Entrepreneurship and Islam

Zamir Ahmed

Last week a youth led initiative went relatively unnoticed before our overly politicized society. The Initiative was the “One Young Kashmir” six-day youth leadership summit which provided an excellent platform to youth to discuss, debate and deliberate upon things that they thought were vital to our existence as a nation. The summit had many firsts to its credit.

One, it was purely a youth led project right from its ideation to its final execution. Two, unlike other such programs the organizers of the summit had decided to conduct the proceedings outside the media glare. Three and most important was that it had almost 600 youth from cross section of society working on various issues through a systematic problem solving process. The format of the summit was unique in many ways as there were less one-sided lectures and more of structured discussions between groups of youth facilitated by a trained volunteer and the discussion proceedings of each group being duly recorded by a rapporteur.

One of the six days of the summit was dedicated to discussions on Enhancing Empowerment as one of the solutions to our economic problems. It was heartening to see young boys and girls – even school children – discussing vociferously the various aspects of our economy, its ills and the possible solutions. Since the summit had been worked out around a ‘participatory planning process’, one of the impediments to encouraging empowerment was identified by these young boys and girls as religion. And since most of the youth participating in the summit were Muslims, the reference to religion was obviously to religion of Islam.

Being present on the sidelines of the summit on that day, it was not clear to me why the youth considered religion as an impediment to enterprise. Bright young men and women as they were, they must have had their reasons to believe so. The reasons could have been based on their own experiences, perceptions or their own understanding of religion as it had come to them. However it is true that Islam has been considered as a religion that discourages enterprise and entrepreneurship by many. Since many feel that Islam teaches conformism as essence of its faith, it is understood – wrongly – that Islam per se has impeded entrepreneurship by inculcating conformism and fatalism.

Ever since the Muslim World slipped into a state of underdevelopment, lack of creativity, excessive risk aversion, and hostility to innovation have been among the factors viewed as causes of its economic shortcomings. Several observers attribute such attitudes to the faith that Muslims profess. “Islam inculcates a belief in predestination, commonly referred to as fatalism,” proposes one such observer Raphael Patai. Yet, another researcher Bernard Lewis promotes a view which lays the blame on closing of the Muslim mind between the ninth and eleventh centuries. This transformation, he says, has had adverse effects on enterprise, experimentation, and creativity in a wide array of contexts, including production and commerce.

This view that Islam – directly or indirectly – discourages entrepreneurship has not gone unchallenged. Leading Muslim reformers of the nineteenth century believed that it confuses perverted forms of Islam, which counsel passive resignation to the flow of events, with authentic Islam, that holds the individual responsible for his acts, including his failures, and requires the active use of God-given talents.

History also belies the claim that Islam impedes entrepreneurship. For, the better part of the past 14 centuries, Muslims have not appeared deficient in entrepreneurship.

A contemporary scholar, Timur Kuran, makes a wonderful observation on the emergence of Islam and how it triggered ingenuity and enterprise amongst its followers. He says,  “The emergence and spread of Islam in the early seventh century CE, like the development of other great religions, involved entrepreneurial acts of immense ingenuity. Prophet Muhammad (SAW) displayed remarkable social, political, economic, and military ingenuity in securing the earliest conversions, moving with his co-religionists from Mecca to Medina to establish a rudimentary state, and then defeating his pagan opposition by taking control of the region’s commercial arteries.

Over the next few centuries the development of Islamic norms, standards, rules, laws, practices, organizations, belief systems, and reward mechanisms entailed, likewise, a highly creative synthesis based on the appropriation, but also the refinement and modification, of pre-Islamic institutions.  Of particular interest here are institutions designed to facilitate entrepreneurship… Classical Islamic law harbors a law of contracts that offers entrepreneurs various contractual templates, each suitable to a distinct range of objectives. This law provided peoples all across the Islamic world, which by the eighth century stretched from the Atlantic Ocean to the shores of China, an essentially uniform legal system enforceable wherever Muslims ruled.”

How would one then explain, the lack of enterprise, in Muslim countries in the recent past? While it is a fact that the teachings of Islam lay a lot of emphasis on enterprise, it has also to be understood that Islamic institutions that served innovators well in the medieval global economy became dysfunctional as the world made the transition from personal to impersonal exchange. ‘The key problem is that Islamic law did not stimulate the development of organizational forms conducive to pooling and managing resources on a large scale’, argues Timur Karan.

Motivations, beliefs, laws, regulations, and practices are all malleable. Reforms in Islamic legal system that can allow individual entrepreneurs to borrow money from institutions, form organizations with indefinite lives, trade enterprise shares, and track complex financial flows through modern accounting systems are thus imminent to enhancing entrepreneurship in the Muslim world.

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