 So, I want to explain that this idea of social science that was created in the West is a great deception and problem, a serious problem for us because the idea of science does not work when you apply it to the study of societies because science is the study of universal laws, like the law of gravity, which is the same in all places. It is the same in Iran, in Pakistan, in England, in Brazil, and it is the same in the 19th century and the 20th century and the 21st century. But in societies, we don't have such laws. And so what has happened as a result is that the Europeans have taken some patterns which are extracted from their own historical experience and they have extracted these as laws and they have applied these to all societies. And because we Muslims are so impressed by the West and their technological achievements that we accept, even though we see that it is ridiculous. For example, modern economics, somebody has speaker on. Modern economics says that the purpose of life is to maximize the pleasure that you get in this dunya. This is what the textbooks of economics teach. Now, as Muslim, you say nonsense. This is absurd. This is ridiculous. This is not true. But nobody says that. Muslims are so much in shock and awe of West because, you know, their technological achievements, they have these computers and audios. So they think they also can look into the heart of the human beings. And this is false. The West is like the Dajjal in the sense that they have very deep insight into the external reality, the world around us. They can split the atom and they can send a rocket ship to the moon. But they have, they are completely blind to what goes on inside the heart of the human being in the soul. They, in fact, they reject the existence of these things. They say the heart is just a pump. It has no feelings. And the soul doesn't exist. And these are not sources of knowledge. So because of this blindness, they are creating a theory which they think applies to the whole world, which it does not. It doesn't even apply to the West. And we are following them. So once you understand that science is not a good way to think about social change, then you can go back to the Islamic tradition for how to study society. And we have an intellectual tradition of thousand years and we can build upon that. But Muslims have forgotten how to do that these days. And so one of the critical things in studying a society is history. If you want to study the society of Iran, the society of Iran, the economics of Iran, before the revolution is different. In the time of the Shah, it's different. Before the Shah, it's different. So you can't, there is no one economic law which applies to Iran pre-revolution and the same law applies after the revolution. It's not true. Now economics says that there is such a law and it is the supply and demand. But this is false. The law of supply and demand does not actually hold. It is not a law. So if you want to study economics, you have to study the history. One of the critical things to understand is that every economic theory originates from the study of society. You see, I am in Pakistan these days, actually. And so in Pakistan, we have some problems. We have huge government debt. We have low productivity in agriculture, et cetera. So now if I study economics for Pakistan, I will be thinking about how we can raise agricultural productivity. How can we help the poor? How can we feed the poor, which is the order of the Quran? And this is a very different kind of problem from the problems that we would have if we were studying the economy of Nigeria or of Iran or of Russia. So every society has its own problems. And so if I develop a theory for this, the theory will depend on what I am looking at. But because of the false idea of science, if you look at the economics textbooks, look at any economic type and they will start writing mathematical equations as if it's a physics textbook. So this physics textbook, it doesn't say are these laws being studied for Iran or are they for Afghanistan or are they for Nigeria or are they for Brazil? It doesn't say anything. But by not saying anything, it deceives you into thinking that they are valid for all societies. And this is false. It is not true. So for example, Keynesian economics, which was a very important analysis of economy, was based on the analysis of the economy of England in 1929 to 1940 between the after the Great Depression and before the World War II. And he even said that in one of few sentences that my analysis is for this society, it's not generally valid for all societies and all time. But now in our textbook, we study Keynesian economics as if it is a universal law to understand what Keynes was saying. You must look at the Great Depression, what happened, where it happened, why it happened, because Keynes was trying to analyze that economy. And then so basically this is the critical point. Similarly, once we understand this, that theories are aligned with history. So Islamic economics is also aligned with history. It was produced by historical forces and it has changed according to history. So this is why this concept of first generation, why was Islamic economics born? When was it born? What were the historical circumstances in which it was born? That will lead you to understanding of what is Islamic economics. And this is never explained because we are also in our Islamic economics, we're also imitating Western theories and we say, okay, just like their theory is valid in all times, so our theory is also valid all our time, but it is not true. So this is just some background as to what I want to do. Now I want to get to start this discussion from my slides. Okay, so these slides have just put up and you should be able to download them. So three generations of Islamic economics. So one of the orders, first of all, we must understand that Islamic economics should be founded in the Quran and the Sunnah and the intellectual heritage of the Islamic civilization. If you look at most textbooks of Islamic economics currently existing in the world, you will not find this to be true. You will find that these textbooks are based on the theory of economics as it developed in the West with the modifications from Islamic ideas. So actually modern textbooks are part of what is known as the Islamization of Knowledge Project, which means that the West has some knowledge which we do not have and we take this knowledge and we Islamize it by taking away anything un-Islamic and adding Islamic elements. But the core is Western knowledge. That is the source of our knowledge and then we will modify it to fit Islam. That is the Islamization of knowledge. Now the third generation, the critical thing is that it rejects the Islamization of knowledge approach. It says that know what the West has is not knowledge, it is ignorance. So we start with the premise that they are in ignorance and darkness, the scholars of the West and so they don't have knowledge. So there's