Methodology of Islamic Economics PDF

Methodology of Islamic Economics Resa Mae C. Laygan Department of Economics Mindanao State University-Iligan Institute of Technology PPT content adopted from the lecture of Assoc. Prof. Dr. Mohd Mahyudi  Learning objectives: To increase awareness on epistemology (theory of knowl...

Methodology of Islamic Economics Resa Mae C. Laygan Department of Economics Mindanao State University-Iligan Institute of Technology PPT content adopted from the lecture of Assoc. Prof. Dr. Mohd Mahyudi  Learning objectives: To increase awareness on epistemology (theory of knowledge) To gain knowledge on the nature of economics, shari’ah, fiqh and usul al-fiqh To understand the broad steps in developing Islamic economics (IE) Methodology of Islamic Economics | 01  Method vs Methodology METHOD Systematic arrangement and ordering of thoughts in a way appropriate to investigation Mode, procedure or way of investigation according to a defined and regular plan Research technique, structured reasoning and tools used to gather data METHODOLOGY Science that deals with methods and their application in a particular field Determines sources from which a particular knowledge can be derived and the approach taken by a research to understand certain phenomena Set standards for acceptability of evidence and reasoning Methodology of Islamic Economics | 01  Islamic Economics and Theory of Knowledge WHAT IS ISLAMIC ECONOMICS? AN EPISTEMOLOGICAL EMPHASIS An approach to interpreting and solving man's economic problems based on the values, norms, laws, and institutions found in, and derived from, the sources of knowledge in Islam (Mohamed Aslam, 1997) Islamic economics is the application of the Qur'anic framework in the study of any individual's and society's effort in welfare improvement (Mahyudi & Abdul Aziz, 2017) Methodology of Islamic Economics | 01  Identity and Motive of Analysis An economics can be considered Islamic provided that it relies upon ontological and epistemological foundations which are consistent with the Islamic worldview, and so long as it is able to help guide to transform their economy toward the realization of welfare as the Islamic worldview dictates (Susanto, 2020) Methodology of Islamic Economics | 01  Definition of Knowledge Conventional/western – Justified true belief (Plato’s version) Islamic – The confirmed belief that conforms to reality [Ali ibn Muhammad al-Jurjani (1339-1414), Kitab al-Ta'rifat (the Book of Definitions)] So, a statement/proposition/claim is knowledge when it can be proven to be true. Therefore, the criteria to establish the truth is vital in building knowledge in a particular science. Methodology of Islamic Economics | 01  Theory of Knowledge: Western vs Islamic Western Theory of Knowledge Islamic Theory of Knowledge Knowledge Channels: Knowledge channels: Senses – primary Hissi (Senses) Reason – derived from logic; both inductive and ‘Aql (Reason) deductive Khabar (Testimony) Authority – secondary information gathered from reliable and credible person or organization Khabar sadiq (True narrative): brought by Prophet (Quran & Hadith); absolute in Standard of truth: Empiricism & secular nature rationalism established by reliable past scholars; reviewable Empiricism: The belief that information should be Ilham (intuition) via purity of qalb (heart) proven by real sense experience and past observation Standard of truth: Reason aided and guided by Quran Secular rationalism: The belief that information & Sunnah should be proven by the power of reasoning based purely on worldly facts and not revelation from God Methodology of Islamic Economics | 01  Two major points of difference: Western vs Islamic point of view 1. Prominence and centrality of revelation how Islamic thought emphasizes revelation as a core source of knowledge and guidance, contrasting with the Western approach, which may rely more on human reasoning, empirical evidence, and scientific inquiry. 2. Standard of Truth: Secular vs. Tawhidic paradigm This revolves around the oneness of God (Tawhid) as the foundation of truth, whereas the Western paradigm often aligns with a secular worldview that separates religion from public and academic life. Methodology of Islamic Economics | 01  Knowledge and Islamic Economics Islamic Economics is a IE is comparatively a new area of study with a promising future provided it is developed via proper methodology. 