Launching An Islamic Revolution in Economics

[bit.do/azai4] Final Part 4 of talk on “How Islam applies to Economics” By Dr. Asad Zaman, Ex-VC PIDE  English Re-Recording of Original 1hr talk in URDU at Econ Dept. Karachi University Monday 16th Sept 2019 — 14m Video of Part 4:

So we started this talk with the question: “(How) Does Islam apply to modern economics?”. Conventional textbooks seem to be completely unrelated to Islam. As we have seen, this is because conventional economics is about a market society based on humans lives for sale in a labor market, competition, greed, individualism, and hedonism. These values are opposed to Islamic values. Islam does NOT apply to modern economics – it tells us to reject the whole thing, and build a new economic system on entirely different foundations. Islam works on TRANSFORMING human behavior towards Cooperation, Generosity, Social Responsibility. Of course, we may object that this is too idealistic – we can never create a perfect society, where everyone acts like an angel. The answer to this objection is that Islam is concerned with PROCESS, not with OUTCOMES. That is, we are required to WORK for change, to struggle for a good society. We are not responsible to achieve success. The Prophet SAW was tasked with the responsibility of taking the Deen of Islam to all of mankind, but he was told that Guidance was solely in the hands of Allah. Similarly, we are asked to struggle to spread the ways of Islam, but the outcomes of our efforts are solely in the hands of Allah.

How can we work to create change? One effective technique is to replace conventional economics courses with radical replacements, which provide a critique of standard theories, and provide Islamic alternatives. I have developed many courses which provide alternatives to conventional courses on the basis of these principles. Before I discuss the courses, I want to provide some general advice to Muslim students and teachers of economics.

Advice to students: Students frequently become frustrated and unhappy when they learn that they have been taught false theories. It is important that you don’t give up, drop out, abandon study because all economics is based on wrong ideas. Even though economics is all wrong, these ideas are running the world today. We cannot understand what is happening in the world without learning these ideas. To have any chance of creating a viable alternative, we must understand these ideas. So we must study harder, to learn the weapons being used by the enemies.

Advice to teachers: We must teach economics in a DIFFERENT way. Don’t teach it as the TRUTH. Teach it as a theory which is used to make policy decision. Don’t focus on micro-details; how to do the calculations. Instead, understand and teach the CONCEPTS beneath the theories. See through math and technicalities, as discussed earlier. Learn how these theories are used to make policies. Teach students how to DRIVE the car, not how the ENGINE is constructed. Since the Western educational model does not teach these things, you will have to learn them on your own. My courses, described below, will provide a lot of help with them. Become a student, and learn along with your students. Use Fellow Traveller model: we are all learning together, but I am a senior learner, a little bit more experienced than the students. See my lectures on How to Become A Great Teacher for more details.

SOME NEW COURSES: As explained, I have developed alternatives to conventional courses. One of these courses is Advanced Microeconomics I [shortlink: bit.do/az4micro] This starts out by covering the Hill & Myatt: Anti-Textbook on Microeconomics. The purpose is to create a link with conventional micro. The student will learn all of the basic concepts taught in conventional micro, but in a critical fashion. The textbook goes through standard theories of micro – in context of how they are USED in the real world. Explains why the theories are wrong, and why they lead to wrong policies. There is a serious question which emerges – why do wrong theories continue to be taught, even though there is huge amount of evidence against them? The answer has to with how Power shapes Knowledge. Theories which are taught serve the interests of power. Theories like Marxism are rejected and ridiculed, not because they are wrong, but because they are harmful to the rich and the powerful. As I have explained in detail, modern economic theory is really Economic Theory of the Top 1% (ET1%) – it protects the interests of the rich and the powerful, while pretending to be objective and neutral.

This is why Islam help us launch a revolution in Economics. We need to construct a theory of the bottom 90% – ET90% – which protects the interests of the weak and powerless masses, against the rich and wealthy. As a first step, we must learn to see through the deception of conventional economics. We must study conventional theories, not as an apprentice learning the truth, but as an external observer watching a magician to learn the secrets by which he deceives the public – see Thousand Snakes: Image and Reality of Western Economics.

One of the key deceptions is the WRONG model of human behavior: homo economicus. The idea that we are all selfish and greedy, and that this is rational behavior, serves to justify and allow the rich an powerful to do whatever they want. Actually, this concept is contradicted by actual human behavior. This theory is used to justify laissez-faire economics – just let everyone do whatever they want. By the ridiculous theory of the invisible hand, if everyone behaves selfishly, the society will automatically reach the best results. See Game Theory for Humans with Hearts.

The Islamic Perspective on this is that economists have the wrong model of human behavior, and also the wrong model of what makes us happy. We can create a new basis for Micro if we start by differentiating between NEED and WANT (as discussed earlier, and in greater detail in “Scarcity: East and West”). There is enough for everyone’s need, but not enough for everyone’s greed. If we make the objective the fulfillment of NEEDS, discouraging fulfilment of Wants, and encouraging people with excess to give to those who are in need, this is enough to launch a  Revolution in Economics.

I have developed new courses in Microeconomics, which are a compromise between the full ideal Islamic course, and the current neoclassical economics courses. Advanced Microeconomics I is based on using existing alternative approaches. One of these is Behavioral Economics, which studies actual behavior of human beings, instead of the axiomatic behavior which is mathematically predictable. As we have discussed, many development in Islamic Economics can be brought into the picture, to provide genuine alternatives – see Islam’s Gift: An Economy of Spiritual Development. Closely related is Experimental Economics, which engages students in real world experiments, which allows them to see that actual human behavior is very different from what economic theories say. In particular, human beings do not optimize; they use heuristics for decision making. This makes it impossible to calculate outcomes using simple mathematical formula. A solution is provided by the techniques of Agent Based Modelling. This allows us to deal with Heterogeneity (many different types of agents). Instead of mathematically calculating outcomes, we can simulate results on a computer.  This allows us to go beyond the “equilibrium” theories of economics, which belong to nineteenth century physics. Another new development discussed in our new approach to micro is Evolutionary Game Theory. This allows to model change over time, without having any equilibrium in mind.

Advanced Microeconomics II (2018): This course is based on Holt & Davis text on Experimental Economics, it examines conventional micro theories within an experimental framework. By being subjects in experiments and by running experiments themselves students learn the vast differences and contradictions between economic theories and real-world markets. Course provides students with deep intuition about real world economics which is not available by studying formulas as in conventional courses.

Similarly, I have developed pedagogical materials and videotaped lectures on more than TEN courses. These educational materials have a Radical Design, based on Islamic Pedagogical Principles. Testing them on students, we find Radically improved educational outcomes. The principles involve teaching students how to DRIVE, and not technicalities of the Engine manufacture. That is, our courses equip students with real life skills of value in solving real world problems. This is based on the Islamic principle of providing BENEFICIAL knowledge, and of avoiding useless knowledge. In addition, teachers and students should make the intention to use knowledge to serve mankind, out of love of God. For more details about these courses, Lookup ONLINE COURSES on asadzaman.net  In particular, for  Advanced Macroeconomics, see: bit.do/az4macro  This course is based on integrating history with macro – the goal of the course is to study the real world events which led to the development of macro. Students will learn about the Great Depression, the Gold Standard, and its replacement by the Dollar in the Bretton Woods Agreement. Many aspects of the changing and evolving global economic and financial systems are discussed and studies in the new advanced macro course. The point is to enable the student to understand real world macroeconomics issues, rather than mathematical theories based on bizarre assumptions made just to make it possible to do the calculations with pencil and paper.

End of Part 4 of 4. For the earlier parts, see Part 1: How Islam relates to modern economics?, Part 2: Conflicts between Islam and Economics, Part 3: The Shock and Awe Factor. This concludes the four part lecture. May Allah T’aala make it beneficial for the Ummah of Muslimeen, and for humanity as a whole. Ameen.

Shock and Awe: Barrier to Islamic Approach

[bit.do/azai3] Part 3 of talk on “How Islam applies to Modern Economics”, re-recorded in English. Original one hour Urdu talk on Monday 16th Sept at Econ Dept, Karachi University by Dr. Asad Zaman, Ex-VC PIDE. For previous parts, see Part 1 and Part 2. 18m English Video:

1800 Word Summary of Part 3

The challenge we face today is to Re-think economics from GROUND UP. The greatest obstacle in our path is shock-and-awe of the West, and the Western intellectual apparatus. WE must not be scared of conventional economics – its is DESIGNED to shock-and-awe, and prevent us from thinking. We must not be discouraged from this study; Economics is the new religion of mankind, and the driver of policy, thought and action, all over the world. This religion idealizes a society based on individualism and competition, driven by greed and hedonism. As opposed to this, Islamic teachings aim to create a society based on cooperation, generosity, and social responsibility.

