Islamic Economics as Mesoscience pdf

ISLAMIC ECONOMICS AS MESOSCIENCE – Sample Book

Mesoscience -Inquiring the Micro-Ethical Endogenous Foundation of Aggregate Economic World-System

Islamic Economics is neither a microeconomic nor a macroeconomic study framed in these mainstream dichotomies. The moral and ethical foundation of Islamic economics emerges from the possibility of symbiotic inter-causality at the mesoscales of methodology, behaviour, applications, and continuity. Integrated together by methodological abstraction and applications, the resulting mesoscale phenomenological study presents a distinctive methodological worldview of organic unity of knowledge. In the Qur’anic terminology this monotheistic worldview is referred to as Tawhid, the universal Law of ‘everything’16

“Meso-science implies there are some underlying principles that can unify different disciplines, and all disciplines may be involved in contributing available disciplinarily specific knowledge at corresponding levels to revealing common principles for meso-scales at all levels. A small change in the angle to view old problems could lead to a big progress in solving them.”17

Mesoscale herewith refers to a range of scale in between the micro- (element) scale and the macro- (system) scale and, within this range of scale, a characteristic structure exists, namely meso-structure, featuring dynamic heterogeneity in space and time, which is critical to the performance of the system. Parameters at the mesoscale are needed to bridge the mechanism at the element scale to the behavior of the system. The objective of mesoscience is to develop a principle as general as possible to make such a bridge for different levels of disciplines.18

The econometrics of mesoscience of Islamic economics does not question the appropriateness of mathematical usage in microeconomics and macroeconomics. Rather, the mesoscience question of intellectual discourse revolves around the ontological methodology in the construction and evaluation of the emergent eco-nomic models and their implications. Islamic economics as meso-economics has its own distinct methodology and methods of abstracto-empirical formalism premised in the monotheistic law of unity of knowledge arising out of the Qur’an. It is called Tawhid. This primal ontology of Islamic economics and mesoscience is treated throughout this text as the universal law in abstracto-empirical formalism.

Reconstruction of Economic Theory with Epistemic Grounding

It is therefore necessary once again to rethink economic and financial theory. This note explores the new epistemological possibility within a theory of pervasive complementarities between ethically determined choices of social possibilities. The meaning of unity of knowledge is gained from the property of such pervasive complementari-ties between variables that represent the attribute of continuity by participation. The emergent pervasive attribute of unity of knowledge by complementarities and partic-ipation between agents and their representative variables is the meaning of ethics in decision-making, resource allocation, and dynamic preferences of economic and financial behaviour.

The emergent theory we are constructing is thereby contrary in epistemology and structure of explanation to all of economic theory that premises on the postulates of resource scarcity, and thereby on the economic rationality properties of pre-ordering of preferences, perfect information, marginal substitution, methodological individ-ualism of self-interest, and competition. Wherewithal, in the emergent heterodox economic theorizing the epistemological question invokes the social embedding of ethics as evolutionary learning behaviour arising from the postulates of unity of knowledge. The episteme of unity of knowledge by the continuous circularity of cause and effect between complementary goods as the sign of sustainability is the property of evolutionary learning. It causes dynamic preferences to replace pre-ordered preferences as datum. Dynamic preferences along with evolutionary learning in unity of knowledge cause continuous reproduction of resources. This reinforces the complementarity and continuous repetition of learning in unity of knowledge.

In the end, neither optimal states nor steady state equilibrium can exist. They give way to non-optimal dynamics in evolutionary learning equilibriums. As pointed out by Amartya Sen,11 the combination of ethics as evolutionary learning between complementary possibilities, negation of the assumptions of economic rationality, and deontological preference maps together define the new structure of economic thinking contrary to mainstream economics. Such emergent novelty of new ontolog-ical economic theory forms the order of epistemic and economics in today’s need to stem the tide of global financial instability and unpredictability in the optimum economic modeling (Lawson, 2012; Choudhury, 2014).

Objective

The objective of this chapter is to expound briefly the outlook of the heterodox economic thinking in the direction of epistemic and economics to undertake the following explanations regarding such a theory: The evolutionary learning character of the emergent theory of the epistemology of unity of knowledge and its induction of the unified world-system by the complementary nature of choices involves the formalism and study of a nexus of inter-causality between the choices. Such inter-causality conveys the methodological nature of social and economic embedding by cause and effect.

Thereby, a system of circular causation equations between the inter-causal variables is formalized. Such a system allows for evaluation by repeated estimation and simulation of the first round of estimated coefficients to correct deficiencies of nega-tive relationship between the variables into less negative to positive reconstruction. The negative relations denote marginal rates of substitution between the variables during any given process of evolutionary learning.

Positive relations denote complementarities. The result then is sensitivity of changes in coefficients to policy-theoretic and institutional strategic issues. This chapter explains the interactive, integrative, and evolutionary nature of evolutionary learning equilibriums underlying market and institutional interaction, convergence, and dynamic continuity via the episteme of participation and change. The discursive nature of preference formation embedded in the decision-making induced by the episteme of unity of knowledge along with all this conveys the meaning of ethico-economic holism.

The Formal Model of Micro-Money by Combining Expressions

The following steps lead toward the construction of the formal meso-economic model of micro-money interrelating with finance and the real economy (i.e. the MFQ(θ)-formal model) in the framework of Islamic ontological foundation of monotheistic unity of knowledge and its consilience functioning in the world-system; meso-economy being a particular case. The wholeness of the inter-causally unified meso-economy EE(θ) and its components is specified by the system of interaction, inte-gration, and evolutionary learning processes interconnecting money, finance, and the real economy (MFQ).23 Figure 1.2 outlines this model construction explained by its attributes.

In the generalized meso-economic model of EE(θ) particularized to micro-money, finance, and real economy (MFQ(θ)) taken intertemporally, the following attributes are noted: