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Islam’s Gift: An Economy of Spiritual Development

Asad Zaman1

“For what profits a man if he gains the whole world but loses his own soul?”
to appear in American Journal of Sociology and Economics, 2019. For more material on Islamic
Economics, see Islamic WorldView Blog: For more writing on economics, see WEA
Pedagogy Blog

Abstract: According to the standard narrative, economics is an objective and scientific study of universal
laws applicable to economic affairs of modern societies. After a brief introduction, the second section of
the paper presents a counter-narrative which disputes this claim, and provides an alternative point of
view which situates modern economics within its European historical, political, and social context. We
briefly discuss why the conventional methodology of modern economics makes false claims to
objectivity and universality. The third section provides an alternative methodology, which is based on
the recognition that human behavior is inherently and unavoidably normative, and any study of human
beings and societies must take this into account. The fourth section of the paper brings out the norms
concealed within the foundations of modern economics, since the avowed methodology does not
permit explicit and open expression of these norms. The fifth section describes Islamic views which
describe the normative ideals for our personal and social lives. In particular, Islam aims at the
development of the potential for excellence that every human being is born with. It does not aim at
accumulation of wealth and material possessions, nor does it aim at achievement of happiness through
the maximization of pleasure achieved by consumption. The sixth section describes the transformational
strategies required for spiritual progress in different dimensions of our human existence. The seventh
section describes some of the institutional structures required in the economic realm to assist in the
achievement of the transformation towards the normative ideals. The final section explains how we
should use our unique and precious lives to aim for higher goals than mere consumption of goods and
acquisition of wealth.

Keywords: Islamic Economics, Homo Economicus, Homo Islamicus, Transformation of Human Behavior.
JEL Codes: B41, B59, P49

Vice Chancellor, Pakistan Institute of Development Economics, Islamabad, Pakistan. Taught
economics and econometrics at Columbia, University of Pennsylvania, Johns Hopkins, California
Institute of Technology, and Bilkent University, Ankara. His textbook Statistical Foundations of
Econometric Techniques (Academic Press 1996) is widely used as a reference in advanced
graduate courses. He is managing editor of International Econometric Review and Pakistan
Development Review. His research on Islamic economics has been influential in shaping the field.
His publications in top-ranked journals like Annals of Statistics, Journal of Econometrics,
Econometric Theory, and the Journal of Labor Economics have more than a thousand citations as
per Google Scholar. Email:

KAU-JIE-Classification: G1, H11, M1

Foreword....................................................................................................................................................... 3
1 Introduction .......................................................................................................................................... 3
2 Flawed Foundations of Modern Economics ......................................................................................... 4
3 A Three-Dimensional Approach to Humanities .................................................................................... 5
4 Normative Elements of Western Economics ........................................................................................ 7
5 Normative Ideals of Islam ..................................................................................................................... 9
5.1 The Highest Goals ......................................................................................................................... 9
5.2 Multiplicity of Ends and Plurality ................................................................................................ 11
5.3 Worship of Desires ...................................................................................................................... 11
5.4 Islamic Description of Human Behavior ...................................................................................... 12
6 Spiritual Transformation: The Goal of Islamic Economics .................................................................. 14
6.1 Islamic Moderation In Consumption .......................................................................................... 16
6.2 The Solution to Scarcity .............................................................................................................. 16
6.3 The Shaping of Desire ................................................................................................................. 17
6.4 The Welfare Implications ............................................................................................................ 17
6.5 Strategies for Spiritual Transformation ...................................................................................... 18
6.6 Generosity Versus Greed ............................................................................................................ 20
7 Institutions For Generosity, Cooperation, Responsibility ................................................................... 20
7.1 Private Property .......................................................................................................................... 21
7.2 Banks Versus Waqf...................................................................................................................... 23
7.3 Replacing Insurance with Takaful ............................................................................................... 25
7.4 Islamic Production: Halal and Meaningful ................................................................................. 25
7.5 Islamic Labor: An Act Of Worship ............................................................................................... 27
8 Concluding Remarks............................................................................................................................ 29
9 Bibliography ........................................................................................................................................ 30

A note on the genesis of this paper will allow me to express my deep appreciation and gratitude to Clifford
Cobb, and also explain his contributions towards shaping the unique point-of-view expressed in this paper.
As Edward Said has explained in Orientalism, the conquest of the globe by Europe colors all European
productions of knowledge about the Orient. Because of the dominance of European educational systems,
these Eurocentric views have also been absorbed and assimilated by Muslims. This has caused great
difficulties in the development of Islamic Economics, because Muslim scholars have attempted to
reconcile two diametrically opposite views. European views give primacy to the material dimensions,
which Islamic views give primacy to the spiritual dimensions of human existence. In my writings – for
example, “The Crisis in Islamic Economics,” and “Building Genuine Islamic Institutions” – I have explained
how this attempt has prevented the emergence of genuine Islamic theories as well as genuine Islamic
institutions which embody these theories. The majority of the literature on Islamic Economics attempts
the impossible task of making minor modifications to Western economic theories, to align them with
Islamic Views.
Cliff asked me to write a paper explaining Islamic Economics from an authentic Islamic viewpoint,
uncontaminated by Eurocentric perspectives. I wrote initial drafts with sensibilities of a modern secular
audience in mind, and tried to avoid stepping on toes. But this has the natural consequence of diluting
and modifying the message in subtle ways. Cliff repeatedly encouraged me to avoid pulling punches, and
the present paper is the final result after a sequence of attempts at greater authenticity, disregarding the
conventional boundaries of Western intellectual discourse. As many authors have documented in detail,
the transition from a traditional society based on Christian values to the present day secular modern
society was a revolution in ways of thinking and acting. Islamic views on economic organization would be
familiar to pre-modern thinkers, but alien and strange to modern scholars. Understanding it will require
‘walking in alien moccasins for mile’.

Although modern economics presents itself as “value free,” universal, and outside the influence of
culture, that is not the case. Timothy Mitchell (2002) writes:

The possibility of social science is based upon taking certain historical experiences of the West as the
template for a universal knowledge. Economics offers a particularly clear illustration of this. Certain forms
of social exchange, contract law, disposition of property, corporate powers, methods of calculation,
dispossession of labor, relationship between public and private, organization of information, and
government regulation that were formalized in Western Europe in the nineteenth century as “market
exchange” were abstracted by economics into the framework of a social science.

As Mitchell recognizes clearly, modern economic theory takes certain background institutional
structures for granted, and is strongly shaped by Western historical experiences. Nonetheless, the
theory claims for itself a universal status as a science, free of its historical, cultural and institutional
context. Since Islamic economics arises out of extremely different historical circumstances, and is based

on an extremely different set of institutional structures, we must start by disputing the claims of
universality made by Western social science.

Modern social sciences took their current shape in the early 20th century and represent a radical
break from the past, even though dominant narratives of social sciences create the appearance of
continuity and links to antiquity. We must unearth and expose the framing assumptions of modern
Western economics since Islamic economics is built on radically different foundations. In particular, the
question of why Western economics claims universal status must be examined, especially since this
claim is trivially easy to refute.

Islamic economics can only be understood as a response to, and a rejection of certain foundational
claims of Western economics. This statement may be puzzling since Islamic economics also claims roots
in antiquity, just like Western economics. While source materials for the subject are available from early
Islamic times, the separation of the economic realm, and its treatment in isolation, packaged as “Islamic
Economics”, is a modern response to the West. As detailed in Zaman (2008), the subject was created as
an Isamic alternative to capitalism and communism, meant as an economic system for newly liberated
colonies in the Islamic region. Modern economics is actually economics of capitalism, and cannot be
understood without studying the historical context of emergence of this economic system, and the
associated ideologies. Since Islamic economics was initially framed as a competitor to capitalism and
communism, understanding it requires analyzing the historical roots which led to the emergence of
these economic systems. We must use Foucault’s archeology of knowledge to discover how radically
different historical experiences have led to radically different ways of understanding the world.

The defeat of Christianity in a battle with science led to an extraordinary respect and reverence for
scientific knowledge, sometimes called the “Deification of Science,” in Europe (Olson 1990; Zaman
2015a). This had fatal consequences. Even though all scientific knowledge is inherently uncertain, a
concerted effort was made to prove the opposite—that scientific knowledge is not only certain, but it is
the only source of certain knowledge. Because of distortions necessary to prove something which was
not true, the methodology of science was dramatically misunderstood by the logical positivists.
Nonetheless, this philosophy became tremendously popular, because it purported to prove both claims:
science is certain, and is the only source of certain knowledge. When this became widely accepted in the
early 20th century, modern social sciences were born out of an attempt to gain greater intellectual
respectability for the humanities by adopting the methodology of science as it was (mis)understood by
the logical positivists. This led to a re-formulation of the humanities as “social sciences”—a set of
universal laws stripped of their historical, sociological, and institutional context. Eventually, logical
positivism collapsed under the weight of mounting evidence of failure on multiple explanatory fronts.
However, economists never undertook the exercise of re-building the logical positivist foundations of
economic theory. Methodology is treated superficially in textbooks, with the result that most
economists continue to believe in the central tenets of logical positivism.

