In Islamic economic framework, increase in investment through entrepreneurial activities could increase the labor demand and wages. Increase in wages will improve the standard of living of poor labor class and enable them to improve their productivity further.
The recent literature on Islamic economics hardly makes use of mathematics even for expositional purposes. Mathematics is a language. It keeps argument and logic straight. Just like growth models could talk of seemingly non-mathematical concepts like public infrastructure, social infrastructure and governance, one can incorporate Islamic principles to show how they could be more welfare enhancing. For instance, the need is to show the impact and effects of Islamic principles on allocation of resources, income distribution, externalities and so on using mathematics.
Institution of family is highly respected in Islam. Women are indispensable part of this institution. As per Islamic worldview, mental and physical capabilities that we enjoy are the blessings of Allah and we hold them as a trust. Therefore, based on the differences in these mental and physical capabilities alone, no one is superior and powerful in the eyes of Allah.
Both the absence of broad based wealth taxes and the legal decree of allowing compound interest on money capital are the prime sources of wealth concentration. If both are corrected, capitalists would not be able to systematically exploit in competitive markets.
Abbas Mirakhor and Hossein Askari write that the claims of any society to call itself Islamic must be validated by the existence and effective operations of the institutional structure (rules of behavior). They opine that in today’s Muslim societies, the core elements of the institutional structure that would designate a system as Islamic are, by and large, notable for their absence.
Most of the description of human economic behavior in mainstream economics is trivial at best. Mankiw once wrote in a widely used textbook ‘people react to incentives, rest is commentary’. Islamic economics cannot confine itself to commentary on material pursuits alone. In mainstream economics, the important issues of equity, welfare, equitable distribution and institutions that can ensure these are at the periphery rather than at the center.
This article briefly analyzes the logical arguments that are usually presented in the defense of interest as a price of money capital in loans.
Islamic economics enables a Muslim society to achieve certain ends. It is not so difficult to understand that material resources are required in order to achieve the objectives or Maqasid of Shariah namely “preservation and protection” of Deen, Life, Family and Intellect. The purpose of Divine Law is to make mankind successful in Akhirah. Therefore protection of the religious and spiritual status of the mankind is the prime objective of Shariah. The remaining objectives are also meant to help toward achieving this bigger goal.
Allah asks people to use their intellect and exploit the nature’s blessings. Islamic principles neither stop one’s use of intellect in seeking material progress, nor the pursuit of success in life hereafter conflict in any way with success in this world provided that the ethical filters and Islamic injunctions are observed where they have been explicitly given.
Message of Islam invites people of all faiths, race, color, region and gender towards its message of peace, excellence of character and living in harmony with nature and environment.