Foundational problems, practical challenges and consequences of mainstream economics, banking and finance are more apparent in contemporary times.
The centurieslong pursuit for profit and utility maximization, marginal cost and benefit analysis, Pareto efficiency and steady path convergence measurements among macro-economists, micro-economists, wealth and asset managers and the corporate world have generally pushed humankind to the edges of existence. There is hardly a day without a natural disaster whether it be a wildfire, land erosions, earthquakes, floods, typhoons and so on.
Life on Earth is unbalanced, yet the banking and finance world, in addition to other corporate players, perpetuate practices that caused it all. Efforts to curb them are evident in the trendy discourse on sustainable development goals (SDGs), or environmental, social and governance (ESG), and Shariah-compliant screenings. Apparently, there are alternative initiatives to mitigate disruptive globalization and climate shifts in the Earth’s ecosystem.
Islamic Economics (IE) is an alternative too, and perhaps the only one offering solutions rooted in sound and comprehensive foundations derived from sound Islamic sources. The essential methodology to pragmatize this alternative in real time is that of epistemological integration. The epistemological integration methodologies foster fused learning and practice derived from textual and real-time sources. These approaches have the potential to shape global perceptions and transform our thoughts.
Changing perceptions changes the world. Hence, the solution to many problems we currently face in the world lies in the way we perceive things. This perception is reflected in the way we consume and produce resources. We know that consumption is a central tenet of an economic system. It represents demand levels and impacts degrees of supply or production.
Management of consumption and production becomes possible if we change the way we approach the consumption of goods we really need, need less, or don’t actually need at all. The Shariah theory of Maqasid (objectives) is a great determinant of the hierarchy of needs. In this hierarchy, we have the Daruriyyat (essential), Hajiyyat (intermediate) and Tahsiniyyat (luxurious) levels of needs. Most humans can sustain themselves with the first two while they aspire for the last category. The economic world shaped us in such a way that we pursue needs that we don’t need while neglecting needs that are essential. Spending one's wealth on any need is a legal right, but the long-term outcome of such reasoning has brought humanity to the edge of collapse. Supply for such consumer demand is no longer sustainable.
On the other hand, SDGs and ESGs are sustainably attainable through a greater epistemological understanding of economic activity, and referencing the Maqasid helps us manage our needs and wants more effectively. As much as it will manage our consumption, even supply levels will align. Questions that we may ask ourselves to delve deeper into epistemological economic thinking and the Maqasid methodological realm may range from “Do I really need this item? If so, what for?" to “Will I really use it or dispose of it shortly after purchasing it?” and “Do I affect anyone's life by disposing of items so quickly and recklessly?” among others.
These are basic questions that each consumer can ask themselves to review whether their consumption habits are rational and sound. This will also rectify the rational or sound level of supply. Hence, the consumer will raise their awareness about their actions, i.e. disposal of plastics, electronics and clothes, which affect the degree of meeting certain SDGs or ESGs. The supply side or the producers follow course, meet consumer demand and envisage ways to enhance their experience. This approach to economic reasoning is epistemological in the sense that it takes into account how things were supplied to the consumer and how the consumer utilizes and disposes of them.
The awareness about the source of a product and its use shapes the perception of consumers more comprehensively and roots their actions on sound foundations. All their actions are executed more responsibly. Thus, Maqasid can be viewed as highly normative and rooted in sources of knowledge, i.e. contributing to environmental protection, the use of resources, sharing of products/things via responsible disposal, and living within one's means and actual needs without a reduction of one’s quality of life. The consumer becomes an active participant in an economy by questioning their purpose and objective when consuming or supplying a product. Linkage with the reality (Haqiqah) of our world becomes evident when we have a proper purpose or objective, which defines truly living. Life becomes more truthful.
Apparently, the Maqasid-based epistemological approach in an economy not only has the potential to shape individuals but also industries or finance and banking services in such a systematic and genuine way to reveal the true teachings, vision and mission of what the industry of Islamic banking and finance (IBF) aspire to attain. Hence, it is time that stakeholders and shareholders, all of whom are consumers, begin to question their consumption habits, to use and dispose of things owned in a responsible manner to contribute to the global aims of SDGs and ESGs. This makes the Maqasid practical as well. Moreover, IBF institutions have the chance to universalize their way of economic activity by appealing to consumers around the world who are still not aware that IBF is not solely for Muslims.
The world has the chance to understand IBF from its epistemological basis and comprehensive Maqasid gateway where innovation and creativity drive change. Contemplation along these lines enables the IBF to reclaim its fame as the engine of an Islamic economy or an alternative economic system where contemporary drives for greater data analytics and artificial intelligence are integral, and the fuel for greater empirical testing and refinement vis-a-vis sound philosophical foundations derived from the sources of knowledge in Islam. Multidisciplinarity is evident from the appraised approach to economic understanding and the reshaping of the IBF industry based on real-time data.
Humanity generates the data that reveals their consumption and production habits while Maqasid identifies and defines the higher purpose of consumption and production with an epistemological integration base. The interplay between the two enables convergence along a steady path of growth toward greater levels of Shariah compliance. Greater levels of Shariah compliance mean greater levels of ESGs and SDGs that is commensurate to a pragmatic solution to save our planet.
Reversing human activity on the planet on a sound epistemological basis guided by Maqasid enables the improvement of lifestyles for all, and the prevention of further disasters, which actually maintains the welfare of many people under such threat in contemporary times. Resources, meant to relieve many that would suffer from preventable disasters, could be used to improve their living conditions. These represent new services of the industry and new revenues. Hence, it is crucial for stakeholders and shareholders to adopt the demonstrated economic reasoning in practice or reckon with the consequences of failing to do so.
Practitioners, inclusive of academics and industry players, should adopt a comprehensive analytical framework where philosophical foundations play a crucial role in defining the purpose or objectives (Maqasid) of actions. Training, seminar and workshops in the industry and academia about such foundations are crucial too and could be the means through which experts of texts and contexts exchange their views. This would lead practitioners to revise current modalities of action and systematically refurbish limited, imitated, narrow and contradictory plans. Social needs should be the core of practitioners' orientation, and social service provision is the consumer base for each and all of us.
Worsening circumstances in society will lead to the perpetuation of contemporary experiences about which we hear daily. Regulators could oversee the plethora of activities that such economic reasoning stimulates and ensure that a data-driven economy aligns with higher purposes and objectives (Maqasid) rooted on sound philosophical foundations. The impact of such economic activity would surely be evident and appreciated globally. While this remains the inception of a new economic era, new insights are truly essential to ensure the re-envisioned approach towards economic development, and the shaping of banking and finance along with other corporate world actors remains genuine.
