1. Globalization: An Islamic Perspective
Nasser Elahi
Mofid University, Iran
http://lass.calumet.purdue.edu/cca/jgcg/2007/sp07/jgcg-sp07-elahi.htm
This paper investigates from an Islamic perspective the consequences of
globalization in general. To specify my argument in accordance with my
understanding of Islam, I would strive to argue that globalization might be very
harmful before society reaches maturity but very useful after that. Allow me a brief
prefatory note about my methodology in this essay: in the first part, I provide many
specifics about how Islamic texts and sources view the human being as God’s
creation and his ultimate goal in the world. In the second part, after a brief definition
of globalization, I apply the analytic method employed in the conventional literature
of economics to show why the market mechanism fails to satisfy equality and
eradicate poverty in the globalization era. Finally, I try to explain how a free but
virtuous, mature society can satisfy equality throughout the world in this era.
Obviously, my argument relates, to some extent, to normative aspect of economics.
However, it does not follow the ideological methodology at all.
Let me begin by elaborating briefly on the ultimate goal of man’s creation in Islam,
since this is so essential to understanding my argument.
The Human Being as God’s Creation
From monotheism, the pivotal pillar of the Islamic worldview, we can conclude that
the universe is the best and perfect manifestation of God’s beautiful names and that
there is no better alternative system to govern the universe. Indeed, this principle
refers to the conception of creation. That is, God is like a secret treasure, so He
creates and expands the universe not only to give a clue to His throne but also to
reveal His beauty and His brilliance. Some facets of His attributes such as His
majesty may manifest themselves in a deterministic environment such as with
galaxies and other physical phenomena. There are, however, other facets of His
characteristics such as His wisdom and His mercifulness that are impossible to
manifest themselves except in indeterministic form.

2. There seem to be many common elements in the explanation of the philosophy of
man’s creation in all Abrahamic religions of which Islam is believed to be a sequel
and culmination. By investigating the quality of Adam's creation, which stands as the
symbol of human being in the Quran, we can infer the kind of status he occupies in
the sight of God in Islam, as well as in other religions.
In the beginning the Lord addresses all the angelsthat He wants to create a viceroy
on earth. This position will be held by man. The angels object to Him and say that
He wants to create a vengeful and vindictive creature to commit crime and
bloodshed on earth again! But God responds that He knows something they do not
know. And so, God became engaged in creating man. And this is the point which
symbols, loaded with profound anthropological connotations, come into being.
From a faithful Muslim point of view, God is the greatest and most exalted. Thus,
with this providential address the mission of man on earth is clarified. That is, man's
mission on earth is to fulfill God's creative work in the universe. Therefore, man's first
superiority is that he represents God on earth.
Since God wants to create a viceroy for Himself on earth, He must, as a rule, choose
the most valuable and sacred material. Yet He selects the basest matter. In the
Quran there are three references relative to the material that man was made of: from
sounding clay, like unto pottery, and from mud. Finally, the Lord blew His spirit into
the dry mud and man came into being.
In the human tongue, God is the most sacred and exalted being so the spirit of God
refers to the most exalted, and the noblest manifestation of His being, while mud
stands as a symbol of the meanest and the basest thing. Accordingly, He blew His
own Soul, not something else like His breath, blood, or flesh, into man in its creating
process. God is the most sublime being and His spirit is the finest entity for which
man can possibly have an epithet in his language.
Thus, man who was formed from mud and God's spirit is a two- dimensional being.
For unlike all other beings which are one dimensional, man is two-dimensional; one
dimension tends towards mud, lowliness, sedimentation, and stagnation while the
other aspires to the loftiest imaginable point possible. Thus man's significance and

