Islamic Economics and Economics

Price determination by supply and demand as the core of the science of economics is acknowledged by Islamic economists as by anybody else. The same is the case with tools like indifference curves. But when it comes to maximization of utility by consumers and maximization of profits by entrepreneurs the situation changes. The main reason why this could not be accepted without qualification and reservations lay in the emphasis on moral values. It was rightly perceived that maximization of private gain could sometimes conflict with dictates of morality. Sometimes moral considerations call for behavior or policy different from the one derived on the basis of economic calculus.

Since Islamic economics envisaged economic agents under influence of moral values they refused to accept analysis based on the assumption of 'economic man' as valid for all times and places. That the analysis did apply some times to some places nobody disputed. In this manner Islamic economics envisaged economic behavior and economic policy inspired by morality which served two distinct purposes. Firstly it indicated what ought to be / was likely to be, as more and more economic agents internalized Islamic values. Secondly it provided a moral critique of modern economics by comparing and contrasting the consequences of current behavior and policy with the expected results of morally inspired economic behavior and policy.

That seems to be the distinctive feature of Islamic economics. Its focus is on problems with a moral side to them. Even though every economic problem is amenable to study by Islamic economics, it is where morality is involved that it has special contribution to make. Within the discipline of economics, Islamic economics is distinguished by its emphasis on morality.

Source: Dr. Muhammad Nejatullah Siddiqi, Economics An Islamic Approach. Republished with permission.