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Proceeding - Kuala Lumpur International Business, Economics and Law Conference Vol. 2.
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EPISTEMOLOGY AND METHODOLOGY OF ISLAMIC ECONOMICS
Nurul Ashirah Othman
Institut of Islam Hadhari
Universiti Kebangsaan Malaysia
Bangi, 43600 Selangor Darul Ehsan, Malaysia
Email : [email protected]
Abdul Ghafar Ismail
Research Center for Islamic Economics and Finance
School of Economics
Universiti Kebangsaan Malaysia
Bangi, 43600 Selangor Darul Ehsan, Malaysia
E-mail: [email protected]/[email protected]
Bayu Taufiq Possumah
Institut of Islam Hadhari
Universiti Kebangsaan Malaysia
Bangi, 43600 Selangor Darul Ehsan, Malaysia
E-mail: [email protected]
Abstract
In recognizing and understanding the basis concept of science required an epistemology. An epistemology is also very
indispensable to understand the rules and principles of a science. Then the epistemology is closely related to
methodology of science it-self. In analyzing the epistemology dealing with the methodology of science especially
economic science, this paper tries to explore some basic concept of epistemology to explain that economic science
substantively is not value laden. Economic sciences developed by some worldview which are formalize its body and
principle.
Keyword: Epistemology, Methodology, Economy, Philosophy, Islamic Economics
JEL: A13-B41-P5- P51-Z12
1. INTRODUCTION
Discussing on economic methodology, will not escape from discussing on epistemology and worldview of science,
because economics as a science built on epistemology and worldview then transform the human mind. Eventhought
the question of how they work in the human’s mind is not easy to disentangle. In the simple context it can be said that
the accumulation of knowledge within human mind will shape his worldview, the worldview will establish a scientific
tradition further that if done collectively in society will bear a discipline of knowledge. The development of these
disciplines requires a right scientific theory and methodology. Theory of science (theory of knowledge) is then
referred to an epistemology. Thus it appears that the three elements of knowledge have subtle interrelations.
The theory of knowledge or epistemology specifically examines the nature of a science or scientific
knowledge. Discusssing on the nature of science in the treasures of the modern field of philosophy in general has its
foundations laid down by Rene Descartes with his method of deduction and Francis Bacon with his method of
induction in the nineteenth century. But only in the beginning of the twentieth century people has began to notice the
philosophy of science. Most of the philosopher, scientists, and theologians argue that the advancement of science and
technology could threaten the existence of mankind, even the nature and its contents. Especially the philosophers saw
the threat arises because of the development of science and technology goes regardless of basic philosophical
assumptions such ontology, epistemology, axiology who tend to walk alone whereas the presence of philosopical
science is a laid back role and function of science and technology accordance to its original purpose, the happiness of
mankind.
Etimologically, epistemology is derived from the Greek word; epiteme and logos. Episteme means
knowledge, while logos mean theory, explanation or reason. So epistemology can be interpreted as a theory of
knowledge. In terminology, Dagobert D Renes (1971:94) in his book Dictionary of Philosophy explains that
epistemology is the branch of philosophy in which investigates the origin, structure, methods and validity of
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knowledge. Thus, epistemology is a branch of philosophy that examines in depth and radical knowledge about the
origin, structure, methods, and validity of knowledge. The epistemology is generally called the philosophy of
knowledge or theory of knowledge. The term epistemology emerged for the first time and used by JF Ferrier in 1854.
In this terminological sense, Miska Muhammad Amin (1983 ), said that the epistemology associated with matters: i)
philosophy, which is a branch of philosophy which seeks the essence and truth of knowledge, ii) method, as a method,
aiming to deliver human acquire knowledge, and iii) system, as a system aimed to gaining a reality of knowledge truth
itself.
2. EPISTEMOLOGY AND EMPIRICAL SCIENCE
Philosophy plays a important role as a torch of explanation, while the duty of science is scientific discoveries or in
other words, the duty of philosophy is a "contemplation", and science in charge of "reality", or reveals the reality of
this universe. With the contemplation, philosophy initially contains tools that eventually become rational
contemplation in reaching his point. Rational tools already exist in the human body since was born. The tools are
called "nature" and the ability of the rational form of logic, mathematics and statistics. Everything is abstract, and the
presence of only in our minds as Plato calls "innate ideas". This ability is innate ideas, ideas to make someone
transformed without observation. Because the nature is neutral and the other hand, people develop empirical science.
Empirical science is real discoveries of the universe, or called also "external reality". This external reality could not be
determined correctly. So far it cannot be determined whether the external reality revealed by the man or exist
independently from the mind, or "external reality is created by the mind. It is difficult to solve, which are actually.
Based on these matters philosophy of science is a study in philosophy that wants to answer some questions about the
nature of empirical science:
a. What object studied by science? What is the ultimate existence of the object? How the relationship between
the object and human perception (such as thinking, feeling and sensing) to produce knowledge? These
questions - is called the ontological foundation of knowledge.
b. What is the process that allows obtaining knowledge in the form of science? What is the procedure? What
things should be taken to ensure that we get the right knowledge? What is called the truth? What are the
criteria? How / techniques / means which helped us in getting the knowledge in the form of science? These
questions are called epistemological foundation of knowledge.
c. For what the knowledge in the form of science was used? How was the link between the way the use and the
moral rules? How to determine which objects are reviewed based on moral choices? How the link between
procedural technique which is the operationalization of the scientific method to the moral norms
/professional? These questions are the cornerstone of axiological foundation of knowledge.
