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- I have taught at leading universities like Columbia, U. Penn., Johns Hopkins and Cal. Tech. My textbook Statistical F... moreI have taught at leading universities like Columbia, U. Penn., Johns Hopkins and Cal. Tech. My textbook Statistical Foundations of Econometric Techniques (Academic Press, NY, 1996) is widely used in advanced graduate courses. My research on Islamic economics is widely cited, and has been highly influential in shaping the field. I am deeply engaged in a project to create a revolutionary alternative to mainstream economics and econometrics. Both disciplines are based on flawed foundations of logical positivist ideas. My publications in top ranked journals like Annals of Statistics, Journal of Econometrics, Econometric Theory, Journal of Labor Economics, etc. have more than a thousand citations as per Google Scholar.edit
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The concept of development and progress ultimately shape the value systems of human beings and drive their efforts. The narrow conception of development solely in terms of economic growth has had a disastrous effect on the stability of... more
The concept of development and progress ultimately shape the value systems of human beings and drive their efforts. The narrow conception of development solely in terms of economic growth has had a disastrous effect on the stability of our natural ecosystem and planetary resources by pitting human beings against each other in a competitive struggle for more and more. The purpose of the article is to highlight concisely the main critiques that have been raised against the flawed notions of development in neoclassical economics. We present cogently five different critiques-a) the ecological critique; b) the distributional critique; c) the Keynesian critique; d) the "economics as if people mattered" critique; and finally, e) the lack of pluralism critique
The reconquest of Spain, and translations of book in the Islamic libraries ended the dark ages of Europe, around the 13 th Century. The schoolmen used these material to construct a social theory encompassing economics, politics,... more
The reconquest of Spain, and translations of book in the Islamic libraries ended the dark ages of Europe, around the 13 th Century. The schoolmen used these material to construct a social theory encompassing economics, politics, governance, and community. The rapid influx of knowledge contrary to Catholic doctrines led to a breakup of the Church and a century of devastating factional warfare. This had a huge impact on European thought. In particular, it became necessary to develop social theory without religious or even moral foundations, because of the obvious failure of Christianity in this domain. Some aspects of this historical tradition from Christian society to secular modern society are described in this essay. Our emphasis is on aspects of this story which would be helpful to Islamic societies to resist the pressures towards secular modernity which face the Ummah today.
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(Turkish Translation of English Article -- abstract in English) There is a huge number of definitions of Islamic Economics available in the literature. The vast majority take existing definitions from the western literature and modify... more
(Turkish Translation of English Article -- abstract in English) There is a huge number of definitions of Islamic Economics available in the literature. The vast majority take existing definitions from the western literature and modify them to incorporate an Islamic angle. This leads to the widespread belief that Islamic Economics is a variant or a branch of conventional economics. We argue that something can be called “Islamic” only if it is based on the Quran and Sunnah. In this paper we propose a new definition based purely and directly on Islamic ideas and sources. We show that this definition differs radically from any available in the West, as well as the vast majority of definitions proposed by Islamic Economists. It creates entirely new ways of looking at and organizing the subject matter of Economics. This paper discusses ten dimensions of contrast, where our new definition suggests that the methodology of Islamic Economics is directly opposed to western methodology. Zaman (2012, Crisis In Islamic Economics) describes the current crisis in Islamic Economics, widely acknowledged by leaders in the field. Conventional views are that Islamic Economics must be a compromise between Islamic ideals embodied in homo islamicus, and realistic views embodied in homo economicus. However, there is substantial disagreement on the nature and extent of the compromise required. Consensus on defining “Islamic Economics” appears to be a pre-requisite for progress. I believe that a definition which can be justified purely and directly from Islamic sources will be able to command consensus that compromises cannot. Furthermore, this definition opens the way to radically new approaches, which can fulfill the promise initially held out by Islamic Economics. This (now largely forgotten) promise was that Islamic Economics will provide justice, and eliminate oppression and inequities associated with capitalist, communist and socialist economic systems.
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Since Robbins (1932) influential essay on the methodology of economics, scarcity has been taken as the fundamental economic problem. We will argue that this is based on a tacit assumption of primacy of property rights. We illustrate how... more
Since Robbins (1932) influential essay on the methodology of economics, scarcity has been taken as the fundamental economic problem. We will argue that this is based on a tacit assumption of primacy of property rights. We illustrate how differing ethical commitments on part of a society lead to differing formulations of the fundamental economic problem.
Research Interests: Economics and Methodology
Can the modern economy function without a market for interestbased credit? This question has acquired some urgency in the wake of the recent Shariat Court ruling banning interest in Pakistan. Some pundits have pronounced that great harm... more
Can the modern economy function without a market for interestbased credit? This question has acquired some urgency in the wake of the recent Shariat Court ruling banning interest in Pakistan. Some pundits have pronounced that great harm will result from the banning of interest 1. Actually, such pronouncements are based on a lack of understanding of both the modern economic system, as well as the nature of the Islamic prohibition of interest. As we hope to demonstrate clearly below, the modern economy can function very well, indeed ...
The large majority of the criteria for model selection are functions of the usual variance estimate for a regression model. The validity of the usual variance estimate depends on some assumptions, most critically the validity of the... more
The large majority of the criteria for model selection are functions of the usual variance
estimate for a regression model. The validity of the usual variance estimate depends on
some assumptions, most critically the validity of the model being estimated. This is often
violated in model selection contexts, where model search takes place over invalid models.
A cross validated variance estimate is more robust to specification errors (see, for
example, Efron, 1983). We consider the effects of replacing the usual variance estimate
by a cross validated variance estimate, namely, the Prediction Sum of Squares (PRESS) in
the functions of several model selection criteria. Such replacements improve the
probability of finding the true model, at least in large samples.
estimate for a regression model. The validity of the usual variance estimate depends on
some assumptions, most critically the validity of the model being estimated. This is often
violated in model selection contexts, where model search takes place over invalid models.
A cross validated variance estimate is more robust to specification errors (see, for
example, Efron, 1983). We consider the effects of replacing the usual variance estimate
by a cross validated variance estimate, namely, the Prediction Sum of Squares (PRESS) in
the functions of several model selection criteria. Such replacements improve the
probability of finding the true model, at least in large samples.
The reconquest of Spain, and translations of book in the Islamic libraries ended the dark ages of Europe, around the 13 th Century. The schoolmen used these material to construct a social theory encompassing economics, politics,... more
The reconquest of Spain, and translations of book in the Islamic libraries ended the dark ages of Europe, around the 13 th Century. The schoolmen used these material to construct a social theory encompassing economics, politics, governance, and community. The rapid influx of knowledge contrary to Catholic doctrines led to a breakup of the Church and a century of devastating factional warfare. This had a huge impact on European thought. In particular, it became necessary to develop social theory without religious or even moral foundations, because of the obvious failure of Christianity in this domain. Some aspects of this historical tradition from Christian society to secular modern society are described in this essay. Our emphasis is on aspects of this story which would be helpful to Islamic societies to resist the pressures towards secular modernity which face the Ummah today.
Research Interests: Islamic Studies and Islam
Massive amounts of confusion exists regarding the definition of Islamic Economics. This has blocked progress in terms of the development of the discipline, since there is no agreement on what its proper subject matter and methodology is.... more
Massive amounts of confusion exists regarding the definition of Islamic Economics. This has blocked progress in terms of the development of the discipline, since there is no agreement on what its proper subject matter and methodology is. This paper shows that the confusion arises because of our attempts to borrow foundational concepts and methodology from conventional capitalist economics. Modern economists advertise their discipline as a positive, objective, and factual science. However, it is actually a branch of moral philosophy, built on concealed moral foundations of competition, selfishness, individualism, and hedonism. Islamic economics cannot be built on such foundations. We can build the discipline of Islamic Economics on the diametrically opposite foundations of cooperation, generosity, brotherhood of mankind, and social responsibility. Instead of the methodology of Newtonian physics currently in use, we need to use the methodology of Ibne-Khaldun, created for studying the...
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First generation Islamic economics promised to create a system with just and equitable economic outcomes, which would be far superior to capitalism and communism. Historical circumstances led the second generation to forget this promise,... more
First generation Islamic economics promised to create a system with just and equitable economic outcomes, which would be far superior to capitalism and communism. Historical circumstances led the second generation to forget this promise, and to consider Islamic Economics as a minor variant of capitalism. The second generation has been trying to create a sharī'ah compliant system, where the form is Islamic but the spirit is capitalistic. We need to go back to the roots, and build a genuine Islamic system in form and spirit which is sharī'ah based, rather than sharī'ah compliant. By doing this, the third generation can revive the promise of Islamic Economics and create a model economic system which fulfills the promise of the first generation. JEL Classification: P4
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Krugman has popularized the experiences of the Capitol Hill Baby-sitting Cooperative (BSC) as a fundamental paradigm for macroeconomic policy. Many authors who have formally analyzed the story have concluded that money must be supplied in... more
Krugman has popularized the experiences of the Capitol Hill Baby-sitting Cooperative (BSC) as a fundamental paradigm for macroeconomic policy. Many authors who have formally analyzed the story have concluded that money must be supplied in an optimal quantity for smooth functioning of the BSC economy. We create a natural model of the BSC which has sunspot equilibria. Agents must co-ordinate their expectations to arrive at an equilibrium. Our analysis shows that many of the lessons derived from the experience of the BSC depend on a particular choice of the equilibrium. Other choices can be more efficient and lead to different lessons. In particular, money holdings act like sunspots; they matter only if all agents agree that they matter. Surprisingly, flexible prices cannot solve the problem of mismatch between supply and demand. Also equilibria with excess supply may be more efficient than outcomes where supply and demand are matched. Our model shows that there are deep lessons to be learned from the BSC economy, but they are of a rather different nature from those derived by most authors. How expectations are formed, and how agents learn about other agents strategies form a crucial part of the equilibrium. These must be part of good models, and suitable interventions must take these into account. How agents can consciously choose among multiple equilibria and learn to coordinate on a particular choice requires more attention from economists.
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Ibn-e-Khaldun wrote of the impact of conquest on the psychology of the conquered. This can be made much more vivid by thinking about a possible complete conquest of Iraq by the USA. This fantasy serves to illuminate the current reality of... more
Ibn-e-Khaldun wrote of the impact of conquest on the psychology of the conquered. This can be made much more vivid by thinking about a possible complete conquest of Iraq by the USA. This fantasy serves to illuminate the current reality of how our perceptions of the world have been shaped by our history of having been colonized. These distorted perceptions form a major obstacle towards progress in desired directions.