nothing to Islamize. So instead we reject what they have done and we start from our own foundations to build economics. So this is the definition of third generation economics that we don't start from Western ideas, we start from the Quran and the Sunnah and the intellectual heritage of Islam. So the first and critical thing is that the society of Islam started in Madinah by the when Allah Ta'ala made the Muslims, the brothers and in another place in the Quran Allah Ta'ala says that Allah Ta'ala put the love between your hearts and this love is more precious than anything that can be purchased with gold and silver. So the beginning of Islamic economics, we start by rejecting macroeconomics because macroeconomics at the level of nation, Iran, Pakistan, Afghanistan, all of these nations were created after World War I as a part of a project to divide the Muslims against each other and they have been very successful in doing this. So when we do macroeconomics we're already stopped doing Islam because macroeconomics is at the level of the nation. We want to go back to the level of the Ummah. We will think when we talk about economics, what is the economics of the Ummah as a whole? So if there is a trade deal between Pakistan and Iran, we won't talk about what is the advantage to Pakistan and what is the advantage of Iran. We will talk about the advantage to the Ummah, the cost to the Ummah and the benefits to the Ummah. This is the way of thinking that we need to develop for third generation economics, Islamic economics. So this is another verse which stresses the unity of the Ummah. So this has to be at the foundation, at the core of Islamic economics. You can't accept, you see, western microeconomics is based on the philosophy of individualism. I alone, me, myself. This philosophy has no place in Islam. Our building unit is the family, then it is the neighborhood, then it is the community, then it is the, you see, even our institutions, the Masjid represents the neighborhood, then the Salat al-Jumaa is not for one neighborhood, it is for multiple neighborhoods. They come together and then there is the Eid, which is for the whole grouping in the nearby area, but only in the nearby area. And then there is the Eid al-Adha, which the whole Ummah gets together in the same place in the Kaaba. So this is the natural grouping level for economics in the Islamic ideology. But you see Muslims, so blind that we think of individuals and then nations. No, we start with the community, that is our smallest. So we have to have Meso-economics, which is the intermediate level between the individual and the whole nation. And then we have Ummah level economics for which they have no word. And then we can actually go one higher level and think of economics for the whole human being. Allah Ta'ala says that all of the creation of God is the family of God. And if we love the, if we service, if we provide service to the family of God, then Allah Ta'ala will love us. So we have to think of the whole creation, which means all human beings and all animals and all plants, everything is the creation of God. And so we have to love all of these things and to protect them and preserve them. And if we do that, there will be no climate crisis. So capitalism arose when western societies rejected Christianity. And after rejecting Christianity, they said that, okay, there is no God. So this life is just a jungle because we are just animals, because there's no creator. So human beings, this world was created by chance. And then the life evolved by chance. And man is just another kind of animal. And so in the jungle, we have survival of the fittest. And we have competition. And everyone is only interested in its own self. So that is greed. And then there's individualism and hedonism means that there's no life after death. So we must pursue pleasure in this world. So pleasure, power and profits are the goal of life for western economics. So according to how you think of what a society is, so you design the institutions of that society. So in the west, the bank came into existence after the rejection of Christianity because Christianity is against accumulation of wealth. Christianity says that the love of wealth is the source of all evil. That is what is in the written in the Bible. And we have similar statements in our Quran and Sunnah. So once they said, no, the goal of the world life is to make money. So then they said, okay, then we need some place to make money and to collect money and to grow money. And that was the bank. In Islamic society, the spirit, the Sahaba asked the Prophet, what should we do with our wealth? It's written in the Quran. So Allah says that spend it, the spend it in the path of Allah. All that is beyond what you need. So now how do you spend on others? Well, for that you have the Waqf. So in the Islam, the spirit of this variety is spending on others. So we have the, our financial institution is the Waqf. The, in capitalism you have, the goal is to accumulate wealth, not to give it to anybody else. So if you have a million dollars and everybody else in your neighborhood is starving, you don't care. You say, I'll put my one million in the bank and I will make two million from it. Now in Islam, if you have a million dollars and people are starving, then you must spend it on them, not, not make more money out of the money that you have. So today we have 10 people in the world and they have more than half the wealth of the whole, whole planet. Why, why do they need so much wealth? Why do they want so much wealth? This, it makes no sense. But this is the, what they have been taught that wealth is the, you must pursue wealth and create wealth and make more wealth. So the institution of banking is, promotes this greediness and selfishness. And the Waqf, it promotes generosity. So it reflects the spirit of the society. So this is now in capitalism you have insurance because when you're dealing with large amounts of money and you're doing trade and you take risks and so you can get insurance. If your house burns down, if your ship burns down then or if your ship is lost, then you can collect money from the insurance. Now in the western capitalism, insurance like all other transactions is adversarial. It is made between enemies because there are no friends. In capitalist society you don't have any friends. So every, everybody is an enemy. We are in competition with each other. So there is somebody who makes a bet with you. He says that okay, if your ship loses, you pay me some money because of 100 ships, only one ship will sink. So you pay me $1,000 and everybody pays me $1,000. I will get $100,000 from 100 ships. One of these ships will sink and I will pay that ship $10,000, $20,000, maybe $50,000 and I will make money. So this is kind of gambling. They collect the risk and then they insure against the event. So health insurance like that, okay, one person in $1,000 is going to get cancer and the treatment for cancer requires $50,000. So if