The ideas briefly discussed thus far are strongly in conflict with dominant narratives being told
about economics. I have examined these counter-narratives in more detail in Zaman (2009, 2013,
2015a). We can summarize them as follows:

1. The dominant understanding of the methodology of science in the early 20th century was based on
logical positivism, which became wildly popular for a brief period of glory, before going down in
flames in a spectacular crash (Zaman 2015b).
2. Modern social sciences were born in early 20th century on the basis of a conscious effort to emulate
the methodology of the physical sciences, as mis-understood by the logical positivists. This attempt
to mathematicise, quantify, and study general laws of motion in societies, reflected a break from the
past, in which the study of social phenomena was more qualitative and historically oriented, aligned
with complexities of human behavior. Hodgson (2001: 79-94) discusses the Methodenstreit, or
battle of methodologies, in Germany, in which the historical and qualitative school lost to the
mathematical and quantitative approach.
3. The foundations of modern economics were laid in 1930s by Lionel Robbins as a science of choices
subject to scarcity, replacing earlier conceptions based on human welfare. The new foundations
were strongly aligned with positivist misconceptions regarding the methodology of science. Cooter
and Rappoport (1984) provide an account of how the misconception of that welfare was not
observable (and hence not scientific), led to the definition of “scarcity” by Robbins, which replaced
earlier conceptions based on human welfare.
4. The collapse of positivism should have led to radical re-consideration of these foundations. This did
occur in other areas in the social sciences. However, economists continue to use the same
foundations, and continue to believe in central tenets of logical positivism. A recent survey by
Hands (2009) concludes:

So most modern economists generally consider rational choice theory to be a positive, not a
normative, theory; endorse the position that normative statements/concepts should be prohibited
from scientific economics; and equate normative theories/presuppositions with ethics.

Manicas (1987) and Reuben (1996) provide empirical evidence and arguments for the counter-
narrative. The idea that “science” is a special way of knowing the world, which is radically different from
other types of human knowledge, continues to be firmly embedded in the Western intellectual tradition.
Manicas (1987) argues that the Western conception of “science” itself is mistaken. Removing
misconceptions about the nature of science could lead to a thoroughgoing revolution in received
theories. In historical context, Reuben (1996) explains how the internal dynamics of the academia,
coupled with the emergence of positivism, led to a re-conceptualization of the nature and function of
the humanities, reformulated as the social sciences. In particular, Weber’s ([1918] 1956) influential
essay led to the attempt to remove the subjectivity associated with normative and action-oriented
elements of the social sciences.

As Polyani (1944) explains, the shift from a traditional society based on Christian values to a market
society did not occur smoothly, via a gradual and evolutionary transition. Because of the radical conflict
and opposition between the two, market values could only be imposed after a bloody battle, “a
revolution of the rich against the poor,” in which traditional Christian social values were replaced by
market-oriented social values. Living in a market society conditions us to look at the world in certain
ways which are incompatible with Islam; for example, market societies consider portions of human lives
as objects which can be sold and purchased in a labor market. Explaining Islamic economics involves

learning to see the world in a different way. To accomplish this objective, it is useful to highlight and
accentuate the differences between the two ways of looking at the world. For simplicity and brevity, we
will paint the picture in black and white, and ignore the complexities of the gray middle grounds.

When conceptualized as a purely positive field of study which excludes the normative and the
unobservables, social science is an oxymoron. This is because our human lives are driven by our visions
and conceptions of the good life and the ideal society. Excluding these from consideration leads to
absurd caricatures of human behavior like the homo economicus used by economists. In Zaman and
Karacuka (2012), we have shown how this theory systematically blinds economists to realities of human
behavior, making them unable to understand typical human behaviors in the Prisoner’s Dilemma or the
Ultimatum Game. Hirshliefer (quoted in Dawes and Thaler 1988) reveals the hollowness of game theory:

The analytically uncomfortable (though humanly gratifying) fact remains: from the most primitive to the
most advanced societies, a higher degree of cooperation takes place than can be explained as a merely
pragmatic strategy for egoistic man.

Humanities is the study of human beings, and is inherently and deeply normative. Human beings
continuously make choices, and every choice is normative; making a choice is equivalent to an assertion
that this particular choice should be made over all other possibilities that were available. All human
action is directed towards a goal, whether this goal is explicit and understood, or whether it is only
expressed by the actions, without conscious awareness of the goals. The Quran (92:4) states that “the
ends you strive for, are diverse.” Our actions are driven by a vast range of emotional as well as rational
considerations. Even though these drivers, the motivations for our actions, remain hidden from external
observers, and often even our own selves, and even though these motivations can change dramatically
in the blink of an eye, nonetheless, human behavior cannot be understood without trying to understand
the purpose or life-goals of human beings.

Therefore, as a methodological principle, any study of human beings must take into
consideration the normative dimension. The traditional questions:” What is the good life?” and “What is
the good society?” serve as a convenient starting point for any inquiry into the activities of human
beings. Once a goal for human activity has been specified, then human behavior can be understood as
purposive behavior, directed towards achieving the goal. We will call this the transformative element.
These are strategies used by human beings to move towards their goals. To complete the analysis, it is
also essential to have a descriptive component, which describes the current state of affairs. This is the
starting point to which transformative strategy must be applied, to bring it closer to the ideal state. To
summarize, we will use a three-dimensional framework for comparison of modern Western economics
and Islamic economics:

Normative: An articulation of the intertwined concepts of the good life and the good society, which
provides a normative ideal, a target and a benchmark.

Positive: A description of the institutional structures—political, economic, social, and environmental—
that shape individuals and societies. This is the positive component of social science.

Transformative: Strategies for moving from the actual (positive) description towards the normative

In remaining sections of this article, we will describe all three components of Western
economics and compare and contrast them with the corresponding component of Islamic economics.
However, a preliminary observation is in order. According to the projected self-image of Western
economics, it only contains the positive component—a purely objective description of human behavior
in the economic realm. The normative and transformative components are left up to the policy makers,
while the economist merely provides scientific factual description of ground realities.

The fact that conventional modern economics is normative is indisputable, and yet, economists
are very strongly attached to the opposite view. This conflict is hard to understand because the level of
cognitive dissonance required to defend the view that economics is a positive science is similar to what
would be required to defend the idea that the universe was created 6000 years ago. How apparently
sane and rational humans can adhere to theories so violently in conflict with observations is itself a
puzzle that many have pondered and attempted to explain. To document that this is not an
exaggeration on my part, I offer here some summarized paraphrases of quotes from leading economists
as evidence:

Keynes: Economists are unmoved by lack of correspondence between their theories and facts.

Solow: DSGE models are so crazy that their founders are like lunatics, and, policy making using these
models could only be suitable for some alien planet, not Earth.

Sitglitz: Economists frequently make claims in conflict with easily observable facts, because economics is
a religion, not a science.

Olivier Blanchard: DSGE models makes assumptions profoundly at odds with what we know about
consumers and firms.

Paul Romer: Macroeconomic theorists ignore mere facts by feigning an obtuse ignorance.

Paul Krugman: The Economics profession went astray because they mistook the beauty of mathematics
for truth.

The full quotations from these and many other economists can be found at Zaman (2018a), where I have
compiled many more examples.

Because economists regard their subject as a “science” with universal domain of validity, they
refuse to acknowledge the normative and transformative elements, and abstract from background
institutions and historical experiences which frame the subject. However, a comparison with Islamic
economics requires extracting these hidden elements, and comparing them with their Islamic
counterparts. Accordingly, this is how we proceed in this article.

We will first exposit the normative dimensions of conventional modern economic theory, in
order to compare them with Islamic views. Western economics defines rational human
behavior as maximization of lifetime utility obtained from the consumption of goods and
services. Hausman and MacPherson (2006) write that “Rationality … is … a Trojan Horse,

smuggling ethical commitments into the theoretical citadel of positive mainstream economics.”
In order to highlight the contrast with Islamic economics, it is useful to articulate some of the
ethical commitments which are being smuggled into economics by this strong assumption.
By assuming that human purpose is maximization of pleasure in this earthly life, the framework
of modern economics excludes the spiritual concerns that are central to an understanding of
the purpose of life for Muslims and for many Christians as well. This normative exclusion of
beliefs different from modern secular views regarding after-life and God is described by
economists as a positive and objective description of rational human behavior. Typical
economics textbooks start by arguing that human beings are purposive, and conclude that they
maximize utilities, without mentioning the numerous strong assumptions required for this leap
of faith. In fact, utility maximization reflects its origins in the secular modern philosophy that
emerged after the defeat of Christianity in Europe. Having rejected the idea of paradise in the
afterlife, secular philosophers sought to build paradise in this life, by making the goal of life the
maximization of pleasure. Jeremy Bentham, one of the founders of this philosophy, explicitly
aimed at banishing religion and the spiritual, and replacing it by a morality based on the
pleasure-pain principle or utilitarianism.
While economists claim that the theory of utility maximization is descriptive and positive,
studies of actual human behavior show strong conflict with this theory. A massive amount of
empirical evidence for violation of this theory is collected in a survey by Zaman and Karacuka
(2012). The idea that neoclassical theory of utility maximization is a purely positive description
of reality is a non-starter. An alternative view is to consider this theory normative. This is how
human beings should behave, once they lose faith in God and religion. On normative grounds,
this theory is disastrously wrong. Indeed, it is this failure of utility maximization as a normative
principle which explains why the theory fails as a descriptive theory. It is not sensible to behave
like homo economicus, even if one aims at maximizing pleasure in this earthly life, without any
concern for afterlife. This is because the deepest pleasures that we derive from life come from
our social connections—loving and being loved. Selfish behavior of the type suggested as
rational by irrational economists demeans human beings, damages their hearts and souls, and
deprives them of the sources of greater happiness (Grant 2013, Nelson 2012).
From a secular point of view, the Easterlin Paradox shows clearly that material consumption is
not the source of long run welfare or happiness (Easterlin 1973, Easterlin et al. 2010). While
consumption of goods and services brings short term stimulus and pleasure, long run happiness
depends on character and on social connections. As a formula for obtaining welfare, pursuit of
material goods and wealth fails miserably to achieve the desired results. Money does not buy
happiness, as wisdom in all religious and philosophical traditions holds. In fact, money buys an
illusion of happiness (Quran 3:185): The life of this world is but the comfort of illusion.