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Many authors have described and modelled Keynesian effects in a Baby-sitting Cooperative (BSC), which has the underlying structure of a single good barter economy. We construct a simple model of the BSC economy to explore this issue, and... more
Many authors have described and modelled Keynesian effects in a Baby-sitting Cooperative (BSC), which has the underlying structure of a single good barter economy. We construct a simple model of the BSC economy to explore this issue, and find very surprising results. Outcomes depend on agents beliefs about the decision making process of others, as in the Keynesian beauty contest. For some structures of beliefs, money is neutral, while for others, money can have short and long run effects. The value of money can be high, low, or zero, depending purely upon expectational effects. Also, despite the fact that this is a single good economy, partial equilibrium supply and demand analysis do not work as expected. Some equilibria have excess supply, others have excess demand, and none have a match between supply and demand. Furthermore, flexible prices cannot fix this problem. An additional paradoxical property is that excessive trading can take place. Even though all trades are done with m...
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For Turkish translation, see: https://ssrn.com/abstract=3139291 There is a huge number of definitions of Islamic Economics available in the literature. The vast majority take existing definitions from the western literature and modify... more
For Turkish translation, see: https://ssrn.com/abstract=3139291 There is a huge number of definitions of Islamic Economics available in the literature. The vast majority take existing definitions from the western literature and modify them to incorporate an Islamic angle. This leads to the widespread belief that Islamic Economics is a variant or a branch of conventional economics. We argue that something can be called “Islamic” only if it is based on the Quran and Sunnah. In this paper we propose a new definition based purely and directly on Islamic ideas and sources. We show that this definition differs radically from any available in the West, as well as the vast majority of definitions proposed by Islamic Economists. It creates entirely new ways of looking at and organizing the subject matter of Economics. This paper discusses ten dimensions of contrast, where our new definition suggests that the methodology of Islamic Economics is directly opposed to western methodology. Zaman (...
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Economics started out as a branch of Moral Philosophy. Early in the 20th Century, logical positivists argued that science is the only source of knowledge, and values are not part of science. The desire to make humanities “scientific” led... more
Economics started out as a branch of Moral Philosophy. Early in the 20th Century, logical positivists argued that science is the only source of knowledge, and values are not part of science. The desire to make humanities “scientific” led to the creation of the “social sciences”, which claimed to be objective and value-free. In fact, values are inevitably involved in the study of human societies. Instead of being removed, they were buried into the foundations. In economics, “rational” behavior was defined to be the pursuit of pleasure, without any explicit recognition or acknowledgement of the value judgment involved. Similarly, the scarcity foundations of modern economics also conceal many value judgements. In particular, secular morality at the heart of economics makes pursuit of pleasure and profits the goal of life for all rational human beings. Once we recognize the secular moral principles on which modern economics is built, the path to creating an Islamic alternative becomes c...
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First generation Islamic Economics promised to create a system with just and equitable economic outcomes, which would be far superior to capitalism and communism. Historical circumstances led the second generation to forget this promise,... more
First generation Islamic Economics promised to create a system with just and equitable economic outcomes, which would be far superior to capitalism and communism. Historical circumstances led the second generation to forget this promise, and to consider Islamic Economics as a minor variant of capitalism. The second generation has been trying to create a Sharia compliant system, where the form is Islamic but the spirit is capitalistic. We need to go back to the roots, and building a genuine Islamic system in form and spirit which is Sharia based, rather than Sharia compliant. By doing this, the third generation can revive the promise of Islamic Economics and create a model economic system which fulfills the promise of the first generation.
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Allah is the Light of the Heavens and the Earth. May Allah guide us all to His Light, and protect us from error, and the deceptions of Shaitan and the idle desires of the Nafs. We human beings have been given very little knowledge, and... more
Allah is the Light of the Heavens and the Earth. May Allah guide us all to His Light, and protect us from error, and the deceptions of Shaitan and the idle desires of the Nafs. We human beings have been given very little knowledge, and cannot acquire even partial understanding of any subject except if Allah T’aala chooses it for us. May Allah open our hearts, join us on the straight path of Guidance, illuminate our understanding, and grant us the words which clearly express His will.
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Ozet Islam’in ruhunun kapitalizmin ruhuyla sert ve keskin bir uyusmazlik icinde olmasindan dolayi, Islam’in ruhunu ifade etmek uzere tasarlanmis kurumlarin almis oldugu bicimin de ayrica farkli olmasi zorunludur. Kapitalist finansal... more
Ozet Islam’in ruhunun kapitalizmin ruhuyla sert ve keskin bir uyusmazlik icinde olmasindan dolayi, Islam’in ruhunu ifade etmek uzere tasarlanmis kurumlarin almis oldugu bicimin de ayrica farkli olmasi zorunludur. Kapitalist finansal kurumlar kapitalist toplumlarin ozunde yer alan servet biriktirme surecini desteklemek uzere tasarlanmislardir. Islam’da esas olan, kapitalist toplumlarda baskin olanlardan radikal bir sekilde farkli cesitli hizmet-odakli kurumlardaki hizmet ruhu ve baskalarina infak etmektir.
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The term “science” represents a claim to universality, but modern social science is based on lessons from European historical experience. Why, then, does it claim to have universal application? We suggest that Weber’s dictum that social... more
The term “science” represents a claim to universality, but modern social science is based on lessons from European historical experience. Why, then, does it claim to have universal application? We suggest that Weber’s dictum that social science should be value free led to the concealment of Eurocentric values within an apparently objective framework governed by “rationality”.
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The goal of this section is to point out the observed difficulties with the classical/neoclassical theory of labour markets. According to classical and neoclassical economics, the labour market is a market like any other market. The... more
The goal of this section is to point out the observed difficulties with the classical/neoclassical theory of labour markets. According to classical and neoclassical economics, the labour market is a market like any other market. The equilibrium wage is determined by the intersection of the supply and demand for labour.
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The 'sustainable development' movement arose as a reaction to the myopic formulation of development exclusively in terms of economic growth by neoclassical economics, regardless of its disastrous effects on the planet as well as... more
The 'sustainable development' movement arose as a reaction to the myopic formulation of development exclusively in terms of economic growth by neoclassical economics, regardless of its disastrous effects on the planet as well as on the people. The sustainable development movement has made much progress in highlighting the deficiencies of existing economic theory, but its practical import has been insufficient. The purpose of this article is to articulate the Islamic conception of the sustainable development vision and to briefly describe the tools, incentives, and guidelines that Islam offers. The Islamic conception of development is inherently sustainable (as defined by the sustainable community) due to its focus on responsible consumption, empathy for others, and recommendations for simpler lifestyles. Furthermore, the Islamic tradition provides concrete practical tools - such as legal instruments for the state as well as incentives to individuals - that can help in practically implementing the sustainable development vision.
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The perils of private bank creation of money using the fractional reserve system were discovered by many economists in the aftermath of the Great Depression. They formulated the “Chicago Plan” for 100% reserve banking which would give the... more
The perils of private bank creation of money using the fractional reserve system were discovered by many economists in the aftermath of the Great Depression. They formulated the “Chicago Plan” for 100% reserve banking which would give the state exclusive power to create money. Strict regulations on banking obviated the need for the Chicago Plan for fifty years. Financial de-regulation in the 1980’s led to the re-discovery of the same set of problems following the Global Financial Crisis of 2008. As a result, the Iceland government has formulated an updated version of the Chicago Plan, centering on state created Sovereign money to replace money creation by private banks. The Iceland Plan does not discuss the root cause of the problems, which is the interest based financial system. The goal of this paper is to present an extension of the Iceland plan and discuss several dimensions of coordinated changes required to bring the financial system in conformity with Islamic principles.
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To understand the functions of the financial institutions within a capitalist system, one must understand the spirit of capitalism. This paper argues that the spirit is the pursuit of wealth without any moral or social restraints.... more
To understand the functions of the financial institutions within a capitalist system, one must understand the spirit of capitalism. This paper argues that the spirit is the pursuit of wealth without any moral or social restraints. Financial institutions represent an embodiment of this spirit. Furthermore, these institutions act in concert with social and political institutions and cannot be understood except within this context. Ultimately, the unrestrained pursuit of wealth leads to the collection of wealth in the hands of a small number of the rich and powerful. Sustaining such outcomes within a democratic society requires radical changes in social values. Neither the spirit, nor the social values associated with capitalist society are compatible with Islam. Islamic financial institutions attempt to modify the form of the institutions without affecting the spirit. Thus they end up performing the same functions as capitalist institutions and do not represent a genuine Islamic alternative.
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Abstract: Positivist philosophy provided the foundation for all social sciences as they were developed in the twentieth century. Now that positivism has been abandoned by philosophers, it is essential to replace methodology founded on... more
Abstract: Positivist philosophy provided the foundation for all social sciences as they were developed in the twentieth century. Now that positivism has been abandoned by philosophers, it is essential to replace methodology founded on positivist precepts. We show that the foundations of probability (both Bayesian and Frequentist) are wedded to positivist assumptions, which have been shown not to be workable. We suggest an alternative non-positivist foundation for probability theory, which avoids many of the problems faced by the ...
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ABSTRACT Many economic theories which explain causes of poverty, such as the Malthusian one, are not based on any empirical evidence. Apparently designed to reduce poverty, these theories in fact hurt the poor, without impacting on... more
ABSTRACT Many economic theories which explain causes of poverty, such as the Malthusian one, are not based on any empirical evidence. Apparently designed to reduce poverty, these theories in fact hurt the poor, without impacting on poverty. Analysis shows that these theories are popular because they serve class interests of the rich against the poor, rather than because they correspond to the facts about poverty.