everybody pays me $100 health insurance, I will get $100,000 and then one person will get cancer. Not everybody is going to get cancer. So I will pay him $50,000 and I make profits of $50,000. So this is how it is. It's adversarial because when somebody reports to me that my ship was lost, I say, okay, how much was it really lost? Maybe you were trying to deceive me. Maybe you set fire to your own ship. If you did that, I will not pay you any money. And you will say that, oh, my ship was carrying goods, which were worth $50,000. I will go and evaluate. There is a proper auditor process which says, no, your goods were not worth $50,000. They were only worth $20,000. So there is a dispute between us. The person who is insured, he wants to get the maximum money from me. And I want to give him the minimum amount of money because I am trying to make profits. And this is what happens in real life, real world insurance, that you make a claim and then there is a claims adjuster who comes and he checks to see if your claim is valid and he tries to minimize the amount of the claim. In Islam, we have insurance, but we have indifferent spirit. It's the kafil. The kafil means taking care of each other. So now we have 100 ships. We are all owners. We get together and we say, brothers, we have all sent our ships. We are all taking risks. And so let us put some money together to help anyone who has problem. So we all put together the money and there is a pool of money. And then if one ship dies, then we say, okay, our brother has had some problems. So let us use this pool of money to help him. So we say, here, your ship was lost at sea and here is 50,000. So the person says, oh, you know, my loss was only about 20,000 because I don't want to take more money from your brothers than what I need because this is for others. So I will take only what I need and less than that. I only need 10,000 to get by. I can get my business back together with 10,000. So you keep your money and use it to help others. And I will try to get myself up. So the spirit of the kafil is not adversarial. It's cooperative. And this is true for all transactions in Islamic society, that the spirit of the transaction is cooperation. So in Western societies, they have microfinance and they give money to the poor. And what happens, they charge interest from the poor. According to last research I saw, microfinance is a way to exploit the poor. You give them loans and they pay 20% interest on it or something in that neighborhood. So you give them loans, you ask them, you help them put a business and you say, oh, look, they're running a business and they're making lots of profits. So I'm helping them. But what about the 20% that you are earning? So you say, and this argument has made that I'm only charging them 20%. If I wasn't there, then there is the famous lender and he charges 100% interest. So I'm actually helping them to avoid 100% interest. So I am actually a benefactor. But Islam doesn't accept this kind of logic. So in Islam, we have Karjahasana to help the poor. We give them money. It must be at zero interest. And there are rules which say that, well, if when you ask for payment and he cannot pay, you should try to give him help and delay the demand or even forgive him. So Karjahasana is in the helping spirit. If somebody is needy, you give him the money at zero interest and you try to help them. Now, in other institution, in capitalism, you see when the people are out to make maximum profits, then it is very dangerous to have a monopoly. In the USA, the doctors have a monopoly on the profession and they charge maximum amount of money. The same thing which costs $1,000 in USA can be done for $100 in Canada and even in other places. Medicines here cost $1,000. They cost $10 in the rest of the world. Why? Because when you have a monopoly, you have a life-saving medicine and you can sell it at any price you like because if he doesn't buy, then he will die. So giving anybody a monopoly is a very dangerous thing. Now, in Islamic society, we used to have gills. So the gills are, for example, the collection of doctors, but their goal is not to maximize profits. Their goal is to provide service to the society. So when the guild of doctors, they can charge money, but if anybody dies in any place, then you go to the guild of a why did you allow that person to die? So they will be responsible. They are responsible for providing the service and they say, okay, this person died because we didn't have a doctor in the village. It's very difficult to reach the villages, but now we will make plans to send somebody to every village, even in the remote areas. And so they collectively think about how to serve the society. So these are some of the institutions of an Islamic society, but they are very different from the institutions of a capitalist society. So one of the critical ideas for organizing in Islamic society is social responsibility. And again, this is a very different thing from the organization of a capitalist society. In a capitalist society, you have competition, you have cutthroat competition, you have survival of the fittest, the firms are there to compete with each other. In Islamic society, we have social responsibility. If there is anybody who is poor, anybody who is hungry in the ummah, then it is the collective responsibility of all Muslims to make sure that food reaches that person. Now this collective responsibility is organized. It is organized by a local area. So if somebody is hungry, then the first responsibility on his neighbor. And if all the neighbors are also hungry, then the people who are next to them, there is one community and then in the people in the next Masjid. And if the whole nation is hungry, then the whole ummah is responsible. So like in the case of Palestine, Palestine, we are all responsible to help them now because they cannot help themselves. So that is the principle. And this principle is a contribution of Islam to the world. And this idea, this concept did not exist before Islam, and it still doesn't exist currently anywhere in the world. We still have this, but we have also forgotten it because our minds have been colonized by Western ideas. So this is a big idea, but there are two very special things that I want to mention that because those things are practical and we should be working on getting this back. Because Islamic society is just an idea right now. Islamic economics is just an idea. It doesn't exist on the planet. But we want to build an Islamic society. We want to build Islamic economics. Then there are some things we have to do. And there are two critical things that we need. This is the place to start an Islamic economics and an Islamic society. And the place to start is to say that education is a collective responsibility. If somebody asks for, if somebody is seeking knowledge, then immediately it becomes the knowledge, the responsibility of everybody to make sure that he gets the knowledge. We don't go and ask. This