By Salman Ahmed Shaikh
Abstract
This paper attempts to explain the distinctive features of Islamic Economics that guide the equitable distribution of resources in an economy. Prohibition of interest and institution of Zakat encourage investment, spending and circulation of wealth. It is discussed that how Islamic principles help in achieving both efficiency and equity. Islam does not disallow market and price mechanism, but compliment them with rules and institutions that ensure distributive justice, equity and social welfare. The paper also discusses how Islamic principles help moderate greed, pursuit of self-interest and how ethical principles and afterlife accountability result in including externalities and marginal social cost in firm’s economic accounting of profits and costs. In the final section, it is argued that the Islamic ethical principles have far reaching effects on corporate governance.
Comments are closed.