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Abstract

  1. Top of page
  2. Abstract
  3. Introduction
  4. Weber, Capitalism, and Islam
  5. Sadr's Islamic Economic System
  6. Sadr, Capitalism, and Islam
  7. Weber and Sadr
  8. Conclusion
  9. References

This article attempts to reconsider the controversial relationship between Islam and economic development. It does so by deeply engaging the views of Weber and Baqir as-Sadr. According to Sadr, the development of capitalism in Europe is a consequence of the moral practice of Western societies, which is fundamentally different from that of Islamic societies. This divergence in moral practices translates into a divergence in economic doctrine, resulting in an incompatibility between the capitalist method and the moral practice of Islamic societies.


Introduction

  1. Top of page
  2. Abstract
  3. Introduction
  4. Weber, Capitalism, and Islam
  5. Sadr's Islamic Economic System
  6. Sadr, Capitalism, and Islam
  7. Weber and Sadr
  8. Conclusion
  9. References

In his seminal scholarly achievement, The Protestant Ethic and the “Spirit” of Capitalism, Max Weber developed a thesis that attempted to explain the emergence of capitalism in Western societies. The thesis was particularly interested in investigating the religious ideas that contributed to the formation of the capitalist spirit. Later, in an equally important scholarly achievement, Economy and Society, Weber expanded his analysis to examine the role of institutional factors in the development of capitalism, where these factors may have a facilitating or limiting effect on this process of development. Weber's interest in tracing the roots of capitalist development in the West, composed of mainly Christian societies, extended to an effort to study similar phenomena, but in the context of non-Christian religions such as Hinduism, Buddhism, Confucianism, Judaism, and Islam.

Of particular importance to the author is his incomplete but important study of Islam. The aim of this article is not to support or refute Weber's views on Islam, although this will be done to some extent, but to utilize his general thesis in an attempt to reconsider the historically controversial relationship between Islam and economic development. Weber's impact on this debate is not so much with regards to his conclusions on Islam, but more a result of the enduring effect his general thesis has had on the methodology of subsequent scholars.

We are asking the question that Weber and others have asked: Why do Islamic societies lag behind their non-Islamic counterparts (specifically Western) in the area of economic development? We examine this question from an Islamic perspective, admitting, however, that several Islamic perspectives do exist on such a complex and contentious matter. Specifically, the Islamic perspective that we present is that argued by a renowned Islamic scholar of the 20th century, Baqir as-Sadr (1931–1980).1 Sadr's argument is presented in the form of a “virtual dialogue” with Weber that deeply engages the views of both scholars. This dialogue promises to offer important insights into the ongoing debate concerning Islam and economic development. It will seek to highlight the significance of Islamic perspectives on the topic, and how such input can potentially enrich the literature, especially with regards to our understanding of the moral and ethical dimensions of capitalism in Islamic societies. Furthermore, the introduction of Sadr's views to this debate will hopefully amend the questions asked and the methodology applied, so that the answers bring us closer to understanding the historical reality.

In the next section, we provide a brief overview of Weber's views on Islam, and the critical literature that developed. We then direct our attention to Sadr, briefly examining his theory of the Islamic economic system. This is followed by a careful discussion of his views on the relationship between Islam and capitalism. In the section, “Weber and Sadr,” we highlight the important points of comparison between the two scholars, deeply engaging their views in conjunction with recent developments in the literature. We then conclude in the final section.

Weber, Capitalism, and Islam

  1. Top of page
  2. Abstract
  3. Introduction
  4. Weber, Capitalism, and Islam
  5. Sadr's Islamic Economic System
  6. Sadr, Capitalism, and Islam
  7. Weber and Sadr
  8. Conclusion
  9. References

Weber's general thesis on the development of capitalism is based on two distinct but complementary sets of factors, “motivational” and “institutional” (Schluchter 1999: 81). In The Protestant Ethic and the “Spirit” of Capitalism (hereafter PE), Weber examined the religious or motivational factors that assisted in the rise of capitalism as the dominant economic system in the West. He then directed his attention to the role of institutional factors, which formed the larger part of his great treatise, Economy and Society (hereafter ES). These factors represented the “points of comparison” or ideal types that Weber utilized as “conceptual tools” for the purpose of historical and comparative analysis (Trigilia 1998: 57). In the case of Islam, his inquiry lacked the coherence and comprehensiveness that characterized similar treatments of Christianity, Judaism, Hinduism, Buddhism, and Confucianism (Salvatore 1996). This renders the task of discussing Weber's views on Islam relatively more difficult. Nonetheless, the task is best served by examining the ideal types, each separately.

