Davi John J Simundo Palo

Introduction

The use of Gross Domestic Product as the central indicator of economic progress has become an unquestioned convention in global economic governance. Since its development in the mid twentieth century, GDP has anchored national income accounting, policy design, international comparison, and development planning.

Despite its widespread influence, GDP is conceptually narrow, measuring only the monetary value of goods and services produced within a national boundary. It aggregates market transactions without distinguishing between desirable and harmful economic activities, thereby treating all production as inherently positive.

Activities that degrade the environment, harm families, undermine public health, or erode social trust contribute positively to GDP if they involve market expenditures. Conversely, activities that generate substantial social value, such as caregiving, religious service, ethical restraint, community building, and informal mutual aid, are excluded because they are not monetized.

This reductionist approach reflects the philosophical foundations of GDP, which rest on secular utilitarian assumptions and methodological individualism. The metric was never designed to measure welfare, justice, or moral well-being.

Simon Kuznets, one of the architects of national income accounting, explicitly warned that GDP should not be treated as a proxy for societal welfare. Nevertheless, economic policymakers, global institutions, and mainstream economists adopted GDP as the central measure of progress, resulting in a technocratic system that prioritizes material expansion over holistic well-being.

Within the Islamic intellectual tradition, GDP poses profound conceptual problems. Islam does not view human welfare solely through the lens of material consumption or monetary exchange. Instead, Islamic thought conceptualizes human flourishing (Falah) as a multidimensional state encompassing ethical, spiritual, psychological, social, familial, and economic well-being.

Economic activity is not morally neutral but is embedded within a normative framework governed by divine guidance. The ultimate objective of economic systems is not merely to expand production but to support the pursuit of a virtuous life, uphold justice, protect human dignity, and ensure balanced societal development.

The core normative framework of Islamic law is found in Maqasid al Shariah, which identifies the essential objectives that law and public policy must preserve. These objectives include the protection of religion, life, intellect, lineage, and property. They represent universal necessities for human flourishing and provide clear ethical criteria for evaluating the legitimacy and desirability of economic activity.

When economic policy is guided solely by GDP, these ethical imperatives may be undermined. For example, a country may pursue industrial expansion that increases GDP but harms public health, violating hifz al nafs. Liberalization of entertainment sectors may boost GDP but erode moral and family values, violating hifz al din and hifz al nasl. Financial expansion through interest-based lending may raise GDP but undermine fairness and risk sharing, violating hifz al mal.

The fundamental misalignment between GDP and Islamic values necessitates the development of an alternative macroeconomic indicator rooted in Maqasid al Shariah. The proposed Maqasid Oriented GDP seeks not merely to supplement GDP with additional metrics but to reconceptualise national income accounting based on a teleological framework. Instead of measuring economic activity as an end in itself, M-GDP evaluates economic performance based on the degree to which it promotes the essential objectives of Shariah.

To develop this indicator, we engage in a multi-step analytical process. We reconstruct Maqasid al Shariah as an applied economic framework, analysing how each objective can be translated into measurable indicators. Then, we design a composite index that integrates the five Maqasid into a unified mathematical structure capable of empirical implementation. Finally, we analyse how adopting M-GDP would reshape fiscal policy, regulatory frameworks, investment strategies, and social welfare systems.

By embedding Maqasid al Shariah into macroeconomic measurement, we create an index that captures the full complexity of human well-being. This approach aligns economic governance with ethical imperatives and ensures that material progress does not come at the expense of spiritual, social, or moral degradation. The resulting framework represents not only an analytical innovation but also a normative transformation in the way Islamic societies understand and measure economic success.

Toward a Maqasid Oriented GDP Model

This section develops the core conceptual and methodological framework for the Maqasid Oriented GDP (M-GDP). Unlike GDP, which measures economic output without reference to ethical or social value, M-GDP seeks to evaluate national performance based on the degree to which economic systems promote the five essential objectives of Maqasid al Shariah. The model is designed as a multidimensional composite index that incorporates religious, moral, social, environmental, and economic indicators into a unified framework.

The M-GDP index is constructed using five primary dimension scores corresponding to each Maqasid:

M-GDP = w1 * D1 + w2 * D2 + w3 * D3 + w4 * D4 + w5 * D5

Where:

• D1 = Hifz al din
• D2 = Hifz al nafs
• D3 = Hifz al aql
• D4 = Hifz al nasl
• D5 = Hifz al mal
• w1 … w5 are weights summing to 1

Weights may be determined through:

• Expert consensus (shura-based deliberation),
• Public preference surveys in Muslim societies,
• Ethical priority rankings derived from classical jurisprudence.

Each dimension includes several sub-indicators:

Religion (D1):

• Availability of religious institutions
• Protection of religious freedom
• Ethical media environment
• Prevalence of harmful industries (inverse)

Life (D2):

• Health care access
• Mortality and morbidity rates
• Food security
• Environmental safety
• Pollution indices (inverse)

Intellect (D3):

• Education quality
• Research expenditure
• Literacy rates
• Prevalence of addiction or harmful content (inverse)

Family and lineage (D4):

• Marriage stability
• Divorce rates (inverse)
• Child welfare
• Social cohesion
• Crime rates (inverse)

Wealth (D5):

• Income equality
• Employment quality
• Access to finance
• Corruption levels (inverse)

Indicators will be normalized to a 0–1 scale using min max or z score methods. The dimension scores can be computed by averaging sub indicators, and the overall M-GDP is computed using the weighted linear aggregation formula. In cases where a Maqasid is severely violated (for example, widespread loss of life), a penalty function may be applied to ensure that violations reduce the overall score drastically.

The M-GDP framework captures both material and non-material welfare, embeds ethical considerations into economic measurement, ensures that harmful economic activity is not rewarded, provides a comprehensive basis for policy evaluation and aligns national planning with Islamic moral imperatives.

M-GDP can be integrated into budgeting, development plans, social welfare systems, and regulatory frameworks. Governments may allocate funds based on Maqasid priorities, shifting focus toward education, health, family support, environmental protection, and religious welfare.

Policy Implications of the Maqasid Oriented GDP Model

The adoption of the Maqasid Oriented GDP (M-GDP) framework has far reaching implications for economic governance, public finance, regulatory design, and national development strategies. Because M-GDP restructures the normative foundation of macroeconomic evaluation, it does not merely supplement existing metrics but transforms the priorities and incentives that shape state behaviour. This section explores how the integration of M-GDP into official statistical systems would alter fiscal policy, development planning, financial regulation, human capital strategy, and environmental management. The analysis demonstrates that M-GDP functions both as an alternative measurement tool and as a comprehensive blueprint for values-based governance.

Traditional GDP incentivizes states to prioritize industrial expansion, consumption, and short-term economic output. In contrast, the M-GDP framework encourages prioritization of:

• Human development
• Ethical financial systems
• Family integrity
• Public health
• Religious and moral safeguards
• Environmental sustainability
• Equitable wealth distribution

Under M-GDP, the success of a government is measured not by the pace of economic expansion alone but by its ability to uphold the five Maqasid. This implies a structural shift away from growth-based policymaking toward welfare-based governance. Thus, adoption of M-GDP would overhaul national governance, ensuring that public policy aligns with ethical goals and producing a more balanced, just, and sustainable society.