|
|
Islamic Epistemological Question Applied to Normative Issues of Trade and Development in the Muslim World1
Islamic
epistemology is premised on Divine Unity as the source of all knowledge. From
this premise are derived flows of worldly knowledge. The emanating
knowledge-flows in relation to all world-systems are shown to give form and
meaning to cognitive and material constructs. This methodology is applied to
the topic of trade and development in the Muslim World. The
Muslim World has gone through a continued regime of low economic growth,
inter-communal trade, high indebtedness and socio-economic problems of
poverty, economic and political instability. The institutions of the Muslim
World, namely the Organization of
Islamic Conference (OIC) and the Islamic Development Bank (IDB) along with
many of the Islamic banks and financial institutions that have mushroomed,
particularly following the days of the high oil revenues and in recent times
by the prospect of profitability in the new financial age, have all failed to
achieve the goal of self-reliance in the Muslim World. The looming question
then is why has this debility in the Muslim World continued, even though many
other regional economic blocs have succeeded in paving the way to their
progress in recent times? It is true that economic integration has been in the
agenda of the OIC and IDB for quite sometime now. In
this paper we will argue that this debility in the Muslim World stems from two
causes. First there is her blind accession to the models of trade and economic
development of the Western genre. These have been forced into the Muslim World
by her member Governments and elites, who
have overlooked the immense costs that are associated with these model
implementations. Trade thus brought about with it diversion into northern
markets, with only a slim 10 percent of world trade flowing between the Muslim
countries (IDB Annual Report, 1999). The
flow of foreign direct investments between Muslim countries is a nil
and there are no effective flows of capital goods between them. These
conditions show that the Muslim countries as a whole suffer from lack of
coordination of their trade policies and fail to generate linkages among
themselves as well among their domestic sectors of the economy. The second
cause of the Muslim debility is the lack of political will, ineffective
institutions, inefficiencies of human resource and technical know-how that
have remained tied to technologies imported from the West and that remain
least adapted to the existing levels of skills and knowledge in Muslim
countries. 1.
Acknowledgment is made to SSHRC grant on "Trade and Development in the
Muslim World". intrinsic
role of participation on an extensive scale. These changes require
institutions, economic agents, finances, businesses and markets that together
respond to the role of participation through actions and responses among the
agents and entities of in these areas. For
the Muslim World a relevance of development must thus commence from her own
epistemological foundations of morals, values, models, methodology, thought
process and the resulting technology, programs, socio-economic order, markets
and institutions. All these together comprise the appropriate framework of the
Islamic political economy capable of defining her own worldview and then
applying this worldview to the issue of trade and development for general
well-being. ObjectiveThe
objective of this paper is to delineate such a worldview or praxis in the
Islamic context that could have the power to help construct a new conscious
future for the Muslim World and mobilize her own resources towards realizing
this future prospect. This new model will be shown to stem from the normative
background of Islamic epistemology premised deeply on Divine Unity as the
source of absolute, perfect and complete knowledge. We will call this primal
source as the Stock of Knowledge because of its immutable and unchangeable
nature. From the Stock that comprises the Divine Law will be deduced flows of
knowledge for understanding the world-systems according to the organization of
thought, axioms, instruments and dynamic evolution of ideas, around which the
multifaceted problems and issues of the Muslim political economy revolves.
This value-based praxis will be shown to be contrary to the theory of
knowledge of the Western genre. Hence the implications on human well-being,
the material and cognitive perspectives emanating from the understanding and
the application of the episteme of Divine Unity through the knowledge-flows
will be shown to be quite different from those gained from Western
epistemological roots. Our next task will be to apply this epistemological
methodology of the Islamic worldview to the practical problem of trade and
development. We will discover here the role of unity of knowledge on the
issues at hand. The
Islamic Epistemological Model
Islamic
theory of knowledge is premised on the Unity of God, which in the context of
knowledge we will treat as the complete and absolute. In mathematical terms we
will refer to this Stock of Knowledge as the primal topology.
