FALSAFAH

EKONOMI ISLAM
(PHILOSOPHY OF ISLAMIC ECONOMICS)

DR. HAFAS FURQANI M.Ec

CENTRIEFP FEBI
UIN AR-RANIRY

Kuliah Umum Ekonomi Islam Seri 1, Biro Rektor, UIN Ar-Raniry,

23 September 2016
INTRODUCTION
The Emergence of Islamic economics:
Formal emergence: 1976 (1st International Conference on Islamic
Economics, Makkah)
Main Driven:
Practical: to rearrange economic life in accordance with Islamic principles ---
institutions
Intellectual: to develop economics in accordance with Islamic principles ---
IOK, Islamic economics discipline
Supporting Factors:
o Mainstream economic crisis:

The mainstream body of knowledge of economics based on the neoclassical

school is increasingly criticized for its shortcomings and lack of coherence in
understanding of real economic problems; lacks appropriate
methodology to deal with problems and hence solutions provided are not
comprehensive.
ISLAMIC ECONOMICS SCIENTIFIC
COMMUNITYS RESPONSE

Responses:
1970s 1980s: bigger picture as a system of Islamic
economics
1990s now: downstream areas of banking and finance
M. Fahim Khan (Essays in Islamic Economics) Observes:
After 40 Years, Islamic Economics is not yet recognized as
a distinct discipline. Some scholars who have involved in
this project have taken U Turn and no more believe that
IE is potential to be a discipline. Some have taken position
that there is no need for a separate discipline.
Conventional (Neo-Classical economics) is sufficient to
explain Islamic economics behavior.
PROBLEMS IN CURRENT MOVEMENT
Insufficient response and gaps in Islamic economics research
program
Islamic economics as a discipline is still at formative stage.
Nevertheless, the discourse of an Islamic economic philosophy -
that discusses the foundations of Islamic economics to be a
discipline is limited and rather elementary as the scientific
community shifted the discussion into downstream areas of
banking and finance.
Lack of foundation of Islamic economics
Developing an Islamic body of knowledge of economics, and/or
Islamizing modern economics, cannot be done properly without a
clear and coherent philosophical foundation that is projected from
an Islamic worldview or vision. Only then can the discipline sustain
itself or to provide genuine Islamic alternatives to contemporary
mainstream economics with the indigenous solutions requested.
CHALLENGE FOR ISLAMIC ECONOMICS
A serious challenge for Islamic economics is whether
it qualifies to be called a discipline?
Discipline criteria ( Acikgenc, 2003):
clear subject matter,
well-defined body of knowledge,
methodology or methodologies,
continuous flow of theories and knowledge accumulation.

Does Islamic Economics

have the above?
 THE PHILOSOPHY OF ISLAMIC ECONOMICS SCIENCE

Islamic understanding of
economic realities New
ONTOLOGY Islamic economic conceptual perspective DISIPLINE
foundation of economics DIMENSIONS:
Definition,
Subject-matter.
Islamic economic methodology New Scope,
Islamic economic key-concepts approach Sources of
EPISTEMOLOGY
Islamic economic conceptual of economics knowledge,
scheme Purpose and
criteria of theory
appraisal,
Scrutinizing the Value-Bias in New value-
Mainstream Economics Microfoundations
orientation of discipline
AXIOLOGY Infusing Islamic Ethics in of economics
Economics
WORLDVIEW SYSTEMATIZATION IN THE DISCIPLINE
CONSTRUCTION

Developing the Islamic

Understanding economic
economics philosophical
phenomena/realities
foundations

Developing the Islamic

Developing Islamic economics
economics conceptual
key-terminologies
scheme/framework

Developing an Islamic economic Developing an Islamic economic

methodology to appraise and ethical framework and incorporating
justify theories in Islamic those ethics into the body of
economics knowledge and its theories
The Epistemological Challenge of Islamic
Economics Science

The unity of doctrine and realities, ideals and facts, haqiqah and
haqq,
The Interaction of doctrine, realities, and theory .
 The Purpose of Theory Appraisal in Islamic
Economics

The purpose of theory

Appraisal in Islamic
Economic
Methodology

To produce economic To produce

To produce economic
theory that could economic
theory that is able to
link the ideals and theory that
explain realities
realities, doctrine and could help in
and their relationship
factual experience, goal
values and facts in totality
realization
THE CRITERIA IN ISLAMIC ECONOMICS THEORY APPRAISAL

The INTERNAL-INTEGRITY Criteria:

