I am extremely grateful for the flow of ideas that distinguished this dialogue. I would like to point out that the program offered in comparative economics has the following important qualities:

First: a good survey of the cumulative criticism directed to conventional economics since the early twenties   takes a good space. Much of it has been ignored by economists and has not yet taken a worthy place in classrooms.
Second: conventional economics is taught in our program with reference to the recently (as well as old) writings that attempt to avoid the inadequacies of the received doctrine. The new material minimizes the orientation towards perfect models. New models that succeed to escape the neoclassical framework expose more weaknesses of mainstream economics and point to the advantage of Islamic economics.  However, there is a long way for rebuilding mainstream economics to rid it from the many problems we all know. 
Third: in teaching analytical Islamic economics that leave the most of the job of textual and historical analysis to religious studies and stick to the use of economics tools of analysis, is done while emphasizing certain important aspects.
Muslems have not spent enough time to elaborate two of the most important pillars of Islam, and through their history, they ignored them mostly. The first is the implementation of intellect or ‘aql. A good reading of the Qur’an indicates that using intellect is a religious duty. Its protection is therefore mandatory as one of the maqassed. We have fallen into the pit of imitation and closed the door to Ijtehad a long time ago. Some schools of thought, like Imamis, Zaidis, and Ebadhis institute strict imitation. While we are not supposed to innovate in Sha’aer, Ebadat (شعائر، عبادات) or rituals, we are free to innovate in rules or Shara’e’ (شرائع) related to our daily life.
The second is Shura, which means the right of State citizens (Muslems and non-Muslems) to choose their rulers from amongst the most qualified. It has been set aside by the Umayyads and never returned ever since. We can recognize only few Muslem countries with some Democratic measure of government, like Turkey, Indonesia, and Malaysia, but generally, Muslems have lived under despotism with no right to choose their rulers. Instead, many Muslems claim certain types of Welayat, including Welayat al Faqih (ولاية الفقيه), Welayat al amr (ولاية الأمر) and Welayat al ‘askar (ولاية العسكر). Any economic system must be built on a political system. Without political freedom, economic activities become handicapped. that is why, in Islamic economics, it is mandatory to define our political system. In this regards, we need to ignore the debates among Fuqaha’ about the divine right of some group to govern and extract the political values that are embedded in Islam in order to use as building blocks for our political system. This is required for setting the type of property rights, enforcement, economic rights, equity rules, etc. To build Islamic economics in the absence of Shura is as bad as formulating economic theory under the assumption of perfect competition.
Fourth: Religious texts are open to interpretation. Interpreting religious texts by non-economists would be unsatisfactory. An example from Islamic finance can be presented. Shares Murabaha (مرابحة الأسهم) is a way that Shari’ah board members have ingeniously developed to finance speculations which are potentially destabilizing. Lack of understanding the economic consequences of activities becomes counterproductive. We can therefore agree on two important rules. First, economists must have the upper hand in determining the ultimate consequences of economic actions. In addition, as we economists attempt to draw institutional arrangements, policy rules and their rationalizations, to fulfill the Islamic teachings in the field of economics, we must keep in mind that such constructions are only our human product in interpreting the divine rules. Being human, our constructions are subject to discussion and debates and cannot be taken in themselves as divine. 
Fifth: This calls for another point which is often made by some Islamic economists, that the Islamic economic system is perfect. Perfection can only be attached to divine rules but not to their interpretation. If, for example, I suggest a monetary structure together with policy rules, as my interpretation of the divine rules. My interpretation, no matter how ingenious it would be remains human, subject to discussion and far removed from being perfection.
To tie few things together, since divine rules are open to interpretation, and since human intellect perceives things differently with different people, difference of opinions must be admitted. At the social level, an institutional structure for group ijtehad, through which the society chooses through its specialists a common ground in their social affairs must be instituted. It is about time to register in our mind that the wisdom of Allah has been manifested in creating an imperfect man in an imperfect environment (marred to say the least with scarcity) with peculiar perceptions, in order that we struggle with ideas before finding suitable arrangements. The perfect God, creates an imperfect people, in an imperfect world to see how they perform, before admitting them to his perfect Paradise.
Sixth: In the field of Islamic finance, the program keeps instilling in students minds the example of fishing on Saturdays that ancient Arab Jews have ingeniously developed as ruse for which they have been seriously condemned. While the Prophet has warned Muslems against imitating them, his warning has been totally ignored by Muslems in the field of economics.
Seventh: Islamic economists have two alternatives. First, they may wish to immerse themselves in criticizing the received doctrine, leaving no energy to present their own genuine ideas in economics. Instead, slogans are repeated about the total rejection of conventional economics and the “economics of Tawheed” without spelling out what it is. Second, they can leave the job of reforming the received doctrine to conventional economists, while presenting their own analysis and interpretation of the divine rules. We have spent so much time already on the first alternative. It is about time to focus on the second. 
I am again grateful to the contributions of all.
Warmest regards,






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 Dear Dr Mahmoud El-Gamal
It is a rare pleasure to be understood so completely. Our views are almost perfectly aligned — however, I have discovered some alternatives which did not exist in the past, and which make it possible to create a sophisticated response to the calamity that is neoclassical economics. The response is structured along many different dimensions, to take care of the many possible problems that you have pointed out. I will provide more details on this later. Note that “revolution” vs “evolution” is a pragmatic choice of words referring to the speed and the quantity of change — which word should be used depends on the audience, since one or the other would appeal to different audiences.  For the moment, I do think that this conversation would be of great interest to a much larger audience than this small email group. I have therefore posted in reverse chronological sequence all the messages on the following PAGE (not post) on my wordpress blog:
It might be useful to continue the discussion in the form of COMMENTS on this page, which provides a natural sequencing. The advantage of the blog page is that it is public and anyone can see it and comment upon it. I will try to do both in my response, where I will answer in CONCRETE detail a lecture-by-lecture structure of an alternative Micro-Economics couse which I have already taught  for three semesters. These courses provide a viable alternative to conventional courses, will equip[ students with all necessary skills to debate and argue with conventional economists, and also provide them with radically improved tools for use in constructing create alternatives.




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Dr Mahmoud El-Gamal — detailed and sophisticad response.

