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This article originally published in:

The Journal of Interdisciplinary Economics, 1999, Vol. 10, pp. 31-49
0260-1079/99 $10
Q 1999 A B Academic Publishers
Printed in Great Britain

The Schumpeterian Gap and Muslim Economic Thought

Ameer Ali* and Herb Thompson**

Abstract

Contemporary analytical economists normally date their origins from the late eighteenth century. We argue herein
that a pseudo-scientificity (which omits normative information), combined with an overriding ethnocentrism, tends
to lead the disciplinary agents of economics to ignore much economic thought outside the American-British-
Continental axis.
The argument is developed beginning with Joseph A. Schumpeter's classic, The History of Economic Analysis,
which set what appears to have remained a trend in history of economic thought and analysis texts, by ignoring
Arab/Islamic scholars.
At present, entire economies are organised, more or less, on Islamic principles. Islam is explicitly concerned with
material life and provides numerous guidelines for the conduct of economic affairs for millions of people. While it
is not the aim of this paper to examine the methodological or epistemological content of these principles, we
argue that, at the very least, the history of economic thought should incorporate the work of Arab/Islamic
thinkers.

The material foundation of Islam cannot be understood by students of a discipline which continues to promote a
positivist, Cartesian, mathematical formalism, at the expense of understanding its contextual origins. The
economies in which hundreds of millions of people live, work and produce, are being guided, for better or worse,
by the epistemological premises of Islam. Until these premises are comprehended, and then critically evaluated,
economists educated in the industrial west continue to marginalise themselves and their students in a manner
which is no longer excusable.

"Economists belonging to some particular tradition do not face phenomena armed only with some set of
explicit generalisations. What makes a neoclassical or aMarxian or an institutional economist is not
just learning the generalisations accepted by members of the particular tradition. Economists
within a single school agree implicitly on the answers to queries such as: what questions are the
right ones for economists to ask? How should one simplify these questions to make them
answerable? How should economists distinguish their questions and answers from those of other
social theorists? What sorts of techniques should be employed in seeking answers? What sorts of
causal factors should economists emphasise and what sorts should they ignore? How should one
respond to apparent disconfirmations? How should one present hypotheses to colleagues? How

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should one defend hypotheses from criticism? Learning economics, like learning any science, is not
just learning some set of generalisations, such as the law of demand. It is a socialisation process in
which one learns facts, generalisations and techniques at the same time as one comes to share
values, language and perspective" (Hausman 1994: 195).

INTRODUCTION

Contemporary analytical economists normally date their origins from the late eighteenth century before which:
"economic writing was frequently subservient to particular political or religious doctrines" (Samuelson 1980: 1).
Today, neoclassical economics continues to eschew the normative views of what people ought to do, preferring
instead to explain what is (Beed and Beed 1996: 102). This pseudo-scientificity combined with an overriding
ethnocentrism, we argue, tends to lead the disciplinary agents of economics to ignore much economic thought
outside the American-British-Continental axis.

Joseph A. Schumpeter, in his classic, The History of Economic Analysis, set what appears to have remained a
trend in history of economic thought and analysis texts, by ignoring Arab/Islamic scholars. Schumpeter did this
for one or more of a number of reasons. Three identifiable reasons taken from his work itself include: (1) his
interest in what he called "economic analysis" to the exclusion of "economic thought"; (2) the normative
composition of Islamic thought; and/or (3) his ignorance of the existing literature. With reference to Schumpeter's
reasoning, we now have texts in the sub-discipline which are entitled "economic thought" rather than "analysis";
most authors of these texts are aware of tenuous nexus between the notions of positive and normative; and most
relevant Arab and Islamic texts are translated into English. Yet Hausman, negating, in spirit, his comments cited at
the beginning of this piece, shows the continuation of this anachronistic trend. While commenting on Schumpeter's
work, he (1992: 188) says: "Consider the first extended discussion of returns (to factors) in Western culture,
which began in the wake of the revival of commerce in Europe in the twelfth century, when such monetary returns
grew larger and more common. Scholars of the church were called upon to judge the moral legitimacy of such
returns, for interest on money loans had been condemned as morally impermissible usury." As it can be shown,
this was not the first "extended discussion" at all. The discussion had taken place much earlier amongst Arab and
Islamic scholars. "The Arabs in particular were a light to the Christian West and yet this debt has rarely been fully
acknowledged" (Armstrong 1992: 225).