Mathematics is used a weapon, to prevent outsiders from criticizing economics. Many top economists have criticized the over-use and abuse of mathematics. For example, Krugman said that “Economists went astray because they mistook beauty of mathematics for truth.” For a detailed discussion, with many quotes and references, see “The Overuse of Mathematics in Economics: Nobel Resistance”. One simple example of absurd mathematical models is the theory of utility maximization, which all economists learn. If I were to say to you the following: “See that old lady purchasing tomatoes? Do you know what she is doing? She has a multivariate utility function. She is now computing the first order partial derivatives with respect to the goods she is planning to purchase. Now, she just put in the budget constraint, and is solving the system of n nonlinear equation. Great! She just learned that she must purchase 3 pounds of tomatoes to maximize her utility!”. Every economics students laughs – but they all took it seriously when it was taught to them in their textbooks. This is how shock-and-awe operates. Completely absurd theories, contradicted by our personal experiences, observations, and thoughts, are accepted on the authority of the West.

In fact, Nobel Laureate economists, who have spent their lives in the profession, also recognize the absurdity of the theories currently dominating economics. For example, Robert Solow remarked that theories of Lucas and Prescott are based on crazy assumptions, and to discuss mathematical details of these theories means that you have accepted these assumptions. Instead, you should just laugh at these theories. See “Quotes Critical of Economics” for a large set of quotations deeply critical of current economic theories. A large amount of recent work shows that complex systems cannot be described via mathematics – the formal symbols are not built to handle real-world complexity. Instead, we must use computer simulations, which can deal with the level of complexity which exists in the real world.

Instead of being deeply impressed by fancy mathematics, we must learn to see through the fancy assumptions and complex Mathematics. The way to do this is to note that all analysis must start with some real world problem, which we can all understand. This problem is then translated into symbols and fancy mathematics, on the basis of simplifying assumptions which are actually quite crazy, if you can understand them. The trick is that no one understands the mathematics, so you can get away with murder. After translation into mathematics, a mathematical solution is produced, and then explained in real world terms. If we realize that all the fancy mathematics is useless, misleading and wrong, then we can see through the deception. Just Look at the Question (understandable) and look at the Answer (also understandable). IGNORE the math which is useless. Instead of the wrong mathematics, look at the MOTIVATIONS which lead to these answers. We illustrate this process by a few examples below.

Economic theory tells us that Price = Marginal Cost in competitive markets. If someone was pricing above marginal cost, than a competitor could sell the product cheaper and make a profit. Instead of the mathematics, look at the world around you. We find that Insulin prices are $300 in USA, and $10 in LDCs Similarly, a vial of life-saving Epinephrine is around $600 in USA, and $1 in Pakistan. The same drugs which sell for $30 in Canada, sell for $300 in USA. Is it possible for price to be marginal cost in such situations. Instead of mathematics, think about WHY this argument is being made. Actually, it is being made to justify the extortionary prices being charged by greedy corporations, which bankrupted millions of households to make profits in the Global Financial crisis. Economic Theory teaches us that firms are Price Takers, but a Survey by Alan Blinder shows that more than 80% of firms SET prices. They are Price Makers. Lots of empirical evidence exists to show that price equals marginal cost theory does not work in the real world. Why do textbooks keep on teaching these theories, which are easily proven false? Because these theories support the rich and the powerful corporations which are actually running the world, behind the cover of democracies.

Consider another basic principle of economic theory. Does Wage = Marginal Product of Labor? Consider all people in Govt Grade BPS 19 – They all receive roughly the same pay – are they all equally productive? Similar categorization occurs in all industries.  CEO pay is now 300 times median worker. This has increased from 30 times since financial deregulation in the 1980s. Productivity of CEOs has not gone up, but their pay has become ten times greater. Similarly, Labor productivity has increased greatly, but real wages have remained stagnant. Why do economists insist that wages equal marginal productivity in face of all this evidence to the contrary? This is because it allows billionaires to say, like Qaroon, that the money I have earned is due to my cleverness – it is justified reward from my productivity, instead of use of power for exploitation of the weak and powerless. Looking at the power structures of a society gives us a deeper understanding of the Marginal Productivity theory compared to the understanding of the mathematics behind the theory.

As a final illustration, let us look at the most fundamental of all economic theories. Is price determined by Supply-Demand? Card & Krueger: Myth & Measurement: Data on Minimum Wage shows that increasing minimum wage leads to increased employment, contradicting the Supply and Demand models. A huge amount of empirical evidence exists to show that supply and demand theory does not work in the labor market. The central argument of Keynes in his General Theory of Employment, Interest, and Money was that real wages were NOT determined by Supply and Demand. A simple evidence and proof of this was that high unemployment persisted for more than ten years – the real wage did not adjust downwards to eliminate excess supply of labor. For more details, see “Understanding Macro: The Great Depression

So, we come back to the core question addressed in this talk: How can Islam help us launch a revolution in Economics? FIRST: We must master conventional economics – not as a body of KNOWLEDGE – but as a (wrong) conceptual framework which is currently used by vast numbers of people to understand the world around us, and to make policies which affect the lives of millions. A key problem with this framework is that it uses completely wrong models of human behavior. Islam provides us with alternatives based on REALISTIC theories of human behavior, from Islamic sources. As we will discuss in part 4 of this talk, correcting fundamental methodological mis-understandings at the heart of Western Social Sciences allows us to launch a complete revolution in Micro-economics, Macro-Economics, Statistics, Mathematics, Econometrics. From being third rate followers, copiers and imitators of the West, we can become world leaders in these fields. More details will be given in the final Part 4 of this talk. Here we provide a brief description of the process by which economic models currently in use are constructed, to debunk their mystery.

APPENDIX (not covered in video/talk): The NATURE of mathematical models in Economics and Econometrics. “To a man with a hammer, everything looks like a nail”.

Everyone, economists included, realizes that the real world is too complex to be described mathematically. A MODEL is built by simplifying the world to make it possible to apply mathematics. What most people do not realize is that the simplification is NOT done on the basis of what describes reality best. Rather the simplification is done on the basis of what mathematics we have available to us – the world is re-shaped to fit calculus, rather than expanding mathematical tools to fit the world. Human behavior is too complex to model, so human beings are replaced by the robots – homo economicus – who behave according to mathematical laws. If we put more than one human being in our model, the formulae become too complex, so DSGE models contain only ONE human being! Completely absurd assumptions are made, because the mathematical calculations can ONLY be done if the world fits these absurd assumptions. Recently, Agent Based Models are becoming more popular. These allow for more complex and diverse forms of human behavior and allow for hundreds of agents within a model. The outcomes cannot be calculated mathematically by hand, but it can be fed into a computer to get simulation results. When we do this, we find that the real economy is drastically different from simplified mathematical models used by economists. There is no surprise that economists and econometrician completely missed the Global Financial Crisis. Their models were too simple to capture the elements which created the crisis. Robert Solow remarked that with only one person in the model, it is not possible for one agent to deceive another, which was the cause of the GFC. What is surprising is that after the crisis, there has been no change in the economics profession. Despite solid evidence that these theories are wrong, they continue to be taught. The established economists have too much to lose by allowing a revolution, so that are preventing all attempts at change. This makes an Islamic approach all the more promising.

RSIA-01 Islamic Approach to Knowledge

This is the 1st & 2nd section of a DRAFT of Chapter 1 of a proposed new textbook on Real Statistics: An Islamic Approach — This Chapter introduces an Islamic Approach to knowledge, and how this differs from the Western approach. I would like to get feedback and comments from readers in order to create a final version of this for textbook. Readers can add comments directly on the SHARED Google Document: ISM01main. Or they can add comments below this post. Note that Hyperlinks connect to additional material which is NOT part of this lecture — if some material from those references should be included here, readers can add remarks to this effect. Also, you can add comments on the 90m You-Tube Video Lecture which corresponds to this chapter:

Sections 1&2 are given below. Sections 3&4 are given in the next post – RSIA01b Value of Knowledge – which also provides links to a shorter Alternative Introductory Video lecture of 42m

Section 1: Introduction

I seek refuge in Allah from the outcast Shaitan, and begin with His Name Allah, who is also Rahman and Rahim:

7:172 When thy Lord drew forth from the Children of Adam – from their loins – their descendants, and made them testify concerning themselves, (saying): “Am I not your Lord (who cherishes and sustains you)?”- They said: “Yea! We do testify!” (This), lest ye should say on the Day of Judgment: “Of this we were never mindful”:

Allah T’aala created all of us, and made us recognize Him as our Lord, prior to sending us to this world. The object of our life on this Earth is to live with full awareness and recognition of our Creator. All useful knowledge is a means to this end. The prophet Mohammad SAW delivered to us the message of Allah, which is both complete and perfect.

5:3 This day have I perfected your religion for you, completed My favour upon you, and have chosen for you Islam as your religion.

According to a prophecy of our Prophet Mohammad s.a.w., the Deen of Islam came as a stranger, and it will become a stranger. Over the past few centuries, Muslims as a whole have moved far from the Deen in their individual and collective lives. The rise to global power of the West has led to spread of many types of ideas and philosophies very much in conflict with the central message of Islam. Central to Western secular thought is the idea that certain realms of knowledge fall outside the scope of religion. Because the West has taken the lead in many realms of knowledge, Muslims have been forced to study, adopt and accept these western ideas. The project of Islamization of knowledge is an attempt to acquire the useful aspects of western advances in knowledge, while removing the harmful secular and atheistic components. This has been difficult to do because many ideas conflicting with Islamic views are buried within foundational assumptions of Western knowledge and not openly stated or discussed. Nonetheless, it is an issue of high priority because how Muslim youth are trained will have a big impact on our future. Current methods of training borrowed from the West are highly unsuitable, for many reasons discussed in “An Islamic Worldview: An Essential Component of an Islamic Education”. At the same time, we cannot afford to bypass or ignore Western contributions to the stock of human knowledge. Finding a suitable way to accomplish both objectives is our goal.

