Why a Distinct Islamic Economic Development Model is Necessary: Foundations and Framework of Islamic Moral Economy in Light of Islamic Ontology

Abstract

This study examines the need for a distinct Islamic economic development model based on Islamic principles. The current global economic system faces significant income inequality and wealth distribution issues, prompting a search for alternative models. Many Muslim countries, having experienced both capitalism and socialism, struggle with high unemployment, poverty, and economic instability. The Islamic ethical economy offers a value-based approach that aims to reduce inequality and promote balanced growth through human-centered development. Key concepts such as Tawheed-ullah recognize Allah as the Creator and Owner, addressing resource imbalances and unjust allocation. Al'Adle Well Ehsan emphasizes social stability and participative development, while Tazkiyah focuses on purification, linking self-reliance to economic development. Furthermore, Ikhtiyar and Khalifa highlight the ethical responsibilities in the Islamic Moral Economy, and Maqasid Al Shari’ah outlines the objectives of Islamic law, emphasizing individual well-being. This study proposes a new Islamic Economic Development Model, drawing on Imam Al Ghazali’s ethical framework and integrating Amartya Sen’s Theory of Capabilities. The model considers both physical and psychological aspects of human development, aiming for success and happiness in this life and the afterlife. It aligns with Islamic goals, balancing material and intellectual development. By linking developmental goals in Islam with spiritual uplift, the study uses the Ghazalian ethical framework to achieve self and social development, ultimately attaining falah (success in the afterlife). This comprehensive approach ensures that worldly development aligns with spiritual objectives, promoting justice and equity in society.