartya Sen has explained in his essay on “Rational Fools”. For a simple example, consider finite repeated Prisoner’s Dilemma. Those who follow the economic theory of rational behavior do very poorly in this game. Actual human beings trust each other and cooperate, relying on others to adhere to social norms of cooperation even when it is against their selfish personal interests. This supposedly “irrational behavior” by economic standards earns them much higher returns than they can get by selfish behavior.

Robert Nelson in his book Economics as a Religion discusses the many ways in which economists are ideologically committed to their principles, which have no basis in facts or logic. An important one among these is the commitment to efficiency over equity. For example, economists routinely recommend free trade policies, knowing that these will lead to destruction of industries and large scale unemployment. For example, recent studies shows that free trade with China has destroyed a huge number of jobs in the USA. The reasoning for economists advocacy for free trade is that when inefficient industries fail to compete, the resources released – especially the labor employed – will find jobs in other sectors with higher competitive advantage. Economists are so committed to the efficiency of production that they do not take into consideration the human costs which will be involved in this transition. Joblessness creates stress and misery in families, which cannot be measure in dollars. Furthermore, people value communities, and do not move after loss of jobs. Many studies show that people remain in high unemployment regions, instead of moving to get better jobs. All of these transition costs are completely ignored, because economists give the greatest priority to the production of wealth, while families and communities are completely ignored in economic theory. This is clearly a normative principle, which is inhuman.

Julie Nelson: Poisoning the Well: How Economic theory damages our moral imagination People believe in generosity, kindness, cooperation, sacrificing for others.  However, ECONOMIC theory trains them to think of this as irrational. It ALSO teaches them that selfishness leads to social welfare. Thus, against their better nature, people become unkind, selfish, and close their hearts to the pain of others, in the mistaken belief that it is irrational to behave morally. For example, Mankiw writes that “Selfishness, not love and kindness, leads to efficient market outcomes.” Similarly, Stigler writes that people talk about benevolence, but when it comes to action, they all act selfishly. However, this is not true of actual human behavior, as many many studies have shown. When given a choice between selfishness and generosity in the Ultimatum game, the vast majority of people choose generous behavior. This has led many to the realization that economic theory actually creates selfish behavior, which is why Julie Nelson claims that it “poisons the well from which we get our moral ideas.

Hill & Myatt: Economics Anti-Textbook. Among the many arguments against conventional economic theories, Hill and Myatt explain how these theories justify the extreme inequality that we see. The theories of production provide an argument that the share of output is distributed between capital and labor according to their respective marginal products. This is an argument for fairness – both factors get what they contribute to the product. This theory is meant to counter Marxist assertions that capitalists exploit laborers. However this theory is deceptive and wrong in many different ways. In the Cambridge Capital Controversy, Joan Robinson and associates shows that the argument for the Marginal Product was circular, and capital could not be measured. As Hill and Myatt argue, even if capital contributes to production, it is questionable whether “ownership” of capital justifies returns to capitalists. Since modern economic theory treats physical capital (machines) and financial capital (money) as identical for this purpose, it justifies the payment of interest. In effect, modern economic theory makes the same argument for interest that is rejected in the Quran: the trading of money for profits is just like the trading of goods for profit. The main point here is that economic theory justifies the wealth accruing to the wealthy by arguing that this is a reward for their productive activity, even though this is patently and manifestly false.

Zaman: Normative Foundations of Scarcity. This paper shows how three major moral arguments are built into the foundations of the apparently objective concept of scarcity. The first of these is the idea that there is no difference between wants and needs; the economists’ task is to full all wants, whether natural or contrived. This is clearly anti-Islamic, since Islam encourages fulfilment of needs, but condemns the pursuit of idle desires. Furthermore, the supply and demand theory justifies as efficient production which fulfills the demand of the rich, since they can afford to pay for their products. If hungry and sick people are poor, then their demand for food and health-care will not be fulfilled, since the price they can pay does not cover costs of production. This is efficient, according to economic theory, but highly immoral according to Islamic values.

Conclusions: HUGE numbers of absolutely ridiculous, and extremely nauseating value judgments are built into the foundations of economic theory. Economic theory PRETENDS to objectivity because it is the only way to sell its otherwise absurd norms. If these normative judgments were recognized for what they are, a defense of the wealth of the wealthy, then they would immediately be rejected by the people.  Thus they are cloaked in the guise of objectivity and formal mathematics, to prevent people from penetrating to the reality, and keeping them in the dark about the normative nature of economic theory.

