Sunni-Islamic Values and Ethical Standard Role in Promoting Economic Growth and Capitalism

Introduction

According to Giddens, every social theorist considers some factors more effective and hence detrimental to social change.1 Karl Marx would consider shifts in modes of production whereas Durkheim sees the division of labor as it interacts with material factors as the cause of social change. Over the past four centuries, according to Max Weber, the protestant ethics has played a key role in shaping the economic statuses of certain cultures relative to cultures that were not affected by the protestant reformation.

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General Context

In the 21st century, humanity has encountered scenarios that have led to the positioning of capitalism at the epicenter of their economic systems. However, as Blum and Dudley assert, concerns have been raised about nations that struggle with common problems such as poverty, poor health, and hunger.2 These challenges are common among people in low socioeconomic classes as Blum and Dudley confirm.3 They are also common disadvantages since such people lack adequate resources to support their existence. Therefore, they cannot compete successfully with people who are majorly capitalistic in upper socioeconomic classes. This situation introduces an important argument based on Max Weber’s protestant capitalism that is anchored on the premise that the concept does not guarantee equal resource distribution. It leads to segregation of people who have lesser resources by making them less participative in the process of economic growth. The rest of the paper discusses an alternative approach to capitalism ethos, namely, Sunni-Islamic.

Summary of Protestant Ethics by Max Weber

During the 16th century, protestant reformers provided an interpretation of the Bible that was different from the one that was widely held by the Catholic Church at that time. To identify their standing in the afterlife, Protestants (specifically Calvinists among other groups) have argued that economic success in life is a sign of salvation. To fulfill this premise, protestant ethics encapsulates principles and values that promote economic success (such as hard work, being disciplined and rational orientation). Therefore, economic success is a sign that God has pre-determined someone to go to heaven in the afterlife.4

The social shift of ethics and values that came with Martin Luther’s protestant ethics was an important determinant of the western countries to industrialize and realize economic growth far greater than its Catholic and Orthodox counterparts. As Chalcraft and Harrington observe, premises related to the effect of certain belief systems on the economic outcome or the merits and defects of global capitalism are debatable.5 Hence, it remains important to study the implications of similar shifts in social and ethical standards in a religion or culture, which is associated with Max Weber’s protestant ethics in other religious settings such as Sunni-Islam.

Research Question

There is the need to test Max Weber’s most important cause of social change, namely, shifts or changes in ethics and values as they manifest in a specific religion or culture. This situation leads to the question that this research is concerned with: ‘do changes in beliefs systems (specifically shifts in ethics and values) of Sunni-Islam promote economic growth/capitalism?’

Thesis and Methodology

This paper uses secondary sources to discuss the role of Sunni-Islamic values and ethical standard in promoting economic growth and capitalism. It hypothesizes that economic principles that are acceptable within specific social groups may help to limit people’s conduct to promote economic growth. By providing supporting arguments from the literature on social and political theory, and not based on theological sources and interpretations, it provides a critical response to the above question. The thesis of paper is that shifts in ethics and values that came with Islam 14 centuries ago caused a change in the attitude towards economic activity and hence the applicability of Max Weber’s theory in different religions/cultures, in this case, Islam.

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Islamism and capitalism in Max Weber’s protestant ethics and promotion economic growth

Economic growth encompasses consistent rise of the ability of economies to produce service coupled with goods as measured from one period to another. Ali notes that economic growth may be measured from perspectives of nominal terms, which consider inflation.6 When measured in real terms, adjustments are made for inflation. For purposes of comparisons between different nations, economic growth may be determined from GDP and/or GNP per capital as these parameters incorporate differences in population for different nations.

While Max Weber philosophy of economic growth in capitalistic economies considers economic positions while incorporating adjustments for inflation, Sunni-Islam cultures do advocate for inflation of currencies.7 This claim means that economies under Islamism are shielded from inflation and other changes in value of money, including Riba (interest). This concern underlines the necessity for examining how such an economic system would contribute to higher economic growth and development. Rodinson asserts that Mecca, the place where Islam originated, was an epicenter of capitalism.8 It was critical in enhancing economic growth in the city. Max Weber’s theory suggests that a religion is an important factor that determines the value system of a given society. Therefore, a question whether capitalism that arises from specific religious (Islam) values and ethics can contribute to economic prosperity remains relevant.

Capitalism constitutes an economic system that relies on the principle of private property and confidential enterprises. Under the system, institutions and people compete economically at an individual capacity through various market transactions. According to Yassin, capitalistic principles are well established in western cultures.9 However, the Islamic religion has different set of values. While western cultures evidence elaborate systems that foster capitalism, shifts in ethics and values that came with Islam 14 centuries ago caused a change in the attitude towards economic activity.