3. grandeur lie in the fact that he possesses two poles: mud and the spirit of the Lord. It
is up to man to choose where to go, towards mud or providence. And as long as he
has not selected either of the poles as his fate, struggle will perpetually rage within
him.
Another surprising point in man's creation in the Quran is that God calls upon the
whole universe that He has a trust to offer it, but everything refuses to accept this
offer except man. This is indicative of the fact that man possesses another virtue;
that is, his acceptance of a trust that everyone else refused. This means that man is
a representative of God in the universe as well as His trustee. As to what the trust is,
Islamic scholars mention many things. Some of them such as Mawlavi and Shariati,
believe that it is will and choice. I agree with that, however, it means much more than
that. It means that man has adopted a great responsibility to personify all His
beautiful names; individually and collectively. Of course, such responsibility requires
the ability of will and choice.
Shariati (1981) says that the only superiority that man has over all other beings in the
universe is his will. He is the only being that can act contrary to his nature, while no
animal or plant is capable of doing so. It is impossible to find an animal which can
fast for two days. And no plant has ever committed suicide due to grief or has done a
great service. Man is the only one who rebels against his physical, spiritual, and
material needs, and turns his back against goodness and virtue. Further, he is free to
behave irrationally, to be bad or good, and to be mud-like or divine. The point is that
possession of will is the greatest characteristic of man and it throws light upon the
relationship between man and God.
Man is a viceroy of God on earth as well as His trustee among the universe, and the
spirit of both quenches their thirst from the same fountain of virtue: possession of
will. God, the only being in the universe, who possesses an absolute will and can do
whatever He wishes, blew His spirit in man. Hence, man is capable of working like
God (not on par with Him, only as an image of God), or acting against the
physiological laws of his own nature. Therefore, as in the Old Testament, He has
created mankind as a potentially perfect image of Himself. Obviously, this perfect
image goes beyond the interpretation that some distinguished scholars have given it.
It shows that all God’s beautiful names may manifest themselves with man and

4. human society. Consequently, it requires the ability to mastery and rule over the
universe.
Two kinds of rationality
As mentioned above, according to my Islamic understanding, man is a two-
dimensional being. During his spiritual evolution, he should pass from being mud-like
to approaching God-like. In other words, God has invited him to pass through an
important reference point, maturity. Thus, we can imagine that he has two distinct
parts of his life: an individualistic, selfish period (before maturity of society, when the
real love is not the dominant flow in the society); and a God-like, selfless period
(after maturity of society). Clearly, each specific period requires a certain and
separate corresponding rationality. The rationality discussed in the conventional
literature of economics, which is based on a low-level self-interest, only corresponds
with the period of childhood. Mainstream economics, based on Adam Smith’s
invisible hand and the market mechanism, quenches its thirst from this fountain of
rationality. In the next part, I will explain how the market mechanism increases the
gap between poor and rich countries as well as the gap between poor and rich
classes. That is, the more international trade and the more integration of financial
markets, the more market failure and more divergent economies! However, when
society evolves from selfishness and being mud-like to altruism and being God-like,
this rationality will not be effective at all and will collapse instantaneously. The
alternative and mature rationality creates a special dynamism for the economy which
is very powerful and without any failures. The driving force of this rationality is still
self-interest, but a high-level one rooted in being God-like.
I would like to refer to one verse of the Quran, which clearly argues that the
individual desires derived from a low-level self-interest lead to harm and corruption:
“Corruption doth appear on land and sea because of which men's hands have done,
that He may make them taste a part of that which they have done, in order that they
may return.” We may deduce this corruption is only a part of the consequences of
what man has done as a result of his selfishness, and that there might many other
bad consequences washed clean by God’s forgiveness. In other words, the invisible
hand in an immature society not only is not able to optimize social benefits, but also

5. it creates a great deal of harm and corruption that surpasses our imaginations.
However, most of this corruption will be removed by the mechanism provided in the
universe by God. The remaining corruption serves to warn the people and deter
them from being selfish.
Due to self-interest maximization in immature society, we may also observe clearly
many, many problems such as global warming and environmental destruction which
will definitely jeopardize future life, while the market mechanism and its price signals
fail to reduce these consequences, much less to motivate sustainable development.
Globalization and the issue of equality
In this part of my essay, I would like to show why globalization in the context of low-level
self-interest motivation and based on the market mechanism may not lead to equality.
Instead, it is biased to developed countries where there is located a complex of various
industries and the benefit of economies of agglomeration can be utilized. To do this, it is
necessary to have a brief definition of globalization first.
The definition of globalization
As globalization is a multi-layer concept and it has become a buzzword in recent
years, globalization has already been defined in many ways. I, in some extend,
agree with what Thomas L. Friedman defines globalization. He says: “it is the
inexorable integration of market, nation-states and technologies to a degree never
witnessed before- in a way that it is enabling individuals, corporations, and nation
states to reach around the world farther, faster, deeper and cheaper than ever
before, and in a way that it is enabling the world to reach into individuals,
corporations, and nation states farther, faster, deeper and cheaper than ever before”
(Friedman 2000, 9). He says: globalization "also has one overarching feature-
integration. The world has become an increasingly interwoven place, and today,
whether you are a company or a country, your threats and opportunities increasingly
derive from who you are connected to. This globalization system is also
characterized by a single word: the Web"(ibid, 8). This system is a dynamic ongoing
process, with a driving idea of free-market capitalism, and "its own dominant culture"
involving "the spread of Americanization" (ibid, 9). It has its own defining

