Competition in [worldly] increase diverts you, until you visit the graveyards.[102:1-2]
While working towards the tazkiyyah of a society fraught with economic exploitation and hedonism, it is futile to try and combat these symptoms without interrogating the conditions from which they arose.
Unfortunately, much of the discussion on Islamic economics has been relegated to Islamic finance and banking—in other words, a discussion on how to amass wealth within the current system, rather than a discussion on the system itself and whether it is compatible with Islamic principles of governance.
The first stage of building a system is to establish its goals, and this is the stage at which we can begin to question the validity of a system and its compatibility with an Islamic worldview. If we understand the primary, if not overarching, goal of modern economic systems to be development, we must first understand what development is and why—or if—we should pursue it, in order to understand whether the modern capitalist system is congruent with our values.
What follows is a discussion of the prevailing views on the concept of development, the problems they pose in the context of Islamic governance, and how to begin moving towards an Islamic discourse of development.
What’s in a name? Only a host of assumptions and subsequent implications. The term “development” implies a course along which societies progress over time. Here, the danger lies in conflating material progress with moral progress, and particularly in attributing the latter to the former. This is, however, how development has come to be popularly understood: that there is something inherent to the beliefs and values of the “developed” (read: Western) world that is conducive to economic development.
The modern global development project arguably first emerged in the global south during the late 1940s, largely as a means by colonial powers to quell uprisings due to poor economic conditions. Since then, various theories have emerged as attempts to understand why parts of the world are more developed than others.
Theories of Development
In one of the most well-known theories on development economics, Walt Whitman Rostow laid out a five-stage timeline for the economic development of a nation entitled The Stages of Economic Growth. In these five stages which take a society from “traditional” to the modern age of high mass-consumption, the key drivers of development are industrialization and investment. Rostow posits that every society exists in one of these sequential stages, implying that parts of the world are behind others in reaching the modern stage.
Economic historian Andre Gunder Frank rejected Rostow’s traditional versus modern dichotomy, and particularly Rostow’s claim that “traditional societies”—agrarian and technologically undeveloped—are at an original state that developed countries have moved beyond. Similar to the core-periphery concept found in dependency theory, Frank argues that this claim ignores a dialectical relationship between the metropolis (the global economic center) and the satellites, and that these two spheres of the world cannot exist as they do without one another. The underdevelopment of the satellites isn’t a characteristic of not yet exiting the primitive stage, but rather a direct result of their relationship with the metropolis. Underdevelopment is generated, not a fact of origin.
In sum, Rostow’s theory of development fails to account for how some societies accumulate wealth and advance technologically by invading and exploiting other societies. Not only does colonial extraction from the satellites lead to the metropolis being “ahead” in terms of development, it also effectively disables the satellites from catching up.
The Discourse of Development
Whilst the aforementioned theorists engage in a discourse surrounding the causes of economic development, another strand of post-structuralist theorists question the concept of development altogether.
Anthropologist Arturo Escobar writes about development as a “discourse”: a knowledge construct that consists of certain language and ideas that, together, form the definitions of development. The concept of development itself doesn’t exist without the definitions that comprise it: “advanced”, “backwards”, and “prosperity” are some of the defined words that form the backbone of development theory. Each of these words has a widely understood meaning when used to describe societies. But are these meanings objective?
Short answer: no.
Long answer: The meanings of these words are determined by choosing to measure certain things (and not measure other things). Advancement is measured by things like low infant mortality rates, consumerism, and use of technology. The idea that some nations are developed and others are not didn’t emerge from thin air — it was decided by academics and policymakers who had the power to say so and have what they say be affirmed on a mass scale.
When the powerful generate discourses, we come to accept their underlying assumptions as true.
Free markets are efficient.
High mass consumption is an indicator of prosperity.
The global south is underdeveloped.
These are all “truths” that go largely unquestioned, but when looking at how and where they arose, we start to realize that it was from a person or people who stood to benefit from these things being true.
