Blanket Rejection of Economics

Interestingly, my blanket rejection approach is getting a lot more traction in the West, than it is among Islamic Economists, who are committed to the lines along which they have been working for several decades. An editor of a prominent journal has offered to devote an entire issue of the journal to my works, and has specifically asked me to highlight the radical elements, directly in conflict with modern economics.
Contrary to the typical case of missing the forest for the trees, I think a major source of mis-communication and mis-understanding is the reverse — missing the trees for the forest. When I ask for a blanket rejection of economics, it is NOT because all alien knowledge should be rejected. It is because we should reject Phrenology, Palmistry, Astrology, Voodoo Witchcraft — Modern Economic Theory currently taught at universities belongs to this category of “KNOWLEDGE” — it is just plain WRONG. On many occasions I have asked diverse groups to find me ONE proposition from any field in modern economics, currently being taught in university textbooks, which is TRUE and adds significant insight (not trivial commonsense, easily available from straightforward logic without using any theory). So far, no body has been able to do so. Utility maximization is wrong, and hence the entire theory of consumer behavior is wrong. Profit maximization by firms does not correctly describe firm behavior, the entire theory of cost and profit functions is completely incoherent, as pointed out by many mainstream economists like Sraffa, and others. So the Consumption theory which leads to demand, and the production theory which leads to supply, are both wrong.  Finally the idea that EQUILIBRIUM holds is wrong; studies of dynamic systems behavior show that they are most often out of equilibrium and disequilibrium dynamics — completely ignored by modern economics — plays a heavy role in the behavior.  Consequently Supply and Demand equilibrium theory fails to explain many empirical phenomena. For instance, raising the minimum wage led to increased employment in very careful studies by Card & Krueger. So a detailed, tree-by-tree examination did not lead ME to any tree worth saving in the jungle of modern economics. If anyone knows of a tree which is worth saving please let me know. I am happy to incorporate KNOWLEDGE from any source, but I want to protect ourselves from adopting superstition and ignorance disguised as knowledge.
I keep qualifying my statements by saying that modern economics as taught in current university textbooks, because modern economics came into being in early twentieth century with Lionel Robbin’s scarcity definition, which rejected earlier, more sensible approaches to economics. Similarly, in the early twentieth century the historical and qualitative approach was rejected in favor of the scientific quantitative approach which currently dominates. This was a major methodological mistake. In my essay on “Economics for the 21st Century“, I have explained how there are THREE MAJOR methodological mistakes at the foundations of modern economic theory which must be corrected in order to create a viable discipline of economics for this century, which avoids the mistakes of 20th Century Economics, based on the false and misleading concept of scarcity. For more detail, see “The Illusion of Scarcity“.
From the Islamic point of view, the most serious ground for rejection of economics is because economic theory posits the the PURPOSE of human existence (which all rational humans must act in accordance with) to be maximization of pleasures obtained from lifetime consumption of goods and services. My recent essay on “The Secrets of Happiness” explains why this is a very foolish and childish way to pursue happiness — it is on the basis of this ridiculous theory of human behavior and sources of human welfare that modern micro economics is based. This theory is EXACTLY the same as the religion of worship of the Nafs, strongly condemned by the Quran. Because economics is a religion, and not a science, it has to be rejected — see “Economic Theory as Ideology” for further elaboration of these brief remarks.
This entry was posted in Critique of Conventional Economics, islamic economics, methodology by Asad Zaman. Bookmark the permalink.

About Asad Zaman

BS Math MIT (1974), Ph.D. Econ Stanford (1978)] has taught at leading universities like Columbia, U. Penn., Johns Hopkins and Cal. Tech. Currently he is Vice Chancellor of Pakistan Institute of Development Economics. His textbook Statistical Foundations of Econometric Techniques (Academic Press, NY, 1996) is widely used in advanced graduate courses. His research on Islamic economics is widely cited, and has been highly influential in shaping the field. His publications in top ranked journals like Annals of Statistics, Journal of Econometrics, Econometric Theory, Journal of Labor Economics, etc. have more than a thousand citations as per Google Scholar.

2 thoughts on “Blanket Rejection of Economics

  1. Assalamoaleikum. I fully agree with your views but what should be taught to students of Economics? For the very reason that Economics is wrong, I opted for teaching a course in Islamic Economics to the BS students of my university. I started the course with your article “Islam vs Economics” and some insights from “Crisis in Islamic Economics” e.t.c. I searched for a good textbook in Islamic Economics but couldn’t find one with a consistent and coherent development of thought in the text. Sifting through the existing literature on Islamic Economics, I found that a new economics must be build-up from scratch. But if the precise description of reality is not the objective of Islamic Economic theory, then Islamic Economics would become the description of an ideal human which does not exist. Who will, as has been pointed out by you somewhere, come to existence along the course of developing an Islamic Economic theory. My confusion here is that unless that Ideal Human is found and thereby the study of his behavior in practice(in the form of an Islamic Economic Theory), what an economist should teach in Economics? Can behavioral Economics be the subject of focus until we develop our own Islamic Economic theory? What about Mufti Taqi line of reasoning of doing something than doing nothing at all? What about the Societies of Muslims today? Will studying the behavior of Muslims today another branch of conventional Economics with focus on some special group? And as we know perfection is humanly un-achievable, the ideal human as espoused in Islam, will still have imperfections, so how would we come to grip with those imperfections? and why the current study of imperfect Muslims behavior will be different in essence (not in degree) from the study of a more perfect Muslim behavior?

  2. Pingback: From Darkness to Light | An Islamic WorldView

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