An Ideal Islamic Economic System: A Gone Case
AbstractIslamic finance industry mostly uses LIBOR linked financial contracts which are akin to debt financing than the more preferable participatory modes of Mudarabah and Musharakah. As per the current orthodox understanding and practice of Islamic finance, the often cited preferable modes like Mudarabah and Musharakah are incapable even in a simple model economy with them as the only mode of financing. Hence, they are rarely used. The prevalent Islamic products which are linked with LIBOR are and will predominantly be used and practiced Islamic finance may remain incapable of providing egalitarian benefits it once promised. Ironically, Islamic values like justice, equality, truth, trust, kindness, honesty and responsibility are often discussed in literature and seminars on Islamic Economics; whereas, in reality, the lack of these values in practice is the major reason why preferable participatory modes remain unusable! As discussed, the current orthodox understanding of Islamic fiscal redistribution mechanisms like Zakat and Inheritance also make them incapable of contributing towards the establishment of an egalitarian economic framework. This paper proposes an alternate approach to practiced Islamic finance and orthodox understanding of Zakat and inheritance laws and shows that the alternate approach could still be sufficient to contribute towards egalitarian objectives effectively.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 26701.
Date of creation: 01 Nov 2010
Date of revision:
Islamic Finance; Islamic Economics; Welfare Economics; Experimental Economics; Heterodox Economics; Zakat; Fiscal Redistribution;
Find related papers by JEL classification:
- A1 - General Economics and Teaching - - General Economics
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- G0 - Financial Economics - - General
- B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-27 (All new papers)
- NEP-ARA-2010-11-27 (MENA - Middle East & North Africa)
- NEP-CWA-2010-11-27 (Central & Western Asia)
- NEP-HPE-2010-11-27 (History & Philosophy of Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shaikh, Salman Ahmed, 2010. "Proposal for a New Economic Framework Based On Islamic Principles," MPRA Paper 23000, University Library of Munich, Germany.
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