books, and research reports throughout the world. Individuals, universities, research organizations and governments are all actively participating in this development. Furthermore, substantial resources are available to scholars to pursue their research as a result of accelerated development in Western industrial countries. It is to the credit of the West that there is such a great quest for knowledge, that researchers are willing to work rigorously, and that creative work is richly rewarded in terms of both prestige and material benefit.
Economics with an Islamic perspective, which is now referred to as Islamic Economics, has, however, only enjoyed its resurgence over the last three to four decades and this after a deep slumber lasting several centuries. The number of individuals, universities, governments and research organizations participating in its development is, however, still relatively very small. Since most Muslim countries are poor and in the initial stages of development, the resources they have available at their disposal for financing research activities are also relatively meagre. Moreover, some of the governments in Muslim countries consider the resurgence of Islam, with its unmistakable call for political accountability and socio-economic justice, to be a threat to their survival. They are, therefore, reluctant to render any moral or material support for the development of the Islamic Social Sciences.
An unavoidable question, therefore, is whether it is really necessary to have Islamic Economics when conventional economics is already available in a highly developed form. This question acquires particular significance because the subject matter of both disciplines is nearly the same – the allocation and distribution of scarce resources among their infinite uses. The justification is there only if the effort to develop Islamic Economics is directed towards the realization of a purpose which cannot be achieved by the analysis developed by conventional economics. The need would be all the more acute if the set of variables employed for the analysis is broader, and the mechanisms and methods used for the allocation and distribution of resources are also different. An effort is made below to lay down a broad framework for analysis and to raise the questions that need to be answered in the following chapters.
Every activity of rational human beings generally has a purpose, and it is usually the purpose that determines its nature, differentiates it from other activities, and also helps evaluate its performance. The first question one may, therefore, wish to ask relates to the purpose behind any study of the allocation and distribution of resources. Such a study may not be necessary if resources were unlimited. However, resources are limited and are not sufficient to satisfy all the claims made on them by all individuals and groups in society. We are, therefore, posed with the perplexing question of which uses and whose claims to choose and how to make that choice. A simple answer, perhaps, may be to use them in such a way that helps society realize its vision. A vision essentially incorporates society’s dream about what it would like to be in the future. It may consist of a number of goals which the society aspires to achieve. All these goals together may serve as a guiding star and indicate the direction in which society wishes to proceed. This may help channel society’s efforts and energies in the desired direction and thereby minimize waste. The vision may, however, never be fully realized. It may, nevertheless, continue to inspire society to persist in the struggle for its realization by keeping the faith in the future perennially kindled.
Different societies may have different visions. Nevertheless, there is one dimension that seems to be common to most societies. This is the goal of realizing human well-being. However, the term well-being, even though used by a number of economists,3 is itself a controversial term and may be defined in a number of ways. It may be defined in a purely material sense, totally ignoring its spiritual content, or in a way that also takes into account the spiritual aspect. Depending on which definition of well-being one adopts, there may arise the need for an entirely different configuration of goods and services to be produced by society with the scarce resources at its disposal. This may lead to different mechanisms for allocation and distribution.
If well-being were defined in a purely material and hedonist sense, then it would be perfectly rational for economics to give prominence to the serving of self-interest and the maximization of wealth, bodily pleasures, and sensual gratifications. Since pleasures and sensual gratifications depend primarily on individual tastes and preferences, value judgements may have to be kept out so as to allow individuals total freedom to decide for themselves what they wish. In this way, all goods and services that provide such pleasures and gratifications to individuals in accordance with their own tastes and preferences may become acceptable. Impartial market forces may then be considered sufficient to bring about such an allocation and distribution of resources. Redistribution4 of the wealth produced may be important, but only to the extent to which it does not interfere with the freedom of the individual to pursue his or her self-interest. The government’s role may also have to be kept at a minimum, except insofar as it is necessary to enable the individual and the market to perform effectively.
However, if well-being were defined in such a way that rises above the materialist and hedonist sense and incorporates humanitarian and spiritual goals, then economics may not be able to avoid a discussion of what these goals are and how they may be realized. These goals may include not only economic well-being but also human brotherhood and socio-economic justice, sanctity of life, property and individual honour, mental peace and happiness, and family as well as social harmony. One of the tests for the realization of these goals may be the extent to which social equality, the need-fulfilment of all, full employment, the equitable distribution of income and wealth, and economic stability have been attained without a heavy debt-servicing burden, high rates of inflation, undue depletion of non-renewable resources, or damage to the ecosystem in such a way that endangers life on earth. Another test may be the realization of family and social solidarity, which is reflected in the mutual care of members of the society for each other, particularly children, the aged, the sick, and the vulnerable, and the absence, or at least minimization, of broken families, unwed mothers, juvenile delinquency, crime and social unrest.
Once economics gets into a discussion of human well-being in this comprehensive sense, then the task of economics may become wider and more complex. It may not be able to confine itself just to economic variables. It may have to take into account all those factors, including moral, psychological, social, political, demographic and historical ones, that determine well-being in such an all-inclusive sense. It may also have to answer a number of questions that may not need answering if its goal were only to help maximize wealth and consumption. One such question may concern whether the serving of self-interest is sufficient as a motivating force to realize comprehensive well-being or is it also necessary to have some other motivating force? Could such well-being be realized more effectively if all the agents operating in the market observed certain rules of behaviour and had certain desirable qualities? If so, then it may be necessary to impose certain constraints on individual behaviour. The individual may not then remain totally free to do what he pleases in accordance with his tastes and preferences. The question that then arises is about who will determine these constraints and how can it be ensured that the individual’s freedom is not unduly restricted. This because individual freedom is also essential for human well-being and it cannot be compromised except to a certain agreed extent.
In addition, there are a number of institutions in human society that influence individual and social outcomes. The market is only one of them. Others include the family, society and the state. The family is perhaps the most important of these because it provides the human input for the market, the society and the state. It is the primary breeding place and training ground for all individuals. It is here that a substantial part of individual tastes and preferences, personalities, and behavioural patterns are formed. The family’s health and solidarity are hence of crucial importance. If the family disintegrates, is it possible to provide the future generation with the kind of upbringing that it needs? If the quality of upbringing declines, then it may not be possible for a society to sustain its development and supremacy for long in economic, technological and military fields. Since economics is also concerned with the rise
