Whereas Weber believed in the significance of religion as an active factor in social analysis, Sadr believed in the primary role of religion. Sadr's construct of an Islamic economic system is characterized by its distinct religious nature. Moreover, his thesis to explain the ineffectiveness of capitalism to resolve the economic crisis of the Islamic world rests on what he perceived to be a fundamental incompatibility between a particular religious doctrine and an economic system at odds with the doctrine. Western societies, however, enjoyed a unique compatibility, embracing a moral practice that fueled the capitalist spirit and enabled considerable success on the economic level. Both scholars thus presented similar theses on the development of capitalism in Western societies, but with one variation. Sadr bestows a more significant role for religion in this process, and regards the role of institutional factors as conditional on the religious context and spirit. Furthermore, both were opposed to a historical theory of capitalism.4 They rejected theories that characterize capitalism as an inevitable historical system, but argued on the basis of religiously or culturally conditioned economic systems. However, the more relevant question for this inquiry is whether they presented similar theses on the development of capitalism in Islamic societies?
Weber believed the Islamic warrior ethic to have been a hindrance to the development of the capitalist spirit. This hindrance was further reinforced by the absence of comparable institutional conditions that favored capitalist development in the West. Sadr also believed in an incompatibility, but of a separate nature. To begin with, it is a testament to the “untutored” views of Weber on Islam that Sadr has no mention whatsoever of an Islamic warrior ethic. The Muslim's ethic is an essentially religious one, characterized by an omnipresent devotion to the heavens to achieve divine satisfaction. It is governed by the principle of reciprocal responsibility and directed for the purpose of achieving social justice.5 This allows for a uniquely Islamic conception of personal freedom, very different from that implicit to capitalism. Furthermore, whereas the capitalist ethic rests on the belief that public interest is best served by providing private interests with the utmost possible freedom, the Islamic ethic refuses to assign any of the two sets of interest a leading role, but integrates both in a unified framework towards achieving divine satisfaction.
Capitalism failed to develop in an Islamic society simply because it cannot.6 In the West, it developed on the basis of a moral practice that is in contrast to the Islamic moral practice. In the PE, Weber discusses the tension between “precapitalist” and “capitalist” spirits, and how this tension eventually paved the way for the capitalist spirit to endure. This argument is especially relevant to Sadr's thesis. If a conflict existed between the religious ideas or elements associated with the precapitalist spirit and those associated with the capitalist spirit, then a conflict may also exist between elements of the capitalist spirit and those of another spirit. Weber's argument, it would seem, lends direct support to Sadr's thesis. If the PE formed the basis of the capitalist spirit, then an Islamic ethic should form the basis of an Islamic economic system. The relevant question that Weber should have asked, and that is clearly more consistent with his methodological “spirit,” is not why capitalism failed to develop in the Islamic world, but why did the Islamic economic system fail to develop?
Regrettably, the majority of scholars who studied the relationship between Islam and development continued along this “wrong” intellectual path originally set by Weber. Many seem to have been influenced by his substantive views on Islam, and even more so by his formative style. For example, Hansen (1963) argues that something similar to the Protestant ethic will be needed for the progress of underdeveloped countries. This is because the psychological and social hold of “contemplative and ecstatic” religions on such societies prevents them from rationalizing their daily lives. What is needed therefore is a rationalizing force that can stimulate hearts and minds towards the “rational, systematic pursuit of wealth” (Hansen 1963: 473). Rodinson (1966: 288) offers a similar formula to the Islamic world, albeit for a different purpose, by calling on Muslims to extract from the Qur'an and the Islamic tradition values that are conducive to the modern world. Interestingly, Rodinson is here bestowing upon religion a role he previously sought to suppress. In the final pages of his book, he is compelled to grant religion, though partially, its significance in Islamic societies. But he only does so by calling for a selective application of Islamic doctrine to the modern world. Muslims should focus primarily on what is perceived by Rodinson to be compatible aspects of their religion. The rest, it would seem, would have to be discarded as “unsuitable” (Rodinson 1966: 289). According to Sadr, the above analyses consistently misconstrue the relevant issue at hand. Scholars insist on employing Weber's inadequate approach to Islam by mistakenly seeking to offer solutions to a religious context that is quite unlike that which existed in the West. Granted that Weber's knowledge of Islam rendered him “unfit” for such a task, it is inexcusable that later scholars continued down the same path.