Amazing Inequalities

In my paper entitled “Re-Defining Islamic Economics“, I explain that we need to found Islamic Economics directly on principles of the Quran. If we attempt to implement the order of Allah, which stress the feeding of the poor, and the prevention of concentration of wealth among a few people, we would not see the amazing inequalities which currently exist. Furthermore, these inequalities are increasing. Modern economic theory deliberately pays no attention to this, and in fact provides a justification for inequality; as I have said, modern economics should be recognized as ET1% — the Economic Theory of the top 1% — because that is its main purpose.There are many graphical displays of the amazing levels of current inequality; see One Graph, Another Graph, Multiple Graphs.

In a later post, I will elaborate on how Islamic Economics can provide a solution to the major economic problems facing the bottom 90% today. This post is to highlight the recent OXFAM report which explains how extreme the inequality is, and how it is becoming worse. This is the result of the disastrously bad economic theories being used to guide policy today. Follow the link to read the full article, and a video on the subject:

82% of new wealth last year went to the richest 1% – while the poorest half got nothing, says Oxfam

Eighty two percent of the wealth generated last year went to the richest 1% of the global population, while the 3.7 billion people who make up the poorest half of the world saw no increase in their wealth, according to a new Oxfam report released today.

Billionaire wealth has risen by an annual average of 13% since 2010 – six times faster than the wages of ordinary workers, which have risen by a yearly average of just 2%. The number of billionaires rose at a rate of one every two days between March 2016 and March 2017.

This huge increase could have ended global extreme poverty seven times over.

The Oxfam report states that it takes just four days for a CEO from one of the top five global fashion brands to earn what a Bangladeshi garment worker will earn in her lifetime. In the US, it takes slightly over one working day for a CEO to earn what an ordinary worker makes in a year.

(read more)

Welcome Address to New Students at PIDE

AZ Seminars

09 11 2017 Orientation for new students; remarks by Dr Asad Zaman, VC PIDE

I would like to welcome all of the new students of the PIDE.  PIDE is a unique place in many different ways. But first thing to understand is that an institution is not a way of bricks and stones, it is made out of people.  So, know that you are PIDE and what PIDE will be is determined by what you do.  PIDE offers you a huge numbers of opportunities and possibilities which are also unique.  PIDE is currently involved with all of the frontier policy issues that are going to all in shaping the future of Pakistan. We are involved in projects about how we can increase the exports.  We are involved in the policy making regarding macroeconomic issues, like money supply, deficits, trade, and other major economic issues. We are involved with policies for…

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Friedman’s Methodology: A Stake through the Heart of Reason

Economists have adopted a methodology which says that theories dont have to be true. Instead, it is enough that in some situations, implications of the theories match what we observe in the real world. This completely ridiculous methodological stance leads to the acceptance of completely ridiculous theories of human behavior. What is worse is that Islamic economists accept these theories on face value, and attempt to accomodate and justify them within an Islamic framework. This attempt to adopt false theories about human behavior within Islamic Economics has led to the failure of the entire project, as discussed in earlier posts on this blog

WEA Pedagogy Blog

Romer writes that macro-economists casually dismiss facts, and the profession as a whole has gone backwards over the past few decades, losing precious and hard-won knowledge. He does not consider WHY this happened. What are the methodological flaws that create the possibility of moving backwards, losing knowledge, affirming theories known to be in conflict with facts. How is it that leading economists can confidently assert theories which border on lunacy, and receive Nobel Prizes instead of psychiatric treatment?

This is due to the famous AS-IF methodology of Friedman, which gave economists a license for lunacy.  Friedman came up with this defense of orthodoxy when numerous emprical investigation revealed clearly that firms did not maximize profits, did not know their marginal costs, typically used mark-up pricing, and did other things which did not square with neo-classical theories. Friedman’s argument has been universally condemned by logicians and philosophers as an instance…

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The Search for Knowledge

Published in The Nation, 12th Mar 2018. This is a summary of a lecture at PPMI conducted for training of new inductees at the MoPD&R. An 85m video of the entire talk: Research Methodology Training Lecture:  shortlink:

The Search for Knowledge (2265 word summary) 

As Muslims, we are asked to “seek knowledge from the cradle to the grave”. As a first step, it is essential to have clarity about our goals: “what is the knowledge we seek?”. Surprisingly, the definition of knowledge is a matter of ongoing debate and controversy.  To understand this better, it is useful to consider two categories – knowledge of the external world around us, and knowledge of our internal world. The two categories complement each other, and both are necessary for our personal and collective affairs. It should be obvious that the methods required to pursue these two types of knowledge would be substantially different from each other.

The importance of knowledge is obvious, especially to Muslims. The knowledge provided by the teachings of Islam led ignorant and backwards Arabs to launch a civilization which dominated the planet for a thousand years. Knowledge can transform people and societies. Those who have knowledge are given respect and honor, while those without knowledge are considered ignorant fools, even if they have wealth and power.

