Written by Fazleabbas Kinkhabwala from https://www.thenuances.blog/
There are thinkers whose ideas age quickly, tethered to the problems of their own time. And then there are thinkers whose ideas seem to wait for the future to catch up. Abu Hamid al-Ghazali belongs firmly in the second category.
Living in the eleventh century, long before central banks, stock markets, or digital currencies, Al-Ghazali nonetheless developed a theory of money that speaks uncannily to the moral dilemmas of modern economics. His brilliance lies not merely in what he said about money, but in how he framed it: not as a neutral tool, but as a moral instrument—one that reflects the ethical health of a society.
In an age obsessed with growth, efficiency, and optimisation, Al-Ghazali’s ideas feel almost subversive. Yet it is precisely this moral clarity that makes him so relevant today.
Money as a Means, Not a Master
At the heart of Al-Ghazali’s economic thought is a deceptively simple principle: money has no intrinsic value. Gold and silver, he argued, are useful not because they are desirable in themselves, but because they facilitate exchange. Money is a measure and a medium, not a commodity meant to be hoarded or worshipped.
This may sound obvious, but it is a distinction modern economics frequently blurs.
When money becomes an object of desire in its own right—rather than a servant of real human needs—it ceases to function ethically. Al-Ghazali compared money to a mirror: valuable only insofar as it reflects something else. To desire the mirror instead of what it reflects is a category error. In today’s terms, this is a warning against financialisation—the tendency for money to detach itself from the real economy of goods, services, and human wellbeing.
Modern markets often reward precisely this detachment. We trade abstractions, derivatives of derivatives, wealth generated from wealth, while entire communities struggle to access housing, healthcare, or dignified work. Al-Ghazali would recognise the imbalance instantly.
Hoarding, Speculation, and Moral Decay
One of Al-Ghazali’s sharpest critiques was directed at hoarding. When money is withheld from circulation, he argued, it violates its very purpose. Hoarded wealth stagnates; circulated wealth sustains life.
This is not merely an economic observation but a moral one. For Al-Ghazali, hoarding reflected a spiritual disease: fear, greed, and a loss of trust in the social order. Money locked away serves no one—not the individual, not the community, and not the economy. Contrast this with modern attitudes toward wealth accumulation. Today, hoarding is often reframed as “prudence,” “asset protection,” or “wealth preservation.” Entire financial industries exist to shield money from circulation—tax havens, speculative instruments, and artificial scarcity engineered for profit.
Al-Ghazali would not be impressed. To him, an economy thrives when wealth flows, when exchange is fair, and when surplus returns to society through trade, charity, and investment in real needs. His concern was not efficiency alone, but justice.
Riba, Risk, and Responsibility
Perhaps Al-Ghazali’s most controversial economic position—especially in modern discourse—is his rejection of riba (usury). This was not a blanket hostility toward profit, but a nuanced critique of riskless gain.
Profit, in Al-Ghazali’s framework, is morally legitimate only when it accompanies effort, risk, or value creation. To earn without exposure—to profit while transferring all risk to another—is ethically corrosive. It distorts incentives and exploits vulnerability.
Modern finance, unfortunately, is replete with mechanisms that do precisely this. From predatory lending to asymmetric derivatives, profit is often engineered to be private while losses are socialised. The global financial crisis offered a painful demonstration: gains were celebrated in boardrooms, while losses were absorbed by taxpayers.
Al-Ghazali’s insight here is strikingly modern. He understood that economic systems shape character. When systems reward irresponsibility, they cultivate it. When they demand shared risk and accountability, they cultivate trust.
The Economy as a Moral Ecosystem
What sets Al-Ghazali apart from many modern economists is his refusal to isolate economics from ethics. For him, the economy was not a mechanical system governed solely by supply and demand, but a moral ecosystem embedded within society.
Markets, he believed, should serve human flourishing. This includes material needs, but also spiritual and social ones. Fair pricing, honest trade, and compassion toward the vulnerable were not optional virtues; they were structural necessities.
In today’s language, Al-Ghazali anticipated what we now call institutional ethics. He understood that personal morality cannot survive long in immoral systems. If markets reward deception, people will deceive. If they reward extraction over contribution, extraction will dominate.
This insight challenges the modern tendency to treat ethics as an afterthought—a matter of corporate social responsibility rather than economic design. Al-Ghazali would argue that ethics must precede efficiency, not follow it.
Relevance in a Financialised World
Why does Al-Ghazali matter now?
Because we live in an era where money increasingly governs meaning. Success is measured numerically, worth quantified financially, and policy judged by growth alone. Yet despite unprecedented wealth, anxiety rises, inequality widens, and trust erodes.
Al-Ghazali offers a different lens. He reminds us that money is a servant of values, not their replacement. When money dictates morality, societies fracture. When morality governs money, societies stabilise.
His ideas resonate with contemporary debates about stakeholder capitalism, ethical finance, and sustainable development. They also expose the limitations of technocratic solutions divorced from moral reasoning. Algorithms may optimise markets, but they cannot define what markets are for.
The Brilliance of Moral Clarity
Al-Ghazali’s genius lies not in predictive models or mathematical formalism, but in moral clarity. He saw that economics is ultimately about human choices—about what we reward, what we tolerate, and what we revere.
In linking money to morality, he did not weaken economics; he completed it.
Modern economics, for all its sophistication, often struggles to answer its own foundational questions. Why should growth be unlimited? What justifies inequality? When does profit become predation? Al-Ghazali asked these questions a millennium ago—and refused to separate them from the economic conversation.
Perhaps that is why his work feels unsettlingly relevant. He reminds us that economic brilliance is not merely technical mastery, but ethical wisdom applied to material life.
A Question for Our Time
If Al-Ghazali were alive today, he might look at our markets, our debt structures, and our obsession with accumulation—and ask a simple, disarming question:
If money is meant to serve human flourishing, why have we built an economy in which humans increasingly serve money instead?