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Fundamental Ideas Of Contemporary Islamic Economics
In his full life of religious and political involvement, Khurshid Ahmad has participated in the creation of the contemporary discipline of Islamic economics. This has not been done in addition to his other activities but as a direct part of his active involvement in the Islamic movement. Like other contemporary Islamic activist thinkers, Khurshid combines theory and practice, not because he believes that this is the most efficient or effective way of operating but because he believes that it is the only way for a Muslim professional. His life as a believer, as a member of the Jamaat-i-Islami, and as an economist are combined in many important ways.
As an economist, Khurshid has played an important role in the evolution of economic thought and programs in the Muslim world. He has himself described the major lines of transition:
Initially the emphasis was on explaining the economic teachings of Islam and offering Islamic critique of the Western contemporary theory and policy. During this phase most of the work was done by the Ulama, the leftists and Muslim social thinkers and reformers.
Gradually the Muslim economists and other professionals became involved in this challenging enterprise. Perhaps the First International Conference on Islamic Economics [held in 1976] represents the watershed in the history of the evolution of Muslim thinking on Economics, representing the transition from “economic teachings of Islam” to the emergence of “Islamic Economics.”
This statement provides both a description of the changes taking place in the intellectual world of Islam and also an insight into Khurshid’s perceptions of those changes. It is clear that this transformation is something he approved and that it came to constitute the program and challenge to which he devoted his future activities as a Muslim economist.
Khurshid Ahmad and other contemporary Muslim economists would maintain that the fundamental values and message of Islam are no different than they have been since the days of the Prophet Muhammad. What is new is the approach and method; the different approach can be seen clearly in Khurshid’s works.
The more traditional approach concentrates on “the economic teachings of Islam.” There is an effort to search out all of the verses of the Qur’an that have specific economic implications. This is supported by a similar collecting of the Traditions (hadith) of the Prophet Muhammad that have an economic message. The description of the plans for a conference, “The Place of Economics in Islam,” held in New Jersey, in 1968, provides an example of the more traditional approach. Planners said there was to be “a classified presentation of relevant verses from the Qur’an and selections from the Hadith literature on the subject.” In this way it was hoped that prior to entering into the details of specific issues and practices, participants in the conference would be reminded of the basic sources on which Muslim economic thought is based.
This approach has as its foundation a vast aggregation of separate propositions and specific cases that are then used to provide the legitimizing proof for particular positions. From the perspective of many Muslim intellectuals in the decades since World War II, this methodology had the advantage of grounding the presentation in explicitly Islamic sources and fundamentals. It emphasizes the effort to go beyond apologetically trying to show that Islamic teachings and some Western concepts are compatible.
At the same time, this approach has some problems. It tended to result in a collection of discussions rather than a more holistic and integrated analysis. In addition, the traditional approach involves the scholar in many of the traditional debates of Qur’anic study and hadith analysis. For example, old arguments about abrogation (naskh) of one hadith by another or of one Qur’anic verse by another become the necessary starting points for analysis. These debates are regarded as of critical importance in presentations of “the economic teachings of Islam.”
Islamic economics, however, is a more holistic enterprise. Muslim economists like Khurshid Ahmad are aware of specific Qur’anic verses and traditions, but this is the foundation for their perspective rather than the starting point for their analysis. Khurshid makes this distinction clear in his definition of the “first premise” of Islamic development economics: “The first premise which we want to establish is that economic development is an Islamic framework and Islamic development economics are rooted in the value-pattern embodied in the Qur’an and the Sunnah” (emphasis added). In Islamic economics, Khurshid speaks of the broader Qur’anic “value-patterns” rather than the specific provisions of particular verses. This enables him to present a more broadly integrated model of Islamic economics rather than a list of Islamic characteristics and teachings.
Certain basic themes and beliefs provide the foundation for the approach of Khurshid Ahmad as an Islamic economist. These are often consciously distinguished from basic assumptions of Western economics. However, Khurshid’s perspective is not simply apologetic or defensive; it is an attempt to create an intellectual discipline on an Islamic basis so that it can provide guidance for operational programs and activities.
The first principle of Islamic economics is that it is not a separate system describing a distinct aspect of human experience. Islam is seen as a comprehensive system and a total way of life. In this framework, economics as a discipline is only part of the picture and must be integrated into other aspects of analysis from the very beginning of the process.
