The following essay was originally submitted as an assignment for my university and was graded as a 2:1.
Four years ago, I took part in an online course on Islamic intellectual history, through which I was introduced to the works of al-Ghazali, an 11th-century polymath credited as being the Ḥujjat al-Islām (The Proof of Islam). There is no overstating the importance of al-Ghazali’s writings on Islamic thought and practice. To this day, al-Ghazali’s Iḥyā’ ‘ulūm ad-dīn (The Revival of the Religious Sciences) continues to influence and inspire Islamic scholars and Western academics alike. That said, many may be surprised to learn that al-Ghazali also had a lot to say about the economy. I know I was.
Al-Ghazali’s Life and Times
Abu Hamid al-Ghazali was born around 1058 during the height of the Islamic Golden Age in Tus, north-eastern Iran, which was then part of the Seljuk Empire. Following an education in fiqh (Islamic Jurisprudence), al-Ghazali joined the court of Nizam al-Mulk, who appointed him as the head of the Nizamiyyah of Baghdad in 1091.
During this time, Baghdad was the political, economic and cultural centre of the Islamicate world. Scholars, both Muslim and non-Muslim, would gather in Baghdad to discuss and share ideas, leading to many new scientific breakthroughs and vibrant philosophical debates (Goodwin, 2003). It is in this context al-Ghazali was elevated to the Medieval world’s most prestigious academic position, where all the leading scholars of the day “were astonished by his words; they believed these teachings had great merits, and they used them in their own books” (Griffel, 2009, p. 34).
In 1095, al-Ghazali abandoned his position in Baghdad to go on Hajj (pilgrimage to Mecca) before undertaking a decade of seclusion from public life. During this time, Al-Ghazali authored his magnum opus, The Revival of the Religious Sciences, which aimed to reinvigorate Islamic spirituality and ethics. The book addresses all aspects of a Muslim’s life, from worship and daily life to inner belief and salvation, and is widely considered the most influential book in Islamic history after the Qur’an (Islam’s holy text) and Hadith (the sayings of the Prophet Muhammad ﷺ). It is in this book that we also find al-Ghazali’s economic thought.
Al-Ghazali eventually returned to public life in 1106 and began teaching at the Nizamiyyah of Nishapur for a time before moving back to Tus. In 1110, Diya al-Mulk invited al-Ghazali to retake his position in Baghdad. He declined, saying that “pursuing the increase of worldly goods” had been removed from his heart, and he had to take care of his family and madrassa in Tus (Griffel, 2009, pp. 57-58). Al-Ghazali passed away the following year at the age of fifty-three.
Al-Ghazali’s Economics 101
Broadly speaking, al-Ghazali’s economics can be grouped into four key areas: market, production, monetary and public economics (Ghazanfar & Islahi, 1998, p. 23). Although he had much to say on all these topics, I will focus on al-Ghazali’s elucidations on supply, demand, prices and profits, concepts familiar to any student of economics.
Al-Ghazali doesn’t delve into supply and demand the same way a modern economics textbook would, yet his writings demonstrate his familiarity with their effect on pricing. In The Revival of the Religious Sciences, he acknowledges the impact of low demand on prices: “The farmer brings grains, and in case there is none to buy them, the storekeeper buys them for a cheap price” (al-Ghazali & al-Sharif, 2011b, p. 378). Furthermore, upon observing high food prices, al-Ghazali suggests reducing demand as a way to “render it cheap by abandoning it” (al-Ghazali & al-Sharif, 2011b, p. 150). Similarly, al-Ghazali also appreciates the impact of supply on prices: “There is plenty of food to the extent that the people might not be in need of purchasing it but by a low price” (al-Ghazali & al-Sharif, 2011a, p. 124). In contemporary economics, we’d observe these same phenomena as shifts in demand and supply curves.
