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 universities.

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, U.K.

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 life.

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.


KALPOINT: What 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 Islamic Economics.

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.

KALPOINT: What actually is an Islamic Economy and can we adopt it in Pakistan to full extent?

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.

KALPOINT: What 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.

KALPOINT: You have 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 with it.



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 fruitful results.

KALPOINT: How 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 institutions.

KALPOINT: How would you differentiate between Islamic Economics and Modern-day economics?

DR. CHAPRA: 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.

KALPOINT: Are you satisfied with the Islamic system being used by the present Government of Saudi Arabia?

DR. CHAPRA: 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.

KALPOINT: What is the concept of capitalism and socialism in Islam?

DR. CHAPRA: 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 wealth.

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.

KALPOINT: In the 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.

KALPOINT: What 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 concealed riba).

KALPOINT: In the end we would like to have your comments on the web portal KalPoint? C U On Net.

DR. CHAPRA: I was highly impressed by what I saw in this Institute. It should be able to render excellent service to Pakistan in several different ways, not only in expanding software exports but also in creating greater computer awareness and spreading the message of Islam. Many thanks for inviting me.