DR. M. UMER CHAPRA is
Research Advisor at the Islamic Research and Training Institute (IRTI)
of the Islamic Development Bank (IDB), Jeddah. Prior to this position,
he worked at the Saudi Arabian Monetary Agency (SAMA), Riyadh, for
nearly 35 years, retiring as Senior Economic Advisor. This position
involved him actively in different phases of Saudi Arabia's hectic pace
of economic development. As a token of appreciation of his services he
was awarded the Saudi nationality by King Khalid in 1983 at the request
of the then Minister of Finance, Shaikh Muhammad Aba al-Khail. He has
also taught as Assistant and Associate Professor of Economics at the
University of Wisconsin (Platteville), as Associate Professor of
Economics at the University of Kentucky, Lexington, as Senior Economist
and Associate Editor of the Pakistan Development Review at the Pakistan
Institute of Development Economics, and as Reader (Associate Professor)
at the Central Institute of Islamic Research (Pakistan).
He is well known for his seminal contributions to
Islamic Economics and Finance over the last three decades. He is
respected for his balanced views and scholarly approach. He has authored
12 books and monographs, 70 papers and 9 book reviews. Some of his
books, monographs and papers have been translated into a number of
languages, including Arabic, Urdu, Turkish, Malay, Indonesian, Bangla,
French, Japanese, German, Spanish and Polish.
His most outstanding contributions have been his
three books: Towards a Just Monetary System (1985), Islam and the
Economic Challenge (1992) and The Future of Economics: An Islamic
Perspective (2000). All of these three books have been widely acclaimed.
Prof. Rodney Wilson of the University of Durham, U.K., called the first
book as "the most lucid presentation yet of the monetary theory of
Islam" in the Bulletin of the British Society for Middle Eastern
Studies (2/1985, pp.224-5). This book was one of the few books that
helped lay down the intellectual foundation for Islamic finance and
became a prescribed text for courses on the subject in a number of
The second book, Islam and the Economic Challenge,
was declared by the prominent American economist, late Prof. Kenneth
Boulding, in his pre-publication review, to be a brilliant analysis of
the virtues and the defects of capitalism, socialism and the welfare
state and an important contribution to the understanding of Islam by
both Muslims and non-Muslims. The book has been favourably reviewed in a
number of Western economic journals. Prof. Louis Baeck, reviewing the
book in the prestigious Economic Journal of the Royal Economic Society,
stated that: "The book is well written and offers a balanced
synthesis of the literature on contemporary Islamic Economics. Reading
this text will be a healthy intellectual challenge for Western
economists" (Sept. 1993, p. 1350). Prof. Timur Kuran of the
University of South California, reviewing the book in the Journal of
Economic Literature of the American Economic Association, states that:
"The book stands out as an exceptionally clear exposition of the
market-tolerant strand of Islamic Economics. Its critiques of existing
economic systems are unusually sophisticated and well documented. Chapra
has read widely on capitalism and socialism, so his negative assessments
carry some weight. For anyone who wants an introduction to Islamic
Economics, Islam and the Economic Challenge is an excellent place to
start." (September 1993, p. 1486).
The Third book, The Future of Economics: An Islamic
Perspectives was greatly admired by Professor Samual Hayes III of the
Harvard Gradate School of Business Administration, and some other
prominent scholars from Germany, Spain and UK in their prepublication
reviews. Dr. Murad Hofmann, former German Ambassador to Algeria and
Morocco, considered it "to be among the most crucial books of this
century for the revival of Islam.... The subjects he treats are highly
complex but he makes reading about them easy."
He has played an active role in the planning and
organization of a number of seminars and conferences on Islamic
Economics and Finance and has also presented papers, participated
actively in discussions, and presided over various sessions. He has
lectured widely at a number of universities and professional institutes
in different countries around the world, including the Harvard Law
School, Loughborough University, U.K., the Oxford Centre for Islamic
Studies, the London School of Economics, Universidad Autonoma, Madrid,
and the University of Malaga, Spain. He has also participated in a
number of meetings of international and regional organizations like the
IMF, IBRD, OPEC, IDB, OIC, GCC. He is on the editorial board of a number
of professional journals and has acted as referee for a number of
others, including the Economic Journal of the Royal Economic Society,
In addition to these professional activities, he has
been actively involved in giving lectures to different groups regularly
on the Qur'an, hadith, fiqh and various aspects of the Islamic way of
He has received a number of awards for his academic
excellence, including the Islamic Development Bank Award for Islamic
Economics and the prestigious King Faisal International Award for
Islamic Studies, both in 1989. He was awarded the IOP (Institute of
Overseas Pakistanis) gold medal in August 1995 by the President of
Pakistan for service to Islam and Islamic Economics at the First IOP
Convention in Islamabad.
