Minggu, 30 Agustus 2015

Islamic Economic Thought




Islamic Economic Thought
 
The Prophet Muhammad (pbuh) told Muslims
"seek knowledge, even if it be in China."
 
 
Origins of economic thought have been found in the writings of some prominent Islamic scholars, during the five centuries prior to the Latin Scholastics, who include St. Thomas Aquinas. During this period the Islamic civilization was one of the most fertile grounds for intellectual developments in various disciplines, including economics.
 
 
 
 
 
 
Al-Ghazali (1058–1111) classified economics as one of the sciences connected with religion, along with metaphysics, ethics, and psychology. Authors have noted, however, that this connection has not caused early Muslim economic thought to remain static. Persian philosopher Nasir al-Din al-Tusi (1201-1274) presents an early definition of economics (what he calls hekmat-e-madani, the science of city life) in discourse three of his Ethics:
"the study of universal laws governing the public interest (welfare?) in so far as they are directed, through cooperation, toward the optimal (perfection)."

Many scholars trace the history of economic thought through the Muslim world, which was in a Golden Age from the 8th to 13th century and whose philosophy continued the work of the Greek and Hellenistic thinkers and came to influence Aquinas when Europe "rediscovered" Greek philosophy through Arabic translation. A common theme among these scholars was the praise of economic activity and even self-interested accumulation of wealth. Persian leader Shams al-Mo'ali Abol-hasan Ghaboos ibn Wushmgir (Qabus) (died 1012) advises his son in the work Qabus nama:

"My son, do not be indifferent to the acquisition of wealth. Assure yourself that everything you acquire shall be the best quality and is likely to give you pleasure."

Persian philosopher Ibn Miskawayh (b. 1030) notes:
"The creditor desires the well-being of the debtor in order to get his money back rather than because of his love for him. The debtor, on the other hand, does not take great interest in the creditor."

This view is in conflict with an idea Joseph Schumpeter called the great gap. The great gap thesis comes out of Schumpeter's 1954 History of Economic Analysis which discusses a break in economic thought during the five hundred year period between the decline of the Greco-Roman civilizations and the work of Thomas Aquinas (1225-1274). However in 1964, Joseph Spengler's "Economic Thought of Islam: Ibn Khaldun" appeared in the journal Comparative Studies in Society and History and took a large step in bringing early Muslim scholars to the attention of the contemporary West.

The influence of earlier Greek and Hellenistic thought on the Muslim world began largely with Abbasid caliph al-Ma'mun, who sponsored the translation of Greek texts into Arabic in the 9th century by Syrian Christians in Baghdad. But already by that time numerous Muslim scholars had written on economic issues, and early Muslim leaders had shown sophisticated attempts to enforce fiscal and monetary financing, use deficit financing, use taxes to encourage production, the use of credit instruments for banking, including rudimentary savings and checking accounts, and contract law.

Among the earliest Muslim economic thinkers was Abu Yusuf (731-798), a student of the founder of the Hanafi Sunni School of Islamic thought, Abu Hanifah. Abu Yusuf was chief jurist for Abbasid Caliph Harun al-Rashid, for whom he wrote the Book of Taxation (Kitab al-Kharaj). This book outlined Abu Yusuf's ideas on taxation, public finance, and agricultural production. He discussed proportional tax on produce instead of fixed taxes on property as being superior as an incentive to bring more land into cultivation. He also advocated forgiving tax policies which favor the producer and a centralized tax administration to reduce corruption. Abu Yusuf favored the use of tax revenues for socioeconomic infrastructure, and included discussion of various types of taxes, including sales tax, death taxes, and import tariffs.

Early discussion of the benefits of division of labor are included in the writings of Qabus, al-Ghazali, al-Farabi (873–950), Ibn Sina (Avicenna) (980–1037), Ibn Miskawayh, Nasir al-Din al-Tusi (1201–74), Ibn Khaldun (1332-1406), and Asaad Davani (b. 1444). Among them, the discussions included division of labor within households, societies, factories, and among nations. Farabi notes that each society lacks at least some necessary resources, and thus an optimal society can only be achieved where domestic, regional, and international trade occur, and that such trade can be beneficial to all parties involved. Ghazali was also noted for his subtle understanding of monetary theory and formulation of another version of Gresham's Law.