In term of epistemology linked to empirical science there is approach called Naturalistic epistemology is an approach
to the theory of knowledge that emphasizes the application of methods, results, and theories from the empirical
sciences. It contrasts with approaches that emphasize a priori conceptual analysis or insist on a theory of knowledge
that is independent of the particular scientific details of how mind-brains work. Varieties of naturalistic epistemology
differ in terms of how they conceive the relationship between empirical science and epistemology, how much they
rely on empirical science in theorizing about knowledge, and which sciences they take to be particularly relevant to
epistemological questions. Naturalistic epistemologists such as W.V. Quine regard epistemology as part of
psychology while others such as Alvin Goldman think it merely needs aid from the empirical sciences. On the other
hand, Thomas Kuhn thinks that the social sciences should be applied to epistemology. Regardless, the importance of
the sciences to epistemology is undisputed among naturalistic epistemologists. Among the topics within this
discipline, the debate on the internal and external theories for the justification of beliefs is one of the main issues.
Donald Davidson and John Pollock are major naturalistic epistemologists that support Internalism. Alvin Goldman, on
the other hand, supports externalism. The issue of a priori knowledge and the problem of induction are also topics for
debate within naturalistic epistemology.
Lastly, naturalistic epistemology is not without criticism. Among the problems for naturalistic epistemology
are the circularity problem and the problem of normativity. With regard to the aims of unifying science and
philosophy, solutions to these problems are of crucial importance for naturalistic epistemologists. Therefor the impact
of epistemology to empirical statistic; First, as a means of testing scientific reasoning and the people may become
critical of scientific activity. Thus a scientist must have a critical attitude towards the field of science itself, in order to
avoid the solipsistic attitude which assumes that only the truest own opinion. Second, an effort to reflect, examines,
and criticizes the assumptions and methods of science. There is a tendency among modern scientists who apply
scientific method regardless of the structure of science itself. Attitudes required by a scientist are to apply the
scientific method in accordance with the structure of science, not vice versa. The method is only a means of thinking,
not the nature of science. Third, to provide the logical foundation of the scientific method, because every scientific
method developed must be accounted for in a logical and rational in order to be able to understand and use in general.
The more widespread acceptance and use of the scientific methods, the more valid the method.
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3. LINKING EPISTEMIC BETWEEN RELIGION AND ECONOMIC
Generally, religion defined as perceptions and beliefs related to human existence, the universe, and the role of the
Lord of the universe and human life that led to the pattern of that religion determines the behavior and purpose of
human life. Religion is a social system that has been institutionalized in every society. Basically religion transformed
into a binding norm in everyday life and into the guidelines of the most ideal concept. Religious teachings that have
been understood driving the lives in individual interaction as a reference to God, between human beings and between
human and culture (Nasir, 1999: 45-47). History has proven that religious thinking is very influential to the
development of aspects of the material life, political, economic, social, and natural surroundings. That doctrine could
be applied in encouraging economic behavior, social culture. Or in other words, there was a significant relationship
between progress in the field of thought (immaterial) and advances in the field of materials. Understanding the
relationship between religion and economic behavior has been described by Max Weber (1905) in his book The
Protestant Ethic and the Spirit of Capitalism (German: Die protestantische Ethik und der Geist des Kapitalismus) that
there is a major role of religious values in the process of modernization premodern; In that essay Weber studied many
world religions and found out the interaction between various religious ideas and economic behavior Weber stated
that religion was one of the primary reasons for the different ways the cultures have developed. Weber tried to find
out why the capitalism first emerged in the Western Europe. He was convinced about the high correlation between the
Protestantism and successful European capitalists. Weber also believed that many religions have in themselves values
that could lead to the economic development, but the Protestants’ believes were already developed at such a high,
extreme level, that they allow the Protestants to start this transformation earlier than the other societies started.
Weber (1905:20) also said "Cavinisme ", especially sect puritanism see work as “beruf” or “calling”. Work is
not merely the fulfillment of the purpose, but a sacred duty. The attitude of religious life according to this doctrine is
innerweltliche ascetic (innerwordly ascesticism), which is an intensification of religious devotion that is run in the
excitement of working as a description and statement of the man who was elected. Within the framework of
theological thinking like this, the "spirit of capitalism" that rests on the ideals of perseverance, thrift, reckoning,
rational, and able to help myself, find a mate. Success of life generated by the hard work could also be considered as
justification that he, the followers, is the chosen ones. Weber analyzes that Western society changes towards
economic progress are not only caused by business groups and investors. In his research, the majority of Protestant
religious values have aspects of economic rationality and the values shown in the religious spirit
Economic studies should not proceed only from the principle of capitalism and the principles of Marxism,
but also on the contrary should be thinking more reliable economics in maintaining the safety of all human beings and
nature, that has truth values, logical, goodness (ethical) and beauty (aesthetic). Economy to free mankind from the
repression, suppression, poverty, squalor, and all forms of backwardness, and can straighten the economic action of
the characters that are not human, injustice, greed, and inequality. Economy the historically-empirically has proven
its superiority in this world, value laden or not to free themselves from the values derived from religion (value
committed).