He was born in February 1933. He has had a
distinguished academic career, standing first in the matriculation
examination of the University of Sindh (Sindh and Karachi combined) in
1950. After receipt of the B. Com (=BBA) and M. Com. (=MBA) degrees from
the University of Karachi in 1954 and 1956, his academic career
culminated summa cum laude in the Doctor's degree in Economics in 1961
from the University of Minnesota, Minneapolis. His Adviser, Prof. Harlan
Smith, addressing a farewell dinner arranged jointly by the Pakistan
Students' Association and the Islamic Cultural Society at the University
of Minnesota, said that, considering his amicable personality, his
upright character, and his academic excellence, Umer has been the best
person I have known, among not only the students but also the faculty.
INTERVIEW WITH KALPOINT.COM
motivated you towards choosing Economics for your Doctorate? Also if you
would not have been an economist, what would you have been and would you
encourage youngsters to take up economics as a subject?
DR. CHAPRA: When
I went to college I wasn't sure how many years I would be able to study
because my domestic financial circumstances were not very good. I
thought that if I took commerce and was able to study for even two
years, it would stand to my credit in the job market. However, by the
Grace of God, I was able to complete B.Com and M.Com. After that I
shifted to Economics. This is because, while in college, I studied
Islam, took part in Islamic activities, and became motivated to render
services to Islamic Economics and Finance. Alhamdulillah, while doing my
Ph.D. in Economics and even after that, I made an effort to learn
Arabic, Quran, Hadith and Sunna. The ability to have access to the
original sources has given me a better understanding of Islam and
Economics is a subject in which you are nowhere if
you are not very good. You have to be excellent in this subject,
otherwise you will not be able to make a headway in the job market.
While I was considering what subject to choose for my
college studies, I found out about different subjects. One of these was
Actuarial Science. However, I decided against it subject because this
field allows you to do job in only one area. In contrast, as an
Economist you can fit into a variety of fields. I could also have taken
medicine or engineering because of my first position in the
matriculation examination. However, both these were out of my means. So
commerce seemed to me to be the best.
actually is an Islamic Economy and can we adopt it in Pakistan to full
DR. CHAPRA: The
difference between Islamic and Conventional Economic is that Islamic
Economic is oriented more towards justice than any other system. Justice
is the primary objective of Islam. The Quran says "We have sent our
Prophets with clear signs and We have sent with them the Book and the
Balance, so that the people may establish justice". This is also
the primary objective of Islamic Economics.
Now, why do we think that Islam is more oriented
towards justice then any other system? This is because you can't
establish justice without moral values and the sacrifice of immediate
self-interest that is involved in living by them. Islam has not denied
private property; there was private property during the days of Prophet
(P.B.U.H) and even before him. When you have private property, there
have to be certain rules of behavior to serve the social interest. The
serving of self-interest by itself cannot help establish justice in this
world. This was the mistake that capitalism committed by assuming that
the serving of self-interest would lead to the establishment of justice
and the well-being of all.
There are a number of areas in human life where the
serving of self-interest cannot serve social interest. The moral system
is extremely important for this purpose. If you juxtapose the economic
with the moral, the economic system will be tuned to render justice and
to serve the interest of all people in society. The fault of the Western
system was that it adopted secularism. It was argued that the serving of
self-interest will serve social interest. This didn't work. Now the
system is having a number of difficulties and there are so many scholars
in the West who say that it is important to introduce moral values into
Economics to improve the performance of the economic system.
However, depending only on the moral system is not
enough. It is also important for the government to play an important
role to ensure development with justice. A number of measures need to be
adopted for helping the poor. This has now been done in the West under
the influence of socialism and the welfare state. Even this is not
enough. Individuals and families have also to play a role so as not to
shift the entire burden to the welfare state. Zakat and charitable
contributions along with family solidarity and mutual help are important
for this purpose.
Pakistan needs to adopt the Islamic economic system
to ensure justice. Without justice Pakistan will not have the social
peace that is necessary for a country to develop. Ibn Taymiyyah rightly
said that God sustains a just state even if it is not Muslim, but does
not sustain an unjust state even if it is Muslim.
are the reasons why Muslims are considered as a backward nation? When we
look at Islamic history, we find that many a scientists and learned
personalities were Muslims. What was the time when all this
intellectuality disappeared and what were the reasons?
DR. CHAPRA: Muslims
progressed rapidly for almost 600 years. Over this period they were
supreme in science & technology. This was the time when Europe was
backward and Muslims were foremost. Islam provided encouragement to
science. Islam is a rational religion, which urges men and women to
think and to do research.
Another reason of their progress was the
encouragement and appreciation received from the Government. Many
facilities were provided to scholars as well as to students. A number of
observatories and laboratories were established and libraries were made
available. A proper environment was established for creative work and
the frontiers of knowledge kept on expanding. Education, research and
development moved together. A book on bibliography by Ibn Nadim, called
al-Fihrist, contains the names of books available at that time. However,
only one out of a thousand of those books is available now. One of the
reasons is the destruction caused by the Mongols. They used the books to
construct a bridge over the river. They also burnt many of them.