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Economics, as a distinct discipline started out as a branch of moral philosophy. Early in the 20 th century, logical positivists argued that science is the only source of knowledge, and values are not part of science. The desire to make... more
Economics, as a distinct discipline started out as a branch of moral philosophy. Early in the 20 th century, logical positivists argued that science is the only source of knowledge, and values are not part of science. The desire to make humanities 'scientific' led to the creation of the 'social sciences', which claimed to be objective and value-free. In fact, values are inevitably involved in the study of human societies. Hence, when the social scientists could not remove them, they buried them into the foundations. In economics, 'rational' behavior was defined to be the pursuit of pleasure, without any explicit recognition or acknowledgement of the value judgment involved. Similarly, the scarcity foundations of modern economics also conceal many value judgements. In particular, secular morality at the heart of economics makes pursuit of pleasure and profits the goal of life for all rational human beings. Once we recognize the secular moral principles on which modern economics is built, the path to creating an Islamic alternative becomes clear. An Islamic society is built on the foundations of cooperation, generosity, and social responsibility, in stark contrast to the competition, greed, and individualism which are the basis of capitalist societies. Islam has a well-developed moral philosophy to deal with economic affairs, embodied in the science of fiqh (jurisprudence) as it has developed over the centuries. By rejecting the secular morality built into the foundations of modern economics, we can create a radical alternative based on the moral foundations of Islam. The modern world offers many new challenges; environments radically different from those faced by our elders. Thus, building a revolutionary Islamic economics requires ijtihad (diligent and creative research) to use the well-developed methodology of fiqh creatively to find new solutions to the deep and complex problems currently facing humanity and the planet.
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The perils of private bank creation of money using the fractional reserve system were discovered by many economists in the aftermath of the Great Depression. They formulated the “Chicago Plan” for 100% reserve banking which would give the... more
The perils of private bank creation of money using the fractional reserve system were discovered by many economists in the aftermath of the Great Depression. They formulated the “Chicago Plan” for 100% reserve banking which would give the state exclusive power to create money. Strict regulations on banking obviated the need for the Chicago Plan for fifty years. Financial de-regulation in the 1980’s led to the re-discovery of the same set of problems following the Global Financial Crisis of 2008. As a result, the Iceland government has formulated an updated version of the Chicago Plan, centering on state created Sovereign money to replace money creation by private banks. The Iceland Plan does not discuss the root cause of the problems, which is the interest based financial system. The goal of this paper is to present an extension of the Iceland plan and discuss several dimensions of coordinated changes required to bring the financial system in conformity with Islamic principles.
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Research Interests: Economics and Methodology
The idea that development is mainly about the accumulation of wealth commands widespread support. Dissenters have introduced other dimensions of development, but nonetheless agree on the centrality and importance of wealth. However, Islam... more
The idea that development is mainly about the accumulation of wealth commands widespread support. Dissenters have introduced other dimensions of development, but nonetheless agree on the centrality and importance of wealth. However, Islam is primarily concerned with spiritual and moral development. Teachings of Islam created an inner revolution within the companions of the prophet, which led to the creation of a new form of society with distinctive institutions and ideology. Eclipse of Islamic civilization, and the rise to global dominance of capitalist societies has led to widespread acceptance, even among Muslims, of ideas antithetical to Islam. In this article, we expose and refute one dozen widely believed myths created to support Western hegemony, and provide alternative points of view.
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The methodology of science is suitable for material substances subject to laws, but not for humans with free will. “Social science” was born from the misconception that application of the scientific method to human beings and societies... more
The methodology of science is suitable for material substances subject to laws, but not for humans with free will. “Social science” was born from the misconception that application of the scientific method to human beings and societies would lead to remarkable progress. However, this approach has failed in many different ways, documented below. Islam provides us with a radically different approach to the study of human beings and societies, predicated on human freedom to choose between good and evil. This approach is delineated below.
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Since the spirit of Islam is in stark and violent conflict with the spirit of Capitalism, the form taken by institutions designed to express this spirit must also be different. Capitalist financial institutions are designed to support the... more
Since the spirit of Islam is in stark and violent conflict with the spirit of Capitalism, the form taken by institutions designed to express this spirit must also be different. Capitalist financial institutions are designed to support the process of accumulation of wealth, which is at the heart of capitalist societies. Central to Islam is the spirit of service, and spending on others, which is expressed by diverse, service-oriented institutions, radically different from those dominant in capitalist societies.
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Paper meant to explain the nature of modern money and banking to Ulema. Current fatwa's are based on superficial understanding of these institutions. This paper presents deeper explanations not known to Ulema which would affect the... more
Paper meant to explain the nature of modern money and banking to Ulema. Current fatwa's are based on superficial understanding of these institutions. This paper presents deeper explanations not known to Ulema which would affect the Shariah rulings.
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ABSTRACT
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DESCRIPTION Paper meant for ULEMA in URDU explain how private banks create money. This issue has not been taken into consideration in the rulings regarding the status of modern money as well as the validity of Islamic Banking.
Research Interests: Islamic Studies and Islam
Abstract Current economic theory is mainly concerned with the factors which affect the wealth of nations. Issues of income distribution and elimination of poverty and deprivation is secondary. The present paper invites discussion on a new... more
Abstract Current economic theory is mainly concerned with the factors which affect the wealth of nations. Issues of income distribution and elimination of poverty and deprivation is secondary. The present paper invites discussion on a new paradigm: hunger and ...
Research Interests: Islamic Studies and Islam
For original article and abstract in English, see: https://ssrn.com/abstract=3118255 ÖZET:Literatürde çok sayıda İslam Ekonomisi tanımı mevcuttur. Büyük çoğunluk, mevcut tanımları batı literatür dan alıyor ve onları İslami bir bakış... more
For original article and abstract in English, see: https://ssrn.com/abstract=3118255
ÖZET:Literatürde çok sayıda İslam Ekonomisi tanımı mevcuttur. Büyük çoğunluk, mevcut tanımları batı literatür dan alıyor ve onları İslami bir bakış açısı içerecek şekilde değiştiriyor. Bu, İslâmi İktisat'ın geleneksel bir iktisadın bir çeşidi ya da bir dalı olduğu inancına yol açmaktadır. Bir şeyin ancak Kuran ve Sünnet'e dayanması durumunda “İslami” olarak adlandırılabileceğini savunuyoruz. Bu yazıda tamamen ve doğrudan İslami fikir ve kaynaklara dayanan yeni bir tanım öneriyoruz. Bu tanımın, İslami Ekonomistler tarafından önerilen tanımların büyük çoğunluğunun yanı sıra, Batı'da mevcut olan herhangi birinden kökten farklı olduğunu gösteriyoruz. İktisat konusuna bakmak ve örgütlemek için tamamen yeni yollar yaratır. Bu yazıda, yeni tanımımızın İslami Ekonomi metodolojisinin doğrudan batı metodolojisine karşı olduğunu öne sürdüğü tezatın on boyutu tartışılmaktadır.
Zaman (2012, İslam Ekonomisinde Kriz), İslami Ekonomideki mevcut krizi, bu alandaki liderler tarafından geniş çapta kabul gören bir tanımıyla anlatıyor. Geleneksel görüşler, İslam Ekonomisinin, homo islamicus'ta somutlaştırılmış İslami idealler ile homo Economicus'ta somutlaştırılmış gerçekçi görüşler arasında bir uzlaşma olması gerektiği yönündedir. Bununla birlikte, gereken uzlaşmanın niteliği ve kapsamı hakkında ciddi bir anlaşmazlık var. “İslam Ekonomisini” tanımlama konusundaki fikir birliği, ilerleme için ön koşul gibi görünüyor. Tamamen ve doğrudan İslami kaynaklardan gerekçelendirilebilecek bir tanımın, uzlaşmaya varamayacağı konusunda uzlaşmaya hükmedebileceğine inanıyorum. Ayrıca, bu tanım, başlangıçta İslami İktisat tarafından verilen vaadi yerine getirebilecek radikal biçimde yeni yaklaşımların yolunu açmaktadır. Bu (şimdi büyük ölçüde unutulmuş olan) vaadi, İslam Ekonomisinin adalet sağlayacak ve kapitalist, komünist ve sosyalist ekonomik sistemlerle ilgili baskı ve eşitsizlikleri ortadan kaldıracağı yönünde oldu.
ÖZET:Literatürde çok sayıda İslam Ekonomisi tanımı mevcuttur. Büyük çoğunluk, mevcut tanımları batı literatür dan alıyor ve onları İslami bir bakış açısı içerecek şekilde değiştiriyor. Bu, İslâmi İktisat'ın geleneksel bir iktisadın bir çeşidi ya da bir dalı olduğu inancına yol açmaktadır. Bir şeyin ancak Kuran ve Sünnet'e dayanması durumunda “İslami” olarak adlandırılabileceğini savunuyoruz. Bu yazıda tamamen ve doğrudan İslami fikir ve kaynaklara dayanan yeni bir tanım öneriyoruz. Bu tanımın, İslami Ekonomistler tarafından önerilen tanımların büyük çoğunluğunun yanı sıra, Batı'da mevcut olan herhangi birinden kökten farklı olduğunu gösteriyoruz. İktisat konusuna bakmak ve örgütlemek için tamamen yeni yollar yaratır. Bu yazıda, yeni tanımımızın İslami Ekonomi metodolojisinin doğrudan batı metodolojisine karşı olduğunu öne sürdüğü tezatın on boyutu tartışılmaktadır.
Zaman (2012, İslam Ekonomisinde Kriz), İslami Ekonomideki mevcut krizi, bu alandaki liderler tarafından geniş çapta kabul gören bir tanımıyla anlatıyor. Geleneksel görüşler, İslam Ekonomisinin, homo islamicus'ta somutlaştırılmış İslami idealler ile homo Economicus'ta somutlaştırılmış gerçekçi görüşler arasında bir uzlaşma olması gerektiği yönündedir. Bununla birlikte, gereken uzlaşmanın niteliği ve kapsamı hakkında ciddi bir anlaşmazlık var. “İslam Ekonomisini” tanımlama konusundaki fikir birliği, ilerleme için ön koşul gibi görünüyor. Tamamen ve doğrudan İslami kaynaklardan gerekçelendirilebilecek bir tanımın, uzlaşmaya varamayacağı konusunda uzlaşmaya hükmedebileceğine inanıyorum. Ayrıca, bu tanım, başlangıçta İslami İktisat tarafından verilen vaadi yerine getirebilecek radikal biçimde yeni yaklaşımların yolunu açmaktadır. Bu (şimdi büyük ölçüde unutulmuş olan) vaadi, İslam Ekonomisinin adalet sağlayacak ve kapitalist, komünist ve sosyalist ekonomik sistemlerle ilgili baskı ve eşitsizlikleri ortadan kaldıracağı yönünde oldu.