In the context of development, this leads to the construction of development programs for the global south by those who live outside it. In his work on “Kicking Away the Ladder”, Cambridge economist Ha-Joon Chang explains how development programs designed for the global south by Western financial institutions actually recommend the opposite strategies that Western countries utilized to amass wealth. Whereas Britain and the United States historically utilized protectionism to first stabilize domestic industries, the IMF and World Bank’s policy recommendations for developing countries emphasize free trade—incidentally, fighting protectionism in the global south benefits developed Western countries who can then access these markets without the added costs of protectionism.
These programs thus work to benefit those who design them, even whilst they are to blame for generating poverty in the global south through colonial extraction. As a result, we see policy recommendations that aid those generating the discourse. These policies will even shift blame onto victims, often attributing poverty to overpopulation and recommending increased abortion-access as a solution.
However, as long as solutions are being created external to those they are meant to assist, they cannot realistically be suitable nor effective. As long as discourse is being created about a people, by another people, it can scarcely reflect reality.
It’s a Small World-System
When talking about development, it’s important to recognize the global nature of these issues. In Immanuel Wallerstein’s theory of World-Systems Analysis, he proposes using the world-system, as opposed to the nation-state, as a unit of analysis to understand why parts of the world are more or less developed.
Wallerstein explains that the current world-system is a deeply interconnected, capitalist, global economy dominated by sovereign nation-states. In his aforementioned work, Andre Gunder Frank similarly argues that all regions of the world and all levels of society have been impacted by global capitalism, and indeed that capitalism is the reason why various regions are wealthy or impoverished.
I recount these theorists’ arguments not because they are perfect and necessarily true, but because I believe that they can be useful. The world-system as a unit of analysis is arguably crucial for Muslims working to conceptualize and actualize Islamic institutions of governance; the capitalist world-economy, as Frank argues, impacts everyone. Any Islamic polity in the modern context will inevitably have to reckon with the dominant forces of the world-system.
So while we engage in Islamic discourses, we must remain aware of the discourses we have internalized as citizens of the modern world-system, and we especially need to recognize how they may conflict with our deen. We must also recognize who is behind generating and promoting these discourses (i.e. those with the power to do so)—and all of this must be done with the understanding that Allah ﷻ remains All Powerful.
The first step for engagement is to be critical of the sources of knowledge you consume, as well as having a point of reference against which to judge information; as we know, the ultimate frame of reference is that which is revealed to us from Al-Haqq ﷻ. However, beyond being critical of existing discourses, we must engage in long-term efforts to produce knowledge using Islam as a frame of reference.
One branch of this effort has been the attempt to articulate an “Islamic economics”, against which critiques are levied claiming that it is impossible to articulate a single, ontologically Islamic theory of economics. Still others argue the truth lies somewhere in the middle: Islam contains principles which we have to abide by in building political-economic systems, but its prescriptions are not so specific as to make any theorizing on the part of Muslim scholars obsolete.
In addition to the principles regarding wealth, charity, and exchange in the shari’ah, we also have examples of the practice of economy in the administrations of our Beloved Prophet ﷺ and the Rightly Guided Caliphs, may Allah ﷻ be pleased with them. That said, these examples are limited in that they do not translate directly to all facets of our modern local and global economies, leaving room for Muslims to conceptualize economic systems that are viable for their contexts.
Various efforts to conceptualize an Islamic economics continue to this day, one example of which is Dr. Mehmet Asutay’s project to define an Islamic Moral Economy. The project’s goal of articulating an ontologically Islamic political economy begins with tawhid as its axiomatic framework. On an individual level, tawhid guides us to believe in that which was revealed to the Prophet ﷺ and to act as Allah ﷻ commands, because we understand that He is the Supreme and Sole Arbiter of truth. On a societal level, tawhid guides us to use Islam as a framework for determining right and wrong and as a manual for building institutions.
Herein lies the origin of the discord between Islam and capitalism. The difference between a Muslim and a capitalist is not only their acceptance or denial of tawhid, but their subsequent philosophies of wealth. With the self-professed goal of profit maximization, the capitalist acts without understanding the reality of rizq: the idea that Allah ﷻ has apportioned a set amount of wealth for everyone that no one can increase or decrease save Him ﷻ. Recognizing the reality of rizq both extinguishes the capitalist anxiety about material gain and prevents one from knowingly taking haram means to increase one’s wealth.