For reasons detailed elsewhere, European conceptions about the nature of knowledge were distorted by a battle between Science and Religion which lasted for centuries, and was eventually won by Science. Because of this battle, the West came to the false and misleading view that Science is the only reliable source of knowledge. This is certainly true about the external world, but completely false about our internal personal lives, which cannot be explored by standard scientific techniques.

The most important question we all face is: what is purpose of my life? Human action is goal oriented, and social science, or the study of human beings and societies, must necessarily attempt to understand the diverse goals which humans strive for. We cannot understand human behavior without understanding the goals of human action. The victory of Science over Religion in Europe led to the emergence of the secular modern worldview, which provides an answer to this question which is dramatically in conflict with traditional teachings of all religions.

According to the secular modern view, created in opposition to the teachings of the Catholic Church, the universe came into being by a cosmic accident, and will perish in another. Accordingly, our existence is accidental and our lives are meaningless. In this cold and cruel universe, everyone is free to set their own goals, and pursue them with whatever means he can, without any responsibility towards others, or any concerns beyond his present life. This worldview underlies modern economic theory, which assumes that all human beings seek to maximize the pleasure they obtain from consumption of material goods over their lifetime.

The western education that we have all received is built upon foundations which incorporate all of these ideas about our lives and purpose into their framework. As a result, we have been indoctrinated into ways of thinking which are exceedingly harmful, and create major obstacles to our search for knowledge. The idea that hedonism, the maximization of pleasure, is the goal of behavior for all human beings is manifestly false. Psychologists have discovered that actual human behavior is far more complex than simplistic assumptions upon which modern economic theory is based. Even more importantly, human beings are intrinsically social, and acquisition and consumption of material goods is actually harmful to happiness and welfare when it is done at expense of social relations. Research has established the Easterlin Paradox that massive amounts of increases in standards of living have no correlation with increases in life-satisfaction and human happiness.  Both empirically and normatively, the idea that human beings seek to maximize pleasure derived from consumption, or that they should seek to do this, is definitely false.

Before we can start our journey towards the truth, it is necessary to unlearn a lot of false ideas that we have absorbed from our western education. The first of these is that science, or the knowledge of the external reality, is the only valid source of knowledge. In contrast, Aristotle said that “Know Thyself is the beginning of all wisdom”. Social Science cannot be done without understanding human behavior, and the best place to start the study of human behavior is by understanding our own behavior. Introspection yields deep insights not available to economists or behavioral psychologists who are concerned only with external and observable behavior. It is immediately obvious that we act according to diverse, complex, and conflicting motives, and no mathematical formulae could describe our behavior, because we are free to choose and change. Similarly, we are not robots who can be programmed by stimulus and response, as behavioral psychologists believe. Our internal reality cannot be studied by scientific methods because our experiences, thoughts, and feelings are completely unique and one-of-a-kind.

The second idea that we must unlearn is the “Coca-Cola theory of happiness”, which is at the heart of modern economics. If a cool and refreshing drink makes a hot and thirsty man very happy, he should not deduce that he has stumbled upon the formula for a lifetime of happiness. It would be very foolish of him to build a hot sauna next to a refrigerator stocked with cases of cola, and market it as the ultimate pleasure machine. The economists’ idea that the purpose of our lives is maximization of the utility of lifetime consumption is equally foolish. Consumption and acquisition of material goods provide short run happiness but have zero correlation with long-term happiness. Long run happiness depends not on consumption, but rather on cultivation of character traits like gratitude, contentment, and compassion, as well as cultivation of social relationships – loving, and being loved.

The third idea that we must unlearn is about the importance of scientific knowledge. The dominance of technical subjects like chemistry, biology, physics, mathematics, etc. in western education leads to the impression that these are of the greatest importance. A little reflection will show that these have no bearing on our daily lives. At the same time, western education neglects issues of maximal importance, like spiritual and emotional growth, and developing desirable character traits like generosity and courage while getting rid of undesirable characteristics like stinginess, envy, and malice. The dilemma for seekers of knowledge is that they do not have the knowledge required to evaluate claims of expertise. There are many different sources of many different types of knowledge, all of whom claim to have the secret of success. How can we choose among them? The Bible advises us to judge the tree by the fruit it bears. We cannot evaluate knowledge, but we can evaluate the impact of the knowledge on the lives of the bearers of knowledge – though only to a certain, limited, extent. The limitations arise because character traits and spiritual growth cannot be seen or sensed, except by those with sufficient empathy and sensitivity.