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To understand the functions of the financial institutions within a capitalist system, one must understand the spirit of capitalism. This paper argues that the spirit is the pursuit of wealth without any moral or social restraints.... more
To understand the functions of the financial institutions within a capitalist system, one must understand the spirit of capitalism. This paper argues that the spirit is the pursuit of wealth without any moral or social restraints. Financial institutions represent an embodiment of this spirit. Furthermore, these institutions act in concert with social and political institutions and cannot be understood except within this context. Ultimately, the unrestrained pursuit of wealth leads to the collection of wealth in the hands of a small number of the rich and powerful. Sustaining such outcomes within a democratic society requires radical changes in social values. Neither the spirit, nor the
social values associated with capitalist society are compatible with Islam. Islamic financial institutions attempt to modify the form of the institutions without affecting the spirit. Thus they end up performing the same functions as capitalist institutions and do not represent a genuine Islamic alternative.
social values associated with capitalist society are compatible with Islam. Islamic financial institutions attempt to modify the form of the institutions without affecting the spirit. Thus they end up performing the same functions as capitalist institutions and do not represent a genuine Islamic alternative.
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Hayek was concerned that passing laws to help the poor, even with good intentions, would lead to state interference with free markets, and even more, freedom. This would lead to dictatorship of the state and serfdom for the people, as an... more
Hayek was concerned that passing laws to help the poor, even with good intentions, would lead to state interference with free markets, and even more, freedom. This would lead to dictatorship of the state and serfdom for the people, as an UNINTENDED consequence. The essay shows that intended consequences of dismantling support programs have produced tremendous misery for the poor. States which pursued socialist policies of the type opposed by Hayek have done very well.
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This paper argues that Social Science in the West emerged after bloody and violent religious battles convinced Europeans that religion was not a good basis on which to structure society. Then they sought to create economic, social and... more
This paper argues that Social Science in the West emerged after bloody and violent religious battles convinced Europeans that religion was not a good basis on which to structure society. Then they sought to create economic, social and political systems on a secular basis, without any reference to religious principles. In a secular society, it was necessary to allow maximum freedom to all possible sects, and so freedom became a cherished value. This freedom was translated into all realms of human action, and resulted in principles contrary to both Christian and Islamic ethics. Thus rejection of religion is built into certain fundamental principles widely accepted in modern social science. This is built into the framework, and not recognized as such by Muslim scholars. Therefore, there is a great need of caution and care when we seek to adapt Western scholarship in social sciences for use in Islamic societies.
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Muslims set out to create an ideal Islamic Economic system which would offer justice nad equality of economic opportunity. Numerous obstacles have sidetracked them in this mission, and resulted in substantial confusion about the goals of... more
Muslims set out to create an ideal Islamic Economic system which would offer justice nad equality of economic opportunity. Numerous obstacles have sidetracked them in this mission, and resulted in substantial confusion about the goals of Islamic Economics. It is critical to clear up misunderstandings so as to progress towards these original ideals.
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According to western views, wealth is unambiguously good, and so human welfare is positive when wealth is in excess of needs, and negative if it is less. Islam has a substantially more sophisticated view of the relation between wealth and... more
According to western views, wealth is unambiguously good, and so human welfare is positive when wealth is in excess of needs, and negative if it is less. Islam has a substantially more sophisticated view of the relation between wealth and welfare. Excess wealth is a trial, which can bring great rewards if utilized correctly, and also bring great harm if utilized incorrectly. Similarly, poverty is a trail which can bring great rewards if borne with patience and prayer, and also cause great harm if it leads to begging from others. Thus there is no clear and simple relationship between wealth and welfare. This means that Islamic approaches to constructing an index for welfare must be substantially more complicated than those currently in use in the West. It is worth considering the reasons for undertaking the project of measurement and assessing what needs to be measured, and whether measurement itself is necessary, for achieving these goals?
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It is widely believed that prohibition of interest will cause harm to the economic system. This paper shows that this is not so. Islamic alternatives provide more efficient solutions to economic problems of society.
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The paper shows that fundamental Islamic principles regarding organization of economic affairs are directly and strongly in conflict with teachings of conventional economic theories.
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A central thesis of this paper is that social science is the study of human experience, and hence is strongly conditioned by history. Modern Western political, economic and social structures have emerged as a consequence of the... more
A central thesis of this paper is that social science is the study of human experience, and hence is strongly conditioned by history. Modern Western political, economic and social structures have emerged as a consequence of the repudiation of religion associated with the Enlightenment and are based on secular principles. Many of these are inimical to Islamic principles, and cannot be adapted to an Islamic society. Muslim societies achieved freedom from colonial rule in the first half of the twentieth century and have sought to construct institutions in conformity with Islam. The development of Islamic economics is part of this process of transition away from Western colonial institutions. This paper is a survey of the literature on Islamic economics, which focuses on the contrasts between Western economic theories and Islamic approaches to the organization of economic affairs.
Neoclassical theory is centred around the acquisitive instinct of humans and makes competition the driving force of economic analysis. Islamic approaches foster cooperation and encourage generosity as the fundamental principle for handling economic affairs. Human beings have potential for good and evil, and are free to choose between the two; their behaviour is not subject to the mathematical laws postulated by neoclassical economic theory. The main message of Islam is that we must strive to achieve the potential for good at both the individual and social levels. Behaviour in the economic realm is also governed by this goal.
Islamic law (Shari’ah) provides the framework for all activity within an Islamic society. In the economic domain, Islamic law regulates both methods by which money may be earned and also the ways it may be spent. Acquisition of wealth is permissible only in ways that are just to all the parties concerned; exploitation, arbitrary taxation, and individual profit resulting in social harm is not permissible in Islamic law. This puts numerous restrictions on business practices utilized to make a profit. For example, polluting the environment or selling products that lead to moral corruption are not permissible in Islamic law. Wealth that has been acquired becomes private property, which is, according to Islamic concepts, both a trust and a test. The ‘trust’ aspect means that property must be used in ways beneficial to the individual and society. The ‘test’ aspect means that those who have more than they need are required to take care of those who are in need. Ways in which acquired wealth can be spent is also subject to Islamic law. People are expected to strive to be self-sufficient and not ask from others. Thus striving to acquire wealth and spending it on personal and family needs is encouraged. Islam does not preach austerity and encourages a comfortable standard of living. At the same time, it strongly discourages spending on idle desires, luxuries, and ostentation. There is also a strong encouragement to spend what is beyond one’s needs on social welfare.
These fundamental principles for acquiring wealth, using property (acquired wealth) and spending it impact on all realms of economic activity. Since these are substantially different from Western ideas in all three areas, there are substantial contrasts between Western economic institutions and Islamic ones. The paper traces out these differences in many realms of economic activity. The primary objective of an Islamic state is to provide justice, and Islamic public finance is concerned with tracing the concrete implications of this abstraction in the economic realm. Western financial institutions have the acquisition and multiplication of wealth as their prime objective. Since acquisition of wealth can only be a means to an end, these institutions require modification in an Islamic society. Similarly, Islamic imperatives for social welfare require construction of certain uniquely Islamic types of institutions that do not have counterparts in the West. The paper discusses these issues in some detail.
Neoclassical theory is centred around the acquisitive instinct of humans and makes competition the driving force of economic analysis. Islamic approaches foster cooperation and encourage generosity as the fundamental principle for handling economic affairs. Human beings have potential for good and evil, and are free to choose between the two; their behaviour is not subject to the mathematical laws postulated by neoclassical economic theory. The main message of Islam is that we must strive to achieve the potential for good at both the individual and social levels. Behaviour in the economic realm is also governed by this goal.
Islamic law (Shari’ah) provides the framework for all activity within an Islamic society. In the economic domain, Islamic law regulates both methods by which money may be earned and also the ways it may be spent. Acquisition of wealth is permissible only in ways that are just to all the parties concerned; exploitation, arbitrary taxation, and individual profit resulting in social harm is not permissible in Islamic law. This puts numerous restrictions on business practices utilized to make a profit. For example, polluting the environment or selling products that lead to moral corruption are not permissible in Islamic law. Wealth that has been acquired becomes private property, which is, according to Islamic concepts, both a trust and a test. The ‘trust’ aspect means that property must be used in ways beneficial to the individual and society. The ‘test’ aspect means that those who have more than they need are required to take care of those who are in need. Ways in which acquired wealth can be spent is also subject to Islamic law. People are expected to strive to be self-sufficient and not ask from others. Thus striving to acquire wealth and spending it on personal and family needs is encouraged. Islam does not preach austerity and encourages a comfortable standard of living. At the same time, it strongly discourages spending on idle desires, luxuries, and ostentation. There is also a strong encouragement to spend what is beyond one’s needs on social welfare.
These fundamental principles for acquiring wealth, using property (acquired wealth) and spending it impact on all realms of economic activity. Since these are substantially different from Western ideas in all three areas, there are substantial contrasts between Western economic institutions and Islamic ones. The paper traces out these differences in many realms of economic activity. The primary objective of an Islamic state is to provide justice, and Islamic public finance is concerned with tracing the concrete implications of this abstraction in the economic realm. Western financial institutions have the acquisition and multiplication of wealth as their prime objective. Since acquisition of wealth can only be a means to an end, these institutions require modification in an Islamic society. Similarly, Islamic imperatives for social welfare require construction of certain uniquely Islamic types of institutions that do not have counterparts in the West. The paper discusses these issues in some detail.
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Abstract: A traditional Islamic education develops an Islamic outlook to life but does not prepare the student assimilate developments over the past three or four centuries, in particular Western knowledge. A modern Western education... more
Abstract: A traditional Islamic education develops an Islamic outlook to life but does not prepare the student assimilate developments over the past three or four centuries, in particular Western knowledge. A modern Western education inevitably entails absorption of a secular worldview built into the framework of Western sciences. For Muslims, the need of the hour is to develop an Islamic approach to understanding recent history and developments in Western physical and social sciences.
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Conduct of Economic Policy requires making choices between different types of wealth and income distributions as well as different types of economic and social structures. Making such judgments necessarily requires values or norms. Quirks... more
Conduct of Economic Policy requires making choices between different types of wealth and income distributions as well as different types of economic and social structures. Making such judgments necessarily requires values or norms. Quirks of European historical experience led to the belief that norms and values are not scientific and hence should not be a part of scientific discourse.