The power of supply and demand was understood to some extent by various early Muslim scholars as well. Ibn Taymiyyah illustrates:
 
"If desire for goods increases while its availability decreases, its price rises. On the other hand, if availability of the good increases and the desire for it decreases, the price comes down."

Ghazali suggests an early version of price inelasticity of demand for certain goods, and he and Ibn Miskawayh discuss equilibrium prices. Other important Muslim scholars who wrote about economics include al-Mawardi (1075–1158), Ibn Taimiyah (1263–1328), and al-Maqrizi.
[Wikepedia]
 
First Phase
 
• Zaid bin ‘Ali (d. 738 AD)
• Imam Ja'far (d. 765)
• Imam Abu Hanifa (d. 767 AD)
• Imam Malik (d. 795 AD)
• Abu Yusuf (d. 798 AD)
• Muhammad Bin Al-Hasan (d. 804 AD)
• Imam Shafi'i (d. 820 AD)
• Abu ‘Ubaid (d. 838 AD)
• Imam Hanbal (d. 855 AD)
• Harith Bin Asad Al-Muhasibi (d. 859 AD)
• Junaid Baghdadi (d. 910 AD)
• Mawardi (d. 1058 AD)
• Ibn Miskawaih (d. 1030 AD)
 
 
• Al-Ghazali (d. 1111 AD)
• Ibn Taimiyyah (d. 1328 AD)
• Ibn Khaldun (d. 1404 AD)
• Al-Maqrizi (d. 1441 AD)
 
 
The Third Phase
 
• Shah Wali Allah (d. 1762 AD)
• Muhammad Iqbal (d. 1938 AD)
 
 
Islamic resurgence in economics and other social disciplines
 
• Muhammad Baqir Al-Sadr,
• M. Umer Chapra,
• M. N. Siddiqi,
• K. Ahmed among others.