Islam as a way of life has been providing a wide range of devices complete rules for human life, including in
the economic field. Islamic economy is built on the basis of the religion of Islam, so that an integral part of Islamic
economics of Islam. As a derivation of Islam, Islamic economics will follow the Islam in its various aspects. The
hallmark of Islamic economics is not split between norms and facts, as well as a rational concept. Therefore, study of
human economic behavior in Islamic economic system is the worshipness of God or Tawhid. Economic wealth is a
instrument to meet the livelihood satisfaction in order to improve its ability to be able to better serve the God. Seek
and gain better wealth for the enjoyment of all it is not recognized as a cursed of God. The property is damned if it is
used and become a god in his life. Faith and fear of Allah gives a pattern for the world economy in all its aspects. This
pattern displays the direction and development model that brings together economic development with the
development of religion as a source of value. Thus, economic activities such as production, distribution, and
consumption should use religion and not a value judgment by the mechanistic economic determinism as in capitalism
and Marxism.
Chapra (2001) gives a general explanation of the reasons that used to deny the possibility of science
e.g.economy built upon the paradigm of religion, such :
Science and religion are different in levels of reality. Science deals with the physical universe that can be
recognized by the senses, while religion includes a higher level of reality, transcendental, and exceeds the
range of the five senses, including aspects of life after death (afterlife).
In term of reference, source of religion and science are different. science relying on the sense and religion
comes from God's revelation
By using the scientific method, science seeks to describe, analyze, and then predict the empirical facts of
human life for various purposes. It contains an implicit assumption that man knows with certainty for all aspects of
life so that they can decide what is best for them. Meanwhile, base on the revelation of God and all its derivations
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thereof source of religious, the religion also attempted to describe, analyze, and predict all events in human life. It
contains the implicit assumption that only God who knows all truth, whereas humans only have a little knowledge.
The possibility of science built on the basis of religion as described by Kahf (1992) because religion is defined as a set
of beliefs and definite rules to guide man in his actions to God, others and to itself . Economics is defined as the study
of human behavior in relation to the utilization of economic resources to produce goods and services and distribute
them for consumption. So that economics can be covered by a religion, because it is a form of human life behavior.
4. ECONOMIC METHODOLOGY: AN EPISTEMOLOGICAL OUTCOME
Epistemology is a part of the study of philosophy. The developments were in line with the development of philosophy
itself. In addition to the ontology, which is part of philosophy that examines the "existing" or "true reality",
epistemology is part of the philosophy that examines the origins, assumptions, basic properties, and how to acquire
knowledge, and as a critical determinant for the model philosophy. With the understanding, of course, very decisive
epistemological character of knowledge, even determine the "consideration" what is acceptable and what should be
rejected.
Some philosophers are specialist epistemologists who study the components, sources, and limits of
knowledge and of the justification of knowledge (Moser, 2002). Philosophers of science study the nature of scientific
knowledge, that is, the claims made by various empirical disciplines and the way in which researchers’ beliefs are
formed and sustained (Kitcher, 2002). Formal theories1 of knowledge can enrich but are not the sole determinant of
research epistemologies, and the praxis of social inquiry is an important means by which theories of knowledge can be
constructed (Mauthner &Doucet, 2003; Schwandt, 2000). Accordingly, we will discuss epistemic questions, questions
regarding research practice as knowledge creation and the status of the knowledge created, as academic researchers
informed by the qualitative research literature.
Wiersma, (2000) concurs with Delanty and Strydom (2003) and define epistemology as the study which
investigates the possibility, limits, origin, structure, methods and truthfulness of knowledge and how knowledge can
be acquired, validated and applied. Walker and Evers (1988) put it simply that, epistemology is concerned with how
phenomena can be made known to the researcher. According to Brewerton & Millward (2001), the term refers to the
inquiry of what differentiates defensible belief from opinion. Epistemology can sometimes also have a major impact
on the data collection choices as well as on the methodology in a research process (Hitchcock & Hughes, 1995; 19). In
summary too, epistemology tries to answer the following questions:
- What is the source of knowledge? (Delanty and Strydom, 2003)
- Can knowledge of the world be gained? (Delanty and Strydom, 2003)
- Can knowledge of reality be established by some empirical evidence? (Delanty and Strydom, 2003)
- Can knowledge of reality be deduced from premises? (Maykut and Morehouse, 1989; Gall et al, 2003)
- What are the presuppositions of knowledge? (Delanty and Strydom, 2003)
- What are the methodological problems of knowledge? (Delanty and Strydom, 2003)
- What are the problems of validating truth? (Delanty and Strydom, 2003)
- How can knowledge be communicated to other human beings? (Burrell and Morgan, 1979).
