CIE7 Challenge & Opportunity for 3rd Generation Islamic Economics

{bit.ly/cie7gop} In previous sections, we have explained how 2^nd Generation Islamic Economists sought to build the discipline as a branch of capitalist economics. The Global Financial Crisis blew away the pretensions of modern economics to be a science, creating a crisis for economic theory. This also created a crisis for 2^nd Gen IE, which had tied itself to modern economics. But, every crisis is an opportunity. The concluding section of the paper shows how this crisis creates a golden opportunity for 3^rd Generation Islamic Economists build a new discipline on the revolutionary foundation of 1^st Gen IE. This revolutionary thinking is desperately needed by all of humanity today. An outline of the points to be covered is given below:

1. GFC 2007 made failure of modern economics obvious to all.
2. Modern economics is built on foundations which make radical change impossible
3. Massive challenges face humanity on every front; current conditions resemble pre-Islamic Jahilliyya
4. The ONLY solutions lie in Islam.
5. This creates a GOLDEN opportunity for us to launch a revolution – parallel to the revolution created 14.5 Centuries ago.

GFC 2007 & the Crisis of Economics: Just prior to the crisis, major economists were smug in their confidence that they had solved the problem of prevention of recessions. The GFC came as a shock and surprise, and shattered this confidence. There was widespread agreement that major changes are required, but very little agreement on exactly what that change should be. This state of affairs continues to this day. For more details, see: Completing the Circle: From Great Depression 1929 to Global Financial Crisis 2007 {shortlink: http://bit.ly/gd29gfc}

Modern Economics is built on Flawed Foundations: Contrary to the idea of “science”, modern social sciences are fundamentally normative, even though they pretend to be ethically neutral description of objective realities. It is this pretense that deceived the 2^nd Gen IE to accept the “laws of economics” as being on par with the “laws of physics”. Loss of faith in Christianity led to the search in Europe for alternative models for organizing personal and social behavior. If there is no God and Judgment, then it is “rational” to maximize pleasure on this earth. This alternative basis for morals, created by Jeremy Bentham as a replacement for Christianity, is at the heart of modern economics. This is also at the heart of secular modern thought. But this makes it impossible to reform economics, since all attempts at reform share a common flawed mindset. For more details, see Flawed Foundations of Social Sciences {http://bit.ly/rsia10a}

Massive Crises on Every Front: Today, humanity faces challenges of a magnitude never before seen in human history. Ecological catastrophe has been created by the mad rush to maximize production, regardless of massive pollution of land, air, and the oceans. Politically, continuous wars have destroyed lives of millions of innocents, and homes and livelihoods of millions of others. Economically, a handful of people own half the wealth of the planet, while billions live under the poverty line. Selfish pursuit of individual pleasure, promoted by Hollywood, has destroyed families and communities, and our personal lives. For more details, see Ecological Suicide {http://bit.ly/EcoSui} and Re-Enchanting the World {http://bit.ly/AZrtW}.

Only Islam Has Solutions:  Modern economics is built on a myth that every acting selfishly to maximize personal pleasure in a jungle of ferocious competition will somehow produce the best society, via an invisible hand. The complete failure of this false philosophy is apparent for all with eyes. Solutions require rebuilding society on radically different foundations, based on generosity, cooperation, brotherhood, and social responsibility. Today the world has forgotten these fundamentals, which is why conditions resemble the pre-Islamic age of ignorance (Jahilliya). The opportunity is open today for us launch the same revolution that Islam brought to the world 14 centuries ago. For more details see The Ghazali Project for Revival of the Deen (http://bit.do/azgt6}.  

The Golden Opportunity: Fourteen Centuries ago, the teachings of Islam transformed the world, leading backwards and ignorant Bedouin to world leadership. These teachings have the same potential today. The revolution of Islam was a “knowledge” revolution. As stated in Surah Alaq (96:4,5) Allah T’aala “taught by the pen, taught man that which he knew not”. This knowledge is just as revolutionary today, and provides us with the basis to build all of the social sciences, including economics, on radically different foundations. For more details, see “Launching an Islamic Revolution in Economics” {http://bit.do/azai4}.