This textbook is part of the project of Islamization of Knowledge. We will study statistics in a way that is in accordance with Islamic teachings. Islamic views on knowledge, as well as the methodology for teaching and learning, differ radically from Western views.  One of the central ideas of Western secular thinking is that knowledge can be compartmentalized – some areas of knowledge (like science, mathematics, etc.) have no relation to religion. We will show that Islam sheds light on all areas of knowledge.  We will show how radically our perspectives on the subject change when the contents are assimilated into a meaningful framework defined by Islam.  These differences will be illustrated concretely in the course of these lectures on introductory statistics for Muslims.

We will start by studying the process of teaching and learning. The prophet Mohammad s.a.w. was sent as a teacher, and Islam has a vast collection of important principles about how to teach and learn. The widely imitated Western approach to education carries no hints of these principles, which are characteristics of an Islamic education. We will only be able to review a few essential elements of these principles in this first lecture.

In this lecture, we will establish that Islam has its own unique approach to knowledge, both for teachers and for students. This approach is radically different from the approach currently being followed in the West, and being blindly imitated in the East. Unfortunately, because Muslims have been content to imitate, this has created an impression that Muslims do not have their own approach. It is essential to counteract this. This is the primary goal of this first lecture.

The Prophet Mohammad S.A.W. was sent as a teacher. He was the best of teachers. Learning the principles of teaching and studying from him leads to the best approaches to teaching and learning. We will distill some principles from these Islamic modes of education and exposit them here.

Section 2:  Knowledge is Among the Greatest Gifts of God.

2:269 He granteth wisdom to whom He pleaseth; and he to whom wisdom is granted receiveth indeed a benefit overflowing; but none will grasp the Message but men of understanding.

The first words of the revelation are powerfully infused with the message of the importance of knowledge:

Q96:1- 5 READ in the name of thy Sustainer, who has- created man out of a germ-cell. Read – for thy Sustainer is the Most Bountiful One who has taught [man] the use of the pen – taught man what he did not know!

Reading & writing are mention thrice in this short passage. Reference is made to the mysteries of creation of man, about which the discoverer of DNA, Francis Crick said:”An honest man, armed with all the knowledge available to us now, could only state that in some sense, the origin of life appears at the moment to be almost a miracle.” – Francis Crick, Nobel Prize winner, “Life Itself: Its Origin and Nature”, 1981 (p. 88)

The bounty of the Lord is mentioned as being teaching man to read and write and giving him knowledge of that which he did not know. This first message is reinforced by many other verses of the Quran and Hadeeth giving central importance to knowledge.

Aboo al-Dardaa said: `Listen. I have heard rasoolullaah sallal-laahu `alayhi wa sallam saying, “Allah ta`aalaa makes the way to jannah easy for one who traverses some distance to seek knowledge. Angels spread their wings under his feet, and all things in the skies and earth (even the fish in the water) ask Allah for his forgiveness. The superiority of a person possessing knowledge over a person doing worship is as the superiority of the moon over the stars. The `ulamaa are the inheritors of rasoolullaah sallal-laahu `alayhi wa sallam. The legacy of the anbiyaa `alayhis-salaam is neither gold nor silver. Their legacy is knowledge. A person who acquires knowledge acquires a great wealth.“‘”

In particular, we must approach knowledge as a means of spiritual advancement, inner transformation, and a means for changing the world around us. It is not a way to earn a living, nor is it “human capital,” a way to increase our value as a means of producing material goods. {see PP1: The First Principle of Pedagogy }

End of Sections 1&2 (with Full Video lecture of 90m); Next Post has Sections 3&4  – RSIA01b Value of Knowledge – which also provides links to a shorter Alternative Introductory Video lecture of 42m

Q & A: Islamic Approach to Statistics

Questions which arose in discussion below are typical of those which arise because of ideas we have absorbed from our Western education. A western education trains us to believe in a theory of knowledge which must be UNLEARNED first, before the ideas that I am presenting start to make sense. I will try to provide some answers to questions which were presented to my by some of the group discussions of “Real Statistics: An Islamic Approach to Knowledge”. This topic was presented and discussed in depth on 9/22/19 at ISOSS: Real Statistics, Islamic Approach — See link for 1hr Urdu Talk and 1hr Q&A session after the talk.

1.       When a teacher will firstly announce that he is going to teach stats for Muslims, the first obstacle he gets in his way is the business of stats with Islam. Why are you mixing a pure scientific approach with a religion?

The way statistics is done currently, it is designed to deceive. The most popular book, which has sold more copies than all other statistics textbooks, is Darrell Huff’s “How to Lie with Statistics”. The so-called pure “scientific” approach pretends to be objective, but actually HIDES many subjective judgments underneath a cover of objectivity. The goal of Islam is to lead us to the TRUTH. This requires UNCOVERING what statistics really does, which is very different from what is taught in textbooks of statistics.  See “The Illusion of Objective Knowledge“, and “Statistics as Rhetoric” for a counter-argument.

2.       Why are we mixing religion with a pure objective scientific knowledge?? Due to this mixture, we have to deny the western knowledge, upon which in reality the whole world is running.

The idea that there is such a thing as “pure objective scientific knowledge” is an illusion. This was first made clear by Thomas Kuhn in “The Structure of Scientific Revolutions“. He showed that scientific progress occurs in a sequence of revolutions. For example, everyone believe in Ptolemy’s theory, and does scientific astronomy under the assumption that Earth is the center of the universe. But then this whole picture of the universe is changed. Similarly, Newtonian Physics is replaced by Einsteinian Physics. It is not that these are one-time exceptional events. Every month, new journals of physics come out which reject previous theories and advance new ones in their place. The laws of physics are based on Intuition and on Social Consensus, not on objective reality. This is because we have to GUESS at the laws, they are not visible in the objective external reality. So, most philosophers of science no longer make the claim that science is purely objective knowledge.

Is it true that the whole world is running on scientific knowledge? The amount of devastation done to the planet by science and technology far exceeds the benefits. If you calculate the costs of the destruction of species, plants, and environments, which took millions of years to produce, destroyed for a measly few million bucks.  The looming environmental catastrophe threatens to make the planet un-inhabitable for human beings. It was science and technology which provided the capability to kill 50 million human beings in the two world wars, wreaking havoc on a scale never before seen in human history. Science and technology distract us from the realities of human existence, which depend on character — honesty, integrity, courage, love – qualities which are not taught in the textbooks. Read my post on “Higher Goals of Education” to see how these lessons have been removed from a Western education.  It is actually corporate greed which led to massive deception in the Global Financial Crisis, wiping out lifetime savings of millions, and leading to the highest level of homelessness and hunger in the USA since World War 2. How could advanced science and technology prevent this from happening.

3.    What is the problem with arithmetic mean? Is it western or is it Islamic? If it is western, and it is wrong? Then why and what is the Islamic replacement? Similar is the case of Islamic unit root and Islamic cointegration??

It all depends on HOW YOU USE the arithmetic mean. This is not taught in statistics textbooks. It is GUARANTEED that if you use ONE NUMBER to represent 1000 numbers (by taking their average) there will be loss of information. One number cannot take the place of one thousand numbers. This is exactly what the arithmetic mean does. So one must look at HOW it is used, to see whether this involves deception or not. This is not typically taught, with the result that it is easy to use the mean to deceive people. The issue is not whether to use mean or median, these are tools. The Islamic approach involves teaching the USE of these concepts in ways that AVOID deceiving people. This requires teaching people HOW to use them correctly. To see how arithmetic means are used to deceive people and to make policies favorable to the rich and powerful, see my post on GNP as Statistical Rhetoric

Unit Roots and Cointegrations are hallucinations imposed upon the data by a set of assumptions which are not satisfied by any data set in the real world. These can ONLY be defined for stationary time series, which means that the series must be generated in the same way FOREVER. No real time series goes on forever, and over long periods of time conditions keep changing so stationarity does not hold. For any real world finite series, you can fit both unit root and non unit root models equally well to them; this is a mathematical theorem. So that it is possible to “Get Any Result You Want From a Unit Root Test” – this was the title of an M.Phil. Thesis written by my student Abdul Ghaffar Shah. This is the kind of deception created by standard theoretical statistical method, which pay no attention to how they can be used. For a deeper understanding of why conventional econometrics is a fraud, because it makes assumptions which never hold true in real world applications, see my post and lecture on “A Realist Approach to Econometrics“.

4.       If  arithmetic mean is wrong, then their replacement are median and mode, which are again the fruits of western knowledge.