All disciplines of scientific knowledge must necessarily have an epistemological foundation. In other words,
a science can be used as a new discipline if he meets the requirements of scientific matter. Therefor, one of the
requisite in the study of philosophy is epistemology. Epistemology is the branch of philosophy that discusses in depth
the whole process to acquire knowledge. Epistemology is essentially discusses the philosophy of knowledge that deals
with the origin (source) of knowledge, how to acquire such knowledge (methodology) and validity of such
knowledge.
For the framework of modern epistemology, the philosophy of Immanuel Kant is very influential. This is
because according to Kant, acceptable science is knowledge that can provide new universal information. Such
knowledge is called synthetic a priori. Rationalism as the source of knowledge is reason; emphasizes the importance
of mathematics in scientific knowledge. [Representatives include Descartes (1596-1650), Spinoza (1632-77), and
Leibniz (1646-1716)]. Knowledge is to be understood in terms both of Intuition, which is immediately before us
through perception and Reason which is the way the mind organizes perception so that it becomes the object of
experience. With this restriction then metaphysics is something that is not scientific because it is not possible, which
can not be traced to the five senses. Metaphysics does not contain synthetic a priori statements as in mathematics,
physics, chemistry and other sciences that rely on the facts.1
A methodology is defined as “a theory and analysis of how research should proceed” (Harding, 1987, p. 2),
“analysis of the assumptions, principles, and procedures in a particular approach to inquiry” (Schwandt, 2001, p. 161),
or “the study—the description, the explanation, and the justification—of methods, and not the methods themselves”
1 See Kant’s Methaphisic at http://users.wfu.edu/hhardgra/kantmet.html
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(Kaplan, 1964, p. 18). In short, methodology provides justification for the methods of a research project. Methods are
“techniques for gathering evidence” (Harding, 1987, p. 2) or “procedures, tools and techniques” of research
(Schwandt, 2001, p. 158). Methods can be thought of as research action. In the simplest terms, methodology justifies
method, which produces data and analyses. Knowledge is created from data and analyses. Epistemology modifies
methodology and justifies the knowledge produced (Figure 1).
Figure 1
The Simple Relationship between Epistemology, Methodology, and Method
5. TAWHIDIC EPISTEMOLOGY OF ISLAMIC ECONOMIC
Epistemology of economics in conventional thinking generally discusses the origin or source, structure, methods and
the validity of the science of economics. The issue raised in the epistemology of economics is how humans can know
economics, where economics comes from and how to know the truth about economics. Epistemologically, economics
starts from thinking about economic problems.
While the central idea that restrict Islamic economics, and that put the science in contrast to positive
economics (conventional) is hit insistence to explicitly incorporate ethical values based on religion in an integrated
analytical framework. It can be understood from the various definitions of Islamic economics forward by the Islamic
scholars such as MA Mannan (1986: 18),
“Islamic economics is a social science which studies the economic problems of a people imbued with the
values of Islam.”
Khurshid Ahmad (1980) also proposes the definition of Islamic economic that is not differs,
“a systematic effort to understand the economic problem and man‟s behavior in relation to that problem
from an Islamic perspective.”
A more practical definition is expressed by Nejatullah Siddiqi (1980),
“Islamic economics is “the Muslim thinkers” response to the economic challenges of their time.”
More forcefully Naqvi (1981: 18) states that the difference between Islamic economic to the conventional
Islamic economics is the internalization of ethical values (religion) in Islamic economics. Limitations noted above
suggest that in broad outline, Islamic economics is distinguished from conventional economic viewpoint in the
presence of adhesions (worldview) of Islam. Although different terms are used frequently, such as worldview, way of
life, values, visions, perspectives and so on, but not all have a different sense, namely as a fundamental perspective on
the problem. Islamic economic boundaries as defined above also suggest that the conventional economic paradigm
will continue to the function in shaping the economic paradigm of Islamic praxis. In other words, conventional
economic theories will remain the Islamic economics discourse.
Worldview must in special attention in the discipline of Islamic economics. Before determining step further
on Islamic economics, we must formulate first, the term of "Islamic worldview." Furthermore, this paper also want to
see what and how the relationship between epistemology, worldview with the methodology of Islamic economics. In
other words, how the main sources of economic principles drawn from the Islamic worldview epistemologically
forming the Islamic Economics science methodology. However, it should be noted that further discussion of the
methodology and the modeling of Islamic economics is not a concern in this paper.
Islamic epistemology teaches that the human mind is bound and limited by the three laws of reason. First,
what is mandatory for the senses? The second what is impossible for the mind, and the third what might be for the
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reason? (Suharto, 2005:6). What is mandatory for the sense is a must for that reason to admit a certain proposition
without having to look for the arguments or evidence of its truth. So in this sense can not reject the truth. The
impossible for the reason is the opposite of the first, namely, that reason would reject certain propositions and can not
accept it at all, while the latter is what is possible for the mind to accept or reject it. In this sense rationalism is not
much help to achieve certainty the nature or in certain things. Intellect can only accept the possibility of truth based on
empirical facts.
