Skip to content

Microeconomics: An Islamic Approach

Download the newsletter ›

By Asad Zaman

At the heart of modern economic theory is the micro-economic model of homo economicus, who is cold, calculating and callous. This picture of humans as heartless rational robots is what leads to “Poisoning the Well: How Economic Theory damages our moral imagination” (Julie Nelson). I have provided a thorough critique of neoclassical utility theory in my paper:  The Empirical Evidence Against Neoclassical Utility Theory: A Review of the Literature,” International Journal of Pluralism and Economics Education, Vol. 3, No. 4, 2012, pp. 366-414. However, as Thomas Kuhn noted, paradigms cannot be changed by critiques; they can only be changed by providing an alternative paradigm. Thus to oppose neoclassical utility theory, we need an alternative model for human behavior. For western theorists, a natural alternative is the secular humanist model, which allows for a wide range of cognitive and emotive functions not captured in economics. For my purposes, Islam provide a more relevant model of human beings as having spiritual, emotional and rational dimensions. This model speaks directly to my audience. (see also “Spirituality and Development“)

It is also true that, regardless of how we try, it is impossible to do economics without notions of morality, justice, equity and fair-play. Currently economics pretends to be positive, which means that it sneaks in very questionable (indeed, poisonous) value judgments (like that of Gauthier) into the framework, without explicit discussion. I have explained how the apparently objective concept of scarcity is actually built upon hidden foundations of three major value judgments about exogeneity of tastes, sacredness of property rights, and the idea that (unobservable) human welfare directly corresponds to  (observable) human choice behavior:; see  the normative foundations of scarcity, real-world economics review, Issue no. 61, pp.22-39. Again to oppose neoclassical micro, we must introduce an alternative ethical and moral framework. Here again it suits my purpose to use an Islamic framework for this purpose.

Below, I provide a link to a summary of the first lecture I gave, in a unique course on Microeconomics. Unlike Western epistemology which takes all knowledge as useful, Islam differentiates between useful and harmful knowledge. I am teaching my students that conventional micro is “Harmful” knowledge, which damages our natural tendencies for compassion and kindness, and teaches us to be selfish. It teaches us to accept poverty, misery, injustice, and exploitation as natural outcomes of an ideal economic system. The link below provides (1) a very brief summary of the lecture, (2) a link to the 91min video of the actual lecture, and (3) a more detailed 2500 word outline of the lecture, for people who don’t have time to watch/listen to the 90 minute lecture.

https://asadzaman.net/am01-introduction/

From: p.12 of WEA Commentaries 7(5), October 2017
http://www.worldeconomicsassociation.org/files/Issue7-5.pdf

 

 

Download WEA newsletter Volume 7, Issue No. 5, October 2017 ›

Respond to this article

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Please note that your email address will not be published.