It is question of learning how to USE statistics for solution of real world problems in way that is truthful and honest, and beneficial for mankind. Cigarette companies used statistical consultants to manipulate data to show that cigarettes did not cause cancer, causing deaths of millions. Similarly, drug companies today use fabricated statistics to sell huge numbers of fake, useless, and harmful drugs today in the West. The idea the we can do OBJECTIVE statistical analysis looking only at the numbers, while somebody else uses our analysis to solve real world problems is wrong. We cannot separate the theory from the practice. This is the MAIN problem with statistics as it is currently taught. You are taught how to calculate mean, median, and mode of a series of numbers. You are never taught how this is ACTUALLY used in solving real world problems. When we start studying real world problems, we discover that most of the things we learned in statistics do not apply.See “My Journey from Theory to Reality” which explains how statistical theories are based on assumptions which are almost always wrong when applied to real world data sets. As a result, they create misleading results. For a deeper discussion of how an Islamic approach leads to a methodology for doing statistics which is very different from the current conventional methodology, see my post on “Real Statistics (4/4) The Illusion of Objectivity“.

5.       I just want to understand that by rejecting knowledge of science and technology as to how we can live life in this modern era because even I am writing this text using western knowledge as they developed computer science and softwares like WhatsApp etc.

The problem is that shock-and-awe of West is so great that questioning any part of Western knowledge appears shocking. Surely we should be able to use our OWN judgment about what is good and what is bad, and how to use Western technologies. All of the useful things that have been developed have their costs and benefits. We should learn to examine them, instead of uncritically accepting everything, just because it is from the advanced and developed West, while we are backwards and under-developed — this too is an illusion created by Western education. See “Deep Seated Inferiority Complex.” What I have said is the we need to change our approach to education. I did not call for abandoning the use of computers.

6.       How an Islamic approach to education differs radically from the Western approach? Is the difference in purpose? Is the difference in material?

Do the lessons in the first module: Principles of an Islamic Education to find out. There is a difference in purpose — we want to use education to learn how to become human beings, whereas a western education is designed to turn us into human resources. See my talk at Iqra University on “How to become a Human Being, instead of a human resource“. Because the purpose is different, the material also becomes different. In particular, we have to start by defining our GOAL in life. Then we have to evaluate knowledge to see if it will help us to achieve that goal — in which case it is useful knowledge. If the knowledge we acquire will turn us into machines for making money, without having emotions about all the destruction that we are causing in the lives of people (see the movie TIGERS about how Nestle sells baby milk powder while knowing it will kill millions of babies), then this knowledge is harmful knowledge. To understand this better, see my post on “Learn Who You Are!“. 

FINALLY – for an in depth study of how an Islamic approach creates a revolution in the entire approach to education, register for a free online learning module on Principles of Islamic Education, by filling out Google form “Registration: PIE“. If you go through the lessons given there, you will achieve much better understanding of these issues. The answers given above only scratch the surface.

Real Statistics (4/4) Illusion of Objectivity

[bit.ly/AZrsf4] 4th of a 4-Part Lecture about an online course: Real Statistics: An Islamic Approach.  The course is free, open enrollment, and allows student to go through a sequence of lessons at their own pace. To register for the first module of this course, on general principles of an Islamic education, fill in the form: Registration: PIE. Previous three parts of this lecture were: Part I – Fundamental of an Islamic Approach  Part II: Teaching Statistics as an Act of Worship Part III: Statistics as Rhetoric . This is the final Part IV: How Subjective Comparisons are made to Appear Objective . The original talk at Univ of Baluchistan was in urdu. The four parts of the urdu talk are available on YouTube via the following links: RSIA (1/4) Islamic Fundamentals, RSIA (2/4) Teaching as Worship, RSIA (3/4) Statistics as Rhetoric, RSIA (4/4) Illusion of Objectivity.   The 18min English Video Lecture is linked below:

Comparing Two Numbers – (3000 Word Summary)

Continue reading

Real Statistics (2/4) Teaching Statistics as an Act of Worship

[bit.ly/AZrsf2] This is the second part of my talk at University of Baluchistan on Mon, 22 July 2019 (Link to Part 2 of Original Urdu Talk at UoB). The talk is about my online course, scheduled to start on Sat 27th July 2109, on Real Statistics: An Islamic Approach (RSIA). To register for the free online course, follow link in the first paragraph of “Connecting Statistics to Reality.  The first part of the talk laid out The Fundamentals for An Islamic Approach [bit.ly/AZrsf1]. This second part deals with the question of “How to teach statistics as an act of worship?”. The 15m video (re-recorded in English) is followed by a brief summary of main points in 1700 words.

In order to convert our study of Statistics into an act of worship, the first step must be to purify our intentions. The worth of all actions depends on intentions! Living in a market society teaches us all to make pursuit of wealth the goal of our lives. Students study statistics with the intention to pass the course, get good grades, get degree, get job, make money. We must ask them to make higher intentions, to create an act of worship! When we change the goals of life from making money to higher goals, this leads to  changes in our ways of living, thinking, and acting. This places a tremendous responsibility on the teacher of an Islamic course. He or she must work against the dominant philosophies, which teach students materialism, hedonism, and that they are human resources, commodities for sale in the labor market. If we can persuade them to learn “how to become human beings, instead of human resources”, that will change their lives, and the lives of those whom they touch.

An Islamic approach asks the teacher to reach the hearts of students, and to transform their lives, by encouraging them to set high goals, and reach beyond the stars. For this purpose, the teacher must recognize the hidden potentials of all students. He must look through their current stage of ignorance, to the tremendous potentials within them, which makes them the most valuable of the creations of God. The teacher must make the intention to provide them with ONLY useful knowledge, which enters their hearts and transforms their lives. He must protect them from useless and harmful knowledge. But how can the teacher do this, when he/she has been trained in Western fashion, and does not know the difference between useful and useless knowledge? When he/she has been trained in an intellectual tradition which reaches only heads, and is never addressed to the hearts?

For this purpose, the teacher must become a student, a seeker of knowledge. All knowledge belongs to Allah T’aala alone, and He grants portions of it to whomsoever He desires. As teachers, we mujst make the intention to become lifelong LEARNERS, to seek knowledge from cradle to grave. We must pursue useful knowledge with struggle and sacrifice. As we struggle to ensure that we are providing beneficial knowledge, Allah T’aala will clarify the pathways that we need to follow to achieve this high goal.

An Islamic approach to education must start with a discussion of the PURPOSE OF LIFE! Why are we here? What should we do with our unique and precious few moment on this Earth? This is the MOST important question we all face. I have addressed this at length in several posts on this blog. Most importantly, eee my essay on “Learn Who You Are!”. Very briefly, we must debunk the myth that we are commodities for sale in the labor market. This task is easy because our hearts have been created with this knowledge. We must teach our students that “You can be whatever you want to be! So aim high”. The role of the TEACHER is crucial in recognizing the potential of the student. People are like mines, and the valuable treasures are hidden inside, and can only be accessed by effort and struggle. See “The Ways of the Eagles” to see how we have been deceived into aiming low, whereas we have been born with the capabilities of soaring high in the skies. It is only after we set our goals for life that it is possible to see how learning statistics would fit into our life plans.

To convert our study of statistics into an act of worship, we should change the Purpose for our studies. Let us all (teacher and students) make the intention that we will use the knowledge we acquire to serve the creation of God, for the LOVE of God. This puts a HEAVY Responsibility on the teacher. We must provide our students with USEFUL knowledge, which helps change our lives, and brings benefit to other. This is not easy to do, because Western textbooks do not contain such knowledge, because they differentiate between theory and application. The textbooks teach statistical theory and leave application for the field experts. One of the several meanings of “Real” Statistics is that we must reject the theoretical/applied split, and consider theory together with real world applications. When we teach theories, teachers must learn how these theories are applied, and teach students theories in context of applications.

For this purpose, it will be essential to use the Fellow Traveler model of education. This differs from the expert teacher, which is also the Peer-Murshid model, where someone who knows teaches those who are ignorant. Instead, the teacher and the students engage is a cooperative effort to learn together. The teacher is more experienced and hence acts as a guide and a leader of the group effort. The type of knowledge we seek will be created in the process of the struggle to create applications to the real world of the theories we study.

It is in the context of the fellow traveler model that we can include Non-Muslims. The teacher is not IMPOSING any particular values on the students. Instead, we make the intention use knowledge to to serve humanity, and we work together to find out the ways in which this can be done.

When we ask students to change their intentions and aim high, there is a natural fear of the unknown. If we abandon the goal of earning money, we might starve! The Quran says that the Shaitan scares you with poverty (and prevents you from setting high goals for yourself). To counteract this fear, we should explain the value & effect of Islamic Knowledge. We note that teachings of Islam led ignorant and backwards Arabs to world leadership. These teachings launched a civilization which enlightened the world for a thousand years. Today, the world is once again enveloped in ignorance and darkness, and these teachings have the same power.

The primary impact of Islamic teachings is on our own selves. These teachings allow us to purify our hearts, which are the most important of the cognitive instruments we have been given. Our hearts have the ability to recognize Truth, and to know God. By utilizing the teachings of Islam, we can achieve spiritual transformation, and bring to fruition the capabilities for excellence which we are all born with. The struggle to achieve inner transformation is aided by the process of the external struggle to change the world for the better, by inviting to the Good. It is the internal revolution within ourselves that leads to the external revolution in the world around us.

