AJES Correspondence

1: 16th Mar 2018===================================================
Dear Dr. Zaman:
I am planning an issue of the journal I edit (American Journal of Economics and Sociology, founded 1941) on the ways in which religious traditions offer the potential for new paradigms in economics.  The starting premise is that neoclassical economics represents a particular theology (originally Calvinist, but now nihilist) and that treating it as a universal instrument of secular salvation is, in itself, a form of neocolonialism.  In the past, colonialism was a product of the Bible and the gun.  In the new world order, all that is really required is to convince Western-trained elites that neoclassical economics and other branches of Western social science are culturally neutral and therefore safe to adopt.
I invite you write an article for this issue.  You have indicated a desire to develop an endogenously developed Islamic economics, one that is not simply a response to or adjunct of neoclassical thought.  That is is precisely what I am looking for.  To make sense of why the world needs Islamic economics, it seems to me necessary to reflect critically on  the damage caused by liberal individualism, which explicitly denies the possibility of any purposes outside the self and yet offers no explanation for the source of individual purpose.  If the problem can be named clearly, then even skeptics may begin to understand the value that Islamic economics can play.
Since economics plays a subsidiary role in any theologically-based concept of how to realize a good society, I recognize that your approach might not conform to a model that takes up a standard set of issues in economics, such as banking, markets, public finance, and the like. In my experience, the quintessential question is how the nature of property rights relates to the nature of human existence.  Capitalism envisions a self protected by an almost impenetrable wall, and communism envisions a self without boundaries.  Both of those ontologies fail, and yet there is remarkably little work that aims to define the nature of a self born into a world of social obligations and with an aspiration toward self-transcendence.  What kinds of laws and institutions will serve to promote that sort of self?  The chief problem with societies organized around social obligations in the past is that they tend toward parochialism.  How did Islam function to overcome that problem during its golden age?  Another problem that most societies have faced in the past is feudalization, in which patron-client relationships grow to the point of creating barriers to more fluid social relations.  The growth of corporations today is having that effect once more, shrinking the sphere of res publica and expanding the sphere of private governing structures.  Has Islam found a way to counter that tendency?  Those are the sorts of historical problems that I regard as the primary appropriate subject matter of economics, even though that falls far outside the parameters of standard positivist views of the function of economics.  I particularly like your statement: “The fundamental economic problem is a normative one: what should an individual (and a society) do with surplus wealth?”  That is a much more important question than how to achieve allocative efficiency.
The questions I would like you to address may not be possible to answer at this stage.  But I am not looking for final definitive answers, just plausible claims.  The strongest claim in favor of Adam Smith’s version of capitalism is that it offers a method of self-regulation.  The question that capitalism fails to address is how to maintain the conditions under which self-regulation functions properly.  Those conditions seem to require attention to the character of citizens and their leaders.  No one has yet proposed a method of making that aspect of the “economy” self regulating.
If you agree to write an article for this issue, I would expect much of it to draw from your earlier work, such as the literature survey on the history of Islamic economics that you published nine years ago.  The amount of original material in the present article would be up to you.  The length of the article should be at least 8,000 words and no more than 25,000 words.
The deadline for the article is September 1, but that can be negotiated if you are interested in writing but would have difficulty meeting that deadline.
Please let me know if this interests you.
Clifford W. Cobb


American Journal of Economics and Sociology

phone: 916-448-6460
2:Mar 18  =============================================================

