Setting a Maqasid-Driven Development Agenda for Islamic Finance – II

If we want to juxtapose Maqasid-driven actions along with SDG-driven actions in the same two-dimensional space, a realistic approach would be to use spiritual gains and moral or ethical gains interchangeably.

In this second part of the series on Setting a Maqasid-Driven Development Agenda for Islamic Finance, we continue our discussion on material gains versus spiritual gains in the context of examining the alignment or otherwise between the Maqasid al-Shariah (MaS) and Sustainable Development Goals (SDG) frameworks. Material gain can take the form of something as abstract as reputation or image as an ethical, moral and religious entity, when the same is seen as a proxy for, or as a means to enhancing one’s income and wealth. An example is the hypothesis that reputation of a company as ethically conscious leads to higher valuation and shareholder wealth maximization, or that Shariah-compliant equities on average outperform their conventional counterparts, the additional value coming from enhanced reputation of issuers as ethics-conscious entities.

In a similar fashion, in the context of charities (zakat and waqf) the credibility and trust built and enjoyed by an organization can lead to higher inflow of funds and assets that will enhance the share of amileen and mutawalli or nadzir in direct proportion to the increased value of such flows. This will be so while ensuring that the sharing ratio is still compliant with Shariah and related regulations (e.g. one-eighth of zakat mobilized for amileen or one-tenth of income generated  by a waqf for nadzir as per Indonesian law of waqf). When one entity engages in ethical behavior with the intention (niyyat) of maximization of its share in the charity pie, it is seeking material gains. The economic unit (individual or organization that is essentially a proxy for the individual stakeholders) cannot be faulted or penalized as long as its actions are in compliance with mandate of Shariah or related regulations. Another example may be cited in the context of individual charity givers. A donor may have been motivated to give charity by a feel-good factor while its other benevolent actions may perhaps have been attributable to what is called the self-actualization factor. The motivation may have come from the simple understanding that the image of an individual as an honest and pious soul may be converted into or open the doors of pecuniary gains enhanced social acceptance, power and wealth.

On the contrary, the individual may  have indeed been motivated by the urge to earn the pleasure of the Almighty. An economic unit is seen to be seeking spiritual gains when its actions are backed by intentions of earning the pleasure of the Creator. What lies within the hearts and minds of humans or intentions are largely unobserved and known only to the Creator or when honestly revealed by the concerned individual or entity. Indeed, the hidden material motivators may sometimes remain too deep within the heart and mind of the individual to make him/her conscious of the same. A believer is advised when s/he embarks on any pious and benevolent action to continuously introspect about her/his motivation and seek the help of the Almighty to ensure purity of intentions and seek His forgiveness when the action is completed for any possible dilution of intentions. An actor has to exercise utmost and sustained vigilance to ensure the purity of intentions or the presence of the ikhlas in an action, howsoever pious or benevolent it may appear to be. At the same time, it must be underlined here that the notions of intention (niyyah) and purity thereof (ikhlas) are unobserved and a matter strictly between the individual and the Creator.

The notions of intention (niyyah) and purity thereof (ikhlas) are unobserved and a matter strictly between the individual and the Creator.

For an analysis of societal actions that aim at furtherance of collective benefits and prevention of collective harm, one must move from the unobserved notions of niyaah and ikhlas to revealed intentions as captured in the actions and deeds of economic units.

For our analysis, we classify all actions (strategies, tactics, policy measures) in the following material-spiritual space. The vertical axis represents material gain, while the horizontal axis represents spiritual gain. In the four quadrants, we should be able to place specific actions as leading to four possible combinations of material-spiritual gains.

For an analysis of societal actions that aim at furtherance of collective benefits and prevention of collective harm, one must move from the unobserved notions of niyaah and ikhlas to revealed intentions as captured in the actions and deeds of economic units.

It is pertinent to note two important considerations here. First, if we want to juxtapose Maqasid-driven actions along with SDG-driven actions in the same two-dimensional space, a realistic approach would be to use spiritual gains and moral or ethical gains interchangeably along the horizontal axis. SDGs are not exactly concerned about spirituality, but certainly about morality and ethics. Second, we can place an action as a point in our two-dimensional space, compare and choose the optimal ones, only when the material or moral/ spiritual gain associated with each one of them can somehow be quantified and/or measured.   

Quadrant 1 where both material and moral/spiritual gains are positive (points A1, A2, A3): Examples at the individual level of the believer may include earnings from halal food business; fasting and health benefits therefrom; performing hajj and earnings from accompanying merchandize. At a macro-level, almost all actions in pursuit of the Maqasid al-Shariah and the SDGs aligned thereto fall in this quadrant. Points A1 and A2 may be seen to capture such combinations; A3 implies more of both as compared to A1 & A2. However, there is a trade-off as one moves from A1 to A2. The latter implies more material gains and less moral/spiritual gains as compared to the former. 

Quadrant 2 where material gains are positive, but moral/spiritual gains are negative (point B): Examples may include use of pork extracts in vaccines, low-cost but non-halal ingredients in production of food and other consumption items, businesses and financial institutions in particular seeking to boost bottom lines with riba, investments in sin-stocks. At a broader macro-level a policy that encourages monopolies or that promotes growth but enhances disparity in incomes and wealth is a suitable example.

Quadrant 3 where both material and moral/spiritual gains are negative (point C): Examples include consumption of wine and pork or smoking leading to major health hazards; lack of education and skill leading to lower incomes and poverty, poor sanitation leading to diseases; carbon emissions leading to adverse climate conditions. The actions in this quadrant are exactly the opposite of those in quadrant 1.

Quadrant 4 where moral/spiritual gains are positive, but material gains are negative (point D): A simple example may be that of a business losing customers and volumes as it downs shutters during congregational salat, a bank losing customers as it goes for Shariah-compliant products and shuns riba-based ones, and so on.

With this framework, it is now possible to map various global goals and sub-goals under both MaS and SDG frameworks to either of the four quadrants. In general, one would find cases of alignment would fall in Quadrant I, while cases of misalignment would fall in others. We will see how, in the next part of this series in sha Allah.

To be continued