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The purpose of this study is to explain the effect of a tax-free regime of socioeconomics in the social well-being function. This paper carries on the message that has been recognized in the economic theory and by many for a long time now. This is that the incidence of all forms of taxes – direct and indirect taxes – proves to cause inequitable distribution of wealth. The rich still comprises the top 1 per cent of the income earners despite the existence of heavy tax burden. This paper goes beyond this observation and its explanation to make the case that the tax regime also causes distortionary effects in the generalized system of social and economic relations.

In the midst of the generalized system of simulating the well-being function, subject to what is called the circular causation system of the endogenous variables is explained by the critical parameter of the epistemic nature in the unity of knowledge by complementarities between the variables signifying the good choices.

This paper also contrarily establishes and explains the nature of equitable production and distribution of income in society at large. The tax-free regime is explained to generate and sustain balanced inter-causality between the critical variables in the generalized system of equations for simulating the well-being function. Some of the special properties of the evolutionary learning kind of the well-being simulation problem in the tax-free regime are brought out.

Empirical work could follow.

Of special interest are the Arab Middle Eastern countries, most of which do not levy tax on households; with a small rate on businesses.

This paper goes beyond this observation and its explanation to make the case that the tax regime also causes distortionary effects in the generalized system of social and economic relations. Most importantly, the presence of tax regime disturbs the balanced forms of inter-causality between the critical variables of the social and economic type. The social well-being is thus eroded in the midst of a tax regime.

This paper is a rare one of its kind to bring out the question surrounding the tax-free regimes usually practiced in Islamic fiscal theory and today adopted by many Muslim countries in the Middle East.

The purpose of this paper is to lay down the methodological structure of the epistemology of tawhid (Oneness of Allah). In this paper, the meaning of tawhid also refers to the monotheistic unity of knowledge (consilience) in the cast of its organic pairing by circular causation relations between the moral and material possibilities. The paper thereby raises the critique of mainstream economic reasoning and its imitation by existing Islamic economics. Consequently, by the ontological, epistemological and phenomenological foundation of tawhidi methodological worldview, an altogether new socio-scientific reasoning in generality and economic reasoning in particular is introduced.

The socio-scientific methodological reasoning of unity of knowledge according to the tawhidi methodological worldview is introduced contrary to the inept rational choice postulates of mainstream economic reasoning and its imitation by existing notions of Islamic economics. The method of instructing students in the light of this approach according to Tawhidi Islamic Economics (TIE) is introduced from the existing literature.

The existing nature of mainstream economics and its imitation by Islamic economics is critically deconstructed and replaced by the true epistemological, ontological and phenomenological perspectives of TIE in the world of learning. Some inner properties of such a methodological study of TIE are laid bare for further investigation.

This is the first paper of its kind in this journal to expound the original and most creative methodological worldview that Islamic economics must bear. This is the foundation of the development of the true stance of Islamic economics and finance.

This paper aims to open the gateway of methodological abstraction and its application in an Islamic perspective in a way that has not been carried out before in Islamic literature. That is because of the absence of ontological and epistemological inquiry in Islamic erudition for a long time now. In the case of the Shari’ah and its induction of socioeconomic studies, the span of intellection and application ought to be premised on the ontological, epistemological, phenomenological and continuity attributes derived from the monotheistic law. This takes the formalism of organic inter-causal unity of being and becoming between the complementary good choices of life. The ontological monotheistic law of unity of knowledge is referred to as Tawhid in the Qur’an. Empirical work is done in support of the argument presented in this paper.

This paper is a formal contribution in the direction of developing a model of well-being based on the methodology of unity of knowledge arising from the Tawhidi epistemic foundation. In this regard, a methodologically interrelated theoretical and empirically applied study is accomplished to test the argumentation and hypothesis of endogenous systemic embedding of inter-variable causality between Shari’ah and economic and financial issues.

In spite of the epistemic approach to explain the embedding model of interrelationship between Islamic law and details of the socioeconomic field, Islamic scholarship and practice in all fields have remained oblivious to its epistemic roots. Consequently, as presently understood, Shari’ah and economics and the various socio-scientific specifics, as of Islamic finance and financial and religious institutions in these areas, could not make a generalized model of social well-being, one that can be simulated by inter-variable causal relations.

