Erratic and inconsistent behavior is not amenable to scientific analysis leading to generalizations that could have some predictive value for groups but not for individuals. This is possible only with consistent behavior resulting from deliberate choice guided by certain norms. All intelligent persons try to be rational in this sense, their success depending on the availability of relevant information. It is reasonable, therefore, to assume rational behavior as the basis of economic analysis of households and firms. But economic rationality assumed by modern economics goes farther than that. It regards maximization of advantage for the self as the chief attribute of all economic agents. The consumer maximizes utility or satisfaction and the firm maximizes profits. The concepts are strongly individualistic and utilitarian. Altruism or one caring for the good of others in one's choice is ruled out. The time horizon is narrowed down to the near future if not the present. A care for life in the hereafter is thus excluded, however genuine one's faith in it. The concept tends to regard non-economic ends irrelevant for choice, in so far as utility, satisfaction and profits are interpreted in purely economic terms. As maximization of profits implies minimization of costs, the focus is on direct cost to the individual, ignoring ecological and socio-cultural costs. Thus the concept of economic rationality enshrines the materialistic individualistic worldly approach to life in vogue in the hey-day of capitalism. Those were the days of aversion to religion and morality and revolt against the Church. The Darwinian idea of survival of the fittest further sanctified exploitation of the weak by the strong in the name of economic rationality. The idea of superiority of the white race justified imperialism.

The concept of economic rationality is not suitable for the analysis of behavior in Muslim countries, for two main reasons. It is not realistic. Men and women do care for the good of others besides caring for their own good. Their choice is influenced by their assessment of its possible consequences for society, for their neighbors, etc. They do care for the after life. Their choice as consumers and their decision as producers, employers, traders etc. is influenced by their faith or lack of faith in the life hereafter. They are also motivated by social, cultural and political considerations. These tendencies may be strong or weak, depending on the extent of available information and the strength of the relevant commitment. Yet the tendencies are there. A concept that ignores these tendencies can hardly do justice to reality. Once the concept of economic rationality is given the status of a basic assumption it has a tendency to serve as a norm. Men and women tend to regard it as the proper way to behave. That is the difference between human sciences and natural sciences, the object in the latter remaining unaffected by any assumption the scientist makes regarding its behavior. No wonder that altruism, otherworldly considerations and non-economic motives tend to be regarded as irrational modes of behavior by those who take economics seriously. When economic theory is applied to practical problems and policy prescriptions are made, this bias results in the neglect of the vital interests of society and its individuals. This is the second reason why Western "economic rationality" cannot be admitted into the conceptual framework of Islamic economics. It would hinder the process of Islamic transformation by virtue of its normative role. Islamic economists have suggested its replacement by the concept of "Islamic rationality" implying orientation of action towards maximal conformity with the Islamic norms.' This concept too is normative in nature, but it would serve as a better tool of analysis if due allowance is made for weakness of the Islamic commitment in present day Muslim societies. It is a broader concept than that of economic rationality and a closer approximation to the actual reality. Its normative role will promote the cause of Islamic transformation of our societies.


Source: Dr. Muhammad Nejatullah Siddiqi, Economics An Islamic Approach. Republished with permission. 

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