The comprehensive nature of Islam was one of the major keystones of the teachings of Mawdudi, and Khurshid maintains this principle. The implications of this comprehensiveness were clearly spelled out in essays by Mawdudi that Khurshid edited and published recently. It is clear that Khurshid shares these views. In an address entitled “The Economic Problem of Man and Its Islamic Solution,” Mawdudi says:
[T]he economic problem of man which was, indeed, part of the larger problem of human life, has been separated from the whole and looked at as if it were an independent problem by itself. And gradually this attitude has taken such a firm root that the economic problem has come to be regarded as the sole problem of life. This has made its evolution infinitely difficult.
The human economic problem is defined, in simple terms that are similar to those in any economic system, as, with a view to sustain and advance human civilization, how to arrange economic distribution so as to keep all men supplied with the necessities of existence and to see that every individual in society is provided with opportunities adequate to the development of his personality and the attainment of the highest possible perfection according to his capacity and the aptitude.
Within this perspective, economic problems arise when the economic dimension of life is separated from the rest. Problems of distribution arise not from inefficiencies but from immoral acts by humans.
The basis and position of Islamic economics is defined by Khurshid:
Islam does not admit any separation between “material” and “moral,” “mundane” and “spiritual” life, and enjoins man to devote all his energies to the reconstruction of life on healthy foundations. It teaches him that moral and material powers must be welded together and spiritual salvation can be achieved by using the material resources for the good of man, and not by living a life of asceticism.
In this broad perspective, two key concepts set the basic framework for analysis. One is the unity and sovereignty of Allah, or tawhid, and the other is the stewardship, or khilafah, of humans operating in Allah’s creation. The delineation of the economic implications of tawhid and khilafah represent the primary focus of thinking and analysis in contemporary Islamic economics.
Tawhid means that there can be no other source of authority than Allah and that there can be no other focus for ultimate human loyalty than Allah. These are implications accepted by all Muslims. However, people involved in the contemporary Islamic resurgence have drawn more limiting conclusions from tawhid analysis than the more general, inclusive Islamic modernist thinkers of the 1960s did. In political terms, people like Khurshid emphasize that while state institutions are necessary and national communities legitimately exist, loyalties to states or nationalisms must be subordinated to allegiance to Allah and the global community of Muslims.
In more economic terms, Khurshid’s discussion of economic development in Islamic economics shows that tawhid sets the goals of development: “The development effort, in an Islamic framework, is directed towards the development of a Allah-conscious human being, a balanced personality committed to and capable of acting as the witness of Truth to mankind.” In concrete policy terms, this means, for Khurshid, that human resource development — education, vocational training, improvement of the quality of life — is the objective of development policy.
In this perspective, while industrialization programs are not rejected, policies that regard industrialization as the leading element in development are seen as unsuitable. The development of the industrial sector must be placed in the broader context of creating conditions of social and economic justice for all citizens in the society. Property can be possessed and used for investment but, in the Islamic model, may not be used to gain advantage over or exploit others who may be in need. In this way, the emphasis is on “Allah-conscious” planning.
The economic role of human beings is also seen in this way. In Islamic economic analysis, the basic operating unit is not “economic man.” Instead, humans are seen as the direct agents or representatives of Allah in Allah’s creation. The concept of Muslims as Allah’s khalifahs (or “human khalifah-ship,” for which the term is khilafah) is an important part of Khurshid’s presentation of Islamic economics. For him, khilafah is the “unique Islamic concept of man’s trusteeship” in moral, political, and economic terms. It is the source of the Muslim vocation and mission: “This exalts man to the noble and dignified position of being Allah’s deputy on earth and endows his life with a lofty purpose: to fulfill the Will of Allah on earth. This will solve the perplexing problems of human society and establish a new order wherein equity and justice and peace and prosperity will reign supreme.”
The concept of khilafah provides the basis for the creation of an economic system in which cooperation and mutual obligations replace competition as the dominant feature of human economic interaction. Thus, Islamic economics, as defined by Mawdudi and Khurshid, affirms private property as part of the human agent’s management responsibilities. Both scholar-activists also recognize and accept that there can be competition and differing successes in obtaining material goods.
