Islam and «Scientific» Economics : In the Pursuit of a New Paradigm

In an Islamic society, it is ethics that dominates and determines all behavior, including economic behavior. The Holy Koran emerges as the main source of all economic behavior and practices which are subject to the commands of Allah as stated in the Koran. Since Islam is a universal religion, the Islamic economic paradigm with its «scientific» Islamic economic theories has to be comprehensive as well as perfect in the sense of fairness, ethical values and fruitfulness. A universal Islamic economic system ought to have universally applicable economic laws acceptable by both, the Muslim and the non-Muslim world – meaning that when the word Islamic is taken out of the equation; it should appeal to all societies and countries equally, regardless of their religious persuasion. The question now is; do Islamic economics offer such «scientific» economic theories? Surprisingly, there were no such theories at all. In fact, there was not even a theory of interest, the most frequently referred to subject in Islamic economics. This appeared to be a serious omission. The Holy sources may be more than sufficient for Muslims, but what about non-Muslims? Isn’t it justified to expect Islamic «scientific» economic models and theories that are applicable to or able to guide non-Muslims? Cover Preface Table of Contents Introduction On the State of Knowledge On the “Creative” Mental Skills of Man On the “New Knowledge” on Economics The Content and the Method Chapter-1: Revaluation of Islamic Economics-1 Developing Islamic Economic Theories Introduction Islamic Economic Theories in Retrospect Islam and Economic Knowledge Influence of Islamic Scholars on Economic Issues The difference between Islamic economics and the “Others” Islamic economics-reconsidered Islamic Economics The lack of a scientific dimension The Verses of the Koran & the Hadith about “Alternative” Economics Concluding Remarks Chapter-2: Revaluation of Islamic Economics-2 Western Scientific Economic Theories: Are They A Proper Source of Inspiration for Islamic Economics? Some Opinions on Islamic Economics The Concept of Islamic economics How Does One Proceed? Some Features of the Mainstream Theory The Nature of the Neoclassical Theories Do Assumptions have to be “Utopian”? The Historical Dimension A Fictitious Case: The State of Equilibrium Utility Homo Economicus vs. Normal Man What is the Attraction of the Neoclassical Theories? A Brief Glance at the Past “Normative” Neoclassical Theories Positive Economics vs. Normative Economics On scientific (!) mainstream economics Chapter-3: Revaluation of Islamic Economics-3 Islam, Science and the “Absolute Truth” Introduction The Positive Sciences – Economics & “Absolute Truth” “Natural” Sciences and the “Absolute Truth” Social Sciences and the “Absolute truth” The Islamic Faith and the “Absolute Truth” Islamic Economics and the Notion of “Absolute Truth” Chapter-4: An Islamic Value & Price Theory: An alternative approach based on mental labor and technological change Introduction The Hypothesis The analysis is “Islamic” because Why Price Theory? Towards a New Mindset A Brief Historical Review The Original Sources of Value: Nature and Laborer The Labor-power “Creative” Mental Labor and Value Generation Value Generation - A Simple Model Different Qualities of Mental Labor Value-Price Relation Relative Prices Relative Prices in the Service Sector Commodity Sector Price Formation Transformation of Values into Prices A Case of “Barter-Exchange” Price Formation in a Monetary Economy Production with Multiple Inputs A “Given” Product & a “given Production Method” & Profit How Influential is Variations in Demand? Technological- (Macro-) Productivity Growth & Profit A “Given” product but “new” production method and price “New” products, price & profit Concluding Remarks Chapter-5: On the Islamic Theory of Trade Introduction Developing a New Theory of Trade On Western Trade Theories Adapting Secular Theories Developing an Islamic Trade Theory Some Remarks On Global Trade Global? or International? Global Trade & Competition Global Competition & FDIs FDIs & Global Intra-Firm trade (IFT) Global Trade & the Convergence of Wages & Prices Concluding Remarks Chapter-6: Islam & Interest From the perspective of an economist Introduction What is Interest (or Riba)? Some Views about Interest Interest as referred to in the Koran Koranic Verses on Interest (According to their Date of Revelation) Sunnahs and the Interest Commodity Interest Interest According to the “Islamic Encyclopaedia” “Other” Views on Interest Interest: Reconsidered “Surplus” 1- “Earned” Income 2- “Unearned income” Chapter-7: Interest, Surplus, Savings and Rent Introduction Income of the Financial Firms The “Surplus” in the Return of a Loan 1- Loans for “Production” and the “Surplus” 2- Loans for “Consumption” and the “Surplus” 3- Loans for “Basic Consumption” and the “Surplus” 4- Loans Borrowed by the State and the “Surplus” The “Surplus” on Saving Deposits of Individuals Encouraging Productive Investment “Hoarding” Money, Capital & Competition Rent Rent-Interest Dichotomy? “Interest” vs. “Profit-sharing” Final Remarks on Interest Chapter-8: Concluding Remarks General Perception Final Remarks: Competence Bibliography The Islamic economic paradigm with its scientific Islamic economic theories have to be comprehensive as well as perfect in the sense of fairness, ethical values and fruitfulness. But are there universal Islamic economic systems with universally applicable economic laws acceptable by both, the Muslim and the non-Muslim world?