An Islamic Approach to Knowledge

Urdu Talk by Dr Asad Zaman at IBA on 26th Jan 2018 – shortlink: — English summary of talk (+ urdu video)  is posted below. For an urdu summary, see: Insaniyat Ka Madar: Tabiati Uloom Ya Islami Uloom? (shortlink:

My paper on “Origins of Western Social Sciences” explains that the amazing technological progress of the West has dazzled the eyes of the Muslims. Physical Sciences are based on knowledge of the external world, while social sciences are based on knowledge of the internal world of the human beings. Knowing Chemistry, Biology and Physics does not lead to insights into the human heart. Economics is based on a hopelessly bad theory that human beings act like homo economicus. Nonetheless, the prestige of the West has led Muslims into accepting completely absurd theories about human behavior and welfare. Economics teaches us that all of us have maximization of the pleasure obtained from consumption as the sole purpose of life  Furthermore, it teaches us that this is “rational”; that is our happiness and welfare depends solely on how much we consume (see “The Coca-Cola Theory of Happiness”. A 30m talk in URDU by Dr. Asad Zaman at IBA on these issues is linked below.

A brief outline of the talk is as follows.

Knowledge is of two types: about external affairs and internal affairs. External knowledge is of the world around us; the physical sciences. Internal knowledge refers to the world inside us; the knowledge of the psyche, heart and soul, of human beings. Western Economic theory, like all their social sciences, is based on a fundamentally misguided conception about the nature of human beings. Because we are all exceedingly impressed with Western achievements in the physical sciences, we find it difficult to believe that they could make serious and fundamental errors in their formulation of the social sciences. However, this is in fact the case. The West has created many myths that are now widely believed throughout the world:

Myth Reality
1 Progress is through external knowledge without taking account of internal affairs.


Physics or Chemistry cannot teach us how to become better human beings.
2 Making profits at the cost of lives is a legitimate business strategy. Human life is infinitely precious and cost benefit analysis is not viable.


3 Everyone aims to maximize happiness that comes from utility of consumption. Happiness actually comes with developing social relationships.
4 Social relationships are hurdles to make progress through money. Social relationships create love, cooperation, sympathy which we all need as human beings
5 Welfare is gained by material goods. Material goods and facilities for better living can bring no happiness if you are deprived of family, friends, social relationships


6 Human resource is an input to the production function. Y = f (K, L). Human beings are the purpose of creation. Wealth is an input to production of human welfare
7 The purpose of life is to earn money, and everything else is subordinate to this goal. All humans are born with amazing and unique potential capabilities. The purpose of life is to develop these capabilities to the fullest.
8 Humans are like robots and behaviors can be predicted by mathematical formulae Human beings have free will, choice, ability to change, and hence unpredictable behavior.

The failures of modern European Social Science are demonstrated by the continuous wars, increasing inequality, environmental catastrophes which threaten the planet. For example,  “Killing children for profit”: almost no human can favor this but today modern corporatioonsd do it roputinely. For instance, companies sell baby milk powder for profits, knowing that this will lead to deaths of large numbers of children. The arms lobby in the USA has blocked all efforts to restrict sales of firearms, even though incidents of people shooting crowds of innocents occur routinely. Madeleine Albright declared on public TV that it was fair to kill half a million children in the Iraq for political benefits. The economic theories currently being taught say that profits is the primary business of business, and they should not be concerned about socially responsible behavior. The misconception that money leads to happiness has made people obsessed with making money, having successful careers, and increasing standards of life and having high levels of consumption. However, this increasing wealth has come at the cost of neglect of family, friends and social relationships, leading to breakdown of families. In a society where more than 50% of the children are growing up without fathers, how can they learn about love, cooperation and sacrifice, and how these lead to happiness?

Consequences of western mis-education in social science:

  1. Death of the spirituality.
  2. No knowledge of human development.
  3. Collapse of society.

How did the West go Astray?: Given that the West has made so much progress in so many areas, it comes as a great surprise to know that they can make such huge blunders in their development of the social sciences. This requires some explanation, since the dominant versions of history are highly Eurocentric – that is, they portray history in a way which puts Europe at the center of the stage.

The truth is the the dark ages of Europe ended when they conquered Islamic Spain, This happened because an increasing taste for luxuries led to decay and degeneration in the advanced Civilization of Islamic Spain – AL-Andalus. It took two centuries for Europeans to absorb and assimilate the treasure of knowledge found in the millions of books in libraries of Andalus. This is what led to the Enlightenment of Europe. This process led to a crisis of thought when primitive philosophies adopted from Greeks and Romans by the Catholic Church were overturned by the influx of new knowledge. This was called the battle of Science and Religion, in which the “science” defeated Catholic religion in Europe. This victory of science led to the emergence of several mistaken lines of thought in Europe, which lie at the root of their current mistaken ideas about social science. Three of these major mistakes are listed as follows.

