(The following paragraphs refer to Sunni Islam. The shiite concept and practice of ijtihad is slightly different.)
In early Islam ijtihad was a commonly used legal practice, and was well integrated with the philosophy of kalam, its secular counterpart. It slowly fell out of practice for several reasons, most notably the efforts of the Asharite theologians, who saw it as leading to errors of over-confidence in judgement. Al-Ghazali was the most notable of these, and his "The Incoherence of the Philosophers" was the most celebrated statement of this view.
It is debated whether Al-Ghazali was observing or creating the so-called "closure of the gate of ijtihad". Some say this had occurred by the beginning of the 10th century a couple of centuries after the finalizing of the major collections of hadith. In the words of Joseph Schacht: "hence a consensus gradually established itself to the effect that from that time onwards no one could be deemed to have the necessary qualifications for independent reasoning in religious law, and that all future activity would have to be confined to the explanation, application, and, at the most, interpretation of the doctrine as it had been laid down once and for all." This theory has been put in question recently by Wael Hallaq.
What is clear is that long after the 10th century the principles of ijtihad continued to be discussed in the Islamic legal literature, and other Asharites continued to argue with their Mutazilite rivals about its applicability to sciences.
Al-Amidi (1233) mentions twelve common controversies about ijtihad in his book about usul al-fiqh (the theory of Islamic law) amongst others the question if the Prophet himself depended on ijtihad and if it should be allowed for a mujtahid to follow taqleed.
In Islamic political theory ijtihad is often counted as one of the essential qualifications of the caliph, f.e. by Al-Baghdadi (1037) or Al-Mawardi (1058). Al-Ghazali dispenses with this qualification in his legal theory and delegates the exercise of ijtihad to the Ulema.
Along with isnah (citation), ijtihad is considered to have been a major influence in the development of the scientific method. Ironically, the loss its application in law seems to have also led to its loss in philosophy and the sciences, which most historians think caused Muslim societies to stagnate before the 1492 fall of Muslim Spain, after which Muslim works were translated and led in part to The Renaissance revival of classical works, using improved methods, who were no longer using these methods in their daily life at all. This resulted in the muslims entering the dark ages, where they have been ever since.
see also fiqh, usul al-fiqh, ijma, qiyas, istihsan, list of Islamic terms in Arabic
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