is only in a capitalist society. If somebody is seeking knowledge, you say, okay, do you have the money to pay for your education? This is a joke in an Islamic society. What nonsense? Somebody is seeking film. Now the one with who has the Ilm, he is responsible to provide the Ilm to the one who does not. It is not the ignorant who is going to pay money to get educated. This concept doesn't exist in Islam. So throughout 1,000 years of Islamic history, nobody had to pay for an education. When you went to place of learning, then if you were accepted for study, then all your needs were taken care of, your food, your housing, everything you are provided for and you pay attention to your studies only. So this is the thing. So we need to start that kind of education and some initiatives are there already. Today I have recently joined Akhuwati University in Pakistan and we provide free education to all students. And I think there are many institutions in the Islamic world which do the same thing. But we need to do this on a mass level that every student in the Islamic world should be able to get education without any barrier because of finance or other. Similarly for health. In the health provision, we used to have institutions in which once a patient comes, then you take complete care of him. Not only you provide for him, in fact, I was reading an account. A patient would come in, he would get four attends, one to look after his physical health and provide medicines, one to take care of his of his exercise and needs for rest, recreation, one to take care of his spiritual health and somebody would provide money to his family because you say this person is sick, he can no longer work for a living. So who's going to look after his family while he's sick? So they would give some money to make sure that while the person is sick then somebody is looking after the family. So you see this is how a person is sick, it's not his fault that he is sick. Now it is the responsibility of society to take care of him while he's sick. So this is the concept of Islam and it's currently not available anywhere in the Islamic world but we used to have it. But also we do have some institution like in Pakistan we have a number of hospitals where anybody can go. In fact, in this hospital there is no financial department. You don't have to go to see the treasurer and to pay your fees. There is no money exchange for medical services and there are some other institutions like that in the Islamic world too but very few. So I said that earlier that Islamic economies no longer exist. Now everybody should understand that that's true. Today our in all over the Islamic world we are living in capitalist economies and we think like capitalists. We are thinking selfishly and when we go to university we study we study for a job and we seek knowledge for the purpose of making money. Again this is very very bad. This is not the purpose of film and to start with we can make a change in near because capitalism teaches us that the goal of education is to make money. So we have to change that and for the professors and for the students our goal in pursuing knowledge is to serve the ummah. So all kinds of knowledge will qualify even when you study western knowledge even when you study kufr. This is useful because we need to study it to understand how the world is running so that we can help the people. So there is no even though western economics is actually kufr because they're teaching you that the purpose of life is to maximize pleasure and this is kufr because it's directly against the teaching of the Quran. The purpose of life is not to maximize pleasure and Allah the Almighty says So instead of consuming what you love you give up give it away for the path of analysis is minimizing utility not maximizing utility. So even though we are studying kufr it is permissible if we to study kufr if we use it to help the ummah. So with this near we can study western economics but we should understand that it is not the truth it is a false fit. So as I said in the beginning to understand what's going on we have to study the history of the world. History of the world is not part of conventional economics and so Islamic economists also don't look at history and this is a big mistake because you cannot study any kind of social theory without studying the society for which this theory applies. So in order to understand what Islamic economics is we have to study the history of the world and one of the questions is why did Islamic economics start in the 20th century? We don't have a subject like Islamic economics in the thousand years of Islamic history in the intellectual tradition of Islam there is no book on Islamic economics why? So first we have to understand that the Islam the concept of Islamic society was destroyed by the process of colonization and in particular when the Khilafat was lost 100 years ago then the political structure of Islamic the last surviving political structure of Islamic society was lost and that is the backbone on which Islamic society is built and so basically Islamic societies cease to exist 100 years ago. Now we can rebuild them and we don't have to rebuild them in the same way but we have to adapt them to modern conditions and there are ways to do that but let us discuss further. So Islamic economics actually emerged in the 20th century under the influence of the liberation movements which started in all the colonies after World War I. After World War I all over the Islamic world about 90 percent of the Islamic world was colonized at that time and so all over the world movements for liberation started and this Islamic economics was part of the movement for liberation that once we achieve independence from the West from the colonizers then we will create our own economic system and it will be like this that's what Islamic economics was. So as I said for the over the period of colonization which lasted for about a century all the social structures of Islamic societies were modified or adopted to Western social structures. How were they adapted because the Western societies had the social science and they used the social science to impose it upon the Islamic world and as I already said in the beginning of the talk this social science is built on lessons derived from European history and so they imposed patterns of European society on colonized societies. So in Pakistan we had our own judicial system, we had our own health system, we had our own educational system and all of these were destroyed. These our original systems were much better than what was put in as a replacement by the West. So the institutions of our society were built on theories developed in the West and were based on patterns that were suitable for Western societies and not suitable for Islamic societies and we are continuing to use those ideas, those theories we are studying Western economics we are studying Western political science and we are using these ideas to build our own