1976 is usually referred as the birth year of Islamic Economics when the 1st International Islamic Economics Conference was held in Makkah. Islamic Economics is 2 centuries behind conventional economics when compared to 1776; the birth year of conventional economics, which was the year Adam Smith wrote ‘The Wealth of Nations’. Methodology of Islamic Economics | 01  Economics as Descriptive & Social Science Economic theories and principles are descriptive hypotheses and assumption that explain economic realities A descriptive statement is a statement of what is that describes a specific reality or a certain relationship between variables. ✓ Studies aggregate collective behaviour that reflects human nature ; as they are and not as they ought to be, in any given economic scenario ✓ Concerns with policy issues that affect groups ✓ These policy issues involve numerous variable that defy permanence and always demand revision ✓ Not legal rulings to establish hukum shar’ia Methodology of Islamic Economics | 01  Unit of Analysis Enables the economists to study certain economic phenomena and discover the relationships between variables. Tools or methods for reading economic phenomena: i. Observation vi. Interviews ii. Experiences vii. Market research iii. Inductive reasoning viii. Statistical method iv. Survey ix. Quantitative research v. Questionnaires Methodology of Islamic Economics | 01  Shari’ah Literal meaning: Path to watering place; path to guidance Technical meaning: Path to tread for divine guidance; commands, prohibitions; values in order to achieve success in this world and the hereafter Deep understanding on context (waqi’) and priorities (awlawiyyat) would further guide us on how to express the true meaning of shari’ah (i.e., the way; not simply the law) Caliph Umar’s temporary suspension of hudud (Islamic law) during famine Wider than fiqh (ahkam ‘amaliyyah or sanctions on personal conduct) since shari’ah includes ahkam i’tiqadiyyah (belief) and akhlaqiyyah (moral and ethics) too Methodology of Islamic Economics | 01  Shari’ah Law This refers to the set of divine guidelines that govern the behavior of individuals and communities in both personal and social contexts. Components of Shari’ah Matters of belief and worship (Aqaid) – core principles of faith (Aqidah) and acts of worship (Ibadah) Matters of discipline (Akhlaq) – moral and ethics Transactions and Contract (Muamalat) – deals with the rules and laws governing social and economic interactions among individuals in society Righteous Deeds (Amal Salih) – encompass actions that are morally good and beneficial to society Punishments (Uqoobaat) –maintain justice, protect society, and deter individuals from engaging in prohibited activities Methodology of Islamic Economics | 01  Sources of Shari’ah Primary Sources Qur'an: Qur'an is the last revealed book from the Almighty. Sunnah: The Sunnah consists of the sayings of and the actions done and/or approved by the holy Prophet (pbuh) Secondary Sources Ijma': Unanimous consensus among Muslim scholars. Qiyas: Analogy. An extension of law from original text. Ijtihad: Critical thinking. The endeavor of a jurist to infer. Urf: Custom. Maslaha-E-Mursalah: Public interest. Methodology of Islamic Economics | 01  Maqasidu Shari'ah (Objectives of Shari'ah) Primary Objectives: The primary objectives that Shari'ah tends to realize are the protection and preservation of: 1.Religion 2.Life 3.Progeny – family unit. 4.Property. 5.Intellect. 6.Honour. Methodology of Islamic Economics | 01  Maqasidu Shari'ah (Objectives of Shari'ah) Secondary Objectives: 1. The establishment of justice and equity in society. 2. The promotion of social security, mutual help, and solidarity, particularly to help the poor and the needy in meeting their basic needs. 3. The maintenance of peace and security. 4. The promotion of cooperation in matters of goodness and prohibition of evil deeds and actions. 