Salman Ahmed Shaikh

This article highlights the points of distinction and compatibility between the Islamic and mainstream economics framework. The distinction comes in the decision horizon and the addition of moral filters on the choice set. The difference also appears explicit when one looks at the encouragement and incentive structure for pure altruism in a two-worldly Islamic framework. The distinction is even deeper in values whereby the Islamic framework encourages contentment, pure altruism and self-less behaviour while the mainstream economics framework is at best neutral between the moral content of economic choices.

This reflects in policy implications; whereby, in the mainstream economics framework, policy intervention is either suggested to be avoided with belief in the Pareto-efficient outcome of competitive markets or even when the intervention is tolerated, it is required to follow the principle of Pareto-improvement. Though, the practical public policy bypasses these theoretical policy implications and does favour excise tax on luxuries, subsidies on essential consumption goods and provision of public goods, which are funded from progressive taxation. On the other hand, Islamic framework does not need to resort to ad-hoc policy interventions. In the Islamic framework, enacting policies to promote Maslaha (social interest) and remove Mafsadah (social harm) govern the policy framework. Islamic jurisprudence suggests that in the presence of two evils, the one whose injury is greater is avoided by the commission of the lesser. Furthermore, severe injury can be removed by lesser injury. Table below gives a summary of the distinctive features in both frameworks.

Distinction in Consumption Framework