Dear Asad:

This could potentially evolve into a very interesting debate. We each understand exactly where the other is coming from: After all, we share the common experience of a modicum of mainstream academic success, but only as statistical technicians with carefully circumscribed roles, but we both obviously have much broader intellectual interests that were not possible to entertain in that role.
Please allow me to respond to some of the main points of agreement and difference in the current thread. I am not sure that email is the ideal medium for this type of debate, but it is the most convenient.
Let me start from the end of your last email.
On Al-Ghazali and tafaqquh:
We obviously share an admiration for Ghazali’s written corpus, especially his ‘Ihya’. Interestingly, the latter starts with a devastating attack on the fuqaha and speculative theologians (mutakallimun) of his time. Indeed, the entire program of the ‘Ihya’ seems to be precisely to replace what he saw as the defective fiqh of the fuqaha and theology of kalam with a better alternative (possibly the best available for his time, hence the well deserved recognition to this day).
On Philosophy (falsafa), however, which is separate from fiqh and kalam, we have to go to his Tahaful Al-Falasifah to find his critique mainly of Al-Farabi and Ibn Sina. In this book, Al-Ghazali made it very clear that he thought Philosophy (mostly translated from Greek by commissioned Christian and Jewish scholars and clerics, and then elaborated upon by a few Arab and mostly Arabic-writing Persian scholars) was the best path for secular knowledge. He gives several examples in the Tahafut about calculating the circumference of the earth as a sphere (so much for people thinking that 11th Century Muslims thought the earth was flat :-), the orbits of the planets, etc.
It is only the theological implications of Philosophy that Al-Ghazali attacks in the Tahafut. And when he does, the reader is compelled to believe that although he was brilliant in the fields of speculative theology (kalam) and fiqh in which he was trained by non other than Imam Al-Haramein Al-Juwaini, his training and understanding in Philosophy is extremely lacking. For example, his argument against the infinitude of the world, which was a very popular subject for argumentation at his time, relies on a sophomoric argument against the concept of infinity, because, he says, every number must be odd or even, but infinity always allows you to add one, and then the odd becomes even and the even odd, and so on…
Perhaps Ghazali should have left Philosophy alone to those who were better trained to study it, as Ibn Rushd showed in his Tahafut Al-Tahafut. However, there is also the possibility that he was disingenuous in his attack of the Philosophers, and used the logically weak methods of speculative theology (kalam) on purpose. Francis Bacon famously said that a little bit of philosophy drives people to atheism, but more philosophy brings them back. It is possible that Ghazali was trying to protect the commoners who would lose their religion once they got “a little bit of philosophy.”
I must go back, though, to the main point, and say again that Al-Ghazali was very clear that secular sciences are best studied using the logical methods of Philosophy (rather than the exegetical and religious-sciences methods of applying revelation), from which natural science and then other areas of inquiry emerged during the European Enlightenment. This is not to say that he would have approved wholesale of today’s Economics, and neither should we, and neither do most economists, but this is another issue to be discussed under another heading.
In my defense, I must also say that by criticizing fiqh, I am not saying that tafaqquh is subordinate to secular knowledge. On the contrary, to paraphrase what Coveyu said about random number generation (it “is too important to be left to chance”; he was obviously referring to pseudo and quasi RNG), I would say: Fiqh is too important to be left to the fuqaha.
On tolerance for heterodoxy:
I must first point out the irony of Muslims (including myself) complaining that Economics exhibits extreme intolerance of heterodoxy. It is a valid point, and the point that it is a “religion” (in the broader sense) that primarily serves the interests of the richest is one that I and most economists would not dispute. Classical (excluding the Marxian thread) and Neo-Classical economists would argue that it also serves the interests of most other members of society (in an admittedly unappealing Utilitarian way, which we may discuss under a separate heading). Their response is always: show us something that performs better.
This is always the problem with any system that has some degree of success, including early Muslim civilization. Accumulation of knowledge and success builds on the constancy of worldview and institutions. Then, we get set in our ways, and too vested in the knowledge that we already have. Take for example the extreme animosity to Al-Shafi`i in Egypt, for daring to diverge from the opinions of Malik that were so revered there. Then the Shafi`is exhibited the same degree of animus toward the Hanbalis, some of whom terrorized populations in today’s Syria, and so on. Ultimately, closer to our day, the larger body of Muslim thought would not admit that the West had devised institutions and methods of thought that were superior to theirs… until they lost market shares and many wars, eventually getting colonized for a couple of centuries.
I don’t think that I need to mention how little intolerance for heterodoxy exists within heterodoxies, for example Marxists, Post-Modernists, etc. all develop their own “religions,” and persecute those who do not play by the rules of their respective clubs. The same is true of Islamic Economics, Islamic Finance, etc. Dare to tell someone in those camps that early Muslim history is nothing to be proud of (three of the four “Guided Caliphs” killed, civil wars that started during the life of the Prophet (p), and only became more vicious after his death, glaring inequalities and impieties during the age of Muslim Empires, and the list goes on).
As `Ali famously said to the kharawarij, who defied him for “arbitration to men rather than scripture,” he said: “We are arbitrating to Scripture. But Scripture are words written on lines between two book covers. They do not speak, but men speak with their authority.” How we understand revelation in light of our accumulated secular knowledge is the issue at hand.
But before I continue to debate what you mean by “Islam is complete and perfect,” I need to be given safe passage :-).
On whether Muslims are hedonists:
Dr. Mabid contested my claim that most Muslims are reasonably well modeled, at least to a first order approximation, as utility maximizers (and, indeed, I claimed, the frequent reference to heaven and hell in the Qur’an and Islamic teaching suggests that the way to convince Muslims to forego some utility in life is through promise of reward and threat of punishment in the hereafter… perhaps utilizing a Ghazali-Pascal wager argument). A second order of approximation may be boundedly-rational utility maximization, for which a number of Bank of Sweden (in honor of Nobel) prizes have been awarded. So, behavioral economics has clearly become part of the mainstream, and the Qur’an and Islamic teachings obviously contain numerous references to the bounded rationality of humans.
Dr. Mabid referred instead to the ideal of a believer. I feel compelled to mention that Allah (s) instructed the Prophet (p): و ما أكثر الناس و لو حرصت بمؤمنين (and the majority of people, no matter how much you care and try, will never be believers). Shari`a, therefore, was not revealed for ideal Muslims, but for the lying, cheating, and greedy folks with whom we deal most of the time. Fiqh is likewise full of reminders about guarding against subversion, although it has often itself become a powerful tool of choice for subversion of the intent of Shari`a. In this regard, as a significant mufti remarked in recent years, against those who challenged his fatwa: من أراد التقى و الورع فله التقى و الورع، و من أراد الفتيا فهذه فتواي (to those who want God-consiousness and piety, they may have God-consiousness and piety; but for those who want a fatwa, this is my fatwa).
This does not mean that I concede Economics to Utilitarianism, with or without bounded rationality, even at the individual level, and most certainly at the social/public-policy level. The reason I advise bright Muslim economists not to work on Islamic Economics is the same as the reason I wouldn’t advise them to work on Islamic Psychology or Islamic Physics. Secular knowledge is a human endeavor, and we can only contribute to its advancement by engaging with others working in this enterprise, which means speaking the same language, etc. The rebuttal that social sciences are different from natural sciences is unconvincing: Consider for instance Muslims who wish to work in the biological sciences. They will have to work within the existing paradigm, thus accepting evolution as the organizing principle. Whether or not they agree with the theological implications of this work, in terms of the nature of creation and beyond, is irrelevant. Trying to establish Islamic Biological Sciences as a separate discipline would be just as counterproductive as trying to establish Islamic Economics as a separate discipline.
On the (un)desirability of revolution:
Let me close this email by referring briefly to the issue of “revolution,” which both Dr. Mabid and Dr. Asad have mentioned at multiple occasions in this thread. I would go further than what Dr. Asad said (about me not wanting to start a revolution). I may have had a successful career had I been content with not wanting to start a revolution. In the event, I think that it is important for Muslims who venture into the intellectual arena to work to prevent revolution. The latter is always destructive, no matter how romantic it may seem in retrospect or imagination. I would argue that the Prophet (p) was not a revolutionary, but a reformer. He said “I was sent to perfect the best of human character,” i.e. building on what came before and what others already knew to be “good.” This was the mission commanded in the verse: خذ العفو و أمر بالعرف و أعرض عن الجاهلين (accept what comes easily to people, command them to do what they already know to be good, and stay away from the ignorant). The Egyptian-Turkish “Prince of Poets” Ahmad Shawqi summarized it best in his poem on the Prophet’s (p) birth:
 داويت متئداً و داوو طفرةً … و أخف من بعض الدواء الداء
(You administered your medicine gradually, and they administered it suddenly; and sometimes the disease is less harmful than the medicine).
Now, I recognize that Dr. Mabid and Dr. Asad were both referring to intellectual revolutions, not to the violent social kind to which I refer. However, we recognize that the latter oftentimes comes as a consequence of the former (e.g. Rousseau and the French Revolution, Marx and the Bolshevik Revolution, Mawdudi and Islamism, and so on).