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What are we trying to accomplish as Muslim economists? The mission that we are trying to fulfill started as a historical necessity. When Muslims struggled for freedom from colonization all over the world, it was necessary for them to take... more
What are we trying to accomplish as Muslim economists? The mission that we are trying to fulfill started as a historical necessity. When Muslims struggled for freedom from colonization all over the world, it was necessary for them to take a stand on how they would organize the country after liberation. One of the important elements in the demand for freedom was that idea that Muslims would be free to practice their religion, which offered a complete social, political and economic system.
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How does the diversity of human goals impact on the organization of economic activity? How can we co-ordinate efforts taking this diversity into account? These questions have been the subject of a deep investigation by economists. Our... more
How does the diversity of human goals impact on the organization of economic activity? How can we co-ordinate efforts taking this diversity into account? These questions have been the subject of a deep investigation by economists. Our goal in this article is to compare these results with Islamic views on the subject.
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Dr. Iqbal has given a clear picture of the accomplishments of these last conferences. I would like to match these achievements against the goal: what are we trying to accomplish as Muslim economists? The mission that we are trying to... more
Dr. Iqbal has given a clear picture of the accomplishments of these last conferences. I would like to match these achievements against the goal: what are we trying to accomplish as Muslim economists? The mission that we are trying to fulfill started as a historical necessity. When Muslims struggled for freedom from colonization all over the world, it was necessary for them to take a stand on how they would organize the country after liberation.
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This is an excellent overview of the literature on evaluation of performance of Islamic Banks. It begins with a much needed review of technical details of two popular methods for evaluating the performance of banks–the so called DEA and... more
This is an excellent overview of the literature on evaluation of performance of Islamic Banks. It begins with a much needed review of technical details of two popular methods for evaluating the performance of banks–the so called DEA and SFA are clearly explained, and the assumptions behind these measures are spelled out.
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Abstract: The European Enlightenment led to the development of several views which are incompatible with Islam. This article discusses and rebuts three of these views. The first is the Enlightenment Myth, according to which light of... more
Abstract: The European Enlightenment led to the development of several views which are incompatible with Islam. This article discusses and rebuts three of these views. The first is the Enlightenment Myth, according to which light of reason first dawned in Europe in the sixteenth century. The second is the Deification of Science, according to which scientific knowledge is the most certain and superior type of knowledge. The third is the myth that European have progressed to the apex of civilization, and the rest of us must imitate them to succeed. It is an urgent need for Muslim scholars to develop alternative methods and subject materials for the education of Muslim children.
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There is substantial evidence that the development of the discipline of Islamic Economics is currently in crisis. In this article we argue that the main reason for this is that most Muslim economists have accepted too many of the ideas... more
There is substantial evidence that the development of the
discipline of Islamic Economics is currently in crisis. In this article we argue that the main reason for this is that most Muslim economists have accepted too many of the ideas of Western economists uncritically. The methodological framework, and underlying assumptions are wrong, and in conflict with Islamic views. This conflict has not been recognized, and the attempt to combine contradictory bodies of knowledge has failed. We
also present alternative foundations on which a genuine Islamic
economic theory could be constructed.
discipline of Islamic Economics is currently in crisis. In this article we argue that the main reason for this is that most Muslim economists have accepted too many of the ideas of Western economists uncritically. The methodological framework, and underlying assumptions are wrong, and in conflict with Islamic views. This conflict has not been recognized, and the attempt to combine contradictory bodies of knowledge has failed. We
also present alternative foundations on which a genuine Islamic
economic theory could be constructed.
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In contrast to the European worldview, Islam asserts that the best of times was the time of the Prophet Mohammad. S.A.W. These two worldviews are dramatically opposed to each other in many different dimensions. Today, the dominance of the... more
In contrast to the European worldview, Islam asserts that the best of times was the time of the Prophet Mohammad. S.A.W. These two worldviews are dramatically opposed to each other in many different dimensions. Today, the dominance of the Eurocentric worldview has indoctrinated Muslims into accepting many un-Islamic beliefs. Understanding and absorbing the Islamic worldview is a necessary antidote. This essay discusses key elements of the Islamic Worldview, and how these elements conflict with beliefs which are automatically built into a western education
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We provide a detailed discussion of current methodology of economics and its emergence from secular roots in Europe. The foundational principles of this methodology, which is based on logical positivism, are in conflict with Islam. We... more
We provide a detailed discussion of current methodology of economics and its emergence from secular roots in Europe. The foundational principles of this methodology, which is based on logical positivism, are in conflict with Islam. We then sketch some alternative methodologies which would be more suitable for Islamic economics.
We first describe how logical positivism emerged as the dominant philosophy of science, and how it was adopted into the foundations of economics. We then show that the current economic methodology is based on logical positivism. This philosophy is anti-Islamic, and therefore cannot be used to construct Islamic Economics. There are two main points of opposition. Logical Positivism rejects the unseen, while Islam requires faith in the unseen. Logical Positivism rejects morality as unscientific, while morality is a central part of Islamic teachings. This means that a methodology for Islamic economics must be radically different from that currently in use in conventional economic theory. Some essential elements of an alternative methodology are sketched.
We first describe how logical positivism emerged as the dominant philosophy of science, and how it was adopted into the foundations of economics. We then show that the current economic methodology is based on logical positivism. This philosophy is anti-Islamic, and therefore cannot be used to construct Islamic Economics. There are two main points of opposition. Logical Positivism rejects the unseen, while Islam requires faith in the unseen. Logical Positivism rejects morality as unscientific, while morality is a central part of Islamic teachings. This means that a methodology for Islamic economics must be radically different from that currently in use in conventional economic theory. Some essential elements of an alternative methodology are sketched.
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Abstract: Positivist philosophy provided the foundation for all social sciences as they were developed in the twentieth century. Now that positivism has been abandoned by philosophers, it is essential to replace methodology founded on... more
Abstract: Positivist philosophy provided the foundation for all social sciences as they were developed in the twentieth century. Now that positivism has been abandoned by philosophers, it is essential to replace methodology founded on positivist precepts. We show that the foundations of probability (both Bayesian and Frequentist) are wedded to positivist assumptions, which have been shown not to be workable.
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Abstract: The systematic risk of IPO's in the thinly traded Istanbul Stock Exchange (ISE) are estimated using Empirical Bayes Estimators (EBE). The sectors that the firms belong to, provide the priors. Comparisons are made with OLS... more
Abstract: The systematic risk of IPO's in the thinly traded Istanbul Stock Exchange (ISE) are estimated using Empirical Bayes Estimators (EBE). The sectors that the firms belong to, provide the priors. Comparisons are made with OLS estimators across different estimation and forecasting periods. Two benchmark criteria are used; sum of squared residuals and sum of absolute residuals. The application requires some complicated manipulation of the theory where some inferiors of the ordinary Bayesian approach are avoided.
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Consider a random variable X uniformly distributed on the unit interval [0,I]. For any xe [0,1], the probability the X=x is zero, and yet one of these events must occur. This appears to preclude interpretation of an event of probability... more
Consider a random variable X uniformly distributed on the unit interval [0,I]. For any xe [0,1], the probability the X=x is zero, and yet one of these events must occur. This appears to preclude interpretation of an event of probability zero as an impossible event. Several authors of elementary probability texts comment on this puzzling situation. Levi (1980) argues from this that events of probability zero may nonetheless be 'seriously possible'.
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We study the test for location parameter of a random number from Cauchy density, focusing on point optimal tests. We develop analytical technique to compute critical values and power curve of a point optimal test. We study the power... more
We study the test for location parameter of a random number from Cauchy density, focusing on point optimal tests. We develop analytical technique to compute critical values and power curve of a point optimal test. We study the power properties of various point optimal tests. The problem turned out to be different in its nature, in that, the critical value of a test determines the power properties of test.
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A test is said to detect an alternative hypothesis if it is unbiased against it, at all levels and all sample sizes. It is a robust test if this property is true for a large class of null distributions. This approach allows for method of... more
A test is said to detect an alternative hypothesis if it is unbiased against it, at all levels and all sample sizes. It is a robust test if this property is true for a large class of null distributions. This approach allows for method of comparison of tests which can be carried out for finite samples as well as in asymptotic behavior. We use this method to compare the properties of several methods of testing for heteroskedasticity, emphasizing on the possibility of testing for nonspecific heteroskedasticity. We show that a robust test for non-specific ...
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The Breusch-Pagan Lagrange Multiplier test for heteroskedascity is supposedly able to detect heteroskedasticity which is an arbitrary function of some set of regressors. We will show that in fact it detects only linear functions. The test... more
The Breusch-Pagan Lagrange Multiplier test for heteroskedascity is supposedly able to detect heteroskedasticity which is an arbitrary function of some set of regressors. We will show that in fact it detects only linear functions. The test is inconsistent for general alternatives, in ...
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By Asad Zaman; Random Coefficients and Heteroskedasticity.
Publication View. 5974583. The single period control problem in econometrics / (1978). Zaman, Asad. Abstract. Thesis (Ph. D.)--Dept. of Economics, Stanford University.. Bibliography: leaves 106-107. Publication details. Download,... more
Publication View. 5974583. The single period control problem in econometrics / (1978). Zaman, Asad. Abstract. Thesis (Ph. D.)--Dept. of Economics, Stanford University.. Bibliography: leaves 106-107. Publication details. Download, http://worldcat.org/oclc/38693445. ...
Abstract: We suggest a procedure for model update, based on detection of structural breaks at unknown change-points. The procedure makes use of the SupF test introduced by Andrews (1993). We apply this procedure for modelling the common... more
Abstract: We suggest a procedure for model update, based on detection of structural breaks at unknown change-points. The procedure makes use of the SupF test introduced by Andrews (1993). We apply this procedure for modelling the common stock index returns in ...
If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note... more
If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large. ... Paper provided by California Institute of Technology, Division of the Humanities and Social Sciences in its series Working Papers with number 390. ... No references listed on IDEAS You can help add them by filling out this form. ... Did you know? RePEc ...
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If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the... more
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large. ... Article provided by Econometric Research Association in its journal International Econometric Review. ... No references listed on IDEAS You can help add them by filling out this form. ... This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS. ... If you have authored this item and are not yet ...
