Would Having Islamic Economics Grounded on a Religion (Islam), Make it a Moral Economy?


The following essay will attempt to answer the question, “would having Islamic economics grounded on a religion (Islam), make it a moral economy? Discussion will be centred on the case for Islamic economics to be framed and analysed as a ‘moral economy’. There will be an explanation to distinguish between religion (Islam) as such, and moral economy. The distinguishing nature and the articulation of moral economy will be identified and located within Islamic economics.


Firstly, the term moral economy will be explained. Secondly, there will be an explanation with regards to the morality of economics grounded on Islam. Finally, this will lead to a conclusion, summing-up the essay.


Amartya Sen a noble prize winning economist grew up witnessing the Bangladeshi famine during the 1940’s. He stated with regards to the famine that the experience affected him. People would struggle to obtain food to survive. Later in life, he went on to study Economics. After an in-depth study, a number of years later, he came to the conclusion that the famine and drought around the world did not occur due to the lack of food because there is plenty of food. The problem is that the mechanisms to deliver food; to make it reach the people who need it the most has collapsed or did not exist at all (Wallace, 2004). This is why the study of Economics is so important. Economics is a social science that looks in to how individuals, groups, governments or indeed entire societies, deal with and manage these existential problems. Economics is the study of human decision-making with regards to maximising happiness and minimising costs under certain restrictions (Khumalo, 2012) (Rad Talks, 2014).


What is moral economy?

Moral economy is a term that was invented in the eighteenth century. However, for centuries, moral economy has been bestowed with a more widespread meaning. It has been used as a synonym for either a divine order sent to the world or for the human situation (Gotz, 2015, p. 147).


Sayer (2000) suggests that moral economy is analysing and determining how all types of economic activities are swayed and controlled by moral temperaments and standards, and subsequently how those norms can be negotiated, overruled or strengthened by economic pressures. However, according to this definition, all economies will be classified as moral including capitalist ones (Booth, 1994). As such, this definition cannot be taken for granted.


Some are of the view that moral economy can conveniently be contained in social science as a constructive form of study, but it may also be advanced in a normative way. Every economic relation has moral consequences just like every type of social relation; hence, to assess them, a normative moral economy can be developed too (Sayer, 2004).


Thompson (1971) perceives moral economy as a widespread consensus about what differentiates lawful from unlawful practices; an agreement imbedded in the past and able to motivate action.


It is clear from the abovementioned definitions and explanations with regards to moral economy that there is not an accepted and agreed upon definition, rather there are a plethora of opinions regarding the explanation of moral economy. However, there are many features that are common from amongst the various definitions and explanations. Before mentioning those features, it is important to understand moral economy according to Asutay’s (2012b) detailed explanation which is a good summary in light of what other experts in the field have said. His explanation gives an insight into the different perspectives of moral economy. Consequently, this explains why there are a plethora of definitions regarding this term. This is because everyone that attempted to define moral economy, did so according to a certain perspective and context, hence their definition reflected and shaped that perspective and context.


Asutay (2012b) suggests that there are three main ways to define the term moral economy: 1) An approach to the study of an object 2) A discipline defined by an object of study 3) A particular kind of economy.


If moral economy is looked at as an approach to the study of an object then it can be defined as the application of ethical concepts to the study of the economy. This application of ethical concepts is very important as the elimination of ethical concepts in neo-classical economics is a cause of ‘descriptive impoverishment’ in economics.


Moral economy can also be explained as the application of economic classifications to the study of ethics, such as making use of rational choice models etc., to expound on the progression of moral norms.


If moral economy is looked at, as a discipline defined by an object of study then it can be defined as the critical study of the ethical character of economic life which in essence is economic relations, activities and how this relates to political and social life. The particular object in this case alludes to how the moral economy encompasses a specific set of relations, beliefs and standards that constitute a certain type of economic life.


Furthermore, in this case, that which is moral conduct and not immoral conduct is arguable. Certain types of moral economies such as that of a patriarchal culture, could be considered immoral, or as authority concealed as fairness and benevolence (Sayer, 2004). As such, the morality of economics needs to be grounded on something.


If moral economy is viewed as a particular kind of economy then it can be defined as an economy rooted in or focused on moral norms. It is in this capacity that both critics and supporters of market economies mention that markets are not moral economies, but rather areas without ethics at all.


The features of a moral economy can be summarised as:
• Social justice
• Commodification
• Community and charity
• Reciprocity
• Embeddedness
• Existence of ethical dimensions
• Interdependency/co-operation
• Real economy
(Asutay, 2012b) (Avdukic, 2017)


It can be argued that pre-modern economies are moral due to their being a fundamental part of social relations and non-economic institutions. Furthermore, there is no doubt that the working together of economic and social relations will vary according to the various contexts. However, the common understanding of a pre-modern moral economy is that the aims, objectives and procedures are mentioned and fixed by the non-economic (Scott, 1976).


