The rate of return for most non-agricultural activities will fall to naught, while the rate of return for farming will soar high. The organized sector, assisted by interest-driven financing, keeps prices of its products and services high by controlling production and employment. Due to the confusion created by the illusion of consistently rising prices, commoners fail to respond effectively.
The authors note that the instability leading to crisis is assumed away by the models which assume inherent stability. Economists are confined to models of stable states that are perturbed by limited external shocks. Economists failed to incorporate the intrinsic recurrent boom-and-bust dynamics characteristic of a complex economic system. Consequently, ‘systemic crisis’ is treated as an ‘otherworldly event’ absent from theoretical frameworks.
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.
Islamic Economics Project 