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My response to Br Mahmoud El-Gamal:

Dr Mahmoud El-Gamal has spelled out very clearly and accurately the nature of the choice we face, in attempting to construct an Islamic Economics. The mainstream orthodoxy is EXTREMELY intolerant of any type of diversity or dissent. In the recent past, I know of two leading heterodox economists who have been forced out of their respectable university jobs by dirty tricks. The marginalization of all forms of heterodoxy, regardless of how empirically accurate they are, is a well known fact. Even Keynes has been kicked out because his views are not in  line with Chicago school free market thought. A recent study looked at whether or not there has been some change in syllabus after the Global Financial Crisis. One would expect to see more Keynes, Minsky, Behavioral explanations, etc which would be able to explain why the GFC occurrred. However, the study showed that business as usual continues. The ARCH GARCH models which performed disastrously in the GFC continue to be used for risk prediction etc. Models like DSGE, which have been blamed for their blindness to the possibilty of crisis, continue to be used at Central Banks all over the world.

To understand why this is the case, why there is such strong resistance to change, we have to understand the nature of economic theory.. As I have explained in my recent post ET1%: Blidfolds Created by Economic Theory,, Economic theory is a branch of moral philosophy which is designed to justify how capitalism works to enrich the wealthy. It does so by creating illusions and deceptions about the nature of the systgem, In other words, it is the religion of the rich. Note that Global Financial Crises hurt the population, but they actually help the rich entrench their power, so they have nothing to lose from repeats, unlike the bottom 90%.  — a topic which receives no attention in mainstream economic theory (this is left to the trickle down).
That leads to the cruel choice — if we want to share in the wealth and power of the rich, we can join the club of the middle 9%, who preach the moral philosophy of the wealthy (economics) to innocent students. In this case we can enjoy perks and privileges, and live in comfort and peace. I But we must renounce all ideas of a revolution. Alternatively, if we wish to create a revolution, we must renounce the academia and economic theory. We will be treated as crackpots, not get published in top journals, not get jobs in western academia, and many other horrible things that could be expected to happen if we recognize economics for what it is — the religion of the wealthy.  Quite sensibly, Dr Mahmooud has made the choice not to launch a revolution, and he also advises his students to do the same.  If I was in Western acadmia, I would also have exactly the same choices. However, there is a way out of this dilemma, which is what I have chosen. If we stop seeking popularity or connections with Western economics, THEN we can launch a revolution ONLY in the Islamic countries. We have to restrict and NARROW our audience. We cannot be UNIVERSAL, because our Islamic message WILL NOT APPEAL to the economists and their followers in the West.
I believe that the message of Islam is complete and perfect, and it provides a solution to all the problems facing the Ummah today. The message which catapulted ignorant and bhackarwds Arabs to world leadership 1440 years ago has the same power today. However, vast majority of the Ummah has lost this trust, and believes that the message needs to supplemented  by Samuelson to be effective today. This is the real source of our problems.
As brother Anas Zarka wrote, in the times of Imam Ghazali, there was a gooup who was so impressed with Greek phjilosophy that they accepted all of it un-critically. Today, we are facing the same problem with respect to Western knowledge. A Vast group of Muslims today think that a PH.D. from Haravard would have more knowledge about how to solve the economic problems facing the Ummah, then someone with Tafaqquh in the teachings of the Deen.


