Analysing the Present State and Future Agenda
Studies in Islamic Finance, Accounting and Governance series
Chapter 6: Expanding the frontiers of economics
Conventional economics studies the economic problem of man arising from scarcity of resources in a market economy perspective. The economic analysis focuses on the behaviour of consumers, producers, business firms, government and non-government organizations, and so on. However, to keep the analysis simple and understandable, it treats a large number of factors such as individual differences due to genetic and hereditary factors, environmental pollution, climate change, international legal developments, political changes across the globe and so on as exogenous, although they influence the economic problem. Economics considers the effect of exogenous factors on economic variables but assumes them away as ‘other things being equal’. Muslim economists have adopted the same frame of reference for the development of Islamic economics. They are also trying to develop microeconomics, macroeconomics, public finance and so forth on the same pattern as in conventional economics. In addition they treat extra-market factors as exogenous. Developing Islamic economics as a social science presents immense possibilities for expanding the frontiers of economics. Besides the factors that are generally treated as exogenous a number of moral laws operate in the universe. Some of these laws affect the creation of wealth, distribution of income and state of material prosperity and deprivation.
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