At present, entire economies are organised, more or less, on Islamic principles. Islam is explicitly concerned with
worldly life and provides numerous guidelines for the conduct of economic affairs (Behdad 1992: 221). It is not
the aim of this paper to examine the methodological or epistemological content of these principles. The intent is to
argue that, at the very least, the history of economic thought should incorporate the work of Arab/Islamic
thinkers. Economists presently teach economic thought in a most ethnocentric fashion and continue to ignore the
ramifications of either Islamic theoretical, or practical, economic principles on a world scale. How can any
inquiring mind passively accept the proposition that Islam, which built and maintained the largest empire over the
longest period in history, and whose scholars made seminal contributions to the development of several branches
of intellectual and scientific disciplines, such as mathematics, physics, chemistry, medicine, astronomy, geography,
philosophy and language and literature, left a 'blank' in the field of economics? It is true that economics did not
develop as an independent discipline in the Islamic world, but that was so even in Greek civilisation and in
medieval Christianity. For that matter even Adam Smith was not an economist in the strict sense of that term.
Within the overarching religious paradigm, Arab/Islamic scholars did, and continue to, provide both analytical
and descriptive insights from which we can all learn. Schumpeter was, but more so we are, wrong in excluding

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these scholars from both our colleagues' and students' attention. Abu Yusuf (731-798) who wrote on taxation
(Kitab al-Kharaj), Yahya bin-Adam ( -818) the author of a book on the same subject and under the same title,
AI-Farabi (c.870-850), who authored more than one hundred books, Nasiruddin Tusi (1201-1274) who
produced several treatises on moral philosophy, AI Ghazzali (1058-1111) the venerated Islamic theologian, Ibn
Taimiyah (1263-1328) who wrote on the function of the market in his Al-Hisbahfil-Islam and on Public and
Private Laws in Islam, and Ibn Khaldun (1332-1406) the author of The Muqaddimah, are some among the
many Islamic scholars who have contributed to the analysis of economic conditions in Islamic societies and to
'theological ratiocination' on economic issues. The omission of the works of these and other Muslim authors is the
real gap in the history of economic thought. This promotion of ignorance, by selection, is no longer acceptable for
economics and its practitioners. It is only when we are fully informed that we may begin the productive effort of
examination, critique and debate.

We proceed in the following section to specify the ethnocentric elements within the sub-discipline of the History
of Economic Thought. This is followed by comparison of the related developments found in the "scholastic
school" and the early Islamic scholars in the next three sections. Finally, before we conclude, special attention is
directed at Ibn Khaldun who, as Louis Althusser asserts (Althusser 1993), provided the philosophical core of
Marxism 500 years before Karl Marx, an economist who is normally provided with a place of prominence in
most economic thought textual discourses.

THE GAP

The ethnocentricity of economics is epitomised in the comment by Schumpeter: "So far as our subject is
concerned we may safely leap over 500 years to the epoch of St Thomas Aquinas (1225-74) whose Summa
Theologica is in the history of thought what the southwestern spire of the Cathedral of Chartres is in the history of
architecture" (Schumpeter 1954: 74). Schumpeter's analysis follows in the tradition of earlier work, such as that
by William Ashly whose two volume publication of An Introduction to English Economic History and Theory
(1888) also ignored the Islamic contribution to political economy (Hosseini, 1995). Schumpeter's leap however,
omits the golden age of Arab and Islamic development from 800 to 1200 AD which unfortunately falls within the
infamous era of European Dark Ages. Little acknowledgment is made of the fact that European scholastics
notably Thomas Aquinas, the Italian-born citizen of France, and Nicole Oresme, the Bishop of Lisieux, derived
much of their intellectual armour from Arabs such as Abu Hamid al-Ghazali, al-Farabi, Ibn Sina (Avicenna) or
Ibn Rushd (Averroes). The consolidation of the economic views in Europe in the thirteenth century was partly the
result of the Arab crusades which brought to the cities of Italy and some other European countries "the
knowledge of organising industrial and commercial activities" and partly the influence of Greek thought which was
introduced into Europe through translations of the Arabic works (Pribam 1986: 4). Hosseini points out that had
Schumpeter been able to "read some Persian and Arab authors of the Islamic Golden Age, he could not have
written: "(A)s regards the theory of the 18th century", as if there had been no antecedent theory (1988: 56).
Briffault (1930: 133-153) has identified, and Henry (1990: 62) acknowledged the fact that it was Arabic
scholars, who as a social group, maintained a coherent scientific attitude during the highly unscientific Middle
Ages.

In Chapter 1 entitled Graeco-Roman Economics Schumpeter takes up Plato to Aristotle (Schumpeter 1954: 53-
65), and moves on to a quick sketch of the Roman eclectics, Cicero and Seneca. "The reason we have for
referring to this literature is its genuinely scientific character" in that they provided social patterns that recognise

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"private property, and 'capitalist' commerce. ... Mainly we owe to them definitions-for instance of price, money,
of purchase and sale, of the various kinds of loans, and so on-which provided starting points for later analysis"
(Schumpeter 1954: 67). Six centuries of Christian thought are cursorily covered which brings the first chapter to
a close; wherein Chapter 2 takes a leap over "The Great Gap" of 500 "blank" years to Thomas Aquinas.
Schumpeter clarifies the scope of his effort, as to why he ignores much of the literature both before and after the
Greeks, by distinguishing between economic thought and economic analysis (Schumpeter 1954: 52). While pre-
Greek civilisations faced economic problems, as identified in the Code of Hammurabi or the sacred books of
Israel, there is no trace of analytic effort, as there is in the work of Aristotle, for example. The Greeks mixed their
economic reasoning with their general philosophy of state and society and rarely dealt with economics for its own
sake. The scientific splinters that are accessible may be gleaned from Plato (427-347 BC) and Aristotle (384-
322 BC). During the twelfth century more complete knowledge of Aristotle's writings filtered slowly into the
intellectual world of western Christianity, partly through Semite mediation. Schumpeter cursorily mentions the
work of Ibn Sina (980-1037 AD), the Arab physician-philosopher, Ibn Rushd (1126-98 AD), the lawyer-
philosopher of Cordoba, and Moses Maimoides (1135-1204 AD), the Hebrew theologian-philosopher
(Schumpeter 1954: 53-54, 87, 87 ftn. 7).