Meanwhile economic Capitalism, according to Spengler (1980), is essentially “a product of European
civilisation with some of its origin dating back to the Greco-Roman and medieval worlds.”2 Furthermore, Heilbroner
in his classic book The Worldly Philosophers argues that contemporary economics is not a science. of society (void of
any ideological underpinnings, parenthesis added), its purpose is to help us better understand the capitalist setting in
which we will most likely have to shape our collective destiny for the foreseeable future.3
Hence, we can say that “nature and behaviour of the economic agent” and the subject matter of economics is
very foundation of economics. 4 Mainstream economics has established “homo economicus” or “economic man” as
the ideal type of economic agent who will apply all assumptions of economics in real life. Homo economicus is a term
used for an approximation or model of homo sapiens who act to obtain the highest possible well-being for himself
given available information about opportunities and other constraints, both natural and institutional, on his ability to
achieve his predetermined goals Homo economicus is conceived as an individual who acts rationally by pursuing his
own self interest and maximising his own utility. A person is seen as maximising his utility function, which depends
only on his own consumption, and which determines all his choices. He is characterised by an individualistic self-
interested, utility-maximising, “rational” characterisation, while any ethical consideration is an exogenous variable in
his preference. This notion of individual behaviour constitutes the ethical foundation as well as micro-foundations of
economics as a discipline where all economic theories and analyses are based on this concept of man. Amartya Sen
describes this complex structure of “self-interested behaviour” as having three distinct and essentially independent
features:5
- Self-centred welfare: A person’s welfare depends only on his or her own consumption (and in particular
it does not involve any sympathy or antipathy towards others). Formally, this is known as the
assumption of independent individual utility functions.
- Self-welfare goals: A person’s goal is to maximise his or her own welfare, and – given uncertainty – the
probability weighted expected value of that welfare (and in particular, it does not involve indirectly
attaching importance to the welfare of others).
- Self-goal choice: Each act of choice of a person is guided immediately by the pursuit of one’s own goal
(and in particular, it is not restrained or adapted by the recognition of mutual interdependence of
respective successes, given other people’s pursuit of their goals).
2 J. Joseph Spengler, The Origin of Economic Thought and Justice, xii, this is not surprising since science and
scientific activities are the result of specific ontology which relates the scientific endeavour of the individual to
environment and furnishes their motivational basis. Therefore, knowledge in Islam is not neutral, a position
commonly argued in Western epistemology. As Al-Attas observes: “It seems to be important to emphasise that
knowledge is not neutral, and can indeed be infused with a nature and content that masquerades as knowledge. Yet it
is in fact, taken as a whole, not true knowledge but its interpretation through the prism, as it were, the world-view, the
intellectual vision and psychological perception of the civilisation (Western) 2 that now plays the key role in its
formulation and dissemination. What is formulated and disseminated is knowledge infused with the character and
personality of that civilisation (Western).” Syed Muhammad Naquib Al-Attas, Islam and Secularism (Kuala Lumpur:
ISTAC, 1993), p.133 3 Robert Heilbroner, The Worldly Philosophers, 7th ed. (New York: Simon and Schuster, 1999), 310. The statement
reflects aspirations underlying the theories put together over nearly 200 years by the great economic thinkers that he
reviews: Adam Smith, David Ricardo, Thomas Malthus, John Stuart Mill, Karl Marx, Alfred Marshall, Thorstein
Veblen, John Maynard Keynes,
and Joseph Schumpeter. Their legacy is a quest for “socially as well as economically successful capitalisms.” See
Baghirathan et al., “Structuralist Economics: Worldly Philosophers, Models, and Methodology,” Social Research, 71,
no. 2 (2004): 305-326 4 Economics as defined by Lionel Robbins is the science which studies human behaviour as a relationship between
ends and scarce means which have alternative uses. Economics according to Robbins is not concerned with
production, exchange, distribution or consumption as such, see: Lionel Robbins, An Essay on the Nature and
Significance of Economic Science, 2nd
ed. (London: Macmillan, 1945), pp.16 It is instead concerned with an aspect of
all human actions in those activities, see M. Daniel Hausman, The Inexact and Separate Science of Economics
(Cambridge: Cambrige University Press, 1992), pp.3. But, in studying human behaviour, Robbins clarifies his
position that “it does not seem logically possible to associate the two studies [ethics and economics] in any form but
mere juxtaposition,” see: Robbins, An Essay on the Nature and Significance of Economic Science, pp. 148 5 Amartya Sen, On Ethics and Economics (Oxford: Basil Blackwell, 1990), pp.80
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The nature of human being in this regard is reduced to an autonomous/atomistic individual in all his activities
where he measures value at the level of personal impulses, desires and preferences.6 He is independent of any external
elements of society, environment, even God. This notion of an “anthropomorphic” nature of science comes from the
principle of secularism and materialism that is at the base of modern Western worldview, where the human being is
the centre of everything, and the measure of all things. The human being is considered as a purely earthly creature,
divorced and cut off from the Divine source, master of nature and responsible to no one but himself.7 In addition,
religious/spiritual insight is considered irrelevant. The materialist and secular view of the ultimate nature of the human
being sees human action as being motivated merely by the materialistic side of man. Increasing or maximising utility
and satisfaction of all desires becomes a supreme goal in mainstream economics on which all economic theories,
policies, regulations, and institutions are based, and should patronise. The concept of ethics sine qua non is also
developed based on this notion.8
The Islamic concept of economic, however, is significantly different to conventional economics. The latter,
influenced by the process of secularization, sees economics and other “worldly” activities as being devoid of the
presence of God. In Islamic economics, the concept of tawhid being fundamental “vertical” relation between God (the
Creator) and man (the created), Allah and insan, as well as the “horizontal” man-man relationship defines and guides
human behaviour that will be applied in various economic related concepts. Two fundamental concepts in the Islamic
worldview that would have significant implications on economic behaviour of the agent in Islamic economics are the
concept of man as khalifah (vicegerent) and abd (servant/slave).
