Economics and Business

Methodology of Islamic Economics

The main objective of the present paper is to discuss in broad and general terms methodology of Islamic Economics and to show its major differences with the methodology of economics. It would also discuss some of the methodological issues relating to Islamic economics. This paper does not intend, however, to discuss or appraise methodology of economics. A vast literature exists on this subject  and its restatement at this place would not add much to the pool of knowledge. In this section we intend to take up two questions: first, why do we discuss methodology of a subject especially that of economics? Second, why do we need a methodology for Islamic economics?

Why Methodology at all?

Methodology of a subject investigates into the concepts, theories and basic principles of reasoning of a subject.  There is a wide difference of opinion on the methodology of economics. From the classical emphasis on verification of assumptions to the neoclassical falsification of predictions, the debate on methodology touches such issues as positive vs. normative, inductive vs. deductive, incorporation vs. exclusion of values, prescription vs. description, apriorism vs. empriricism, to name only some main cross-currents. Economists have taken positions on these issues and often heated debates have ensued as a result. The question arise: why a discussion of the methodology at all? The answer is that the economists are keen to reach the truth and each methodological approach claims to reach it in a surer manner as compared to the others.  Looking from this angle the debate on methodology is an inborn human demand. Man has been keen to reach the truth in all ages. The Quran also invites people on the plea that it is a book of sure knowledge.  Thus it appeals the human instinct to reach the truth. The Quran argues that one should discard the ‘doubtful’ against ‘the sure’.  The debate on methodology in economics (and other sciences as well) shows that there is hardly a disagreement on this basic fact. The entire debate is intended to establish clear and consistent rules to sift the true from the false.
1.2 Need for Methodology of Islamic Economics

Despite the differences in various strands of methodological debate in economics there is a broad agreement on at least three points:

(i) The basic assumption is that man is selfish by nature and he behaves rationally.

 (ii) Material progress is a supreme goal.

(iii) Every person has an inherent tendency to maximize his material welfare and he also has the knowledge and ability for deciding what is good for him.

The Islamic view-point is quite different on these points. Firstly, it is not true that man is selfish by nature. There is an overwhelming evidence that in all civilized societies men have been motivated by altruistic motives. Altruism is a fact of life. Islam encourages people to adopt altruism and to make sacrifices for others.  The Quran has praised Muslims because they prefer others over themselves although they are in difficulty.  Caring for others is a paramount value of Islamic society. Muslim societies have a history of waqf institutions devoted to philanthropic activities.  Even in this age when the religious hold has gone weak, people in Muslim societies display a spirit of altruism. In non-Muslim societies also philanthropy is a fact of life. Only in America 22000 organisations  are engaged in philanthropic activities.  In sum, the assumption of selfish nature of man is not supported by evidence in real life.

Secondly, the material progress is not a supreme objective in an Islamic society.  It is a desirable goal but is subservient to the falah in ‘Akhira, should there be a conflict. The prophet (S.A.W) led a simple life and his companions also adopted an ardous life-style. The Quran talks of worldly pleasures as a plaything and a fleeting joy. It seems that the primary emphasis is on the well-being of man in the ‘Akhira. It does not mean that Islam teaches monasticism or fatalism.  Far from it. It enjoins upon its followers a balanced attitude. Material property is desirable so far it helps one to perform his duties towards God, society, family and one’s own self.  It should be a means to achieve falah in the ‘Akhira. Adopting material progress as a supreme objective of life is thus alien to the Islamic framework. Thirdly, Islam considers man incapable of knowing what is best for him.  Only God has perfect knowledge. The human knowledge is imperfect and man needs guidance for making various decisions in life. God in His ultimate mercy has revealed guidance for man through prophets and books. Man needs this guidance.

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