Methodological Dimension of Islamic Economics

The following sections are included:

• Prologue: Oneness of Allah and the World System — Tawhid as Monotheistic Law
• Preface
• About the Author
• Acknowledgment
• Contents
• List of Figures
• List of Tables

Islamic economics began around 70 years ago with the works of some Indian scholars in the field. The King Abdulaziz University Center for Islamic Economics records the origin of the contemporary approach to the study of Islamic economics to be 30 years ago. The works of the great Islamic scholars, the mujtahids, such as Imam Ghazali, Ibn Taimiyya, Imam Shatibi, Ibn Qayyim, and Ibn Khaldun, recorded the study of Islamic economic and social problems either in reference to the Qur′an and prophetic teaching, the sunnah, or independent of these as intellection borrowed from Greek social and economic thoughts. The latter examples are of Ibn Khaldun (Rozenthal, 1958) and the Muslim philosopher of Greek vintage, Al-Farabi (Waltzer, 1985). The use of the terminology “Islamic economics” is an imitation of contemporary times. It reflects the classification of educational disciplines left to us by the Occidental world. Such classification was devoid of the holistic beginnings of intellectual thought in which all Muslim scholars had drowned themselves in the search of knowledge, not of this or that discipline, but of all disciplines as a holistic methodological worldview…

What is the meaning of socio-scientific methodology in its wide conception? How is the economic analysis derived from such a broad socio-scientific methodology? What is the relevance of Islamic epistemology in this broad concept of methodology…

The general epistemological methodology of scientific investigation in the comparative perspectives of Occidentalism and Islam that was formalized in Chapters 1 and 2 is now brought forth to establish the nature and scope of Tawhidi Islamic Economics (TIE). The starting point is to note that in comparative methodological perspectives, like all other disciplines of study, economics too has been cast in the framework of its own differentiated specialization (Holton, 1992). Thereby, in the name of disciplinary specialization, mainstream economics has been deprived of its embedded methodological worldview along with the important human elements of concern. These elements are morality, ethics, and the crosscurrents of issues with other disciplines, whether by way of a unique methodology and methodical study, or by way of formalizing economics as a generalized human science (Boulding, 1968). Yet, quite evidently, the various disciplines lack the methodology and the attenuating method to blend morality and ethics with the material forms and considerations regarding the embedding. Thereby, even more damaging has been the fact that no methodical discovery has been attained that can analytically study morality and ethics as neural system studies and thereby draw policies, strategies, and institutional forms that can present a wider field of endogenous learning phenomena (Choudhury, 2014b)…

This chapter commences along the lines of application of the theory contrasting Tawhidi unity of knowledge and the rationalist world systems that we substantiated in Chapters 2 and 3. In this regard, we will first translate the premises of Chapter 2 in a formal model and explain all its details. Along with this task, this chapter will also explain several important concepts that emanate from the formal model and treat the essence of the Islamic instruments within such a formal model that carries with it the contrasting concepts, differentiating Islamic methodological worldview and the rejection of rationalism depicted in mainstream economics. The same kind of arguments and formalism applies to the generality of the world-system study and its details…

The following sections are included:

• Introduction
• Background
• Objective
• Critical methodological issues of Islamic Economics and Finance
• The inference derived from Islamic bank financing on the ethical front
• Exercise 1
• The principle of pervasive complementarities applied to Islamic financial instruments
• The true nature of Islamic economic and financial studies
• How do we get to the Tawhid methodological formulation from the imitative Islamic mainstream economic approach?
• Example 1
• A small amount of gold is required to maintain the value of monetary circulation in the real economy
• A Tawhidi epistemological application to unified Islamic financing portfolio: PF Model
• Exercise 2
• Stakeholding and shareholding in the PF for purposes of risk and production diversifications
• Exercise 3
• FTFC in the PF formalism
• Conclusion
• References

In the previous chapters, the foundational topics of Islamic methodology and some of the methods and formulations arising from it were laid down in terms of the Tawhidi theory of knowledge. This theory was laid down in terms of firstly, ontology. Ontology means the theory of existence, as of the primal origin of knowledge being the Qur′an and its instrumentation by the sunnah. Secondly, there is epistemology, meaning the theory of knowledge. In Islamic intellection, epistemology is derived from the Qur′an and the sunnah in terms of the cardinal law of Tawhid. It is logical for the purpose and establishment of an abiding theory of Tawhidi Islamic economics (TIE) and broadly of Tawhidi socio-scientific intellection to utilize the foundational topics. The analytical results so arising from the methodological foundations will then be carried over into quantitative perspectives. This last part of the comprehensive theory of TIE is referred to as the unraveling element of consciousness. In scientific language, this last part that integrates ontology and epistemology in a methodological way leading to the methods of analysis is referred to as phenomenology…

The general theory of evaluation of the objective function of wellbeing (maslaha) in the light of the epistemology of unity of knowledge with maqasid-choices and using the method of circular causation has been laid down in the previous chapters. The same method and the underlying idea meeting the Tawhidi analytical methodology has also been particularized for special problems of economics. Therefore, the building blocks of this theory will not be treated henceforth. What will be accomplished is the application of the Tawhidi theory of unity of knowledge with the method of evaluation of the wellbeing function subject to circular causation relations…

The following sections are included:

• Nature of macroeconomic analysis
• General flows of goods and services according to macroeconomics with ethical valuation
• Critical issues of consumption, savings, and investment functions
• Exercise 1
• Further extensions of the problems of sustainability of the Keynesian general equilibrium
• Generalized system model of evolutionary ethico-economic equilibrium in TIE
• Applications of Differential Evolution in Chemical Engineering
• The form of the generalized model of evolutionary system learning in aggregative TIE
• Exercise 2
• Exercise 3
• Adverse effect of bank-savings on potential real output
• The nature of the generalized system of evolutionary equilibrium model
• The example of generalized system of evolutionary equilibrium model in the vector of variables, (θ, Z, T_r, y, r/i)[θ]
• Exercise 4
• Exercise 5
• Conclusion
• References

The following prologue is the starting premise of this chapter…

The following sections are included:

• The objective of this book is to expose the thoughtful student and the awakened Islamic scholar to the Tawhidi methodological worldview of TIE
• The universe is the science of the signs of Allah in generalized manifestation of Tawhid
• Economic science is a particular characterization of Tawhid as the law of consilience
• According to the Qur′an, the universe of the known, the knowable, and the unknown, the unknowable comprise an extended economic venue
• Socio-scientific thought is disabled in the absence of Tawhidi episteme of unity of knowledge
• Teach and application: How is TIE different from existing “Islamic” economics?
• Exercise 1
• Final Thoughts
• Example 1: Failure of studying social justice in mainstream economics and the alternative in TIE
• The call to Islamic thinkers
• References

The following section is included:

• Index