Afterwards Muslim Governments became addicted to
luxury and lost interest in education and science; very little financing
was provided for research activities and intellectual pursuit. Muslims
gradually moved backward. When Oxford, Harvard and such universities
were being established in the West, the Ottoman Empire was busy spending
its resources on conquering different territories, which were ultimately
lost. It is education and advancement in knowledge and technology that
enables a country to move forward.
The Muslim world has remained behind because the
Governments have, in general, been illegitimate and have not taken much
interest in promoting education and research. I am sorry to say that the
same situation prevails in Pakistan. The Government is spending more on
defense and debt servicing and very little on education and research.
attended several conferences of different international and regional
organizations including OIC (Organization of the Islamic Conferences).
Please tell us about the aims and objectives of OIC and has OIC ever
been able to attain its objectives? Lots of controversies are attached
DR. CHAPRA: OIC
was established with the objective of reuniting the Muslim world. This
has always been one of the objectives of Islam — not only to unite
Muslims but also all the people around the world. This is because every
human being in this world is the Khalifa of God and there can be better
cooperation and development when they are united. That's why
globalization as such is not against Islam. What is indispensable is
that globalization must be accompanied by Justice. However, if
globalization is meant to serve only the interests of the Western world
and to promote Western culture, then it will not be acceptable. It will
rather accentuate conflict.
As far as the OIC is concerned, it has tried its
best, but because of the divisions in Muslims countries, there has been
lack of support and it has not succeeded to the full extent. You can't
succeed unless you have finance and good leaders. Muslim countries lack
these. Still we have to support the OIC and I hope it will lead to
would you elaborate Good Governance according to Islamic teachings?
DR. CHAPRA: According
to Ahadith, the Government is supposed to struggle for the well-being of
the people. This doesn't mean that the Government should own all
businesses. Ibn Khaldun and a number of other Muslim scholars were
against the owing of businesses by the government. They said that if the
government owns businesses it will ruin the economy. This doesn't mean
that the Government should not own certain businesses, which are
considered essential for the well-being of the people. But on the whole
the Government should keep away and let the people themselves take care
of businesses. Government should, however, provide the services needed
by people, like infrastructure, education, health facilities, etc. They
should also regulate to ensure justice and fair play, but without going
to an excess.
The private sector should also be encouraged and
helped to provide these services. However, when the private sector
provides educational and health services, it should not do this with the
objective of profiteering. This would make education and health very
costly. If this happens, then the children of the poor will become
deprived of education and health facilities. This will accentuate
inequalities and injustices in the future.
Government schools and colleges are in very bad
condition in Pakistan and the quality of education is also very poor.
This means that the poor will always remain poor if they go to these
schools. They can't afford to go to private schools. This, along with
the inequalities of the financial and land tenure systems will make
Pakistan a very unjust country.
It is the Government's responsibility to provide the
services that people need and to promote the well-being of the people,
particularly the poor. If the Government does this, the economy will
expand and the country will prosper. Good Governance actually means
ensuring law and order, justice and fair play, providing the services
that the economy needs, and enabling the private sector to play its role
effectively and equitably. The government should act as the trustee of
the poor. This role should be further enhanced by charitable
would you differentiate between Islamic Economics and Modern-day
Justice is the most important
objective of Islam. Accordingly, we are not supposed to discriminate
among people in the economy, whether they are Christians or Jews or
Hindus or Parsis. All should be treated equally. Inequalities of income
and wealth need to be reduced. We must ensure that the needs of all
people are fulfilled and that employment opportunities are available.
Many countries around the world stand for these
goals. However, the difference is that when you want to establish
justice you need to have moral values. These will provide the criteria
by which people are supposed to behave with each other. If people do not
observe these values then there will be chaos. In other words, a
businessman is supposed to operate honestly. If he doesn't, many people
will suffer. So it is the job of the Government to ensure the
enforcement of moral values. However, the Governments may be corrupt and
the rich and powerful may be able to get away with wrong-doing.
Therefore, it is necessary to enable the people to remove them.
Democracy makes this possible. Moreover, in Islam, as in other
religions, this role of values and the Government is reinforced by
belief in the Hereafter.
Christian values did not get wiped out in the West in
spite of secularism. This, along with democracy, forced the governments
to do their best and the countries prospered. However, now that morals
are declining and families are disintegrating, decline will set in.
Muslims should try to avoid the mistakes that the West has made. They
should try to enforce their values, ensure family solidarity, and strive
for development with justice.
you satisfied with the Islamic system being used by the present
Government of Saudi Arabia?