Akram (1986) argues that each discipline in social science include economics should be founded on the belief
in Tawhid, risalah and akhirah. Linked to this statement according to Izutsu (2002), Man as khalifah-al abd is seen as
a focus-word in economics. We explored related terms in various ayah that could explain the concept of khalifah or
istikhlaf such as: ilm, taskhir, amanah, isti’mar, Islah, ifsad, ibadah, and ummah that could meaningfully explain the
Tawhed epistemology as relationship between man and God, man and nature as well as man and man. The word
khalifah itself means roughly “one who comes after,” “successor,” “deputy,” or “vicegerent.” However, this concept
of khalifah and why human kind was chosen to be khalifah, and the tasks and destiny of the khalifah have
implications that are not clearly understood by ordinary believers.9
All earthly blessings, and also all that is in the heavens, have also been created for the sake of human beings
in managing their role as khalifah.
“He it is who created for you all that is on earth...”10
“He has subjected to you all that is in the heavens and all that is in the earth…”11
Human beings are free to use the bounties and blessings conferred upon them (taskhir), but at the same time, they
must carry out their duty towards God mainly as an abd (who serve and worship Him) and khalifah (who holds
amanah as God’s representative on the earth) to isti’mar, i.e., to prosper the earth and to create a moral social order on
earth. The role of khalifah (vicegerent) is essentially a trust (amanah). God has invested man His trust, a trust which
the heavens and the earth were incapable of carrying out. 12
As a khalifah (God’s vicegerent), man is entrusted with an
amanah to establish responsibility on earth by means of virtues and bounties endowed to him by God, his initiative,
creativity and labour (isti’mar). “He brought You forth from the earth and settled You therein”13
to fulfill God’s
creative work in the universe (isti’mar). Nature has been created for human beings but man is also required to
establish a moral social order on earth. The concept of amÉnah implies that in all his actions, man should choose to
prosper the earth (islah) by making the best use of resources and to fully utilise the virtues inherent in him to isti’mar
the earth. Ifsad (fasad) or adversity or corruption, is to be avoided in managing one’s role as a khalifah. The
acceptance, as implied, is not by any force, but a voluntary choice and based on man’s own will. 14
This will to accept
and do or to choose not to do is another “virtue” and superiority that man has over all other beings in the universe.
6 X. Frank Ryan “Values as of Transaction: Commentary on Reconciling Homo Economicus and John Dewey’s
Ethics,” Journal of Economic Methodology, 10, no. 2 (2003): 249 7 Seyyed Hossein Nasr, “Reflections on Islam and Modern Thought,” in Islamika II, eds. Lutpi Ibrahim, et al. (Kuala
Lumpur: Jabatan Pengajian Islam University Malaya, 1982), p. 97-113 8 Here, one should note that homo economicus is an ideological construction that comes in a package with a whole set
of values that imposed on economic man although the proponents of positive economics claimed it as value-free.
Homo Islamicus, on the other hand, is also an ideological construction of the Islamic economic system. Homo
Islamicus is created based on the ideals of the nature of human behaviour that is envisaged in Islamic teachings. Both,
homo economicus and homo Islamicus are conscious of the worldview/ideology in their actual economic behaviour 9 Toshihiko Izutsu, The Concept of Belief in Islamic Theology: A Semantic Analysis of Iman and Islam, p.2
10 QS.2:29
11 QS.45:13
12 QS.33:72
13 QS.11:61
14 QS.76:2-3
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In this perspective, we could say that the mission of khalifah on earth is actually part of a grand raison d’etre
of his creation, namely, ibadah, i.e., the mission to serve God and to realize the divine will and patterns by being an
abd. “I (Allah) have not created jins and humans, but they should worship (serve) me (alone)” 15
The very purpose of
man’s creation, as well as the whole creation, is to serve God (ibadah), both inwardly and outwardly. Internally by
acknowledging God’s magnificence and supremacy and by awareness of His presence, His magnificence, and His call
for human progress and righteousness; externally by compliance with God’s teachings pertaining to ritual and non-
ritual activities.16
All man’s actions, including his economic activities, should be viewed in this complete commitment
to God by obeying the prescribed framework. His success in life on earth is also valued based on his level of
commitment to God17
. This means that being a khalifah is not an easy task. Humans must strive for it to be successful
(falah) as there is also possibility of failure (khusrin). The successful khalifah will be granted heaven (al-jannah)
while the failed khalifah will be in hell (al-nar).