Bear in mind that the main economic problem is the fair and just distribution of wealth and resources, hence the huge disparity in the world, where there are very few rich people and many poor people. This is why Islam has a very exceptional economic principle which is to eliminate the hurdle that prevents distribution of wealth. This is the main idea and focal point of Islamic economics. This is also where the morality of economics grounded on Islam plays a crucial role in providing a solution to economic-related problems and providing a truly moral economy.


The morality of economics grounded on Islam

Islam is still applicable in the twenty-first century, in that it has the components to accommodate modifications in contemporary times and can assist in operating governments, economic development and in re-establishing nations (El-Ashker and Wilson, 2006, pp.350, 351).


Islamic moral economy is an economic and political model grounded upon the scriptural doctrines and standards upheld by the Quran and Sunnah. The Quran is the exact Word of God; a revelation that began in 610 CE by the arch angel Gabriel to the Prophet Muhammad and it is considered prescriptive. The Sunnah is the prophetic tradition of Prophet Muhammad, recorded in the Hadith literature and is considered as descriptive. These two primary sources are regarded as the basis for Islamic law (Karim, 2010, p. 1). They are also collectively known as the Shariah.


Shariah is a vast amount of ethical and legal treatises, proposed by second and third century Islamic scholars to guide Muslims to live a righteous life; a life that will lead to paradise in the Hereafter. Shariah is what actually makes an economy Islamic. Shariah explained the moral economy of traditional Islam, formed both its micro and macro institutions, and regulated its actual performance (El-Sheikh, 2008, p. 116).


Islamic moral economy is a complete model categorised as the just distribution of wealth. It compromises of complete societal structures that deliver universal care for everyone in need. Coupled with praising the virtues of charity, the Quran makes charity compulsory through Zakat, upon those that fulfil the conditions that make it binding. Likewise, numerous verses in the Quran oblige Muslims to care for widows, orphans, the unfortunate and indebted. Islamic moral economy’s just distribution of wealth is comparable to the eventual aim of Marx and Engel’s visualisation of communist economic equality. Marx and Engel anticipate a class difficulty amongst the proletariat and capitalists. However, Islamic moral economy presents a divine command, necessitating all Muslims to contribute in the reallocation of wealth through methods such as Zakat, charity, religiously established alms-giving and general gifts (Karim, 2010, pp. 1, 2). Equity has precedence over efficiency in Islamic economics. In this science, focus is on justice in all economic activity with regards to wealth in relation to man.


Economic morality suggests that the propriety of an action be weighed by initially observing its causes. So effectively, an individual performs an action which causes an affect. That affect may have a good outcome or a bad outcome. However, to ascertain whether the outcome is good or bad, there needs to be a moral filter or a moral system against which the outcome is weighed. Muslims believe that specific things are intrinsically good or bad due to their belief in revelation. Hence, they do not base everything just on an affect. Rather, the moral filter for Muslims is revelation. Consequently, for Muslims, the relationship of economic decision making and being Muslim is essential.


As such, ethics that stems from Islam is the overriding foundation of Islamic economics (El-Ashker and Wilson, 2006, p.376).


The jurist Abu Yusuf is known to be the first economist who wrote extensively with regards to the fact that the government should be involved in the economy for it to grow (Book of Taxation, 2015). Ibn Rushd wrote an authoritative manual on Islamic Law, almost half of which focuses on transactions; how should individuals, groups, firms and even governments carry out monetary transactions with each other and rulings pertaining to this (The Distinguished Jurist’s Primer, 2017). Ibn khaldun was one of the most important historians in history, regarding whom western scholars state that he is the greatest economists in history (Mccaffrey, 2009) (Abdelhakim, 2000). Ibn Taymiyyah is known to be one of the greatest economic thinkers. He would not rush in declaring anything lawful or unlawful. Rather, he would undergo an intensive study of economics of his day, by understanding the market, understanding the philosophy behind it, looking at different prices and analysing the mannerisms in which things are traded. Only then would he give a judgement with regards to a thing being lawful or unlawful (Abdelhakim, 2000). Al-Ghazali, a leading figure in the field of philosophy and Sufism, although never specifically spoke about Economics as a discipline, but in his master piece, ‘The Revival of Religious Sciences’, he mentioned the idea of human understanding, human decision-making, human interaction and the concept of commerce (The Revival of the Religious Sciences, 2013) (Rad Talks, 2014). The one thing that was common amongst all these great scholars was that they grounded everything on religion (Islam). They were guided by Islam and their ideas were driven by Islam. Hence, these great luminaries were known to be embodiments of morality. It is no coincidence that they were considered revolutionary and their teachings deeply impacted societies. This adds weight to the fact that having economics grounded on a religion (Islam) makes it as a moral economy.