The “Coca-Cola Theory of Happiness” clearly illustrates the fallacy at the heart of modern
economic theory (Zaman 2018b). Whereas it is undeniable that a cool drink of Coca-Cola can
bring a lot of short-run pleasure to one who is hot and thirsty, it would be insane for someone
to consider this to be the formula for long run happiness. It is precisely this naïve and childish
mistake that the economists have made by assuming that all rational humans pursue the
maximization of pleasure obtained from consumption as the goal of life.
Secular studies of sources of long run human welfare confirm the deep wisdom of Islamic
teachings, common with all religious traditions. Short term pleasure obtained by material
comforts is an illusion that leads us away from real sources of happiness. Long run happiness
requires cultivating character traits like contentment, gratitude, and trust, and is deeply
affected by our community and social relationships. Both character and community are strongly
stressed in Islamic teachings, and the pursuit of worldly gains is described as an illusion.

Having explained briefly why conventional economics fails both as a positive and as a normative theory,
we now consider the Islamic views regarding the good life—normative ideals for both our personal and
social lives. For individuals, conventional economics prescribes the norm of pursuit of selfish pleasure,
packaged as “rationality”. The ideal society is viewed as based on perfect competition (between
individuals, between firms, and between nations), where survival of the fittest leads to increasing
efficiency. The ideals of self-interest and competition stand in stark contrast to Islamic ideals of
generosity and cooperation. At the individual level, ideal behavior is based on compassion, concern, and
caring for others, which leads to generosity and self-sacrifice. At the social level, cooperation and unity,
based on equality and fraternity of all mankind, are strongly encouraged.

Conventional economics is consequentialist, and evaluates welfare by looking at the final
consumption levels of all individuals in a society. In contrast, doing the right deed is what matters in
Islam, whether it leads to success or failure in terms of current outcomes. Doing good deeds is not a
matter of collecting brownie points; rather, this is the path to spiritual growth, which allows us to
develop our human potentials. In this way, the Islamic approach is closely aligned with the capabilities
approach of Mahbubul Haq and Amartya Sen.

The Quran (95:4,5) indicates that human beings have a vast range of capabilities: We have created the
human being in the best design. Then We turn him to the lowest of low.

Humans have the potential to rise above the angels, and, at the same time, the potential to be
worse than the beasts. The purpose of our lives is to realize these hidden capabilities, the potential for
excellence buried within our souls. The rules and regulations in Islam, describing sinful and meritorious
acts, actually provide us with the guidelines to develop these capabilities. If we act according to the
rules, we make spiritual progress. If we go against the rules, engaging in sinful behavior, this leads to
deterioration and degeneration, stunting our spiritual growth and deforming our souls. Worship of false
gods is the path to ruination, and among the worst of these false gods is our own ego—or our egotistical

Because Islam addresses all dimensions of human existence, Islamic teachings cannot easily be
encapsulated or summarized. For this reason, we have been sent the perfect model of behavior, our
Prophet Mohammad (peace and blessings upon him), who demonstrated the ideal form, for us to
emulate in all dimensions of our lives. The Quran (68:4) states: “And you (O Muhammad) are truly ˹a man˺ of
outstanding character.” A unique characteristic of Islam is the rejection of monasticism. Instead of
renouncing the world, Islam encourages us to engage with the world according to Islamic rules of
conduct, as the best path to spiritual development. This is demonstrated by Islamic teachings like
“Excellence in conduct and character is superior to fasting all day and worshipping all night” and "The
best among you are those who have the best manners and character.” As an illustration, we will discuss
just two ways of engagement with the world, which differ from current norms, and which would lead to
spiritual progress.

Kindness and Compassion. Prophet Muhammad was sent as a mercy to the whole of creation. As the
Quran (21:107) testifies “And We have not sent you, (O Muhammad), except as a mercy to the worlds.”
Compassion, the ability to feel the pain of others, is at the heart of spirituality. The Quran (9:128) tells us
the Prophet was kind and merciful, and felt deeply the pain of others. The Arabs of pre-Islamic times had
savage customs, among which was burying infant daughters alive. The transformation wrought by the
teachings of Islam taught them to care for the feelings of animals. When some of the companions of the
Prophet captured some baby birds, the mother bird circled the air, beating its wings in grief. Upon
observing this, the Prophet said "Who has hurt the feelings of this bird by taking its young? Return them
to her."

Similarly, the companions learned to prioritize the needs of others over their own selves; as the
Quran (76:8) witnesses, “And they give food in spite of love for it to the needy, the orphan, and the prisoner.”
Magnanimity and generosity should be used to build the social relationships at the heart of living
communities. The Prophet advised us to “reconcile with those who cut off relationships, give to whoever
deprives you, and pardon whoever wrongs you.” It should be obvious that economics of a society based
on these normative principles would be radically different from that of a population of the homo

Brotherhood and Equality. Islam teaches us that “All creatures are [like] a family of God: and He loves
most those who are kindest to His family”, In his last sermon, the Prophet stated that: "There is no
superiority for an Arab over a non-Arab, nor for a non-Arab over an Arab. Neither is the white superior
over the black, nor is the black superior over the white -- except by piety."

The teaching that all men and women are brothers and sisters, and all are equal in the eyes of
God, has radical implications for economic organization. Combined with the prohibition of prejudice
(tribal, linguistic, ethnic), Islamic teachings strongly urge rising above national and racial divisions, to
work together for the welfare of humanity. Putting national interest above our common interests as one
family of human beings has been the greatest obstacle to progress on preventing the “climacide”
currently going on. Considering the global welfare of humanity would also have a large impact on the
theory of international trade. It is worth noting that animals are also creations in the family of God, and
the large-scale destruction of species and their habitats in the quest for corporate profits is repugnant to
Islamic teachings.

The Prophet Muhammad deeply wanted all those around him to be believers, to do good deeds and
attain the pleasure of Allah. The Quran (26:3) states: “Perhaps, [O Muhammad], you would kill yourself with
grief that they will not be believers.” However, the Quran (2:256) informs us that “There is no compulsion in
religion” It is to be freely chosen. Even the Prophet is chided that he cannot deliver guidance to those
whom he pleases; guidance is solely for Allah T’aala to bestow. Quran (28:56): “(Muhammad), you cannot
guide whomever you love, but God guides whomever He wants and knows best those who seek guidance.” The Quran
(92:4) is addressed to the entire spectrum of human beings, and recognizes that “the ends that ye strive for
are diverse.” Thus, Islamic economics is not restricted to analyzing a non-existent society composed
entirely of Muslims who always behave in the ideal manner prescribed by Islamic laws.2 Rather, the
Quran recognizes and respects other communities, displaying a tolerance that is the hallmark of Islamic

God will judge all the different communities justly: Those who believe, those who follow the Jewish
(scriptures), and the Sabians, Christians, Magians, and Polytheists—Allah will judge between them on the Day of
Judgment: For Allah is witness of all things (Quran 22:17). Muslims are taught to let others be, in their own
faith: I shall not worship that which you are worshipping. Nor will you worship whom I worship. To you be your
religion, and to me my religion. (Quran 109:1-6) If others interfere and contradict us, Muslims should adopt a
tolerant stance: And if they belie you, say: "For me are my deeds and for you are your deeds! You are innocent of what
I do, and I am innocent of what you do!'' (Quran 10:41).

The Quran (45:23) provides severe warnings against worshipping our own desires:
Have you seen him who takes his whims and desires to be his god—whom Allah has misguided knowingly, sealing up his
hearing and his heart and placing a blindfold over his eyes? Who then will guide him after Allah? So will you not pay
This is perhaps the greatest point of contrast between Islamic teachings and conventional modern
economics. Islam condemns the worship of whims and desires, while Western economics regards this as
optimal and rational behavior. According to Western theory, all people know what is best for
themselves, and letting them choose freely according to their desires will lead to optimal decisions.
Furthermore, consumer sovereignty means that we are not allowed to question desires, whether they
are arbitrary whims or genuine needs. In contrast, the Quran (7:31) differentiates strongly between idle
desires and genuine needs, and condemns fulfilment of the former while encouraging fulfilment of the
latter: O Children of Adam! wear your beautiful apparel at every time and place of prayer: eat and drink: But waste not
by excess, for Allah loveth not the wasters.
Islam rejects asceticism and asks us to enjoy the pleasures of life provided by God. But it also rejects
wasteful and excessive consumption. Also, against neoclassical assumptions that we all know what is

Interestingly, modern economics is restricted to the analysis of a monstrous world in which all people
are cold, callous and calculating robots who behave like homo economicus. All the complex and
sophisticated mathematical theories of economics apply only to this imaginary horror-story world.

best for us, the Quran (2: 216) informs us that: it may well be that you hate a thing while it is good for you, and
it may well be that you love a thing while it is bad for you: and God knows, whereas you do not know.

Economists propose the normative ideal of homo economicus, who is completely selfish, has no
social concerns, calculates his advantage to the last penny, and acts according to these calculations. As
behavioral economists have discovered, human beings are boundedly selfish, have bounded willpower,
and bounded computational abilities. The normative ideal of Islam has been termed homo islamicus,
and is at the opposite extreme—generous, compassionate, socially responsible, and not concerned with
worldly gains or losses. Neither extreme is achieved, nor even achievable, by real human beings.
Nonetheless, both serve as targets that guide actions. As a result, being taught economics leads
students to act more selfishly than those in other disciplines (Grant (2013). It is similarly true that
teaching normative ideals of generosity and compassion creates and reinforces these tendencies of

Unlike the pleasure-seeking and pleasure-maximizing robotic homo economicus of conventional
economics, the Quran paints a rich and complex picture of human behavior. On the one hand, humans
have been created in the best of forms, with potential to reach excellence even beyond the angels. On
the other hand, all of us also have the potential to be worse than beasts, and even the prophets are
subject to temptations of the nafs (psyche/soul). We have been shown the two highways (of good and
evil) and have been left free to choose between them. Behavioral economists, who discovered some of
the complexities of human behavior, have asked whether people are selfish or cooperative. Islam
answers that all humans have both tendencies built into us, and we can choose between them. Because
of this freedom, no mathematical formulae can define human behavior, and patterns of past behavior
may not correctly predict future, since humans are free to choose and to change their path.