Although Schumpeter was concerned with analysis, and not economic thought, some effort might have been
given to identifying the Islamic scholars in a manner similar to that given to the early Christian thinkers in the realm
of economics. One of the greatest thinkers in medieval history, and "medieval Islam's greatest economist" as
Spengler (Spengler 1963) argues, Abu Said Ibn Khaldun is referred to as simply by Schumpeter as having
influenced Giambattista Vico (Schumpeter 1954: 136, ftn.22). At this point Schumpeter explains that he is only
familiar with "de Slanes French translation of the first introductory part of (Khaldun's) history". This suggests that
Schumpeter may be ignoring Arab thinkers, at least Khaldun, mainly because he did not look for, or he could not
find, the necessary information (in English?). Given the available information at hand, he then goes on to say
somewhat fatuously: "But potentially, at least, human geography complements the material of historical sociology-
as Ibn Khaldun had realised ..." This statement is included in the section on "Prehistoric-Ethnological Sociology"
(Schumpeter 1954: 788). Some support for his ignorance is due to the fact that the task confronting scholars in
this field is enormous, where the language barrier alone is not easily surmounted by Western scholars. A decade
after Schumpeter wrote, it could be said by a noted scholar in medieval Islam that, "Many of the relevant texts
remain unpublished, and many of the problems to be solved have scarcely been formulated much less seriously
tackled. Thus, for example, the social and economic history of medieval Islam has only just begun to be
investigated" (Saunders 1965: vii).

THE SCHOLASTIC TRADITION

The term scholastic refers to the identifiable philosophical approach followed by Europe's medieval clerics such
as Thomas Aquinas (1225-1274 AD), who were largely concerned with the possibility of reconciling reason with
faith (Ghazanfar and Islahi 1990: 381). Their curiosity about issues such as rent and interest was driven largely by
the need to make economic behaviour moral; and, according to Hausman (1992: 189), they made little attempt
at systematic theorising. The context (similar to that of the Islamic zakat) was one in which the rich were held to
have an obligation to aid the poor to overcome what we would today call market externalities. The Scholastics'
had not yet begun to pass judgement on capitalism, as a system, or to ask whether business profits are
exploitative. Instead, they offered principles for judging the practices of individuals. According to Pribram, "the
economic views which prevailed in the early Middle Ages belonged to the realm of theological ratiocination
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rather than to economic reasoning in its own right" (Pribram 1986: 3). However, he maintains that "The history of
economics starts with the Thomistic economic doctrine, a normative discipline ruled by the principles of the
Scholastic philosophy" (Pribram 1986: xlix). Pribram who demonstrates his awareness of the Arab influence on
Thomas Aquinas, also fails, rather mysteriously, to correct the Schumpetarian error.

Amongst the scholastics the thinking on economic problems stemmed from the ideas of Aristotle: "Access to
Aristotle's thought immensely facilitated the gigantic task before them not only in metaphysics where they had to
break new paths, but also in the physical and social sciences, where they had to start from little or nothing"
(Schumpeter 1954: 88). As well, it has been established that Greek logic "became the heart and basis of Islamic
epistemology from the ninth century onwards. It provided the only systematic scientific framework available to
Muslim scholars for intellectual expression from that time" (Netton 1992: 37). This Greek logic and the thoughts
of Aristotle came to the Schoolmen via the Latin translation of the commentaries on Aristotle's Ethics by the
Cordoban philosopher Ibn-Rushd. While Thomas Aquinas was well acquainted with Muslim scholars such as
Ibn Rushd and Ibn Sina, there exists no evidence that the Muslim thinkers of the medieval period were familiar
with the contributions of the West, outside those of the Greeks (Islahi 1988: 39-40).