Topology is a dimensionless mathematical method capable of creating extensive
relations. In our case we will treat the extensively relational and
process-oriented orders generated by the topology of the knowledge-flows. We
will show below that such relationships between the Stock and flows of
knowledge take the form of a relational process-oriented order. Within and by
it knowledge-flows appear as rules, laws, instruments and guidance, all
derived from a combination of the fundamental sources and are discoursed among
participants in organizations and institutions in every aspect of the Islamic
political economy. The fundamental sources of Islamic knowledge are the Qur'an
and the guidance of the Prophet Muhammad (Sunnah).
Upon these are also the reinforcing consensus of the community and the
Islamically learned. While Qur'an
and Sunnah remain immutable, yet
their interpretation and comprehension are to be continuously evolved by
discourse and consensus. Thus consensus formation assumes a dynamic nature
over time and space in compliance with the immutable nature of the principal
sources. Since
we are treating the episteme of Divine Unity as the primal topology in
mathematical terms, its subsets of elements, which are knowledge-flows and
their induced forms, must also be a topology. Hence the principal
characteristic of unity of knowledge of the Divine origin is carried through
in the nature and function of the knowledge-flows. This unraveling or
manifestation in the material and cognitive worlds from increasing unity among
the various knowledge-induced forms becomes a process of social becoming
within the framework of the unifying entities. Such a process is referred to
as unification of knowledge and its induced forms. Entities
and forms mentioned above are
material and cognitive elements of all kinds of systems, for the Unity of God
as the absolute and complete in knowledge pervades all possible domains. By a system
we will mean a relational order formed by knowledge-flows and their induced
entities. Thus there are knowledge-induced world-systems within which abide
agents, social, economic, scientific and similar variables, their relations in
functional and structural categories and similar systems of interrelating but
diverse entities. If unity of knowledge is to be derived from the divine core
and then carried through in a functional and meaningful way into living
experience, then all the material and cognitive entities together with the
instruments used on them, must be uniquely derived on the framework of unity.
This framework or medium of deriving the worldly laws of unity from their
Divine moorings is called Shari'ah,
the Islamic Law. The agents, institutions and variables of the emerging
world-systems, their relations and complexes of interrelations among further
entities of such diverse systems, all are seen to unify according to Shari'ah.
Here appropriate instruments, programs, policies and methodology are used to
realize this process of unification among the knowledge-induced forms. The
praxis of Islamic epistemology in political economy is thus to derive that
vastly interacting and participatory domain of entities that leads into
dynamic consensus by the exercise of discourse and participation in accordance
with Shari'ah. On a methodological
sense, creative evolution of the continuum of interacting and consensual
entities is seen to be engineered by simulation of such knowledge-induced
states as opposed to attaining optimum states. Optimal states are essentially
non-learning due to their loss of creative novelty. Interactions in the sense
of gaining knowledge-flows
through extensively relational and participatory orders require the existence
of diversity of possibilities. Then between such extensively relational orders
of diverse possibilities emanate the convergent or equilibrium forms. Such a
manifestation of unity by linkages among the Shari'ah
recommended diverse possibilities being of the pervasive nature within and
across relational systems, is termed as the principle of universal complementarily.
We then have complementarily among knowledge-induced entities and their
systems as the sign of integration following from the background of
interactions among diversity of possibilities recommended by Shari'ah.
