Israr Ahmad on Revival of Islam

Islamic Renaissance seeks to rejuvenate Islamic ideals, practices, and societal structures. Dr. Israr Ahmad’s monograph, “Islamic Renaissance: The Real Task Ahead,” delves into why many Islamic revival movements have fallen short and how to correct these missteps for a true renaissance. In particular, Dr Israr Ahmad argues that the real task facing the Islamic Civilization is to meet the intellectual challenge created by Western academic achievements over the past few centuries. For a copy of the original book in Urdu, together with its English translation, see: Islamic Renaissance: The Real Task Ahead“

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1. Global Domination of Western Thought

The Western philosophical dominance has shaped global views, promoting concrete facts and physical phenomena while sidelining spiritual and transcendental concepts. This shift has impacted political, social, and cultural realms worldwide, influencing not just Western societies but also Islamic ones.

2. Western Onslaught on the Islamic World

The Western invasion of the Islamic world was not merely political but also ideological and cultural. The influence of Western ideologies led to the adoption of secularization and materialism within the Islamic world. Early attempts to resist this onslaught ranged from defensive postures to outright compromise.

3. Western Thought’s Influence on Islamic Revival

One of the key issues with contemporary Islamic revival movements is their assimilation of Western ideologies. These movements tend to focus on external aspects of Islam, such as political and social systems, adopting a Western-influenced framework while neglecting the spiritual essence at the heart of Islam. This misunderstanding leads to a superficial interpretation of Islamic principles, often reducing Islam to a set of social and political systems without the necessary spiritual foundation.

4. The Error in Interpretation of Islam

Dr. Ahmad asserts that many revivalist movements have fallen into the trap of secularization and materialism, emphasizing political and societal structures at the expense of spiritual depth. These movements often fail to stress the inner spiritual life that is central to Islamic belief. As a result, the essence of Islam is compromised, with revivalist efforts becoming more about social and political activism than about cultivating a deep, inward connection with God.

5. Revitalization of Faith: The Necessary Precondition

For an Islamic renaissance to be genuine, there must be a revitalization of faith (Iman). This requires moving beyond superficial affirmations of belief to a profound, existential faith. The focus must shift from a materialistic interpretation of Islam to a spiritual one, emphasizing the inner journey and communion with God.

6. A Blueprint for Action

Dr. Ahmad proposes a blueprint for achieving an authentic Islamic renaissance. The first step is establishing an organization dedicated to reviving faith and spreading the Qur’anic message. This step aims to correct the materialistic focus of previous revival movements. The second step involves creating a Qur’anic research academy to foster rigorous academic study while encouraging a deeper spiritual understanding of Islam.

7. Conclusion

Dr. Ahmad’s vision for an Islamic renaissance acknowledges that many revival movements have been compromised by Western thought. To correct this, he advocates for a return to the spiritual core of Islam, emphasizing faith, devotion, and a closer relationship with God. By addressing the shortcomings of previous movements and focusing on spiritual revitalization, a true Islamic renaissance can be realized.

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This summary explains how Western thought has influenced Islamic revival movements, leading to a misunderstanding of what is required for a genuine Islamic renaissance. It emphasizes the need for a deeper spiritual connection to correct this misunderstanding and achieve a true revival. For a deeper and detailed discussion, please see the original monograph in urdu (with English translations) at: Islamic Renaissance: The Real Task Ahead.

Monetary Economies: A Historical Perspective

{bit/ly/ME01} A Monetary Economy is one in which the use of money is essential to the functioning of the economy. That is, without money, people would starve, and massive amounts of economic misery would result. Since monetary economies have dominated the world for centuries, this seems to us like a natural state of affairs. However, a study of history reveals that monetary economies came into existence only a few centuries ago, and eventually came to dominate the globe. Most pre-modern societies were not monetary economies. For instance, a feudal economy was not a monetary economy. The landlord owned the land, and workers on the land would receive all necessary support – food, clothing, housing, etc – from him. In return, they would work the land and produce crops, and provide other services. No money was needed for the basic necessities of life. The landlord could sell excess crops for money, and buy fineries from foreigners, but this was not essential for existence. Even today, in many areas of the world, rural subsistence economies far from urban centers are often self-sufficient, and can function without money. These non-monetary economies are excluded from the scope of our study.

Our goal in this textbook will be to clarify how monetary economies function, and how they have evolved over time. This is important because conventional modern textbooks of economics do not correctly describe monetary economies. In these textbooks, money does not serve an essential function. This point is recognized and articulated in these textbooks using the terminology “neutrality of money”. For instance, a popular textbook by Mankiw states that:

Over the course of a decade, for instance, monetary changes have important effects on nominal variables (such as the price level) but only negligible effects on real variables (such as real GDP). When studying long-run changes in the economy, the neutrality of money offers a good description of how the world works.

