Category: Articles on Islamic Economics

Articles on Islamic Economics

Islamic Worldview and Sustainable Development: Limits of Legal Compliance and the Need for Ethics

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Sustainable development in an Islamic economy is unattainable without the integration of ethics. To stay relevant, it is essential to broaden the interpretation of Shariah compliance beyond mere legal requirements, incorporating maqasid and qawaid to foster positive social and environmental outcomes. Islamic economics and finance are designed to benefit all humanity, not just Muslims, and achieving “Rahmatil alamin” (mercy to all) requires ethics to be deeply embedded in the economy. However, this can only be realized by transforming the mind-set of economic agents from “homo Islamic-legalus” to “homo Islamic-ethicus,” who prioritize ethical decision-making.

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Behavioural and Islamic Economics Critique on Mainstream Views on Unemployment: A Joint Perspective

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Mainstream economic policies often prioritize short-term goals, such as inflation control and GDP growth, over addressing the root causes of unemployment. This short-sighted approach can lead to unemployment persistence, even during periods of apparent economic growth. By contrast, behavioural economics urges policymakers to adopt long-term and holistic strategies that prioritize social welfare and sustainable job creation, offering a more nuanced and comprehensive perspective on addressing unemployment.

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Debunking Economics

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Prof. Keen shows the unscientific nature of economics by looking at the notion of diminishing marginal costs required to produce a downward slopping supply curve. He presents a summary of the empirical evidence which contradicts this key assumption of economics. How has economics handled this consistent evidence accumulated over many decades? By ignoring it. This speaks volumes for the way that economics handles contrary evidence to accepted beliefs. Not that this should come as a surprise, given that the notion was originally invented to ensure that neoclassical economics did not suggest that the economy would become dominated by big business (that this was precisely what was happening in the real economy at the time was considered irrelevant). The book also analyses a mathematical flaw in the standard argument against monopolies (often used to justify opposition to large firms). The book questions the conventional theory of the firm, arguing that monopolies can play a beneficial role in the economy.

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Reinstating the Family in ESG: A Tawhidic and Maqasidic Recalibration of Global Governance Frameworks

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The omission of the family from ESG frameworks is not a minor oversight—it is symptomatic of a deeper malaise within secular ethics and governance. As Professor Nejatullah Siddiqi once noted, “The preservation of family is not a cultural preference—it is a civilizational necessity.” The Mf-ESG model, with its Tawhidic, Maqasidic, and civilizational foundations, offers a corrective to the ESG paradigm’s moral myopia. It presents a model of sustainability not limited to compliance and metrics but inspired by meaning, purpose, and transcendence.

This model deserves further exploration and institutional support through high-level scholarly forums, international think tanks, policy summits, and academic curricula. It bridges theory and practice, faith and governance, offering not only a critique but a constructive framework for a just and flourishing civilization.

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Highlights of Human Development Report 2025

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This year’s Human Development report examines what distinguishes this new era of AI from previous digital transformations and what those differences could mean for human development (Chapter 1), including how AI can enhance or subvert human agency (Chapter 2). People are already interacting with AI in different ways at different stages of life, in effect scoping out possibilities, good and bad, and underscoring how context and choices can make all the difference (Chapter 3). Human agency is the price when people buy into AI hype, which can exacerbate exclusion (Chapter 4) and harm sustainability. And, of course, who produces AI and for what matter a lot for everyone (Chapter 5).

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Economic Development in an Islamic Framework

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Prof. Khurshid Ahmad argues that the Western model of development overemphasized industrialization, capital formation, and technological transfer while neglecting social and cultural factors. This approach adopted as it is by the third world countries has led to negative consequences, including increased poverty, inequality, and dependence on foreign aid. Prof. Khurshid Ahmad emphasizes that the Islamic concept of development focuses on human development across moral, spiritual, and material dimensions.  It encompasses the purification and growth of individuals and societies, striving for comprehensive well-being and prosperity in this world and the hereafter. He lists the goals of development policy within an Islamic framework which include human resource development, expansion of useful production, improvement in the quality of life, balanced development, evolution of new technology, and reduction of national dependency on the outside world.   

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Remembering Prof. Zubair Hasan

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He wrote extensively on Islamic microeconomics giving the Islamic perspective to the theory of consumer and producer behaviour. He would go beyond philosophical debates and narratives to also discuss the operationalization of the analysis of consumer and producer behaviour. He wrote several books, book chapters and research papers on Economics, Microeconomics, Development Economics, Essays on the issues in Islamic Economics and Islamic Banking.

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Outline of an Islamic Fiscal Policy

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Regarding taxation, Islam has laid out clear guidelines: not only is excessive taxation sinful, but even when collecting taxes even from non-Muslims, there should be no element of hardship. For example, Urwah ibn Zubayr narrated that Hisham ibn Hakeem (RA) once saw a tax collector in Homs mistreating some Christian Copts by making them stand under the sun while collecting Jizya. He objected, citing the Prophet Muhammad (PBUH) who said: “Allah will punish those who torment people in this world” (Sunan Abi Dawood 3045).

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Comprehending Human Economic Behavior Through a Multicultural Lens: Examining the Concepts of Homo Economicus and Islamicus

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Author states that the validity of the homo economicus model has been challenged by substantial empirical evidence showing that human beings are not entirely rational in their economic decision making, and are prone to cognitive biases and sociological factors. Herbert Simon proposed the concept of “bounded rationality” to describe the limitations of human rationality. The behavioural economics movement also sought to incorporate psychological insights into economic analysis, to construct more realistic models of human behaviour. The validity of the homo islamicus model has also been questioned for being overly idealistic and not necessarily reflecting the actual behaviour of Muslim economic agents, who are profoundly shaped by the modern social context.

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Economic Thinking of Arab Muslim Writers During the Nineteenth Century

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The authors highlight the negative effect of colonialism and double standards of Europe to keep the Muslim lands under colonial and imperial rule. They awakened the Muslims to avoid becoming laggards, isolated and mere consumers. Rather, they should also advance knowledge and sciences and do not feel shy in learning from the Western development experience. However, in doing that, they should not be uncritical to take everything European as acceptable, especially when it comes to interest based banking. Given that, there is much to take from socio-economic innovations such as the joint stock companies, mutual insurance, bank-based payment systems. The authors provided positivist explanations of how these institutions and structure avoid the problem of moral hazard, information asymmetry and achieve pooling of funds, risk diversification and efficiency.

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