STUDIES IN ISLAMIC SOCIAL SCIENCES

Also by Masudul Alam Choudhury

COMPARATIVE DEVELOPMENT STUDIES:In Search of the World View

CONlRffiUTIONS TO ISLAMIC ECONOMIC TIlEORY:A Study in Social Economics

ISLAMIC ECONOMIC CO-OPERATION

FOUNDATIONS OF ISLAMIC POLITICAL ECONOMY(with Uzir Abdul Malik)

TIlE PRINCIPLES OF ISLAMIC POLITICAL ECONOMY:A Methodological Enquiry

Studies in Islamic SocialSciences

Masudul Alam ChoudhuryProfessor ofEconomicsUniversity College ofCape BretonNova ScotiaCanada

With a foreword by Johan Saravanamutta Abdullah

and a chapter by B. N. Ghosh, Abdul Fatah Che Hamat,Muhammad Syukri Salleh and Hanapi Mohd Noor

First published in Great Britain 1998 by

MACMILLAN PRESS LTDHoundmills, Basingstoke, Hampshire RG2I 6XS and LondonCompan ies and representatives throughout the world

A catalogue record for this book is available from the British Library.

ISBN 978-1-349-26181-9 ISBN 978-1-349-26179-6 (eBook)

First published in the United States of America 1998 by

ST.MARTIN'S PRESS,INC.,Scholarly and Reference Division ,175 Fifth Avenue, New York, N.Y. 10010

ISBN 978-0-312-17516-0

97-3011CIP

) and index.

Library of Congress Cataloging-in-Publication DataChoudhury, Masudul Alam, 1948-Studies in Islamic social sciences / Masudul Alam Choudhury.p. cm.Includes bibliographical references (p.ISBN 978-0-312-17516-0 (cloth)I. Islam and the social sciences . 2. Sociology, Islamic.3. Islam-Social aspects . 4. Islam-Economic aspects. 5. Islam andeconomics. 6. Islam and state. I. Title.BPI73 .25.C49 1997297.27-dc21

© Masudul Alam Choudhury 1998Foreword © Johan Saravanamutta Abdullah 1998Chapter 8 © B. N. Ghosh, Abdul Fatah Che Hamat, Muhammad Syukri Salleh andHanapi Mohd Noor 1998

Softcover reprint of the hardcover 1st edition 1998

All rights reserved. No reproduction, copy or transmission of this publication may be madewithout written permission .

No paragraph of this publication may be reproduced, copied or transmitted save withwritten permission or in accordance with the provisions of the Copyright, Designs andPatents Act 1988, or under the terms of any licence permitting limited copying issued bythe Copyright Licensing Agency , 90 Tottenham Court Road, London WIP 9HE.

Any person who does any unauthorised act in relation to this publication may be liable tocriminal prosecution and civil claims for damages.

The author has asserted his right to be identified as the author of this work in accordancewith the Copyright, Designs and Patents Act 1988.

This book is printed on paper suitable for recycling and made from fully managed andsustained forest sources.

10 9 8 7 6 5 4 3 2 I07 06 05 04 03 02 01 00 99 98

DOI 10.1007/978-1-349-26179-6

This book is dedicated to the present and futurestalwarts of an international programme in Islamicpolitical economy, the seeds of which were sownin the International Project in Islamic PoliticalEconomy (IPIPE) at the School of Social Sciences,the Science University of Malaysia, in 1995

Contents

List ofFigures and Tables viii

Foreword by Professor Johan Saravanamutta Abdullah x

Acknowledgements Xli

Notes on the Contributors xiii

Introduction XIV

Glossary ofPrincipal Arabic Terms xvii

Comparative Islamic View in the Methodology of the SocialSciences I

2 The Framework of Islamic Methodology in the Social Sciences 21

3 Issues in Islamic Political Economy 47

4 Perspectives of Institutionalism in Islamic Political Economy 86

5 The Islamic World View and the Question of Development III

6 Human Resource Development in the Islamic Perspective 146

7 Development Cooperation in the Islamic Perspective 180

8 Islamic Financial and Socioeconomic Institutions inMalaysia: Examining Viability of the Interactive Worldview(by B. N. Ghosh, Abdul Fatah Che Hamat, Muhammad SyukriSalleh and Hanapi Mohd Noor) 219