Human behavior is driven by three different sources—brains, hearts and “spirit” (nafs). “Nafs”
literally means breath, and is usually translated as “spirit” or “soul.” The rational faculty represented by
the brain is most familiar to secular modern readers. Indeed, the standard theory of rational behavior
suggests that this is the only relevant faculty for the study of human decision making.

The heart is the source of feelings. It reacts to the situations it perceives by emotions like
sadness, joy, hope, anxiety, guilt, shame, and courage. The nafs is the source of desires, likes and
dislikes in various degrees of intensity. Economists do not recognize the heart (“feigning anesthesia” as
repentant positivist A. J. Ayer put it) but they do partially recognize the nafs in the form of the utility
function, which measures like or dislike. The recognition is only partial because, due to positivist
misconceptions, economists pretend not to know about intensity of choices, since this is an
unobservable feeling. Real human decision making is governed by all three faculties – rational,
emotional, and “spiritual” (referring to “desires”). Each of these operates in different dimensions and all
three must be integrated to arrive at decisions. Ignoring or neglecting any of the three faculties would
lead to a misleading and defective picture of human behavior. This is why the theory of rational
behavior fails to match the reality of actual human behavior. For a survey of the conflicts, see Zaman
and Karacuka (2012).

Hearts are equipped with a moral sense. They feel guilty when a wrong action is taken, and they
feel virtuous and content when a good action is taken. As empirical evidence for the heart, note that

infants are sensitive to emotion. Gopnik (1998) explains: “By the time newborns are just a few months
old, they recognize the difference between a happy expression and a sad one..” Repacholi (1998)
conducted an experiment to demonstrate that a 14-month-old child can sense how other people feel.
Each infant watched as an adult peered into two closed, displaying pleasure when looking into one and
disgust when looking in the other. When the experimenter offered the babies a choice, most chose the
"happy" box.

The desires of the nafs often conflict with the moral sense. The Quran (12:53) states that “Verily,
the (human) self is inclined to evil.” It is often the case that we desire things which we sense to be
morally wrong. In such situations, the choice that we make shapes our heart and soul. If we make the
“right” (moral) choice, over-riding our desires, then this trains and shapes our desires. If we make the
“wrong” choice, giving in to our desires, despite the knowledge that this is immoral and wrong, then this
shapes our moral sense in the wrong direction by damaging the heart, and its ability to perceive the
difference between right and wrong.

In the long run, if a person continuously makes choices in accordance with his desires, exactly as
prescribed by the “rational behavior” theory of economists, he or she eventually become the slave of
desires, or homo economicus. Repeated pursuit of desires damages the heart, and eventually the moral
sense becomes extremely dim and unable to perceive all except the grossest of differences between
moral and immoral behavior. This is exactly the type of behavior recommended by Jeremy Bentham,
who explicitly rejected religion as a source of morality, and recommended using the pleasure-pain
principle as an alternative. In opposition to the utilitarian construction of morality on the basis of
pleasure and pain, the Quran (45: 23) says people who take their own desires as their god lose the
ability to use all three organs: the hearing and the heart and the sight.
Have you seen he who has taken as his god his [own] desire, and Allah has sent him astray due to knowledge
and has set a seal upon his hearing and his heart and put over his vision a veil?
That is, the pursuit of instant gratification blinds human beings to their own long run welfare. It
is worth noting that this idea, that we must control our desires, instead of being controlled by them, is
common across all religious traditions. In the Bhagavad Gita, the desires are described as the horses,
which drive the chariot. They are extremely powerful when harnessed to the goals of the charioteer.
However, if the task of choosing the goal is left up to the horses, they will go off the desired path, and
turn to grazing at random in the forest. Similar metaphors occur in many different traditions of wisdom.
We can reconsider neoclassical theory in light of this traditional wisdom as a formula to ensure
perpetual stagnation in the most primitive and infantile stage of spiritual progress, where one is
enslaved by one’s desires.

Spiritual progress occurs when we continuously make the moral choice, and override the
immoral or idle desires of our nafs. How to do this is one of the central concerns of Islam, which teaches
us many strategies to bring the powerful nafs (our desires) under control. The Quran describes three
stages of spiritual progress. The first stage is called nafs-e-ammara or the commanding soul. At this
primitive spiritual stage, the desires command our actions. At any point of time, when we think about
what our next action should be, the imperative is to do whatever will please us the most: whatever we
desire. This is similar to the instant gratification mode of conduct, and accords with the theory of
behavior exposited in economics textbooks. Failure or inability to control our desires leads to obesity,

failure to exercise, violating social commitments for instant pleasure, drugs, and many other vices. All
long run achievements occur only when we control and restrain our desires for instant gratification. This
restraint allows us to pursue long run goals like fitness, at the cost of inhibiting our short run desires for
consuming calories on the couch.

If we use our moral sense—our hearts—to restrain ourselves from pursuing idle or immoral
desires, this restraint leads to spiritual progress. Eventually, the nature of the nafs changes to nafs-e-
lawwama or the self-blaming soul. At this stage, we try to follow moral dictates but sometimes we
succeed and sometimes we fail, giving in to desires we know to be wrong. The nafs-e-lawwama feels
guilty and blames our own self for wrongdoing. It is worth noting that this guilt is not felt by those who
have made no spiritual progress, or those who have damaged their hearts by pursuing immoral desires
for a long time.

The vast majority of human beings belong to this middle stage of spiritual progress, where they
can sense right from wrong, and occasionally do the right thing and feel virtuous, while occasionally they
also do the wrong thing and feel guilty. If we make a preponderance of right moral choices, and exercise
strict control over our desires, this leads to further spiritual progress, and eventually trains the soul to
become nafs-e-mutma’innah or the contented soul. At this stage, doing the right thing and making
moral choices comes naturally, and feels pleasing. Making the wrong choices or immoral choices causes
repulsion or disgust and no longer appeals to the soul. Islamic teachings are designed to lead us along
this progression from the lowest stage to the highest stage. This is indicated in the verse of the Quran
(95: 4-5): We have created man in the best of forms, and reduced him to the lowest of the low.

The highest ideal form of spiritual progress was personified in the character of the Prophet
Mohammad (peace and blessings upon him). Just as homo economicus is an extreme form, so homo
islamicus is a modern term coined for polar opposite—a person who conforms to the ideal teachings of
Islam. It is important to note that Islamic teachings are concerned with the journey and not with the
destination. Homo islamicus who arrives at the highest spiritual stages is a saint, but for most people, it
is enough to be travelling in that direction. Islamic teachings are not meant to create a society of saints,
nor are the economic teachings meant to be operational only in such a society. Rather, it is expected
that the society will consist of people at all stages of the journey between homo economicus and homo
islamicus. The key characteristic of an Islamic society is that individual and collective efforts should be
made to transform behavior towards higher spiritual stages. That involves making efforts to control our
desires and to act morally, and to improve over the previous day. We are not tasked with arriving at the
goal, but with making efforts to improve.

Human beings have been created with desires, as clearly stated in the Quran (3: 14):
Beautified for people is the love of that which they desire—of women and sons, heaped-up sums of gold and
silver, fine branded horses, and cattle and tilled land. That is the enjoyment of worldly life, but Allah has with
Him the best return.
Economic theory turns these desires into our gods. We must satisfy them in order to
achieve happiness and be considered rational. Islam teaches us that these desires are the

motivational engines we must harness in order to achieve the purpose of our creation, which
may broadly be defined as “worship.” As the Quran (51:56) states: “We have not created Man or
Jinn except for our worship.”

Spiritual transformation occurs in the process of the struggle to harness our selfish
desires to the achievement of higher goals. The goals of an Islamic society are to encourage
human beings to struggle for the good, and not for the accumulation of wealth. To create this
change, individuals should purify their hearts of the love of worldly things, and fill them with
three loves: love of God, His Prophet, and love of the struggle to create the good society. Unlike
other traditions which counsel detachment from worldly concerns, Islam offers a radical
alternative: we engage with the world in certain specified ways, in order to make spiritual
progress. Indeed, it is requirement of faith that we must engage in the struggle to change the
world for better; the love of this struggle must become greater than our love of worldly
comforts and pleasures. It is the effort to re-shape our desires to conform to the teachings of
Islam that generates the knowledge required for spiritual transformation. As the Quran (29:69)
says: “As for those who strive in Us, We surely guide them to Our paths, and lo! Allah is with the good.”

In the economic realm, this involves giving away wealth that is in excess of our needs.
Since needs are defined in a generous way, asceticism is not involved. A better understanding
of the goals of Islamic economics can be achieved by comparing it with the Marxist concept of
praxis. Marxists study and engage with the external world so as to bring about desired changes
in it. Muslims struggle for justice and equitable economic outcomes because such struggles will
bring about an inner spiritual transformation. Thus, we struggle with the external world, and
engage with economics, primarily to create desirable internal spiritual change. Marxists
emphasize material outcomes to the extent that they suggest that our inner world—ideals,
philosophies, and visions—are conditioned by the material prospects of humanity. Islam denies
this emphatically, and tells us of the primacy and dominance of the spiritual over the material
It is worth emphasizing this dramatic opposition between Islamic economics and
Western theories. In Islam, the spiritual is primary, and the material is subordinate to it. Human
history bears witness to this primacy, as demonstrated by numerous instances of men with
vision who have changed the world without any apparent material means of doing so. A prime
example is that of the Prophet Muhammad (peace be on him) himself, who changed the course
of human history solely by inspiring the people of the Arabian peninsula with a grand vision,
without bringing about any significant change in the material means at their disposal.
Interestingly, Marx himself provides a perfect counterexample to his own theories about
materialistic determinism. His vision of a classless society with social justice, where each person
would be provided for according to his needs, inspired two major revolutions and shaped the
20th century, without any intervening material causes.