This is equally the sign of unification through a process of learning. Interactions
thus lead to integration among the material and cognitive entities of the
knowledge-induced domains. Finally, from the interactions and integration
comes about post-evaluation of the performance of the rules, laws, guidance,
policies and programs set in motion by the existing set of Shari'ah
instruments and knowledge-flows and followed by the corresponding organization
of the Islamic political economy. Such a creative evolution is termed here as
the evolutionary stage of the process of unification. The complete process is
formed by interactions leading to integration and these two are followed by
creative evolution towards more of the same kind in continuum. We thus derive
the interactive, integrative and evolutionary (IIE) process-oriented worldview
of unity of knowledge. The
Interactive, Integrative and Evolutionary Process-Oriented Methodology
The
knowledge-inducing process of unification is explained in figure 1 by the
sequences of functional relations appearing and continuing by cause and
effect. We first define the symbols. Figure
1: The
interactive, integrative and evolutionary process (IIE) W
® ® ® ® [q ® x(q) ® SW(q, x(q))]
® [q' ® x'(q') ® SW(q',
x'(q'))]® etc………..W ¯
¯
¯
¯
¯ ¯
Interactions Integration
Evolution
¯
¯
¯
Epistemology
Knowledge unification:
Knowledge unification: of
Divine Unity
Shuratic Process 1
Shuratic Process 2 W
denotes the topology of Stock of Knowledge, which is non-dimensional and
without form, but creates all knowledge-flows and their induced forms. The
same argument applies to 'de-knowledge' as the mathematical complementation
(opposite) of knowledge-flows. The concept of 'de-knowledge' and its model of
rationalism will be explained later on. Since
W is axiomatically complete and absolute, it must close itself in the very
large-scale universe of all space-time subsystems. Consequently, W at the
beginning is shown to complete itself at the end. In other words, W maps on to
itself through the process of the knowledge-flows and their induced
world-systems. The
world-systems are defined by knowledge-flows, {q}, and their induced forms, {x(q)},
which appear as vectors and matrices because of interactions among diversity
of possibilities. Between these entities exists pervasive complementarity as
the sign of unification of knowledge through the {q}-values, which comprise
various tenets of Shari'ah. The
performance of the knowledge-induced world-system is post-evaluated by the
well-being function, SW(q, x(q)),
after the enactment of policies, programs, institutions and the realized
socio-economic order based on the previous values of {q, x(q)}.
The test of the well-being function is on the degree to which unification has
been realized in the sense of interactions leading to integration. Thereafter,
the creative evolutionary function of interactions and integration is shown by
the emergence of new sequences of knowledge-flows arising from the realization
of the material and cognitive proof of unity in a given process. The
corresponding variables appear in the accented form. This knowledge-induced
interactive, integrative and evolutionary (IIE) process continues on in
continuity together with their induced forms, x(q)
and SW(q, x(q)).
One
notes the strong methodological properties of the above IIE-process and
methodology. The deductive premise of knowledge-flows derived is the episteme
of Divine Unity. Continuous reference to this episteme is made in realizing
the process of unification in world-systems and thereby deriving new rounds of
knowledge-induced processes. Therefore, the deductive conception is circularly
integrated with the inductive process of knowledge -- from the world-system to
the emergence of new knowledge-flows. Such a methodology of circular causation
and continuity of unified reality is a strong proof of intrinsic unification
in the Divine roots of human knowledge brought about by cause and effect
between deductive and inductive sensations. Secondly,
we note that knowledge-flows and their induced forms being circularly linked
to each other over evolutionary processes become endogenous in Islamic
world-systems. The IIE-methodology is therefore essentially endogenous in
morals and values. Consequently, by such a praxis the organization of
institutions, technology, policies and instruments becomes endogenous in
nature. Endogenous variables and functions are seen as those that causally
relate with systemic variables and are themselves regenerated within the given
systems under examination. For instance, if price, which is an endogenous
variable relates with money and so does money relate with price level, then
there is an endogenous relationship between money and prices. On the other
hand, if only the quantity of money affects price level and not vice versa,
then money is an exogenous economic entity. Knowledge-flows generate all
variables as endogenous ones except for God and His Stock of Knowledge that
remains the Creator of all. But in the very large-scale universe of all
knowledge at the end, even God becomes endogenous in the end revelation of W. Contrasting
Islamic Epistemology with Occidental Epistemology
In
what ways is the Islamic theory of knowledge as explained by its IIE-methodology,
different from the occidental theory of knowledge? The premise of W as the
functional core of knowledge is missing in the latter. Kant who critiqued pure
reason on the pretext that God cannot be sensed in real-world situations and
hence His existence and functional need lies outside human domain, invoked the
beginning of scientific rationalism (Kant trans. Friedrich, 1987). Before Kant
Descartes on similar grounds propounded his logical positivism premised on a
similar reductionist rationalist philosophy. Popper's falsification hypothesis
and Darwinism are other classes of rationalism that are inextricably premised on
multiplicity as opposed to unity of knowledge (Popper, 1972). In all of these
thoughts we note that rationalism is a praxis of multiplicity as opposed to
unity of the epistemes. Consequently, competition among such falsifying
doctrines replaces the essence of participation and interactions leading to
integration and creative evolution. In occidental epistemology and its
methodology we find no sustained process-oriented worldview or unification of
knowledge explaining such a process. If process exists it remains random.
