The Notion of Risk in Economics Revisited in the Light of Arab-Muslim Classical Literature

Abstract

The aim of this study is to show how Arab-Muslim societies, from Indonesia to Andalusia, did not wait for the modern era in order to learn how to live with risk. Rather, they developed codes of conduct, modes of thinking and moral values. At first sight, the main issue of the notion of risk that emerged in the light of classical Arab-Muslim literature lies in distinguishing between two types of risk: that associated with the real economy and linked to common goods and trade; and that which is associated with gambling and speculation. Taking risk is generally encouraged if it is bound to serve the productive economy from which everyone will benefit. It is, however, prohibited to take such a risk should it feed a game where a person’s gain is obtained at the expense of another. From our analysis, it appears that the notion of risk is not confined to the legal approach or the question of a probabilistic computation of uncertainty which characterizes the modernist approach to risk. This broader definition of risk opens-up the perspective to field studies incorporating notions such as vulnerability developed by some Muslim travelers. Our analysis also emphasizes the importance of studying historical manuscripts to explore alternative notions of risk.