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By Asad Zaman; Consistency of F-Test and Applications.
By Asad Zaman; Identification of Parameters of Interest.
By Sıdıka Başçı and Asad Zaman; Predictive Residual Sum of Squares: A Comparision of Criteria for Estimating Lag Order of an Autoregressive Process.
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No RePEc service, like IDEAS, charges for the use or the display of bibliographic data. ... No abstract is available for this item. ... To our knowledge, this item is not available for download. To find whether it is available, there are three options: 1. Check below under "Related research" whether another version of this item is available online. 2. Check on the provider's web page whether it is in fact available. 3. Perform a search for a similarly titled item that would be available. ... Paper provided by Purdue University, Department of Economics in its ...
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No abstract is available for this item. ... To our knowledge, this item is not available for download. To find whether it is available, there are three options: 1. Check below under "Related research" whether another version of... more
No abstract is available for this item. ... To our knowledge, this item is not available for download. To find whether it is available, there are three options: 1. Check below under "Related research" whether another version of this item is available online. 2. Check on the provider's web page whether it is in fact available. 3. Perform a search for a similarly titled item that would be available. ... Paper provided by Bilkent University, Department of Economics in its series Departmental Working Papers with number 952. ... No references listed on IDEAS You ...
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the... more
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large. ... Paper provided by California Institute of Technology, Division of the Humanities and Social Sciences in its series Working Papers with number 391. ... No references listed on IDEAS You can help add them by filling out this form. ... This item is not listed on Wikipedia, on a reading list or among the top items on ...
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If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the... more
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Related works: Working Paper: What do heteroskedasticity tests detect ? (1990) Working Paper: WHAT DO HETEROSKEDASTICITY TESTS DETECT? (1989) This item may be available elsewhere in EconPapers: Search for items with the same title.
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Almost sure convergence of averages of the rows is proven for arrays of random variables and for random elements in Banach spaces, which can be extended to square arrays with independent and identically distributed columns. The result... more
Almost sure convergence of averages of the rows is proven for arrays of random variables and for random elements in Banach spaces, which can be extended to square arrays with independent and identically distributed columns. The result requires that each column converge to ...
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No abstract is available for this item. ... To our knowledge, this item is not available for download. To find whether it is available, there are three options: 1. Check below under "Related research" whether... more
No abstract is available for this item. ... To our knowledge, this item is not available for download. To find whether it is available, there are three options: 1. Check below under "Related research" whether another version of this item is available online. 2. Check on the provider's web page whether it is in fact available. 3. Perform a search for a similarly titled item that would be available. ... Paper provided by Bilkent University, Department of Economics in its series Departmental Working Papers with number 952. ... No references listed on IDEAS You ...
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No RePEc service, like IDEAS, charges for the use or the display of bibliographic data. ... No abstract is available for this item. ... To our knowledge, this item is not available for download. To find whether it is available, there are three options: 1. Check below under "Related research" whether another version of this item is available online. 2. Check on the provider's web page whether it is in fact available. 3. Perform a search for a similarly titled item that would be available. ... Paper provided by Purdue University, Department of Economics in its ...
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By Asad Zaman; Random Coefficients and Heteroskedasticity.
By Asad Zaman; Consistency of F-Test and Applications.
By Asad Zaman; Identification of Parameters of Interest.
If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note... more
If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large. ... Paper provided by California Institute of Technology, Division of the Humanities and Social Sciences in its series Working Papers with number 390. ... No references listed on IDEAS You can help add them by filling out this form. ... Did you know? RePEc ...
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the... more
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large. ... Paper provided by California Institute of Technology, Division of the Humanities and Social Sciences in its series Working Papers with number 391. ... No references listed on IDEAS You can help add them by filling out this form. ... This item is not listed on Wikipedia, on a reading list or among the top items on ...
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By Sıdıka Başçı and Asad Zaman; Predictive Residual Sum of Squares: A Comparision of Criteria for Estimating Lag Order of an Autoregressive Process.
Publication View. 5974583. The single period control problem in econometrics / (1978). Zaman, Asad. Abstract. Thesis (Ph. D.)--Dept. of Economics, Stanford University.. Bibliography: leaves 106-107. Publication details. Download,... more
Publication View. 5974583. The single period control problem in econometrics / (1978). Zaman, Asad. Abstract. Thesis (Ph. D.)--Dept. of Economics, Stanford University.. Bibliography: leaves 106-107. Publication details. Download, http://worldcat.org/oclc/38693445. ...
Probabilities of one-time events are unobservable and unmeasurable. According to empiricist and positivist principles, they must be meaningless. However, our cognitive limitations do not prevent entities and effects from existing. We show... more
Probabilities of one-time events are unobservable and unmeasurable. According to empiricist and positivist principles, they must be meaningless. However, our cognitive limitations do not prevent entities and effects from existing. We show that the argument for existence of subjective probabilities relies crucially on the non-existence of objective probabilities. In this case however, the existence of subjective probabilities reduces to a triviality. When objective probabilities do not exist, we are free to believe whatever we like about these probabilities, without any consequences. The theorems which establish the existence of subjective probabilities are normally interpreted as establishing the existence of beliefs about probabilities. We show that this interpretation is not tenable when objective probabilities do not exist. We establish the validity of an alternative interpretation: in absence of objective probabilities, we are free to choose any arbitrary number as a subjective probability. JEL Codes: B40, C11 1 MANY TYPES OF PROBABILITY De-Finetti's (1974) famous book on The Theory of Probability starts with the deliberately shocking claim that "Probability does not exist". The conflict between the title and this claim arises because of the failure to distinguish between different notions of probability, as we will clarify. Contrary to standard usage, throughout this paper, probability will refer to the probability of a unique, one-time event-known as a single case probability. Consider an experiment E, the 1 Email: asad.zaman@alumni.stanford.edu-Affiliation: Retired.
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Massive amounts of confusion exists regarding the definition of Islamic Economics. This has blocked progress in terms of the development of the discipline, since there is no agreement on what its proper subject matter and methodology is.... more
Massive amounts of confusion exists regarding the definition of Islamic Economics. This has blocked progress in terms of the development of the discipline, since there is no agreement on what its proper subject matter and methodology is. This paper shows that the confusion arises because of our attempts to borrow foundational concepts and methodology from conventional capitalist economics. Modern economists advertise their discipline as a positive, objective, and factual science. However, it is actually a branch of moral philosophy, built on concealed moral foundations of competition, selfishness, individualism, and hedonism. Islamic economics cannot be built on such foundations. Realization the modern economics is the religion of secular modernity opens the pathways to construct a radical alternative. We can build the discipline of Islamic Economics on the diametrically opposite foundations of cooperation, generosity, brotherhood of mankind, and social responsibility. Instead of the methodology of Newtonian physics currently in use, we need to use the methodology of Ibn-e-Khaldun, created for studying the process of social change. With new moral foundations, and a new methodology, it is possible to rebuild Islamic Economics on new foundations. As a first step towards doing so, we examine thirty different definitions of Economics available in the literature. We show that most of them are in harmony with our conceptualization of new foundations for the discipline. Most of the remaining can be harmonized by considering them as specialized branches of the broad definition of Islamic Economics. It is hoped that achieving consensus on goals and methods for Islamic Economics will open the path to rapid progress in the field.
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We show that the rationality arguments used to establish the existence of subjective probabilities depend essentially on the identification of acting-as-if-you-believe and actually believing. We show that these two ideas, the pretense of... more
We show that the rationality arguments used to establish the existence of subjective probabilities depend essentially on the identification of acting-as-if-you-believe and actually believing. We show that these two ideas, the pretense of knowledge about probabilities, and actual knowledge about probabilities, can easily be distinguished outside the restricted context of choice over special types of lotteries. When making choices over Savage-type lotteries, rational agents will act as if they know their subjective probabilities for uncertain events, but they will reveal their ignorance in other decision-making contexts. This means that subjective probabilities cannot be assumed to exist, except when there is objective warrant for them.
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Paper discusses the principles of Islamic education, which differ drastically from the ones we learn from our Western education. The starting point is the intentions for acquiring knowledge. There are good, permissible, and also forbidden... more
Paper discusses the principles of Islamic education, which differ drastically from the ones we learn from our Western education. The starting point is the intentions for acquiring knowledge. There are good, permissible, and also forbidden intentions. The forbiddens ones of seeking popularity and fame are the most common ones currently. We must learn to differentiate between useful and useless knowledge, seeking one while avoiding the other. There is an extensive discussion of ethics and etiquette for the seeker of knowledge, as well as corresponding rules for teacher.
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The myopic formulation of human development by neoclassical economics exclusively in terms of economic growth has resulted in a transformation through which self-interested greed-based consumption is idealized to the great detriment of... more
The myopic formulation of human development by neoclassical economics exclusively in terms of economic growth has resulted in a transformation through which self-interested greed-based consumption is idealized to the great detriment of both the planet and the inhabitants of this planet (not only of the current generation but also those of the future generations). The Islamic notion of human development, in contrast, emphasizes a harmonious coexistence of human beings and nature through the responsible utilization of natural resources, which are considered as God's gift to the whole of humanity (belonging to the present as well as the future generations). In this article, we articulate the failings of the modern conceptions of development and contrast that with the Islamic sustainable development vision. The Islamic conception of development is endogenously "sustainable" due to its emphasis on the responsible use of resources; moderate consumption and simple living; and empathy for the less privileged (e.g., through both optional and mandatory charity). After providing a broad framing of the Islamic sustainable development vision, we also describe briefly the tools, incentives, and guidelines that Islam offers regarding authentic sustainable development. We will also describe how Islamic guidelines provide the keys for facilitating social inclusion, environmental sustainability, and inter-generational sustainability.
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We show that the dominant definitions of probability are seriously flawed. While finite frequentism fails to define, infinite frequentism is not operational. Similarly, the Dutch Book arguments used to establish the existence of... more
We show that the dominant definitions of probability are seriously flawed. While finite frequentism fails to define, infinite frequentism is not operational. Similarly, the Dutch Book arguments used to establish the existence of subjective probability fail to do so. An alternative definition of probability as a metaphor is offered. It is shown that this definition resolves several puzzles regarding the interpretation of common frequentist procedures and also some puzzles regarding the philosophy of science.