Furthermore, competition replaces the principle of universal complementarity in
IIE-methodology by the principle of marginal substitution and trade-off in
occidental thought. This principle is most pronounced in all of mainstream
economics that relies on neoclassical economics. From the marginalist origin
also emanates the competing and power-centric nature of institutions, policies
and methodological individualism as opposed to the pervasive worldview of
participation in the framework of unity of knowledge. Eurocentric order and
global governance by large institutions and Governments over weaker ones becomes
the permanent feature of global relations. Issues of trade, development,
technology, education, human resources, institutions, science and culture
revolve within such a relationship. Furthermore,
endogeneity of knowledge-flows is replaced by complete exogeneity of policies
and instruments in the marginalist praxis. Consequently, ethics and values
remain outside scientific domains including political economy. They belong to
compartmentalized subsystems of their own and are differentiated between
themselves. No recursive relationship by cause and effect (i.e. circular
causation as in IIE) can be defined between learning entities and emergent
knowledge-flows. There is no continuity between the deductive and inductive
organization of thought in occidental epistemology of rationalism. The
occidental praxis remains inherently random and unstable by not being unified
and hence open rather than closed. Within this permanently falsifying praxis,
competition leads into the emergence of Darwinian type natural selection
categories out of their previous histories. Thus occidental thought and its
cognitive and material forms move into domains of individuated entities
separated from their previously short-run interacting roots. If
we were to depict occidental epistemology of competing branches of knowledge by
means of figure 1, we would obtain multiple W's.
each of these differentiated roots will generate a path as shown in figure 1,
but only in the very short run. Continuously emanating competition and trade-off
between entities will further atomize the branches of knowledge. Ultimately such
independent branches will result in isolation and non-interactions. All the
properties of the IIE-methodology in respect to unity of knowledge are thereby
lost in the occidental world-systems. Rationalism
and unity of knowledge are thus opposite views of reality (Etzioni, 1988).
Rationalism was thus termed as 'de-knowledge' previously. Its methodology and
worldview being of the non-interacting and non-relational type, it cannot
sustain systemic interrelationships for long. The new systems arising from such
organisms being of the competing type in gaining their optimal share of
benefits, must necessarily adopt the methodology of marginal substitution,
optimization and steady-state equilibrium. All these properties are causally
interrelated with respect to the cessation of learning at the points of optimum,
steady state equilibrium and marginal trade-off in resource allocation.
Contrarily, the continuous evolution of knowledge-flows must reject
optimization. We must then resort to simulation methods of continuous learning
in the Islamic world-systems. The rationalist methodology is thereby linear in
the long run. The methodology of unity of knowledge is continuously non-linear
and complex. Predictability is enforced axiomatically in the occidental
scientific methodology at the expense of realism. Realism is gained in the IIE-methodology
but only bounded predictability can exist over the long run in such a complex
and extensively relational order. Normative
Issues of Trade and Development in
Islamic Epistemological Perspective
We
will commence with the formal nature of the IIE-methodology as shown in figure 1
to explain how this methodology of unity of knowledge applies to the issue of
trade and development from a normative viewpoint. The
endogenous nature of IIE-methodology is reflected in the following
knowledge-induced interrelationships between endogenous money and economy (Choudhury,
1997): If,
X1 (trade flow) ® X2 (financial instrument) ® X3
(quantity of money),
...… (1) then
X3 ® (X1,X2) only by first regenerating a new
q (=q'). It
is the same with the other interrelationships among the (X1,X2,X3)
variables, etc. In
this way, elements of pure economic theory that remain benign to the idea of process
in discourse due to their reliance on the precepts of optimality and
steady-state equilibrium, are replaced by knowledge-induced discursive
interrelationships and their orderly evolution through interactions and
integration across complex relations among the (X1,X2,X3)-variables.