The use of material means and efforts to achieve spiritual progress is central to Islamic
economics. It is also highly unfamiliar to a Western audience. In this section, we explain how
Islamic teachings affect and shape all dimensions of our economic and social lives, transforming
them into pathways to God.

On the one hand, we have the ascetics who renounce the world, and consider its flavors a trap. 3 On the
other extreme, we have the gluttons and the gourmands who live to eat. The latter is the extremist
position taken by economic theory which considers the purpose of life to be consumption. According to
this theory, all our (rational) efforts are directed towards this solitary goal, unflavored by any social
considerations. Both of these extreme positions are forbidden by Islam.

Islam offers a middle path of moderation. It strongly urges the fulfillment of legitimate desires
and just as strongly discourages our following illegitimate desires. The Shari’a, or Islamic law, is meant to
enable us to differentiate between the two types. To understand this further—and this topic is quite
complex, we illustrate how Islam encourages fulfillment of legitimate desires: Say: "Who is there to forbid
the beauty which God has brought forth for His creatures, and the good things from among the means of sustenance?" (
Quran 7:32)

Enjoyment of the good things which God has created for us is encouraged. Sayings of the
Prophet Mohammad show that enjoyment of conjugal pleasures earns rewards, because it creates
barriers to the prohibited types of desires. For example, when a husband and wife look at each other
with love, Allah T’aala looks upon them with mercy. Islamic teachings encourage us to fulfill our
legitimate needs, but prohibit us from wastefulness and excess: O Children of Adam! wear your beautiful
apparel at every time and place of prayer: eat and drink: But waste not by excess, for Allah loveth not the wasters.
(Quran 7:31)

These teachings of Islam offer a very simple solution to scarcity, supposedly the central problem of
economics. Islam strongly discourages pursuit of idle desires. Quran (45:23) explains that those who
make their desires their gods are blind to the realities of human existence. Similarly Quran (79:40)
explains that “Those who restrain themselves from following their base desires will attain Paradise.”

Scarcity is created because economists refuse to distinguish between needs and wants, and
consider the fulfillment of both to be their professional goal. For example, Samuelson and Nordhaus
(1989: 26) state that economists “must reckon with consumer wants and needs whether they are

Perhaps paradoxically, one the strongest barriers to understanding Islam is prior knowledge of
Christianity. This is because of the preponderance of “faux amis”; concepts which appear superficially
similar, but are actually radically different. Those already familiar with the Christian concepts are lulled
into complacency created by instant recognition, and fail to recognize the deep differences. Since it
would distract from our main topic, we have not focused on highlighting these differences. We mention
this here as a warning to readers from Christian cultural backgrounds.

genuine or contrived.” This sets economists up for failure, since “wants” expand when they are fulfilled.
According to Islamic teachings, “Give a man a valley of gold, and he will desire another.” Islam accepts
and encourages fulfillment of needs, but rejects and discourages the fulfillment of wants. This single
principle is sufficient to solve the problem of scarcity; as Gandhi said, there is enough for everyone’s
need, but not enough for everyone’s greed. To support this Islamic solution, we need to discuss several
issues where opinions of economists differ from the empirical evidence.

As a matter of principle (consumer sovereignty), economists refrain from studying how desires are
shaped. They take the utility function as exogenous: desires are formed outside the economic system.
However, Islam teaches us that our desires can be shaped by our conscious efforts. There are several
strategies we can use to overcome our inclination to follow our desires. For example, the Quran (3:92)
states: Ye will not attain unto piety until ye spend of that which ye love. By giving away what we love most, we
will weaken the hold of desires on our behavior. Similarly, fasting, staying away from food and water,
teaches us control of our appetites, and leads to the purification of the heart from the love of material

As Galbraith has explained quite clearly, capitalism works in the opposite way. At the heart of
capitalism is massive over-production. In order to sustain the system, it is necessary to persuade
consumers to increase their desires. This is achieved by advertisements, which create desires for
unnecessary objects, required to create growth. There are many ways to show that advertisers create
artificial wants. For instance, Hamilton et al. (2005) found that over $10 billion worth of goods were
purchased but never used by consumers in Australia alone.

One of the bedrock assumptions of modern economic theory is “consumer sovereignty,” the ideas that
everyone knows what is good for them. This means that we should allow people to make free choices,
because then they will automatically choose what is best for them. In contrast to this, the Quran (2: 216)
explicitly states the opposite: You may dislike something although it is good for you, or like something although it is
bad for you: God knows and you do not.

Controlling our desires for instant pleasure is an essential requirement for spiritual progress. The
Quran prohibits excessive (israf) and wasteful (tabzeer) spending. Both introspection into our own lives
and examination of the external empirical evidence lead to a clear conclusion in favor of the above
passage from the Quran and against the economic theory of welfare. The level of naiveté about sources
of human welfare required to adopt the “Coca Cola Theory of Happiness” is mind-boggling. If everyone
always knows what is good for them, no one would make wrong choices or have regrets. In fact, short-
sighted indulgence in temporary pleasures often trumps long run welfare considerations. For example,
excess consumption is chosen over exercise and diet. Fryar (2018) estimates that, for 2015-2016 in the
U.S., 39.8 percent of adults aged 20 and over were obese (including 7.6 percent with severe obesity) and
that another 31.8 percent were overweight. This cannot be considered a rational choice when excessive
annual mortality related to excessive consumption is estimated to be in the range of 100,000 to
400,000, and overall obesity-related health spending reached $147 billion in 2008. The cost of the harm

we cause ourselves by self-indulgence is enough to feed, clothe, house, educate and provide healthcare
for all those who need it on the entire planet.

Annually, the un-imaginably high quantity of more than a billion tons of garbage is thrown away
globally. The construction materials, industrial minerals, and metals that end up in the trash in the
United States and Europe could supply planetary needs (Baker et al. 2016). This sinful waste impacts on
the soul by producing guilt in those who have a conscience. In addition to internal harmful effects, there
are also devastating external harmful effects. Wasteful consumption by the unheedful rich is leading to
disaster on a planetary scale. As Lovins et. al. (1999) show, changing our attitudes towards waste could
dramatically improve the situation. This would be in line with Islamic injunctions regarding gratitude and
respect for the gifts of God, embodied in nature.

It seems clear that maximization of short run utility causes us harm individually and collectively,
and the Quranic prescriptions of avoiding excess and waste would be beneficial, not just for spiritual
progress, but also for our material welfare in our life in this world. Adoption of the positivist
methodology has led economists to avoid discussions of intangible and unobservable conceptions
human welfare. Furthermore, a narrow focus on market costs and benefits, measured in dollars, has
prevented the appreciation of the broader dimensions of human existence, and our relations with the
environment and society. This is why economic theories are implicitly founded on absurd views
regarding human welfare, without any awareness of this among economists. Elsewhere, I have
articulated some of the normative ideas buried within the “scarcity” concept currently taken as the
foundation of economics Zaman (2012b).

Spiritual transformation is achieved by controlling our desires. According to the Prophet Mohammad:
“The warrior is the one who struggles against his own desires.” To achieve this goal, it useful to know
that fulfilling desires appears to be the path to happiness, but this is an illusion, according to the Quran
(57:20): Know that the life of the world is only play, and idle talk, and pageantry, and boasting among you, and rivalry
in respect of wealth and children. … The life of the world is but a matter of illusion.

Because modern economics is founded on the illusion that material progress is the route to
human welfare, economists have not been able to digest the Easterlin Paradox, which provides empirical
evidence that massive increases in material comforts have no correlation with happiness (Easterlin
1973; Easterlin et al. 2010). The field of happiness studies which emerged in the aftermath of Easterlin’s
pathbreaking research has come up with two explanations of the phenomena. One is the called the “set-
point”—the ability of human beings to get accustomed to any standard of living as “normal.” This means
that increased standards of living lead to a temporary boost in happiness, which disappears when the
normal becomes reset to the higher level. The other is the “reference point”: people evaluate their
material possessions in comparison with those of their neighbors, so that if all incomes rise, then people
do not feel better off, because the reference for comparison rises. Taking human psychology into
account leads to Islamic strategies for improving human welfare, which are radically different from
those ardently advocated by economists.

Simple Lifestyles: Once the idea that we can get accustomed to any lifestyle is understood, it seems
clear that it is best to choose a simple lifestyle. The higher the standard we choose, the more we will
have to work to maintain it. Since the main object of our lives is the development of our capabilities—

spiritual as well as others—engagement with material comforts is a distraction which side-tracks us from
our central goals. The ideal amount of material wealth is that which is sufficient for our needs. The
Quran (89:15-16) tells us that people mistakenly think that wealth is a sign of favor and poverty is a sign
of displeasure of God, but neither of these are true. Both excess and insufficiency are trials from God.
The Prophet Mohammad (SAW), who is the role model for all Muslims, led a very simple and austere
lifestyle. The Quran warns us not to be deceived by the apparent luxury of non-Muslims.

When evaluated with respect to the worldly goals of happiness and contentment, the pursuit of
luxury is harmful, and seeking simplicity in lifestyle is beneficial. This is because people quickly get used
to luxury so that it does not provide them with additional happiness. Also, the luxury of one person
creates a strong negative externality, leading to unhappiness of many who seek to emulate, but are
unable to do so. Simple lifestyles allow satisfaction with relatively little effort and can be achieved for
all. This will leave people free to do things which really matter, instead of wasting our precious lives on
an empty pursuit of consumption.

Avoiding Conspicuous Consumption: To a far greater extent than commonly realized, economic theories
assume that there are no externalities in utility functions – that is, people do not envy others, and are
not driven by the desire to emulate luxurious consumption patterns. Empirically, the opposite is true
and is widely observed, as in Veblen’s theory of conspicuous consumption.