Just as what Islam calls knowledge is radically different from the Western concept, so the rules for acquisition of knowledge are radically different. In particular, we must teach our students to seek knowledge with humility. Knowledge belongs only to Allah, and He gives fragments of this knowledge to whomsoever he wishes. Allah T’aala has asked us to seek knowledge, as this is the greatest of treasures. In seeking knowledge, our goal should not be status, or pride, or to make arguments. Because knowledge is a gift of Allah, we do not earn it by our merit or our struggle, but only by the pleasure of Allah. This means that we cannot take pride in it. We must seek knowledge with effort and sacrifice, understanding that it is a great treasure of Allah. Allah T’aala promises that He will give guidance to those who struggle in His path.

To create an act of worship, and to compete for doing the best of deeds, we must purify our intentions. We must follow the orders of Allah, and we must follow the patterns of our Prophet SAW. Allah T’aala informs our Prophet SAW that (4:113)  God has bestowed upon thee from on high this divine writ and [given thee] wisdom, and has imparted unto thee the knowledge of what thou didst not know. And God’s favour upon thee is tremendous indeed. We must be grateful to Allah T’aala for granting us the treasures of knowledge that we possess, knowing this to be far greater than is justified by our merits and efforts. When we give thanks for what we have, Allah T’aala will increase our gifts.

One of the most important acts of gratitude is to ACT on Knowledge which we have received. It is narrated by Jabir R.A. that the Prophet S.A.W. stated that Knowledge is of two kinds. One which enters the hearts, and that is the useful knowledge. The other is only on the tongue (without action or sincerety) and that is argument of Allah against the son of Adam A.S. We must seek to translate our knowledge into action. This requires joint efforts on part of the teacher and student, and is outside the scope to traditional Western methodologies of education. For example, if we study poverty, then we should take action on what we see around us, using whatever knowledge we have been given in this regard. Similarly, we should look for statistics in areas where actions are required, and which can guide us towards informed actions. This will always require going beyond traditional Western textbooks, which separate theory from practice.

Whereas theoretical knowledge generates boredom and lack of interest, real knowledge is exciting because it creates changes within us, and in the world around us. This leads to eagerness & enthusiasm to Learn. It is narrated by Abu-Saeed Khudri R.A. the the Prophet S.A.W. stated that: the Believer is never sated (with learning of knowledge). He keeps listening and learning (until death) until he enters Paradise.

This is the end of part 2 of the lecture, which deals with specific details of Islamic approach to teaching and learning.

Links to Relevant Materials

How to Inspire and Motivate Students: Shortlink: bit.do/azhims

Reaching Beyond the Stars Shortlink: bit.do/azrbs

The Ways of the Eagles Shortlink: bit.do/azwoe

Principles of An Islamic Education – This provides a detailed discussion of the issues discussed very briefly in the post. The post links to a full length essay on this topic in English, and also a translation in Urdu. Shortlink: bit.do/azpie

Connecting Statistics to Reality

[bit.do/azcsr] An online course entitled Real Statistics: An Islamic Approach (RSIA)- was launched on Saturday 27th July 2019. 200+ students registered for the course, which has now started. To accommodate the excess demand, I have converted the course to a self paced open enrollment course. Students can start at any time, and work through the lessons at their own pace. To register for the first module of the course (on Principles of an Islamic Education), signup on form: Registration: PIE. The 26m Video lecture below provides the motivational ideas which went into the construction of the online course. Additional relevant materials are listed in the Postscript.

Real Statistics: An Islamic Approach – (1300 Word Summary). Continue reading

The Forest and Tree Principle

In a previous post, “My Journey from Theory to Reality“, I explained how converting my ‘worldly’ profession of teaching economics to an act of worship required working on intentions: (both mine and the students). I made the intention to study “useful” knowledge, in order to provide service to the creation of God, for the sake of the love of God. I also asked my students to make the same intention.

Our Prophet Mohammad SAW made dua for beneficial knowledge, and also made dua for protection from useless knowledge. This distinction does not exist in Western epistemology. In fact, there is an explicit argument made that there is no such distinction. Apparently useless knowledge we acquire today (for example about how bats navigate without eyes) may become useful tomorrow (as in the discovery of the sonar). It is clear that Islam does make a distinction, and so  it became necessary for me to make the effort to find out the nature of “useful” knowledge. At the outset, I defined the term solely in terms of the ability to use this knowledge in order to solve some real world problem. Later, I learned much more about ‘useful’ knowledge. In this post, I will describe some basic and elementary facts that became clear to me in my search for useful knowledge to teach my students.

My first introduction to the huge gap between theory and practice came when I wrote my first book: “Statistical Foundations for Econometric Techniques“. When I submitted the first draft to Academic Press in 1990, one of the reviewers wrote that the author is an expert on theory, but has no grasp of real world problems. The theory of knowledge that we had absorbed in Graduate School taught us that applications were trivial. We took our theoretical models, and plugged in real data sets to get the results. So I was irritated by this criticism; I decided to add one real world application to each chapter of my book. To my great surprise, this process took six years, delaying the publication of the book to 1996! I ran into great difficulties when I tried to find serious and realistic applications of the theory I was describing in the book. It was not a matter of just plugging in data and producing results. Most data did not fit the assumptions made in our theoretical models.  Eventually, I did manage to add a lot of realistic examples, almost one per chapter as I had decided. But in the process I learned a lot about the gap between theory and practice in Econometrics. I could find real examples only by choosing the very few realistic problems which provided a rough match to the theoretical assumptions. I learned that the vast majority of complex real world problems did not fit the simplified assumptions we used to set up our theoretical models.

As one example, Chapter 5 of my textbook was an introduction to robust regression techniques. When I surveyed the literature, I found more than 25 different techniques had been suggested in the theoretical literature. This was too many to cover in one chapter.  While trying to decide what to cover, I decided to look at techniques which had actually been applied to the analysis of real world data sets. That immediately reduced the number under consideration to only 5 or so, which was possible to cover. This was just one among many examples which showed me the great divide between theory and practice. Theoreticians would happily work out solutions to problems which never occur in practice, making assumptions which lead to nice mathematical solutions. In contrast, real world problems would have structures which were too complex to express in elegant mathematical forms, and hence were never dealt with by the theoreticians.

The simple idea of converting the theoretical knowledge that I had been taught, into practical ideas which were relevant to solution of real world problems, made my life an exciting process of continuous discovery — every abstract theoretical idea acquired new life when it was translated into the context of a real world application. Many theories and skills that I had been taught died a natural death — I learned that they could not be applied. For example, I discovered that the mathematical theorems and proofs that I had spent years learning had no practical real world applications. The few theories that could be applied acquired new meanings, depth, and complexity, when viewed in the light of real world applications. This led me to what I have called the ‘forest and tree’ principle. The forest is a theory about how a collection of trees can be grouped together — this collectivity exists in minds, and is subjective. At the same time, the trees are out there, and an objective part of external reality. Understanding the world requires simultaneous work on the theories which organized the complex external reality into simple patterns (the forest) , and on the objects (trees) which have been collected into a pattern by ignoring a huge amount of details regarding the particulars (like size, type, distances from other trees, age, etc.). The forest and tree principle involves looking together at the forest and trees: the general and abstract theories, and the particular and special trees. I found this principle of great importance in developing “useful knowledge”.

The Forest and Tree principle: Any abstract theory, philosophy, or concept, can only be understood in context of its application to a particular, specialized, concrete, and unique real world problem. The converse is also true: we cannot understand particular, special, and unique real world problems without the help of abstract theories.

We all learn Western epistemology (theory of knowledge), not because we take courses in philosophy, but by on-the-job training that an apprentice receives. The courses we take in chemistry, biology, physics, mathematics, history, economics, etc. etc. etc. define for us the nature of knowledge — knowledge is what we learn in our courses. Because it is never mentioned, we are taught that learning how to live, discovering the purpose of life, learning codes of conduct for our personal, family, and social lives — these are NOT part of knowledge. As I understood much later, real knowledge is about learning how to realize the potential for excellence that all human beings are born with. Knowledge of our internal world, which is required for this, is not part of the Western syllabus, but plays a central role in the teachings of Islam. The Forest and Tree principle applies to the knowledge of the external world, which is the sole focus of Western knowledge.  But even when it comes to the study of the external world, Western theories of knowledge are seriously mistaken. This is especially surprising in view of the tremendous success these theories have achieved in terms of technological and scientific progress. The errors arise from the effort to prove that scientific theories are objective facts about external realities, when in fact they are subjective ways of organizing collections of facts into meaningful patterns. To understand this, it is useful to think more deeply about the forest and the trees.