6. technologies, and is measured by its speed, "speed of commerce, travel,
communication and innovation" (ibid, 10). He suggests that "globalization is not
simply a trend or a fad but is, rather, an international system. It is the system that
has now replaced the old Cold War system, and, like that Cold War system,
globalization has its own rules and logic that today directly or indirectly influence the
politics, environment, geopolitics and economics of virtually every country in the
world" (ibid, IX).
What I want to focus on is strictly the economic layer of globalization. In my view,
economic globalization refers to a completely different process of
internationalization. Although in internationalization the cross-border relations
between countries will increase, the nation-state institution will play the main role in
the economies, they can still make economic policies and decisions. Economic
globalization, however, refers to the process of removing government-imposed
restrictions on movements between countries in order to create an "open",
"borderless" world economy' (Scholte 2000: 16) so that the nation-state institution
will be eradicated and no longer play no role in economy. Instead, the Transnational
Companies (TNCs) will be the main players in the economy. More technically
speaking, the nation’s Production Possibility Frontier (PPF) makes nonsense in the
literature and there is only the worlds PPF and TNCs follow fragmentization policy in
their production and distribution which is definitely alien from conventional
international trade and international finance.
The Inevitability of Asymmetry in Globalization
According to mainstream economics, policies of openness through liberalization of
trade and investment regimes, and capital movements have been advocated
worldwide for their growth and welfare enhancing effects on the basis of the
propositions embedded in the well-known economic theories of international trade
and investment (i.e. the Ricardian comparative advantage theory, the Heckscher-
Ohlin-Samuelson (HOS) model, the new trade theories of Krugman, or the model of
intertemporal international borrowing/lending or portfolio allocation models). In these
models, the main goal of openness is assumed to increase social welfare through: (i)
static efficiency gains associated with improved resource allocation for national
economies as well as for the world economy due to increased specialization; (ii)

7. dynamic efficiency gains from such factors as economies of scale, diffusion of
information, technology transfers, knowledge spillover effects as well as
intertemporal trade gains from cross-border borrowing/lending for increased
investment and consumption smoothing and portfolio risk diversification.
Convergence in accordance with international trade theories is still a serious
dilemma. That is, there is no doubt that the level of social surplus will increase totally
after free trade or integration of financial markets. However, there is a lasting
concern regarding how these gains are distributed between trade partners; are they
biased toward developed countries or at least unbiased. Mainstream economics’
theories including static and dynamic insist that international trade will reduce the per
capita income gap amongst the open countries. For instance, one of the main
theorems that derived from the static model of HOS Theory, implies that when the
prices of the output goods are equalized between countries as they move to free
trade, then the rewards of the factors (capital and labor for instance) will also be
equalized between countries. Therefore we should expect that the increase of free
trade due to globalization will reduce the North-South per capita income gap. The
dynamic version of this model also suggests a convergent per-capita income trend
between north and south countries.
To explain cross-country differences in economic performance, Matsuyama (1996)
employs symmetry-breaking methodology. Symmetry-breaking creates asymmetric
outcomes in the symmetric environment. It is the key concept for understanding self-
organized (a.k.a. endogenous) pattern formations.
As a key answer to the increasing gap between North and South countries in the
level of cross-country differences as well as the increasing gap between poor and
rich classes inside the countries, Matsuyama (2005), rejects coordination failures as
the key notion to understand these questions. Instead, he argues that such
emphasis is misplaced; the key to understanding the diversity is symmetry-breaking.
The notion of coordination failures is not only irrelevant but also misleading when
thinking about diversity.

