reviews of books d fawzy atwi

Tradingstrategycourse.com 26 Jan 2024

In crafting a literature review on the topic of "Economy and Money in Islamic Legislation and Man-made Systems," it's essential to explore the key differences and similarities between these systems. Islamic economics, characterized by its adherence to Shariah principles, stands in contrast to capitalist economies in several fundamental ways.

One of the core differences is the Islamic prohibition of interest (riba) and speculation (gharar), which significantly influences the structure and operation of Islamic financial institutions and products. The Islamic economic model advocates for profit-loss sharing arrangements (such as mudaraba and murabaha), and places a strong emphasis on wealth redistribution through mechanisms like waqf, sadaqah, and zakat​​. These elements are rooted in the ethical and moral framework of Islam, which seeks to promote fairness, social justice, and the avoidance of exploitation.

The evolution of Islamic finance has been rapid over the past decade, with its assets growing annually by 10-12% and reaching approximately US$2 trillion. This expansion includes a diverse range of financial instruments and institutions, including banks, capital markets, money markets, and insurance products like Takaful. Interestingly, Islamic finance has gained traction not only in Muslim-majority countries but also in non-Muslim countries like the UK, Luxembourg, South Africa, and Hong Kong. This growth demonstrates the global appeal and applicability of Islamic finance principles, which are equity-based, asset-backed, ethical, sustainable, and emphasize risk sharing, financial inclusion, and social welfare​​.

Comparatively, the capitalist economic system, which dominates many Western and global economies, operates on principles that are markedly different. It is characterized by the liberalization of markets, the pursuit of profit, and often, the separation of financial activities from tangible real-world assets. This model has led to significant wealth accumulation and economic growth but has also been criticized for contributing to economic disparities and promoting unsustainable practices.

To understand these differences in a more analytical context, econophysics models provide valuable insights. These models apply principles from physics, such as kinetic energy exchange, to economic systems to understand wealth distribution and disparity. For instance, models show how wealth can become concentrated in the hands of a few, as illustrated by the Pareto principle, or how the introduction of taxation and insurance models can alter wealth distribution within a society​​.