An important development within the more recent literature is an attempt to evade “essentialist” explanations of the economic underdevelopment of Islamic societies, in favor of political and institutional accounts. Timur Kuran has been a strong advocate of this view, which he presents in a more developed form in his latest book, The Long Divergence. Rejecting the notion of an “inherent incompatibility” between Islam and development, he believed that the Islamic world “fell behind the West because it was late in adopting key institutions of the modern economy” (Kuran 2011: 5). The explanation he offers is that the institutional structure of Islamic societies lacked the dynamic capacity for “self-undermining,” and thus “self-transformation,” a quality that their Western counterparts possessed. Institutions were for the most part “self-enforcing” (or “self-reinforcing”), by achieving “immunity to outside shocks.” Colonialism, therefore, as an external shock, “brought fundamental transformation, not stagnation” (Kuran 2011: 35–37). He engages in a detailed analysis of several Islamic institutions (such as the inheritance system, marriage regulations, interest prohibition, lack of corporate form, Islamic law) and their role in the ensuing socioeconomic stagnation. Each of these institutional structures served an important socioeconomic function, thus achieving “local efficiency,” and this in turn fueled their political and religious legitimacy. But as economies developed in scale and complexity, the same institutions failed to achieve “global efficiency,” as more advanced alternatives were developing elsewhere.7
Prior to engaging in any comparative assessment between the views of Kuran and Sadr, it is important to note that Kuran's explication of the role of institutions in Islamic societies shares much in common with Weber's views on the topic. Granted that Kuran's analysis is clearly more developed, it remains, however, that comparable institutional factors were examined by Weber, and the conclusions are by and large identical. The significant difference is that whereas Weber is more outright about his opinions regarding the relationship between Islam as a doctrine, and economic development, Kuran is more cautious about drawing such inferences. This approach, however, veils a deep methodological inconsistency that must be illuminated. As a case in point, Islamic laws of inheritance represent an inseparable part of Islamic doctrine, a view that Kuran does support, noting that the Islamic inheritance system was principally founded on the Qur'an, and noticeably distinct from alternative systems. To argue that any underdevelopment attributed to such factor does not imply an “inherent incompatibility” is methodologically inconsistent, especially when he does argue earlier that, very often, “to attempt institutional reform would be to risk a confrontation with religion” (Kuran 2011: 25). A similar case can be made for the prohibition of interest, marriage laws, and Islamic law in general.
This is clear illustration of the lasting impact that Weber's methodology of ideal types, which essentially imposes a strict duality between the religious and the secular, and between extrinsic factors and intrinsic factors, has had on the literature. Notwithstanding the volumes of critiques his theses have undergone, the literature continues to subscribe to Weber's dichotomies, an approach that is highly problematic in an Islamic setting. In an Islamic context, argued Sadr, we cannot allow for such dualities, as they dissuade us from comprehending the true nature of Islam and its socioeconomic system. Early on, Kuran defines an institution as a “system of socially produced regularities that shape, and are in turn shaped by, individual behaviors” (Kuran 2011: 6). The definition is clearly forging an inseparable relationship between the individual and society, and between institutions and social norms. Elsewhere, he argues that the “performance of a barrowed institution necessarily depends on preexisting local institutions, including norms and understandings,” a view very much in common with Sadr (Kuran 2011: 294). Interestingly, what emerges from all this, is that Kuran's logic and analysis can be construed to support Sadr's arguments.
For the most part, the Islamic institutions or norms examined by Kuran are informed, understood, and imagined by the religious doctrine. The Islamic inheritance system and the Islamic prohibition of interest cannot be comparatively evaluated on the basis of how conducive they are to the aggregation of savings, the establishment of complex business enterprises, or the expansion of investment time frames, but rather by appreciating their intended Islamic purpose in establishing a more just and egalitarian system of wealth dissemination that can reduce social and economic inequality. If inheritance laws or interest restrictions do stand in the way of economic development, then any reconsideration of their role or content is, for all intents and purposes, un-Islamic, and must therefore be treated as such. In other words, “economic modernization” may well present direct contradictions with Islamic doctrine, a view shared by Weber and Sadr, albeit for different reasons. One may well question Weber's substantive views on Islam, but he clearly did not shy away from extending such views to their logical conclusions.