ECONOMICS ISLAMICUS

Unlike the Western Christian intellectual tradition which underwent a gradual process of secularisation beginning
with the Renaissance and Reformation movements of the fifteenth and sixteenth centuries and continuing later
through the impacts of the French and Industrial revolutions in the eighteenth and nineteenth centuries, the
intellectual tradition of the Islamic world remained rigidly tied to its religious corpus. This rigidity is showing some
signs of relaxation only now but the signs are too few and far between. Thus discussion on any of the intellectual
disciplines has to start with a basic reference to the Quran and the Hadiths, the holiest of the Muslim religious
sources. In these one finds a plenitude of commandments and exegesis in relation to human economic behaviour.
In the areas of production, consumption and exchange the Quranic injunctions have been and are being
interpreted and reinterpreted with the help of the Hadiths to arrive at a normative code of economic behaviour. In
essence, the chief objective of this exercise is to provide a practical guide to the followers of Islam so that their
material life does not conflict with the ultimate objective of success in the Hereafter. In this exercise the Muslim
thinkers were highly influenced by the Oikonomikos of Bryson, a neo-Platonist of uncertain date whose text was
translated into Arabic and elaborated by the Muslim scholars. They all followed the Hellenic division of practical
philosophy into ethics (akhlaq), household management (oikonomia; tadbir al-manzil), and political science
(ilm al-madani) (Peters 1973). One can therefore agree with Spengler that the "Muslim writers classed
'economics' as a practical science" (Spengler 1963). It is this practical approach which led to the rise of a unique
kind of literature in Islam known as the "Mirror for the Princess" which advised the ruler on what was permissible
and what was not in the realm of economics and politics (Peters 1973 and Spengler 1963).

The most important economic issues which occupied the minds of the medieval Muslim scholars were taxation,
property and inheritance, usury and exchange, and charity (zakat) and welfare. In most instances these issues
were dealt with within the specialised field of jurisprudence (fiqh) which led to the proliferation of a unique
literature, the hisba handbooks which detailed what was permissible and what was prohibited for a Muslim in
material life. As Essid argues, "The hisba treatises are not only important documents related to the economic and
social life in Muslim countries but are also sources of information about the history of economic thought" (Essid
1987).

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The power and primacy of jurisprudence in the medieval Islamic world thus constrained the independent growth
of several disciplines including economics. In an interesting study of the history and development of risk analysis,
Bernstein believes that the reason why the Arabs, given their advanced mathematical ideas did not proceed to
probability theory and risk management was their fatalistic religious beliefs (Bernstein 1996: 35).Although
Bernstein's knowledge about Islam is questionable, his argument that Islam precluded the independent
development of any secular discipline in the Muslim world cannot be disputed. That was also the case however in
the case of Christianity until after the Renaissance and Reformation movements. just as Galileo was executed and
Giordano Bruno was bodily burnt by the Christian Inquisition because they questioned the church doctrine, just
so in Islam the works of Ibn Rushd and Ibn Sina were condensed and incinerated by the Muslim orthodoxy
because they upheld Aristotelian rationalism (Tibi 1991). The church advocated the theory of just price and
proscribed usury until Christianity surrendered to the forces of capitalism (Tawney 1990). The Muslim scholars
did the same and showed far greater resistance against the onslaught of capitalism. Both, the Schoolmen as well
as the Muslim scholars also explored, with some success, the possibilities of circumventing the scriptural
injunctions in order to initiate compromise with the rising tide of market forces. Aquinas' permissibility of taking
interest on the basis of damnum emergens, lucrum cessans, poena conventionalis and periculum sortis
(Gray 1944) were, like the Muslim concession to usury under muamalah, devices to break down the religious
prohibitions. Cook's conclusion on Islam that "the outcome of this prohibition has been the development of a
carefully contrived range of legal fictions under which usurious transactions can take place, rather than any
reduction in the volume of credit" (Schact with Bosworth 1974: 240) is equally applicable to Christianity. The
heritage of the two great religions displayed enormous plasticity in application (ibid). The question therefore
arises as to why the ideas of Muslim scholars on economic issues which preceded those of the Schoolmen were
ignored while the latter are included in an historical analysis of economic thought.

Although one may plead ignorance of Arabic sources for this mishap, it remains a fact that European scholars in
several other fields, thanks to the efforts of the orientalists, had shown by the middle of the present century the
existence of an Islamic intellectual treasure. In the fields of medicine and mathematics, chemistry and physics, art
and architecture, literature and metaphysics and even music and dance the contribution of Islam has been duly
acknowledged. Why then did economists like Schumpeter ignore the Islamic contribution in their field? The
answer may lie partly in the notion that "economic thought is in substance part of the legacy of the whole of
Western civilization" (Spiegel 1991: xxi), and partly in the differentiated development of intellectual disciplines like
economics, history, geography and sociology, all of which until the middle of the nineteenth century "had been a
single domain of intellectual discourse with rather vague boundaries" (Wallerstein 1991: 94). On the first point, if
economics is about the "ordinary business of life" (Marshall), surely then every civilisation must have thought
about how to conduct that ordinary business; and the stock of their thoughts until they are sought after and
discovered, must lie buried somewhere in the unearthed history of civilisations. It is the task of the historian to
look for the missing gaps. On the second point, had economics remained a broader discipline following the grand
visionary tradition set by the classical school and free of the narrow rational focus introduced by the neo-classical
tradition, modem economists like Schumpeter might have expanded their vistas and looked into other normative
paradigms for the development of economic ideas. Thus an Eurocentric view of civilisation and the dominance of
positivism in economic thinking had combined to produce a history of economic thought which has totally ignored
the contribution of non-European minds to economic analysis.

