Islamic Economics and Finance pdf

ISLAMIC ECONOMICS AND FINANCE – Book Sample

Introduction – ISLAMIC ECONOMICS AND FINANCE

This series consists of a number of hitherto unpublished studies, which are introduced by the editor in the belief that they represent fresh contributions to economic science.

The term ‘‘economic analysis’’ as used in the title of the series has been adopted because it covers both the activities of the theoretical economist and the research worker.

Although the analytical methods used by the various contributors are not the same, they are nevertheless conditioned by the common origin of their studies, namely, theoretical problems encountered in practical research.

Since, for this reason, business cycle research and national accounting research, work on behalf of economic policy, and problems of planning are the main sources of the subjects dealt with, they necessarily determine the manner of approach adopted by the authors. Their methods tend to be ‘‘practical’’ in the sense of not being too far remote from application to actual economic conditions. In addition, they are quantitative. The editors hope that the publication of these studies will help to stimulate the exchange of scientific information and to reinforce international coopera- tion in the field of economics.

Introduction: A Technical Insight

The quest for epistemic universality and uniqueness in ‘‘everything’’

Universality and uniqueness as precepts of the socio-scientific worldview have always been the quest of the highest body of intellectual inquiry. This has been the quest by both the Islamic and Occidental scholars for a long time now. In this postmodern era of epistemological criticism the search for the ultimate explanation of reality has intensified (Ruggie, 2002).

In this regard writes Hawking on the ends of scientific inquiry:

In this lecture I want to discuss the possibility that the goal of theoretical physics might be achieved in the not too distant future, say, by the end of the century. By this I mean that we might have a complete, consistent, and unified theory of the physical interactions which would describe all possible observations. Of course, one has to be very cautious about making such predictions: We have thought that we were on the brink of the final synthesis at least twice before. (1985, p. 119)

Likewise, Einstein (1954a, p. 473) wrote on the epistemological foundations of science that remain embedded in other fields of scientific inquiry as well:

Scientific thought is a development of pre-scientific thought. As the concept of space was already fundamental in the latter, we begin with the concept of space in pre- scientific thought.

Alfred North Whitehead in his Process and Reality (Griffin and Sherburne, 1979) gives a succinct explanation of scientific formalism in the light of his idea of functional ontology upon which the search and discovery of scientific truth and empirical observations are launched. In this regard Whitehead writes:

The ontological principle asserts the relativity of decision; whereby every decision expresses the relation of the actual thing, for which a decision is made, to an actual thing by which that decision is made. It constitutes the very meaning of actuality. An actual entity arises from decisions for it, and by its very existence provides decisions for

other actual entities which supersede it. Thus the ontological principle is the first stage

4 Islamic Economics and Finance: An Epistemological Inquiry

in constituting a theory embracing the notions of ‘actual entity,’ ‘giveness,’ and ‘process.’ (1979, p. 43)

Barrow (1991, p. 13) sees the divine depth of oneness in his theories of ‘‘everything’’ from the Judaeo-Christian point of view, in his following words:

Different modern cultures have been variously influenced by their religious heritage in coming to a satisfying picture of natural laws. In the Judaeo-Christian West, the influence of the divine lawgiver has been paramount. The laws of Nature are the dictates of a transcendent God. They enshrine faith in the existence of an underlying order to things. They sanction the investigation of Nature as a secular activity. They outlaw Nature gods and the potential conflicts of polygamous legislation in the Universe.

These words point out the search for conscious oneness as the unique core of mankind’s ultimate aspiration in life, science, and experience. Conscious oneness forms the ineluctable reality of the universe for all. On this point and in terms of the kinship that the world establishes with God as active creator in human faculties, Bruteau (1997) writes:

If you can see the God you love present in, even as, this world, then feel that union and rejoice in that. And be active in it, contribute to it, participate in the building, in the artwork, in the healing, in the understanding. This is where Reality is. You yourself are both a member of the Finite and a member of the Infinite y.

The nature of conscious oneness in Islam

In Islamic intellectual thought the quest for the ultimate meaning and explanation of reality has always been entrenched in the oneness of God and in the relationship of the divine law with the world-system. We will refer to this quest in this book as mankind’s rise toward moral consciousness in the framework of conscious oneness. The history of social transformation toward a good society is thus a study in human consciousness to know the ultimate reality (Lucaks, 1817).

Regarding the precept of interrelationship between divine oneness as conscious oneness and the world-system that the epistemology of conscious oneness builds and explains in the order of organic unity, writes Marmaduke Pickthall:

Islam is a worldly religion which considers first the worldly affairs of humanity, then the Hereafter that is an eternal continuation of the worldly life. It is difficult to believe that man can be saved in the Hereafter without being saved in this world. To be saved in the Hereafter without being saved in this world is simply unthinkable. The sensible approach is to follow the way shown to us by Prophet Muhammad. When his wife, Aishah was asked by a Companion about the Prophet’s daily conduct, Aishah replied that the conduct of the Prophet was the Qur’an, which is the guidance from God and for which Muhammad was given authority by God to interpret. That is why his conduct was the most exemplary expression of human conduct. (2005, p. 22)

 The above quote points out the essential place of the Qur’an and the

guidance of the Prophet Muhammad (Sunnah) in Islamic epistemology. Upon this epistemology rests the structure of intellectual thought that in turn creates the Islamic worldview and the Islamic world-system. This worldview of ‘‘everything’’ is formed in the midst of the ontological oneness of God. It is translated into positive action through the Sunnah (guidance of the Prophet Muhammad) and the discursive medium of human intellect by participation into the knowledge and construction of the unified world-system.

In this way, between divine oneness, the guidance of the Prophet Muhammad, and the multidimensional scheme of things arises the interactive, integrative, and creatively evolutionary world-system of ‘‘everything.’’ Such world-systems are entrenched in learning out of their intrinsic participatory and complementary laws and relations as the sure signs of organic unity of being and becoming. Learning as phenomen- ological experience is thus not simply endowed to the human intellect. It is equally intrinsic in the order of things. It is subjected to search and discovery by human intervention.

Organic unity between diverse artifacts is understood in the framework of the functional ontology of conscious oneness. This methodology establishes the phenomenology of oneness through conception, formalism, and application that reshape the world-system of ‘‘everything’’ into organic unity out of their fallen state of differentiated structure. Such progressive states of organic unity in the scheme of ‘‘everything’’ are gained progressively by continuous learning in interaction, integration, and creative evolution (IIE) of the systemic entities.

In this explanatory field of formalism, using functional ontology to establish the ontic (evidential) state of being and becoming into particular states of the examined phenomenon, the example is of the earth in its causal linkage with cosmology (Qur’an, Chapter 13, Ra’d, Thunder). Likewise, none of the physical, social, and institutional laws stand independently. Over the grand unification between them all, there is the overarching divine law of unity of knowledge (monotheism). The universality and uniqueness of the divine law is proved by its status of unfailing conception, formalism, and application to ‘‘everything.’’

The view of the continuous and pervasive presence of conscious oneness as the character of universality and uniqueness of the divine law of unity of knowledge in ‘‘everything’’ can be gained from Figure 1.1. Figure 1.1 forms a closed system of interrelationships between the points A, B, C, D. But the points A and D are unbounded and open due to the super-cardinal nature of the stock of knowledge that is complete at these levels of epistemology. The interrelations between the relational entities returning back and regenerating continuously through A and equivalent to it at D, form the functional ontology of the system of relations (Maxwell, 1962;

Gruber, 1993).