According to Weber, although Calvinism and Islam shared similar belief in a transcendental God, they differed with respect to the doctrine of predestination and salvation. Whereas in Calvinism actions are aimed at indicating one's grace, in Islam, such actions are fulfilled so as to determine one's fate. The consequence of this divergence is that no “systematization of salvation by works emerges in Islam.” Instead, a doctrine of “predetermination” developed where believers recognize minimal need for the rationalization of life, and would thus fail to develop the economic ethic that can promote the spirit of capitalism. What developed instead was a “warrior aristocracy” that subscribed to the “asceticism of the military camp … and certainly not the bourgeois, ascetic systematization of conduct” (Schluchter 1999: 77–79).

The Islamic worldview that was largely shaped by the warrior ethic also had profound consequences for the nature of political rule that ensued. Islamic political structures were primarily military states, characterized by an overly patrimonial or “sultanistic” character, a highly centralized authority, and the absence of civilian labor. This was in sharp contrast to Western state formations that were largely decentralized, autonomous, contract-based, and bureaucratic. Whereas the political structure in Western societies was conducive for the development of industrial capitalism, the political structure in Islamic societies favored “politically oriented, not economically oriented capitalism” (Schluchter 1999: 100–101). The religious and political autonomy enjoyed by Western cities was also lacking in their Islamic counterparts, due to the centralized structure of power and the inescapable interconnectedness between religion and politics. The distinct feature of the Western city was its ability to induce “fraternization between its citizens,” which in turn “individualizes the faithful and weakens the bonds of kinship” (Zubaida 2006: 113). Islamic cities however, failed to transcend tribal considerations towards a more communal state. Finally, Islamic law according to Weber was essentially a “jurists' law” (ES: 820). With its emphasis on “legal interpretation” as opposed to “legal creation,” and the stagnation in Islamic jurisprudence that later occurred with the four primary schools, Islamic law assumed a “substantive-theological and not [a] formal-juridical nature.” In the West, the separation of sacred and profane law allowed each to develop independently. In Islam, such autonomy was missing, and so the legal system did not provide the predictability required to achieve a rational administrative process and, consequently, contribute to the development of rational capitalism (Schluchter 1999: 105–106).

A few notable works by historians and sociologists have deeply engaged Weber's study of Islam. Rodinson, in Islam and Capitalism, thoroughly criticized Weber's arguments, citing problems of circularity and bias. He believed that Weber's thesis rested on the preconception that the Islamic world adheres to an inferior rationality compared to the West, which paved the way for capitalism to develop in the West, but falter in the Near East. But by explaining Western rationality in terms of its later consequences, Weber was essentially presenting a circular argument. More importantly, this ethnocentric approach to the study of Islam caused many of his conclusions to suffer from considerable substantive errors (Rodinson 1966: 112).

In contrast to Weber, Rodinson argued (in a Marxist tone) against the view that the Islamic world trailed the West due to inherent religious factors. He rejected any ideological explanation for such underdevelopment by arguing that Islam does in fact encourage capitalistic behavior (Rodinson 1966: 157). However, despite the attention he awards to Islamic doctrine, he eventually argues away any effective role the doctrine assumes in the development of Islamic societies, by “ideologically” refusing to entertain religious explanations for the development of capitalism. Schluchter (1999) rejects Rodinson's arguments by stating that “Weber was neither a dialectician nor a positivist” (1999: 119). Hansen (1963) agrees, arguing that Weber did not speak of a “psychological determinism,” nor did he seek to establish a monocausal relationship between religion and economic behavior. Schluchter (1999) also rejects the argument on rationality, explaining that Weber does not differentiate between levels, but types, of rationality. Rationality, according to Weber, was “religiously conditioned,” and its role in any comparative analysis is strictly with reference to its consequences on economic activity.

Another systematic treatment of Weber's views on Islam was produced by Bryan S. Turner, in Weber and Islam. By examining different formulations of Weber's thesis, Turner (1974) concludes that the proper interpretation of Weber's views on Islam is to be sought in the socioeconomic conditions, and not the religious doctrine. The role of Islamic values and motives can only be understood as a consequence of these socioeconomic conditions. Both Rodinson and Turner, assuming a Marxist position, sought to downplay the role of religion in Weber's thesis in favor of a materialistic theory of capitalist development. As a consequence, they offer a positive Islamic view of markets that is quite unlike the perception created by Weber. Curiously, however, both scholars attempt to prove the insignificance of religion after (and by way of) establishing its positively significant role.