  1. Europeans came to believe that religion is a superstition which requires belief in the unseen. They invented the philosophy of logical positivism which rejects the possibility of knowledge about the unseen and requires us to confine knowledge only that which we can observe.
  2. Europeans decided to apply methods of science to the study of human beings and societies. The types of mistakes that this led to is discussed in greater detail in my earlier post of “Method or Madness?”.
  3. Completely mistaken ideas about the nature of human beings and societies emerged from their mistaken idea that the mind is the only reliable source of knowledge, and we must reject the heart and soul of human beings. See “The Coca-Cola Theory of Happiness”.

Because of these major mistakes at the heart of European thought, they were never able to construct good theories in their social sciences – see “Economics for the 21st Century” for more details. As a result, the modern theories of economics are found on entirely wrong assumptions about human beings and can be rejected completely. Unfortunately, today the Muslims have lost all confidence in their heritage, and accept any kind of false and misleading idea if it comes from the West (see the Modern Mu’tazila).

Way Forward:

We Muslims are in Compound ignorance – that is, we think we know Islam, when we actually don’t. Allah T’aala has giftged us with extremely precious knowledge, which changed the destiny of the ignorant and backwards Arabs, and made them leaders of the world 1400 years ago. This knowledge has the same power today, but Muslims are neglecting it. Correcting the foundations for economics as a social science requires a deep understanding of the nature of humans. Islam provides us with the knowledge required to transform human beings from the lowest of the low to the best among the creation. Today, what we need is to utilize this knowledge to create an inner transformation within ourselves, and to show the world the path out the current darkness which envelops humanity.,

Our Traditional Educational Systems

Originally published in The News (Pakistan) on Monday, December 1, 2008. Modern educational system are designed to turn human beings into human resources, useful as interchangeable parts useable for the production of wealth. For example, see “Dumbing Us Down” by John Gatto. More specifically, British educational system were introduced in Pakistan for the purpose of creating bureaucrats who would be subservient and loyal to their British masters, and also have their mindsets — creating the “coconut class”, brown on the outside and white on the inside. These educational systems came into being after destroying very high quality traditional educational systems which provided free education to scholars from all over the world. This little known story is recapitulated in my article below:

