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Market mechanisms in conventional economics and Islamic Economics

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  • Nashihah, Faidatun

Abstract

This article describes the market as a meeting place between demand and supply for the type of goods or services. In a capitalist economic system, buyers and sellers bargain with each other to determine prices that give freedom to the market and the government must not intervene which can disrupt the market balance. While the socialist economic system has a view by eliminating the role of markets and the government plays an active role in resolving and regulating all economic problems. In Islamic economics, the market is left freely or the government distorts the existence of a market mechanism. Using a comparative approach to the existing economic system in the world, this article concludes that the Islamic economic system combines market freedom and the role of government that emphasizes the principle of maslahah (goodness), which is a condition of market justice that emphasizes the fulfillment of people's needs in achieving welfare (falah).

Suggested Citation

  • Nashihah, Faidatun, 2019. "Market mechanisms in conventional economics and Islamic Economics," MPRA Paper 93190, University Library of Munich, Germany, revised 02 Apr 2019.
    • Handle: RePEc:pra:mprapa:93190
    as

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    References listed on IDEAS

    as
    1. Abdul Azim Islahi, 2005. "Contributions of Muslim Scholars to Economic Thought and Analysis مساهمات علماء المسلمين في الفكر والتحليل الاقتصادي," Books published by the Islamic Economics Institute, KAAU., King Abdulaziz University, Islamic Economics Institute., edition 1, number 38, July.
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    More about this item

    Keywords

    market mechanism; capitalism; socialism; Islamic economics; falah;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • P10 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - General
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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