Investment decisions and social justice

The Islamic economy makes investment decisions and allocates resources through market forces, but considerations of social justice and human well-being also play a dominant role. For example, the primary consideration for deciding about the production and distribution of a product lies in its legitimacy under the Shari’ah. However, after crossing this barrier, other considerations such as justice, need fulfilment, reward in the Hereafter, moderation and sharing also influence the investment decision. In the private sector, profit maximisation guides investment decisions. In the public sector, besides the usual methods of project evaluation, a second layer of multiple-factor criteria influences the investment decisions. Fiscal policy allocates public resources among various sectors. Additionally, the Islamic economy distinguishes between obligatory and optional heads of account in its budget. The obligatory heads of account focus on considerations of social justice. The optional heads provide flexibility and room for adjustment according to current and future needs.