Dear Cliff
Thanks for your interest in my work. I am very interested in your proposed project. As a matter of fact, I recently presented a paper at a workshop on Islamic Economic in Istanbul which fits your requirements very nicely. I already have a draft ready, and should be able to send you a more polished version in a week or two.
PS: Given your interest in my work, you might enjoy reading my short post (600 words) on “The Coca-Cola Theory of Happiness” which lies at the foundations of modern economics.
3:Apr 18===============================================================
Dear Asad (if I may),
Thank you for agreeing to provide a paper for this issue of the journal.  There is certainly no hurry.  I am in the middle of editing the current issue.  But I welcome your contribution at any time.
Regarding the Coca-Cola Theory of Happiness, I certainly agree with your critique.  The shrinkage of the presumed motivation that guides human action into self-destructive hedonism has been accelerating since economics began in the 18th century.  I am currently reading a book written by Quesnay about China, which he regarded as the closest approximation to the physiocratic ideal in his time.  The elements of that book that deal with what we would now classify as “economic” are relatively sparse.  Quesnay certainly understood that political economy is part of  much larger cultural whole.  Adam Smith and the other philosophers of the Scottish Enlightenment also recognized the comprehensive character of political economy, but by the time of Ricardo, much of that had been lost. There has thus been a steady erosion of the potential to approach social problems with wisdom.  But this is true of all academic disciplines, in large part, I think, because of the hubris of intellectuals since Kant.  All thought is now human-centered.  The leap from Kant to “revealed preferences” is really not so great, although Kant seemed to have thought that the brain alone was sufficient–no need for mouth and stomach.   I think it is no accident that all of the great social thinkers of the late 19th century in the West had a nervous breakdown.  Weber’s “iron cage” of rationality is more oppressive than ever and yet seemingly more invisible to the majority of Americans, who still look to technology as the source of salvation.
But Weber, like so many others, was more prescient in his critique than in the formulation of any sort of constructive response.  Socialism was a constructive response to capitalism, but it is subject to many of the same pitfalls.  The only real hope lies in traditions with deep roots, which can anchor responses that are tied to the past and that creatively invent new aspects of those traditions.
4: May 18 =============================================================
Dear Cliff

I hope all is well with you and your loved ones.
I am attaching a two paragraph abstract that lays out the core ideas on which I want to construct the article that you have asked me for — The key is that while Economics takes humans as exogenous and invariant, homo economicus, unchangeable, and focuses on increasing production to satisfy wants/desires, Islam takes man as the plastic element, and focuses on transformation of human beings.
Please see the proposed outline and tell me if it would suit what you have in mind — suggest any changes that you would like to see, and I will try to incoroporate them

Proposed Outline for paper on Islamic Economics

Modern economic theory has three distinct dimensions. The first is a positive description of human behavior. The second is a normative description of an ideal state of affairs. The third is a prescription of what needs to be done to transform the current state to the ideal state. Conventional economics describes humans as being homo economicus, motivated solely by the desire to maximize pleasures obtained by consumption (of goods and services). The ideal state of affairs is for all people to be able to satisfy all desires, but this is not possible due to scarcity. The transformative strategy is economic growth – we increase the amount of production in order to be able to remove scarcity and achieve plenitude. The pursuit of economic growth at all costs, prescribed by conventional economic theory, has caused massive economic injustice, and put the future of mankind in peril, by destroying resources in the mad rush for growth.

Islam differs from conventional economics in all three dimensions. The description of human beings is substantially more complex, and closer to realities of human behavior. Humans have a wide variety of different goals, and they have conflicting desires and motivations. The human heart is a battleground between the forces of good and evil. The human being has been give the capabilities for excellence in both directions, for the greatest good as well as the greatest evil. Closely aligned with the Human Development approach pioneered by Mahbubul Haq and Amartya Sen, the ideal state for human beings involves developing the capabilities for excellence that all human beings are born with. The transformative strategy is multidimensional, and involves working on character and personality development, within a framework of Islamic laws and Islamic institutions.

Conventional economic theory takes the nature and desires of man as exogenously given, and works on producing goods to satisfy all desires. Islam works on changing the hearts of men to purify them of the greed and competition for worldly goods, and replace these by the higher norms of cooperation and generosity.

The paper will go on to explain why ALL THREE dimensions, the POSITIVE, the NORMATIVE and the TRANSFORMATIVE of conventional economics are DEEPLY MISGUIDED and wrong, while Islamic Economics provides us with far superior viable alternatives, which have a chance to save humanity and the planet from the destruction towards which it is rushing.