Islam prohibits Muslims from envying others and teaches strategies to prevent envy. The
Prophet told us to look at people less fortunate than ourselves in worldly affairs, so that we feel thankful
for what we have. The Quran (4:32) states:
Hence, do not covet the bounties which God has bestowed more abundantly on some of you than on others. Men shall
have a benefit from what they earn, and women shall have a benefit from what they earn. Ask, therefore, God [to give
you] out of His bounty: behold, God has indeed full knowledge of everything.

Making others envy us is also prohibited in Islam. The rich should conceal their riches to prevent
envy—the exact opposite of conspicuous consumption. At the same time, the poor are encouraged not
to envy the rich, but to be content with their lot. True richness is that of a heart with a generous
disposition; for example, a saying of the Prophet Mohammad (peace and blessings upon him) states

Those who earn to avoid having to ask from others, and to spend on their families and neighbors will
meet Allah with shining face like that of the full moon. Those who earned with intent to show off, and
pride themselves over others, will meet with an angry Allah. (quoted in Taseen (1998: 153-156)

From Veblen (1924) to Lane (2001) and Layard (2005), many have identified envy as an
important source of waste and unhappiness in capitalist economies. This reinforces the lesson that we
should try to lower standards of living, and adopt simple lifestyles. Lowering the benchmark will make
everyone happier with what they have. Islam teaches us that “True richness is the contentment of the
heart”; contentment is much easier to achieve if one does not see others living luxurious lifestyles. Of
course, the problem with this strategy is that it is not compatible with the capitalist mode of
organization of production, which leads to massive over-production, which can only be supported by
wasteful and extravagant lifestyles.

The love of wealth, built into our hearts by our Creator, is a huge obstacle on the path to spiritual
progress. It is the struggle against this love which leads to spiritual progress. This is why Islam places
great emphasis on spending our wealth on others. There are more verses in the Quran encouraging
generosity than there are on all the famous five pillars of Islam combined. One such verse from the
Quran (2: 274) is:
Those who give their wealth by night and day, secretly and openly, they shall have their reward near their Lord, and they
will have no fear, nor will they grieve.

The Prophet Mohammad (peace be upon him) said:

The generous man is near Allah, near Paradise, near men and far from Hell, but the miserly man is far
from Allah, far from Paradise, far from men and near Hell. Indeed, an ignorant man who is generous is
dearer to Allah than a worshipper who is miserly

Note the recurring theme that spiritual engagement with the world is superior to worship in isolation.

This is far different from the attitudes towards wealth which are developed in capitalist
economies and which are implicit in economic theories, encouraging the irrational pursuit of wealth for
its own sake. Weber ([1920] 1958: Ch. 2) writes that the “spirit of capitalism” is the pursuit of wealth as
an end in itself, to the point of being “absolutely irrational.” The Islamic stance on this pursuit of wealth
is clearly stated in the Quran (9:34):They who hoard up gold and silver and spend it not in the way of Allah, unto
them give tidings (O Muhammad) of a painful doom.

Islam condemns the pursuit of wealth for its own sake. It is permissible only when the wealth is
to be spent for the sake of Allah, as a means of purification of the soul. The prohibition to pursue wealth
purposelessly prevents this transition from wealth as a means, to wealth itself as the goal.

Since the heart has been removed from homo economicus, modern economics cannot
contemplate such ideas. However, developing generosity and compassion for the poor is a crucial
element in the Islamic approach to economic affairs.

The institutional structures of a society represent concrete ways to achieve collective social goals. In
Europe, the transition from traditional Christian society to modern secular society created a radical
change in the collective social goals. As Tawney (1926) explains, the standard metaphor for traditional
society was that of a body, with different activities allocated to different and unequal members, but
united in working together for common goals. In contrast, a secular society was conceptualized as a
collection of different communities with different and conflicting goals, living together under common
rules. The only goal on which the communities could be united was that of allowing each community
freedom to practice its own religion. Thus freedom and the wealth that enabled effective utilization of
this freedom both became valued as collective goals of a secular society. This was a radical transition
from a traditional Christian society which stigmatized greed and accumulation of wealth. Institutions to
allow gathering wealth, like banks, and those to safeguard freedoms of communities, like parliaments,
courts, and laissez-faire ideologies, came into existence. Since there are no laws sacred to all groups, the

law must perforce be any artificial set of rules on which consensus can be achieved. Mutual cooperation
and social responsibility cannot be assumed between potentially hostile religious sects living together in
a secular society. The only institution that can take collective action is the government, so all social
responsibility is removed from the individual level, and naturally devolves to the government.

Islamic societies are governed by principles which are naturally very different from those of
secular societies. These principles lead to conforming institutional structures that are very different
from the modern institutions that emerged in the West after the great transformation converted a
traditional society based on Christian norms to a secular market society based on accumulation of
wealth and competition.

Just like freedom and wealth, nearly absolute rights to private property are natural for a secular society,
which safeguards the freedoms of diverse communities in potential conflict. To see that these notions,
incorporated into the foundations of economic theory without discussion, actually embody European
social conventions, it is useful to trace the evolution of the concept of private property. For many
centuries, Christians regarded property as a trust, with limited rights of ownership constrained by social
obligations. As Tawney ([1922] 1948:44-45) documents, 15th century European thought stressed social
mutual obligations over property rights:

Private property is … to be tolerated as a concession to human frailty, not applauded as desirable in
itself…. It must be legitimately acquired. It must be in the largest possible number of hands. It must
provide for the support of the poor. Its use must as far as practicable be common.

However, this social conception of property was replaced by an antithetical creed that arose in Tudor
England in the 15th and 16th centuries:

That creed was that the individual is absolute master of his own, and, within the limits set by positive
law, may exploit it with a single eye to his pecuniary advantage, unrestrained by any obligation. to
postpone his own profit to the well-being of his neighbors, or to give account of his actions to a higher
authority. It was, in short, the theory of property which was later to be accepted by all civilized

Islamic concepts of private property are more in line with pre-market concepts rather than
those of a market society. As Sait and Lim (2006) discuss in detail, Islam has a complex and sophisticated
theory of property. Under Islamic principles, people who utilize property to create social benefits
become entitled to ownership, creating a type of private property. This private property is both a “trust”
from God and a test, a conception that leads to a philosophy of property substantially different from
current Western notions. Since property is a trust, the owner must utilize the property in ways
conducive to the common interest. For example, the property should not be destroyed or used in ways
that cause harm to the public. Furthermore, it must be preserved intact, or improved and enhanced, for
passing it on to successors. Thus, sustainable development is built into the concept of private property
in Islam. The idea that legitimate ownership gives a person the right to do as he or she pleases with
property is specifically and explicitly condemned in the Quran (11:87).

Islam acknowledges that love of wealth is built into the human hearts (Quran 3:14, cited earlier),
but requires us to struggle against this love. The process of the purification of the heart of love of
material comforts is called “Tazkiya” and is central to spiritual progress:
Say: If your fathers, and your sons, and your brethren, and your wives, and your tribe, and the wealth ye have acquired,
and merchandise for which ye fear that there will no sale, and dwellings ye desire are dearer to you than Allah and His
messenger and striving in His way: then wait till Allah bringeth His command to pass. Allah guideth not wrongdoing
folk. (Quran 9: 24)

To achieve this goal, we must struggle against our desires, and love of worldly pleasures. The
Quran (89:15,16) states that the excessive wealth as well as lack of wealth are both trials from God.4
Those who have an insufficient amount of wealth can succeed in this trial by turning to God for His help,
which will bring them closer to God. Those who have excess can succeed in this trial by giving what is
beyond their needs to others who are in need. There is strong encouragement to spend excess money
on social welfare and equally strong discouragement of accumulation and hoarding (Sait and Lim 2006).
These teachings have the side-effect of relieving poverty, but the main effect is the purification of the
heart of the love of material wealth, and its replacement by the love of God and His Creation. This is in
sharp contrast with the capitalist ethos of endless accumulation and economic growth for its own sake,
which leads to increasing love of material wealth, and creates indifference to the misery of others.

There are a large number of Islamic teachings, subtle and sophisticated, regarding the rules for
giving wealth as well as those for receiving it. In particular, givers of wealth should not feel proud of
having excess, and should not feel superior to the receiver. They should not insult, demean, or belittle
those to whom they give. These rules are meant to protect the heart from the many kinds of poisons,
like pride, that can enter the heart in the process of giving, and create barriers to spiritual progress.

Just like there are strict rules about the giving of wealth, so there are strict rules about taking or
earning wealth. In particular, we should learn to seek assistance from, and depend on, Allah alone, and
cultivate an indifference to wealth. One seeker of aid was advised as follows:

Hakim! Wealth has a deceptive appearance. It appears to be very sweet (but it is really not so). It is a
blessing when earned with contentment of heart, but there is no satisfaction in it when it is got with
greed. (Zakariyya 1999: Book 1, Ch. 9, § 9)

Even when in need, and when receiving money as aid, one should cultivate detachment and
contentment; material wealth which is obtained while the heart is filled with greed does not lead to

The goal of the Islamic laws regarding the earning and spending of wealth is to purify our hearts.
Replacing the love of material possessions and rivalry for ownership with the love for Allah has the
natural consequence of softening our hearts, and creating cooperation and sympathy for the entire
creation of Allah. It is a teaching of Islam that “the believer loves and is loved.”

Weber ([1920] 1958) argues that the Calvinist teaching that wealth was a sign of the favor of the Lord
was at the heart of the development of capitalism in Europe.

All of the universe belongs to Allah alone. It was created for the use and benefit of mankind.
Private property is a temporary ownership, given as a trust, to those who would produce social benefits
from this ownership. Guarding and preserving the planet for use by future generations is a religious
obligation. Those who use property in harmful ways, against the public interest, can be legally deprived
of the ownership by the state. Adherence to these Islamic principles for ownership of property would
avert the environmental catastrophe that looms because Western intellectuals, driven by the historical
context of permanent battles and confiscation of property of one group by another, created the concept
of absolute rights to property.