Like other scholars of the time, al-Ghazali discusses profit without explicitly mentioning cost or revenue. However, he does link profit to risk when he implores his readers to consider how “wealth and profit” has impelled merchants to “undergo trouble and suffering” (al-Ghazali & al-Sharif, 2011c, p. 148). That said, al-Ghazali was critical of excessive profit-making and advocated for a ‘just’ price with a profit rate of “no more than one-twentieth or one-tenth” (al-Ghazali & al-Sharif, 2011a, p. 139). Building on this, al-Ghazali seems to utilise the price elasticity of demand as a justification for his low-profit rate when he suggests that “if one is satisfied with a little profit his dealings will increase, from which he will gain more profit” (al-Ghazali & al-Sharif, 2011a, p. 139). This is in stark contrast to contemporary microeconomic analysis, which rarely asks if market prices are ‘just’; instead, it views them as morally neutral outcomes of the natural interplay between supply and demand.
Al-Ghazali’s Economic Legacy
Despite being written nearly a millennia ago, al-Ghazali’s economics still broadly align with what students come across in modern economic textbooks (Mankiw & Taylor, 2017). The main difference is that al-Ghazali’s observations were rooted in medieval Islamic ethics as opposed to contemporary positivism. That said, there is much we can learn from his insights.
Firstly, al-Ghazali’s understanding of the interplay between supply and demand, albeit not as formally articulated as in modern economics, provides a foundational insight into market dynamics. His recognition of the impact of low demand on prices and the abundance of supply lowering prices aligns with the fundamental principles of supply and demand theory in modern economics (Mankiw & Taylor, 2017, pp. 31-144). By acknowledging these phenomena, al-Ghazali lays the groundwork for understanding market equilibrium and price determination, which remains central to contemporary economic analysis.
Secondly, al-Ghazali’s advocacy for a ‘just’ price and his critique of excessive profit-making raise questions about ethical considerations in market transactions. While contemporary economics often focuses on efficiency and market outcomes, al-Ghazali’s emphasis on fairness and the moral dimensions of economic transactions highlights the importance of ethical principles in shaping economic institutions and policies. This resonates with ongoing debates in modern economics regarding income inequality, corporate social responsibility, and the role of government intervention in ensuring fair and equitable outcomes in markets (Mankiw & Taylor, 2017, pp. 145-178).
Conclusion
In conclusion, delving into the works of al-Ghazali unveils a fascinating dimension to economics. Beyond his renowned contributions to Islamic theology and spirituality, al-Ghazali’s grasp of market dynamics, ethical considerations in trade, and reflections on profit and pricing still resonate today. His integration of medieval Islamic ethics into economic discourse also offers a compelling perspective worthy of exploration, especially considering the rise of Islamic economics in recent years.
It cannot be conclusively determined whether al-Ghazali’s economic observations were made in isolation or whether he was simply disseminating knowledge acquired from others. Given the vibrant scholastic culture of Baghdad at the time, I lean towards the latter hypothesis. That said, one shouldn’t underestimate the influence al-Ghazali’s writings had on later Muslim scholars, such as Ibn Taymiyya and Ibn Khaldun, who would build upon his work with analytically superior insights. Thus, while al-Ghazali may not have been an originator of economic thought, his dissemination of economic ideas to the wider Islamicate world outside Baghdad’s intellectual elite earns him a place amongst the great economic thinkers of history.
References
al-Ghazali, A. H. & al-Sharif, M. M., 2011a. Revival of Religion’s Sciences (Ihya’ Ulum Ad-Din) Volume II: The Quarter of the Habits of Life. Beirut: Dar Al-Kotob Al-Ilmiyah.
al-Ghazali, A. H. & al-Sharif, M. M., 2011b. Revival of Religion’s Sciences (Ihya’ Ulum Ad-Din) Volume III: The Quarter of the Destructives. Beirut: Dar Al-Kotob Al-Ilmiyah.
al-Ghazali, A. H. & al-Sharif, M. M., 2011c. Revival of Religion’s Sciences (Ihya’ Ulum Ad-Din) Volume IV: The Quarter of Saviours. Beirut: Dar Al-Kotob Al-Ilmiyah.
Ghazanfar, S. M. & Islahi, A. A., 1998. Economic Thought of Al-Ghazali. Jeddah: King Abdulaziz University Press.
Goodwin, J., 2003. The Glory That Was Baghdad. The Wilson Quarterly, 27(2), pp. 24-28.
Griffel, F., 2009. Al-Ghazali’s Philosophical Theology. Oxford: Oxford University Press.
Mankiw, N. G. & Taylor, M. P., 2017. Economics. 4th ed. Boston: Cengage Learning.