9 Conclusion 227

References 229

Index 248

vii

List of Figures and Tables

Figures

1.1 Tripartite relationship, structural dualism and endogeneityof structural dualism 15

2.1 Contrasting domains of perceptual pluralism and worldview 26

2.2 Denseness of knowledge space 382.3 Theory construction in the Islamic world view 403.1 The simple elements of the Shuratic process 513.2 Interactions among the principles and instruments of

Islamic political economy 693.3 Pricing and resource allocation according to the principle

of universal complementarity 814.1 Islamic versus neoclassical approaches to household

economic decision making 1054.2 The interactive relations between micro-Shuras and the

Islamic state in a national and global perspective 1095.1 Boulding's total social system in the development

framework 1135.2 The money-transaction interrelationship in Islamic political

economy 1255.3 The general theory of Islamic socioeconomic development

in the knowledge-centred world view 1365.4 Population - per capita GDP relationship in neoclassical and

Islamic perspectives 1436.1 A general picture of social well-being in terms of resources,

goods and services 1596.2 Classification of human resource in the Islamic framework 1616.3 Construction of the Islamic social well-being function in

the case of population-development complementarity withpopulation as a human resource 178

7.1 Tripartite relations in mercantile Eurocentricity 1837.2 Global resource allocation in the midst of a hegemonic

world-system 1937.3 Resource allocation and globalisation in the Ummatic

concept 207

viii

List ofFigures and Tables ix

7.4 The rise of Islamic development cooperation and its conflictwith mercantilist Eurocentricity 211

Tables

7.1 Selected external-sector macroeconomic indicators for olemembers 199

8.1 Assets of the Malaysian financial system, 1970-93 2208.2 Key indicators of the performance of the PMFB, 1989-93 2238.3 Assets of the STM and certificates issued under the family

takaful, 1989-93 224

Foreword

I had the pleasure and the honour of meeting Professor MasudulChoudhury when he was Visiting Professor at the School of SocialSciences at our university from April till September 1995. I was immedi­ately struck not just by the drive and commitment to a cause of the goodprofessor but also by the cerebral power with which he endowed hisfavoured subjects . I needed no further convincing after I stepped into thefirst of the seminar series we organised in his honour and keenly followedsome of the other presentations (when time permitted) to pick up thethreads of what has now turned out to be a pioneering work in Islamicsocial scientific epistemology and ontology.

Let me first commend roundly and sincerely Professor Choudhury forthe publication of his tome and express on behalf of the School of SocialSciences, Universiti Sains Malaysia, our heartfelt thanks for his inspiringand fruitful sojourn with us in 1995. That sojourn has not only broughtforth this book but also helped to give birth to what promises to be aJournal of Islamic Political Economy at an imminent future date to behoused here in Penang as well as a programme in Islamic politicaleconomy to be offered by the School of Social Sciences in the near future.In connection with his impending visit, the School also organised the in­augural biennual International Conference on Islamic Political Economyin December 1994 at which Professor Choudhury was a keynote presenter .

As I read it, the importance of Professor Choudhury 's work is its subtleengagement rather than total disengagement with 'Western' epistemologyand ontology as manifested in the social sciences. His deep understandingof Western traditions has allowed him to define what constitutes anIslamic world-view based on the concept of Tawhid, denoting holism andunity . However, at no point in his writing does Professor Choudhury callfor a debunking of the rigour and systematic thinking as well as the neces­sary scientific tools that have often taken Western science to great heights.In delving into an Islamic political economy, the principles of the Islamicperspective guide rather than supersede the scientific approach to knowl­edge. Professor Choudhury is himself a consummate economist schooledin the best mathematical traditions of that discipline. His approach, which

x

Foreword xi

is at once liberal and Islamic. underscores the strength of his work and Ihope it will inspire other Islamic scholars to follow suit.

