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FALSAFAH EKONOMI ISLAM (PHILOSOPHY OF ISLAMIC ECONOMICS) DR. HAFAS FURQANI M.Ec CENTRIEFP – FEBI UIN AR-RANIRY Kuliah Umum Ekonomi Islam Seri 1, Biro Rektor, UIN Ar-Raniry, 23 September 2016 INTRODUCTION The Emergence of Islamic economics: Formal emergence: 1976 (1st International Conference on Islamic Economics, Makkah) Main Driven: Practical: to rearrange economic life in accordance with Islamic principles --institutions Intellectual: to develop economics in accordance with Islamic principles --IOK, Islamic economics discipline Supporting Factors: o Mainstream economic crisis: – The mainstream body of knowledge of economics based on the neoclassical school is increasingly criticized for its shortcomings and lack of coherence in “understanding” of real economic problems; lacks “appropriate methodology” to deal with problems and hence “solutions” provided are not comprehensive. ISLAMIC ECONOMICS SCIENTIFIC COMMUNITY’S RESPONSE Responses: 1970’s – 1980’s: bigger picture as a system of Islamic economics 1990’s – now: downstream areas of banking and finance M. Fahim Khan (Essays in Islamic Economics) Observes: After 40 Years, Islamic Economics is not yet recognized as a distinct discipline. Some scholars who have involved in this project have taken U Turn and no more believe that IE is potential to be a discipline. Some have taken position that there is no need for a separate discipline. Conventional (Neo-Classical economics) is sufficient to explain Islamic economics behavior. PROBLEMS IN CURRENT MOVEMENT • Insufficient response and gaps in Islamic economics research program – • Islamic economics as a discipline is still at formative stage. Nevertheless, the discourse of an Islamic economic philosophy that discusses the foundations of Islamic economics to be a discipline – is limited and rather ‘elementary’ as the scientific community shifted the discussion into downstream areas of banking and finance. Lack of foundation of Islamic economics – Developing an Islamic body of knowledge of economics, and/or Islamizing modern economics, cannot be done properly without a clear and coherent philosophical foundation that is projected from an Islamic worldview or vision. Only then can the discipline sustain itself or to provide ‘genuine Islamic alternatives’ to contemporary mainstream economics with the indigenous solutions requested. CHALLENGE FOR ISLAMIC ECONOMICS A serious challenge for Islamic economics is whether it qualifies to be called a “discipline”? Discipline criteria ( Acikgenc, 2003): clear subject matter, well-defined body of knowledge, methodology or methodologies, continuous flow of theories and knowledge accumulation. Does Islamic Economics have the above? THE PHILOSOPHY OF ISLAMIC ECONOMICS SCIENCE ONTOLOGY EPISTEMOLOGY AXIOLOGY • Islamic understanding of economic realities • Islamic economic conceptual foundation New “perspective of economics • Islamic economic methodology • Islamic economic key-concepts • Islamic economic conceptual scheme New “approach” of economics • Scrutinizing the Value-Bias in Mainstream Economics • Infusing Islamic Ethics in Economics New “valueorientation” of economics DISIPLINE DIMENSIONS: Definition, Subject-matter. Scope, Sources of knowledge, Purpose and criteria of theory appraisal, Microfoundations of discipline WORLDVIEW SYSTEMATIZATION IN THE DISCIPLINE CONSTRUCTION Developing the Islamic economics philosophical foundations Understanding economic phenomena/realities Developing the Islamic economics conceptual scheme/framework Developing Islamic economics key-terminologies Developing an Islamic economic methodology to appraise and justify theories in Islamic economics Developing an Islamic economic ethical framework and incorporating those ethics into the body of knowledge and its theories The Epistemological Challenge of Islamic Economics Science The unity of doctrine and realities, ideals and facts, haqiqah and haqq, The Interaction of doctrine, realities, and theory . The Purpose of Theory Appraisal in Islamic Economics The purpose of theory Appraisal in Islamic Economic Methodology To produce economic theory that could “link” the ideals and realities, doctrine and factual experience, values and facts To produce economic theory that is able to “explain” realities and their relationship in totality To produce economic theory that could help in “goal realization” THE CRITERIA IN ISLAMIC ECONOMICS THEORY APPRAISAL The INTERNAL-INTEGRITY Criteria: To see internal fitness of a theory The RELATIONAL-UNITY Criteria: unity of doctrinal, logical and factual dimensions. unity of understanding and explaining realities; transcendental, logical and empirical