Labor in an Islamic Setting Theory and Practice pdf

LABOR IN AN ISLAMIC SETTING THEORY AND PRACTICE – Book Sample

Preface – LABOR IN AN ISLAMIC SETTING THEORY AND PRACTICE

It is rare to find “labor theory” in the title of Islamic economics literature as this has traditionally focused mostly on banking and financial economics. This dominant trend, perhaps, is well in order bearing in mind the pivotal issue of usury elimination in Islamic economics but labor economics should warrant equal importance.

It is, apparently, the well-defined Sharia ruling on usury that has accounted for the predominance of financial concerns over labor market concerns in the current literature of Islamic economics. Admittedly, there is hardly any clear-cut jurist ruling about labor economics comparable to the position against usury apart from the Islamic moral values embedding fair treatment of labor in terms of wage rate, work conditions, and humanitarian rights.

Yet, it is precisely the moral dimension rather than jurist rulings that distinguishes the role of an Islamic economist from the role of a jurist scholar, and this applies equally well to capital markets and labor markets. The adverse economic consequences of the unfair treatment of labor should trigger the same deep concerns as the adverse consequences of usury in the capital market from the viewpoint of Islamic economics.

 This book – Labor in an Islamic setting: Theory and Practice – is therefore a groundbreaking contribution to Islamic economics, thanks to the organizers and sponsors of the Islamic Eco-nomics Workshop III, held in Istanbul, Turkey under the theme “Labor in Islamic Economics.”

Furthermore, it is a timely contribution in light of the phenomenal migration of labor that has lately preoccupied the world economy and threatened to change the demographics of the Western world. Thus, the book sets out to fill in a significant gap in the current literature.

It furnishes a well-balanced spectrum of topics in labor economics from an Islamic perspective consisting of 10 chapters, ranging from comparative analysis between rival socialist and capital systems, to more practical issues involving female labor and a critical outlook on labor regulations from an Islamic perspective.

Perhaps researchers may find more outstanding questions deeming further inquiry than final answers to the problems and this is, in its own right, a commendable feature of this book. Teachers should find it a particularly useful reference text in developing their own modules on Islamic economics, whether at university intermediate level or graduate level.

Introduction

The Qur’an and the Sunnah of the Prophet Muhammad emphasize on the dignity of human beings. Highly renowned Muslim scholars such as Abu Hanifah, Abu Yusuf, Shafi ‘i, Ibn al-Rushd, al-Ghazali, Ibn Taymiyyah, and Ibn Khaldun relied upon that point and considered human beings the most important factor in the production process. 

However, the pricing process of human services does not follow the same standards that we have for the pricing of commodities. Islamic/moral norms play a very significant role in determining the prices of the different factors of production. Islamic norms such as brotherhood, honesty, mutual cooperation, justice, and fairness are the main ingredients, besides market forces, in determining wages.

Over the past decades, much academic effort has been put into the fi eld of Islamic finance. However, the most vital area, the labor market, has been ignored by most Muslim economists. In light of this, the Islamic Economics Workshop III was held in Istanbul, Tur-key, on April 4–5, 2015, under the theme of “Labor in Islamic Economics.”

The Association for Science Culture and Education (ILKE), the Scientific Studies Society (I˙ LEM), the Association of Entrepreneurship and Business Ethics (I˙ GI˙ AD), and the Istanbul Chamber of Commerce organized the workshop in collaboration with Istanbul Commerce University. A large number of international scholars from all over the world presented their papers in the workshop.

 Labor is the most important concept in economic theory and economic history. The consensus among economists and sociologists is that the design of production, distribution, exchange, and redistribution is not possible without considering the factors of production separately.

For this reason, the factors of production are counted in modern economics as labor, capital, natural resources, and entrepreneurship, and labor is ultimately considered the most significant of them all. The reason for this is that labor is directly related to human beings. If the human constituent were to be removed from the picture, other factors would no longer carry any meaning or purpose.

This central role that labor plays in economics has been widely acknowledged and further marks the starting points for both Marxist and capitalist economic theories. Thus, classical/liberal economists such as Adam Smith and David Ricardo placed the labor theory of value at the center of their own approaches. Similarly, Marx’s basic criticism of capitalism has its source in labor/value discussions; he emphasizes that the principal power of the working class is labor, further affirming that in a capitalist society the labor is turned into a commodity.

 The word “labor” has extended to contain an array of meanings, which include human muscle strength and certain types of intellectual activities. Since the rise of classical economic theory, technological developments have indeed diversified today’s discussion of the issue of labor. Yet, from the very earliest period of economic history, the concept of labor has been studied in close relation to the notions of production, capital, and income distribution. Economists who had different approaches consequently interpreted labor in different ways. Today, the globalization of the world economy and various utilizations of labor beyond the workforce have increased the importance of the concept known as the “exploitation of labor.” Therefore, the defi nition of labor by today’s economies and international companies, together with the identifi cation of the correspondence of this defi nition, have a particular importance in modern debates on the economy.

 In this context, how have the position and the defi nition of labor as a part of the total fac-tor of productivity, which are also a part of the supply chain on a global scale, developed in different economic systems and geographies? Alongside this main issue, what is the current situation in the Muslim world?

 Particularly in the area of economic governance, the perception of primary agents (e.g. governments, companies/producers and consumers) on labor stands to be an important issue in the case of existing companies and their commercial activities in the Islamic world.

 During the discussions in the workshop, a number of issues related to labor economics were highlighted, including labor migration, comparative labor theories, labor markets, mobility of labor, labor value, ongoing problems concerning labor, Islamic law and labor, current debates on labor, alternative wage implementations, and the signifi cance of work in Islamic understanding.

 In the fi rst of the papers in this volume, Azid takes labor to be the basic source of value as discussed by Ibn Khaldun and discusses how labor as a factor of production is dealt with in Islamic economics. Azid claims that the role of justice, fairness, equity, and brotherhood spreads prosperity among workers in the Islamic economy.

These norms not only improve economic conditions but also create harmony in society. This paper explains the cornerstones of the labor market within the Islamic framework, i.e. righteousness, avoiding damage/loss/difficulty, and values relating to the judicious use of resources, avoiding waste, and spending for others.

The main objective of every action under the umbrella of Islam is to please Allah (SWT). And, moreover, all actions are based on benevolence and altruism. Demand and supply as market forces are important but these are dependent not only on wage rates but also on the other moral and ethical norms of Islamic society. The paper also mentions the child and female labor force and suggests that in special circumstances child labor is allowed. It also explains that flexibility of wages is not a new phenomenon; wages depend on the economic conditions of an economy. The demand for human capital is based on the state of the technology of the economy. Al-Ghazali discussed the reservation wage and its economic consequences many years before Stigler.

Azid’s paper also discusses the economics of the family and how it affects the labor market in the Islamic economic frame-work. At the end this paper, the importance of the role of the state in regulating the labor market is presented.

 The next paper compares the economic thought of Ibn Khaldun and Adam Smith. In mod-ern societies, the production of luxury goods is central to our endeavors and we measure the quality and progress of our civilization by it. We therefore measure our happiness in terms of the acquisition of these material goods, not the goods of our character.

Many modern thinkers regard this to be an innate propensity of human nature. Adam Smith, the eighteenth-century author of The Wealth of Nations, holds that people are born to spend for their momentary pleasure, and also to save to improve their material conditions, which is embedded in them from the womb and “never leaves them till they go into the grave. . . . An augmentation of