DeanSchool ofSocial SciencesUniversiti Sains Malaysia

JOHAN SARAVANAMUTIU ABDULLAH

Acknowledgements

When wntmg this book I benefited from many sources. First, I amindebted to the School of Social Sciences, the Science University ofMalaysia (USM), which invited me as Visiting Professor of Economicsfor the period April-September 1995. This occasion provided the opportu­nity to present the chapters of this book as a series of lectures in theSchool of Social Sciences to the students and faculties ofthis university. Ishall always cherish fond memories of the most cordial and congenialenvironment for collegial interactions that was provided by the School ofSocial Sciences during this time. It is therefore only appropriate tomention the names of Professor Johan Saravanamuttu Abdullah, Dean ofthe School of Social Sciences, Dr Abdul Fatah Che Hamat, Chairman ofthe Economics Programme at this School, Dr Mohammad Syukri Salleh,Chairman of the Development Programme at this School, and a host ofother colleagues, who were so helpful, assertive and kind to me in myproject.

Many thanks also go to the University College of Cape Breton, whichallowed me the opportunity to avail myself of the abovementioned visitingprofessorship in Economics.

I was fortunate to receive an early memorandum of agreement fromMacmillan Press Ltd. This enabled me to prepare the manuscript from myUSM lectures within a fairly short period of time.

Finally, I shall always remain most grateful to my family - a loving andcaring wife and four boys busy with study, sports and extracurricularactivities - for bearing my lack of attention to them during my scholarlypursuits .

Professor ofEconomicsUniversity College ofCape Breton

xii

MASUDUL ALAM CHOUDHURY

Notes on the Contributors

Johan Saravanamuttu AbduUah is Professor of Political Science of theSchool of Social Sciences, Science University of Malaysia, Penang,Malaysia.

B. N. Ghosh is Professor of Economics at the School of Social Sciences,Science University of Malaysia.

Abdul Fatah Che Hamat is Lecturer in Economics at the School ofSocial Sciences, Science University of Malaysia.

Hanapi Mohd Noor is Lecturer at the School of Humanities, ScienceUniversity of Malaysia.

Muhammad Syukri SaUeh is Associate Professor at the School of SocialSciences, Science University of Malaysia.

xiii

Introduction

This book comprises a set of lectures that were given to university-widefaculty members at the School of Social Sciences, the Science Universityof Malaysia, during the author's visiting professorship in Economics therebetween April and September 1995. This was a most fortunate opportunityto interact with learned colleagues and discuss with them the many concep­tual, applied and technical issues of Islamic social sciences in general andIslamic political economy in particular. These discussions took place at amost exciting time in Malaysia's history as it was laying down the buildingblocks of a caring and civil society that will mature into an industrialisednation by the year 2020. This was also a time when many issues concerningsocioeconomic development and a broadly interactive multifaceted deci­sion making of a truly participatory nature in Malaysian national life werebeing debated. In addition my lectures were presented at a time whenMalaysia was making bold and innovative strides towards the Islamisationof its national economy, institutions and policies . Hence this book is anattempt to lay down the conceptual, applied and technical aspects of awide-reaching model of Islamisation in an age of globalisation .

In this age of globalisation, while nations are being tied together in aborderless world by rule-based institutional preferences and policies, newquestions and a fresh search for greater social well-being for the humanrace have risen to the surface. These questions are part of an inexorablethrust for the discovery of true freedom from the yokes of the Eurocentricmachinations of Western empires that has gone on for so long and underso many guises. The questions have continued to be asked and are raisedin deeply critical ways both intellectually and politically as the process ofglobalisation enforces its capitalistic order and its new mercantilism inmanifest ways. Questions such as the 'end of history' often used to conveyglobal convergence to capitalism and the Western institutional framework,are being critically rejected for alternative global arrangements. Thispursuit is occurring more at the intellectual level than at the political levelacross nations states, but the advance towards globalisation is opening updistinct opportunities for interface and dialogue between policymakers andintellectuals in the search for social well-being. In the midst of the para­digm of sustainability, the nature of the intellectual inquiry in which othersmust join for the quest for truth, is one that both sustains and in tum is sus­tainable by its inner strength . What other premise of this unique inquiry be

xiv

Introduction xv

but of knowledge! Knowledge here presents itself as interactions attainedamong agents through extensive participation. Such knowledge formationgenerate higher levels of the common good an example of which is socialwell-being (Agius, 1990).

