Islam and the Economic Challange.pdf

The collapse of socialism and its centrally-planned
economies in the former Soviet Union and Eastern Europe has
raised a host of critical questions for all concerned with the
ideological future of mankind. Does this represent the final
demise of the socialist system and the unequivocal victory of the
Western doctrine of economic and political liberalism, as is
being claimed by some of the enthusiasts of Western capitalism,
heralding the 'end of history', or does it constitute yet another
phase in the never-ending ebb and flow of history? Does the fall
of socialism of itself vindicate capitalism? If socialism has collapsed
under the weight of its contradictions and inequalities
does that necessarily mean that capitalism has overcome its own
historical contradictions, injustices and failures? If the rise of
socialism was owed, at least in part, to certain perceived failures
of capitalism, how can its collapse mean that those failures
(which prompted the search for alternatives) were illusory?
Euphoria at the fall of a false god aside, the critical questions
that still perplex the mind and conscience of man crave cogent
answers. .
Is/am and the Economic Challenge represents a timely
effort to reflect on these questions, and to suggest that the search
for appropriate answers need not be confined to the Western
experience, that it can profitably be widened to other religiocultural
horizons. It may open up radical new opportunities for
mankind if questing minds will sincerely and objectively
examine the merit of the submission of Muslim intellectuals that
more satisfying and befitting answers to the economic questions
of our time can be found in the Islamic approach to them.
Mankind has experimented, under the leadership of the
West, with four major economic ideologies during the last three
hundred years: capitalism, socialism, nationalist-fascism and the
welfare state. All of them were based on the fundamentallymorality are not relevant to the solution of man's economic
problems, that economic affairs are better settled by reference to
the laws of economic behaviour and not in respect of any social
code of moral conduct. Capitalism built its house on the
principle of unfettered private enterprise, the profit motive and
the mechanism of the market. Socialism sought millennium
through public enterprise, social motivation, and a centrallyplanned
command economy. Fascism represented a distinct
blend of the two resulting in a state capitalism geared to political
aggrandizement and military adventurism. The welfare state is
founded on a system of mixed economy, a form of capitalism
blended with a measured socialist compassion. Despite noteworthy
achievements in contain specific fields, these major
ideologies on the economic stage have failed to resolve the
major economic problems of mankind. Fascism was the first to
fall into the dustbin of history. The latest fallen god is socialism.
It would be the height of folly to assume that, by elimination,
capitalism and the welfare state have been vindicated.
The economic crisis of our times remains as deep and
distressing as ever and can be ignored only at the gravest peril.
There is an urgent need for objective analysis of the entire
economic landscape with a view to finding a fresh approach
which seeks the objectives of efficiency and equity simutaneously
and for all human beings.

Dr. Muhammad Umer Chapra's pioneering work Islam
the Economic Challenge represents one such effort. Dr. Chapra
is a professional economist, educated at the universities of
Karachi and Minnesota. He brings to the task wide experience
of teaching and research in economics. He has been associated
with a number of prestigious academic and research institutions
tike the Institute of Development Economics and the Central
Institute of Islamic Research, Pakistan. He has taught at the
Universities of Wisconsin, Platteville and Kentucky, Lexington,
U.S.A. For the past twenty-six years he has served as Senior
Economic Adviser at the Saudi Arabian Monetary Agency. This
has given him a unique opportunity to drink deep at the wells of
both theoretical knowledge and practical application of
economics. He has also had abundant exposure to the WesternFor the last fifteen years, he has been deeply involved in the
development of an Islamic approach to economics. His earlier
work. Towards a Just Monetary System (The Islamic Foundation,
Leicester, 1985), won wide acclaim in the academic
community of the Muslim world, and brought its author two
prestigious awards - the Islamic Development Bank Award for
distinguished service to Islamic Economics (1990), and the King
Faisal International Prize for Islamic Studies (1990). Dr. Chapra
is thus eminently qualified to address the more fundamental
issue of the economic system for our times.
Is/am and the Economic Challenge is the result of a
decade of research and reflection. In this masterly treatise he
examines with sophistication and academic rigour the three
major economic systems of the Western world, and comes up
with a realistic balance sheet of their achievements and failures.
He also spells out the Islamic approach to the economy and its
problems, and puts forward concrete suggestions for restructuring
the Muslim economies and pursuing new paths towards
strategic developmental planning. In broad terms, his recipe for
the Muslim world comprises development planning together
with the application of a socially-accepted moral filter for the
market mechanism, more broadly-based motivation for economic
effort and fundamental structural reforms to establish a
supporting framework.
Dr. Chapra has dealt with the subject as a trained social
scientist and objective Islamic scholar. His grasp of the
contemporary economic systems and their problems is thorough
and incisive; his presentation of the Islamic economic order is
precise and convincing. His balanced critique of the Western
systems as well as that of the contemporary Muslim society is
presented in a style that is scholarly yet simple, clear and
prescriptive. Is/am and the Economic Challenge is not merely a
treatise in theory, it is of immense relevance to the policy
makers. not merely in the Muslim world, but in the world as a
whole.
I foresee Is/am and the Economic Challenge becoming a
standard work on contemporary economic systems, and a
catalyst for promoting the Islamic approach to the solution of
the economic problems of the contemporary Muslim world.
Or. Chapra's unique contribution lies in the realism of histhought and approach. He identifies the problem with clarity; he
discusses the prevalent approaches with professional distance.
acknowledging the achievements of different experiments
without reservation, and analyzing their failures without
exaggeration; at the same time he expounds the Islamic
alternative with a quiet precision, without apology or affectation.
Dr. Chapra has clearly demonstrated that well-being
cannot be attained through the pursuit of material possessions
alone. and that efficiency and equity can become operational
concepts only if they are redefined in the context of their linkage
to moral values and socio-economic structures. His is a plea for
the rediscovery of man as the centre-piece of economic thinking
and effort. He uses the tools of economic analysis as effectively
as can be done by a good Western economist, but his real
contribution lies in a highly thoughtful effort to build a new
house for economics where it is not tom from its moral
foundation, and where economic effort can take place within a
socio-economic framework that ensures efficient allocation and
equitable distribution simultaneously, and not merely for a
particular segment of society, of humanity, but for all. He strives
to lift economics to the next stage of its evolution when,
drawing upon its moral springs as well as vast empirical
experiences spread over several centuries. it may be capable of
playing an effective role towards general human fulfillment and
not merely material excess for the privileged. If economics is to
become. a real blessing for man, a tool for his well-being, the
missing dimension needs to be restored. Is/am and the
Economic Challenge is a step towards such an economics of
tomorrow.
as well as the Islamic perspectives on economics and society.