Weber's conclusions in relation to the ideal types have also been separately contested by scholars. His use of the warrior as an ideal type is contradicted by Levitzion (1999: 158), who argues that “Arab warriors ceased to play any significant role as early as the third century of Islam. Islam as we know it is a religion developed by scholars, jurists, theologians and mystics, without virtually any input of those in political authority or those who held military power.” Rodinson and Turner also disagreed with Weber's characterization as simplistic and superficial. Turner (1974: 172) argues that Islam was primarily an urban religion of merchants and state officials that reflected the values of a mercantile rather than a warrior society, a view that Lapidus (1999: 142) also shares.

Lapidus also questions much of Weber's opinions about Islamic states and cities. The depiction of state and city as patrimonial and centralized overlooked the diversity of the political and religious landscape. Zubaida (2006) likewise criticizes Weber's “sociology of absence,” arguing that the absence of institutions identical to their Western counterparts does not imply that Islamic cities lacked an institutional structure. With respect to Islamic law, Weber did find support among subsequent scholars, such as Turner (1974), who accepts Weber's argument, but insists on establishing patrimonialism as the central thesis to explain the Islamic world's underdevelopment. Crone (1999), on the other hand, argues that deliberation about the connection between Islamic law and capitalism is missing the point, as “there are more obvious factors to consider first,” such as the “political conditions” that were clearly not conducive for the development of capitalism (Crone 1999: 258). A somewhat different perspective is that offered by Kuran (2004), who disagrees with the irrationality view, but nevertheless blames the substantive nature of the law, and specifically its “protectionist” attitude towards contracts and risk, as the main obstacle to Islamic prospects for economic development. In the next section, we examine Sadr's theoretical construct of an Islamic economic system.

Sadr's Islamic Economic System

  1. Top of page
  2. Abstract
  3. Introduction
  4. Weber, Capitalism, and Islam
  5. Sadr's Islamic Economic System
  6. Sadr, Capitalism, and Islam
  7. Weber and Sadr
  8. Conclusion
  9. References

In our effort to explain the Islamic economic system that Sadr sought to discover, it is essential that we shed some light on his philosophical arguments, as they represent the foundation for his socioeconomic thought. Despite the major theoretical and practical differences between capitalism and communism, Sadr believed that both doctrines adopt similar assumptions concerning human nature. Both doctrines adopt the individualistic view, which rationalizes behavior on the basis of personal impulses and self-love. Whilst capitalism provides for the total satisfaction of these individual tendencies, Marxism seeks to radically “exploit” such tendencies for the sake of the underprivileged (Sadr 1984: Vol. 1, Part 2: 7–14).

In a capitalist democracy, individuals progressively became more materialistic at the expense of nonmaterialistic tendencies, such as religion and spirituality (Sadr 1987: 9–11). This trend gradually directed the European or the Westerner to look “to the earth and not to the heavens,” and thus “create values for material things, wealth and possession which are in keeping with that attitude.” The “severance of the true link with God,” by focusing on the earth rather than the heavens, distanced the European mind from any conscious thought “of a more sublime value or of restrictions imposed on him from outside his own domain.” This, in turn, encouraged individuals to desire higher levels of freedom and independence. Moreover, this broad notion of individual freedom paved the way for the notion of competition, since each individual, by mere existence, limits the freedoms of others. The resulting state was in “modern man's extreme consciousness of competition” (Sadr 1984: Vol. 1, Part 1: xxx–xxxii).

What mattered to Sadr was the impact of this capitalistic spirit of materialism on morality. The key effect was that the assumptions and conceptions of morality experienced a fundamental change. The principal objective of society became the extensive provision of freedom as a means to satisfy individual interests. This objective was based on the capitalist conviction that by providing the conditions necessary for the fulfillment of individual interests, the achievement of these objectives will, directly or indirectly, achieve the social interest (Sadr 1987: 10–11). This evolving capitalist system eventually expressed itself in flagrant tragedies through various forms of greed and oppression. One manifestation was the commoditization of human life within the confines of labor markets. Another tragedy concerns the history of colonialism by European powers, primarily driven by the capitalist spirit. Furthermore, as economic freedom paved the way for uninhibited competition in markets, powerful parties in this struggle would gradually attain monopoly status, thereby negating the supposed role of freedom (Sadr 1984, Vol. 1, Part 2: 25–32).