THE MUSLIM TRADITION

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AI-Farabi (c.870-950), a Neo-Platonist and commentator on Aristotle, and a Turk from Transoxiana was a
prolific writer who produced more than one hundred books of varying length on subjects such as linguistics,
logic, mathematics, metaphysics, politics, jurisprudence and theology (Bakar 1987; Watt 1976). In five of his
books, Kitab ara'ahl al-madini al-fadilah (The Book of Opinions of the Ideal City), Kitab al-siyasat al-
madaniyah (The Book on the Government of the City State), Fusus al-madani (Aphorisms of the Statesman),
Risalatfi'l-siyasah (Epistle on Politics), and Kitab tahsil al-sa'adah (On Attaining Happiness) al-Farabi's ideas
on political economy demonstrates the influence of Plato's Republic and Laws. In modelling the government of
the state analogously to the management of a household Farabi discusses how happiness and justice can be
achieved through the rational ordering of one's actions. However, in his views, "the rational ordering of one's
actions should not be directed toward economic self-sufficiency but rather toward the achievement of ideal
government" (Essid 1987: 86). In common with the other Muslim intellectuals of that time al-Farabi also believed
that supreme happiness meant earthly happiness in this life and in the life beyond.

Abu Hamid AI-Ghazzali (1058-1110), a Khurasanian by birth, lived shortly before Aquinas and is considered
"one of the most powerful personalities and possessed one of the best organised minds that Islam has ever
known" (Corbin 1996: 80-1). From a historical perception about Islamic culture and civilisation Ghazzali may be
considered as a rescuer of Islamic orthodoxy from the Hellenistic trend set by ibn-Rushd and ibn-Sina. Of all his
intellectual output however, the four-volume Ihya ulum al-Din (The Restoration of the Religious Sciences), is the
most widely read in the Muslim world. It is in this work that he spells out his views on the objectives and conduct
of economic life.

The overriding theme in his work was the concept of maslaha, or social welfare (common good), which
connects the individual to society. All acts were defined in terms of utility and disutility (masalih-mafasid)
(Ghazanfar and Islahi 1990: 383). The social welfare function divided human need into three major categories:
basic (food, clothing and shelter), secondary (the removal of impediments and difficulties in achieving the basic),
and tertiary (luxury and adornment). Economic development was a socially obligatory goal for everyone and
acquisitiveness was a godly act. He provided detailed discussion on the role of voluntary trading activity and the
evolution of markets, based on specialisation and accumulation; and to illuminate the importance of the division of
labour he used an example of needle production, analogous to the pin-factory of Adam Smith (Ghazanfar and
Islahl 1990: 386-390). The role of the state was to be limited to the provision of infrastructure and police
powers.

In general, al-Ghazzalis' was a normative approach to economic behaviour advocating the achievement of a
golden mean between materialistic asceticism and absolute hedonism, in order to cultivate the virtues of wisdom,
temperance, courage and justice. His scholarship revealed a clear understanding of voluntary, market-oriented
exchange that "naturally" evolved among freely acting individuals, motivated by self-interest and mutual necessity-
all of which is guided by an inspired code of ethics and moral values. Little wonder that Aquinas was deeply
influenced by Muslim philosophers, reflected in his consistent referencing of al-Ghazali himself.

Ibn Taimiya (1263-1328), whose full name is Taqi al-Din Ahmad bin Abd al-Halim, is known in the West more
for his Puritan reforms in Islam. He is said to be acknowledged more for having inspired the growth of
Wahhabism in the nineteenth century Middle East which eventually gained a permanent foothold in Saudi Arabia
(Goldziher 1981: 240-43), than for his economic ideas. Ibn Taimiya was born in Harran in modern Turkey but
lived in Damascus, which was central geographically to the rapidly growing trade routes between China and India
on long caravan trails to southern Russia and Asia Minor; the connection between Baghdad and the coast of
Syria; and the sea route between the Indian Ocean or Red Sea and Alexandria. Alexandria was the most

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significant commercial centre in that part of the world for European traders who came both by sea and land. It is
within this geographical and mercantile climate that the notion of the just price was given birth. Although originally
an ethical and legal term "just price" became a central part of economic thinking in the Middle Ages. Although it
was a notion present in Islamic jurisprudence since Muhammed, Ibn Taimiyah seems to be the first Islamic
scholar to pay it particular attention (Islahi 1988: 80). The resemblance between Ibn Taimiyah's concept of the
just price and that of Aquinas is quite remarkable. He also discussed state regulation of prices by the state as well
as issues of monopoly and monopsony (Islahi 1988: 39-40). This is true irrespective of Schumpeter's aside "as
regards the theory of the mechanism of pricing there is very little to report before the middle of the eighteenth
century" (Schumpeter 1954: 305).

Ibn Taimiya had a vision of economic life based on the self-interest of individuals. "Within the limits set by the
Shari'ah, men know better what is good for them and they are free to make transactions, enter into contracts
and conduct their worldly affairs in a just and fair manner" (Islahi 1988: 15-16). However, self-interested activity
did not imply laissez-faire. The role of the state included welfare and economic planning. The state is the
custodian of public interest and the chief instrument for ensuring justice through enforcement of the Shari'ah.
Islam emphasises the priority of justice over efficiency. This is not to say that efficiency is not a relevant
consideration, but only that it is not decisive" (Syed Nawab Haider Naqvi, cited in Kuran 1989: 182).