We can work out the implications of the ideas listed above along three different lines – the personal dimension which involves comparing homo economicus with homo sapiens – instead of taking behavior as fixed, we consider the transformative strategies of Islam to generate cooperation and generosity. In the institutional dimension, there are major differences between Markets, Banking, Insurance along Islamic lines versus corresponding capitalist institutions. In Social dimensions, the community is a key element of Islamic society, which has been made to disappear in economics due to mistaken methodological individualism

5: Jun 18============================================================


Dear Asad,
Your outline of a tripartite response to the capitalist order is excellent.  I would like to make two suggestions.
1. Even though Marxism has been in retreat since the collapse of the Soviet Union, it remains an important theoretical option.  (One might use the term “socialism” but it is so broad as to encompass almost any critique of capitalism that calls for more sharing.  One might even classify Islamic economics as a form of socialism.  Thus, I’m not sure it is helpful to use that term for analytic purposes.)   Latin American intellectuals are still largely Marxist, and a large segment of youth in the U.S. and Europe are also turning towards it as the best alternative (or the only one they know of).  Thus, I think a critique of economics as currently practiced must also make reference to Marxism and its flaws.
2. It seems to me that the Islamic critique of capitalism is actually a critique of classical liberalism, which is a much deeper philosophical tradition than neoclassical economics.  The defense of economic growth is actually based on the liberal principle that individual preferences are inviolate and incommensurable.  Since the state is supposed to remain neutral among competing values, its only role can be to maximize the sum of individual preferences, which is the moral argument for economic growth. Innumerable critiques have been made of growth as measured by GDP, including some by economists, but they fail to have any effect because the underlying argument for individual choice is really what is sacred.  I used the word “sacred” advisedly because the entire structure of political liberalism and neoclassical economics is really an exemplification of the individualism of Protestant theology.   I think it is important, when critiquing capitalism, to go behind the purely economic manifestations of theory (such as homo economicus) to question either classical liberal thought (such as Locke and Mill) or the Protestant theology that underlies it.  The deepest problem here, in my view, is the complete inability of Protestants-liberals-economists to speak about the values a society should strive for.  Catholics recognize the problem and offer us a return to guild order of the Middle Ages with the Church as the supreme authority.  Marxists express social value in terms of the interests of the proletariat.  Islam, it seems, has resolved this problem more thoroughly than any other tradition, with the possible exception of Confucian thought.
I am not proposing that you catalog the entire history of Christianity and its influence on liberalism and economic thought.  But since I am pretty sure you know this background as well or better than I do, I would hope you would find a way to incorporate at least a paragraph or two that refers to the roots of Anglo-American economic traditions.  One of my aims in this volume, which I am sure will be imperfectly realized, is to convey to heads of state around the world that the adoption of the methods of the World Bank, the IMF, and American economics textbooks amounts to the reintroduction of northern European forms of Christianity.   It would be better for them to welcome American Protestant missionaries into the highest councils of government, because they would at least be aware of the bias they bring with them.  Instead, they welcome economic advisers who carry the seeds of the same theology but disguised in secular form as rational and empirically verified truth.
I want to emphasize that my comments are purely advisory.  If you wish to ignore these ideas and stick with your original outline, that is entirely up to you.  I also realize that the critique of Western economics is only one element of your argument.  However, I know from years of experience that the audience will listen to new ideas only after you have raised doubts in them about the ideas they currently hold.  As you say on your website about Islamic economics: “The normative element MUST be taken into consideration for proper economics to emerge, the West has NO WAY to derive norms.”  If you can convince readers of that proposition, they will be much more open to your constructive arguments in favor of Islamic economics.  I have read various articles over the years espousing Islamic economics, following the formula you describe;  Islamic Economics = Capitalism + Zakat – Interest.  None of them seemed very important because they were all reformist.  Your writing is radically different because you are proposing revolution or transformation, not reform.  My main concern is that the transformative quality of your thinking be evident to readers.