THE DIMENSIONS OF AN ISLAMIC ECONOMIC MODEL

Syed Nawab Haider Naqvi
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Syed Nawab Haider Naqvi: former Director of the Pakistan Institute of Development Economics, Postal: Islamabad, Pakistan

Islamic Economic Studies, 1997, vol. 04-2, 1-23

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.

Date: 1997
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