Medieval Islamic Economic Thought: Filling the Great Gap in European Economics

Medieval Islamic Economic Thought: Filling the Great Gap in European Economics

Author(s):Ghazanfar, S.M.
Reviewer(s):Chapra, M. Umer
Published by EH.NET (October 2004)
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S.M. Ghazanfar, editor, Medieval Islamic Economic Thought: Filling the Great Gap in European Economics. London: Routledge/Curzon, 2003. xv + 284 pp. $115/?55 (hardback), ISBN: 0-415-29778-8.
Reviewed for EH.NET by M. Umer Chapra, Islamic Research and Training Institute of the Islamic Development Bank, Jeddah, Saudi Arabia.
Muslim contributions to economics have failed to be generally recognized in the Western literature that deals with the history of economic thought. This has led to the concept of a “Great Gap” of “over 500 years” in the history of economic thought from the time of the Greek contribution to that of the Scholastics. Joseph Schumpeter, therefore, falsely assumed in History of Economic Analysis (1954), that this intervening period was sterile and unproductive. The reality, however, is that the Muslim civilization had made rich contributions to intellectual activity, including socio-economic thought, and had thereby played a part in kindling the flame of the European Enlightenment Movement. Even the scholastics themselves had been greatly influenced by the contributions made by Muslim scholars. The names of Ibn Sina (Avicenna, d. 1037), Ibn Rushd (Averroes, d. 1198), and Maimonides (d. 1204, the Jewish philosopher, scientist and physician who flourished in Muslim Spain and then in Egypt.) appear on almost every page of the thirteenth century summae (books written by scholastic philosophers) (Pifer, 1978, p. 356). Todd Lowry rightly points out in his foreword to the book under review that the character and sophistication of Arabic writings on economic subjects has been “generally ignored” (p. xi).
Since Schumpeter’s book became a classic in economics, it led to a “blind spot” in the history of economic thought (Mirakhor, December 1987, p. 248). This blind spot has persisted to this day, as is evident from the reference by Douglass North, in his December 1993 Nobel lecture, to the “long hiatus between the end of the Roman Empire in the West and the revival of Western Europe approximately 500 years later” (North, 1994, p. 365). It is difficult to understand why these scholars have not realized what Abu Bakr al-Razi, the great Muslim philosopher, scientist and physician (d. 925), understood more than a thousand years ago — that the history of knowledge is a continuous process, building upon the foundations laid by former generations of scholars (cited by Rosenthal, 1947, p. 68). If this evolutionary process in human intellectual development had been realized, Schumpeter and North may not have assumed the great gap or hiatus of 500 years, but rather tried to discover the foundation on which the Scholastics and other Western scholars built their intellectual edifice.
However, Muslims themselves are also to be blamed for having failed to adequately articulate their own contribution. Ghazanfar’s book will go a long way toward setting things right. Ghazanfar has been a faculty member at the University of Idaho for the last 36 years. His long experience in teaching conventional economics along with his deep interest in Islamic economics makes him highly qualified to write confidently on the contribution made by classical Muslim scholars to economics. He has rendered a valuable service to the academy by editing this enlightening book.
In addition to the foreword by Todd Lowry and the introduction by Ghazanfar, the book contains fifteen papers, seven of which are by Ghazanfar himself, four by him in association with A. Azim Islahi, one by Paul Oslington, two by Hamid Hosseini, and one by M. Nejatullah Siddiqi in association with Ghazanfar. These papers cover in sufficient detail the contributions made by Abu Yusuf (d. 798) Abu Hamid al-Ghazali (d. 1111), Ibn Taimiyyah (d. 1328.), Ibn Qayyim (d. 1350), and a number of other Muslim scholars like Ibn Hanbal (d. 855), al-Kindi (d. 873), al-Farabi (d. 950), Ibn Hazm (d. 1064), Alberuni (d. 1048), Kay Kaus (d. 1082), Nizam al-Mulk (d. 1092), Dimashqi (d. 1175), Nasir al-Din al-Tusi (d. 1274), and Dawwani (d. 1501).
All these papers together help enlighten the reader on the contributions made by these Muslim scholars to a number of economic concepts like the market mechanism, demand, supply, prices and profits, money, counterfeiting and currency debasement, labor supply and population, and the role of the state and justice, peace and stability in economic development. There is also a discussion of economic thought in medieval Iran, the link between medieval Islamic socio-economic thought and the Greek and Latin-European scholarship, post-Greek/pre-Renaissance economic thought during the “Great-Gap” centuries, and a comparison between the thought of Al-Ghazali and St. Thomas Aquinas. The quality of the papers is on the whole quite good and the book should go a long way in fulfilling its primary objective, which is to highlight the Muslim contribution.
It is a little surprising that, even though the name of Ibn Khaldun (d. 1406) is mentioned in several places in the book, there is no full-fledged paper on this great scholar. Even though he lived after the “Great Gap” period, his book, Muqaddimah, or Introduction [to History], represents a crystallization of Muslim economic thought before him. His insight into some economic principles was so deep that a number of theories propounded by him nearly six hundred years ago could undoubtedly be considered the forerunners of some more sophisticated modern formulations of these theories. A number of papers are available on Ibn Khaldun’s contribution and at least one or two of these could have been included in this book for the sake of completeness. It would also have been helpful if the spellings of scholars’ names had been made uniform throughout the book. Different spellings in different papers can create confusion in the mind of a reader who is not familiar with these names.
The author deserves our compliments for this valuable contribution to Islamic economics. It deserves to have a place in the library of not only every college and university where history of economic thought is taught, but also of individual scholars of economics concerned with the evolutionary development of economic theories over the centuries.
References:
Abbas Mirakhor, “The Muslim Scholars and the History of Economics: A Need for Consideration,” American Journal of Islamic Social Sciences, December 1987, pp. 245-87.
Douglass C. North, “Economic Performance through Time,” American Economic Review, June 1994, pp. 359-68.
Josef Pifer, “Scholasticism,” in Encyclopedia Britannica, 1978, Vol. 16, pp. 352-55.
Franz Rosenthal, “The Technique and Approach of Muslim Scholarship,” Analecta Orientalia (Rome, Pontificam Institutum Biblicum, Vol. 24, 1974), pp. 1-73.
Dr. M. Umer Chapra is Research Adviser at the Islamic Research and Training Institute of the Islamic Development Bank, Jeddah, Saudi Arabia. He joined the institute in 1999 after retiring as Senior Economic Adviser from the Saudi Arabia Monetary Agency where he served for thirty-five years. He has authored a number of books and papers. His most recent book is The Future of Economics: An Islamic Perspective (Leicester: Islamic Foundation, 2000).
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Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Middle East
Time Period(s):Medievalhttp://eh.net/book_reviews/medieval-islamic-economic-thought-filling-the-great-gap-in-european-economics/   
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