The fundamental Islamic concepts of property rights outlined above have far-ranging ethical and
moral consequences. Since the world has been created for the benefit of people, certain types of natural
resources cannot be owned privately, because private ownership would deprive the public of the
intended benefit. Most Islamic scholars hold that common lands, forests, lakes, rivers and minerals
(including oil) fall into this category. The government must hold such public property in trust and devise
mechanisms to allow the entire public to benefit from the property. As an example, water is a public
resource which is frequently and increasingly subject to international disputes. Water Management in
Islam by Faruqui et al. (2001) provides a comparison of Islamic law with international laws and current
approaches. Sustainable development in Islam translates to the idea that we hold the planet in trust for
future generations, and cannot deprive them of benefits which we enjoyed.

Based on the principle that the entire planet is a trust from God, Islam limits rights to ownership
of property, and also prescribes taxes on income from property. Natural resources like mineral deposits,
oceans, forests, lakes, cannot be privately owned. Temporary ownership can be given to private parties
upon collecting fees or taxes so that the benefits are shared with the public. There is also a land tax,
called kharaj. These traditional methods for generation of revenue in an Islamic state from property
bear an uncanny resemblance to Henry George’s ([1879] 1979) proposal to collect the full rental value of
land and other resources for public use. In Islam, the payment of zakat, which is a tax on wealth, is a
religious duty and is thus a form of worship. Zakat is one of the five pillars of Islam, with the express
purpose of alleviating poverty. But an equally important purpose is spiritual development by creating
sympathy with and compassion for the poor amongst the wealthy.

Excess wealth is a trust and a test. It is given to us so that we can use it for the benefit of others in need.
It tests our hearts for compassion for others when we have more than we can use. Islam is full of
injunctions to spend on others. The social imperatives of generosity and spending on others are given a
concrete shape in the form of the unique institution of charitable trusts or endowments, known as the
waqf (plural: awqaf).

In Islamic history, excess wealth was spent on creating awqaf, as per the original directives of
the Prophet Mohammad (blessings and peace be upon him). Not only was there an effort to spend on
the poor, but there was an effort to do it wisely, to provide maximum benefit to the maximum number
of people for the longest time.5 In the late 18th century, one-third of all revenues of the Ottoman Empire

This is superficially similar to “utilitarian” philosophy of defining social welfare as the greatest good of
the greatest number. There is a subtle but important difference. Individuals do good to others as a

were generated by waqf, showing the strong effect of the command to spend on others. These awqaf
were at the heart of the fabric of social life in Islamic societies, and carried out a tremendous range of
community welfare functions.

Prior to the twentieth century a broad spectrum of what we now designate as public or
municipal services, e.g., welfare, education, religious services, construction and maintenance of the
water system, hospitals, etc. were set up, financed and maintained almost exclusively by endowments….
[V]ery large proportions of real estate in many towns and in the rural areas were actually endowed
property. (Hoexter 1998: 476)

The waqf’s contribution to the shaping of the urban space can hardly be overestimated… A
major part of the public environment in (Islamic) towns actually came into being as a result of
endowments. (Hoexter 2002: 128)

In this way, everyone in the society could expect to be fed, clothed, housed, and educated, since
that was the collective responsibility of the society. It is worth noting that this concept of collective
social responsibility, taking care of each other at the community level, has been lost from view in
modern secular societies. Bowles and Gintis (2012) have recently highlighted the importance of
communities, communal ownership of social spaces, and the harmful effects on social and economic
welfare of their dissolution in modern societies.

Whereas banks are designed to bring depositors the earnings of this world, waqf are designed
to generate earnings of the hereafter. This difference in spirit is the essential difference between Islamic
and Western worldviews. Just as banks compete to find the best investments in Dunya (the temporal
world), so the awqaf compete to find the best investments for the hereafter. The purpose of Islamic
institutions is that of creating cooperation, generosity, trust, love. This purpose is embodied in the
awqaf, designed for social welfare.

The act of giving, softens our hearts, reduces our love of material wealth and worldly life, and
creates reciprocal ties of love and of friendship, which bring worldly rewards of happiness as well as
rewards of the hereafter. Instead of giving our wealth away, which is difficult to do because of our love
of wealth, we can also lend it to others. The rules for lenders are also designed to encourage
cooperation and create love. There is a strict distinction between social loans, to help others in need,
and business loans, for potentially profitable transactions. On social loans, termed Qarz-e-Hasana, given
to help others in need, no interest can be charged. Furthermore, lenders are encouraged to be
considerate of the needs of the borrowers. On business loans, the profit taken must be a share of what
is earned. This aligns the interests of the borrower and the lender: both would like to see the business
succeed, and both participate in the profits of business. In contrast, the interest-based loan is
adversarial, leading “From Universal Brotherhood to Universal Otherhood” in the words of Nelson

means of self-purification. They are encouraged to give away what they love most, and not what would
benefit others the most, which is the logical aim of utilitarian redistribution. The goal of self-purification
would not be served if the state collected compulsory taxes for re-distribution to the poor. See Zaman
(2018c) for a more extensive discussion.

(1969). The lender gets the interest regardless of the outcome of business, and may actually acquire a
foreclosed house or other pledged asset, benefitting from the failure of the borrower.

This illustrates our theme that Islamic institutions are designed to create cooperation and trust,
and reciprocal ties of love and affection between members of the society.

A similar story can be told about insurance. It is nearly unanimously agreed among Islamic scholars that
Western methods of insurance involve gambling and deception, and hence are prohibited by Islamic
law. An Islamic alternative can be created via a radically different method, based on cooperation.
Although both takaful and insurance achieve the same goal of providing assistance to those who suffer
accidental losses, radical differences exist in the spirit of the institutions. The Western insurance
contract is an adversarial contract. The two sides bet with the other and take opposite sides. The gain of
one is the loss of the other and vice versa. If an insured event materializes, then the insured party tries
to present its losses as high as possible, while the insurer tries to minimize the estimates of damage.
Because of the well known “moral hazard,” there is massive amounts of fraud on both sides, as insurers
defraud customers, and customers make false claims to defraud insurance companies (Collinson 2012).

Islamic teachings attempt to create a cooperative society. In this spirit, takaful is a cooperative
contract for mutual benefit. People get together and agree to help each other when the need arises.
Institutionally, all people place money in a common pool that is meant for use by whoever needs it.
Islam emphasizes self-sufficiency, and discourages being a burden on others. Those engaged in a
cooperative contract will try to take care of their own needs whenever possible, and resort to the help
of others only when necessary. At the same time, we are strongly encouraged to seek out opportunities
to help others, and a cooperative takaful contract would spread the burden widely, and make it an act
of worship that we would perform gladly. There are many ways to implement cooperative insurance
ventures, some of which are actually practiced in many areas. For example, in extended families, clans,
and family businesses, it is understood that people will take care of each in times of need. Thus, it is
feasible to use a cooperative model for takaful in the real world; what is required is strengthening of
social ties. Creating social ties of love and brotherhood within the ummah (Muslim community) is one of
the primary goals of Islamic teachings. Unfortunately, the process of colonization destroyed the organic
and historical institutional structures of Islamic societies. Islamic economics is the theoretical framework
for the ongoing effort to replace colonial institutional structures by original Islamic ones. This is a
difficult task, because multidimensional efforts are required on legal, political, regulatory, and social
fronts. Most takaful companies in the Islamic world are half-way houses towards the required changes.
They attempt to achieve compliance in form with Islamic laws, while retaining the adversarial format of
the Western contract. The effort is ongoing to create genuine takaful that complies in body and spirit
with Islamic teachings (Zaman 2015c). Like all Islamic institutions, takaful also tries build the bonds of
brotherhood and love through generosity and practical steps of helping each other in difficulties.

There is a very important conceptual difference in the process of production of goods and services
between Islam and capitalism. Human lives are not for sale at any price. Many verses of the Quran and
sayings of the Prophet attest to the infinitely precious nature of human life. For instance, saving one life

is considered as equivalent to saving all of humanity. When death comes, all the treasure in the world
cannot purchase additional time. All of the gold in the world cannot buy love between the hearts.
Contrary to the idea promoted by capitalism that we are all interchangeable parts within a machine for
the production of wealth – human resources – Islam teaches us that every moment of our lives is unique
and precious beyond price.

As Polanyi (1944) writes, capitalism requires a labor market—the ability to buy and sell the
fabric of human lives—for use as factors of production. When lives are not for sale, the process of
production must be organized differently. Like all acts of a Muslim, the production of goods and services
in an Islamic economy is an act of worship. In order to achieve this goal, the firm must have provision of
goods and service to society as its goal, radically different from the bottom line of profits currently
taught in MBA programs all over the world.6 Islamic firms reverse the relationship between services and
profits. Instead of providing service as a means of generating profits, Islamic firms should earn profits in
order to be able to provide long-run sustainable services. Instead of making money the bottom-line that
must be maximized regardless of ethical or social considerations, we consider the provision of service as
the bottom line to maximize.

The concept of halal earnings is at the heart of Islamic theories of wages and profits. (Halal
means permissible in Islamic Law.) Any earning must be justified by provision of benefits to others in
rough equivalence to the amount of the earning. This is why winning a lottery, or a gamble on the stock
market, does not qualify as a halal earning; no social benefits were provided to justify the money
earned. In pursuit of maximal provision of service to the creation of God, as the most excellent means to
worship of God, we may earn legitimate profits for several purposes:

1. Profits will be needed to keep employees motivated and happy in their provision of service, to
ensure that their personal needs are taken care of adequately. We are all responsible to provide for
our own personal needs and to fulfil our social responsibilities to near-kin before attending to
2. Profits may be needed to make investments and to do research to expand the scope and efficiency
of services and products being provided.
3. Profits may also be required to cope with unexpected contingencies in an uncertain future.

For all of these reasons, when an Islamic business earns profits, that is not the goal of the
business. Rather, at the end of the year, the bottom-line would be amount of service that the
organization was able to provide to humanity.