This book is a project towards that continuing theme of the Islamicworld view of economy-society-institution interactions in national andinternational forums, wherein individual and group preferences are createdand sustained by knowledge as interactions. In tum, such interactionsregenerate knowledge to higher levels of truth. Truth and the medium ofknowledge remain the most immutable features of all systems. In 1931Alexander Gray wrote of the impermanence of all shades of economicdoctrine: 'Economic science, if it be a science, differs from other sciencesin this, that there is no inevitable advance from less to greater certainty;there is no ruthless tracking down of truth which, once unbarred, shall betruth to all times to the complete confusion of any contrary doctrine'. Thisincessant search for truth presents an alternative scope for an alternativeeconomic reasoning to today's socioeconomic problems.

The search for ultimate truth in the social sciences, like unificationtheory in the natural sciences, revolves around an immutable world viewpremised on knowledge and leading to unification . It presents reality in allshapes and forms, small and large, and in every aspect of the sciencesagainst the backdrop of the universal principle of unification. This is theonly truth that remains immutable in both science and experience. It is atruth that emanates from the divine roots of knowledge and presents theprinciple of divine unity as manifest in the laws in all of reality . Conceptsgain their meaning and purpose in and through the Divine Laws . Suchlaws increasingly unify all of reality in the premise of knowledge, as suchknowledge flows are progressively derived from the divine roots. This isthe central message of this book with regard to the varied issues and prob­lems of the social sciences. We will examine at length the relationship offlows of knowledge to the Divine stock of knowledge. We will study andapply this knowledge-centred relationship to contemporary perspective ofa normative world view.

The stock-flow unification world view of knowledge is presented herewithin the framework of an interactive-integrative model premised on anevolutionary epistemology. This bestows on the world and its agents alearning-by-doing power to know and to unify choices. The other term­inologies used in this book for this same process of unification by interac­tion, integration and evolution - all of which are premised on the DivineLaws and their realisation - are as follows: the Shuratic process, the prin­ciple of universal complementarity, and ethical endogeneity.

Introduction xvi

These original contributions to the study of Islamic social sciences aretaken up within the broad framework of science, society, markets, institu­tions , individuals and groups as participatory and interactive decisionmakers to form the centrepiece of this book.

Within the framework of this interactive-integrative world view theproblems of epistemology, development, political economy, institutional­ism, globalisation, markets and science are brought together to develop anIslamic world view of the social sciences. Malaysia is used as a dynamicexample of a nation state that has committed itself to certain aspects ofIslamic transformation as a rational alternative to present-day economicand social thinking (Ibrahim, 1990).

At the same time the scientific and epistemological picture, and theinstitution-society-economy linkages of the knowledge-centred worldview presented here cause this book to be of credible worth to all thosewho pursue science devoid of prejudice. The message is thus of universalinquiry in the social sciences, political economy and scientific methodol­ogy. In these respects this book opens up a wealth of original inquiry andquestions for all social scientists in the perspective of a different postmod­em outlook on the interrelationship between economy, society, institutionand science (Choudhury and Hamat, 1995).

x vi

Glossary of Principal ArabicTerms

Adah Customs.

Ahadith Sayings of the Prophet Muhammad.

Ahkam Rules of life and thought derived by the method of Ijtehad(see below) applying to the socio-scientific order.

Akhira Hereafter, the Final Event of creation.

Al-Haqqa Truth and Certainty premised on the Divine Laws.

Al-Ilm Knowledge to know God's Unity and His creation.

Al-Istihsan-wal-Maslaha Preference formation on matters determiningthe Shari'ah appropriateness of these for the public purpose.

Allah Monotheistic Creator, here also referred to as God.

Amanah Saham Shareholding in Malaysia to assist the poor and under­privileged and help integrate them in a modern society.

Ansars Protectors of believers (classically used in the Qur'an to meanresidents of Madinah who protected the evictees of Makkah,Muhajirin (see below); also used for supporters of the Prophet Isa(Jesus).

Ayath aI-Allah (Ayath) Signs of God as creational indicators of God'sGreatness.

Dhimmis The minority of the Islamic State entrusted (Dhimma) forprotection under Islamic Law.

Dhururiyyath Necessaries of life to guarantee social well-being ofindividuals.