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Dr. Mahmoud El-Gamal: Agrees with Mabid Al-Jarhi’s syllabus and approach, but argues that there is no need to use the word “Islamic”, in this context. Recommends that pragmatics dictates that the label is harmful — not intellectually respectable — so Islamic sensibiilities should not be overtly displayed. This is required for success in Western academia. Says that the Mawdudi program of revolution (of which — according to him — I am an adherent) has proven a disastrous failure. Since consensus is required for progress, we cannot cut ourselves off from mainstream and work in isolation. If there is to be an Islamic economics at all, it requires us to  re-shape fiqh to align with modern realities of the economic and political realms.
Dear All: AA
My apologies for joining the conversation late. I have now reviewed the introductory document that Dr. Mabid has sent, explaining the philosophy of his intended programs. I agree with his approach, but wonder if the label “Islamic” is warranted anymore — unless we reverse the long-standing concept of fiqh as a parallel legal system, as discussed at the end of this email. For most Muslim economists, they should just be economists, period: I know a number of brilliant young Muslim economists now holding senior positions and major Economics departments and Business Schools, with whom I had the pleasure to converse when they were graduate students. My advice to them was not to waste any time or effort on “Islamic economics,” but to try to be the best economists that they can, and that there is plenty of room within Economics for them to inject Muslim perspectives and sensibilities without marketing them or hiding behind the “Islamic” label. Their work, both empirical and theoretical, has surpassed my expectations, and only those who read it with some knowledge of the students’ outside interests would see that what they choose to study and how they study it are clearly influenced by their desire to be good Muslims.In contrast, Dr. Asad’s approach is authentic to the Mawdudist paradigm — which some, including myself, think has proved to be a disastrous failure, but we cannot predict that he and others who share his view will not succeed. Nonetheless, the likelihood of their success must be deemed rather low, based on past experience. More importantly, though, this approach fails to speak the language of Economics, and, therefore, fails to engage the profession in any reasonable conversation. Even those of us who have been trying to speak that language but who were not as talented as the younger generation that I mentioned above have failed to contribute to the conversation despite our best efforts. Because intellectual inquiry and advancement is always a collective effort, cutting ourselves off the mainstream makes the probability of success infinitesimal to zero.On the specifics of Dr. Mabid’s proposal, I will add this: If there is to be an “Islamic Economics” at all, it should be a discipline to reformulate law and fiqh, not the other way around. The idea that “religious scholars” should have independent authority from secular sciences and political authority to determine a parallel legal system should be abandoned. There is nothing to stop economists (Muslim or otherwise) from doing work for Muslim societies, and its analyses should be reflected in the laws and regulations of those countries adhering to contemporary Islamic conceptions. In other words, “Islamic Economics” as “Economics for Muslim societies” would make sense to me, and may be what Dr. Mabid has in mind in his curriculum, although I fear that he is still conceding too much power to people who qualify as “fuqaha” in terms of historical methods of accreditation, but not in the original sense of fiqh as “understanding” of scripture and tradition in light of social realities and secular sciences.


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Dr Samer Al-Karanshawi: (Distressed message — these issues strike too close to heart)

Please, again, remove me from this list.

Please remove me from this list.

Please remove from this list!


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My brief response to Dr Mabid Al-JarhiConventional economics is based on a deep misunderstanding of human behavior and of the sources of human welfare. Both are described with far greater depth and sophistication in Islam, then they are in Western social science. As a result, Islam provides us with strong and sound bases for analysis of human beings and societies — social science. In particular, math and analytics is not of much use, because human behavior is too complex to be reducible to formulae.

Dear Dr. Mabid

I believe that Islamic Economics can only create a revolution if it relies on the knowledge imparted by Allah T’aala to mankind — as indicated in the verse علم الانسان ما لم یعلم
Just as the revolutionary message of Islam created a revolution in world history 1400 years ago, it can do so now — unfortunately, as predicted, Islam has become a stranger, even to the Muslims.
The strengths of the message of Islam lie NOT in mathematical technique — they lie in the DEEP understanding of human behavior AND of the sources of human welfare. Islam rejects the Coca-Cola Theory of Happiness, which is the foundation of modern economics. We can provide solutions to the Easterlin Paradox, which baffles the West because they have no conception of the genuine causes of Falah, which Islam provides us with.
Mathematical techniques were adopted in the West after the Battle of Methodologies established science, instead of history, as the proper tool for studying of human behavior and societies. This was a MAJOR MISTAKE. Mathematics cannot provide us with tools to study human behavior because we have freedom of will and the ability to change radically, in unpredictable ways. Many conventional economists have seen that overuse of mathematics leads to loss of understanding in economics. See my essay on “Method or Madness?” for further details on this topic.
As Mahbubul Haq realized, and Amartya Sen developed his concepts — real development lies in HUMAN DEVELOPMENT — that was the mission of our Prophet Mohammad SAW — How can we develop the potential inside human beings to be Ahsan-e-Taqweem? How can we prevent them from becoming Asfal-a-Safeleen? Economics or materials have to be used as a MEANS to this higher goal. ONLY Islam can provide us with guidance on this goal, and how to use materials to achieve it. For example, the Quran counsels us that we can reach the BIRR by SPENDING that which we love the most — thereby MINIMIZING utility. BUT this is not anywhere in sight in western economic theory because it is based on a primitive and robotic model of man – homo economicus — whose behavior CAN be predicted by mathematics, unlike that of REAL human beings.
Because our eyes have been dazzled by the brilliance of Western technological achievements, we cannot see through to the reality that in social sciences they are completely in the dark — they forgot God, so God made them forget themselves, and as a result they have NO UNDERSTANDING of human behavior.


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Dr Mabid Al-JarhiProvides a brief description of his proposed syllabus, and reasons why he thinks this is the right approach. Invites me to provide an alternative, instead of slogans. 