This sequence of seven posts provides a detailed explanation of my paper “The Crisis in Islamic Economics”:

1. CIE1: Islamization of Knowledge – http://bit.ly/cie1iok: 2nd Generation Islamic Economics was constructed as an Islamization of Knowledge project: We take Western knowledge of economics, and Islamize it. This project has failed, for reasons to be explained. The 3rd Generation alternative proposed is to reject Western Economics, and replace it by a radically different discipline built on Islamic foundations. Slides: bit.ly/SS3GIE1
2. CIE2: Crisis in 2^nd Generation Islamic Economics – http://bit.ly/cie2cri: While the first generation of Islamic Economists saw it as a revolutionary alternative to capitalism, the 2nd generation thought of Islamic Economics as a variant of capitalism. They attempted to “Islamize” capitalism. This is impossible because capitalism is built on foundations of overproduction and overconsumption, and focuses on acquistion of pleasure and wealth in this world. These values are strongly opposed to Islamic ones and the two economic systems cannot be combined. This is why 2nd generation attempts to create Islamic Economics failed, leading to a crisis. Slides: bit.ly/SS3GIE2
3. CIE3: Four Flaws of Modern Economics – http://bit.ly/cie3fce: Modern Economics cannot be Islamized because it is fundamentally flawed, beyond the possibility of repair. Four Flaws are discussed in these slides: (1) The idea that European economic models are universally applicable to all societies, (2) A quantitative and mathematical approach to human behavior, (3) The assumption that human welfare is based on material sources, rather than spiritual, psychological, and social. (4) The pretense of objectivity created by concealment of a toxic moral framework within the codeword of “rationality”. Slides: bit.ly/SS3GIE3
4. CIE4:Two Puzzles about Islamic Economics – http://bit.ly/cie4pie: (1) Why did Islamic Economics emerge as a distinct subject in the 20th Century? (2) Islamic knowledge is founded upon source materials of Islam. How can a modern subject and approach, not found within intellectual heritage of Islam, claim to be Islamic? Slides: bit.ly/SS3GIE4
5. CIE5:The Revolutionary Islamic Alternative – http://bit.ly/cie5ria: As an antidote to Capitalist Economics, this post provides four revolutionary teachings of Islam: (1) Instead of pursuing material wealth, we should pursue human development, (2) Power and Wealth is given to us to help the powerless and poor, not to exploit them and pursue luxuries, (3) Society is built on cooperation, not competition, (4) Instead of pursuing pleasure and power, we should seek to serve humanity selflessly, in hope of rewards in the Akhira. Slides: bit.ly/SS3GIE5
6. CIE6:Pragmatic Objections to Visionary Ideals – http://bit.ly/cie6obj: Is Islam Utopian and Impractical? 2nd Gen IE’s abandoned the revolutionary ideals of the 1st Generation for pragmatic reasons. They swallowed the idea that modern economics is objective truth, and hence cannot be contested on ideological grounds. They recognized that Western economics focuses on wealth, not humans, but felt that we must first acquire wealth. Only then can we afford to pay attention to human development. Thirdly, they felt the utopian ideals of Islam are out of reach for us in the modern world, and so we must settle for less. These objections are discussed and answered in these slides: bit.ly/SS3GIE6
7. CIE7:Challenge and Opportunity for 3^rd Gen IE – http://bit.ly/cie7gop: The failure of modern Western Economics became obvious for all to see with the Global Financial Crisis. The current state of global economy is a disaster on all fronts – wars, ecocide, destruction of society, reduction of human beings to human resources. In this situation, Islamic Economists have the golden opportunity to provide radically new solutions to problems facing mankind, rooted in the teachings of Islam. No one else has anything close to the knowledge provided by the complete and perfect final message of God to mankind. Slides: bit.ly/SS3GIE7

Links to related materials:

• Completing the Circle: From Great Depression 1929 to Global Financial Crisis 2007 — http://bit.ly/gd29gfc
• Flawed Foundations of Social Sciences — http://bit.ly/rsia10a
• Ecological Suicide — http://bit.ly/EcoSui
• Re-Enchanting the World — http://bit.ly/AZrtW
• The Ghazali Project for Revival of the Deen — http://bit.do/azgt6
• Launching an Islamic Revolution in Economics — http://bit.do/azai4