Is Conventional Theory of Economics Totally Irrelevant?

As the following quote from Harvard Professor Zuboff (2009) indicates:

“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.”

We weren’t stupid and we weren’t evil. Nevertheless we managed to produce a generation of managers and business professionals that is deeply mistrusted and despised by a majority of people in our society and around the world. This is a terrible failure.”

I do not agree with the Islamic economists who say we can take from Their Economics whatever does not conflict with our beliefs. This would mean we believe with their economic philosophy and differ only in details.

I do not subscribe to this view

However, Their Economics may be relevant only to study what we may call dark side of human nature

Testing Our Theory of Economics

Will we be able to get the required data and from what source?

In the paper I have given a very brief account of how the theory can possibly be tested.

The main source of empirical data will be based on household surveys that are being conducted in many countries and are more or less standardized

Many of the countries, including several Muslim countries have elaborate network for compilation and collection of statistics on different aspects of society. They conduct opinion surveys also very frequently.

This network can conveniently be utilized to develop data needed for the purpose of Islamic economic analysis in our framework.

Science of Economics Now Carries the Same Significance as Medical Science

One is supposed to heal the sickness of the body of human being and the other is supposed to heal the economic diseases faced by human beings.

Despite so much development in the science of Economics, humanity continues to suffer overwhelmingly from hunger, starvation, extreme unequal distribution of income of wealth, waste of resources, environment pollution, deprivation from basic human needs like education, health, etc.

Why this failure?

An important point to note

It is now well documented that the base of almost all sciences of modern world was laid down during what orientalists like to call medieval ages and we remember it as early period of Islam

Economics is an Exception

Its foundations were laid down less than 300 years ago. And it did not like to pick up anything from Muslim heritage in this area despite that the inventors of Economics had access to the seminal work of scholars like Ibn-i-Khaldun.

The theme of the work of Ibn-Khuldoon was in fact “Wealth of Nations”, which Adam Smith adopted seven centuries later without any reference to Ibn-Khuldun.

“500 years of Gap” in Economic Thought?

Schumpeter, the Economic Historian claimed that there was a gap of five hundred years in history of economic thought, (between 8th century to 13th Century, when Europe was living through dark age). Muslims have now refuted this gap theory. They have shown scientific knowledge in all areas including Economics was thriving in Muslim World during those 500 years. For example see, S. M. Ghazanfar.

It was this period for which CEO of HP (Hewlett Peckard) said

“When other nations were afraid of ideas, this civilization thrived on them, and kept them alive. When censors threatened to wipe out knowledge from past civilizations, this civilization kept the knowledge alive, and passed it on to others.

“While modern Western civilization shares many of these traits, the civilization I’m talking about was the Islamic world from the year 800 to 1600, which included the Ottoman Empire and the courts of Baghdad, Damascus” (Carly Fiorina)

Another point to be noted is that the so much celebrated modern science of Economics, winning a noble prize every year admits that it does not apply to the Third world economic problems where bulk of the humanity lives. It also admits that economic problems like environment pollution, sustainable development do not fall within the scope of this science.

But even for developed economies, it fails to stop recurring financial crisis, business cycles, class conflicts etc

The conclusion is inevitable.

Modern economics is of no use to us or to them (Hardly needs to be proved)

Their methodology is faulty and cannot help us understanding Economics embedded in Islamic system of life

We, therefore, have to Revisit the Foundational Concepts and Thoughts in Islamic Economics and think independently.