In Orientalism, one of the most significant and influential books of the twentieth century, Edward Said describes how the European project of colonizing the rest of the world distorted all academic knowledge produced about the East (the Orient). The necessity of justifying and providing a moral basis for the loot and plunder of Asia, Africa and the Americas led to the invention of a large number of Western theories which made it impossible to achieve an objective understanding of the East.  Imperialism and exploitation was cloaked under the noble objective of the White Man’s burden to spread the benefits of his civilization to the rest of the world. The extremely cruel treatment of blacks (leading to an estimated 10 million slaves taken out and about a 100 million killed in the process, over the period of European colonization of Africa), was justified by the invention of racism: according to a US court ruling Negroes were “”beings of an inferior order … they had no rights which the white man was bound to respect.”.
The superiority complex of the West described in Orientalism has a natural counterpart in the inferiority complex in the East. The colonial educational system was designed by Macaulay, who expressed his extreme contempt for our heritage in his famous Minute on Indian education: “(no one) could deny that a single shelf of a good European library was worth the whole native literature of India and Arabia.” Those who absorb this message embedded in Western education, write fiction and essays demeaning and insulting to their own families, culture, country and religion. European superiority becomes an article of faith to those trained to be “Indian in color, but English in taste” and criticisms such as the present one invoke an irritated defense combined with the platitude that if Europeans are bad, we and our ancestors are even worse. To overcome this inferiority complex, we need to learn that the common bonds of humanity that we all share are much stronger than petty differences created by race, nation, ideology and language.
This essay was motivated by a recent article in a leading newspaper contending that “public education began in our subcontinent with the advent of British rule. Before that, no such system existed.” This perpetuates the European myth that we were all ignorant savages and barbarians before the White Man came to educate and civilize us. The facts are so breathtakingly at variance with this picture that they will come as a shock to the average reader. The educational system of India was one of the wonders of the world and people from many lands came to India in search of knowledge and wisdom. A contemporary account from pre-British India  states that while while excellent scholars are present everywhere in India, Delhi can be especially proud of the vast assortment of world class experts in every field of knowledge as well as trade and craft. Among both Muslims and Hindus it was a religious duty to support scholars and to free them from worldly worries so they could concentrate on the acquisition of knowledge. Scholars could and did travel the country in search of knowledge without financial constraints, since they could count on hospitality wherever they went. Private and public libraries galore, books, copyists, authors, public debates, intellectual competitions of many types, testify to a widespread culture of learning, where even courtesans boasted of literary accomplishments.
This culture survived into the early periods of colonial rule: Dalrymple writes that “He [the Muslim man] who holds an office worth twenty rupees a month commonly gives his sons an education equal to that of a prime minister. … After seven years of study, the young Muhammadan … [is nearly the equal of] … a young man raw from Oxford. ” Research on madrassas in early colonial British India shows that: “The syllabus employed at the Nizamia madrassa, which served as a model for madrassas elsewhere, represented a blend of naqli ‘ulum (revealed sciences), including the Quran, the hadith, fiqh (Islamic jurisprudence) and tafsir (Quranic commentary), on the one hand, and the aqli ‘ulum (rational sciences), including Arabic language, grammar, logic, rhetoric, philosophy, astronomy, medicine, physics and mathematics, on the other.”
Our educational systems were destroyed by deliberate British policy, which seized numerous endowments (Awqaf) set up for educational purposes, and denied jobs to all but those trained in the newly setup British educational systems. The destruction was so thorough that not only the educational institutions but the cultural traditions and even the memory of these institutions was lost:
I Lament on the loss of the treasures of the travellers
And even more, the loss of the sense of loss  [Iqbal: free translation]
The British educational system was explicitly designed to create intermediaries between the ruling class and the public; in effect a method of producing bureaucrats and clerks, not scholars. The greatest loss from the introduction of this system has been the transformation of the concept of education as a sacred duty which leads to spiritual transformation and enlightenment, to education as means of acquiring a job.
This problem can only be fixed by reverting to our traditions. In her book The Making of the Modern University: Intellectual Transformation and the Marginalization of Morality, Harvard Professor Julie Reuben has described how universities in the USA abandoned their mission to build character and develop morals, opting for a purely technical education. It was not illiterate savages, but graduates of the finest educational systems of the West who designed the gas chambers used to burn millions of innocent men, women and children in Germany. David Halberstam in his book, The Brightest and the Best, has documented how graduates of Yale and Harvard ran the Vietnam War on the pattern of an efficient business, with callous disregard for human suffering: more than one million civilians died as “collateral damage” in the mass bombings and napalming,  and atrocities and massacres were common. Ph.D. physicists who developed the Nuclear bomb denied any responsibility for Hiroshima and Nagasaki. Leading biologists work for salaries to develop non-fertile varieties of genetically engineered high yield grains so that multinationals can profit from the hunger of humanity. The value of technical expertise is lost if the expert will stuff his pockets at the expense of the public at every opportunity. There is substantial evidence to show that the greed of highly educated financial wizards is responsible for the current global financial crisis. There is a vital need to re-learn and revive our heritage in education, which emphasized character, integrity, honesty and morality in addition to the development of competence in specialized subjects.

The Coca-Cola Theory of Happiness

For a related article, see “The Secrets of Happiness

WEA Pedagogy Blog

The root cause of our hopelessly defective economic theories is a fundamentally misguided model of human behavior. Modern economic theory assesses the impact of policies by replacing all human beings with homo economicus, which is a brain connected to a mouth and stomach. Because the heart and soul of human beings is removed from the picture before the economist begins his calculations, economists are routinely baffled by behavioral economics, based on actual behavior instead of hypothesis. Topping this deep ignorance is an amazing arrogance about “microeconomic foundations” — that even if macro is wrong, at least our micro theories rest on solid foundations! Such assertions leave me speechless; what can you say to someone who confidently claims to be Napoleon Bonaparte ?

Because of complete failure to understand human beings, economists subscribe to a ridiculous theory of human welfare — it is monotonic in consumption. All of…

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Method or Madness?

Due to the battle between science and religion, in Europe (explained in greater detail in elsewhere), European philosophers came to believe that Science was the only source of reliable knowledge. This embrace of reason, and rejection of heart and soul, has cost them dearly in terms of understanding the nature of human beings, which is required for sound social science. This post explains why Western approaches to the study of human beings and societies are fundamentally flawed.