5. The promotion of supreme universal moral values and all actions necessary for the preservation and authority of nature. Methodology of Islamic Economics | 01  FIQH AS PRESCRIPTIVE ISLAMIC SCIENCE FIQH Literally: understand and have knowledge of something Technically: refers to knowledge of the practical legal rules as derived from the particular sources Basic unit of analysis for fiqh The primary sources (Qur’an and Sunnah) provide normative statements on what an individual Muslim ought to do or avoid Final product of fiqh A shari’ah ruling (hukum shar’i) An interpreted communication from the Lawgiver concerning the conduct of mukallaf (an individual able to understand and carry an obligation) Methodology of Islamic Economics | 01  FIQH AS PRESCRIPTIVE ISLAMIC SCIENCE Implications of Fiqh: Prescribes normative actions, rights, and obligations of an individual Muslim Obligatory (wajib): These are actions that are mandatory for Muslims to perform. Recommended (mandub): Actions that are encouraged but not obligatory. Permissible (mubah): Actions that are neutral, meaning they carry no reward or punishment regardless of whether one does them or not. Abominable (makruh): These are actions that are discouraged but not sinful. Prohibited (haram): These are actions that are explicitly forbidden in Islam. Methodology of Islamic Economics | 01  USUL AL-FIQH Methodology that aims to arrive at normative rulings made by jurists through ijtihad (independent reasoning) and bind each and every member of the society. The methodologies adopted by all fiqh schools have a common characteristic: reason subservient to revelation Role of human reason is to extend the normative statement of Quran and Sunnah to new legal issues or to provide answers to new legal problems through certain well-developed methods of reasoning. Methodology of Islamic Economics | 01  USUL AL-FIQH These methods include: 1.Analogy (qiyas): This involves deriving a ruling for a new situation by comparing it to an existing ruling with similar circumstances or reasons. 2. Consensus (ijma’): Refers to the agreement of Islamic scholars on a particular issue 3. Juristic Preference (istihsan): A method where a jurist may depart from a strict analogy if it leads to hardship or an undesirable outcome, opting for a more equitable solution. Methodology of Islamic Economics | 01  USUL AL-FIQH 4. General Public Interest (maslaha al-mursalah): Legal rulings are made to serve the public interest and prevent harm 5. Blocking the Means (sadd al-dhara’i): Preventing actions that, while permissible in themselves, could lead to prohibited or harmful outcomes. 6. Presumption of Continuity (istishab): Assumes that things remain in their original state until proven otherwise (e.g., assuming purity until impurity is confirmed). 7. Custom (‘urf): Recognizes local customs and practices as long as they do not contradict Islamic law. Methodology of Islamic Economics | 01  ISLAMIC ECONOMICS & USUL AL-FIQH Some methods (qiyas, ijma’ and istihsan) may not suit the social and descriptive aspects of Islamic Economics. But public interest (maslaha al-mursalah) and blocking the means (sadd al- dharai’) can usefully be employed to guide Islamic Economics policies. Another fiqh-related source for IE is maqasid al-shari’ah (objectives of Shari’ah) al-Maslahah is the only prime objective of the Shari’ah” (Imam al-Shatibi, 1320-1388) al-Maslahah = Providing benefits and preventing harms Broad enough to be valuable as guiding principles for designing Shari’ah-oriented economic policies Methodology of Islamic Economics | 01  Developing Islamic Economics ISLAMIC ECONOMISTS’ THINKING FRAMEWORK Operational question: How do we use the sources of knowledge in Islam to develop Islamic economics and finance? Ongoing search for solutions: Continuous process of translating worldview into economic vision, then to economic theory and system Methodology of Islamic Economics | 01  TASKS FOR ISLAMIC ECONOMISTS Four distinct fields of work: 1. Proposing ideal economic behaviour of individuals, firms, markets, and governments, and its possible impacts on economy and society 2. Evaluating actual behaviour and impacts of these economic actors 3. Comparing the ideal and actual behaviour, and explaining any gap 4. Formulating strategies to bring actual economic behaviour closer to the ideal Methods used depend on the end sought within each separate field Methodology of Islamic Economics | 01  Conclusion IE is part of practical sciences and human acquired knowledge. Fiqh-inspired IE theory and policy could assist evolution of homo Islamicus (Islamic man) and the Islamic economic system. Unlike other economists, Islamic economists dedicate their efforts to achieve the objectives of Shari’ah while gradually promoting comprehensive compliance to Islamic ethical values in economic practices. Methodology of Islamic Economics | 01  References https://www.iium.edu.my/media/83342/Mahyudi%20Methodology%20of %20IE.pdf https://www.slideshare.net/slideshow/introduction-to-islamic-economics- part-1-fundamentals-of-islamic-economics/249376656#6 Methodology of Islamic Economics | 01