8. Quoting Matsuyama’s (1996) explanation briefly, it will be shown how globalization
can be considered as an endogenous (or a self-organized) factor to create the
inequalities.
He offers a model of the world economy, where many (inherently) identical countries
trade with one another. It is shown that cross-country differences in the standard of
living and in income appear as a stable outcome of international trade. According to
his model, the coexistence of rich and poor countries is not just a possibility. It is an
inevitable aspect of the world trading system. Although his model adopts many
assumptions for the sake of simplification and concreteness, the logic behind the
result is fairly general and can be understood intuitively.
Imagine that there is a list of goods that need to be consumed. Furthermore, there
are some agglomeration economies in the production of each of these goods. In the
absence of international trade, these goods must all be produced in each country.
Without any innate difference across countries, each country produces these goods
in the same amount, and there is no cross-country difference.
Now introduce the possibility of international trade in these goods. As different
countries start acquiring comparative advantage in different goods, the production of
each good concentrates into some countries, which leads to an emergence of a
system of international division of labor. The stable cross-country difference appears
as a result of ‘‘symmetry-breaking’’ in the world economy, caused by international
trade. Some countries become rich if they are lucky enough to acquire comparative
advantage in goods associated with large agglomeration economies, while other
countries, those which happen to acquire comparative advantage in goods with small
agglomeration economies, become poor. They fail to achieve a necessary
coordination to reach a Pareto-superior equilibrium and find themselves in a Pareto-
inferior equilibrium. The problems thus seem just a matter of coordination failures.
The global perspective, however, offers a different view. The international division of
labor requires different countries to take charge of producing different tradable goods
with differing degrees of agglomeration economies. International trade thus creates a
kind of ‘‘pecking order’’ among nations. Not all countries can be rich: some countries
must be excluded from being rich, just as in a game of musical chairs. At the same

9. time, the model does not rule out the possibility that some (but not all) countries
might succeed in overcoming the coordination failures, and becoming rich. This
feature of the model makes it possible to talk about the effects of such an ‘‘economic
miracle’’ in the world economy.
Since the economies of agglomeration requires the diversity of industries which
produce intermediates available in the marketplace, we can conclude that only those
countries which have already bypassed the threshold of diversity have a chance to
be industrialized and reach to a Pareto-superior equilibrium. Hence, this shows how
the phenomena of economies of agglomeration cause a symmetry-breaking to
separate the otherwise identical regions into the manufacturing belt and the
agricultural hinterland.
Globalization in Mature Society
To explain how globalization in mature society accomplishes beneficial goals, first
we have to take into account the two following challenges:
1. The problem of static market failure: This problem arises mainly because of
externalities (including public goods, pollution and common pool resources),
transaction cost, asymmetric information (such as incomplete markets, moral
hazards and adverse selection), as well as organization failures. The most
common response to a market failure in the literature of the public sector is to
use the government to produce certain goods and services. However,
government intervention may cause non-market failure. Besides, as
mentioned above, globalization causes nation-state eradication so there will
be no effective government in such an era. Furthermore, I can hardly believe
that international institutions are able to fulfill this responsibility, even if they
were independent from the USA.
2. The problem of dynamic market failure: As Matsuyama showed accurately,
international trade creates a specific chaos in the symmetric environment so
that the operations of markets normally lead to increasing inequality across
the countries over time. Likewise, inequality across inherently identical
households is caused endogenously by symmetry-breaking. Matsuyama