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(Turkish Translation of English Article -- abstract in English) There is a huge number of definitions of Islamic Economics available in the literature. The vast majority take existing definitions from the western literature and modify... more
(Turkish Translation of English Article -- abstract in English)
There is a huge number of definitions of Islamic Economics available in the literature. The vast majority take existing definitions from the western literature and modify them to incorporate an Islamic angle. This leads to the widespread belief that Islamic Economics is a variant or a branch of conventional economics. We argue that something can be called “Islamic” only if it is based on the Quran and Sunnah. In this paper we propose a new definition based purely and directly on Islamic ideas and sources. We show that this definition differs radically from any available in the West, as well as the vast majority of definitions proposed by Islamic Economists. It creates entirely new ways of looking at and organizing the subject matter of Economics. This paper discusses ten dimensions of contrast, where our new definition suggests that the methodology of Islamic Economics is directly opposed to western methodology.
Zaman (2012, Crisis In Islamic Economics) describes the current crisis in Islamic Economics, widely acknowledged by leaders in the field. Conventional views are that Islamic Economics must be a compromise between Islamic ideals embodied in homo islamicus, and realistic views embodied in homo economicus. However, there is substantial disagreement on the nature and extent of the compromise required. Consensus on defining “Islamic Economics” appears to be a pre-requisite for progress. I believe that a definition which can be justified purely and directly from Islamic sources will be able to command consensus that compromises cannot. Furthermore, this definition opens the way to radically new approaches, which can fulfill the promise initially held out by Islamic Economics. This (now largely forgotten) promise was that Islamic Economics will provide justice, and eliminate oppression and inequities associated with capitalist, communist and socialist economic systems.
There is a huge number of definitions of Islamic Economics available in the literature. The vast majority take existing definitions from the western literature and modify them to incorporate an Islamic angle. This leads to the widespread belief that Islamic Economics is a variant or a branch of conventional economics. We argue that something can be called “Islamic” only if it is based on the Quran and Sunnah. In this paper we propose a new definition based purely and directly on Islamic ideas and sources. We show that this definition differs radically from any available in the West, as well as the vast majority of definitions proposed by Islamic Economists. It creates entirely new ways of looking at and organizing the subject matter of Economics. This paper discusses ten dimensions of contrast, where our new definition suggests that the methodology of Islamic Economics is directly opposed to western methodology.
Zaman (2012, Crisis In Islamic Economics) describes the current crisis in Islamic Economics, widely acknowledged by leaders in the field. Conventional views are that Islamic Economics must be a compromise between Islamic ideals embodied in homo islamicus, and realistic views embodied in homo economicus. However, there is substantial disagreement on the nature and extent of the compromise required. Consensus on defining “Islamic Economics” appears to be a pre-requisite for progress. I believe that a definition which can be justified purely and directly from Islamic sources will be able to command consensus that compromises cannot. Furthermore, this definition opens the way to radically new approaches, which can fulfill the promise initially held out by Islamic Economics. This (now largely forgotten) promise was that Islamic Economics will provide justice, and eliminate oppression and inequities associated with capitalist, communist and socialist economic systems.
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Özet İslam'ın ruhunun kapitalizmin ruhuyla sert ve keskin bir uyuşmazlık içinde olmasından dolayı, İslam'ın ruhunu ifade etmek üzere tasarlanmış kurumların almış olduğu biçimin de ayrıca farklı olması zorunludur. Kapitalist finansal... more
Özet İslam'ın ruhunun kapitalizmin ruhuyla sert ve keskin bir uyuşmazlık içinde olmasından dolayı, İslam'ın ruhunu ifade etmek üzere tasarlanmış kurumların almış olduğu biçimin de ayrıca farklı olması zorunludur. Kapitalist finansal kurumlar kapitalist toplumların özünde yer alan servet biriktirme sürecini desteklemek üzere tasarlanmışlardır. İslam'da esas olan, kapitalist toplumlarda baskın olanlardan radikal bir şekilde farklı çeşitli hizmet-odaklı kurumlardaki hizmet ruhu ve başkalarına infak etmektir. Abstract Since the spirit of Islam is in stark and violent conflict with the spirit of Capitalism, the form taken by institutions designed to express this spirit must also be different. Capitalist financial institutions are designed to support the process of accumulation of wealth, which is at the heart of capitalist societies. Central to Islam is the spirit of service, and spending on others, which is expressed by diverse, service-oriented institutions, radically different from those dominant in capitalist societies.
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The English Language Version of this paper can be found at: https://ssrn.com/abstract=2772981. Özet İlk kuşak İslam iktisatçıları, kapitalizm ve komünizmin ötesinde adil bir ekonomik düzen oluşturmayı umut ediyordu. Tarihsel koşullar,... more
The English Language Version of this paper can be found at: https://ssrn.com/abstract=2772981.
Özet İlk kuşak İslam iktisatçıları, kapitalizm ve komünizmin ötesinde adil bir ekonomik düzen oluşturmayı umut ediyordu. Tarihsel koşullar, ikinci kuşağın bu umutları hatırdan çıkarmasına ve İslam ekonomisini kapitalizmin bir uzantısı olarak görmesine yol açtı. İkinci kuşak, şeklin İslami fakat özün kapitalist olduğu şeriata uyumlu bir sistem inşa etmeyi denedi. Şeriata uyumlu olmasından ziyade şeriat temelli yani şekilde ve özde gerçek İslami sistem kurulması için meselenin köklerine gidilmesi gerekmektedir. Üçüncü kuşak bunu yaparak, İslam ekonomisi umudunu yeniden canlandırabilir ve ilk kuşağın umut ettiği ekonomik sistem modelini oluşturabilir.
Özet İlk kuşak İslam iktisatçıları, kapitalizm ve komünizmin ötesinde adil bir ekonomik düzen oluşturmayı umut ediyordu. Tarihsel koşullar, ikinci kuşağın bu umutları hatırdan çıkarmasına ve İslam ekonomisini kapitalizmin bir uzantısı olarak görmesine yol açtı. İkinci kuşak, şeklin İslami fakat özün kapitalist olduğu şeriata uyumlu bir sistem inşa etmeyi denedi. Şeriata uyumlu olmasından ziyade şeriat temelli yani şekilde ve özde gerçek İslami sistem kurulması için meselenin köklerine gidilmesi gerekmektedir. Üçüncü kuşak bunu yaparak, İslam ekonomisi umudunu yeniden canlandırabilir ve ilk kuşağın umut ettiği ekonomik sistem modelini oluşturabilir.
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There is a conflict in the mechanism for price determination used in a Marshallian partial equilibrium supply and demand framework and the Walrasian general equilibrium framework. It is generally thought that partial equilibrium is a... more
There is a conflict in the mechanism for price determination used in a Marshallian partial equilibrium supply and demand framework and the Walrasian general equilibrium framework. It is generally thought that partial equilibrium is a simplified approximation to the complexities of the general model. The goal of this paper is to show that there is a strong conflict between the two models-intuitions and heuristics suggested by partial equilibrium are contradicted by extensions to the general equilibrium case.
Research Interests: Economics and Methodology
Current Economics Textbooks and Economists justify a theory of consumer behavior based on utility maximization on a priori grounds. This methodology follows Lionel Robbins’ idea that economic theory is based on logical deduction from... more
Current Economics Textbooks and Economists justify a theory of consumer behavior based on utility maximization on a priori grounds. This methodology follows Lionel Robbins’ idea that economic theory is based on logical deduction from postulates which are 'simple and indisputable facts of experience.' Strong evidence has emerged from many different lines of research that these 'simple and indisputable facts of experience' are contradicted by human behavior. In this article, we summarize some of main contradictions between predictions of utility theory and actual human behavior. Efforts to resolve these contradictions continue to be made within orthodox frameworks, but it appears likely that a paradigm shift is required.
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Men have many motives for their actions. One of these is greed and acquisitiveness. These characteristics have been universally condemned by all religions. Nonetheless, there are occasions when the „bad‟ motives of selfishness may result... more
Men have many motives for their actions. One of these is greed and acquisitiveness. These characteristics have been universally condemned by all religions. Nonetheless, there are occasions when the „bad‟ motives of selfishness may result in an outcome that is socially beneficial. For example, noting that there are few fish stalls in a city far from the coast, a selfish individual decides to make a profit by transporting fish from a coastal city. He makes a tidy profit, but also serves society in that the (iodine) needs of the people are now met. Under ideal conditions of ...
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Krugman has popularized the experiences of the Capitol Hill Baby-sitting Cooperative (BSC) as a fundamental paradigm for macroeconomic policy. Many authors who have formally analyzed the story have concluded that money must be supplied in... more
Krugman has popularized the experiences of the Capitol Hill Baby-sitting Cooperative (BSC) as a fundamental paradigm for macroeconomic policy. Many authors who have formally analyzed the story have concluded that money must be supplied in an optimal quantity for smooth functioning of the BSC economy. We create a natural model of the BSC which has sunspot equilibria. Agents must co-ordinate their expectations to arrive at an equilibrium. Our analysis shows that many of the lessons derived from the experience of the BSC depend on a particular choice of the equilibrium. Other choices can be more efficient and lead to different lessons. In particular, money holdings act like sunspots; they matter only if all agents agree that they matter. Surprisingly, flexible prices cannot solve the problem of mismatch between supply and demand. Also equilibria with excess supply may be more efficient than outcomes where supply and demand are matched. Our model shows that there are deep lessons to be learned from the BSC economy, but they are of a rather different nature from those derived by most authors. How expectations are formed, and how agents learn about other agents strategies form a crucial part of the equilibrium. These must be part of good models, and suitable interventions must take these into account. How agents can consciously choose among multiple equilibria and learn to coordinate on a particular choice requires more attention from economists.
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The elevation of scarcity to the fundamental economic problem rests on some unstated normative assumptions. These include a political commitment to private property, a methodological commitment to not inquire about taste formation, and... more
The elevation of scarcity to the fundamental economic problem rests on some unstated normative assumptions. These include a political commitment to private property, a methodological commitment to not inquire about taste formation, and the idea that human welfare is roughly equivalent to preference satisfaction. The problem arises because current methodology is based on certain positivist principles, and needs revision in light of subsequent collapse of positivism.
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"Purpose – The purpose of this paper is to argue that corruption is inherently unmeasurable. Measures of corruption produced by different sources are highly unsatisfactory. Useful measures may be possible for specific purposes in... more
"Purpose – The purpose of this paper is to argue that corruption is inherently unmeasurable.