This placements of profits above all ethical and social concerns is at the root of the global ecological
disaster currently being faced by humanity as a whole. Even among those who have manufactured and
spread these lessons, the realization of the harmfulness of this education is dawning. For example,
Harvard MBA professor Zuboff (2009) writes:

I spent a quarter-century as a professor at the Harvard Business School, including 15 years teaching in
the MBA program. I have come to believe that much of what my colleagues and I taught has caused real
suffering, suppressed wealth creation, destabilized the world economy, and accelerated the demise of
the 20th century capitalism in which the U.S. played the leading role.

The change in orientation of business is reflected in the institutions of the society. The natural
way of doing business in a cooperative and service-oriented Islamic society is the craft-guild. These
guilds were once widespread throughout the Islamic world. Their devotion to service, and organization
as a brotherhood served many Islamic ideals, and provided meaning to their work. The guilds were
responsible for providing service to the society, and could be called to account for failure to provide it to
all. They were responsible for quality control, internal policing, maintaining standards of service, and
other aspects of professional conduct. The guilds of Al-Andalus were famous for the quality of their
products, innovations, and efficiency in production (Vadillo n.d.). Similarly, guilds of the Ottoman Empire
contributed vastly in terms of creativity and productivity (Yildirim 2006).

If the spirit of service is replaced by the spirit of profit making, then guilds become a menace to
society. A guild of doctors can make tremendous profits by threatening to withhold vital services. In the
jungle, where everyone is out for personal profits at the cost of society, competition is best. Free market
theorists argue that competition can lead to lower prices. Of course, the ugly reality is that oligopolists
drive out the small competitive firms and charge hugely inflated prices because of their market power
and control over the political process. For example, medicines cost 300 percent more in the USA,
compared to global prices, due to the enormous power of the pharmaceutical lobby. It is only recently
that guilds, which were tarred and feathered as evil monopolies in the era of free markets, have been
recognized as an essential component of the social fabric in traditional societies (Lucassen et. al. 2008).

Islam envisions the creation of a society of humans concerned for the welfare of each other. It
does not allow one person to undercut the offer of his brother for the sake of personal profits. The best
modes of doing business differ radically in a cooperative society of civilized human beings and in a jungle
of cut-throat competition. This question is addressed by the “transformative” teachings of Islam: how
can we change social norms from competition to cooperation? This was demonstrated in practice by the
work of the Prophet Mohammad (blessings and peace be upon him) who transformed the ignorant and
backward Arabs into world leaders who were charged with the mission of spreading the good
throughout the world. The key to the process of change is the internal spiritual change driven by the
conquest of personal desires, which must be replaced by the love of God and all of His creation. The
service of the creation of God, for the sake of the love of God, is the highest form of worship in Islam.

The radical differences between Islamic social and institutional structures and those of capitalism stem
from the underlying conception of society. Western economic theory views the world as a jungle ruled
by the survival of fittest, where everyone is out to do the best for himself, regardless of any damage
done to others. Islam acknowledges that these base tendencies exist in all of us, but it also informs us
that everyone has the potential to rise up above these tendencies and to become the best of the

In order to create this transformation from competition to cooperation, Islamic laws about labor
are structured as interlocking sets of complementary rights and responsibilities. The right of an
individual to receive aid from society in times of need derives from the person’s responsibility to do the
best to provide for him or herself. The Islamic work ethic is based on the idea that taking the property of
another unjustly is not permissible. The laborer works to fulfill the obligation created by the contract
between him and the employer. This is not simply a contractual obligation. In Islam, the worker has a

religious obligation to fulfill the requirements of the job. A worker who shirks on the job earns a wage
that is not justified, and this is haram. To reciprocate, employers should treat workers with dignity and
respect, and maintain equality between employers and employees in terms of their social status (in
particular, clothing, housing and food). In contrast, in capitalist societies, an employer generally has a
higher status than workers. This leads to standard critiques, originating from Marx, where the capitalist
is regarded as an exploiter who receives a financial reward for the mere act of ownership, not for work

Like Western firms and businesses, an Islamic firm consists of owners and managers and
employed laborers of many different types. However, the relationship between the laborers and firms is
radically different from that of Western models, and this leads to radical differences in an Islamic theory
of the labor market. In the West, labor is a commodity which is purchased from the laborer, and placed
at the disposal of the capitalist. The laborer produces the commodity but does not have any ownership
in it, since the laborer’s effort has been compensated with wages. The relationship between the boss
and employee is adversarial. The laborer is compelled to sell labor-time to an employer to earn enough
to provide for a family. It is in the interests of the laborer to minimize time spent laboring and to
maximize earnings received. The capitalist who hires labor would like to maximize the amount of labor
obtained from workers, and minimize the amount they are paid.

All of this changes radically in the Islamic context. Laboring for a living is an act of worship.
Islamic teachings state that working, producing, and obtaining subsistence for one’s family are as sacred
as jihad for Allah's approval and as praying in the form of fasting in the day-time and performing the
prayers in the night. As an act of worship, work is not a dis-utility; conventional theory that equates
wages to marginal disutility of labor does not apply. Instead, labor as a form of worship creates meaning
and motivation for work, in contrast with the alienation and anomie in the capitalist system. Islam also
offers dignity and respect to the laborer. The Prophet kissed the hands of a laborer that had calluses due
to his hard work, and highly praised the act of working to earn an honest living. Islamic teachings
provide for equality between the boss and the laborer. According to a saying of the Prophet,

Your servants are your brethren whom Allah has made your subordinate. So, the man who has his
brother as his subordinate should give him to eat what he himself eats, and to wear what he himself
wears. And do not put on them the burden of any labour that may exhaust them. And if you have to put
any such burden on them, then help them yourselves (in his work). (Sahih Bukhari).

Instead of creating an artificial commodity of labor, where the laborer sells a part of life to
another, Islam views all members of the firm, from the lowest to the highest, as engaged in a joint
enterprise for provision of service. The janitor who cleans the bathrooms in the firm is an equal
participant in the provision of the services to the public, and earns merit for doing so. All elements
required to provide the service participate in the blessings and rewards of serving the creation of God.
This gives meaning to labor in ways that are not possible within capitalism, which treats labor as a
commodity for sale.

Are these just Islamic idealizations, remote from possibility of real world practice? There is
strong empirical evidence that past practices in labor in the Islamic world were substantially different
from those in practice today. Modern labor markets in Islamic societies have moved away from their
Islamic roots, due to the hegemonic influence of the capitalist system of production. However, even
today, the cooperative vision casts shadows on the practice in Islamic countries. Pfeifer (2001) shows

that Islamic firms in Egypt offer significantly higher wages (and have lower profits) than comparable
non-Islamic firms. This and numerous other instances show that ideals influence practices, even though
pragmatic considerations and human failings may prevent a complete realization.

The teachings of Islam created a revolution 1450 years ago, leading ignorant and backward tribes to
leadership of the world, and launching a unique civilization that enriched the planet for more than a
thousand years. Over the past few centuries, the reins of global dominance have passed to the West,
which advocates values antithetical to Islam in many arenas. In politics, Machiavelli advocated
deception, cruelty, and ruthlessness, and taught the tactics of shock-and-awe, using fear instead of love
to rule. In economics, the cut-throat laws of competition create efficiency, and selfish pursuit of
pleasure is called rational behavior. If we look at senseless wars, destruction of millions of lives of
innocent civilians, and destruction of our planetary habitat, with extinction of countless species of flora
and fauna, the past century is unique in human history.

The teachings of Islam prophesy that “Islam came as a stranger, and will become a stranger.”
Today, the Muslims in general have forgotten the central message of Islam, which shows how we can
create a transformation which takes us from darkness to light. Islam is focused on the transformation of
human behavior. This internal change is the key to creating an external revolution. Verily, God does not
change men’s condition unless they change their inner selves (Quran 13: 11). Importantly, the Islamic method for
spiritual training does not involve seclusion from the world. Rather, it involves engaging in the struggle
for desired outcomes as a means to spiritual progress. Thus, the process of external and internal change
are undertaken simultaneously, and each reinforces the other. Islam encourages us to carry out the
struggle for bringing the good into the world and to fight against the evil we see, without concern for
success and failure in the temporal domain.

Historically, all civilizations have trained their children to restrain selfish desires, and to behave
in socially responsible ways. European societies launched the unique experiment of attempting to
harness greed for the production of wealth, which would create a paradise on earth. The thought-
foundations for this experiment were well-articulated by Keynes (1930), who said that we have exalted
distasteful and disgusting characteristics as virtues to achieve greater ends:

When the accumulation of wealth is no longer of high social importance, there will be great changes in
the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have
hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human
qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-
motive at its true value. The love of money as a possession — as distinguished from the love of money as
a means to the enjoyments and realities of life — will be recognized for what it is, a somewhat disgusting
morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a
shudder to the specialists in mental disease ... But beware! The time for all this is not yet. For at least
another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for
foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still.
For only they can lead us out of the tunnel of economic necessity into daylight.

This experiment has failed disastrously, and has put the future of mankind in peril. Islam teaches
us that the root cause of the catastrophes facing us on all fronts of human existence is our primitive and
immature spiritual state—labeled nafs-e-ammara. Modern economic theory contributes to this disaster
by encouraging us all to maximally pursue our desires, ensuring that spiritual progress does not take
place. The only path to transformation lies in internal change and spiritual progress, which occurs when
we suppress personal desires and strive for higher causes. Within each human being, God has placed the
potential to rise above the angels. He has shown each of us “the two highways (of good and evil)” (Quran 90:
10) — and left us free to choose. So “Let whosoever wills, choose the path to His Lord” (Quran 73: 19). We are
all given only one chance to live. In the Islamic style, let me conclude with the prayer that God may
guide us to the straight path and fulfillment of the potential for excellence that He has placed within us

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