10. (2004) explains how the class structure is an inevitable feature of capitalism.
Even if every household starts with the same amount of wealth, the society
will experience “symmetry-breaking,” and will be polarized into the two
classes in steady state, where the rich maintain a high level of wealth partly
due to the presence of the poor, who have no choice but to work for the rich at
a wage rate strictly lower than the “fair” value of labor. Hence, in the
capitalistic context we may consider these increasing gaps –whether between
countries or inside countries – as an indication of market failure in a dynamic
version.
It is now necessary to show how mature society, using a different rationality, may
bypass these challenges. This rationality formally is very similar to the conventional
one. It is, however, very different in content. I would like to refer to a few verses of
Quran related to this subject. God says: “Man has been created restless, so he
panics whenever any evil touches him, and withdraws when some good touches
him; except for the prayerful who are constant at their prayers and whose wealth
comprises an acknowledged responsibility towards the beggar and the destitute; and
the ones who accept the Day for Repayment.” These verses show sufficiently that
the rationality that guides immature people is definitely different than that which
guides mature people, although they benefit from the same potential characteristics.
The main distinction between mature and immature is that the mature direct these
potentials toward a transcendental personality which is beyond selfishness. They are
concerned with all human beings’ needs in all generations rather than their own
selves individually or at most their families.
It is very appropriate to ask about the driving motivation in this society. Of course,
conventional self-interest cannot motivate people efficiently to be concerned about
others. It is extremely in need of a stronger motivation based on an exalted
worldview. This worldview should consist of specific beliefs that grant the greatest
reward to the doer when he considers all people of all generations altruistically. As I
understand, the mature society may not be blind and aimless. Society can achieve
this reference point of maturity only when the true beliefs such as the belief in
oneness of God, the Day of Judgment, Justice drive it entirely. Passing this
reference point is a necessary condition, but divine love, which requires perfection in

11. selflessness, is the sufficient condition for the maturity. In general speaking, love
when it appears, has no room but for itself and the lover thinks of no one except the
beloved. In other words, selfishness destroys love and it can never be considered as
co-existent of love. Nonetheless, worldly love is too weak and ineffective to last and
motivate society toward its transcendental goals. In contrast, divine love is quite
sustainable and powerful. Since nature is the realms where God’s beautiful names
are exhibited, divine love implies, in turn, love of the entire world and the whole
creation particularly human beings, the most comprehensive fruit of existence.
Therefore, love is at the core of the concept of mature rationality and creates a
specific invisible hand to satisfy social benefits including prosperity and equality for
all regions and all generations.
Now, allow me to explain how globalization might be useful in a mature world
society. As mentioned above, a mature society is a society where all God’s beautiful
names have flourished. Therefore, as God provides mercifully all necessary
requirements for all creatures, in such a society, each person possesses a certain
portion of natural resources consistent with his area of interest. All initial
endowments are redistributed by lump sum among the people so technically
speaking, all individuals move to the central points of Edgeworth’s box. All members
subject to all generations’ benefits do their best to produce more and more creatively
because they are His representatives. According to symmetry-breaking
methodology, there is still some potential of asymmetry. However, people will share
their incomes voluntarily to produce public goods and to reduce the existent gap.
The communist system is as far away as the capitalistic system from the system
based on love. The lack of motivation in people’s activities as well as the inefficiency
of government –especially when the size of society grows enough- are the essential
issues in communism while there is no concern about them in mature society. It is
because the people are mature enough to understand that more being active means
being closer to God. Besides, there is no need for the presence of strong and big
government because this society is governed by many small components of
authority connected together in a world wide network. There is hardly conflict of
interest between these components because selfishness is the main source of

12. confliction while here the people are selfless. Moreover, they are tolerant and
educated enough to avoid violence and to discuss their problems peacefully.
It should be noticed that the economy in mature society serves only as a means by
which we can improve the level of virtue so that we are not allowed to sacrifice
humanity and its dignity and virtue because of economic benefits.
Endnotes
Quran, 2:30: And when thy Lord said unto the angels: Lo! I am about to place a
viceroy in the earth, they said: wilt Thou place therein one who will do harm therein
and will shed blood, while we, we hymn Thy praise and sanctify Thee? He said:
Surely I know that which ye know not.
It shows very clearly the worth of man in Islam. Even the Post-Renaissance
European humanism has not been able to bestow such an exalting sanctity upon
man.
Quran, 15:26, 15:28, and 15:33
Quran, 55:14
Quran, 6:2, 7:12, 23:12, 32:7, 37:11, 38:71, 38:76
Quran, 33:72 Lo! We offered the trust unto the heavens and the earth and the
mountains, but they shrank from bearing it and were afraid of it. And man assumed
it.
See: Sahriati (1981)
Old Testament, 1:27-28 Elohim said, "Let us make humanity as our image, according
to our likeness. And let them rule over the fish of the sea, the bird of the heavens,
the beast, the whole earth, and all the swarmers which swarm on the earth. And God
created humanity as his image: as the image of God he created him, male and
female he created them.