societies. So it is critical to understand this deception. We have to reject all of Western social science and we have to rebuild it on Islamic foundations and I have explained how we can do that in these two lectures. So once we reject social science we reject all of it and so we have to rebuild a new science for society and our foundation will be based on Ulumul Umran which was created by Ibn Khaldun and he initiated the study of society and his methodology for studying society is very different from Western methodology. So to just give one example he says that in the beginning of his book that I am going to study the process of social change. You see if you look at economics textbook they start by saying we are going to study economic equilibrium. What is equilibrium? Equilibrium is a place where society does not change, it remains in the same place throughout time. Now this is stupid because all societies are continuously changing, every society is growing, any population is increasing. So obviously there is change. So when you say equilibrium then there is nothing. Why where does this equilibrium come from? It comes from physics. It comes from 19th century physics. People, 19th century physics people were studying equilibrium so they borrowed this idea and they're still using this stupid idea. There is no equilibrium but the process of studying the process of social change now that is a good idea an interesting idea and that is what Ulumul Imran would do. So we will say if we have our own science instead of now they say okay you see the second generation Islamic Union says we're going to study equilibrium but we're going to study equilibrium in Islamic society. So that's nonsense. Equilibrium is not relevant. I mean what you're trying to do is Islamize equilibrium but instead of that you reject equilibrium and say no equilibrium is wrong we will study the process of social change just like Ibn Khaldun did in Al-Muqaddama. So if we follow him we will use a historical approach, we will use a qualitative approach and this approach was the basis for economics until the 19th century in the west. It was in late 19th century that the economist abandoned this approach and replaced it by mathematical and quantitative scientific approach and this was a big mistake. This methodology leads to misunderstanding of the world and it has to be changed back to the original. So basically one of the principles of Ulumul Imran is that theories come out of the study of society and they cannot be detached from the society, from the historical context. So whenever we study an economic theory we will study it in the context of a particular society, a particular history, a particular time and place and this simple methodological principle is not understood by western social science. So we have an idea so some of the questions that we as soon as we start thinking history then we come up with these historical questions why did Islamic economics emerge in early 20th century and how can it be Islamic if you don't find it directly there's no books on Islamic economics for a thousand years and I have provided answer to this question so I will not dwell on this here but there is a paper on crisis in Islamic economics and I have in my blog posted several lectures on this so if you look at the crisis in Islamic economics you will see the answers to these questions. So I'm going to look at the first generation Islamic economics why was it born due to historical forces. So again I want to emphasize that this is not a question which is studied by western social science but we are going to ask why did first generation Islamic economic get born in the 20th century. So as I've said before in early 20th century 90% of the Islamic world was colonized in 1914 to 18 World War I occurred and the strength of the western powers was reduced because 20 million people died and the young people were wiped out in fact we see a lot of a lot of immorality in the west that happened because all of the young people were dead at the end of World War I and there were many women the women actually made a protest they went to the church and they said you know the bible allows multiple marriages we see a lot of prophets and they had many wives and so please allow multiple marriages because they're not enough young men for all the women but the church refused so then they started this Zina and other things which are which are now very common in the west because there were just not enough men around for all the women. So after World War I which shaped west the strength of the west was very much reduced and also in the World War I a lot of troops were taken from the colonies and these people learned how to fight and they realized that we can fight for ourselves we don't have to fight for the colonizer. So basically in the World War II liberation struggle started and by the 1950s all of the colonies were liberated except for Philistine. Philistine is the last surviving colony of the rest. So now when you fight against the colonizer you have to take a chance you have to risk your life so it requires an ideological basis you have to believe in something and so all over the Islamic world there were theorists who were saying that we have our own social system, we have our own political system, we have our own economic system so at that time they started Bakr Sardar spelled out the how the Islamic economy would look like the ideological basis the big ideas. Similarly Maulana Maududi in Pakistan spelled out the ideological basis and there were many other thinkers in the Islamic world who explained what an Islamic economic would like and they were very emphatic they were very clear that there's nothing to do with capitalism and it has nothing to do with communism and it has nothing to do with socialism Islamic economics is completely different it's revolutionary it's radical and their books were all about explaining the difference between an Islamic economy and capitalism and socialism and communism and capitalism social and communism they're all based on kufr all three of these philosophies they're based on the idea that welfare comes from possession of materials but how should we get more wealth this is the question now in capitalism they say okay we should compete for it and let everybody get their own wealth and fight each other in communism they say you know the state will be responsible to get the maximum wealth and give it to everybody and in socialism they say that okay we should have some competition but also the state should take responsibility for those poor people who are left behind but in all three cases the pursuit of wealth is the goal of society and so this is rejected by Islam already pursuit of wealth is not the goal of society so Islamic economics was an ideological basis for the freedom struggles that is why it was formulated because the Muslim economies where the Muslim people were living under communism or under capitalism or under socialism and they said no when