The Future of Economics. M. Umer Chapra
indispensable goal of Islam and yet so markedly missing in the present-day Muslim world that there is not much time for the luxury of a prolonged intellectual debate if the prevailing social and political turmoil is seen as needing reduction. A consensus needs to be reached as soon as possible, and a discussion taking place within the framework of the agreed principles of Islam will perhaps take much less time to crystallize than that within the framework of secularist and value-free economics. If conventional economics also progresses more rapidly in the direction of shedding its secularism and value-neutrality and injecting moral values and justice into its analysis, then there might ultimately be a convergence between the two. The prefix may then lose its significance. At that stage mankind would be closer to the goals of ‘unity’ of mankind and human brotherhood, which Islam stands committed to actualize because of their being natural corollaries between the Islamic concepts of Tawḥīd (Unity of God) and khilāfah (vicegerency of man).
Notes
1. Blaug, 1980, p. xiii.
2. Lawson, 1995, p. 35.
3. Brinton, 1967, p. 520.
4. Miller, 1962, pp. 230–1; see also Russell, 1945, pp. 773–82.
5. Alan Blinder has rightly identified the three non-controversial propositions of conventional economics as:
(a) more is better than less;
(b) resources are scarce;
(c) higher productivity is better than lower productivity (Blinder, 1987, pp. 15–17).
6. Sen, 1987, pp. 11–14.
7. Myers, 1983, p. 4.
8. Edgeworth, 1881, p. 16.
9. Friedman, 1972, p. 133.
10. Robbins, 1935, p. 240.
11. Friedman, 1953.
12. There is a difference of opinion among economists on the goal of the economic method. Positivists and operationalists, like Samuelson, emphasize that the role of economics is only to describe. Logical empiricists, however, insist that explanation is the goal of economics. By contrast, instrumentalists, like Friedman, emphasize that prediction is the primary function of economics (see Blaug, 1980; Caldwell, 1982). Since I do not wish to enter into this controversy in this brief paper, I have mentioned all three approaches in the text. There is another goal, persuasion, which has also been emphasized (McCloskey, 1986). This, however, does not differ from explaining and predicting because it is generally not possible to persuade without convincing explanation and reliable prediction. The goal of persuasion has not, therefore, been discussed in this book.
13. Routh, 1989, p. 19.
14. Rawls, 1958.
15. Solo, 1981, p. 38; see also Sen, 1987, p. 32.
16. Colander, 1992, p. 113.
17. Cited by Kuhn, 1961, p. 161.
18. Blaug, 1980, p. 149.
19. Named after Jean Baptiste Say (1767–1832).
20. Smith (1723–90), 1937, p. 423.
21. Rosenberg, 1992, p. 219; see also Blackhouse, 1994, p. 13.
22. A number of economists may hesitate to accept this view. It is, however, a logical outcome of the belief in the efficacy of market forces, and economists like J.B. Clark felt that factor incomes in the real world closely approximated the marginal product and its value (see Stigler, 1941).
23. Milton and Rose Friedman, 1980, p. 23.
24. Klein, 1954, p. 90.
25. Keynes, 1924, p. 88. This book is Volume IV of Keynes, 1972.
26. Lucas did more than any other economist to undermine confidence in the government’s ability to increase employment and output growth with expansionary monetary and fiscal policies. See, in particular, Lucas, 1973 and 1976; Mankiw, 1990.
27. There seems to be a change once again in the direction of the wind as reflected in the World Bank’s call for ‘effective’ and ‘good’ government in its 1997 World Development Report: The State in a Changing World.
28. Hahn, 1970.
29. Samuelson has rightly indicated that “the Invisible Hand will only maximize total social utility provided the state intervenes so as to make the initial distribution of dollar votes ethically proper “ (1966, p. 1410; italics in the original).
30. Okun, 1975, p. 11.
31. Perfectly competitive markets are said to prevail if there are many buyers, many sellers, no barriers to entry, and perfect information about the present and the future. These conditions are not satisfied anywhere.
32. Brittan, 1985, p. 16.
33. Tawney, 1948, p. 12.
34. See North, 1990; Hausman and McPherson, 1993; Rodney Wilson, 1997.
35. Koopmans, 1969, cited by M. Ali Khan in Z. Ahmed et al., Fiscal Policy ..., 1983, p. 243.
36. Kuhn, 1970.
37. Peter Howitt, 1987, p. 273.
38. Lucas and Sargent, 1979, p. 4.
39. Arrow, 1967, p. 734. See also, Peter Howitt, 1987, p. 273.
40. See Chapter 3 on “The Crisis of the Welfare State” in Chapra, 1992, pp. 113–46.
41. Cited by Myers, 1983, pp. 2–3.
42. Lakatos, 1974.
43. Hutchinson, 1964, pp. 29–31.
44. Blaug, 1980, p. 150.
45. See Mark Blaug, 1980; Bruce Caldwell, 1982.
46. Samuelson, 1972, pp. 765–6; also 1966, p. 1778.
47. Friedman, 1953, p. 14. He also states that: “Truly important and significant hypotheses will be found to have ‘assumptions’ that are wildly inaccurate descriptive representations of reality, and in general, the more significant the theory, the more unrealistic the assumptions (in this sense).” (See also Hahn’s view in Hahn and Hollis, 1979, p. 12.)
48. The modern Austrian School, therefore, argues that “prediction is absolutely impossible in a subject like economics because economic behaviour, being forward-looking, is inherently unpredictable” (Blaug, 1980, pp. 259–60).
49. Schweitzer, 1949, p. xii; see also Sorokin, 1951, p. 177.
50. The theoretical side of Welfare Economics is organized around three main theorems. For a brief but readable discussion of these see Feldman, 1987, pp. 889–94.
51. See the article on “Altruism” by Hammond, 1987, p. 86.
52. Blaug, 1980, p. 140.
53. See, for example, Hutchinson, 1964; Myrdal, 1970; Heilbroner, 1973.
54. Blaug, 1980, p. 146.
55. Myrdal, 1970, pp. 55–6.
56. See Hausman and McPherson, 1993; Rodney Wilson, 1997.
57. See, for example, Dopfer, 1976; Balogh, 1982; Bell and Kristol, 1981.
58. See, for example, Skinner, 1986. This book provides the story behind some of the most valiant rebels against the tyranny of normless human sciences.
59. Warnock, 1972, p. 85.
60. Wiseman, 1991, p. 150.
61. Fulton and Gee, 1994.
62. See, Janos Horvath, “Foreword”, in Solo and Anderson, 1981, pp. ix–x.
63. Hahn and Hollis, 1979, p. 12.
64. Solo and Anderson, 1981, p. x.
65. Lutz and Lux, 1979, p. ix.
66. Maslow, 1970.
67. Choudhury, 1986, p. 237.