I concur with Prof. Mahmoud that the serious inadequacies of neoclassical economics has been handled by several economists. Many contributions of this sort have been documented in Steve Keen, Debunking Economics, 2ed. 2011. Understandably, Islamic economics can be a revolution in the discipline, if it resorts to an analytical approach, using economic tools of analysis, rather than textual analysis found in Fiqh and historical analysis found in the writings of the first and second generations of Islamic economist. Some economists may wish to join the long line of critics to neoclassical and even Keynesian economists. Some also may wish to reconstruct economic theory itself, provided they stay professional and use serious analysis. The program I propose for the third generation is composed of:
  • conventional economics, giving more attention to new reconstructions, especially those that exclude perfection competition and include reasons for holding money, like search costs.
  • critique of neoclassical and Keynesian economics in detail,
  • a strong dose of Fiqh, including introducion to Fiqh, Usul Alfiqh, Fiqh Almuamalat, Islamic creed, ethics and the Majallah. This must include a critique of Shari’ah boards members who use ruses in the manner invented by ancient Jewish scholars.
  • A heavy doze of analytical Islamic economics as an alternative to the received conventional doctrine.
  • An increased dose of mathematics (linear algebra, real analysis, stochastic and differential calculus), statistics and quantitative analysis.
  • all above would be paralleled by research to test the many, still untested hypotheses made or to be made by Islamic economists.

This hopefully would produce professional economists who have the tools and the training that enable them to carry out an enlightened dialogue with their conventional colleagues. In addition, they can take forward positions in policy-making  institutions and cast their shadows on actual decisions. Prof. Assad is cordially invited to contribute to microeconomics in a fashion equal to that of Joan Robinson, and to give us microecnomic analysis that involves money, production, government, frictions, etc. He is also invited to offer an Islamic economic system that can be represented by a macroeconomic model. Many troubling concepts in conventional economics wait to be handled by Islamic economists, like equilibrium, aggregate demand and aggregate supply, financial market efficiency, microfoundations and the like.

The Islamic economics response to the received doctrine must avoid sloganism and even unreasoned rejection, partial or total. Instead it should provide alternative analysis that make differences in results and policies.
I am concerned with Prof. Mahmoud’s claim that Muslems are hedonists, evidenced by his casual empiricism. In the after life, humanity faces accountability. Hedonistic behavior would result in the imposition of strict rationality with calculative behavior parallel to marginalism. We Muslems know that we do not earn the Paradise by deeds but by His mercy. Calculus of good and bad deeds is impossible as well as tedious. That is why we tend to use sufficing rather than maximizing.
For those who missed the more detainled version of my proposed program, some of its documents are attached.
My warmest regards to you all.


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Tariqullah KhanAsks for practical ways to implement Islamic ideas, to demonstrate their importance and relevance. Suggests that the Circular Economy, which internalizes compassion, might provide a vehicle

Dear All
Lately I came across comparisons between linear and circular economy paradigms. Perhaps we are too much driven by the idea of circularity, our new PhD program is captioned as “PhD in Islamic Finance and Circular Economy”. The idea is to internalize compassion in the design of financial contracts. Perhaps an example of this idea is the Gates’ Foundation paying the $ 7 million mark up part in the $ 100 million murabaha financing of polio vaccines for Pakistan. For example, if waste rationalization and management solutions were the focus of PIDE university, similar other products could be developed! Similar ideas are abound these days. PIDE University under leadership of Prof Zaman is indeed extremely well placed to innovate solutions to society’s perennial problems which PIDE University previously has failed under influence of wrong prescriptions. So what can we do to innovate policy reforms through PIDE university other premier universities. This is my standing question to all of you since long! I remember raising this to Prof El-Gamal long ago.
Keeping such a perspective in view, is the theme of our new PhD “Islamic Finance and Circular Economy” on the direct direction?
With warmest regards


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Br Mahmoud Al-GamalSome economists have attempted to deal with the problems I have pointed out within Economic. Suggests that Muslims have same worldly motivations as non-Muslims — observationally.  

Although I agree with Asad’s overall view, I feel compelled to point out that there are, of course, economists who have tried to address some of the issues that he raises in the last paragraph.

There are old results, at least dating to Azzi and Ehrenberg’s 1975 JPE paper, which include afterlife in the utility function, and there are numerous papers now that include what they call “social preferences,” i.e. including others’ welfare in one’s own utility.

Perhaps a different question is why anyone, religious or otherwise, should be promoting a utilitarian approach, including its most common application by Muslims who think excessively about Benthamite afterlife reward and punishment, rather than virtue for its own sake. Casual empiricism suggests that the vast majority of Muslims are indeed utilitarian — convinced only to pursue virtue by promises of delights and warnings of fire. Indeed, the Qur’an itself suggests this type of “trade” for the afterlife, which means that the English insights on utilitarian human psychology was acknowledged, at least for the masses.



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My response to Dr. Anas ZarqaI argue that normative positions contrary to Islam are intermingled with apparently positive statements of modern Economics. Economics is not what it pretends to be — an objective science. Instead, it is the religion of Capitalism, which justifies wealth, property and privileges of the wealthy. As such, just like Greek polytheistic philosophy was reject in toto  by Al-Ghazali, so it must be rejected completely by Muslims. 

Dear Brother Anas Zarka Assalamo Alaikum

Thank you very much for taking out the time and effort to put together a response. With due humility, I would like to suggest that you have seriously mis-understood my position, which is in no way a recommendation of wholesale rejection of the West. A detailed explanation of my actual position is given below. I hope you will read it, and respond further.


I agree completely that knowledge is the lost property of the Mo’min and he can take it from wherever he finds it. I have used a vast amount of knowledge that originates in the West in arriving at my position, and many of my articles contain praise and respect for many Western scholars; see for example my post on Three Books to Read. So, this idea that I am rejecting economic theory because it originates from the West is a grave mis-understanding of my position on this issue.

I am completely in harmony with Imam Ghazali’s position. I recommend acceptance of Western sciences which are valid, but I am against acceptance of the RELIGION of the West which conflicts with Islamic teachings. So our disagreement is not about whether we should do wholesale acceptance and/or rejection of Western teachings. Our disagreement is on the STATUS of Economic Theory as a branch of Western knowledge. Economic Theory CLAIMS for itself the status of a positive, objective, and factual science. Those who ACCEPT this claim are puzzled by my wholesale rejection of Economic Theory. They consider it to be on par with a rejection of mathematics or physics. However, I REJECT the knowledge claims of Economic Theory.  My claim is the following:

Modern Economic Theory is nothing more, and nothing less, than the religion of Worship of the Nafs, which is prohibited by the Quran.