From the perspective of Sadr, the requirements of economic modernization highlighted above are in fact a form of “economic Westernization,” since they are extrapolated from a particular social and moral context that is supportive of such institutional arrangements. Applying such arrangements to an Islamic context, and contrary to Kuran's claim, is an implicit assertion that there is “a unique path” to economic development. Colonialism, Sadr argues avidly, was not a blessing, but a tragedy, and the success of an institutional system in the West is by no means an endorsement for implementation elsewhere. In summary, both Kuran and Sadr acknowledge the underdevelopment of Islamic societies, and the relative economic superiority of their Western counterparts. The critical divergence between the two scholars is that, while Kuran is seeking solutions from modernity (a rather ineffective abstraction of the West), Sadr believes such an approach incongruous, and seeks solutions from within. This divergence reflects, at a deeper theoretical level, each scholar's respective approach to the duality (or unity) of the sacred and the secular on one hand, and the social and the individual on the other. We now turn our attention to yet another duality, between theory and practice, which presents several possible objections to Sadr's general thesis.
If capitalism, as Sadr has argued, would always be at odds with the moral practice of Islamic societies, what can be said about markets and market activity that existed throughout Islamic history? How does Sadr's perspective fit with what we know about the Prophet's early profession as a merchant, the trade that flourished over vast areas of the Islamic world, and the extensive references in scripture and traditions that portray a favorable view of commerce (Crone 1987; Pirenne 2001)? More importantly, how can we reconcile this view with the extensive literature that examines a diversity of Islamic “capitalist” endeavors? Several studies, by sociologists and anthropologists in particular, have examined points of integration between Islam and capitalism, and arrived at conclusions that potentially contradict much of Sadr's thesis.
First, Sadr does not at any point in his analysis equate markets with capitalism. He acknowledges the role of private property, contracts, transactions, exchange, and prices. However, he believed that the essential component of the Islamic economic system is its religious basis. This basis is responsible for establishing the moral practice of Muslims, which in turn is the crucial factor that defines all socio-economic behavior. Markets in capitalism are characterized by excessive freedom and individualism, while markets in an Islamic economic system consent to a limited notion of personal freedom. In the former, an acquisitive spirit directs participants to the systematic pursuit of profit, while in the latter, participants are driven to achieve salvation, via divine satisfaction. In the former, individual interests are believed to be guided by an invisible hand towards achieving social interests, while in the latter, individual and social interests are guided by the visible hand of religion to act harmoniously towards the achievement of divine objectives. Finally, while competition is encouraged as the path towards efficiency in capitalism, in Islam, reciprocal responsibility and cooperation is promoted as the path to social harmony and divine satisfaction. This view of a capitalist economy provided by Sadr shares much in common with the prevailing definition in the literature. Swedberg (2005) outlines a basic model of capitalism as an economic system concerned with production, distribution, and consumption, and in which a plurality of interests determine individual behavior. Such interests, and “through the logic of unintended consequences,” will yield social interests. More importantly, the “unique” aspect of a capitalist economy is “that it alone is primarily driven by the profit motive” Swedberg (2005: 7).
Moreover, much of the literature disturbingly overlooks the nature of markets as social institutions, and not as natural phenomena (Clark 2006; Dugger 1989; Loy 1997). It follows that if we do acknowledge that markets are institutional products of their respective social contexts, then it is likely that a variety of market forms may exist (Hodgson 2011). More importantly, this means that “an immense variety of forms of any given socio-economic system can exist” (Hodgson 1999: 130). The implication is that if markets are products of their social environments, then where such environments have a distinctly religious nature, the structure and substance of the market will naturally assume a religious nature as well. Markets may well exist in a setting quite unlike contemporary capitalist economies, a view that has been extensively deliberated in the literature (Hollingsworth and Boyer 1997; Hall and Soskice 2001). These theoretical qualifications do offer a possible reconciliatory method through which the views of Sadr can be understood and applied. By acknowledging markets as socially conditioned institutions, it is only natural that we examine how markets are shaped by the moral practice of a society. It would not be far-fetched then to argue about the possibility of an Islamic market, distinct from a capitalist market. But does this suffice in explaining the expanding literature on Islamic forms of capitalism (or even Islamic capitalism)? Is the discrepancy merely a problem in semantics, with different scholars adopting variable terms and definitions? Or is the problem of a more fundamental nature, with Sadr seemingly treading a doomed theoretical path that is increasingly at odds with reality? We will seek to address these issues by examining, respectively, the insightful studies of Rudnyckyj (2010) and Maurer (2005) that investigate contemporary Islamic experiments in a highly globalized and capitalist environment.
