Islmic economic framework does not argue for a state-led or state-run economy. In fact, Islamic economic principles are very much open and favorable towards market based economy. By enabling market economy to run competitively, an Islamic economy provides market based solutions to employment creation and improvement in living standards through effective and efficient utilization of resources.
Islamic inheritance laws in Islamic economic framework have the potential to permanently and systematically reduce the concentration of wealth in every generation at the most micro level possible.
In neoclassical growth theories, the emphasis is on increasing savings and technological progress which brings about increase in capital per worker and eventually output per worker. In ‘endogenous growth theory’ models, more sophisticated work has been done by determining the factors which affect the technology, human capital and savings. This article analyzes whether Islamic economic principles have the capacity to help build these elements for sustainable growth and development.
Unrestrained chase of self-interest, moral relativism, incentive-led economic choices and indifference to collective responsibilities has led to engender societies where economic interests have become the solitary basis of establishing and maintaining relationships.
Non-discretionary fiscal policy with automatic stabilizers can help in stabilizing the business cycles. This article discusses how the institution of Zakat can act as automatic stabilizer in an Islamic economic framework.