Even though there is an external reality which is objective, out-there, and same for all, our only access to this reality is through our subjective senses. When we call an object in the external reality a “tree” – we have already added a lot of subjective information to the external reality. We have ignored a huge amount of information — how many branches, leaves, colors, wood density, age, molecular composition, roots, etc. etc. — in arriving at this classification. Philosophers of science have realized that observations are theory-laden. The tree is not an external reality out there; it is a product of our classification system which says that many details about the external Tree-object can be ignored, while certain special aspects must be taken into account. If we really took all details into account, then every tree would be a particular unique type of object which would have no other similar objects elsewhere. A fact of the type: there is an object O, at time T, which has characteristics C1, C2, …  is not very useful because we cannot use it to say anything about the world in general. In order to learn from observations, it is NECESSARY to introduce THEORIES – These theories tell us what facts should be considered as important, and which ones can be ignored. It is after ignoring particular details of the tree, that we can create a collection of trees which share similarities, and are located in the same place. Thus the FOREST is a subjective meta-theory – it is theory which is built on top of our theories regarding what a tree is.

In general, whenever we collect an objective set of observations about the external reality, it is necessary to find some patterns in them, in order to learn something more about the real world. If we have a collection of facts F1, F2, F3, … these facts tell us nothing more than what they are themselves, UNLESS we construct a theory based on these facts. The theory is what allows us to LEARN from the facts, but the theory is ALWAYS subjective — it is based on our own judgments about how to organize the trees into a forest.

One very important implication of this way of understanding the world is that we DO NOT LEARN from EXPERIENCE. Experience is just a collection of facts that we observe in the process of engaging with the world. Learning comes from applying a THEORY to organize this experience. To give a very simple example, consider someone who struggles to achieve some goal, and fails 100 times. What can he learn from this experience? He may apply the theory that the goal is too difficult, that his capabilities are too limited, or some other similar lesson, which says that he should give up. Alternatively, he could apply the theory that his failure represents incomplete effort and insufficient experience, and therefore he should try harder, and learn more, in order to succeed. It is interesting that both theories can prove themselves by further experience. The one who gives up will say that yes, my theory is correct, and a 100 examples prove it. I have no need of further experimentation to prove my theory. The one who keeps trying may experience success on the 150th trial, can also conclude that his theory was correct. Identical people with identical experiences may apply different theories and learn different things from the same experience.

Let me summarize the key lessons of the forest and trees. Theories about the external world are based on collections of facts, but always involve subjective elements — theories are patterns in our mind which have some reflections in external realities as well. All facts are also theory-laden, which means that arriving at a “fact” always involves discarding large amounts of information as being irrelevant, and focusing on some small set of observables as being relevant — this classification is based on our theories about what matters and what does not matter. It is our higher level theories — like the forest — which determine how we define a tree (so as to fit into a collection of trees). So what we observe in the real world is based on the theories we use to look at the world. This is how our theories like “forest” can only be understood by looking at external realities represented by the “tree”. But also, the external reality can only be understood by applying theories which allow us to abstract from the particular and unique features, and put our experience in terms which can be shared across individuals because of the commonalities.

POSTSCRIPT: For a list of relevant posts to the project of creating new foundations for the study of statistics (and all subjects) see “Connecting Statistics to Reality“. Also, I recently saw a quote from Kant, which very succinctly summarized the essence of the Forest and Tree Principle: “Thoughts without content are empty, intuitions without concepts are blind. The understanding can intuit nothing, the senses can think nothing. Only through their unison can knowledge arise.” One must combine sense data (we see the tree) with the thought (forest) to create knowledge.

My Journey from Theory to Reality

[bit.ly/2K5WMIA] I have now created a new website to use for the “final” version of a course on “Real Statistics: An Islamic Approach.” I have been working on this course for more than ten years. The journey started when, inspired by Tableegh, I started thinking about how to turn all of my life into worship, as required by the Quran (51:56) “And I did not create the jinn and mankind except to worship Me.” As a professor, a large part of my life consisted of teaching. At the time, I also believed in the myth of “secular knowledge” — statistics is just objective facts about numbers, and as such, it would be same subject whether approached from Islamic perspective or from Western. The laws of gravity are the same in the East and the West. As I progressed in the journey, I learned that this was not so — the subject matter itself changed, when approached from an Islamic angle. However, this was not clear to me at the start.

But it was clear that an Islamic approach did make a difference. An act of worship must be done with the intention to serve Allah. If I teach statistics in order to earn money to feed my family, this may be permissible, but it is a secondary level, a worship after other worships. Furthermore, for people who are sufficiently well off, this may not be permissible. Furthermore, there are some restrictions on buying and selling education. It seemed better to target for a higher intention, where these doubts would not arise. I made the intention to provide USEFUL knowledge to my students, and also to ask my students to USE this knowledge to provide SERVICE to the Creation of Allah, for the sake of the LOVE of Allah. This involves two changes from the standard approach to teaching, one for the student and one for the teacher:

  1. As a Teacher, I am committed to providing USEFUL knowledge, instead of covering whatever is written in the textbook. I wanted to go from the theory to the application, to show how the material covered is used to solve real world problems. I found that typical textbooks were useless for this purpose. They covered concepts in a purely theoretical way. Real data was often used, but it was always for SHOW – it created an IMPRESSION that these techniques can be used on real data sets, but there was no actual problem which occurs in the real world, which could be solved by these techniques. The UNIQUE textbook that I found which did actually cover real world problems was “Statistics” by David Freedman. This books starts with a discussion of real world problems, and every technique discussed is illustrated in context of real world use of statistics. I immediately adopted this textbook for use in my teaching of statistics, as being clearly useful knowledge. Even though I had Ph.D. level training in statistics, I found this book very hard to read — even though it covers very basic concepts. The reason is that the theoretical training we receive in statistics does not prepare us to solve real world problems.
  2. For Students, I asked them to change the intentions with which they were sitting in my course. Typically, the students assume that the subject being taught is of zero relevance to the real world (as in fact most social science subjects taught in universities are). They are sitting with the intention to acquire enough knowledge to pass the exams for the course. When you try to teach them something difficult, they immediately ask if it will come on the exam, so that it would be worth making the effort to try to understand. Passing the exam is required for the degree, and the degree is required for the job, and the job is required for money. Making money is the goal of life. I asked the students to change their intentions. I told them that statistics is routinely used to deceive people (see “How to Lie With Statistics”), and Economic Hit-Men use statistics to deceive nations into following wrong policies. I committed myself to working hard to ensure that they received knowledge which would be more than just bookish and theoretical, and would actually have application to real world problems. In turn, they should commit to making a real effort to understand and learn what I teach, and to use it to create a better world, to serve mankind, for the sake of the love of God.

With this change in intention on part of the teacher and the student, both can be considered to be performing an act of worship in the process of studying statistics. Of course, it can be argued that earning money is also an act of worship (under suitable restrictions) so that the standard methods of teaching and studying would also qualify as acts of worship. Without going into controversial discussion, note that Quran (67:2)”[He] who created death and life to test you [as to] which of you is best in deed – and He is the Exalted in Might, the Forgiving“. We are not here to do what may or may not be permissible — this is a competition to see who can do the BEST deed. It should be clear that an intention to use knowledge to serve humanity, for the love of Allah, makes studying much closer to a best deed, compared to the intention to get a degree and earn money for personal benefits, regardless of whether or not this is permissible.

At the start of my journey to convert my teaching to a form of worship, I did not expect that there would be changes in the subject itself. I expected to make myself and student ‘responsible’ users of knowledge. They should not learn how to build atom bombs, and then claim that they have no responsibility for how it is used. A statistical consultant who studies how to raise taxes should have awareness of whether or not this is in the public interest. However, much to my surprise, I found that the subject matter itself changed, as I struggled to make it useful to students. In the two commitments to convert study and teaching into worship, I was trying to live up to my commitment to ensure that the topics I were teaching were actually useful. Working on making the subject useful led to a lot of surprises for me. The standard approach to education which had been given to me was ‘analytical’ — acquire small pieces of knowledge A,B,C, …. and then put them all together to arrive at the big picture. I discovered, to my bitter experience, that all the small pieces I had been taught did NOT add to a bigger picture — they just remained small pieces. See “Recovering from a Western Education“.

Instead of teaching techniques T, R, S, separately and asking the student to put them all together to solve real world problems, I wanted to combine theory and application by showing students how techniques are used in the real world. Of course, the standard objection to this approach is that each technique is not applicable by itself — rather, it is a whole package of techniques which are used together to solve a problem. To resolve this problem, I decided to do ‘reverse engineering’. Start with a real world problem, and introduce whatever techniques are required for its solution in the process of finding the solution. This will have the advantage of keeping students motivated, because we will work together on solving real world problems which actually matter. This methodology will also show how techniques are used in real world contexts, ensuring that these techniques are indeed “useful” knowledge. I decided to follow this INVERSION principle in teaching. Instead of teaching techniques T,R,S, … and hoping that in some later course, someone else would put them together in order to solve real world problems, I would devote the course to the solution of problems P1, P2, P3. I would pick the simplest possible real world problems. I would ONLY teach techniques which were ACTUALLY useful in solving these real world problems. At the end of the course, the students would actually have knowledge of how to solve at least a few real world problems.