we become free of this rule we will have our own economic system now one thing that it is important to understand is that economics itself is a religion it is although they say we reject God then rejection of God becomes a religion and this economics was born after the rejection of Christianity in the West so then the religion is the pursuit of wealth if there is no after life no God no day of judgment then money becomes your God because you need it to do anything in this dunya this dunya is your only concern and with money you can buy anything in the dunya so it means that a gold is wealth is the pursuit so Adam Smith wrote the wealth of nations this is the key thing that nations need they need to have more wealth and this is the spirit of western education this is very important because this is the poison which is planted into the minds of muslim youth all over the world by western education that the goal of life is to make money so basically then still there is the question of why islamic economics was not nobody wrote nobody write about this in for a thousand years the reason is that economics politics society all three are mixed together so there's lots of stuff on economics but it is mixed in with politics and with social institutions and throughout the books there is no concept islam that economics is separate from politics and society and is not true if you think about economics in pakistan who is rich who is who are who is getting who is getting jobs who is who is giving jobs it's all has to do with social class and power who is in power and why are they in power and the power class seeks to replicate itself so they keep the money to themselves there was no economic teachings had not been collected in one place before because they are not separate from the other teachings of islam so religious teaching political teaching social teaching and economically they're all in one place so the economic institutions serve the society so we have so that's why nobody had done it before but because in the west economics had become separated so we said okay we will collect our all our economic teaching and put it in one place and show how the economics of an islamic society is different from capital this was the need of the time at that time such a need had not existed before so the first generation claimed that islamic economic system is superior to the western economic systems it guarantees prosperity for everyone it doesn't have this class conflict it doesn't have the capitalists and the laborers fighting each other it doesn't have a top one percent which is extremely rich and the bottom 90 percent which is extremely poor so what happened was and this is what led to second generation that the the after the revolutions after the freedom the class which came into power all over the islamic world were stooges and puppets of the west so these people wanted to preserve the western power so they preserved all of the social structures the justice system in pakistan is western not sharia the economic system of pakistan is western not based on islamic ideas we have insurance companies we have banks we don't have waqf we don't have the kaffir our proper islamic the kaffir so we did not create the structures that our thinkers had been asking for we do not go follow the ideas of vakir sardar and maudhudi and others to build an islamic society why because there was no power in the islamic societies muslims did not have power so that was so after the liberation political islam was started what is political islam it said that first we must capture power then we will be able to implement our ideas about what islamic society is without power we cannot implement an islamic economic system so for until the 1970s the first generation ideas were prominent but in the 1970s a lot of thinkers said that you know this revolution is not going to come nobody we don't have the power we don't have enough power to take control so then they said that okay what we will do is we will take capitalism and we'll modify it to become islamic so this is the islamization of knowledge project which started after the failure of political islam see the political islam people thought that we will capture power and then we will create our islamic economy and then they said okay they tried all over the world there were movements to capture power and they failed the irani revolution succeeded after that not in the 70s and the some other there were some other successful revolutions later on but in the 70s the second generation started and they started by saying that political islam will not succeed we will not create a revolution and so they said okay let's take capitalist economics and modify it so there is a famous formula that islamic economics equals capitalist economics plus zakat minus interest i have this paper on capital crisis in islam which explains that what happened was the second generation approach failed because when you start with something which is the opposite of islam and you try to islamize it you can't do it if you say that okay we are going to build economics on competition and on individualism and on hedonism and then say okay let's modify it to make it islamic you can't do it the foundations are wrong and so the second generation islamic economics project failed completely throughout the world they did not contribute any single positive idea not even one idea and over the three decades since 1970s 80s 90s 2000 and there were no good ideas presented by islamic at the same time a lot of different people made a lot of different revolutionary contributions to economics so there was behavioral economics and evolutionary economics and environmental economics and many other and all of these ideas actually come from islamic ideas but the muslims were not putting forth these ideas other people were doing so this is the failure of second generation so i mean most people today in the world are second generation islamic economics so this is the thing so one question we can ask them is that why do you have not even one new idea to offer to economics is our quran and sunnah completely dead there is nothing new we can give to the west in the realm of economics the message of god doesn't have anything new guidance for us today so i think this can be the last slide so in 2008 i think i can say that the global financial crisis 2007-08 everybody realized that the conventional capitalist economics is a complete failure the capitalist economists could not even predict the coming of the crisis and they could not handle it afterwards there was a global recession and they don't really understand even today what happened because they're all of the leading theories of macroeconomics even today cannot explain the global financial crisis so what is written in the text books is completely useless so with this collapse we have the freedom to create rebuild economics and new foundation and while they are trying to do so in their own way there are revolutionary ideas in