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 report calls for a new policy consensus based on equity, economic security for all, and solidarity. It emphasizes the need for structural transformations in policy, institutions, norms, and mind-sets, and a fundamental reorientation of policymaking through a social lens. A new consensus must prioritize strong social policies, investments in public institutions, and a people-centred approach to development, moving beyond the current over-reliance on markets.
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.
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.
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.
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.
Islamic Economics Project 