This INVERSION methodology goes against the separation of theory and practice which is often done in Western education. By studying how to solve real world problems, we guarantee that knowledge being given is useful. We also study theory ONLY in the context of how the theory is used to solve real world problems. We DO NOT study theory in isolation, separated from how the theory is used in the the real world. Doing this created a dramatic change in the topics that I started to teach. My original training was heavily mathematical. A Bachelors in Math and more advanced training created within me an extreme admiration for the beautiful, elegant, and complex proofs, that we learned for deep and difficult theorems of mathematics. To my mind, this was the highest form of learning. As I started studying about how I could use my knowledge about how to prove theorems to solve real world problems, I was extremely disappointed. I could not find a SINGLE real world problem where my abilities to prove mathematical theorems would be helpful in finding a solution. Very gradually, hesitantly, and reluctantly, I reversed my position about the value of learning proofs of mathematical theorems. I started expressing this insight in terms of the metaphor of the car engine and the driver. An excellent car driver need not know anything about the car engine. Conversely, an excellent mechanic who knows everything about radiators, spark plugs, and cylinders, may be very poor as a car driver. What mattered for practical purposes, for most people, was learning how to drive. Our education — in terms of proofs of mathematics, was training us to open up the engine and analyze all the parts — but DID NOT TEACH us about driving the car. Learning how to drive the car — that is learning how to solve real world problems — was VERY DIFFERENT from the process of learning how to put the engine together, and learning about how the different parts of the engine function.

I started teaching students how to solve real world problems, and teach them ONLY those parts of theory which they needed to solve them. In this process, I learned (much to my surprise) that HUGE portions of the theory that I had learnt were completely useless. The blinders fell from my eyes when I realized that the beautiful Gauss-Markoff Theorem, which is at the center of every basic econometrics course, is completely useless. This theorem shows that OLS, the most important regression estimator used, is BLUE – Best Linear Unbiased Estimator. However, this property has no relevance to whether or not we should use it in practice. The student who knows this theorem is no different from the one who does not know it, when it comes to practical applications. Instead of teaching students the theory of regression models, I did ‘reverse engineering’. I would start by taking data and running a regression, and my goal in the Econometrics course was to ensure that the students would understand all the numbers that are written on the regression printout. During the process of teaching in this way, I came to realize the UNDERSTANDING concepts was VERY DIFFERENT from actually learning how to carry out computations, or doing theorems and proofs. I started explaining in an intuitive way the MEANING of the concepts being studied, rather than explaining the technical details. For example, the calculation of the OLS estimates involves forming the matrix X’X, inverting this matrix, and multiplying by X’y. However, students can understand the meaning of the OLS estimates without knowing any linear algebra, or even anything about matrices.

This insight — heavy mathematical training is not needed to learn how to drive — allowed me to launch the first Ph.D. program in Econometrics in Pakistan. I was encouraged to do this by the HEC Launch of the Indigenous Ph.D. Fellowships, which allowed me to take students for this program without worrying about financing them. I realized that it was possible to teach students to DO econometrics, without learning years of heavy mathematical theory, in the way that I had been taught. This program proved to be very successful. It produced students who were able to write research papers at world-class levels, contrary to my initial expectations. I was also able to create a radically different course in research methodology, which focused on having students define a real world research problem, and then doing whatever research was required to find solutions to this problem. This methodology created a stream of M. Phil. and Ph. D. students at IIIE, IIUI, whereas previously research had been at a standstill.

Sometime during this process of switching from teaching theory to teaching how to solve real world problems, I came across the “Statistics” textbook of David Freedman. This textbook actually implemented exactly this idea that I had come to believe in — do statistics in context of solving real world problems. One amazing characteristic of this textbook is that it has no mathematical formulae – ZERO. Freedman explained that students use formulae as crutches to prevent them from thinking. So he explains all concepts in words only, exactly the same insight that I had learnt on my own. Formulas teach you techniques for calculation. We don’t need these techniques — leave them to the computer. We need to UNDERSTAND what these calculations mean. That is a VERY DIFFERENT process. I got involved in an email correspondence with David Freedman, who had very similar experience to mine. He had started out as a very heavily mathematically oriented researchers. His early papers are all very heavy mathematically. Later, when he got involved in doing some testimony in real world court cases, he realized that all of the theory he had learnt was useless in the real world. This is because the assumptions we make in theory are almost always false in the real world. Then he had to learn how to do real world statistics, exactly as I have had to do. Since most fancy assumptions we make in statistics and econometrics are wrong, we need to learn how to do simple and basic inferences, which actually makes life much easier for students of the subject — we need to teach them basic and intuitive things, not complex models and math.

David Freedman died in 2008. Around this time, some of my students in Turkey were trying to launch a new International Journal in Econometric. I had asked David for an article for our first issue. He had written a draft, and it had been circulated for comments to other leading econometricians. The first issue of the journal, International Econometric Review, Vol 1, No 1, April 2009 contains my short memorial note for David Freedman, which describes his intellectual journey. It contains his article on “The Limits of Econometrics”, which explains how the assumptions we make for running regression models are almost always wrong in real world applications. Then it contains comments by famous authors Arnold Zellner and Richard Berk, on the problems created by Freedman’s approach, and how we could do realistic econometrics.

The proposed course on Real Statistics: An Islamic Approach is a continuation of efforts to teach students USEFUL knowledge, as required by Islam. In the process of trying to do so, I have made very unexpected discoveries. I have learned that the problems created by splitting Theory and Practice are not a small and isolated set of problems which do not affect most of Western knowledge. In fact, three divisions which are made in Western education are extremely harmful for students, because they prevent understanding. One division, between theory and practice, has already been discussed. Because of this division, a HUGE amount of useless theory, which has NO POSSIBLE application to real world problems, is developed. One example is the entire theory of Unit Roots, which is completely useless from the perspective of solving real problems we face in the real world. Another division is of the Head and the Heart – see my personal experiences with this in “The Great Divide: Head and Heart“. A Western education places enormous emphasis on ‘reasoning’ and very little on intuition. But our learning proceeds from the heart, which can feel and sense truths, rather than our head, which has limited abilities to reason. So explaining concepts, as I learned to do, requires appealing to the hearts of the students. The third major divide has been recognized as a serious problem by many academics, and has been named “the Fragmentation of Knowledge.” Everyone knows a in great detail about very small piece of the picture — which is his own speciality. No one has any idea of the big picture. The theoretician does not know about the practice, and the practitioner does not know the theory. When I got my Ph.D. in Economics, I had deep knowledge of a very specialized area of econometrics (Bayesian and Decision Theory), but only superficial knowledge of many other areas of econometrics (for example Time Series, Simultaneous Equations, and other areas). What is much more important, I did not know what role econometrics plays in the area of economics as a whole — how does it contribute to the advancement of human knowledge? Even more, I did not know the significance of the study of economics, within the entirety of human knowledge. 

Over the twenty years that I have been pursuing an Islamic approach — focusing on the production of USEFUL knowledge, I have managed to heal all three of these divides. This happens naturally, when you focus on solution of real world problems. You automatically need to combine information coming from many different specialization areas. You need to use reasoning and also intuition. You also need to use both theory and its applications to the real world experiences. This leads to substantial changes in the subject matter itself. I have applied this approach with great success to Econometrics, Statistics, Microeconomics, Macroeconomics, Experimental Economics, and even Mathematics itself. I am in process of creating textbooks and teaching materials in all of these areas. Because my work is most advanced in the area of Statistics, I am working on putting it all together in a new course on Real Statistics: An Islamic Approach. There is a large amount of pre-existing material – lectures, texts, exercises, references – that I have created over the past decade on working on this course. However, as I progress, I keep learning new things, and this time I want to put together a polished new version of this course for public use. My primary target audience is teachers of statistics — I  would like to persuade them to use this new approach to teach statistics. Those who would like to follow my progress as I construct a new website on a lecture by lecture basis gradually are encourged to fill in the following Registration form. I will use emails to notify them when I complete a new lecture, and also invite feedback on what is there, so that we can build it up with clarity and consensus. 

To register for the first module, on general principles of an Islamic Education, fill in Google Form: Registration PIE. The course is free, online, and students can work at their own pace, going through a sequence of lessons which will be provided to them.

POSTSCRIPT: Previous posts about this course are:

  1. Real Statistics: An Islamic Approach — provides a draft introduction, which explains how European history led them to reject the unseen and focus on the observable and the quantifiable. Methodology of modern statistics suffers from this defect of only looking at the numbers, and not looking at the complex reality which produced these numbers.
  2. The Quran: Faith and Reason: Instead of subjecting Quran to the test of reason, we must learn to reason according to the ways taught by the Quran. The Quran teaches us how to look at the signs of Allah, and to come to understanding the ways of our Creator. Statistics is also a way of looking at the observations and trying learn about the hidden realities which generated these observations. We can create an approach to statistics based on the way that strategies of persuasion in the Quran are structured.
  3. Economic Theory: Purpose of Life – All knowledge that we acquire is subordinate to the purpose of life. Knowledge is useful and valuable only if it helps us achieve our goals in life. When the goal is just the earning of money, then whatever sells is worth learning. When the goal is to seek beneficial knowledge which teaches us how to spend our unique and precious few moments on this planet, and how to serve humanity, the nature of knowledge, and the process of teaching and learning, all change radically. All courses based on an Islamic approach must begin with a discussion of our goal and life, in order to clarify and purify our intentions regarding the acquisition of knowledge.

