Rise of Instrumental Reasoning and Decline of Embeddedness in Social Relations: Emergence of New Islamic Economic Moralities

Sunday, June 26, 2016: 10:45 AM-12:15 PM
87 Dwinelle (Dwinelle Hall)
Harun Sencal, Durham University Business School, Durham, United Kingdom
Mehmet Asutay, Durham University Business School, Durham, United Kingdom
Islamic normative values aims at constructing a particular social formation based on substantive morality, according to which relationships both among individuals, between individual and society, and between individual and the God is regulated. This refers to embeddedness in the sense that individual behaviours including in economic and financial spheres should be shaped according to the prescribed morality of Islam, as the moral substance of Islam aims to promote a moral society, especially in terms of economic relationships. As contrary to the prescribed morality, in contemporary times, we observe a shift in the Muslim behaviour from an embedded way of life towards hybridity of Islamic prescription with modern values.

This paper, hence, aims to explore the reasons behind the observed decline in the embeddedness of Muslim members in the society in contemporary times compared to the pre-modern period and how such an emergent social formation and morality is reconciled with the principles of Islam which aims to construct an embedded relationship among the members of the society.

We argue that it is evident from Islamic ontological sources that Islam encourages establishment of strong ties among the members of the society which leads to an embedded society, not only in terms of embeddedness of economy and finance into society, but in a wider perspective, such as ‘submergence of individuals’ in social relations which is one of the main pillars of Islamic moral economy. Importance of such a submergence is clear both at local level such as obligatory nature of Friday ceremony and encouragement of performing daily prayers at the local mosques and at global level such as the obligation of pilgrimage. As it is suggested by Polanyi, such social formation is not unique to Muslim communities, yet, unlike others, rules and regulations to sustain Muslim communities are constituted on such a social formation and considered, at least in terms of principles, ahistorical implying that Islamic law is expected to preserve an embedded relationship and protect it against distortions even in modern times. However, rise of the market economy with commodification and emergence of fictitious commodities eventually affected Muslim majority territories as well. Although, due to the rise of secular nation-states, Islamic law has no power of enforcement on people, still, at the individual level, Islamic law influence everyday practice of Muslims. Nevertheless, observed lifestyle of Muslims and established institutions to facilitate religious responsibilities suggest that, in modern times, embeddedness of Muslims in the society compared to former period drastically changed and importantly decreased in nature.

One of the outcomes of emergence of market economy and its impact on individuals is the elevating the status of instrumental reasoning to sustain everyday life of people and raising it to a primary position. This research, therefore, argues that predomination of instrumental reasoning in Muslim majority countries in the everyday practice of people is one of the main reasons behind such decrease in embeddedness of Muslims.

Instrumental reason is a way of thinking which priorities maximum efficiency and the best cost-output ratio to evaluate success of an action. In other words, an individual who is guided with instrumental reasoning, act according to the most efficient economic application of means to a given end. Therefore, if a behaviour has high transaction cost compared to another, the behaviour with less transaction cost should be preferred according to instrumental thinking. Such reasoning in Muslims’ decision process leads to a decrease in submergence in the social relations that is not limited to interpersonal relationships, which is also encompassed within the domain of Islamic moral economy, but also extended to the core religious acts such as animal sacrifice and zakah.

However, if embeddedness is one of the main pillars of Islamic moral economy, how can religious acts be structured in a disembedded way? This study claims that ‘transformation of exception’ into norm within Islamic law in modern time and establishment of the institutions based on exceptions is the leading cause of such an outcome. In the case of animal sacrifice and zakah, for example, this exception is conducted through the delegation system. We claim that such institutionalization is due to dominancy of instrumental reasoning in the act of worship. Through this method, maximum efficiency is reached in terms of cost of input (i.e. time and money) and expected output (i.e. fulfilling the act of worship). Although such an approach could achieve to meet the form of worship, its substance is lost. In other words, zakah as a type of worship fulfils certain benefits to establish an embedded society such as giving opportunity to empathize with the poor in the time of giving money, i.e. establishing a bond between rich and poor which may last longer than one transaction. However, when it is institutionalized and responsibility of giving zakat is delegated to an institute, it transforms into a pay-billing action without any substance involved, yet brings the satisfaction of fulfilling an act of worship; as the connection with the payee being lost result in disembeddedness in the case of zakah.

‘Transformation of exception into norm’ has become a method of compliance with both necessities of modern life which predominantly constructed on instrumental reasoning and Islamic law which requires fulfilment of certain act of worshipping, at least in terms of form. However, such a compliance contradicts with Islamic moral economy due to the lack of embeddedness of individuals in social relations. In a similar manner, the modern practice of Islamic banking and finance is constructed through ‘transformation of exception into norm’, for which the concept of maslaha or public interest is utilised to pave the way for the creation of hybridity in the form of innovated Islamic financial products. Therefore, the current debate in Islamic finance circles always comes back to ‘form vs substance’ or ‘Islam based finance vs the Shari’ah complaint’.

This paper, therefore, argues that with such emergent practices, new economic and social moralities are created through convergence with the requirements of the modern times as compared to Islamic moral economy, as the practice of zakah and also Islamic finance proves.