The discipline of Islamic economics itself will have a “theomorphic” characteristic rather than an “antrohomorphic”
discipline as in conventional economics. In the former, God becomes the centre, the measure of all things, and any
theories developed should reflect this principle as the basis, instead of making the individual man as the centre (i.e.,
self-centred welfare, self-welfare goals, self-goal choice). Islamic economics bases its principles on tawhid (unity of
Allah).Tawhid is the fundamental core of Islam, the foundation of its ethics and philosophy of life, and the basis of its
system and institutions. It is the primary determinant of one’s relationship to the natural and social order. Applications
of tawhid embrace every facet of human activities at the individual and collective levels from both the natural and
social perspectives that reflect unification. Economic action as well as decision or choices made fully reflect the
ethical principles of Islam in his unique relationship to God and society in the consciousness of his intimate
relationship to God. The nature of the human will be broadened in the Islamic perspective as not merely limited to the
physical being with the goal of materialism per se. The human being is a physical-intellectual spiritual being. 18
6. THE CONTRIBUTION OF TAWHID EPISTEMOLOGY TO ISLAMIC ECONOMIC RESEARCH
The epistemological contribution to research is essentially theoretical: It has to do with theories of knowledge.
Epistemology is inescapable. A reflexive researcher actively adopts a theory of knowledge. A less reflexive researcher
implicitly adopts a theory of knowledge, as it is impossible to engage in knowledge creation without at least tacit
assumptions about what knowledge is and how it is constructed.
Methodologi, as Machlup (1978) explained is,
“The study of the principles that guide the students of any branch of knowledge, and especially of any higher
learning (science) in deciding whether to accept or to reject certain propositions as a part of the body of
ordered knowledge in general or of their own discipline (science)”19
The later come into conventional economics after the economics itself is relatively well established and has significant
growth. Thus, the presence of the methodology is to justify or legitimize the existence of economics at once with
empirical practices. Based on this premise it can be understood that the situation is constantly changing, the basis of
the conventional economics establishment. Consequently, in the future fundamental changes to the practice of the
global economy, it will search for a new instrument and appropriate justification, or otherwise experienced by a tragic
and difficult situation to imagine. So for the conventional economy no one absolute methodology that always right
and beneficial. Perhaps even before the economic methodology is correct, but in the other place and the future is un-
correct methodology, even useless. Following to the changes of human behavior and thinking in performing the
economy. So that is a reasonable if methodologically conventional economic theories was always contradict each
other while searching the answer of economic problems
Methodologically, Islamic economics is formed from a "system", and also by something called as "science".
The word "system" is defined as a "complex whole, an arrangement of things or parts which are interconnected each
others", when "science" is "knowledge formulated systematically". Similarly, the word "science" can be defined as "a
organized knowledge about the physical world, animate and inanimate”. Harmoniously to the definition of "systems"
we can easily say Islamic economic is part of a complete system of life, based on four pieces of knowledge, "the
revealed knowledge" (Al -Qur'an), the way of life and pithy remarks exemplified by the Prophet Muhammad (Al
15
QS.51:56 16
Muhammad Abdul-Rauf, Ummah and the Muslim Nation (Kuala Lumpur, Malaysia: Dewan Bahasa dan Pustaka,
1991), p. 91 17
QS. 63:9 18
QS.32:6-9 19
Machlup, Firtz, (1978), Methodology of Economics and Other Social Sciences, (New York: Academic Press, hlm
5-56, see also Daniel M. Hausman, (2008), Essays on Philosophy and Economic Methodology, Cambridge University
Press
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Sunnah). Both upwards and onwards interpretation bring to the consensus of society or by the scholars (ijma'). It is the
flow of "methodology" leads to a built-in mechanism for clear thinking (ijtihad) on various economic to solving issues
and economic problems. This is allowed as long as not contrary to the basic components of the system itself, Al -
Quran and Al- Sunnah. Thus, it seems that a "system" of economic in Islam loads principles and methodologies to the
entire system of life.
Posssumah (2013) explain that the principles of Islamic economic methodology based on Islamic worldview
and Tawhid epistemology, as below:
a. Economic System in Islam is built upon the Aqidah which believe that Islam is the only true religion or
system. Then the methodology of Islamic economics should also stems from the belief in the truth of
IslamAllah berfirman:
“Indeed, the religion in the sight of Allah is Islam. And those who were given the Scripture did not differ
except after knowledge had come to them - out of jealous animosity between them-selves. And whoever
disbelieves in the verses of Allah, then indeed, Allah is swift in [taking] account”20
“And whoever desires other than Islam as religion - never will it be accepted from him, and he, in the
Hereafter, will be among the losers.”21
As the consequences of this worldview are:
- Methodology and procedures of economy in Islam already exist and had been thaught by Islam:
- Islamic Economics must be applied in order to resolve the economic problems. If not, then reverse
the economic problems will never be completed. This case is significant that methodology of
Islamic economics is a practical methodology not only theoretical prediction and perception,
because its objective is human welfare not just an assumption Allah Said:
“It is not for a believing man or a believing woman, when Allah and His Messenger have decided a
matter, that they should [thereafter] have any choice about their affair. And whoever disobeys Allah
and His Messenger has certainly strayed into clear error.”22
b. The methodology of Islamic economics as a science is a methodology that linked to the relationship between
humans or human with the nature. Both of these relationships in the category of Muamalat attached to the
principle "the legal origin of everything is permissible so it comes proof that prohibits" (al-ashlu fil asy-yaa’i
al ibaahah) based on:
“It is He who created for you all of that which is on the earth. Then He directed Himself to the heaven, [His
being above all creation], and made them seven heavens, and He is Knowing of all things”23
“And He has subjected to you whatever is in the heavens and whatever is on the earth - all from Him.
