Hypocrisy or synthesis? -- From Islamic Finance to Religion and Society

I have noticed in my sermons over the past few months a clear pattern. Although I hadn't thought about them in those terms when I wrote them, sermons at one mosque have been neo-Mu`tazilite in orientation, while sermons at another have been Ash`arite, and both had a dose of Sufism in the mix.

Professionally, my approach to Islamic finance, which has won me too many enemies (and, at best, very few and very quiet friends) in the industry's professional and even academic circles, has been solidly new-Mu`tazilite. By the latter I mean the approach of Muhammad `Abduh and his students, which is becoming a minority approach even in Al-Azhar, as it has fallen under traditionalist influence with gulf funding (not surprisingly, even Rashid Rida, `Abduh's main student, had deviated from the latter's approach towards a more traditionalist one).

In the arena of Islamic finance, it was easy to come to my conclusions and to stick to them against the onslaught of attacks from industry consultants ("Shari`a Scholars" in industry parlance), because even the most revered scholars in the Hanbali GCC -- Ibn Taymiya and his student Ibn Qayim -- had strongly condemned the use of legal stratagems (such as today's murabaha, tawarruq, etc. to synthesize interest based loans -- see for example this previous posting on my blog for a clearly rationalist quote).

Historically, Hanbali jurists were dismayed at classical-period Hanafis using legal stratagems to allow circumvention of Islamic law of riba -- as the latter must have believed that the intent of the law didn't apply for some transactions or in cases of need, and therefore found the hiyal (legal stratagems) that allowed it. The master of this game in recent times has been Justice Taqi Usmani, a Pakistani Hanafi jurist and son of a former Pakistani Grand-Mufti, who himself lamented the state of the industry at a panel in which I participated circa 2005, when he said that they have replaced fiqh al-mu`amalat (jurisprudence of financial transactions) with fiqh al-hiyal (jurisprudence of legal stragems).

The interesting thing, however, is that the Hanafi legal code, Majallat Al-Ahkam Al-`Adliya, imposed by the Ottoman Empire, had accepted the fundamental rule expounded by Ibn Qayim in I`lam Al-Muwaqqi`n that "What Matters in Contracts Is Their Substance, Not Their Wording and Constructions" (العبرة في العقود بالمعاني و ليست بالألفاظ و المباني). Thus, modern Hanafis and Hanbalis would have agreed on the incoherence of the financial-engineering driven form-over-substance Islamic finance. Except that, in practice, those who built the current industry have adopted an incoherent traditionalist approach, even as they paid lip service to the juristic role of substance-based analysis of contracts.

I do not regret my adoption of a rationalist approach on the issues of Islamic jurisprudence of financial transactions, even if it meant being ostracized by conference organizers for fear of upsetting their main industry-participant sponsors, because traditionalists (from the Hanbali Ibn Qayim to the Hanafi Ibn `Abidin) had themselves looked at these matters rationally. It is impossible for me to know whether modern "Islamic finance" quasi-scholarship did not reach the same opinions reached by Muhammad `Abduh and scholars in his tradition for religious or financial reasons, whether personal or social (some claim that they help Muslims who otherwise would be isolated financially; a claim that I have not seen verified empirically), or for truly religious reasons. Regardless, I have chosen not to be hypocritical, so I spoke my mind on that industry, and have no regrets about that.

Moving beyond pseudo-Islamic Finance, however, I am now very interested in issues of "Religion and Economics," especially as they pertain to my native Egypt, and, to a lesser extent, other majority-Muslim countries. Many have argued that the major problem of this part of the world is the continued failure to find a synthesis between rationalist and traditionalist approaches to modernity. Even within the economic sphere, to which I limit my attention professionally, this has meant that a revolutionary (sometimes militant, as Bruce Lawrence has shown) reaction to modernity, as represented today by the post-Washington-Consensus Washington Consensus (or WC-II; neo-libaralism with social safety nets and a focus on building proper institutions), cannot be channeled productively without reaching a synthesis that will be acceptable not only to intellectual modernists, secular and religious, which is already a daunting task, but also to traditionalists and the public at large, which carries an incoherently compartmentalized religious approach -- in large part due to deficits in education, as students overspecialize early in life into technical fields, or receive an "illiberal arts" education where freedom of thought is stifled.

As I struggle for an approach to study "Religion and Economics" for economic development in that part of the world, I have noticed my own compartmentalization of religious styles (traditionalist in some mosques, and rationalist in others; selectively choosing elements of each tradition that suit my temperament and would not be too uncomfortable for the congregants). I wonder if this compartmentalization is a sign of the same unproductive hypocrisy that has plagued my native part of the world for at least a century and a half. It is easiest for me to adopt the rationalist modernist approach professionally (which will help me to publish again more frequently in mainstream economics venues), but that is of no value to anyone but perhaps my own academic career. That defeats the purpose of having become an economist in the first place; being a mainstream engineer like my brothers would have produced a lot more value to society.

Trying to force-feed rationalist modernist economic approaches to my native Egypt, as many have tried and failed for decades, is also a waste of time, and potentially a dangerous one at that. In the meantime, the traditionalist approach is anachronistic and often irrational, and my experience with pseudo-Islamic finance tells me that even if I can cynically play the traditionalist game by its rules, my constitution will not allow me to do so convincingly. It is, of course, delusional to think that I can contribute substantially to finding that elusive synthesis between rationalist and traditionalist approaches (which has eluded well-intentioned people at least from the time of Al-Afghani and `Abduh to our day). However, in a Kantian universalizability sense, if many like-minded students work together, the task may not be impossible. Whether that is itself a form of self-delusional hypocrisy or genuine desire to conduct useful social science remains to be seen.