Before I go on to explain and prove my position, I would like to clarify that my position is not unique – I have arrived at it by studying many different Western scholars who have come to the same conclusion by different routes. The FIRST point of great importance is the argument of Philosopher Hilary Putnam in his book of essays called “The Collapse of the Fact/Value Distinction and other essays”. In his essay, he argues the positive and normative statements are mixed up with each other and cannot be separated, contrary to the assertions of the economists that economic theory is positive. The SECOND source of support for my claim is the book of Robert H Nelson entitled “Economics As Religion: From Samuelson to Chicago and Beyond”. This book makes the case that Economic Theory is mainly and ideology, disguised in the shape of a positive theory. The THIRD source of support is an essay by Julie Nelson entitled “Poisoning the Well: How Economic Theory Damages Our Moral Imagination”. In this essay, Nelson argues that economic theory teaches us immorality in many different ways, by upholding selfish behavior as rational, and suggesting that caring for others and generosity leads to irrational behavior. The FOURTH source of support for my views is the book by  Hausman and MacPherson: Economic Analysis, Moral Philosophy, and  Public Policy. This book analyzes how economic analysis and policy decisions always involve moral judgments, even though economists are not aware of them, and deny this. The FIFTH source of support for my argument is my own paper entitled “The Normative Foundations of Scarcity” which should how the apparently objective and factual concept of scarcity conceals three different moral judgments, all of which are in conflict with teachings of Islam.

So to summarize my position, modern economic theory is a RELIGION, not a science. It is the religion of those who REJECT God and the day of Judgment. The heart of economic theory is a model of human behavior according to which ALL RATIONAL human being maximize the pleasure that they get out of consumption over their lifetime. This is EXACTLY the description of the religion of the worship of the Nafs. Just as Imam Ghazali rejected entirely the Polytheistic teachings of Greek Philosophy, so we Muslims must reject entirely the teachings of modern economic theory.

Some Muslim economists have defended utility maximization by introducing concern for Akhira, and concern of others (generosity) into the utility functions. But if you do this, then this is NO LONGER the theory being taught be neoclassical economists. You cannot save Varian and Mankiw by putting Akhira and generosity into the utility function, because their theories COLLAPSE when you do so. EVEN Supply and Demand will NOT work if you have generosity, as I have proven elsewhere. What I am arguing is the standard Microeconomic Textbooks teach the religion of worship of the Nafs. Whether we can CHANGE this to make it compatible with Islam is not RELEVANT.


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Dr Anas Zarka: provides detailed evidence that wholesale rejection of ideas from outside Islamic tradition is against the Sunnah of the Prophet Mohammad SAW, and also against the Islamic scholastic traditions. Quotes Imam Al-Ghazali regarding the Greek tradition, and  the two extremes of complete rejection and complete acceptance. The paper  with complete argument of Dr Zarka is linked here:

Dr Anas Zarqa comments on Dr. Asad Zaman’s paper on Third Generation Islamic Economics


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Asad Zaman: Promoting radical alternatives to conventional neoclassical, and 2nd generation IE, which sees itself as a branch of neoclassical, in Istanbul Workshop.
Currently, I am in Istanbul for the 6th Islamic Economics Workship, organized by IKAM. I was also invited to speak at Ibn-e-Haldun Univedrsity and at Istanbujl Sehir university, where I explained the need to devellop radical alternatives to Western approaches to the social scienceds. I also described the many courses I hjave develolped to illustrate this concept. One of them is Statistics: An Islamic Approach.  This title always puzzles audiences — hjow can one have an Islamic approach to a purely technical subject? To bedin with, we note that the ink of scholars is more precious than the blood of the martyrs. So surely we need to study HOW we can teach the course ion such a way that the notes students take for the course would carry heavy weight on the scales on the day of Judgment. By itself, this would be sufficient to require a distinctive approach. But there are many other factors ionvolved.
A summary of the  main [points is given in my post below, which also provides links to more detailed treatments
This is intended as a partial response to Dr Mabed Al-Jarhi, to illustrate the kind of alternatives I have in mind, which represent a more radical break with nconventional neoclassical ideas. I would like to build economics as a response to the order of Allah that we should URGE THE FEEDING OF THE POOR. While at the CENTER of neoclassical economics is the problem of how to increase wealth, at the center of Islamic ecoomics would be the problem of how to ensure that everyone in our society gets food, clothing, education, healthcare, and all basic needs. That should be our CENTRAL concern, and not the deceptive concepts of GNP per capita and agrowth, wihich end up creating massive inequalities — more than 85% of the fruits of growth went to the top 1% while the pursuit of growth is MOTIVATED by the idea that it will eliminate poverty — on basis of the provably false theory of the trickle down.



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from Asad Zaman — Regarding Third Generation Islamic Economics — paper

Dear Friends, based on the notes I circulated earlier to this group, I have prepared a draft of a paper on “Third Generation Islamic Economics” which is attached. This is to be presented at a workshop in Istanbul in a few weeks. Constructive comments on how to improve the paper would be most appreciated.

Best Regards


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On Sun, Mar 25, 2018 at 7:27 PM, dr munawar iqbal <munawariqbal@gmail.com> wrote: — praised my innovations, defended second generation from accusation of being fooled by neoclassical, approved of Mabid Al-Jarhi’s syllabus, Asked us to focus on pragmatic aspects — what kind of jobs would graduates by able to get. 

Dear Brothers: Assalamu Alaikum wrt wbt

This is unfortunate that I have not been participating in this interesting and illuminating discussion due to my personal circumstances and may not be able to do so very often. I like this and will try off and on to come into picture.

Let me make a few points starting from the latest post of Br. Asad Zaman.

  1. His approach is unique and praiseworthy. His premise: Islam differentiates sharply between USEFUL and USELESS knowledge is very important. His criticism of statistics and other quantitative tools as we were taught is a fresh breeze. Though there are many who speak about the limitations of econometrics to the extent of calling them “Garbage in — Garbage out”; but the way he is “showing” it is something no one else has done among the Islamic economists. I remember my teachers telling me that mathematics is a language, what matters is what you are saying (in other words, what you put in equations, you should be able to say the same thing in simple English). This is very much what Br. Asad wants the teachers to tell the students and learning by doing technique is the best way to drive the message home.
  2. However, his generalizations with respect to the so-called second generation Islamic economists are unfair. There would be few writers who will fit his descriptions like:

“The second generation was FOOLED by the claims of neoclassical economics to be objective, scientific and factual, and ACCEPTED these claims.”

