Studies in Islamic Finance, Accounting and Governance series
Chapter 2: Islamic economics: what it is and how it developed
Islamic economics has been having a revival over the last few decades. However, it is still in a preliminary stage of development. In contrast with this, conventional economics has become a well-developed and sophisticated discipline after going through a long and rigorous process of development over more than a century. This raises a number of questions, some of which are: Is it necessary to have a new discipline in economics? If so, what is Islamic economics, how does it differ from conventional economics needed, and has it made any worthwhile contributions over the centuries? This chapter tries to briefly answer these questions in three parts. It is universally recognized that resources are scarce compared with the claims on them. However, it is also simultaneously recognized by practically all civilizations that the well-being of all human beings needs to be ensured. Given the scarcity of resources, the well-being of all may remain an unrealized dream if the scarce resources are not utilized efficiently and equitably. For this purpose, every society needs to develop an effective strategy, which is consciously or unconsciously conditioned by its worldview. If the worldview is flawed, the strategy may not be able to help the society actualize the well-being of all. The prevailing worldviews may be classified for the sake of ease into two board theoretical constructs: (1) secular and materialist, and (2) spiritual and humanitarian.
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