WEA Pedagogy Blog

My article about the Battle of Methodologies, published in March 2018 issue of NewsLine Magazine:

Because of the universal spread and impact of Western educational systems, necessary for survival in the modern world, we have all learned to view the world through glasses manufactured in Europe. Just as a fish is unaware of the waters in which it swims, so we are unaware of the currents of history which have shaped European thought. Yet to understand the world we live in, and how our perceptions have been shaped by the dominance of West, it is essential to acquire an understanding of how the Western worldview has been radically transformed over the past few centuries. In this brief essay, we will discuss the “Methodenstreit”, the battle of methodologies, which took place in the late nineteenth century. While this is only one piece of the complex and multi-dimensional historical experiences of…

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Replacing Western Courses with Islamic Ones

As discussed in many previous posts, a Western education carries many negative messages which seriously damage our students in Islamic countries. One of these is the myth of the Enlightenment, which says that the whole world was in ignorance and superstition until the sun of reason first rose in the West. Since then, the West has made fantastic progress, and all good things currently known to man are the inventions and creations of the West. For a list of articles explaining why this view is wrong, see Islamic WorldView & Countering Euro-Centricism. This post provides a list of courses that I have developed which provide alternatives to the standard Western courses. These alternatives are more in conformity with Islamic views.
The most advanced that I have developed is: Introduction to Statistics: An Islamic Approach — The title itself strikes the audience as ridiculous and absurd — statistics is portrayed as a purely technical subject, how can their be an Islamic approach to means, median, modes, and standard deviations? The first lecture is devoted entirely to answering this question — this is available from the webpage linked below:
The main point of the lecture linked above is that what is meant by Knowledge, and the Adab – etiquette — for acquiring it and spreading — are radically different in the Islamic tradition, from the ones that were taught to me in the West. One of the main differences is that Islam differentiates sharply between USEFUL and USELESS knowledge, The Prophet SAW made dua for the first kind and made dua to be protected from the second kind. This immediately creates an obligation on a Muslim teacher to ENSURE that he is teaching USEFUL knowledge, not just something students need to pass exam. When you try to RELATE statistics to real life, it leads to an entirely new approach to the subject.
The course contains radical pedagogical innovations, because of its Islamic orientation. Both the contents — subject matter covered — and the methodology for teaching — are very different from conventional ones. Each lecture is followed by a sell-assessment quiz, and a computer lab which students do on their own to get hands-on practice with implementing and manipulating concepts on EXCEL, often on real data sets. For a description of the unique features of the course, see DESCRIPTION
I have now trained many students in HOW to teach the course, and have had it taught by them at nearby universities. It has recently been approved and recommended by our Higher Education Commission for adoption on a nationwide level. This summer I am running a workshop for teachers of statistics on how to teach the new course, since the maximum resistance to the new approach comes from the teachers who have learnt an old approach and are uncomfortable with making changes. There has been expression of interest from outside Pakistan as well, and possibly some teachers from Turkey, Iran and Indonesia might attend, to learn how to teach statistics in an Islamic Way.
In addition, I have prepared courses in Applied Econometrics, Microeconomics I and II, Experimental Economics, Islamic Economics and some Lectures on Macroeconomics. These courses are less well developed (in the sense that they do not follow along fully Islamic lines, which would create radical differences — rather, they are just at a CRITIQUE + ALTERNATIVE chosen mainly from existing heterodox approaches, with occasional discussion of the Islamic alternative)/ This enables me to teach more or less conventional materials, but in a critical way — I teach the subject to explain why it is wrong, and not as a methodology for understanding the world. This gives students deeper insights into conventional materials. A full sequence of video-taped lectures are all publicly available, and if any teacher wishes to follow this pattern, sufficient support (in terms of lecture notes, recorded lectures, slides, reference materials) is available from my publicly accessible course websites to him/her to enable them to teach the course on their own.
I am working on improving these courses in many different ways, starting with the pedagogy. Currently students are taught micro, macro as an abstract theory, which they do not find of relevance to either their personal lives or to understanding major economic events happening in the world around us. Instead, they are busy with calculus, math, differentials etc. which are COMPLETELY IRRELEVANT to understanding the real world. By trying to convert the subject matter to USEFUL knowledge, many insights are gained. Some of these ideas are discussed in my lecture on How to Motivate and Inspire Students .. Since the lecture is very much set in an Islamic mold, I was very surprised when Stuart Birks chose it for a lead article in his WEA Commentaries, which aims to provide heterodox alternatives to conventional economics.
Recently I gave an informal talk to PIDE students at their request, which I would especially urge teachers on this forum to read/view. This talk explains how a Western education, (especially economics) poisons our minds and hearts, imbuing it with love of Dunya and making us forget the Akhira. Remedies and antidotes are also described.

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.


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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