Monetary
Relations in Trade and Development from IIE-Perspective We
will now consider specific applications of expression (1) to issues relating to
trade and development in the IIE-perspective. Money and monetary policy become
endogenous and have a distinct process in price stabilization with respect to
trade and development. We
start by noting that unsustainable relationship between exchange rate, abolition
of interest rate (required under Shari'ah)
and monetary policy arise when money is treated as an exogenous economic entity,
having no intrinsically endogenous interrelationship with the real economic
sector. In an economic and social system the preferences of consumers and
investors may not be sufficiently transformed by existing knowledge-flows
towards changing them into ethical ones. Technological choices may not have been
directed into the choice of appropriate sectoral projects that can establish
one-to-one ‘real order' interrelationships with the monetary and financial
sectors. Projects selected may thus fail to have sufficient linkages among
themselves due to the instability caused by exogenous interactions between the
real sectors and the monetary and financial sectors. Consequently, national
development plans cannot realize the participatory learning process using the
common weal of agents representing these diverse sectors. The framework of
universal complementarity among diverse possibilities remains foreign to the
development planners. The
result of exogenous rather than endogenous money (Choudhury, 1997) and its real
sectoral relationships has made the Muslim countries' become subservient to
hard currency baskets and to interest-based debt financing. This happened
because trade became an instrument of competition among Muslim countries to
penetrate northern markets for hard currencies, while the Muslim regional bloc
could not develop its own independent transaction numeraire
for managing their trade and development matters and valuing their assets.
Cycles of devaluation and borrowing despite high interest rate policy to
stabilize prices and external sector imbalances caused low real value of
accumulated savings. this impeded economic development. The result instead was
the accumulation of large external debts and debt servicing ratios together with
volatile fluctuation in the current and capital account positions. All these
happened in the name of economic growth in which sectors remained de-linked
among themselves. The issuance of money that remains exogenously de-linked from
real economic activity causes monetization of external debt. The result then is
price instability and contraction in investment. Upon
these predicaments the dictates of international development organizations to
organize their policies, programs and institutions in the light of the existing
notions of money, finance and specific notions of structural development by
preferred sectors, caused high volatility of 'portfolio investments'. The
volatile speculative capital that resulted in such short-run capital movements
culminated in the 1997 financial turmoil of Southeast Asia region, causing
currency runoff and the ensuing political instabilities. On
the contrary, the normative IIE-model of linkage, complementarity and
participation necessitates the nature of money and monetary policies to be based
on non-speculative real sectoral activities. Consequently, the demand and supply
of money are determined by market exchange in those goods and services that are
permissible under Shari'ah (Islamic
Law). Yet such a transformation to endogenous monetary regime cannot be realized
unless the prevailing economic and political climate is changed to a
participatory form. In light of the IIE-model we argue that such a
transformation can come about if and only if there is adoption of the
extensively complementary model of unity of knowledge. Realizing this episteme
will require rejection of the prevailing thinking and usage of development
models that are governed by methodological individualism and the economic
epistemology of marginal substitution. The
complementary process that emerges by cause and effect from the episteme of
unity of knowledge in IIE-methodology remains unknown in systems governed by the
epistemology of marginal trade-off, competition and economic rationality. Even
when the topic of interdependence is discussed here, the focus is always towards
a regime of development, coordination of trade and capital market policies and
choices of technology that remains embedded in neoclassical marginalism. This is
testified by increasing marginalizing of the agricultural sector in the
development plans of all developing countries. The resulting prescriptions then
are driven by models of the neoclassical, monetarist and institutional types. Such
models and their underlying theory of growth and development are known to
emanate strongly from the background of the Bretton Woods institutions and their