Exactly contrary to this, Keynes stated clearly in his landmark book entitled The General Theory of Employment, Interest and Prices, that money plays an important role in both short and long run – it is not neutral. If money is neutral, then money plays no essential role in the economy, and so there is no essential difference between monetary and non-monetary economies. In this textbook, we will explain how money, far from being neutral, is a central driver of economic activity. Conventional textbook analysis, which takes money as neutral, leads to deep misunderstandings about modern real-world economies.

The false assumption of neutrality of money led to the failure of economists to understand the causes of the Global Financial Crisis in 2007, and also to their failure to take corrective actions which could have prevented the Great Recession which followed. The battle of ideas, embodied in economic theories about money, is described in “Completing the Circle: From the Great Depression of 1929 to the Global Financial Crisis of 2007”. It is useful to briefly outline how economic theories changed over the course of the 20^th Century:

1. Classical Economists argued for the neutrality of money, along with other ideas, which lead to the conclusion that unemployment can only be a short-run phenomena. In the long run, unemployment will be eliminated by the workings of the free market.
2. Following the Great Depression of 1929, large amounts of unemployment which persisted for long periods of time was observed. This was directly in conflict with theories of classical economics.
3. Keynes then came up with a new theory, which had many revolutionary ideas, dramatically different from the assumptions of classical economics. One of the central ideas was that money is not neutral. In particular, in the labor market, the supply and demand for labor, and hence the rate of employment is strongly affected by the quantity of money available.
4. Keynesian ideas came to dominate macroeconomics for about three decades following World War 2. In particular, the idea that free markets will not automatically eliminate unemployment, leads to the necessity of the government policies required to create full employment. Application of Keynesian policies led to full employment in USA and Europe for about three decades.
5. The oil shock of the 1970’s led to the failure of Keynesian policies. Development of monetarism by the Chicago school of economists led to the re-instatement of pre-Keynesian ideas about the neutrality of money and the idea that free markets lead to elimination of unemployment. This came to be known as neoclassical economics, because it rejected Keynesian ideas, and went back to classical economics. See The Keynesian Revolution and the Monetarist Counter-Revolution
6. A concerted campaign was carried out by monetarists to discredit Keynesian theories and rebuild Economics on neoclassical foundations. See Understanding Macro III: The Rule of Corporations. This was highly successful. The Monetarists went from a minority and eccentric school to mainstream orthodoxy by the early 1990s. It became impossible to publish Keynesian and post-Keynesian views in mainstream top-ranked journals.
7. Over the decade of the 1990s economic performance in the Western world became flat – fairly low growth, but no ups and downs of business cycles which had been characteristic of capitalist economies for a long time. This led to celebrations of “the Great Moderation” by the monetarists. Robert Lucas, Nobel Laureate and leading Chicago school economist, announced triumphantly in his Presidential Address to the American Economic Association in 2003, that we economists have conquered the business cycle, and from now on, recessions will not happen.
8. The Global Financial Crisis of 2007 took the economics profession by surprise, just as the Great Depression of 1929 had come as a surprise. Paul Krugman wrote the book “The Return to Depression Economics” arguing that insights of Keynes continued to be valid, and to provide deeper insights into the GFC than was available from leading neoclassical macroeconomic theories of the time. Paul Romer wrote a scathing article entitled “The Trouble with Macro” in which he argued that modern macroeconomics is based on fundamentally flawed doctrines, and leads to wildly incorrect predictions.

This is more or less the current state of affairs, as good alternatives to conventional macroeconomics are unavailable in the mainstream. The mainstream macroeconomic theories are based on assumptions which have no relation to reality. For more details, see “Why Do Economists Persist in Using False Theories?”

We will conclude this introduction to monetary economies by discussing some of the key elements of the approach we will be using. First, while mainstream macroeconomics rejected Keynesian ideas, a group of theorists known as Post-Keynesians have continued to develop the ideas of Keynes, building on his fundamental insights. This has led a branch of macroeconomics which provides much deeper insights into modern economies then the monetarism which dominates universities today. Our text borrows from these ideas. However, the critical innovation of this textbook is to study economic theory within its historical context.

As described earlier, historical events, and economic crises, have played a major role in shaping economic theories. In fact, we cannot understand economic theory as an abstraction, removed from its context. This is in conflict with the claim implicit in the use of the word “science” – lessons from study of European societies are universally applicable to all societies across time and space (see: The Puzzle of Western Social Science). In fact, all social theory is developed as an attempt to understand historical experiences of a particular society, and cannot be understood as an abstraction, detached from this historical context. Studying economics within its historical context requires a methodology radically different from that currently in use, in both orthodox and heterodox textbooks of economics currently in use around the world. We will discuss this methodology in the next section.