Eid al-Adha Festival of sacrifice to commemorate and take spiritualstock of Prophet Abraham's dream in which he was asked by theangel to sacrifice his son Ismail for the love of God. But whenAbraham passed this test by his willingness, he was asked in hisdream instead to substitute a lamb.

xvii

xviii Glossary of Principal Arabic Terms

Falah Well-being in the broad sense of the term,

Fard Ayn Obligatory knowledge and learning in Islam and belongs tothe acquisition of religious knowledge of Islam .

Fard Kifaya Recommended but not compulsory for the Islamic existenceof the individual.

Fiqh The science of interpreting Sunnah (see below).

Gharar Speculation as distinct from risk and uncertainty.

Hablum-Minallah Individual duties directly to God.

Hablum-Minannas Individual duties to fellow beings.

Hajiyyath Comforts of life to guarantee higher levels of satisfactions ofsocial well-being.

Hajj Pilgrimage to Makkah by Muslims.

Halal Permissible things and actions under Islamic Law.

Haram Forbidden things and actions under Islamic Law.

Hima Protected lands for ecological purposes practiced by the ProphetMuhammad and subsequently in the classical Islamic society.

lbadah Worship in the Islamic sense .

ljma Social consensus, here taken in terms of all matters relating to thesocioscientific application of Shari'ah (see below).

ljtehad Authoritative research to develop rules of life and interpretationand extensions of Islamic Law in reference to Qur'an and Sunnah(see below).

lslah Goodness and piety .

Israf Waste both in consumption and production.

Jahannum Hell , the Final Place of Perdition as ordained by the DivineWill in the Qur'an.

Jannab Heaven, the Final Resort of Divine Bliss as ordained by theQur'an.

Jizya Tax on the non-Muslim inhabitants of an Islamic State who do notpay and do not receive the benefits of tax payments on Muslim citi­zens, called Zakah (see below).

Glossary ofPrincipal Arabic Terms xix

Khalq-in-Jadid Re-origination of creation, meant both in terms of thecontinuity of creation and in terms of the Final Event, Hereafter(Akhira) .

Lauh Mahfuz The essence of the Qur'an, also mentioned as the Tablet.

Mubah Undetermined things and actions between Halal and Haram(see above) .

Mudarabah Profit and cost sharing in Islam.

Muhajirin Evictees from Makkah who were driven out by the unbeliev­ing tribe of Qureish and who then took refuge with the Ansars , newMuslims, in Madinah.

Musharakah Equity financing in Islam.

Mutakallimun Islamically learned scholars.

Qiyas Analogy as a method in forming Ahkam (see above) out ofShuratic (see below) discursions. It is practiced particularly by thevery learneds in Islam (Mujtahids) .

Qur'an Revealed Book to the Prophet Muhammad.

Riba Financial interest, but strictly any increase taken over the dueworth of a thing in monetary or physical terms.

Sharee Members of the Shura (see below) who are required to have highintegrity and knowledge of Shari'ah.

Shari'ah Islamic Law.

Shura (hence Shuratic) Islamic consultation explained in the Qur'an as auniversally discursive process governing the Islamic socio-scientificorder.

Sidrathul Muntaha The celestial flight of the Prophet Muhammad to therealm of perfect knowledge to the extent ordained by Allah to him.

Sunnat aI-Allah Divine laws.

Sunnat al-Rasul (also Sunnah, Risalah) Guidance of the ProphetMuhammad.

Tahsiniyyath Refinements of life as the third higher category of goods tosatisfy social well-being.

Taqwa God-consciousness.

xx Glossary ofPrincipal Arabic Terms

Tawhid Oneness of God.

Tazkiyyah Purification of self and society by means of the actions andapplications of Shari 'ah.

Umm al-Kitab The Qur 'an, meaning mother of books, also the essenceof Qur 'an and hence Lauh Mahfuz.

Ummah World nation of Islam understood geographically and epistemo­logically in terms of unity of knowledge and action, thus alsoummatic.

Uif Traditions.

Usul al-Shari 'ah The foundation of Shari'ah.

Uswatul Hasanah A nation of goodness, guidance and bliss.

Zakah Islamic wealth tax levied on savings and assets existing either inliquid or disposable forms (jewelry and animals) net of a givenexemption for the fiscal year (Nisab).