latter days' sister organizations. If then the Muslim
countries are to import these models and methodologies for Islamic
reconstruction, the core principle of complementarity through diversities, which
is the mark of unification of knowledge in the IIE-process, will always be
contradicted by the foundational neoclassical premise of marginal trade-off. The
consequential nature of monetarism, social contracts and institutionalism will
emerge. Issue
of Appropriate Technology, Trade and Development in IIE-process
The
issue of appropriate technological choice is another important one linked with
trade and development. In the IIE-methodology characterized by its unifying
complementary process among diverse possibilities, dynamic
basic-needs regimes of development make up the moral and socio-economic goal
(Ahmed, 1991). Such regimes are subsequently sustained by ecologically
interconnected technological know-how capable of integrating the grassroots
responses with the higher levels of technology. A social meaning is then
injected into the well-being function of figure 1. Markets for goods in such
regimes are transformed by the IIE-preferences of consumers, entrepreneurs,
lobby groups and Islamic institutions. Such endogenous transformations attune
the appropriate dynamic basic-needs
regimes of development with the acceptance of Islamic change in consumption,
production and distributive menus, self-reliance and the relevant development
futures. Consequently, the issues of price stabilization, debt management,
monetary issues, intersectoral linkages for focusing on real economic activity
are concurrently determined by the appropriate choice of technology and economic
transactions emanating from a worldview of such systemic linkages. They signify
the process of unification of knowledge across increasingly complementing
world-systems.
Choice
of Investments in IIE-perspective
Debt
management and control of volatile foreign investments, particularly those that
come in the form of 'portfolio investments', lured by short-term returns of
speculative transactions, can be attained by maintaining a close relationship
between money and real economic activities. Indeed it was the de-linking between
money and ‘real' economic activity that brought about global volatility,
financial and economic uncertainties in recent years. The excess supply of money
by commercial banks was caused due to inadequate moral suasion by central banks
to control and guide the direction of the quantity of money into appropriate
projects. Money thus flowed into the hands of the wrong kinds of investors. Over
and above this the power of corrupt political systems transferred easy money in
the hands of patrons of speculative ventures. Transparency in the financial
sector was lost. On
the other hand, the IIE-related economic and financial instruments will help
because of their primal determinant of ethical values that are endogenously
embedded in the unification worldview of the IIE-process
through participation and thus financial as well as project-specific
transparency. The processes employed in such a framework of well-coordinated
organization, actions and responses both at the grassroots levels of
policy-making and at the interactive, integrative and dynamic forms of higher
levels of decentralized decision-making are contrary to the doctrines of
marginal trade-off and the hegemonic models of the Eurocentric genre. They are
participatory and hence complementary in nature among all knowledge-induced
entities in this milieu. At
the end, the issues of elimination of interest rate, so strongly required under Shari'ah,
and the consequential determination of stable exchange rates in the Islamic
political economy, becomes centrally linked with the concept of endogenous money
and its monetary interrelations with real sectoral activities. This kind of
complementary relationship between money and real sectors on which the economic
sages (see Von Mises, 1981) have written is normatively prescribed here to
develop sustainable development of the Muslim World along her own
epistemological prescriptions of development and change. Contrary
to the interest-based financing and exogenous monetary approaches there are
cogent sets of Shari'ah prescribed
instruments (IDB Annual Report, 1999). Examples are equity financing, joint
ventures, profit sharing, economic cooperation, foreign trade financing,
leasing, choice of investments for the Islamic investors' portfolio,
development of Islamic secondary financial instruments. Furthermore, during a
maturing Islamic transformation the Muslim World will also have to think about
the development of an Islamic capital market. There would also be need to
protect nascent marketing channels for the products of the grassroots. This
would be brought about by means of specific Islamic financial instruments and Shari'ah
prescribed goods and services in economic transactions. Details of such
financial ventures and development of appropriate instruments must be a matter