In Spiritual Economies, Daromir Rudnyckyj explores the transformation in development policy from a nationalistically-driven strategy of “faith in development” to a religiously-inspired strategy of “developing faith,” and specifically, in the context of the Indonesian manufacturing sector. Whereas the former strategy involves state-led campaigns for economic modernization and growth, the latter attempts to develop religious practices conducive to a work ethic that is consistent with contemporary business norms of higher productivity, efficiency, and transparency (Rudnyckyj 2010: 3). This nationwide program of “spiritual reform” consisted mainly of human resources training initiatives aimed at producing “better Muslims [and] … better workers.” The crucial aspect of this reform program, argues Rudnyckyj, is not only in adopting Islam as its guiding principle, but also in the espousal of neoliberal economic rationality as its methodological philosophy. This curious wedding between Islam and neoliberal economics highlighted the possibility of a “neoliberalization of [Islam],” as well as an “Islamization of neoliberalism” (Rudnyckyj 2010: 21–22).
One can easily highlight several themes explored by Rudnyckyj that share similarities with the views of Sadr. From the perspective of the “participants,” Indonesia (and the Islamic world) suffer an economic as well as a “moral crisis” (Rudnyckyj 2010: 8). A program of reform, therefore, Sadr would argue, must acknowledge the necessary association between the moral practice and the economic system. In the Indonesian case, reformers developed an Islamic work ethic they believed is conducive to a globalizing economy, a profound endeavor that “entailed nothing less than the creation of a theoretical model of human nature …” (Rudnyckyj 2010: 16). The program must also forge the religious link between private and social interests. In this regard, Indonesian reformers sought to design a method of governing that “linked self-interest to collective interest through a powerful means of affecting action” (Rudnyckyj 2010: 184). Granted such parallels, does the Indonesian experiment in spiritual reform qualify as a practical vindication of Sadr's views, or a verdict against his incompatibility thesis?
First, it is important to reiterate that the crucial element in Sadr's thesis concerns the moral practice of the social context in which an economic system is to be established. The Indonesian experiment is clearly conducted within an Islamic context. Interestingly, however, the reformers believe the context itself is in need of rehabilitation, hence the notion of a “moral crisis.” This is achieved by developing the moral foundations of workers, while at the same time linking their personal interests with the collective interest in a harmonious relationship towards achieving the ultimate objective, namely, “for God” (Rudnyckyj 2010: 148). The problems arise in the nature of this rehabilitation process, and the real identity of the ultimate objective. Rudnyckyj brilliantly addresses the concerns emanating from subscribing to the pervasive logic of neoliberal economics, which he calls “the most fateful force of our time” (Rudnyckyj 2010: 24). The attempt of spiritual reformers to qualify economic rationality on a religious basis risks the possibility of sacrificing substance for style, as evidenced by the highly superficial nature of some of the program's training tactics. It also risks the instrumental makeover of religion into a business strategy aimed at maximizing productivity and profits. After all, it is much easier to evaluate the productivity of a “good worker” than it is to judge the morality of a “good Muslim.” The pervasiveness of such rationality may eventually prove overwhelming to a practice that started as an Islamic “calling” but may end up anything but Islamic, thus following in the footsteps that Weber had prophetically charted for Christianity. Sadr shared a similar concern in his rejection of any neoclassical appraisal of Islamic economic practice, justifying this on the basis of his incompatibility thesis. In addition, such an approach to reform overlooks the arguments of Sadr and Weber regarding the possibility of different types of rationalism, and that neoliberal rationalization “was not an inevitable effect of history” (Rudnyckyj 2010: 12).
Bill Maurer, in Mutual Life, Limited, offers a penetrating reading into the nature and logic of Islamic banking, which may be regarded as the most advanced Islamic attempt in modern times to implement the Islamic economic system, albeit partially. What distinguishes his account from others is that he insists on understanding the phenomena of Islamic banking in light of the declared objectives of its participants, rather than imposing on the practice intentions and goals inspired by the researcher's perspective or the literature's particular outlook. This does not mean, that in so doing, he offers any positive appraisal of Islamic banking, or even at the very least, a rationalization of its theory or practice (Maurer 2005: 35–36). What he does offer, however, is a call to appreciate that “something else is going on” that is not necessarily “instrumental” or “ideological.” Individuals or communities, disturbed by the reality in which they are situated, will attempt to create an “alternative” inspired by an animated past, without necessarily living fully in either. The mere attempt “is good enough” (Maurer 2005: 16).