In Europe, a research has been carried out to examine Weber’s arguments in terms of the relationship between capitalism and cultures/religion. The study examines the relationship that occurs between capitalism, especially, “European tradition of Puritan asceticism and the mystical ethics of Asian religion” as Facchini (b) observes based on Weber’s presumptions.10 Despite the fact that Weber died before he completed his work of Islam and capitalism, Garrett reveals how the sociological tradition neglects how Weber treated Islam.11 One of the major arguments raised by Weber was that Islam was a religion that did not focus on salvation. Hypothetically, this claim suggests that it does not have the tenets of hard work, self-orientation, and discipline, which are important foundations of the manner in which religion influence capitalism as argued before. Indeed, Weber’s thesis on protestant ethics could be read as a theory of values or advanced arguments, which set out the necessary conditions for the thriving of capitalism, religion being one of them. The paper is only concerned with the second approach.

When reading Weber’s characterization of Islam, some level of confusion emerges on whether it contributed to capitalism or not. Considering his arguments on Islamic religious ethics, Facchini (b) asserts, “Islam could not provide the social leverage whereby the Muslim Middle East could be lifted out of feudal stagnation.”12 At this stage, it becomes too easy to assume that his arguments implied a shift of values that are associated with the rise of Islam and that they had no role in inducing capitalism since the religion introduced a culture that was highly incompatible with capitalism. Secondly, it is also possible to conclude that Weber was asserting that militaristic values had a close relationship with warrior groups that emerged from Palestine Islam to the extent that when he turned to analyzing the Islamic law, his arguments shifted to considering religion (Islam) a necessary predetermining development of capitalism.

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Weber upheld the premise that in case Muslim never discovered capitalism, then the situation arose because Islam had the effect of transforming “original ascetic extra-social monotheism into military ethics”.13 This class of worrier ethics hindered any possibility of the rising of capitalism in Muslim cultures. Turner provides a description of the structuring of medina society in terms of its mystics coupled with worrier mentality.14 Such a society has little possibility of creating avenues of production since people are preoccupied in praying or making war in the power of God’s name as Facchini (a) reveals.15 War leads to an increase in taxes. Indeed, as evidenced by Arabs and Turks, tax spending formed the basis of generating merchants’ wealth in cities.

Arabs who had an Islamic inclination placed garrison in territories. They ensured differentiations in terms of religious (Islam or non-Islam). Facchini (b) observes, “They established camps, living off the fruits of their conquests and taxes paid by non-Muslims in exchange for their freedom and protection” (12). Life was organized around whether one was a believer or not. The presence of Muslims created an opportunity for exchange, which merchants who mainly comprised Jews and Christians, exploited. People were attracted to join Islam to enjoy the fiscal advantages shared by Islamic believers. Others remained unconverted from Jewish or Christianity with the view of taking advantage of the exchange. This situation suggests a clear departure from capitalistic activity by Muslims due to their value system as compared to Christians or Jews.

Aristocracy of Arabs was found in the garrison cities. Muslim had interest in ensuring ample protection of merchants. They contributed to the growth of Turkish people and Arabs by way of paying taxes. Muslim autocracy led to the disengagement of revenues that flourished through monetary system. This case led to the incarnating of landowners’ power via the development of generosity and donation values. These values were contrary to the growth of capitalistic values that are driven by concerns of efficiency and/or frugality.

According to Nasir and Turner, the rise of Islam preludes a society that is shifting from organized forms of government to one that is religion- dominated.16 A different society arises, which demands so much from those who are engaged in production activities, which reduce the solidness of the economic base. Such a society values predators more compared to production, a case that is well established with a capitalistic mindset. Indeed, the narration of Arab believers in Islam compared to non-believers reflects a society that is suffocating entrepreneurial activities. Consequently, this shift in ethics and values caused a change in the attitude towards economic activity, hence demonstrating the applicability of Max Weber’s theory in Islam.

Sunni-Islamism advocates for values and standards that are taught through the Holy Quran and the prophet’s saying (Hadith). El-Sheikh asserts that the foundation of Islamic economic ethics and standards is based on the principle of Riba and Zakat.17 Zakat refers to tax levied on incomes while the Riba theory implies interests charged by financial institutions or individuals who lend money to businesses and other parties. Another important principle of Islamic economic principles that are anchored on the Shariah law is Gharal, which refers to dishonesty or falsification. The Islamic tenets comprise regulations or values and standards in an economy whose implications are well replicated through countries adherent to the faith and capitalism. As El-Sheikh reveals, higher economic growth occurs in times of higher trade growths.18 This situation is evident when people face a limitation in terms of the degree in which they can generate more revenues through Riba or Zakat. Such a case depicts a limitation of levels of capitalism in Islam to the extent of imposing limits in the thresholds in which money may be generated to guarantee flourishing of trade.