Indeed in that are signs for a people who give thought"24
c. Methodology and theory of Islamic economics as part of Islam must always be appropriate and evolve with the
development of human and economics behvaior itself as Islam was always in line with the times and places
(salihun likulli zaman wa likulli makan). Allah berfirman:
“And We send down of the Qur'an that which is healing and mercy for the believers, but it does not
increase the wrongdoers except in loss."25
“Then do they not reflect upon the Qur'an? If it had been from [any] other than Allah, they would have
found within it much contradiction.”26
d. The methodology of Islamic economics in the solution of problems of human economic activity following the
rules “al-hukmu yadhuru ma’a ‘illatihi wujudan wa ‘adaman”, ( the law follows the causes, presence and
absence); “al-hukmu yataghayyaru bi taghayyuri al-azminah wa al-amkinah wa al-ahwal wa al-‘adah”, (The
law can be changed with the changes of time, place, circumstances and customs). In the simple meaning
despite economic or Muamalat between humans and between humans and nature has been stipulated in
general, but the economy is a human being behavior which always changed as well as the development of
human life itself, then the methodology of Islamic economics will always explorative while not contradict with
Shari'a. This then makes the analysis of Islamic economics may combine induction and deduction, or blends
between the legal texts (naqliyah) with the analysis of human social reality. Thus for the purpose of analysis,
methodology arranged by several assumptions which separated into two categories, permanent based on
Syari’ah such Zakat in investment, gharar, etc; and changeable taken from empiriccal observation such
competition form, investment, Profit sharing sistem, etc. in Islamic history, induction-deduction method was
20
Al Qur’an, Ali Imran 3:19 21
Al Qur’an, Ali Imran 3:85 22
Al Qur’an, Al Ahzab 33:36 23
Al Qur’an, Al Baqarah 2:29 24
Al Qur’an, Al Jaathiyah 45:13 25
Al Qur’an, Al Isra 17:82 26
Al Qur’an, Al Nisaa 4:82
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practiced by Imam Syafi’i when he launch his new ijtihad (qaul jaded) to change his old ijtihad (qaul qadim).
The amendment of fatwa according to geographical differences of Basrah and Egypt. The geographical
differences then adapted to deductive rule in principle of jurisprudence “taghayyur al-ahkam bi al-taghayur al-
azminah wa al-amkinah” (the law may changed by time and places)
e. Methodology of Islamic Economics is a methodology that combines between ratio and the revelation in its
analysis and does not polarize both. Both are also considered as a source of Islamic economics. Revelation as a
general principle of economic and ratio as an analytical tool. So that as the result, theory of Islamic economics
is a theory that should not be contradict between positive and normative27
, between qualitative and
quantitative, and physic and methaphyisical. About reason or logik, Al Qur’an say,
“And He has subjected for you the night and day and the sun and moon, and the stars are subjected by His
command. Indeed in that are signs for a people who reason”28
7. CONCLUSION
Epistemology generally called philosophy of knowledge or theory of knowledge. It is a branch of philosophy that
studies the radical about the methods, knowledge of the origin, structure and validity. Some basic concepts of
epistemology that explains the substantive economic science is not value laden has been discussed in this paper.
Relevances and impact of science and epistemology emparikal, where the terms of epistemology associated with
empirical science is called epistemology naturalistic approach is an approach to the theory of knowledge, which
emphasizes the use of methods, results, and theories of empirical science. Relationship religion and economics as
substance or matter in epistemology developed on the basis of Islamic Economics. Islamic economy will be in
accordance with all aspects of Islam. Then there was a correlation between the methodologies of epistemology, the
whole discipline of scientific knowledge must have epistemological foundation. One of the conditions in the study of
philosophy is epistemology. Thus epistemology is essential in determining the economic methodology. Epistemology
and worldview are closely related in the form of economic methodology. What is the difference between conventional
and Islamic economics economy is the view of life (worldview). Islamic economics bases its optimum principles on
tawhid (unity of God) .Tawhid is the fundamental core of Islam, the foundation of its ethics and philosophy of life,
and the basis of its system and Institutions. Epistemological contribution to research on the theoretical basis: It has to
do with the theories of knowledge. Epistemology is inevitable in the study. Therefore, to determine a methodology
that must be seen to epistemological.
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