Even when speaking of “one’s wealth”, the Muslim cannot ignore the reality of being a mere temporary custodian and that the sole owner of the dunya is Allah ﷻ. This aspect of the Muslim’s philosophy on wealth means they understand wealth not as a source of freedom, but responsibility. We do not even have total discretion over where to spend the wealth we currently possess; our families and the impoverished have rights to our wealth explicitly delineated in the shari’ah.
An Islamic Substructure
Some may argue that Islam is general enough that it can be superimposed on a variety of economic systems; it may give them some unique characteristics, but they maintain their fundamental nature. I would argue that the folly in this line of thinking is reflected in the failures of Islamist political parties to create Islamic states by enforcing “shar’iah-compliant” policies within the modern nation-state—a system created outside of the shari’ah and thus incompatible with it, as argued by Wael Hallaq.
By using Islam as a starting point for development, as opposed to something we try to stretch to fit existing capitalist institutions, we can build economic systems that not only have Islamic roots but produce results that fulfill the objectives of the shari’ah.
The aforementioned poststructuralist theories are useful for deconstructing the discourse of development, which is indeed both dishonest and harmful. However, poststructuralism, like postmodernism, fails to provide a concrete value-system. This further lends to the fact that we cannot construct viable systems of governance outside of Islam, the only comprehensive and universal value-system.
Towards Islamic Governance
Thus, we are presented with the challenge of not only building viable economic systems in accordance with Islam, but doing so in a world-system dominated by states that use Rostow’s modernization logic to subjugate parts of the world and enrich others. I argue that part of addressing the challenge is in building an Islamic discourse of development: a set of factors that define the goals of our economic system, as well as the acceptable methods for pursuing those goals.
Earlier I mentioned that the definitions comprising the discourse of development are determined by measuring certain things. The task of creating an Islamic discourse of development entails determining what factors constitute desirable results of economic activity on a societal level from an Islamic perspective—we may not even choose to call it “development”.
A commonly cited measure of development is education, which makes a good deal of sense. But being educated in the United States, for example, means having received an education that taught you nothing about the reality of Allah ﷻ and Him being the Creator of the various sciences we seek to uncover the truths of. What use is such an education that doesn’t lead one to knowledge of The Truth, and how good is it as a measure of development from an Islamic perspective?
Additionally, we must determine the acceptable methods for pursuing development (as we define it) as determined by the shari’ah. Muslim jurists have already generated an extensive wealth of knowledge on the fiqh of buying & selling, banking, and other economic activities, and this field continuously grows and develops as economic systems change over time.
Lastly: I must say that articulating an Islamic discourse of development is not the work of social scientists in the realm of academia—at least not exclusively—but rather the work of scholars of the traditional Islamic sciences. It is not enough to list maqasid-ul-shari’ah and reference the history of bayt-ul-mal. Rather, the project of articulating Islamic social, political, and economic systems requires a deep knowledge and understanding of the Islamic sciences that a secular education cannot broach unassisted. My preceding effort to elucidate a general application of Islamic economic principles to development is nothing more than one student’s attempt to begin connecting the dots.
Asutay, Mehmet. “Islamic Moral Economy: Foundations of Islamic Finance.” The Influence of Islam on Banking and Finance, 2014.
Escobar, Arturo. Encountering Development: The Making and Unmaking of the Third World. Princeton Univ. Press, 2012.
Frank, Andre Gunder. “The Development of Underdevelopment.” Monthly Review, vol. 18, no. 4, 1966.
Ha-Joon, Chang. “Kicking Away the Ladder: The ‘Real’ History of Free Trade.” Foreign Policy In Focus, 2003.
Hallaq, Wael. The Impossible State. Columbia University Press, 2012.
Rostow, W. W. The Stages of Economic Growth: A Non-Communist Manifesto. Cambridge University Press, 1999.
Wallerstein, Immanuel. World-Systems Analysis: An Introduction. Duke University Press, 2004.