Let us look then at the impact of the teachings of Islam on the Arabs, who were among the most primitive people on the planet. Great Civilizations existed next to them among the Chinese, the Persians, the Romans, and the Egyptians. But the teaching of Islam propelled them to world leadership, and changed the character of the Arabs from semi-savages who buried their daughters alive, to those filled with compassion and mercy for all of the creation of God, emulating our Prophet Mohammad SAW. In contrast, consider the effect of a Western education, which produces scientists who can prepare atom bombs without feeling responsible, politicians who do cost-benefit calculations involving trading lives of millions of dead bodies for control over oil, and biologists who create terminating seeds so that corporations can make profits from the hungry and the poor.

It is obvious that Western education cannot create character, since it is concerned purely with external reality, and cannot touch our hearts and souls. In particular, economics degrades human lives by equating their value to lifetime earnings, and transforming humans into resources for the production of wealth. The teachings of Islam transformed the character of the early Muslims, who went on the change the world. These teachings have the same power today. The Quran teaches us that saving one life is like saving the entire humanity. This paradox can be understood in terms of the capabilities hidden within each human being. Just like a seed has the potential to grow into a tree and produce millions of seeds, so there is amazing potential buried within each human soul. So the question of burning importance for all of us is: How can we develop this potential within us, and develop our capabilities to their fullest extent? This, and not the accumulation of wealth, or the search for pleasure, is the purpose of our lives.

The first step towards the unfolding, or the development, of our potentials is to emulate our Prophet Mohammad SAW, who was sent as a Mercy to the Worlds. We must open our hearts to the suffering and sorrows of all of the creation. Parodoxically, the ability to fail pain is closely tied to the ability to feel joy. To the extent that we deaden our hearts to others, we also lose the ability to feel genuine joy. Thus both our worldly happiness and our spiritual progress depend on the opening of our hearts.

The second step in the acquisition of knowledge is struggle. It is only in the process of engaging with the world, struggling to achieve desirable outcomes, that we will be given the knowledge that we seek. We have to become active participants in the battle for the good; we cannot be neutral and detached observers, and hope to gain knowledge. This is again in conflict with Western ideas, which teach the opposite.

The third lesson in the methodology for the acquisition of knowledge is that the process matters, and not the outcome. At every moment, there is the right action to take, the one which brings us closer to God. If we take that action, then we have done the best deed, and we have already achieved success, by choosing the right act. Whether or not the desired outcome occurs is not relevant for our success or failure. This way of thinking is radically different from the teachings of economics, which is highly consequentialist; only the outcomes/consequences matter, and the process by which they were obtained do not.

The fourth lesson is to cultivate within ourselves the passion for acquiring knowledge. The secret of the rise of Islam was the stress it placed on acquisition of knowledge. The ink of the scholars was worth more than the blood of the martyrs. The angels spread their wings beneath the feet of the one who sets out from his home in search of knowledge. The exhortations to learn inspired the Muslims to seek knowledge from all over the world, which was the secret to the extraordinary rise of the Islamic Civilization.

The fifth lesson is to acquire confidence. Centuries of colonization by the West as well as their tremendous technological achievements have resulted in an inferiority complex. We must recognize that knowledge of machines does not create insights into the hearts of men, and we are the best experts on the problems of our own society. We must acquire confidence in ourselves, our heritage and traditions, and in our faith, as being the source of solutions of human problems today, as it was in the past.

The sixth lesson is the plurality of knowledge. Human lives are complex and multidimensional, and understanding them requires the ability to see the same matter from multiple points of view. This requires the ability to lay aside our personal baggage and step into the shoes of others, to see alternative perspectives. Since all human beings have their own unique perspectives, analysis of humans and societies requires the ability to see multiple points of view.

The seventh and last lesson for today is to examine carefully the sources and heritage of the knowledge that we are acquiring. Digging into the origins of knowledge reveals deep insights not available in the binary approach, which merely evaluates whether something is true or false. For example, take todays concerns with governance. Obviously this is a good thing, and worth having, but the question is WHY and HOW did this topic acquire the importance it has today? When we investigate this, we find that the topic rose to prominence when the World Bank programs failed to deliver the promised results. All over the world, the structural adjustment programs resulted in rise in poverty, social and political strains, and very poor growth. In order to escape the increasing chorus of blame, the World Bank found a scapegoat. The problem lay not in the programs, but in the poor governance which did not allow the World Bank programs to succeed. In fact, if we can rise above the inferiority complex generated by centuries of colonial rule, we can see that governance in the USA is just as bad, if not worse, than that of Pakistan. The Senators and Congressmen are just as corrupt, if not more, than our much maligned Parliamentarians.

Research is about penetrating the surface appearance to reach for the hidden realities lying beneath the surface. This creates deep understanding which enters the heart and become part of you. This is very different from the shallow understanding of surface appearances which we have learned as part of our Western education.