INTRODUCTION

In the aftermath of the successful resistances against colonialism in the Muslim world, Muslims have been inspired into seeking Islamic alternatives to the pre-existing institutional structures imposed on them by the colonialists. Consequently, studies have been conducted on the kind of social arrangement Islam offers as an alternative. In the sphere of economics, the attention has been on extracting, from the Islamic system of thought, economic conceptions that will replace capitalist and socialist ideas – the predominant bases on which most post-colonial Muslim societies remained organized. This, and other related reasons, led to the First International Conference in Islamic Economics in 1976, in the city of Makkah, which sought to streamline a new discipline known as Islamic Economics²⁹⁰. The conference inspired more activity in the research area of Islamic economic thought, producing, among other things, studies on the economic thought of some prominent Islamic scholars of the medieval period, such as Abu Hamid ibn Muhammad al-Ghazālī (1058-1111), Taqi ad-Din Ahmad ibn Taymiyyah (1263-1328), Shams ad-Din Abu ‘Abd Allah ibn al-Qayyim (1292-1350), and ‘Abd ar-Rahman ibn Muhammad ibn Khaldūn (1332-1406).

It has become quite apparent, from these recent studies, that the medieval Islamic scholars addressed various economic questions in their writings, ranging from economic behavior of the individual members of society to the role of the state authority in the economic affairs of society. These economic ideas, derived mainly from primary sources of Islamic knowledge and law (i.e., the Qur’ān and hadīth/prophetic tradition), were part of the broad attempt, by the scholars, to provide an Islamic guide to social life in their respective periods, and this carried significance since the affairs of historical Islamdom were, largely, organized on the basis of the Sharī’ah (Islamic law). Consequently, the intellectual approach that

290 Islahi, A.A. (2008). Thirty Years of Research in the History of Islamic Economic Thought:

Assessment and Future Direction. 7^th International Conference in Islamic Economics (pp. 347-70).

produced these ideas was harmonious with the general Qur’ānic conception of life – an integrated whole with functional constituents, each playing its role towards the attainment of a spiritual end. Economic ideas were, thus, treated as integral to the broader conception, not as isolated ideas that could be completely understood on their own. Unfortunately, though most of the recent studies have acknowledged the

“holistic intellectual approach”²⁹¹ of the early scholars, they have tended to discuss the economic ideas as divorced from their holistic contexts, as a result of which wrong interpretations of the ideas have ensued. The obvious culprits in this have been studies that have sought to disprove Schumpeter’s ‘Great Gap’ thesis, by proving how scientific/analytical these classical Islamic economic ideas are. In doing so, they have often been compelled to explain the economic thought emanating from these medieval sources as if distinct from their holistic sources, and have, in the process, been led to interpret them as similar to the modern capitalist-dominated economic concepts. For instance, in Shaykh Muhammad (S.M.) Ghazanfar’s introduction to Medieval Islamic Economic Thought²⁹², he asserts that “while terms such as “capitalism”, “market economy”, “price system”, and “voluntary-exchange economy” are of rather recent origin, the assumptions underlying the economic discussions of the medieval Islamic scholars were essentially the same as those of a contemporary market economy, albeit with an administrative role for the state in order to pursue the goal of common good”²⁹³. Such suggestions were reinforced in one of the studies published in the book, in which Imam al-Ghazāli’s ideas were likened to laying “the foundation of…the “spirit

291 Ghazanfar, S.M., & Islahi, A.A. (2003). Economic Thought of an Arab Scholastic Abu Hamid Al-Ghazali (AH 450-505/1058-1111 AD). In Medieval Islamic Economic Thought: Filling the “Great Gap” in European Economics (pp.23-44), p. 23.

292 Medieval Islamic Economic Thought (published in 2003 and edited by S.M. Ghazanfar) is a collection of studies, all of which have sought to fill the centuries that have been left “blank” by Schumpeter and other historians of economic thought, by presenting the economic ideas of medieval Islamic scholars. All the papers (except one) were previously published in various academic journals.

293 Ghazanfar, S.M. (2003). Introduction. In S.M. Ghazanfar (ed.), Medieval Islamic Economic Thought: Filling the “Great Gap” in European Economics (pp.1-5), p. 5.

of capitalism””²⁹⁴. Such conclusions could only imply, in the least, misinterpretation inspired by a wrong methodological application. In respect of the just-mentioned misinterpretation of al-Ghazāli’s idea, for instance, Oslington (2003) suggests that the writers “look[ed] at al-Ghazali’s writings through a modern Western lens that blocks out the eleventh-century, non-European nature of the texts, and especially their religious nature”²⁹⁵.

In this paper, we attempt to explain Islam’s market doctrine using the holistic methodology. In order to nullify any misinterpretation that may have emerged in previous studies on the subject, the study will be conducted as a comparative analysis of Islam and capitalism. It is obvious that these recent misinterpretations have been influenced by modern capitalist-dominated economic ideas, hence our choice of capitalism. Our study will thus attempt to filter intellectual sources (Islamic and Western) in order to establish the inherent difference between the two systems. This attempt is significant, not only for correcting the existing interpretational errors with respect to the Islamic economic ideology, but also for establishing a useful conceptual framework for explaining historical developments in the Islamic world. The broad nature of the two ideologies, however, makes it an impossible task to comparatively examine all of their features in single study such as this one. Thus, we limit our discussion to the issue of ownership, production, and exchange in the two systems. We would be establishing the role of morality and ethics in the two systems (founded on their respective conceptions of the essence of human life). As a natural progression from this, we will examine the significance of ethics in economic relations within the two ideologies (captured by their respective views on economic justice). Finally, on the basis of these two issues, we will attempt to draw out the respective positions of Islam and capitalism

294 Ghazanfar, S.M., & Islahi, A.A. (2003). Economic Thought of an Arab Scholastic Abu Hamid Al-Ghazali (AH 450-505/1058-1111 AD). In Medieval Islamic Economic Thought: Filling the “Great Gap” in European Economics (pp.23-44), p. 28.

295 Oslington, P. (2003). Economic Thought and Religious Thought: A Comment on Ghazanfar and Islahi. In S.M. Ghazanfar (ed.), Medieval Islamic Economic Thought: Filling the “Great Gap” in European Economics (pp.45-48), p. 45.

on the freedom of the individual in the pursuit of economic ends, with specific reference to issues of ownership, production, and exchange. Much of our discussion, especially of capitalism, unfolds as historical analysis, given the fact that capitalist ideas were formed through a historical process. For instance, as we shall see later, the gradual transformation of European society from a feudal one in the medieval era to a capitalist one (from the sixteenth century onwards) was paralleled by a gradual transformation of social theory from one that was essentially religious to one that was essentially materialistic. The Islamic ideology, though it took shape over time, did not experience any significant change in its essence. Thus, history is referred to only when it is relevant in helping us understand some specific concepts.

Our study is organized in five sections (including the introductory section). In section two, we discuss the meanings of morality in Islam and capitalism, largely derived from their respective conceptions of the essence of human life. Section three establishes why an ethic-based definition of economic justice is incompatible with capitalism but compatible with Islam. In section four, we utilize the tools derived from sections two and three to analyze the inherent difference between Islam and capitalism in their respective conceptions of economic freedom (in terms of ownership, production, and exchange). Finally, we conclude in section five.