Market mechanisms in conventional economics and Islamic Economics

Faidatun Nashihah

MPRA Paper from University Library of Munich, Germany

Abstract: This article describes the market as a meeting place between demand and supply for the type of goods or services. In a capitalist economic system, buyers and sellers bargain with each other to determine prices that give freedom to the market and the government must not intervene which can disrupt the market balance. While the socialist economic system has a view by eliminating the role of markets and the government plays an active role in resolving and regulating all economic problems. In Islamic economics, the market is left freely or the government distorts the existence of a market mechanism. Using a comparative approach to the existing economic system in the world, this article concludes that the Islamic economic system combines market freedom and the role of government that emphasizes the principle of maslahah (goodness), which is a condition of market justice that emphasizes the fulfillment of people's needs in achieving welfare (falah).

Keywords: market mechanism; capitalism; socialism; Islamic economics; falah (search for similar items in EconPapers)
JEL-codes: E02 I31 P10 P20 P51 (search for similar items in EconPapers)
Date: 2019-03-20, Revised 2019-04-02
New Economics Papers: this item is included in nep-hme, nep-isf and nep-mac
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