Three Generations of Islamic Economics

Over the past two months, I have been extremely busy, and I have not had time to post anything on social media. I recently joined Akhuwat University, and plan to create radical changes in education at this university. Aligned with the mission of Akhuwat Foundation, this university provides completely free education for the poor. Very briefly, I would like the university to provide a complete education in 4 years, with three pillars (1) Building Character, (2) Teaching Real-World Skills of Value to Society, and (3) Teaching academics which help us to understand the world around us, not textbook theories which are only useful for answering exam questions. For a more detailed discussion, see: Akhuwat University: A Paradigm Shift in Education

As announced in my last post on Third Generation Islamic Economics, I taught a workshop for teachers on how to teach 3rd Gen IE. There were six lectures in this workshop, but they are not yet publicly available. For a paper on this topic, see Three Generations of Islamic Economics. The abstract for the paper provides a brief introduction to the terminology:

ABSTRACT:The idea of social science is based on the false assumption that universal laws applicable to all societies can be derived from the historical experiences of European societies. Instead, we argue that all social theory emerges as an attempt to handle challenges facing particular societies within a particular historical context. Within this framework we analyse how the first generation of Islamic Economics emerged as part of the struggle for liberation in the colonized Islamic lands after the second world war. The first generation argued that Western economic systems – capitalism, communism, and socialism – were created by human beings, and led to inequities and injustice, and brought misery to the masses. Instead, they offered the vision of a system built on the teachings of Islam which would serve and promote the welfare of all members of society. Failure to achieve the political control required to create genuinely Islamic socio-political systems led to the emergence of the second generation in the mid 1970’s. Whereas the first generation had rejected capitalist economics , the second generation sought to build an Islamic Economic system within a capitalist framework. The defects of both the capitalist system, and the accompanying economic theory, became glaringly obvious to all in the global financial crisis of 2007-8. This led to a re-evaluation of the 2nd Generation approach and the birth of the Third Generation of Islamic Economics, which seeks to go back to the revolutionary ideas of the First Generation. The critical insight at the heart of the third generation is that capitalism is fundamentally incompatible with Islamic ideals, and must be rejected and replaced by an alternative system built on Islamic foundations. The goal of this paper is to describe the historical contexts within which the three generations emerged. Also, we aim to describe the central characteristics of the third generation of Islamic Economics, which builds on the experiences gained from both the first and second generations.

This paper was presented at a conference on Islamic Finance at the Allama Iqbal Open University on Thursday Nov 2nd 2023. The original presentation was done in Urdu, but with the same slides. A re-recorded video (redone in English) for this talk is linked below:

The Original Urdu Audio recording is available from: AIOU Urdu Audio Recording. Slides for the talk are available from English Slides for AIOU