Measures of corruption produced by different sources are highly unsatisfactory. Useful measures
may be possible for specific purposes in limited contexts. Reasons why highly unsatisfactory
measures are in use have to do with politics and power, rather than utility of these measures.
Design/methodology/approach – The paper shows that different dimensions of corruption cannot
be reduced to a single number without serious loss of information. For example the number and size
of bribes cannot be reduced to a single index. The difference between perceptions of corruption and
the reality also makes most popular indices useless.
Findings – The paper shows that commonly used measures of corruption are useless for their
ostensible purposes. Evidence is presented that they are calculated and used for political purposes. In
particular, they provide convenient excuses for the widespread failure of the structural adjustment
programs of IMF and World Bank.
Originality/value – The paper’s findings cast doubt on the vast amount of research which takes the
corruption measures as objective and factual, and attempts to find causal factors for corruption, as
well as effects of corruption on growth and other variables."
Measures of corruption produced by different sources are highly unsatisfactory. Useful measures
may be possible for specific purposes in limited contexts. Reasons why highly unsatisfactory
measures are in use have to do with politics and power, rather than utility of these measures.
Design/methodology/approach – The paper shows that different dimensions of corruption cannot
be reduced to a single number without serious loss of information. For example the number and size
of bribes cannot be reduced to a single index. The difference between perceptions of corruption and
the reality also makes most popular indices useless.
Findings – The paper shows that commonly used measures of corruption are useless for their
ostensible purposes. Evidence is presented that they are calculated and used for political purposes. In
particular, they provide convenient excuses for the widespread failure of the structural adjustment
programs of IMF and World Bank.
Originality/value – The paper’s findings cast doubt on the vast amount of research which takes the
corruption measures as objective and factual, and attempts to find causal factors for corruption, as
well as effects of corruption on growth and other variables."
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The object of this paper is to present an exposition of Efficiency Wage theory, and to test its basic assertions in the context of Pakistan. The Great Depression of 1929 showed that labour disequilibrium persists for long periods of time.... more
The object of this paper is to present an exposition of Efficiency Wage theory, and to test its basic assertions in the context of Pakistan. The Great Depression of 1929 showed that labour disequilibrium persists for long periods of time. One of the causes of this was rigidity of nominal wages, which was assumed without explanation by Keynes in his General Theory. Stagflation in the 1970s led to re-examination of Keynesian theories and a search for a satisfactory theoretical explanation of wage rigidity.
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Abstract We study the role of reciprocity in a labor market field experiment. Recently, many experiments have been conducted to test the extent to which cash and non-monetary gifts affect workers' productivity through social exchange. Our... more
Abstract We study the role of reciprocity in a labor market field experiment. Recently, many experiments have been conducted to test the extent to which cash and non-monetary gifts affect workers' productivity through social exchange. Our experiment concluded that non-monetary gifts are more effective at invoking reciprocal behavior. Despite higher preference for money, a nonmonetary incentive results in a significant increase in productivity compared to equivalent cash gift.
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Abstract While the wrong Western diagnosis that lack of wealth is the source of 'scarcity'leads them to pursue the wrong remedies, the Quran offers us the correct solution to the problem. Instead of striving for more wealth, the Quran... more
Abstract While the wrong Western diagnosis that lack of wealth is the source of 'scarcity'leads them to pursue the wrong remedies, the Quran offers us the correct solution to the problem. Instead of striving for more wealth, the Quran teaches us to restrict our idle desires, strive to lead simple lifestyles, and to spend on others less fortunate than us. It also teaches us to be content with what we have, and not envy those who have more material wealth.
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Abstract: Traditionally poverty has been understood only as 'lack of income'. However, with the passage of time it was realized that poverty is a complex and multidimensional phenomenon. Mahboob-ul-Haq (1973) and Sen (1975) argued that... more
Abstract: Traditionally poverty has been understood only as 'lack of income'. However, with the passage of time it was realized that poverty is a complex and multidimensional phenomenon. Mahboob-ul-Haq (1973) and Sen (1975) argued that development is about enlarging human capabilities, rather than only acquisition of wealth. The purpose of this research is to argue that poverty being multidimensional in nature, cannot be properly measured by unidimensional (income or calorie based) poverty measures.
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Abstract Since Robbins (1932) influential essay on the methodology of economics, scarcity has been taken as the fundamental economic problem. We will argue that this is based on a tacit assumption of primacy of property rights. We... more
Abstract Since Robbins (1932) influential essay on the methodology of economics, scarcity has been taken as the fundamental economic problem. We will argue that this is based on a tacit assumption of primacy of property rights. We illustrate how differing ethical commitments on part of a society lead to differing formulations of the fundamental economic problem.
Research Interests: Economics and Methodology
The twentieth century has been extremely unusual in that economic growth rates have been extraordinarily high. At the same time, costs of this growth have also been extremely high. These have been in the form of environmental degradation,... more
The twentieth century has been extremely unusual in that economic growth rates have been extraordinarily high. At the same time, costs of this growth have also been extremely high. These have been in the form of environmental degradation, depletion of planetary resources and species, climate change, and adverse social change. Since many of the effects of growth go outside the marketplace, evaluating costs and benefits involves value judgments of types which economists are not well-equipped to make. This article sketches some issues which have not received sufficient attention in the discourse about current policy options which bear importantly on our future.
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ABSTRACT Despite many failures of the invisible hand both empirically and theoretically, it continues to be vigorously asserted and widely believed. We document the failures and explain why it continues to be asserted despite these... more
ABSTRACT Despite many failures of the invisible hand both empirically and theoretically, it continues to be vigorously asserted and widely believed. We document the failures and explain why it continues to be asserted despite these failures.
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: Polanyi’s book on The Great Transformation provides an analysis of the emergence and significance of capitalist economic structures which differs radically from those currently universally taught in economic textbooks. This analysis is... more
: Polanyi’s book on The Great Transformation provides an analysis of the emergence and significance of capitalist economic structures which differs radically from those currently universally taught in economic textbooks. This analysis is based on a methodological approach which is also radically different from existing methodologies for doing economics, and more generally social science. This methodology is used by Polanyi without explicit articulation. Our goal in this article is to articulate the methodology used in this book to bring out the several dimensions on which it differs from current approaches to social science. Among the key differences, Polanyi provides substantial scope for human agency and capabilities to change the course of history. He also shows that the social, political and economic spheres of human existence are deeply interlinked and cannot be analyzed in isolation, as current approaches assume.
Research Interests: Economics and Methodology
This paper discusses many philosophies, starting with Malthus, which blame poverty on the poor, and gind solutions which harm the power. The errors in these theories, and their basis in the political interests of the rich and powerful are... more
This paper discusses many philosophies, starting with Malthus, which blame poverty on the poor, and gind solutions which harm the power. The errors in these theories, and their basis in the political interests of the rich and powerful are also discussed.
Research Interests:
It is widely believed that human knowledge represents valuable information about the world we live in. Historical studies of Michel Foucault led to the striking conclusion that human knowledge cannot be separated from the power... more
It is widely believed that human knowledge represents valuable information about the world we live in. Historical studies of Michel Foucault led to the striking conclusion that human knowledge cannot be separated from the power configurations governing society. In this paper, we study how economic theories are shaped by socio-political power.
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How do we arrest the decline of the social sciences in Pakistan? Is it a matter of money or one of sending more students to the West who might then return to teaching at the local universities? In this article I argue that the solution... more
How do we arrest the decline of the social sciences in Pakistan? Is it a matter of money or one of sending more students to the West who might then return to teaching at the local universities? In this article I argue that the solution lies elsewhere. Borrowing frames, concepts, and analytical techniques based on the concept of universalism runs a serious risk of imposing alien views on local problems. Moreover, attempts to become 'scientific'requires side stepping value judgments of good and bad.
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"Abstract: The core economic functions of production and distribution of goods can be handled by many different methods. After the fall of communism, the market mechanism has become nearly universal. Conventional economic theories argue... more
"Abstract: The core economic functions of production and distribution of goods can be handled by many different methods. After the fall of communism, the market mechanism has become nearly universal. Conventional economic theories argue that this is natural, because it is the best and the most efficient method for organizing economic affairs in a society. This paper, based on the analysis of Polanyi (1944) and Klein (2008) argues that the opposite is true. Market mechanisms conflict with natural mechanisms for production and exchange in traditional societies. Unregulated markets cause tremendous damage, as can be witnessed today in terms of countless economic crises, wars, environmental destruction, as well as damage to social networks. Because of this damage, market societies can only be maintained
by force, as well as disinformation. To resolve crises on myriad fronts caused by the unregulated market, it is the need of the hour to find viable alternatives."
by force, as well as disinformation. To resolve crises on myriad fronts caused by the unregulated market, it is the need of the hour to find viable alternatives."
Research Interests:
Our goal is to show that production of knowledge requires different approaches in different areas. In particular, radically different methodologies are suitable for mathematics, science, and humanities. Mathematics requires an axiomatic... more
Our goal is to show that production of knowledge requires different approaches in different areas. In particular, radically different methodologies are suitable for mathematics, science, and humanities. Mathematics requires an axiomatic and deductive approach, while science requires an inductive and empirical approach. Historical events in Europe led to a conflict between science and religion, and a consequent attempt to use science to replace religion. The attempt to prove that science leads to certainty led to the mistaken understanding that scientific methodology is mathematical. The assumption that science is the only valid body of knowledge led to the mistaken attempt to apply this wrong understanding of scientific methodology to the social sciences. These two mistakes have crippled the development of our understanding of human beings and societies. The failure to understand the basic realities of human experience has led to many disasters, and needs to be rectified by correcting this double mistake.
Research Interests:
Research Interests:
Models are representations of reality. They simplify and ignore many complexities in order to focus on certain aspects. With constant and repeated use, theorists sometimes confuse the model with reality. This leads to many types of... more
Models are representations of reality. They simplify and ignore many complexities in order to focus on certain aspects. With constant and repeated use, theorists sometimes confuse the model with reality. This leads to many types of errors. In this article, we argue that the metaphor of the invisible hand has become deeply entrenched in the ways of thinking about and framing of economic problems. This has led to overuse and abuse of the metaphor. Why this happened, what harm has resulted from it, and how it can be remedied is the subject of this paper.