Of all the so called laws in economics the one which says that bad money drives out good is, according to
Galbraith, "one of the major misattributions of history" (Galbraith 1987: 30). The law is named after Sir Thomas
Gresham, an Elizabethan merchant, financier, diplomat and one of the founders of the Royal Exchange.
According to Galbraith, centuries before Elizabethan times, Nicole Oresme (c. 1320-1382), the Bishop of
Lisieux, appears to have observed this trend and if a name were to be given to this so called economic discovery
it should be called the Oresme Law. However, Ibn Taimlya who died eight years after Oresme was born had
discussed this phenomenon extensively in his writings (Islahi 1988: 143-5). Might we suggest the Taimiya Law?

Nasir al-Din al-Tusi (1201-1274), a Persian who died in Bagdad was in the service of the Mongol ruler Hulagu
and is well known for his work Akhlaq-i nasiri (Nasirean Ethics) which was originally written in Persian but later
translated into English by Wickens (Wickens, 1964). He is reported to have authored more than one hundred
works most of them in Arabic. The primary concern of Tusi in the Nasirean Ethics however, was with the criteria
of human behaviour, first at the individual level, then at the economic level and finally at the political level. In
keeping with the medieval Islamic attitude he treated none of the levels in isolation or from a pragmatic point of
view. His was a holistic approach purported to lead humans towards the achievement of supreme perfection and
happiness. In his discussion on the household and government he adapts the theory of Plato's philosopher-king to
the Islamic ideal and deals with the nature of humans, the need for co-operation, association and management,
the need for a divine institute, a governor, and a monetary currency which "is the preserver of justice, the
universal adjuster and the lesser law" (Wickens 1964: 157).

In describing the characteristics and functions of money Tusi sounds more like a monetarist than a philosopher. In
virtue of its existence, and by equating a little of its kind with a great amount of other things, one is able to
accomplish the labour of transporting provisions from dwellings to more remote dwellings: this, in as much as the
transportation of a little of it (being of the value of a quantity of provisions) serves for that of a quantity of
provisions, and it is therefore possible to dispense with the inconvenience and trouble of carrying the latter.
Likewise, in view of the solidity of its substance, the firmness of its constitution, and the perfection of its
composition (which called for permanence), it was possible to conceive of the stability and fixity of acquired
gains; for if it were to change or disappear, this would necessarily nullify the trouble taken to gain supplies and to

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gather acquisitions. Moreover, with its acceptance by the various peoples, its full usefulness was organised for
all" (Wickens 1964: 157).

Tusi's writings like those of his Muslim predecessors clearly show the influence of the Aristotelian oikonomia, the
management of the household and platonic politics of the philosopher-king and Tusi pays tribute to these
philosophers by concluding his book "with a chapter from the utterances of Plato of profit to the generality of
men; namely the testament that he gave to his pupil Aristotle" (Wickens 1964: 258). Although Tusi was a
contemporary of Aquinas and Roger Bacon he appears to have never heard of them.

Ibn Khaldun (1332-1406) was an exception to all these writers in the sense that he provided a rationalist
approach to economic reasoning and developed models of the economy which are considered unparalleled
among the writers of medieval times (Soofi 1995: 387). In his magnum opus, The Muqaddimah, described by
Toynbee as "the greatest work of its kind that has ever yet been created by any mind in any time or place"
(Spengler 1963), he attempted to discover the natural laws that governed the macrodevelopment of societies:
"We must study human society and distinguish its essential features from its accidental ones and trace the social
laws that are at work within it and use them as criteria as to the value of historical assertions" (Khaldun as cited in
Nashat 1945: 380-381).

The foremost finding was that economies developed cyclically, from a limited economy to a more diversified,
more productive, and integrated one (Shatzmiller 1994: 399-400). From here however, a cumulative process of
underdevelopment begins. The richest cities attract more producers making them richer. However, given the
physical limits to the city such as energy and food, as well as the increasing propensity to tax producers by the
State, the productive elements of society are driven away.

'When tax assessments and imposts upon the subjects are low, the latter have the energy and desire to do
things. Cultural enterprises grow and increase, because the low taxes bring satisfaction. When cultural
enterprises grow, the number of individual imposts and assessments mounts. In consequence, the tax
revenue, which is the sum total of (the individuals assessments), increases. Royal authority with its tyranny,
and sedentary culture that stimulates sophistication, make their appearance. As a result, the individual
imposts and assessments upon the subjects, agricultural laborers, farmers, and all the other taxpayers,
increase beyond the limits of equity. Eventually, the taxes will weigh heavily upon the subjects and
overburden them beyond the limits of equity. The result is that the interest of the subjects in cultural
enterprises disappears, since when they compare expenditures and taxes with their income and gain and
see the little profit they make, they lose all hope. Therefore, many of them refrain from all cultural activity.
The result is that the total tax revenue goes down. Finally, civilization is destroyed, because the incentive
for cultural activity is gone (Khaldun 1958 Vol. 11: 89-91)."