Irrespective of any evaluation concerning the uniqueness or success of the Islamic banking experiment, it remains that the effort itself is a sincere Islamic endeavor at evading the ubiquitous grasp of the dominant capitalist system. It is a testament to what Sadr would argue is an undiscovered reservoir of Islamic tradition that remains to be tapped. Muslims, for the most part, would be willing to experiment with alternatives that better coincide with their moral practice, despite the glaring imperfections. In fact the apparent failure of the Islamic experiment in banking would not come as a major surprise to Sadr. Being an early pioneer of Islamic banking, Sadr's reaction to its current form would likely be: Where is the morality? In essence, it is this morality that Maurer believes to be “going on” with alternative currencies, the quest for value, for an ideal “not [yet] realized,” in which the very notions of maximization and efficiency take on different meanings. Rather than succumbing to the conventional wisdom of mainstream economics, the alternative seeks to define such terms in its distinct context (Maurer 2005: 79). Efficiency in an Islamic context would thus carry a distinct meaning, as would value, money, markets, etc. And yet, there remains an unanswered question, incessantly pulsating beneath the surface of all this discourse, but that must be addressed if any of the notions of alternative context or moral practice should make any sense. Maurer (2005: 70) insightfully raises the concern: Can a thing be more or less Islamic? In other words, are we correct in assuming that there is such a thing as an Islamic identity, with its distinct moral practice and economic system?
It is evident from the discussion so far that Sadr and Weber do believe there is such a thing as a recognizably Islamic identity, though their respective accounts may differ. In fact, from our discussion so far, one can reasonably argue that the theses of both scholars require that such a presumption be made. Others, however, such as Sami Zubaida, question the very notion of an Islamic society, arguing in favor of a more elastic conception of the Islamic world that allows for multiple and changing identities. In Beyond Islam, Zubaida attempts to provide a comprehensive response to Ernest Gellner's (1983) model of a Muslim society, where Islam is presented as an alternative path to modernity (Zubaida 2011: 32). By examining several aspects of Gellner's model, such as clergy, entertainment, tribes, Islamic banking, and urbanism, he concludes that little stands out in terms of uniqueness and uniformity that can be generalized into a distinct Muslim society. The consequence of such flawed characterizations, he argues, is that Muslims are perceived positively in a modern context, while at the same time being kept “apart and alien” (Zubaida 2011: 76). The implication, quite common in the literature, is that Islamic “exceptionalism” is merely a theoretical instrument serving ideological agendas.
Although Sadr was quite open with regards to his ideological motives, he would, however, reject the notion that Islamic exceptionalism is a concocted reaction to the challenges of modernity. What it does represent is an effort to reinstate the role of Islamic tradition in Islamic societies. In The Formation of Islam, Jonathan Berkey examines the “slow emergence” of a uniquely Islamic tradition over the centuries that followed the death of its prophet (Berkey 2003: ix). Sayed Hossein Nasr, in Islam in the Modern World, argues in favor of what he calls “traditional Islam,” which is Islam “understood in the widest sense of the word, a sense that embraces all aspects of religion and its ramifications,” and that contains “the perennial wisdom as well as the continuous application of its immutable principles to various conditions of space and time” (Nasr 2010: 4).8 This tradition, he admits, has been gradually receding in the wake of modernity, thus materializing in the image of contemporary Muslim societies that Zubaida seeks to illuminate, an image, however, that both Sadr and Nasr would reject as historical generalizations of the Muslim world. Traditional Islam, at the very least, may well become an ideal to be theoretically imagined, but this in no way nullifies its existence in the past, ready to be reinstated in the present or future. In an insightful essay on Weber and orientalism, Nafissi (1998: 113) concurs with the view of a “comparatively entrenched and recognizable Islamic tradition,” arguing that Islam does in fact differ from Christianity or Buddhism (as cases in point), and that such differences will retain their significance with respect to the question of an Islamic identity, as long as they continue to be presented within the context of a political discourse.
In his critical response to Gellner, Zubaida uses Islamic economics and banking as an illustration of the lack thereof of a universal Islamic ideology or worldview. He supports his claim by arguing that Muslim business practices are indistinguishable from their secular counterparts, and the prohibition of interest dealings is for the most part theoretical. He cites examples of business fraud and public corruption that contradict much of the declared objectives of Islamic economics (Zubaida 2011: 73–75). Granted such failures, and many Islamic scholars would be even more critical of current practices, this does not, however, qualify as a sanction on claims of Islamic exceptionalism, just as similar arguments have not prevented corresponding claims of Christian or Jewish exceptionalism. This is evident by the extensive literature that exists on Christian economics, which barrows heavily from the Catholic social tradition (Hobgood 1991; Long 2000). The same can be said regarding the literature on Jewish economics that relies on interpretations of the Torah and Talmud (Ohrenstein and Gordon 2009; Levine 2010).9