Re-Launch and Re-Activation

Dear Pakistani Economists – friends, colleagues, students — This website is a branch of the World Economic Association, which strongly rejects conventional economics (as fairy tale economics) and works on creating Real World Economics. There are MANY, MANY elements which are extremely different when we want to do real world economics, as opposed to theoretical neoclassical, which ONLY works in textbooks, but has no application to the real world. This particular blog is meant for STUDENTS of economics, who wish to LEARN new ways of thinking about economics. I am hoping for high levels of participation from our Pakistani economists of all levels. This is NOT a news group or a chit-chat group – rather, we hope to study serious issues. For blessings, I would like to start with a talk about Islam and its connection with economics. As a lesson, this consists of four parts. In later posts, I would pose QUESTIONS about this material, so that we can get deeper understanding. It is my hope to go through papers, books, sequences of lessons in the way, so that we can all study together and learn new concepts and ideas. Please participate by FOLLOWING the blog, and by adding comments on posts to discuss and absorb new ideas.

I recently gave a talk at the Economics Department of Karachi University on; Do Islamic Teachings Apply to modern Economics? All over the world Muslim students learn that the answer is NO — Textbooks in use all over the globe make no mention of Islamic teachings. Yet this is a puzzling situation, because it is obvious that the Quran and Hadeeth have a lot to say about economic affairs. This talk provides not only a critique of modern economics, but also shows how we can rebuild economics on entirely different foundations, based on an Islamic approach. This is in continuations of  the original discussion by Dr. Mabid Al-Jarhi regarding how we need to revise the syllabus of conventional economics, to match Islamic perspectives.

The original talk was in Urdu : 1 hr video ; Do Islamic teachings apply to modern economics?

I have revised it and re-written it in Four Parts in English – these writeups also have 15m video recordings in English:

Part 1Applying Islamic teachings to Economics   – — This introduction asks the question of WHY it appears that Islam does not tell us anything about modern economics — None of the Western textbooks in use globally make any mention of any religion, ethics of morality. It is a puzzle how economics, which started out as a branch of moral philosophy, ended up as a purely positive and objective subjective, with no reference to morals. To get the answer to the puzzle, we must study the origins of secular thought in Europe. How continous warfare between protestants and catholics led to the creation of “SECULAR KNOWLEDGE” – a branch of objective knowledge which ALL rational people would agree on, regardless of their religion. In fact, there is no such thing – all branches of knowledge are subordinate to religion, which tells us about the nature of man, and the purpose of the creation of man. So SECULAR knowledge HIDES a large number of moral ideas underneath a facade and appearance of objectivity. This is why modern treatments of economics make no mention of morals.

Part 2: Conflicts between Islam & Economics — when we examine the underlying MORAL foundations of modern economics, we find dramatic conflicts with Islamic ideas. For starters, we learn that the job of the economist is to fulfill the unlimited needs and wants of human beings with limited resources, leading to the fundamental problem of scarcity. However, Islam teaches us to fulfill needs but to NOT fulfill idle desires (HAWA) – so it is not permissible for Muslims to try to encourage the fulfilment of idle desires – this is strongly discouraged/prohibited in the Quran {This leads to the question of whether it is permissible for Muslims to teach conventional economics, if it preaches that rationality is fulfilment of all desires, as in utility maximization}. IF WE CHANGE the basic task of economists – instead of trying to fulfill ALL needs and wants, we try to fulfill ONLY needs, and DISCOURAGE Israf and Tabzeer, idle desires, then scarcity disappears. The resources we have are FAR MORE than sufficient to fulfill all the NEEDS of every human on the planet, because NEEDS are LIMITED. Then the FAZAL of ALLAH T’aala can easily be understood. The central problem of economics becomes prevention of ISRAF and TABZEER. Today the money spent on problems of OBESITY — over-eating, excess consumption – is more than enough to feed the ENTIRE PLANET. So if we can do AMR BIL MAROOF, and NAHI ANIL MUNKIR and campaign against EXCESS consumption, and encourage GENEROSITY – those who have more than needed should GIVE to those who are in need. This will provide an ENTIRELY new foundations for an Islamic Economics.

Part 3: Shock-and-Awe:Barrier to an Islamic Approach.  The question is that why have Muslims not come up with this idea? When the Quran clearly states that we should eat and drink, but we should not waste – it seems clear that EVERY islamic theory of consumption should be built around the prohibition of ISRAF and TABZEER – yet, Muslim economists do not seem to be aware that this is in conflict with Utlity maximization, which actually encourages Israf and Tabzeer. I argue that centuries of defeat on the battlefield have created a defeated mindset, and shock and awe of the West has created the idea that we must accept Western intellectual efforts without question.

Part 4: Launching an Islamic Revolution in Economics. Once we overcome our shock and awe, especially of the complex mathematics and analytics which hides ignorance, the path is open to launching an Islamic Revolution in Economics, and also in all the social sciences. We have to learn to see through the mathematics — We must understand that human behavior is TOO COMPLEX to be described by mathematical formulae – this has been discovered in many different context. Because humans have free will, they cannot be treated as physical particles subject to laws. This part describes a number of courses that I have constructed in Microeconomics and Macroeconomics, which start by debunking existing approached and create radical alternatives. In particular the two basic concepts of OPTIMIZATION for behavior and EQUILIBRIUM for outcomes are BOTH rejected. Instead, a new basis can be found, based on approaches which have already come into existence in the West. These new approaches are far more compatible with Islamic points of view.

Finally, it should be clear that it is CONVENTIONAL NEOCLASSICAL MICRO and MACRO which should be rejected wholesale. Many other approaches, invented in the West, ARE compatible with Islam and can be accepted and used freely.


Date posted: September 26, 2019
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