“The DEFINING characteristic of the second generation is that when they see a conflict between Samuelson and the Quran, then they re-interpret the Quran to make it conform to Samuelson.”

Instead of using “generations”  terminology (since we have inter-generations writers), let me say that almost all writers in Islamic economics criticised the neoclassical economists and wrote about what I can call “the impossibility theorem of positive economics”, [but possibility of making “positive” statements]. The classical piece in this respect is the paper of Dr. Anas Zarqa ” Islamic economics: An Approach to Human Welfare” presented to the 1976 Conference.

There is hardly any Islamic economist who fully accepts the neoclassical axioms, though some of “conventional” concepts had been “adapted” in Islamic economics. For example, the profit motive; free markets, scarcity of resources etc; all duly re-interpreted; conforming Samuelson to Quran, rather than the other way around.

  1. The program distributed by Dr. Mabid which I am still studying is perhaps the best and most comprehensive program designed to the best of my knowledge during my forty years involvement in teaching and research in Islamic economics. The attempts being made by Dr. Asad are also in the same category. In my view, these prominent scholars’ attempts if given proper recognition and implemented, they will go a long way to put the teaching of Islamic economics on the right track.
  2. One problem that I have always faced with teaching programs in Islamic economics since we introduced one at IIUI in 1983 is that if we make it very demanding, the graduates should be able to “cash” the skills learnt in their careers. Depending on “commitment to Islam” would not be a sufficient motive to enroll in these programs. They must be convinced that the extra effort to have double or triple “Major” (not to speak of specialization) is worth their time, effort and money. I urge both Dr. Asad and Mabid to give this dimension a VERY careful consideration. Teaching Islamic economics (may be calling it economics from Islamic perspective) must be rewarding for the graduates in THIS life. Let the reward in the HEREAFTER, be a bonus. A very BIG BoNUS of course.



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On Sun, Mar 25, 2018 at 4:35 AM, Asad Zaman <asad.zaman@alumni.stanford.edu> wrote: Describes, in a nutshell, many of reforms I have introduced, in courses and lectures, to distinguish the Islamic approach to knowledge and education, from the western approach. 

Dear Tariqullah Khan Saheb,

Thanks for your constructive question.
The most advanced reform that I have been able to carry out is the introduction of a course called: Introduction to Statistics: An Islamic Approach — The title itself strikes the audience as ridiculous and absurd — statistics is portrayed as a purely technical subject, how can their be an Islamic approach to means, median, modes, and standard deviations? The first lecture is devoted entirely to answering this question — this is available from the webpage linked below:
The main point of the lecture is what is meant by Knowledge, and the Adab – etiquette — for acquiring it and spreading — are radically different in the Islamic tradition, from the ones that were taught to me in the West. One of the main differences is that Islam differentiates sharply between USEFUL and USELESS knowledge, The Prophet SAW made dua for the first kind and made dua to be protected from the second kind. This immediately creates an obligation on a Muslim teacher to ENSURE that he is teaching USEFUL knowledge, not just something students need to pass exam. When you try to RELATE statistics to real life, it leads to an entirely new approach to the subject.
The course contains radical pedagogical innovations, because of its Islamic orientation. Both the contents — subject matter covered — and the methodology for teaching — are very different from conventional ones. Each lecture is followed by a sell-assessment quiz, and a computer lab which students do on their own to get hands-on practice with implementing and manipulating concepts on EXCEL, often on real data sets. For a description of the unique features of the course, see DESCRIPTION
I have now trained many students in HOW to teach the course, and have had it taught by them at nearby universities. It has recently been approved and recommended by our Higher Education Commission for adoption on a nationwide level. This summer I am running a workshop for teachers of statistics on how to teach the new course, since the maximum resistance to the new approach comes from the teachers who have learnt an old approach and are uncomfortable with making changes. There has been expression of interest from outside Pakistan as well, and possibly some teachers from Turkey, Iran and Indonesia might attend, to learn how to teach statistics in an Islamic Way.
In addition, I have prepared courses in Applied Econometrics, Microeconomics I and II, and some Lectures on Macroeconomics. These courses are less well developed (in the sense that they do not follow along fully Islamic lines, which would create radical differences — rather, they are just at a CRITIQUE + ALTERNATIVE chosen mainly from existing heterodox approaches, with occasional discussion of the Islamic alternative)/ This enables me to teach more or less conventional materials, but in a critical way — I teach the subject to explain why it is wrong, and not as a methodology for understanding the world. This gives students deeper insights into conventional materials. A full sequence of video-taped lectures are all publicly available, and if any teacher wishes to follow this pattern, sufficient support (in terms of lecture notes, recorded lectures, slides, reference materials) is available from my publicly accessible course websites to him/her to enable them to teach the course on their own.
I am working on improving these courses in many different ways, starting with the pedagogy. Currently students are taught micro, macro as an abstract theory, which they do not find of relevance to either their personal lives or to understanding major economic events happening in the world around us. Instead, they are busy with calculus, math, differentials etc. which are COMPLETELY IRRELEVANT to understanding the real world. By trying to convert the subject matter to USEFUL knowledge, many insights are gained. Some of these ideas are discussed in my lecture on How to Motivate and Inspire Students .. Since the lecture is very much set in an Islamic mold, I was very surprised when Stuart Birks chose it for a lead article in his WEA Commentaries, which aims to provide heterodox alternatives to conventional economics.
Recently I gave an informal talk to PIDE students at their request, which I would especially urge teachers on this forum to read/view. This talk explains how a Western education, (especially economics) poisons our minds and hearts, imbuing it with love of Dunya and making us forget the Akhira. Remedies and antidotes are also described.
Best regards



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On Sat, Mar 24, 2018 at 11:06 PM, Tariqullah Khan <tariqullah.khan@gmail.com> wrote: asks about educational reforms I have carried out. 

Assalamualikum wrbt

My question is addressed to Prof. Asad Zaman. I was wondering about the types of pedagogical reforms you were able to suggest or introduce at LUMS, IIUI and specifically, PIDE university as President. We can benefit from such reforms to bring suitable changes in our universities. If the reforms were suggested and their implementation faced barriers, what type of barriers were faced and what can be done to overcome those barriers!

At our university we are trying to review our pedagogical approach and knowing about your valuable experience will InshaaAllah be helpful.