Saudi Arabia is one of the Muslim
countries trying to implement the Islamic system. Islam will become
implemented in its true sense when, firstly, the needs of all people are
satisfied, secondly; when people have the opportunity to earn their own
livelihood by their own labour; thirdly, when inequalities of income and
wealth are reduced substantially; and fourthly, when economic
instability is reduced to a substantial extent. Saudi Arabia has
succeeded to a certain extent. However, a lot still remains to be done.
is the concept of capitalism and socialism in Islam?
Capitalism stands for private
property and market mechanism. There is nothing basically wrong in both
of these. The problem, however, is about how will social interest be
safeguarded if everyone tries to serve his self-interest in the market
place. Capitalism thought that the serving of self-interest by everyone
would automatically serve the social interest. There was no need for the
role of the government or moral values. The invisible hand of market
forces will take care of this. However, history has belied this claim.
The invisible hand of market forces led to an inhuman and unjust society
with rising inequalities of income and wealth. This was before the
emergence of the welfare state.
Socialism blamed private property for the injustices
generated by capitalism. It brought about public ownership of means of
production with central planning. This gave too much power to the people
in the politburecan and they used it to serve their own vested interest.
If people could not mange private property within the framework of
social interest, how could they mange the property of all people for
social well-being. Giving too much power to a few people was wrong.
Socialism therefore failed.
Islam does not abolish private property. It rather
provides a moral code to regulate the acquisition and use of private
property. It makes the state responsible to see to it that this code
gets enforced and the well-being of all is ensured. It has also
introduced a number of measures, which would help in the
need-fulfillment of all and in reducing inequalities of income and
However, now under the influence of socialism and the
welfare state, capitalism has changed and a number of measures have been
introduced to reduce the misery of the poor. Socialism has also accepted
the role of private property for the more efficient management of an
economy. Unfortunately, the excessive stress on the serving of
self-interest along with the decline in moral values is leading to the
breakdown of the family and to juvenile delinquency. The effect of this
will be felt in the future.
current situation, which Muslim leader can lead the Muslim Ummah?
DR. CHAPRA: Leadership
cannot be imposed. It evolves. The values of a society and circumstances
play an important role in this. It is the ability, sincerity, hard work,
consciousness and contribution of the leaders that makes them popular
and able to lead the people.
The problem is that the Muslim world is, at present,
in a serious mess. It is faced with internal as well as external
threats. Internal threat arises from moral depravity, injustice,
political corruption and economic problems. The external threat arises
from the effort by the big powers (and Israel, their illegitimate child)
to capture our territory and to control our resources, In the process
they have destroyed the infrastructure of some Muslim countries and
weakened their economies.
However, we should not lose hope. We have passed
through more trying times in the past. In 1258 when the Mongols attacked
Baghdad and captured it, they killed nearly 800,000 people. Their
economy was ruined and they were in a bad situation. When the British
came to India, they hanged thousands of Muslims and treated them badly.
Bahadur Shah Zafar was forced to leave his own country. So we Muslims
have faced worse situations and survived. Compared to the past, the
current situation is not all that bad.
We have to improve our ways to improve our condition.
We have to educate ourselves morally and technically and to develop our
economies. We must also change our behavior towards others. A policy of
confrontation is not good for Muslims. We have to learn to live
peacefully with others. According to the Quran, peace is best, and
whoever kills a person without cause has killed the whole of mankind?
Here the Quran does not distinguish between a Muslim and a non-Muslim.
Irrespective of whether we kill a Muslim or a non-Muslim, we have killed
the entire humanity. So where have our extremists learned that Islam
allows them to kill Muslims or non-Muslims. We must remember that a
perfect Muslim is he whose character is the best. We are doing
disservice to Islam by killing non-Muslims or treating them badly.
A great deal of effort is being made in the Muslim
world for the revival of Islam and the development of Muslim economies.
This struggle will bring into the forefront the real leaders. Whoever
succeeds the most will be able to lead the Muslim world.
is meant by the term riba?
DR. CHAPRA: The
word riba literately means increase, addition, expansion or growth. It
is, however, used technically in the Shari'ah in two senses: riba al-nasi'ah
and riba al-fadl.
Riba al-nasi'ah stands for interest that the borrower
is required to pay to the lender on the amount which he has borrowed.
This is how the term riba al-nasi'ah has been understood throughout the
history of Islam. It is also called riba al-Qur'an (riba prohibited in
the Qur'an ) or riba al-duyun (riba on loans).
Riba al-fadl refers to all forms of exploitation in
trade. While Islam has allowed trade, it has not allowed everything in
trade. Islam wishes to ensure justice and remove exploitation in trade
just as it wishes to do lending and borrowing. It is also called riba
al-buyu' (riba in trade transactions) or riba al-khafi (invisible or
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DR. CHAPRA: I
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