realm. unity of doctrine and practical realities, ideals/goals and factual experiences, values and facts, normative and positive dimensions, a priori and a posteriori. Doctrinal Integrity THEORY Factual integrity Logical Integrity Methodological Unity (Tawhidic Methodology) A methodology that attempts to unify the object of study; the Realities, doctrine and practical experiences, ideals and facts, normative and positive aspects, haqiqah and haqq. A methodology that is going to fulfill the integrity and unity criteria in Islamic economic theory. Characteristics: INTERACTIVE and INTEGRATIVE approach rather than DISSOCIATIVE or REDUCTIONIST. MULTIPLICITY (plurality) of METHODS in scientific enquiry Gives EQUALITY to all methods of inquiry, but it aims at THEORETICAL INTEGRITY and UNITY to arrive at total understanding and coherent interpretation of reality and reach the ultimate truth. METHODOLOGICAL UNITY: the unity framework of doctrinal, rational and empirical dimensions. Goal: THE UNIFICATION OF MULTIPLE TRUTH: doctrinal truth, logical truth and empirical truth. ISLAMIC ECONOMIC AGENT? Kirzner (2000: 14): “it has long been recognized that economics depends for the derivation of its theoretical propositions, upon its understanding of human nature.” The assumptions of economic man (homo economicus) are essentially constructed from certain ‘visions’ put by economists based on a certain worldview that will guide further development of economics as a science. The notion of economic man is not a value free concept (it is “what ought to”, not “what is”). The basis of the microfoundations of Islamic economics Islamic Man? Equipped with “Islamic assumptions” on his economic behavior The scientific basis as well as directions in terms of research in Islamic economics APPROACH Substantial Approach (Man in Islamic economics) To look at the ideal characteristics of man without ascribing to them an ‘Islamic’ title: • Restrictiveness and exclusiveness of Islam • Classificatory (‘type’ instead of ‘types’ of behavior) • Unfortunate situation/ lack of example Explicit reference to homo Islamicus with ‘Islamic’ terminological values: Formal • Identification of the field of study Approach • scientific clarification based on the (Islamic framework and criteria developed in economic man) behavioral analysis • Strong response in scientific community THE CHARACTERISTICS OF ISLAMIC MAN: EXPLORING FRAMEWORKS AND KEY-CONCEPTS Conceptual Challenges: In developing appropriate “concepts” that are able to capture those messages or spirit In developing a “framework” of how human behavior is to be approached and analyzed. In developing “key-terminologies” to capture the dynamic relationship of individual, state, society and nature in individual agent behavior in Islamic economics. Technical challenges: Genuine (derived from Islamic worldview) Not a patchwork modification Implies the shift of paradigm THE NATURE OF MAN IN ISLAM Process of creation Self-sacrifice or benevolence Nature of Self Enlightened selfinterest Raison d’etre? His existence in realities Self-interested but without hurting others’ interest Selfish behavior The basis of human behavior: Self-interest versus huquq Self-Interest Huquq Unitary and atomistic self-view (emphasizing individual identity) Unitary (static) type of behavior (Self-centred) Static process of choice; self-interest/selfutility as ref. Holistic/Integrated self-view (human is having both individual and social identity) Reciprocity (dynamic) type of behavior Dynamic process of choice- considering other’s interest The motive of economic agent: Utility versus maslahah Utility Maslahah The basis: pain and pleasure defined and calculated at the level of individual Subjective concept, measured at the level of individual (personal basis) Individual’s utility is relatively (might or might be) inconsistent with society’s utility Utility is not measurable or comparable The basis: benefits and harms defined and calculated to the self and others Objective criteria of beneficial and harm (good and bad, vice and virtue) Individual’s maslahah is relatively consistent with society’s maslahah Maslahah is a measurable and comparable concept The cardinal virtue of economic agent: Rationality versus taqwa Rationality Taqwa Self-interest is the foundation of rationality Self-interest as balance sheet of rationaity A rational individual is a utility maximize All his actions are directed to maximize his selfutility Huquq preservation as foundation of taqwa behavior Huquq as balance sheet of taqwa individual calculation A taqwa individual is a maslahah maximizer Taqwa behavior aims at maximizing maslahah in all aspects/dimensions of life WASSALAMU’ALAIKUM THANK YOU