In Islamic moral economy, the role of a purchaser and seller is instilled with specific moral and ethical expectations, imbedded in Islamic concepts of uprightness, honesty and refraining from manipulating asymmetric information. Asymmetric information is the information about a certain transaction due to which one party has an advantage. Islamic moral economy purposes to present as much transparency as possible. This is because God is the third economic party in a transaction (Karim, 2010, pp. 2, 3).


Looking at this from an ecological dimension’s perspective, God mentions ‘justice’ a number of times in the Quran. Whereas, Riba (the impermissibility of usury/interest) is only mentioned a couple of times. Furthermore, God mentions in the Quran (41:10) that there are enough resources for His creatures, but the means to gain those resources are limited. As such, indicating that everything has to be done in a systematic, organised and orderly fashion; according to Islam.


It is no hidden fact that western modernity has no values. This is because the actual problem is that everything has been commodified. In stark contrast, Islam emphasises on ethical values. Hence, in terms of substance, it is an Islamic moral economy and in terms of framework, it is a political economy.


It is important to bear in mind that just because something is legal does not render it moral. Likewise, something being moral does not render it legal. This is where consequentialism plays a role. Consequentialism suggests that the consequences of one’s behaviour is the eventual foundation for any decision regarding how right or wrong the behaviour is (Mizzoni, 2010).To understand this through an example, if an individual has no license to drive a car, but someone in his presence is dying and he needs to drive him to the hospital, then the moral thing to do is drive the dying person to hospital in order to try save him. Thus, from a consequentialist point of view, a morally right action is one that will yield a good outcome. This demonstrates that there needs to be a moral filter to ascertain such things and that moral filter is Islam. Furthermore, internationalism needs to be embraced in this regard, as mutual cooperation between everyone will be beneficial in the sense of agreeing to a set of principles and axioms based on the moral filter of Islam.



Upon conclusion, it is clear that having Islamic economics based on a religion (Islam) will make it a moral economy. This is because the concept of Islamic moral economy is based on the central principle of ‘embeddedness’ in the sense of it being embedded in a real economy, coupled with the values and standards extracted from the Quran and Sunnah. Additionally, being Muslim directs one to an ethical and moral code which leads to the concept of morality. This demonstrates the true meaning of value.


It should be borne in mind that it is not always about knowing the price of everything; it is about knowing the value. This can be understood from a letter penned to the Principal Minister of the state government, by an individual in the Narmada Valley of western India, after being displaced, due to the Sardar Sarovar Dam:


“You tell us to take compensation. What is the state compensating us for? For our land, for our fields, for the trees along our fields. But we don’t live only by this. Are you going to compensate us for our forest?…Or are you going to compensate us for our great river – for her fish, her water, for vegetables that grow along her banks, for the joy of living beside her? What is the price of this? …How are you compensating us for fields either – we didn’t buy this land; our forefathers cleared it and settled here. What price is this land? Our gods, the support of those who are our kin – what price do you have for these? Our Adivasi (tribal) life – what price do you put on it?” (Brava Mahalia, 1994, ‘Letter from a Tribal Village’ Lokayan) (Asutay, 2012b).


The moral lesson that can be gained from the above was excellently summed up by Oscar Wilde, when commenting on the morality of a market:

“They know the price of everything and the value of nothing” (Ranasinha, 2010).
In constructing an Islamic moral economy, it has to be understood that the emergence from an economic crisis led to an Islamic moral economy that became an all-inclusive solution for daily practices. The foundational principles and axioms that define the moral framework are provided by the ontological and epistemological sources. The axiomatic method coupled with its political economy highlight the limit of the conduct of the economic agents and elements of Islamic moral economy. The political economy of Islamic economics structure, alongside the axioms, establish a value system and normative world in figuring out the nature of a specific social formation (Islamic) which decides the embeddedness in the society (Avdukic, 2017).


It is the axioms that create the embeddedness as a social formation and inference to produce social goods and social justice in congruence with the best interest of people and society. Furthermore, the axioms form the core to confirm that non-economic factors must also figure out economic and financial conduct and decision-making; along with bearing in mind spiritual and material well-being. Moreover, the axioms crucially reject the idea of fictitious commodities which totally demoralises the social balance. Additionally, the axioms certainly achieve moral economy’s reciprocity element via essentialising socialisation. They also respond to communal and philanthropic nature of moral economy because communal good and socialisation is regarded a key basis inside the Islamic normative world (Avdukic, 2017).


It can clearly be concluded that having Islamic economics grounded on Islam will make it a moral economy because Islam is a complete way of life and morality is one of the foundations of it. In fact, morality is one of the essential elements of a society’s strength, just like immorality is one of the key causes of a society’s decline. Islam has established certain general and essential rights for all of humankind that should be observed in all situations. To maintain these rights, Islam has not just provided an effective legal system, but also a very effective moral system (Latif, 2008).



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