Karl Marx introduced the theory of the functioning of the society functions, including how the society has developed and the reasons for its development. According to Rummel, Max insisted on the idea that life in the society depends upon the serious disagreements of economic interests.19. Parkin asserts that the most important disagreements are those that exist between people who have power to control the method and means of production, commonly referred to as Bourgeoisie, and the waged people who can purely exchange their labor power for money in the market place.20

Max defined class as the things that belong to a person. Perception of this ownership gives a person the right and power to prevent others from using the property for their personal use. According to Kingston, what people own determines their class in the society.21 Parkin agrees with this line of argument by further asserting that class is not determined by a person’s earning or status, but by how things are distributed and consumed.22 This criterion determines the production capacity and strength of a given class. From the contemplation of Karl Max’s functioning of the society, capitalism emerges from materialism as opposed to a religious impulse as suggested by Weber.

Sunni-Islamist’s Shariah prohibits such speculative investments since they involve acts of deprivation. This claim implies that Islamic value system altered economic thinking, thus tending to favor equal distribution and predation attitudes, which are least considered in a capitalistic mindset. Rodinson asserts that this change only occurred after the 14th century.23

One possible argument in support of Islamic economic values is that people create unhealthy capitalistic practices with the sole objective of ensuring individualized economic growth and development.24 Islamic economic systems offer alternative solutions to capitalistic economies that operate under Darwinian principles of survival for the fittest. As Hunt and Lautzenheiser observe, the general theoretical assumption is that capitalism encourages all members of the society to work tirelessly with the objective of earning more today than yesterday.25 In turn, such efforts pay off by increasing economic growth and development. This position suggests that unbridled individualism associated with capitalism is an important tenet for economic growth and development.

Limitation

The paper has argued that religion (Islam) had the implication of changing people’s attitudes towards economic activity by discouraging the adoption of capitalistic attitudes. This claim suggests the applicability of Max Weber’s theory in some religious contexts. The claim depicts a construct through which the theory holds substance. However, the historical accounts of the development of Islam indicate engagements in trade among Islamic business communities.26 Such entrepreneurial activities have profit motives. Therefore, the paper has the limitation of being inclined towards Max Weber’s theoretical proportions on how a religious impulse can influence value systems in a society without considering the counterargument that societal struggles lead to the establishment of approaches to deal with traditional attitudes. This school of thought suggests that a religious impulse can lead to the development of an alternative or different form of economic attitudes that seek to improve the past stance. Consequently, the work of Max Weber indicates the emergence of different forms capitalism among Muslim communities, but not essentially the absence or erosion of capitalistic attitudes altogether. This case can be seen from the development of Islamic law that is based on Sharia law aspects such as Gharal, Zakat, and Riba, which mainly focus on establishing rules that regulate how people relate in trade.

Conclusion

Capitalistic economies are highly individualistic with the theoretical anticipation that such individualism will lead to total increase in economic gains in a nation, thus leading to higher economic growth and development. In collectivist economic systems such as those advocated for by Sunni-Islamic values and standards, the main concern involves shared gains for all people to have equal play and contribution towards a nation’s economic prosperity. Max Weber’s theoretical paradigm suggests that such attitudes towards economic activities could have emanated from a shift in ethics and values that came with Islam 14 centuries ago. Hence, religion, Islam in this case, discouraged the flourishing of capitalism that was present in communities before the onset on the Islamic era. In parallel with the development of the religion, Islamic law also developed to reinforce wealth distribution attitudes that challenged values of hard work, self-orientation, and interest, which fostered capitalism in the context of protestant ethics.

Bibliography

Ali, Nazim. “Islamic finance and economics as reflected in research and publications.” Review of Islamic Economics 12, no. 1 (2008): 151-168.

Blum, Ulrich, and Leonard Dudley. “Religion and Economic Growth: was Weber Right?” Journal of Evolutionary Economics 11, no. 2 (2010): 207–230.

Chalcraft, David, and Austin Harrington. “Felix Rachfahl’s Reply to Weber, 1910.” The Protestant Ethic Debate: Max Weber’s Replies to His Critics, 1907-1910. England: Liverpool Scholarship.

El-Sheikh, Salah. “The moral economy of classical Islam: a FiqhiConomic model.” Muslim World 98, no. 1 (2008): 116-144.

Facchini, Francois (a). “Religion, law and development: Islam and Christianity—why is it in Occident and not in the Orient that man invented the institutions of freedom?” European Journal of Law and Economics, 29 no. 3(2010): 103–129.