Later posts are:

  1. The Forest and Tree Principle:  In this post, I explain how the forest (a theory, a generalization, a collectivity) cannot be understood without reference to the trees (example, special case, application), and a collection of trees becomes a forest by applying a theory which groups them together. This principle is of fundamental important in terms of the organization of the course on Real Statistics.
  2. Underground Railroad: The Path to Freedom — How historical forces have shaped our thoughts, and how we can become by standing outside the streams of history to observe how minds are shaped by history. In particular, what we believe about knowledge, and about our own identities, has been shaped by our experience of colonization, and by our Western education. Our approach to knowledge (and statistics) changes radically if we liberate ourselves.
  3. From Light to Darkness:  The West seems to enjoy the light of knowledge, while Muslims are covered in darkness and ignorance. This is in conflict with the Quran, which states that those who reject the faith will be led from light to darkness. To understand this puzzle, we must change how we understand knowledge itself. This is in line with the principle in the post on Quran: Faith and Reason, where we must learn how to reason from the Quran, instead apply reason to judge and interpret the Quran.
  4. Connecting Statistics to Reality: This post provides a sketch of the propose first lecture for RSIA, which summarized and encapsulates many issues discussed in all the posts listed here.
  5. Intentions, Articulation, Meta-Thinking: Three Principles of Islamic Pedagogy

 

 

IE2019 Final Q4: Logical Positivism

Q4: Explain what is logical positivism, and why this philosophy emerged and became dominant in the West. Explain why this philosophy is wrong.

The first three questions on the Final Exam for Islamic Economics 2019 were treated in earlier posts — see: Q1: Economics & The Purpose of Life, Q2: Useful Knowledge, and Q3: Eurocentric History. This post is about the fourth question on logical positivism. First, note that “Epistemology” means “Theory of Knowledge” — this defines what knowledge is, and how it can be obtained. Logical Positivism (LP) is a theory of knowledge which was developed in the early twentieth century, and became wildly popular. Only a short time afterwards, it had a spectacular crash, as philosophers rejected it completely by the middle of the twentieth century. Nonetheless, it exercised a tremendous impact on modern social sciences, shaping their foundations. What appears very surprising is that these foundations were not re-examined and replaced by better ones, even after the collapse of logical positivism. There is an explanation for this, and it is very important for all of us, including those who have no taste for philosophy, to understand this explanation. It is only a slight exaggeration to say that at the current time:

Logical Positivism has become the common religion of mankind

Western epistemology is built on ideas which are encapsulated in this philosophy. Anyone who had a western education — and that means nearly all educated people today — absorbs this philosophy by the method and the substance of this education. This is a learning-by-doing, without any explicit discussion of philosophy. When a teacher comes in and starts teaching you a subject, then you are being taught that the subject matter is “knowledge” and the method of teaching is the method by which you acquire knowledge. To clarify the issue, consider three possible definitions of knowledge:

  1. Knowledge consists of objective, factual information about external reality, which carries certainty, and is the same for all observers.
  2. Knowledge consists of learning how to live the good life. This involves understanding what the good life is, and acting in ways to achieve this goal.
  3. Knowledge consists of learning which deeds please Allah, and acting upon this knowledge.

The first is the LP definition of Knowledge. The second is a Socratic version, and the third is the Islamic view. If we look at the structure of university education, across the world, we will see that it strongly supports the LP view of knowledge, by implementing it in practice. Logically, it seems clear that the second definition, Socratic knowledge, is the best for general use. The Islamic definition is a special case of the Socratic one. If we arrive at the conclusion that God exists, and Islam is the true revealed religion of God, then this defines the good life, and knowledge is defined as how to live the good life according to Islam.

The first question that we all must face and answer is: what is the best use that we can make of our unique and precious lives? Surely, knowledge about this is the most valuable of all types of knowledge that exist. It is only after we determine the purpose of our lives that we can ask whether or not we should learn chemistry, biology, or history. It does not make sense to start studying these subjects without having any clarity about how we should lead our lives. Yet, this is precisely what we do in the course of our Western education — we never learn the answers to the most important questions, while we learn in great detail answers to questions which are of no practical importance in our daily lives. {See “Recovering from a Western Education”}. It is due to the influence of fallacious logical positivist theories of knowledge that a modern education fails to inform us about the most important and pressing questions we face in our lives.

There are several complex issues which need explanation in order to clarify the important role that has been played by LP in constructing a theory of knowledge which is now widely believed, even by Muslims, even though it is strongly in conflict with Islamic theories of knowledge.

First the research program which led to the emergence of Logical Positivism was launched a long time ago — David Hume stated the LP position very accurately when he wanted to burn all books which did not contain objective fact and logical reasoning. It has been a long-standing intuition among European intellectuals that science is the only valid type of human knowledge, and that science is essentially different from all other types of knowledge in that it is objective, equally true for all, and independent of any subjective influences. LP provided what seemed to be a solid proof of this intuition. On deeper examination, this proof proved to be fallacious. But despite the failure and collapse of LP, the intuition remains in place, and continues to be widely believed.

Second How did this philosophy  (LP) emerge, even though it is a seriously mistaken understanding about the nature of science and the scientific method? A brief sketch of the long and complex history is provided in my earlier post on “The Emergence of Logical Positivism“. Briefly, after rejecting Christianity as a source of perpetual warfare, Europeans wanted to construct knowledge to build societies (politics, economics, law, and all social sciences) on neutral grounds, to which all people could agree, regardless of religious background. This was necessary in order to create the consensus required to build communities and nations. The emergence of modern, secular society is firmly founded on principles on which all “rational” people should agree; principles which have no subjective element which might lead to dispute because different people have different experiences, different emotional reactions, different moral judgments.

Third: The Creation of Secular Knowledge. Creation of principles to which all rational people will agree, regardless of religious background, requires the creation of fields of “secular knowledge” — knowledge built on the basis of facts and reason, with no input from subjective sources. Necessity is the mother of invention, and historical necessity compelled European intellectuals to invent ‘secular knowledge’, objective factual knowledge about the external world, which was accessible by the means of observations and logic alone, without recourse to any subjective elements.  For a number of reasons discussion in “European Transition to Secular Thought”, religion eventually lost the battle to science, with the result that secular objective knowledge became the only kind of knowledge that command the respect of European intellectuals.

Fourth:  The problem with ‘secular knowledge’ is that the vast majority of knowledge that we need for the conduct of our personal and social lives, is a combination of objective and subjective elements. There is a large collection of  objective “facts”, like the external geography of the world, to which all reasonable humans would agree. But knowledge which could help us decide how to live our lives, either on a personal or social level, inevitably contains subjective elements. To avoid religious disputes, Europeans were forced to pretend, to themselves and to others, that such subjective elements were not present in the body of secular knowledge constructed over the past few centuries.  A lot of the subjectivity was buried under the conception of “Rationality” — all ‘reasonable’ men should agree to be rational. Post-modernity is the name for the realization that a lot of subjective elements have been hidden in the body of knowledge used to construct secular modern societies. The consensus that was achieved was based on taking certain elements of Christianity, common across different factions, for granted. Recognition of this has led to claims the secular modernity is just “Christianity in disguise”. Influential post-modern thinker Michel Foucault’s work showed that ‘universal scientific truths’ that modern human sciences (biological, psychological, social)  offer, actually varied substantially over time, and were strongly shaped by historical experience. This engagement of social science with historical context shows the lack of objectivity which is claimed for these sciences. Timothy Mitchell, in the Rule of Experts, states that “The possibility of social science is based upon taking certain historical experiences of the West as the template for a universal knowledge.” Thus, what poses as objective knowledge is actually dependent on a large number of ethical assumptions, as well as cultural and institutional context, which are based on the European historical experience.

SUMMARY: Logical Positivism was a philosophy which created the impression that the body of secular knowledge created by the West over the past few centuries is objective factual knowledge of external realities, which are common for all rational observers, and have no subjective elements. In fact, scientific knowledge involves using observations to guess at the nature of the hidden reality — for example, the falling apple provides us with a clue about the hidden and invisible force of gravity. Logical positivism attempted to take guesswork out of scientific methodology, in order to claim certainty and objectivity for scientific knowledge. The philosophy was proven to be wrong because hidden and unobserved forces and objects play an essential role in science, and cannot be removed from the picture or reduced to observable manifestations. Despite the fact the LP has failed as a philosophy, the underlying spirit which led to the creation of this philosophy remains very much alive, and continues to drive the production of knowledge in the West. There is a strong desire to assert certainty and objectivity for scientific theories, and also for the social sciences, which leads to the hiding of the subjective elements. Western social science claims for itself an objectivity, certainty, and factuality, which it does not have. Nonetheless, Muslims scholars have accepted these false claims, and as a result have been trapped into accepting Western ideas which are diametrically opposed to Islam. The failure to recognize the conflicts led to a  “Crisis in Islamic Economics” due to the failure of attempt to create Islamic Economics by merging the Western discipline with Islamic concepts. An extensive discussion is given in my paper on “Islam’s Gift: An Economy of Spiritual Development“. For more history, and further references, see “The Rise and Fall of Logical Positivism.