To see internal fitness of a
theory Doctrinal
Integrity
The RELATIONAL-UNITY Criteria:
unity of doctrinal, logical and
factual dimensions.
unity of understanding and
explaining realities;
transcendental, logical and THEORY
empirical realm.
unity of doctrine and practical Factual Logical
realities, ideals/goals and integrity Integrity
factual experiences, values
and facts, normative and
positive dimensions, a priori
and a posteriori.
 Methodological Unity (Tawhidic
Methodology)
A methodology that attempts to unify the object of study;
the Realities, doctrine and practical experiences, ideals and
facts, normative and positive aspects, haqiqah and haqq.
A methodology that is going to fulfill the integrity and unity
criteria in Islamic economic theory.
Characteristics:
INTERACTIVE and INTEGRATIVE approach rather than DISSOCIATIVE
or REDUCTIONIST.
MULTIPLICITY (plurality) of METHODS in scientific enquiry
Gives EQUALITY to all methods of inquiry, but it aims at
THEORETICAL INTEGRITY and UNITY to arrive at total understanding
and coherent interpretation of reality and reach the ultimate truth.
METHODOLOGICAL UNITY: the unity framework of doctrinal, rational
and empirical dimensions.
Goal: THE UNIFICATION OF MULTIPLE TRUTH: doctrinal truth,
logical truth and empirical truth.
ISLAMIC ECONOMIC AGENT?
Kirzner (2000: 14): it has long
been recognized that economics
depends for the derivation of its The basis of the
theoretical propositions, upon its microfoundations
of Islamic
understanding of human nature. economics

The assumptions of economic Equipped with

man (homo economicus) are Islamic Islamic
assumptions on
essentially constructed from Man? his economic
behavior
certain visions put by
economists based on a certain The scientific
basis as well as
worldview that will guide further directions in
terms of research
development of economics as a in Islamic
economics
science.

The notion of economic man is

not a value free concept (it is
what ought to, not what is).
APPROACH

To look at the ideal characteristics of man

Substantial without ascribing to them an Islamic title:
Approach Restrictiveness and exclusiveness of Islam
(Man in Islamic Classificatory (type instead of types of
economics) behavior)
Unfortunate situation/ lack of example

Explicit reference to homo Islamicus with

Formal Islamic terminological values:
Approach Identification of the field of study
(Islamic scientific clarification based on the
economic man) framework and criteria developed in
behavioral analysis
Strong response in scientific community
THE CHARACTERISTICS OF ISLAMIC MAN:
EXPLORING FRAMEWORKS AND KEY-CONCEPTS

Conceptual Challenges:
In developing appropriate concepts that are able to
capture those messages or spirit
In developing a framework of how human behavior is to
be approached and analyzed.
In developing key-terminologies to capture the dynamic
relationship of individual, state, society and nature in
individual agent behavior in Islamic economics.
Technical challenges:
Genuine (derived from Islamic worldview)
Not a patchwork modification
Implies the shift of paradigm
THE NATURE OF MAN IN ISLAM

Process of
creation

Self-sacrifice or
benevolence
Nature of
Self

Enlightened self-
Raison interest
detre?

Self-interested but
without hurting others
His interest
existence in
realities
Selfish behavior
 The basis of human behavior: Self-interest versus huquq
Self-Interest Huquq
Unitary and atomistic self-view (emphasizing Holistic/Integrated self-view (human is having
individual identity) both individual and social identity)
Unitary (static) type of behavior (Self-centred) Reciprocity (dynamic) type of behavior
Static process of choice; self-interest/self- Dynamic process of choice- considering others
utility as ref. interest

The motive of economic agent: Utility versus maslahah

Utility
The basis: pain and pleasure defined and
calculated at the level of individual
Subjective concept, measured at the level of
individual (personal basis)
Individuals utility is relatively (might or might
be) inconsistent with societys utility
Utility is not measurable or comparable
The cardinal virtue of economic agent: Rationality versus taqwa
Rationality
Self-interest is the foundation of rationality
Self-interest as balance sheet of rationaity
A rational individual is a utility maximize
All his actions are directed to maximize his self-
utility
Maslahah
The basis: benefits and harms defined and
calculated to the self and others
Objective criteria of beneficial and harm (good
and bad, vice and virtue)
Individuals maslahah is relatively consistent
with societys maslahah
Maslahah is a measurable and comparable
concept
Taqwa
Huquq preservation as foundation of taqwa
behavior
Huquq as balance sheet of taqwa individual
calculation
A taqwa individual is a maslahah maximizer
Taqwa behavior aims at maximizing maslahah in
all aspects/dimensions of life
WASSALAMUALAIKUM
THANK YOU