In this framework, Khurshid rejects the concept of private ownership that allows an absolute right of an owner to manage property in any way. (He also sees a socialist system where all means of production are nationalized as a threat to human initiative.). Instead, he argues that “Islam’s most important contribution in the field of economics lies in changing the concept of ownership. No one has the right to destroy property. If misused it can be taken away If it is not needed it must be passed on to others.” Ownership is, in other words, stewardship of Allah’s property rather than an absolute right of the individual human. The concept of stewardship means that those who succeed in gaining wealth must do so without harming others and then must use that wealth to help other human beings.
Some of the more familiar aspects of Islamic economics, such as Islam’s alms tax or tithe (zakat) and the banning of usury (riba), are part of these religious obligations or duties. One of the Five Pillars of Islam is the giving of charitable support to the less fortunate. Zakat is a “compulsory levy . . . on accumulated wealth, trade goods, various forms of business, agricultural produce, and cattle. Its purpose is to create a fund for the support of economically depressed classes.”
Similarly, the well-known Islamic prohibition against usury, which traditionally has included banking interest, is based on the overall obligation of Muslims to help one another. Mawdudi and Khurshid both argue that interest has damaging effects: “Usury develops miserliness, selfishness, callousness, inhumanity and financial greed in the character of man. It increases a tendency among the people to hoard money and spend it to promote their private interest only. It blocks the free circulation of wealth in the society, and diverts the flow of money from the poor to the rich.” In this way, it undermines the function of human stewardship of Allah’s resources.
Another major characteristic of Islamic economics, as it has developed in recent years, is that it has been consciously programmatic. Past discussions that aimed at presenting the “economic teachings of Islam” tended to remain in the realm of theory. Much of the scholarship was in the hands of the traditionally oriented ulama, who were not practicing businessmen or government officials. With the growing involvement of professional economists like Khurshid Ahmad in the debates, there was an increased emphasis on actual projects rather than doctrine. Khurshid was, for example, one of the early advocates of Islamic banks and financial institutions and has played an important role in their establishment and rapid growth. In the past decade, more than one hundred Islamic banks or investment groups have been created in many different parts of the world, with some relatively high degrees of success and profitability. This programmatic activism is an important part of the emergence of Islamic economics.
A final major characteristic of Islamic economics as developed in the work of Khurshid Ahmad is that it is a self-consciously value-oriented discipline. Khurshid, like many other Muslim social scientists, rejects the idea that economic analysis can take place in “a climate of positivistic objectivity and of complete value-neutrality. Most of the economic thinking that masquerades as value-neutral turns out, on closer scrutiny, to be otherwise.” The experience of many Muslims with Western economic planners and analysts over the past few decades has tended to confirm this belief. The value commitment of so-called value-free Western economic analysis becomes apparent when it is applied in non-Western contexts.
Muslim economists like Khurshid firmly believe that economics is not a value-free academic discipline. The effort to develop a value-free system of analysis is seen as, at best, being counterproductive and, at worst, satanic. Instead, they believe, economists have a moral responsibility to work for economic justice and the betterment of humanity. This, then, points to a positive characteristic of Islamic economics: “The major contribution of Islam lies in making human life and effort purposive and value-oriented. The transformation it seeks to bring about in human attitudes and in that of the social sciences is to move them from a stance of pseudo-value-neutrality towards open and manifest value-commitment and value-fulfillment.”
In this way, the emergence of Islamic economics reflects a rejection of some of the basic assumptions of traditional Western scholarship, just as it represents a move away from the traditional Muslim approaches to economic subjects. Khurshid views his work as a mission, that of bringing a more effective programmatic awareness to Muslims and a recognition of the importance of value-commitment to economists in all societies. His contributions to Islam and to the field of Islamic economics were recognized in the late 1980s when he received the Islamic Development Bank’s first award in economics and the Faisal Award for Service to Islam.
The fundamental ideas of contemporary Islamic economics lead Khurshid Ahmad to the position of being a Muslim activist-economist. Islam, for him and in Islamic economics, is a comprehensive system in which no sector can be viewed as autonomous. Its basic concepts of tawhid and khilafah provided and effective conceptual foundation for a programmatic and value-committed discipline that represents an important part of contemporary intellectual life and policy-making in the Muslim world.
Fundamental Ideas Of Contemporary Islamic Economics
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Last Updated: 11/2021
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