The people become soft through luxury, with decay and decline following close behind (Boulakia 1971: 1116). It
was the fascination over this passage which prompted Ronald Reagan, the former president of the U.S., to quote
Ibn Khaldun to justify tax cuts (Nagarajan 1982).

"It can also be noted that those people who, whether they inhabit the desert or settled areas and cities, live
a life of abundance and have all the good things to eat, die more quickly than others when a drought or
famine comes upon them" (Khaldun 1958 Vol. 1: 180).

"(The) Bedouin attitude and simplicity lose their significance, and the Bedouin qualities of moderation and
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restraint disappear. Civilization and its well-being as well as business prosperity depend on productivity
and people's efforts in all directions in their own interest and profit. When people no longer do business in
order to make a living, and when they cease all gainful activity, the business of civilization slumps, and
everything decays. People scatter everywhere in search of sustenance, to places outside the jurisdiction of
their present government. The population of the particular region becomes light. The settlements there
become empty. The cities lie in ruins. The disintegration of (civilization) causes the disintegration of the
status of dynasty and ruler, because (their peculiar status) constitutes the form of civilization and the form
necessarily decays when its matter decays" (Khaldun 1958 Vol. 11: 90 and 104).

Two different kinds of social milieu characterises this socio-economic development: umran al-badaoui (nomadic
civilisation) and umran al-hadhari (urban civilisation). The difference between the two is a function both of the
relations between humans as well as that of human relations with nature. Specifically, the attempt is to
comprehend the qualitative and quantitative differences between a "natural" economy oriented toward self-
sufficiency; and an unnatural one oriented toward accumulation of unnecessary goods, eager pursuit of profit and
a propensity for luxury (Essid 1987: 91).

It should be known that differences of condition among people are the result of the different ways in which
they make their living. Social organization enables them to co-operate toward that end and to start with the
simple necessities of life, before they get to conveniences and luxuries. Those who live by agriculture or
animal husbandry cannot avoid the call of the desert, because it alone offers the wide fields, acres,
pastures for animals, and other things that the settled areas do not offer. Subsequent improvement of their
conditions and acquisition of more wealth and comfort than they need, cause them to rest and take it easy.
Sedentary people adopt the crafts as their way of making a living, while others adopt commerce.
Bedouins, thus, are the basis of, and prior to, cities and sedentary people. Man seeks first the (bare)
necessities. Only after he has obtained the (bare) necessities, does he get to comforts and luxuries. The
toughness of desert life precedes the softness of sedentary life. It will become clear that sedentary life
constitutes the last stage of civilization and the point where it begins to decay. It also constitutes the last
stage of evil and of remoteness from goodness" (Khaldun 1958 Vol. 1: 249-255).

In antiquity, the desert was regarded as a world unto itself, an extraterritorial realm separate from and additional
to the other two known realms: the seas and the habitable lands. Residents of the latter viewed the strange
people of the desert with fear and hostility, perceiving them to be a threat to civilisation-as indeed they often
were. The desert itself was held in awe as a place of terror, a largely useless and dangerous domain. One
ventured into its mysterious vastness only at great risk. The desert's forbidding character has also been a
challenge: a defiance of civilised man's self-proclaimed mastery of the earth; a barrier to human expansion, to
progress, to economic development; a fortress holding out against colonisation and civilisation (Hillel 1991: 108).

The natural economy satisfies the basic needs, as defined above by al-Ghazali, through farming, fishing and
hunting. "The income of the Bedouins is not large, because they live where there is little demand for labor, and
labor is the cause of profit. In fact, the threat of famine always hung over Bedouin society (Saunders 1965: 4).
Bedouins, therefore, do not accumulate any profit or property. In the desert. (the Bedouins) can satisfy their
needs with a minimum of labor, because in their lives they are little used to luxuries and all their requirements"
(Khaldun 1958 Vol. 11: 280). Along with these material conditions go moral qualities of simplicity, courage and
independence. As the tribes expand through population growth and/or conquering other peoples, a sedentary
urban civilisation is constructed and the rudiments of state power are devised. The means of subsistence are
transformed, division of labour and specialisation characterise labour, and production is re-directed to luxury

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goods. With the material shift comes depravity, luxury, idleness, economic decay and markets decline (DeBoer
1970: 205-206; Essid 1987:91).

"(Through luxury,) the soul acquires diverse kinds of evil and sophisticated customs, as will be mentioned
in the section on sedentary culture. The dynasty shows symptoms of dissolution and disintegration. It
becomes affected by the chronic diseases of senility and finally dies. The life of a dynasty does not as a
rule extend beyond three generations. The first generation retains the desert qualities, desert toughness,
and desert savagery. Its members are used to privation and to sharing their glory (with each other); they
are brave and rapacious. The second generation changes from the desert attitude to sedentary culture,
from privation to luxury and plenty, from a state in which everybody shared in the glory for himself while
the others are too lazy to strive for (glory), and from proud superiority to humble subservience. Thus, the
vigor of group feeling is broken to some extent. The third generation, then, has (completely) forgotten the
period of desert life and toughness, as if it had never existed. They have lost (the taste for) the sweetness
of fame and (for) group feeling, because they are dominated by force. Luxury reaches its peak among
them, because they are so much given to a life of prosperity and ease. Group feeling disappears
completely. People, meanwhile, continue to adopt ever newer forms of luxury and sedentary culture and of
quiet, tranquillity, and softness in all their conditions, and to sink ever deeper into them. They thus become
estranged from desert life and desert toughness. Gradually, they lose more and more of (the old virtues)."
(Khaldun 1958 Vol. L 341-345).