These tragedies, however, are but logical outcomes of the distorted sense of morality that sanctifies the individual at the expense of society. More importantly, the assumption concerning an effective link between individual and social interests is highly questionable to Sadr. He argued that any potential link between individual and social interests in any social context can only be conceptualized and realized if based on defined moral or religious foundations. In other words, it is necessary that social interests be defined so as to express identifiable social objectives. This essentially requires justification for certain curbs or limitations on personal freedom. But by allowing any confines on freedom, capitalism essentially compromises much of its philosophical doctrine. Hence, at some point, freedom assumes more than just an instrumental role, but becomes an ultimate end. The principal capitalist objective can then be expressed as the utmost possible provision of individual freedoms. This forms the basis for the “moral practice” of the European. What about the moral practice of Islamic societies?

In contrast to the European, the Muslim living in Islamic societies has long been religiously trained and educated. Naturally, this engages the mind and consciousness of the believer, who is primarily attracted to the metaphysical world, and thus “looks to the heaven before looking to the earth.” This connection to the heavens curtailed the Muslim's attachment to material things, thus limiting the ability of such desires to stimulate or direct behavior. From a practical viewpoint, this trained believers to constantly feel “the presence of an invisible supervision which, in the conscience of the pious Muslim, is an expression of a clear responsibility in the presence of God.” This “feeling of an inner restriction” naturally translates into a limited notion of individual freedom. Such freedom assumes an instrumental role, directed towards greater objectives. It also allows Muslims to experience a strong connection with their group or community, and recognize a relationship of harmony and reciprocity, instead of the competition that characterizes Western societies (Sadr 1984: Vol. 1, Part 1: xxxii).

Given this philosophical background, the Islamic economic doctrine, according to Sadr, consists of three main elements: the principle of double ownership, the principle of limited economic freedom, and the principle of social justice. Islam permits the private ownership of resources and wealth, while at the same time allowing for public ownership. With regards to freedom, he argued that while individuals enjoy unhindered levels of freedom under capitalism and minimal levels under socialism, Islam adopts a balanced approach that is in accordance with its general nature and outlook (Sadr 1984, Vol. 1, Part 2: 54). Finally, the concept of social justice in Islam consists of two main principles, general reciprocal responsibility and social balance. These principles are intended to guide human behavior towards a relationship of unity and social harmony. Humans are expected to act in a reciprocal manner, where rights and obligations complement one another.

The crucial theme underlying Sadr's theory is that the “economic doctrine of Islam is distinguished from other economic doctrines by its general religious framework” (Sadr 1987: 76). The religious nature of the doctrine is not merely a formative matter, but constitutes its theoretical or substantive core. This is because only religion can unify the personal and social interests in a single framework that lacks any contradictions. Religion, in a sense, becomes the visible hand that mobilizes individual tendencies towards the fulfillment of social objectives.2 We now turn our attention to Sadr's views on Islam and capitalism.

Sadr, Capitalism, and Islam

  1. Top of page
  2. Abstract
  3. Introduction
  4. Weber, Capitalism, and Islam
  5. Sadr's Islamic Economic System
  6. Sadr, Capitalism, and Islam
  7. Weber and Sadr
  8. Conclusion
  9. References

In the Preface to Iqtisaduna, Sadr initiates his study of the Islamic economic system by acknowledging the undisputable fact that the Islamic world is in a general crisis. Solutions for some time have been sought from the West, thereby acknowledging the developmental logic of the West's “intellectual guidance” and “leadership of the civilization procession.” The Islamic world thus encountered two non-Islamic systems, capitalism and communism, both claiming to offer the ideal solution to its crisis. The success of capitalism in the West was presented as concrete evidence for the superiority of its method. However, the Islamic experience with capitalism vis-à-vis colonialism encouraged the view that communism was a more viable answer for the problems of the Islamic world. Each method was thus keen in presenting its case, and also in defending its “failure in application.” The persistent nature of the crisis, however, presented clear evidence of the failure of both capitalism and communism as practical solutions for Islamic societies, in spite of the fact that both systems have enjoyed considerable success in Europe and elsewhere (Sadr 1984: Vol. 1, Part 1: xviii–xxii).