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On Mar 24, 2018, at 3:14 AM, Asad Zaman <asad.zaman@alumni.stanford.edu> wrote: explains why neoclassical economics is wrong BOTH positively and normatively, and directly in conflict with Islamic principles — hence, it must be rejected completely — compromises are not possbile.

Dear Friends

I deeply appreciate the courtesy of Dr. Mabid Ali Al-Jarhi for gracefully accepting and seriously taking on board my strongly dissenting view. I believe that the Western intellectual tradition has gone seriously astray in terms of the SOCIAL SCIENCES, because they failed completely to understand the nature of human beings. The HOMO ECONOMICUS at the heart of economic theory has no heart and no soul — The concept of spirituality does not exist in their study of humans and societies. When they ignore the most important driver of human behavior — a strong sense of justice, built into our nature (Fitra) by God — then they are unable to understand simple results llike the generosity and fairness of human beings in the Dictator Game and the Ultimatum Game.

I would request the Ulema on this group to consider the following simple question: Is it permissible for a Muslim to TEACH students that rational behavior consists of maximizing lifetime pleasure (utility) obtained from maximizing consumption? What is not understood clearly is HOW STRONGLY modern economic theory DEPENDS on the assumption of selfish behavior. If people do not selfishly take everything for themselves ignoring the needs of their brothers then EVEN SUPPLY AND DEMAND theory FAILS! I can prove this, and have done so elsewhere.

I have studied the intelllectual tradition of the West extensively to understand how they could go so far wrong in their understanding of human behavior — this is why behavioral economics keep showing HUGE conflicts between the rational behavior assumed in economics and actual behavior. The rational behavior models of Fama and French could not understand the Global Financial Crisis, while behavioral economists can. But this is not to say that behavioral economics offers a solution – it too fails to recognize the heart and soul. But it least it deals with real human observable behavior instead of that of rational robots.

I would like to recommend the distiguished scholars on this mailing list to read my recent post/article on the battle of methodologies which EXPLAINS one of the deep flaws at the basis of Western thinking about human beings. This is linked below:


I am preparing a talk on Islamic Economics for an upcoming workshop in Istanbul. This talk answers the question often posed in response to these critiques: Indeed, I wrote to Kenneth Arrow and sent him my paper: The Empircal Evidence Against Neoclassical Utility Theory: A Survey of the Literature – he wrote back as follows:\

From: Arrow Kenneth J. [mailto:arrow@stanford.edu]

Sent: Thursday, August 28, 2014 6:21 AM

To: Vice Chancellor Office PIDE

Subject: Re: Survey of the massive amount of empirical evidence

Dear Dr. Zaman:

Thank you for the very complete and well-argued critique of the utility-maximization theory.

Of course, the remaining question is, what should take the place of that theory?

Yours truly

Kenneth J. Arrow


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On Wed, Mar 21, 2018 at 3:39 PM, Dr. Mabid Ali Al-Jarhi <mabid.al.jarhi@gmail.com> wrote: — Suggests a middle position, accepting insights from neoclassical and heterodoxy, and adding Islamic touches to these.

Kindly look into the response of Prof. Asad Zaman. as well as his latter response.

Asad Zaman’s opinion is not to be taken lightly. You may have kindly noticed that the program does not teach neoclassical economics as is, but includes most if not all the critique surveyed by Steve Keen and others. Hopefully, program graduates would have a better chance to response to challenges to Islamic economics, using rigorous analysis rather than reinterpreting the divine text. The issue that is particularly objectionable to him is considering Islamic economics as part of the economics discipline. Such objection would require taking the word economics from “Islamic economics.” I am appealing for further wisdom on this and other issues.

Warmest regards,



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Response TO MAJ by AZ — argues that 3rd Gen IE must REJECT neoclassical, rather than extend it, or build upon it. 

To the best of my knowledge, the terminology of 3rd generation of Islamic Economics was introduced by me in my paper on Reviving the Promise of Islamic Economics. which was presented at the 11th ICIEF in Malaysia in 2016, and subsequently published in the IIUM journal. The basic premise of this paper is that the first generation saw the Islamic system as a radical and revolutionary alternative to both Capitalism and Socialism, which promised equity and justice. The second generation was FOOLED by the claims of neoclassical economics to be objective, scientific and factual, and ACCEPTED these claims. Once these were accepted then Islamic Economics became a minor branch of mainstream neoclassicals, adopting nearly all of its frameworks, methodologies, and ways of thinking about the world. This was a MAJOR MISTAKE. Neoclassical economics is a detailed working out of the religion of worship of the Nafs, which is explicitly prohibited in the Quran. It starts with the premise that ALL human beings have (or should have) as purpose of life the maximization of utility of consumption — that is, pleasure derived from the life of this world. All human action is rational if and only if it is directed towards this purpose.  All the mathematics and analytics so fondly developed in neoclassical is based on this premise which is directly in conflict with Islam. For three fundamental flaws in the formulation of modern social sciences in the West, see my talk on Economics for the 21st Century, which explains how Islamic teaching, and only Islamic teachings, can help us overcome these flaws to create a radical and revolutionary approach to a new type of economics so desperately needed today. I have already constructed several courses which take an Islamic approach to teaching conventional subjects like statistics, micro and macro, and I have recorded lectures and put course and reference materials on openly accessible websites.

The distinguishing feature of the third generation, as I see it, is in the REJECTION of the knowledge claims of neoclassical economics to be a positive science. Third generation is defined by the idea that EVEN TODAY, the Quran offers us far better guidance about managing our economic affairs than a Ph.D. from Harvard in Economics would do. In contrast, the second generation rejects this idea, and believe that “reason” (that is, Ph.D. from Harvard) is on par with “revelation”. This general and widely accepted view among muslims — the parity between certainty and confidence we can place in Western systems of knowledge and the WAHY or revealed knowledge — is what I have called the greatest  problem facing the Ummah today — The Second Crisis of Knowledge Facing the Islamic Civilization.  The DEFINING characteristic of the second generation is that when they see a conflict between Samuelson and the Quran, then they re-interpret the Quran to make it conform to Samuelson. As opposed to this the DEFINING characteristic of the third generation is to REJECT Samuelson and accept the Quran.
And Allah T’aala knows best


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Kindly look into the attached program. I would be most appreciative if you provide your comments and suggestions for filling out all gaps. — Mabid Al-Jarhi