Facchini, Francois (b). “Economic freedom in Muslim countries: an explanation using theory of institutional path.” European Journal of Law Economics 1, no.1 (2011): 1-30.

Garrett, James. “Long-run evolution of the global economy.” Earth’s Future 2, no. 3(2014): 127-238.

Giddens, Anthony. Capitalism and modern social theory: an analysis of the writings of Marx, Durkheim and Max Weber. Cambridge: Cambridge University Press, 1971.

Hunt, Kingston, and Mark Lautzenheiser. History of Economic Thought: A Critical Perspective. London: PHI Learning, 2014.

Kingston, Paul. The Classless Society. Stanford: Stanford University Press, 2000.

Nasir, Kamaludeen, and Bryan Turner, Sociology of Islam: Collected Essays of Bryan S. Turner (Contemporary Thought in the Islamic World). London: Routledge, 2013.

Parkin, Francis. Marx’s Theory of History: A Bourgeois Critique. New York, NY: Columbia University Press, 2002.

Rodinson, Maxime. Islam and Capitalism. Austin: University of Texas Press, 1981.

Rummel, Rechard. “Marxism and Class Conflicts.” European Journal of Public Governance 3, no. 2 (2009): 235-247.

Turner, Bryan. “Islam, Capitalism and the Weber theses.” The British journal of sociology, 61, no. 1 (2010): 47-160.

Yassin, Amandu. “Do Ethics Matter in Corporate Business Management From View Point of Islam?” Kuwait Chapter of Arabian Journal of Business and Management Review 2, no. 2 (2012): 1-9.

Footnotes

  1. Anthony Giddens, Capitalism and modern social theory: an analysis of the writings of Marx, Durkheim and Max Weber (Cambridge: Cambridge University Press), 3.
  2. Ulrich Blum, and Leonard Dudley, “Religion and Economic Growth: was Weber Right?” Journal of Evolutionary Economics 11, no. 2 (2010): 209.
  3. Blum and Dudley, 209.
  4. Weber, Max, Anthony Giddens, and Talcott Parsons. The Protestant Ethic; Spirit of Capitalism. London: Routledge, 1992.
  5. Chalcraft, David, and Austin Harrington. “Felix Rachfahl’s Reply to Weber, 1910.” The Protestant Ethic Debate: Max Weber’s Replies to His Critics, 1907-1910. England: Liverpool Scholarship.
  6. Nazim Ali, “Islamic finance and economics as reflected in research and publications,” Review of Islamic Economics 12, no. 1 (2008): 154.
  7. Ali, 155.
  8. Maxime Rodinson, Islam and Capitalism (Austin: University of Texas Press, 1981), 28.
  9. Amandu Yassin, “Do Ethics Matter in Corporate Business Management From View Point of Islam?” Kuwait Chapter of Arabian Journal of Business and Management Review 2, no. 2 (2012): 1-9.
  10. Francois Facchini, (b), “Economic freedom in Muslim countries: an explanation using theory of institutional path,” European Journal of Law Economics 1, no.1 (2011): 12.
  11. James Garrett, “Long-run evolution of the global economy,” Earth’s Future 2, no. 3(2014): 128.
  12. Facchini, (b), 12.
  13. Ibid, 12.
  14. Bryan Turner, “Islam, Capitalism and the Weber theses,” The British journal of sociology, 61, no. 1 (2010): 148.
  15. Francois Facchini (a), “Religion, law and development: Islam and Christianity—why is it in Occident and not in the Orient that man invented the institutions of freedom?” European Journal of Law and Economics, 29 no. 3(2010): 104.
  16. Kamaludeen Nasir, and Bryan Turner, Sociology of Islam: Collected Essays of Bryan S. Turner (Contemporary Thought in the Islamic World). London: Routledge, 2013), 12.
  17. Salah El-Sheikh, “The moral economy of classical Islam: a FiqhiConomic model,” Muslim World 98, no. 1 (2008): 118.
  18. El-Sheikh, 119.
  19. Rechard Rummel, “Marxism and Class Conflicts,” European Journal of Public Governance 3, no. 2 (2009): 235.
  20. Francis Parkin, Marx’s Theory of History: A Bourgeois Critique (New York, NY: Columbia University Press, 2002), 32.
  21. Paul Kingston, The Classless Society (Stanford: Stanford University Press, 2000), 63.
  22. Parkin, 32.
  23. Rodinson, 28.
  24. Yassin, 6.
  25. Kingston Hunt and Mark Lautzenheiser. History of Economic Thought: A Critical Perspective. London: PHI Learning, 2014), 52.
  26. Rodinson, 28.
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