for vigorous discourse within the participatory and complementary framework of
institutions and entities governed by the IIE-methodology. Now
on the one hand, resource allocation, equitable distribution and life-fulfilling
opportunities are expanded in the midst of interest-free transactions and
financial instruments within a regime of endogenous money, monetary policy,
financial instruments and authentic development. On the other hand, exchange
rate now ceases to be an issue of monetary policy alone. It is jointly
determined by conditions of productive linkages between the monetary sector and
real economic activities. The economic and socially meaningful performance of
these sectors is determined by prices of exchangeables. These reflect average
costs of production and not marginal cost pricing conditions, because optimal
condition of marginal cost cannot exist in the IIE-simulation methodology. Real
prices now become the determinants of rates of return. They replace interest
rate as an exclusive price of money when money and real sectoral valuation
become complementary in an ethically and systemically interlinked market
environment. Exchange
rate stability is now attained in terms of stable ratio between terms of trade
and the cost of production of commodities transacted in dynamically
basic-needs regimes of development according to the creative evolution of the
IIE-worldview. Such perspectives of the Islamic political economy are contrary
to the theory of interest rate and exchange rate determination as exogenous
policy instruments in the interest-bearing economy or in a system that imports
such methodology from the occidental order. Interest rate cannot be removed by
sheer market forces in a Muslim economy that imitates the macroeconomic policies
and programs based on the concept of exogenous money, promissory notes and
banking methods based on paper money contrary to a statutory 100 per cent
reserve requirement. Consequently, interest rate and exchange rate movements
will remain volatile as long as speculation negates the money-economy endogenous
linkage within the Shari'ah
environment, wherein morally guided human possibilities are continuously evolved
by the IIE-process. Conclusion
This
paper was an introduction to a topic of massive proportion on the theory and
paradigm of trade, development and financial instruments in an Islamic political
economy in the light of the IIE-model. The epistemology of this worldview is
premised on Divine Unity, which acts as the foundation of unity of knowledge. It
governs and sensitizes the world-systems with a universal process-oriented
methodology of unification among entities within and across systems. When
functionally and structurally comprehended and used, such a paradigm of unity of
knowledge becomes not merely a powerful alternative to the occidental
epistemological worldview, but also powerful because of its vast application and
meaningful social, economic and scientific content. In this paper we have
narrowed down our focus to certain problems of trade and development in the
Muslim World in the light of the extensively relational, complementary and
participatory worldview that emanates from the episteme of unity of knowledge.
The theory of endogenous money in relation to real economic activity and its
various effects on price stabilization, exchange rate stabilization and economic
development were examined. In the end we found that the theory of endogenous
money is a necessary condition for replacing interest transactions with real
economic activities and realize effective economic integration and development.
Muslim development organizations must keep this goal foremost in view. Islamic
social theory is to be understand as the paradigm of
unity of knowledge in light of the IIE-methodology in the most rigorous
way. Indeed, this is a message not simply for the Muslims. The life-fulfilling
worldview of unity of knowledge and its possibilities in trade and development
for a new monetary and financial architecture is for all of mankind. The theory
of endogenous money and its implications in domestic and global political
economy for a stable world order should be examined carefully by the IMF, which
is now developing a new global monetary and financial architecture.
References
Ahmad, Z., Islam,
Poverty and Income Distribution, London: The Islamic Foundation, 1991. Choudhury, M.A.,
Money in Islam, London, Eng.: Routledge, 1997. Etzioni, A., The
Moral Dimension, Towards a New Economics, New York: The Free Press, 1988. Islamic
Development Bank, IDB Annual Report 1999, Jeddah, Saudi Arabia, 1999. Kant, I., Critique
of Pure Reason, in Friedrich, C. ed. The Philosophy of Kant, New York: The
Modern Library, 1987. Popper, K..,
Conjectures and Refutations: The Growth of Scientific Knowledge, London:
Routledge & Kegan Paul, 1972. Von Mises, L.,
“The Nature of Money”, in his The Theory of Money and Credit, Indianapolis,
IN: Liberty Fund. 1981.
|
|