It may be pertinent to note here that, analogous to Marx, Khaldun sees the economy as determinant in both
stages of rise and fall, but only dominant in the latter. The political sphere is dominant in the rise of civilisation. In
the end, economic development frustrates stable political power. According to one of the most prominent
Marxist philosophers of the 20th century, "the philosophical, if not the scientific, core of Marxism was elaborated
long before his (Marx's) day by Ibn Khaldoun" (Althusser 1993: 211). Yet, Marx like so many others, had little
or nothing to say about either Khaldun or Islam (Turner 1974: 7).

At the micro level, Khaldun devoted an entire chapter to the various aspects of making a living, including
observations about the role and value of labour in contemporary economy and society, discussing the trades and
crafts at great length (Khaldun 1958 Vol. II: Chapter V). To Khaldun, as to Marx, homo faber is what
distinguished the human species. Only labour provides useful results and through its organisation and
specialisation the species becomes more skilled and productive (Boulakia 1971: 1107).

Khaldun's division of the total product of labour into "sustenance" and "capital accumulation" is similar to the
Marxian notion of "necessary" and "surplus labour". His argument that "All their efforts and all their labors are
(means) for them (to acquire) capital and (to make a) profit. Human labor is necessary for every profit and
capital accumulation the capital a person earns and acquires, if resulting from a craft is the value realized from his
labour" reflects the Marxian argument although "profits" may not have the same exact meaning that it did for
Marx (Issawi 1959: 85; Khaldun 1958 Vol. 2: 109 and 313-314). As well as developing classical conceptions
of economics, he also followed the tradition of Xenophon and Aristotle by touching on the " marginal revolution"
in identifying "utility" as a source of the value and determinant of the price of a product (Soofi 1995: 392).

Finally, without the techniques or pre-existing concepts available in the eighteenth century, Khaldun could be said
to have elaborated the virtue and necessity of the division of labour before Adam Smith; the value of labour
before David Ricardo and Karl Marx; a theory of population before Thomas Malthus; fiscal responsibility of the
State before J.M. Keynes and cyclical analysis before both Marx and Joseph Schumpeter.

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CONCLUSION

Foucault has identified the inextricable linkage between power and knowledge; with the clear implication that that
there is no knowledge that does not presuppose and constitute at the same time power relations (Mumby 1992:
82). The dominance of neoclassical economics occurred with the transfer of world economic supremacy from
Europe to the United States. The discipline's prescriptions were consistent with the domestic and global policies
of the United States, and given the Cold War, non-believers (such as Marxists or Institutionalists) were
marginalised, and indeed, in some extreme cases driven out of academia.

As recognised in the Introduction, (Beed and Beed 1996), normative evaluation appears to be directly contrary
to the essential thrust of Western thought since the European Enlightenment when rationality and science were
established as the sole legitimate means of producing and appropriating knowledge. "Normative" is often used in
discourse to suggest unscientific, illogical or irrelevant thinking. This, of course, is meant to imply the semiotic
power of homo economicus or the rational economic human. Rationality and self-proclaimed objectivity are
meant to suggest real, paradigmatic knowledge, only itself worthy of being passed on the young.

In fact, homo economicus epitomises the alienated, separated individual acting independently on the world.
Whether this fictional character be Robinson Crusoe, the hero of an Ayn Rand novel, or the individual
entrepreneur rationally expecting the future, it also suggests an isolated ego acting in opposition to the world
around us. The notion of rational, calculating, individuals, maximising their utility implies the greatest happiness for
the greatest number, but is predicated on one's separation from others and the world on which we all,
collectively, depend. Rather, it could be argued that economic growth, pursued by isolated egos, is a vain
attempt to fill a void with material enrichment (See Hamilton 1994). We have argued that, at the very least,
Economics remains essentially ethnocentric. Further, its practitioners ignore the historical precursors and precepts
which set the foundation for Islamic economic practice, similar in content to groups and individuals (eg., Marx or
the Scholastics) who are thoroughly explicated. Contextually, we suggest, that the material foundation of Islam
cannot be understood by a discipline which continues to promote a positivist, Cartesian, mathematical formalism,
at the expense of understanding its contextual origins. The economies in which hundreds of millions of people live,
work and produce, are being guided, for better or worse, by the epistemological premises of Islam. Until these
premises are comprehended, and then critically evaluated, economists educated in the industrial west continue to
marginalise themselves and their students in a manner which is no longer excusable.

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