The ideal solution is within. There exists an Islamic economic doctrine that can solve the crisis facing the Islamic world. And although it is scarcely practiced, it nevertheless exists “theoretically and ideologically.”3 The effectiveness of an economic system depends not only on its method, but also on its feasibility in the particular context for which it is intended. Any adopted system should be capable of accommodating and utilizing the religious and cultural elements of the society within which it hopes to function. This condition was present in European society, where the capitalist system embraced and even stimulated the materialistic tendency in European societies, allowing for an easier appreciation of its ideas and practices. In Islam, any adopted system should likewise be able to embrace Islamic norms, while at the same time creating momentum for economic development. The critical reason, therefore, for the failure of the capitalist solution in the Islamic world is the “incompatibility between [the capitalist] method and the religious belief of the Muslims.” More importantly, the source of this incompatibility is the particular “moral practice” of Muslims. Furthermore, Muslims harbor a “special psychological feeling” of “doubt, suspicion and fear” towards ideologies that, in their estimation, represented colonialism, providing an additional motivation for the development of systems that originate from within (Sadr 1984: Vol. 1, Part 1: xxiv–xxviii). The following statement summarizes much of what Sadr is presenting as a thesis for the failure of capitalism in Islamic societies, and the favorable prospects for an Islamic system:

In fact, there is an Islamic moral practice which is to a certain degree prevalent in the Islamic world and there is the moral practice of the European economy which accompanied the modern Western civilization and which [interlaced] its general spirit and facilitated its success on the economic level. The two moral practices are fundamentally different in tendency, outlook and their appraisal of things: in the same measure as the moral practice of the modern European man lends itself to the methods of the European economy, the moral practice of the people of the Islamic world will be in conflict with it. (Sadr 1984: Vol. 1, Part 1: xxix)

The discussion so far has aimed at setting the stage for the following synthesizing section, where we attempt to create a “virtual dialogue” between the two scholars, supplemented by input from the recent literature, in the hope of gaining a more accurate insight into the relationship between Islam and economic development.

Weber and Sadr

  1. Top of page
  2. Abstract
  3. Introduction
  4. Weber, Capitalism, and Islam
  5. Sadr's Islamic Economic System
  6. Sadr, Capitalism, and Islam
  7. Weber and Sadr
  8. Conclusion
  9. References

Religion

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.

Institutions

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.

Practice

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?

Identity

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

Conclusion

  1. Top of page
  2. Abstract
  3. Introduction
  4. Weber, Capitalism, and Islam
  5. Sadr's Islamic Economic System
  6. Sadr, Capitalism, and Islam
  7. Weber and Sadr
  8. Conclusion
  9. References

In the final page of General Economic History, Weber confidently predicted that capitalism would eventually abandon its religious roots towards a complete rationalization of economic life. Capitalism would eventually create a self-sufficient ethic with minimal religious substance. This raises an important issue that has been surprisingly overlooked in the literature on Weber and Islam. If the religious nature of capitalism in the West diminished or transformed over time as a result of increasing economic rationalization, is this development an inevitable consequence of capitalism? This question unavoidably represents a serious concern to an Islamic society that distinguishes itself chiefly by its religious nature. If such rationalization is in fact inescapable, such an assessment offers clear support to Sadr's incompatibility thesis, as it exposes the contradiction between a rationalizing method and a religious context. More importantly, it proposes an enlightening explanation for the failure of capitalism to develop within Islamic societies. The moral practice of Islamic societies would naturally be at odds with an economic system that gradually eradicates its religious nature. It follows, then, that this incompatibility can only be resolved if the moral practice of Muslims undergoes a radical transformation. But such a transformation entails a shift from “looking to the heavens” to “looking to the earth.” It would mean replacing divine satisfaction with worldly satisfaction.

Notes
  1. 1

    Muhammad Baqir as-Sadr is widely recognized as one of the foremost Islamic personalities of the 20th century, leaving behind a vast intellectual legacy within many disciplines such as political philosophy, theology, jurisprudence, economics, and sociology, in addition to being a prominent leader and politician. He was executed by the Baath regime in Iraq for his strong political and religious opposition. See Mallat (1993: 8–11) for a succinct biography.

