Exploring the epistemology of utility function in Islamic economics: Foundation of Islamic finance

Avdukic, Alija; Khaleel, Fawad

Abstract

An opinion held by the majority of Muslims scholars, such as, Ibn Tamiyah, supports the contention that each thing or act has an ethical value that can be comprehended through reason. Two different methodologies are used for applying reason onto morals. One is a categorical moral reasoning that attempts to locate morality within actions and duties, while the other is consequential moral reasoning which concentrates on the consequences of an act. Jeremy Bentham adopted consequential moral reasoning and developed the concept of utilitarianism, which was further developed by John Stuart Mill. Through utilitarianism, a concept of utility was introduced, measuring consequences of actions or things. The concept of utility has its roots in the idea of pain and pleasure. By way of comparison, Islam has its own theme for pain and pleasure, which originates from the paradox of maruf (known good) and munkar (known evil). Therefore, the paradigm of utility theory in an Islamic economic model is different to that offered by conventional economics and a mainly utilitarianism approach.

In a desire to develop a paraxial economic system, modern Muslim scholarship has spent the last forty years attempting to reconcile and compare the philosophical grounds of conventional political economic ideas. During this process scholars attempted to develop an understanding of utility within the context of Islamic political economy, however, varied views arose on the relevance of utility within an Islamic economic framework. Some scholars outrightly rejected the idea of utility and considered it incompatible with the spirit of Islam, while others (such as Umar Chapra) tried to reinterpret it in relation to taqwa (piousness).

This study attempts to objectively explore the philosophical grounds for incorporating a concept of utility within an Islamic framework by examining maqasid al shariah (the purpose of law); the concepts of development and social justice in Islam; and comparing them with a hermeneutic understanding of tawhidi methodology along with the ontological nature of al-ruh al-tabiiyya (natural forces) and quwwa bahimiyya (animalistic forces). Through this examination, this study attempts to develop foundational arguments for applying an Islamic concept of utility and analyses the relevance of this concept within theories of Islamic political economy.

Citation

Avdukic, A., & Khaleel, F. (2020). Exploring the epistemology of utility function in Islamic economics: Foundation of Islamic finance. In V. Efendic (Ed.), Islamic Finance Practices: Experiences from South Eastern Europe. Palgrave Macmillan. https://doi.org/10.1007/978-3-030-34420-7

• Acceptance Date: May 1, 2019
• Publication Date: 2020-03
• Deposit Date: Jun 24, 2019
• Publisher: Palgrave Macmillan
• Book Title: Islamic Finance Practices: Experiences from South Eastern Europe
• ISBN: 978-3-030-34419-1
• DOI: https://doi.org/10.1007/978-3-030-34420-7
• Keywords: Finance, Islamic, Economics
• Public URL: http://researchrepository.napier.ac.uk/Output/1906428
• Publisher URL: https://www.palgrave.com/gp/book/9783030344191