Islamic Economy and Capitalism

16 Pages Posted: 24 Apr 2020

See all articles by Abbas Mirakhor

Abbas Mirakhor

International Centre for Education in Islamic Finance (INCEIF)

Hazik Mohamed

Stellar Consulting Group; Putra Business School

Date Written: March 31, 2020

Abstract

There is a strong belief formed in scholarly and policy circles that contemporary capitalism is the source of many economic, social and political problems that plague the world today. This system is blamed for large inequalities between the rich and the poor, unrestrained profit-seeking without moral, ethical and social considerations, venal accumulation of income and wealth, and environmental destruction. The argument that capitalism drives innovation and attracts investment is now weakend substantially by these systemic global problems that pose existential threat to human societies. It is clear that the world cannot continue on the current trajectory and needs to harness other forms of managing its resources to create a balance between, self-love, profit motive, ambition on the one hand, and moral, ethical, social responsibility and environmental accountability, on the other. “Islamic economics” has been suggested as providing a basis for one such alternative system. However, it is argued here that the present paradigm of “Islamic economics” needs to change its orientation away from its current “Islamization of knowledge” methodology toward a paradigm more attuned to the Qur’an’s vision of society and its economy in order to provide a viable and sustainable set of solutions to human problems. A move in this direction requires consideration of elements of this vision that have not been been explored thus far in presentations of the discipline of “Islamic economics”.

This note is an exploratory consideration of one such fundamental elements derived from the Qur’an: the idea of spiritual capital — as the organizing element of effective and efficient utilization of social, human and financial capital — as a step toward initiating a paradigm shift in investigating the Qur’an’s vision of how societies should manage their resources.

Keywords: Capitalism, Economics, Economic System, Islamic Economy

JEL Classification: P51, B19

Suggested Citation

Mirakhor, Abbas and Mohamed, Hazik, Islamic Economy and Capitalism (March 31, 2020). Available at SSRN: https://ssrn.com/abstract=3564843 or http://dx.doi.org/10.2139/ssrn.3564843

Abbas Mirakhor

International Centre for Education in Islamic Finance (INCEIF) ( email )

Kuala Lumpur
Malaysia

Hazik Mohamed (Contact Author)

Stellar Consulting Group ( email )

Singapore
Singapore

Putra Business School ( email )

Universiti Putra Malaysia
Selangor, Selangor 43400
Malaysia

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