13. Thomas Aquinas (1976) located the image in the human ability to think and reason,
to use language and art, far surpassing the abilities of any animals. Leonard Verduin
(1976) says that the image consists in our dominion over animals and plants, which
continues despite our sinfulness. Emil Brunner (1976) says that it is our ability to
have a relationship with God, reflected in the tendency of all societies to have forms
of worship.
Quran, 90:10-17 And [Did We not] guide him to the parting of the mountain ways?
But he hath not attempted the Ascent. Ah, what will convey unto thee what the
Ascent is! (It is) to free a slave, And to feed in the day of hunger, an orphan near of
kin, or some poor wretch in misery, and to be of those who believe and exhort one
another to perseverance and exhort one another to pity.
I will discuss the other kind of rationality which corresponds with mature period later
on.
Quran, 30:41
For example, cosmologists wonder why the matter in the universe is distributed in
clusters, leaving much of the universe empty. Earth scientists study the formation of
wave patterns, such as jet streams, ocean currents, and continental drifts. Material
scientists study phase transitions, how molecules aligned themselves when they
reach the critical temperature. Molecular biologists ask how life began in the
primordial soup of amino acids, and developmental biologists attempt to explain how
living organisms acquire forms through cell division and morphogenesis (Weyl 1969,
Prigogine 1980). Similar questions of pattern formations also exist in economics.
Why are there rich and poor countries? Why are industries clustered? Why are there
booms and recessions? Why are some ethnic groups underrepresented in certain
jobs or neighborhoods?
Musical chairs is a game played by a group of people (usually children), often in an
informal setting purely for entertainment such as a birthday party. The game starts
with any number of players and a number of chairs one fewer than the number of
players; the chairs are arranged in a circle (or other closed figure) facing outward,
with the people standing in a circle just outside of that. A non-playing individual plays

14. recorded music or a musical instrument. While the music is playing, the players in
the circle walk in unison around the chairs. When the music controller suddenly
shuts off the music, everyone must race to sit down in one of the chairs. The player
who is left without a chair is eliminated from the game, and one chair is also
removed to ensure that there will always be one fewer chair than there are players.
The music resumes and the cycle repeats until there is only one player left in the
game, who is the winner.
The theory of incomplete markets is an extension of the general equilibrium
approach to intertemporal economies with uncertainty, where the set of available
contracts which can be used to transfer wealth across time is limited relative to the
possible probabilistic states that an economy might find itself in. Unlike in the
standard Arrow-Debreu model where all trade takes place at beginning of time, in an
economy with incomplete markets, agents trade in sequential spot markets.
References
The Noble Quran.
Aquinas, T. (1976), Man to the Image of God, in Millard Erickson (ed.), Man's Need
and God's Gift: Readings in Christian Theology, Grand Rapids: Baker, pp. 37-43.
Emil, B. (1976), Man and Creation,'' in Millard Erickson (ed.), Man's Need and God's
Gift: Readings in Christian Theology, Grand Rapids: Baker, pp. 45-54.
Friedman, T. L. (2000), The Lexus and the Olive Tree, New York: Anchor Books.
Krugman, P. (1992),Geography and Trade (Gaston Eyskens Lectures), The MIT
Press
Matsuyama, K. (1996), Why Are There Rich and Poor Countries?: Symmetry-
Breaking in the World Economy, NBER Working Paper Series
Matsuyama, K. (2005), Structural Change, forthcoming in L. Blume and S. Durlauf,
eds., the New Palgrave Dictionary of Economics, 2nd Edition, Macmillan (available
at: http://www.faculty.econ.northwestern.edu/faculty/matsuyama/Structural
%20Change.pdf )

15. Prigogine, I. (1980), From Being to Becoming: Time and Complexity in the Physical
Sciences, Freeman, 1980.
Scholte, J. A. (2000) Globalization. A critical introduction, London: Palgrave.
Shariati, A. (1981), Man and Islam, Translator: Fatollah Marjani, Houston: Free
Islamic Literature-Filinc.
Verduin, L. (1976), A Dominion-Haver, in Millard Erickson (ed.), Man's Need and
God's Gift: Readings in Christian Theology, Grand Rapids: Baker, pp. 55-74.
Weyl, H. (1969), Symmetry, Princeton: Princeton University Press.