  2. 2

    “Hence [originated] the role of religion [as] being the only solution of the [social] problem, because religion constitutes the only framework in which the social problem could be solved. This is due to the fact that the solution depends on agreement between personal impulses and general social interests and this agreement religion could provide to humanity. Because, religion is the only spiritual power which can compensate for a man's temporary pleasures which he forsakes in his worldly life in the hope of gaining perpetual comfort” (Sadr 1987: 84–85).

  3. 3

    Sadr does consider the limited experiment of the early Islamic society as a model that can be utilized:

    In spite of the fact that the experiment Islam made to bring about such a society was short, yet it produced [some of the] most brilliant results man's life had ever witnessed and proved the possibility of man rising to horizons which members of the capitalist society, immersed in the needs of material and its meanings, could not look at. The information that history gives us about the Islamic experiment and its brilliance throws a light on the possibilities of good (potentialities) hidden in the human being and reveals the power of Islam's mission whereby it could mobilize these possibilities and exploit them for the greater human issue. (Sadr 1984: Vol. 1, Part 2: 18)

  4. 4

    Weber was clear that it was “not [his] aim to substitute for a one-sided materialistic an equally one-sided spiritualistic causal interpretation of culture and history” (Weber [1905] 2002: 122). Zubaida (2006: 111), however, seems to support the view that Weber, and “despite his utter rejection of any philosophy of history, implicitly advanced one of his own.”

  5. 5

    Sadr even had something to say in response to the claim that Muslims adopt a fatalistic attitude to life:

    I will content myself with saying that the Muslim man's inclination to heaven does not in its basic sense mean the submission of man to fate … Rather, this inclination of the Muslim man is, in fact, an expression of the beginning of the khilafah [vicegerency] of man on earth. This, by nature, he inclines to the realization of his position on earth as God's khalifah [vicegerent]. I do not know a concept more rich than the concept of caliphate to God, as conformation of man's capability and his powers … Likewise, I do not know a meaning further from the true meaning of caliphate to God than submission to fate and circumstances. (Sadr 1984: Vol. 1, Part 1: xxxvi)

  6. 6

    According to Sadr, a common misunderstanding concerning early Islamic history is that economic life then was capitalistic, as evidenced by some of the “capitalist” practices that prevailed. The fact that individuals then owned private property and enjoyed some measure of freedom in their economic dealings suggested that the society fully embraced capitalism as its doctrine, an interpretation that suffers from what Sadr called the “deceit of the practical existing reality.” The proper assessment, however, was that practice then was seemingly capitalistic because economic activity was quite limited to have warranted any conflict with the incompatible elements of Islamic doctrine. But with advances in knowledge and application, the evolution in economic activity increased the likelihood of such conflict. Hence, the incompatibility between the two systems became increasingly evident as economic interactions developed and expanded (Sadr 1984, Vol. 1, Part 1, p. 63–65).

  7. 7

    This reasoning is reminiscent of Sadr's argument regarding the emerging incompatibility between seemingly capitalistic practices in Islamic societies and the Islamic economic doctrine. Kuran is arguing that the evolving complexity of economies increasingly highlighted the inefficient nature of existing institutions, thus calling for an institutional overhaul. Sadr, however, speaks of the growing discrepancy between capitalistic practices and Islamic morality, thus calling for a moral overhaul.

  8. 8

    “This Islamic core, at once eternal and evolving, may insist on a complete opposition with modernism, precisely because modernism, understood as a distinct worldview and paradigm, either denies truths of a religious or metaphysical nature or creates … a blurred image which half-truths appear as the truth itself, thereby compromising the integrity of all that tradition represents” (Nasr 2010: 4).

  9. 9

    Interestingly, the argument regarding an antagonistic relationship between religion and capitalism, forwarded by Sadr, is not unique to Islam. Thorstein Veblen, who would be rightly considered in the Christian economics literature as an outsider, has highlighted the “contradictory” relationship between “Christian Morals” on one hand, and the “Competitive System” on the other. According to Veblen, “these two codes of conduct … are the institutional by-products of two different cultural situations” (Veblen 1968: 494). While he sought to explain this contradiction based on “sociological and historical” factors, Clark (2006) argued instead on the basis of contrasting “codes of ideal behavior,” corresponding to opposing “visions” or worldviews.

References

  1. Top of page
  2. Abstract
  3. Introduction
  4. Weber, Capitalism, and Islam
  5. Sadr's Islamic Economic System
  6. Sadr, Capitalism, and Islam
  7. Weber and Sadr
  8. Conclusion
  9. References
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