economics which are currently being studied in the west we have our own opportunity and so uh the third generation islamic economics rejects all of western economics completely and he says we let's go back to our own intellectual tradition let's go to ibn khaldu let's go to the scholars of islam and how they studied there's a very interesting book by david graver which is called debt the first 5000 years and in this book he writes that adamswith borrowed all his ideas about economics from a persian school of economics thinkers so i haven't actually been able to follow up on this he writes this there was some school of thinkers of economics in persia and he has borrowed all of the ideas from them in his book so this is something worth following up but anyway this is my last slide and i'm going to stop the talk here that the third generation is not islamization of knowledge project it is rejection of western knowledge and replacement by the intellectual heritage of islam so we were going for a rooted revival we we build we go back to the intellectual tradition of islam and we build an economic theory based on the tradition of islam so that's what third generation economics is and this is a good place to stop because we we just started to explain what it is and then we can develop more details later so i'm going to stop this sharing here and we can have some discussion now thank you professor for your thought uh knowledgeable and it was very valuable to all of us uh if you allow me i have a just a question that came across to my mind and maybe i can propose it next week but the floor is yours if you allow me i can ask my question okay my question is i'm very interested in the concept of the third generation islamic however i have a few concerns about its practicality practicality first i'm not sure that all people have the islamic motivations that are assuming this model you mentioned and even muslims can be even highest muslims really pure muslims in nowadays can be drawn into the world of capitalism and it may be difficult for them to imagine the making outside of outside of it second i am concerned about the how can incentives would be managed in and islamic economy the idea of relying on god's satisfaction may have worked in the early days of islamic revolution as you mentioned in 1979 it worked in this in that those days uh but uh it didn't continue and how it would be work in long term how can we persist on the uh islamic values third i'm not sure how an islamic economy could be built without first building an islamic society uh how can we create a society that is based on islamic values and that is resistant to change finally uh finally i'm concerned about the how an islamic economy would interact with this system in institutions we live in globalized world and it is not clear how we could isolate ourselves from a capitalist system like bank insurance uh i would be interested to hear your thoughts on these concerns well you have asked about five questions and each of these questions requires a lecture of 90 minutes or so so i don't think i can give you a short answer but uh i have a paper actually i think i read this paper in iran in another conference not at another time it's called building islamic humanities and basically an islamic approach to humanities you can find it on the internet so there are three dimensions in which you see according to western theory economics is positive describes reality and this is false so when we think of islamic economics as being positive and we say okay islamic society is cooperative but there is no cooperation in the world even in the islamic world so what do we do this is where the question is coming from now islamic economics is not like that islamic economics says that there are three dimensions and i think this will answer all of your questions hopefully there is the positive dimension which describes the world as it is people are uh Quran says that the people the love of dunya is in their hearts so Quran doesn't reject the idea that you know people are like animals uh asfala saffelin people can be like asfala saffelin and they can be also so all of the possibility of the so positive just describes this person is evil this is good this is in the middle he is nafs al-abwama he is nafs al-ammara he is nafs al-butmaina so actually any in another place i've said that modern economic theory is the economics of nafs al-ammara it's very precisely i mean they they say that there's only nafs al-ammara in the world and everybody has nafs al-ammara so then you get modern economics it's home economic says is nafs al-ammara so islamic economics says that okay there are some people who have nafs al-ammara and some people who are in a higher spiritual stage and our goal is to transform everybody towards higher to make spiritual progress so that's the positive describing the world as it is without any without any idealization without any romanticism then there is the normative which is the first best the completely ideal perfect world in which everybody is nafs al-ammara so that describes where you're trying to go and where you are and then the third element is the transformative so how do you get from here to there so then you look at okay this is the situation we are in this is where we want to get to and now what is the step we take and the step must be taken from where you are it cannot be taken from where you're trying to get to so from where we are what is the next step to get closer to the ideal so these are the three dimensions in which you operate and all of the questions how do how will our economy relate to the international economy how will we create an islamic society how will we create an islamic economics actually it's not that you must first create an islamic society and then you will create islamic economics not like that well what happens is that you do whatever you can in economic dimension and political dimension in judicial dimension and as you make those changes your society becomes gradually more and more islamic and so as you make efforts you take simple small small steps a journey of a thousand miles begins with one step so you do what you can and this what you can do will make your society a little bit closer to an islamic society and as you keep making those steps in economic dimension and political education and health eventually if Allah wills you will get to an islamic society but if it doesn't then we are not responsible for the outcome we are only responsible for the struggle so if we as long as we are making the effort we are successful even if we never get to the ideal right thank you professor yeah that was very nice but how about how can we predict the outcome I mean you mentioned the modern society the capitalism failed to predict the the future in the 2018 crisis how can we you know propose alternative to predict the future actually some events are unpredictable some are predictable this is exactly what the contribution of ibn kaldun was he studied