THE DIMENSIONS OF AN ISLAMIC ECONOMIC MODEL

Abstract

The paper answers in the affirmative the question about the need for an Islamic economic model, and then proceeds to delineate its dimensions. The distinguishing characteristic of such a model is to highlight the ethical dimension of the economic calculus - i.e., that without ethical moorings individual economic behaviour remains unpredictable. It shows that rational utility-maximizing behaviour will be helped by an ethically-oriented reorganization of present-day economic systems in Muslim countries. Formally, the Islamic economic system is presented as an ‘optimum regime’. On the methodological plane, such a regime gives due prominence to both value judgments and positive judgments in making generalizations about an idealized Islamic economy. At the theoretical level, it is a way of transforming their refutable ethical principles into refutable statements about the behaviour of economic agents in a typical real-life Muslim society. In practice, for such a regime to reflect Islam’s overarching ethical vision of economic processes, it would take assigning top priority to the needs of the least-privileged people in a growing economy. This implies giving greater weight to the wage-goods in total output, minimizing the production and consumption of wasteful luxuries, and redistributing income and wealth from the rich to the poor.

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