Islamic Economics

The only fruitful way to study economics in this ‘fuller perspective’ is to derive basic economic propositions (or ‘statements’) from the first principles of religious ethics – namely, those which are universally accepted by economic agents, who, in the present context, are Jews, Christians, and Muslims. This deductive method, according to Karl Popper, is the only valid method of creating knowledge. However, apart from methodological reasons, the relationship between economic behaviour and religious ethics needs to be highlighted because a voluntary acceptance of restrictions on one’s freedom to support collective action and cooperative relationship requires an ‘internalised’ sense of social obligation, which all great religions have emphasised. Indeed, without strict adherence to shared religious virtues such as truth, mutual trust, observance of contractual obligations etc, no economic system can work efficiently, let alone equitably.