the process of social change so you can look at the things which are changing and what the effect they will have on the future now the economics is fixed on equilibrium and so they cannot predict change so they are unable to predict change and that's why but if we say if we have a theory of change we will be able to see what things are changing what things are changing very fast and there were some very critical indicators debt levels were very high and certain kinds of risks if you looked at them in the market they were going very high and beyond the sustainable levels and so many people actually did predict non-econom not economists and not based on theories but practical people in the field saw what was happening and predicted the crisis Michael Hudson is very important reference to read for this purpose so things are predictable if you're studying the process of change things are not predictable if you're studying equilibrium and economists study equilibrium so they cannot predict change you mentioned Michael Hudson yes now who is it could you explain more about him oh Michael Hudson is a economist who has a fairly deep insight into real-world economics now unlike the textbook theories it's not wrong it's the conventional economics textbooks are completely wrong they are misleading they're deceptive they teach theories which are false many people when they talk to me they think that I am against the west and I don't want to accept anything western this is wrong I just accept I just don't like wrong western theories but there are some good western theorists and Michael Hudson is a good economist and he has studied the world and he understands and he has also this principle of history he understand economics in context of history so we need the help of those people who understand the world as it is instead of trying to build false theories about it thank you very much professor let me give the floor to others today if they have any question just ask a question very quickly and then we can close the session for today okay Mr. Saba we'll go ahead can you hear me professor yes I can hear you thank you thank you very much for your very good and very useful presentation my question is that as we all know capitalism as a thought has penetrated the people of the world considering the historical break that European country and US I mean western countries how created for Islamic countries it seems that we have to we have to fight with the minds of the people to destroy the effects of capitalism is that correct do you think we can succeed in destroying capitalism thinking and what method do you suggest yes this is exactly very very accurate masha Allah very intelligent question and my focus of my efforts is on the decolonization of education the main tool an instrument by which minds are colonized are is a university education today we do not have an alternative to modern university education our religious seminaries are not sufficient to counter the effects of western education so we have to fight them on their own front and I have a lecture on decolonization of education which I think is critical to the efforts that we need to make and I have a string of lectures on how to launch an Islamic revival in which I have explained all of the thousand things that need to be done to do what you are saying but this is the critical point that we have to change the methods of education in order to decolonize minds because the western education that we all receive reduces colonized minds and our traditional madrasa education is not enough to counter this yes thank you very much the leader of Iran Imam Sayyed Ali Khamenei says jihad of explanation I mean jihad tabyeen jihad of explanation is one of the best ways to remove the foundations of capitalism and I mean capitalist thinking and explanation explanation jihad means accurate or explain correct and immediate expression of the teachings of Islam and revolution according to him explanation jihad I mean jihad of explanation is a duty in Iran and as the prophets also came for the same purpose as it says in the whole Quran and the Quran and the jihad of explanation and do you agree with him I think that the battle for the minds and the hearts of the Muslims all over the world must be fought on many fronts in fact we need to replace the entire the university curriculum so we have to create an Islamic biology Islamic economics Islamic sociology Islamic education Islamic institutions so what Imam Khamenei was talking about was actually very any practical and pragmatic and a necessity to sustain the Iranian revolution you need to protect the ideological basis for that revolution and so the people the the the weakest point of the revolution is the people's thinking and falling back into capitalist thinking so to protect the revolution this was the need of the time for his time at that time and that was the most important thing but if you think of from the perspective of the umma that is just one of many different front and in different societies you are in different places and different efforts are necessary and thank you very much professor thank you thank you very much professor it was very nice if you have any question raise your hand and don't hesitate it seems they keep their question for next week I think all right you but before we leave the session you mentioned an article building Islamic humanity oh yeah yeah there was a paper on I don't have the link right now but if I put the name on it uh and Islamic approach to humanities or you can also look for three uh basically everything is available on my blog so if you go to my blog and you look for um any item you will be able to find thank you very much professor um I recently used a website for your workshops and webinars and articles and I also follow you on LinkedIn and read your articles thank you so I just want to end with the message that actually the biggest battlefield that we face is on the intellectual front not on the battlefield with the arms and the weapons and this is a battle in which we have been failing and we have not managed to counter the intellectual dominance of the west and we have this this is the battle in which all of you can contribute the students are the army for the future and the battle they have to fight is not to be fought with the weapons and Palestine it has to be fought with the books and the theories these are the most important things that we need to learn you need to understand why the western theories are very foolish and irrelevant and not applicable in the western world and we have to build on our own tradition which is actually one of the strengths of Imam Sadiq University especially and we have to build on our own heritage and to come up with the things which counter the ideas of the west and we have to build our economies on the basis of our own ideas not on the basis of western ideas and not on the basis of Islamization of knowledge so this is my message to the youth okay thank you very much