Wednesday, 25 March 2015

Why Muslims Don't Need Adam Smith

Early Islam and the Birth of Capitalism, revisited

Assalaam alaykum,

When I posted Benedikt Koehler's video and article last year, I somehow managed to miss a summary of his book that had been published only a few week earlier. Koehler's conclusion is as follows:

"Indeed, Islamic societies today looking to invigorate economic dynamism do not need to prop on to their economies institutional templates from abroad: a complete set of policies regarding competition policy, consumer protection, and fair trading is contained in the economic reforms of Muhammad and his early successors. Arguably, the roots of Chicago economics lie in seventh century Medina."

Another article that argues the same point is by Guy Sorman, who concludes:

"Popular capitalism is the only way out of misery and chaos. Enlightened Arabs should proclaim it, not by imitating the West or importing Western values, but by rediscovering their own faith and history. Adam Smith is not needed in the Arab world. Muhammad's life is enough of a reliable model to rekindle economic growth and opportunities for the people."



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Miskeen said...

I would be slightly cautious in generalizing capitalism is Islam. We have seen such before where socialism was equated to Islam and so on when socialism was popular. Although the book might be good in removing or balancing out the conspiracy theories surrounding capitalism that certain proponents in Islamic currents adopt, and seeing positives in capitalism and similarities with Islam, but at the end of the day, a jurist will have to come to judgement on matters without being negatively influenced by one or the other, or being restricted to a age that will get outdated tomorrow.

Mahdi Lock said...

To quote my friend Dr Adi Setia, "Islam is for capital without being capitalist, just as it is for the social without being socialist."

I am not generalising that Islam is capitalism. What Koehler and Sorman are pointing out is that we Muslims have our own tradition of free trade and free enterprise, and it antedates any similar tradition found in the West. Therefore, if Muslims want to alleviate poverty and enjoy prosperity, there is no need for them to resort to or to import Western economic ideas and institutions. Rather, they simply have to look to their own history, starting with the economic practices of the Messenger of Allah, may Allah bless him and grant him peace.

The stifling, stuffy bureaucracies, which are the legacy of the French and the Ottomans, ended up being the major cause of the so-called Arab Spring, and therefore they have to go.

And Allah knows best.