The paper conveys a critical conceptual idea to debate the scope and approach of Islamic Law, Shari’ah, on economic matters. The system-oriented approach is used to formulate a systems theory of integration between Shari’ah and economics. The results of the approach implemented in this study constitute a major contribution of this paper to scholarship in general and acts as a critique of traditional Islamic thought with respect to Shari’ah and economics.

The purpose of this paper is to explain the structure of Islamic monetary transformation into 100 percent reserve requirement monetary system in terms of the foundational epistemology of the unity of divine knowledge (tawhid). This approach is a scholarly originality in the field of epistemological formalism concerning Islamic theory and perspectives in economic reasoning in comparative perspectives.

The role of micro-money pursuing projects and real economic exchange relations is shown to arise by a natural causality in the ethical social economy (SE). This results in a microeconomic perspective of the quantity theory of money with ethical and social implications. A comparative study of endogenous money in the quantity theory of money points out significant differences between the theory of endogenous money in Islam and mainstream methodologies. A formal model of micro-money and its organismic endogenous relationship with the real economy is formulated with the goal of realizing social well-being, economic stabilization, and sustainability of development regimes.

This is a conceptual paper, though with the potential for continued work in applying the theory of micro-money in the Islamic methodological perspective of unity of knowledge. This is an original contribution of this paper. Islamic economists have not been able to produce a rigorous theory of micro-money. They have also not been able to situate the study of Islamic economics with its specific contribution to the field of the nature of money in project-specific financing of Islamic projects by the money-finance-real economy inter-causal relations. Thus, the findings of this paper, though of the conceptual nature, open doors to a vast field of methodological development and its application to the problem of micro-money modeling. Such a conceptual finding arising from the methodological theory of unity of knowledge and applied to the topic of micro-money along with some examples of potentiality of these approaches constitutes a vastly original field of findings as contribution. Thereby, an analytical model is established in the Islamic social economy (ISE) perspective. The model is used to explain monetary transmission and functioning of monetary policy with instruments that avoid interest rate and comply with Islamic financing requirements. The resulting model of money, finance, and real economy (MFE) systemic interrelationship in reference to the epistemology of unity of knowledge leads into the construction of a 100 percent reserve requirement monetary system with the gold-backed micro-money as currency complementing real economic transactions.

The present paper is of a conceptual type based on the essential ontological and epistemological foundation of Islamic social and economic thought and bearing a deeply scientific implication. The conceptual part of this paper becomes a study in the foundations. The second part follows into the study of application in the real world of micro-money in terms of financing projects. Micro-money pursues projects in the Islamic economy due to its very nature of ethical and social choices. The paper shows that such a micro-money transmission is realized by the money-finance-real economy integrated model. Thereby, some real-world examples of such transformations are given. All these together substantiate the conceptual-analytical-empirical nature of the study conducted.

The development of the micro-money transmission system of generalized circular causation interrelations between MFE activities as a return to 100 percent reserve requirement monetary system with the gold standard is the profound theory that has been propounded. Its applied perspectives are implied through the MFE-model wherein micro-money pursues social projects. Furthermore, the possibility and practicality of such a conceptual model of micro-money and its transmission mechanism in the real economy are established by real-world examples of kinds of micro-money that are found to circulate or are recommended by some studies in the literature.

The conceptual part of the paper presents a model of generalized epistemological model of unity of knowledge characterizing the MFE circular causal interrelations as the organismic meaning of social ethics and evolutionary learning. The social implications are the epistemic foundations of the derived model in the midst of choices of life-fulfillment projects that micro-money finances and the economy sustain.

This is an original paper premised on the general and the specific Islamic epistemological criterion of unity of knowledge as a generalized system theory. It is now particularized to the case of money and real economy by using the Islamic perspective of creating conditions to regenerate resources continuously in SE with ethical implications. The paper is equally informative to all who like to understand the social and ethical nature of endogenous relations between money and the real economy as two great institutions of the national economy. These together bestow well-being to the society at large in the construction of SE. Specific attention in this regard is given to ISE.

The purpose of this study/paper is the generalized ontological law of monotheism (unity of knowledge) and its functioning in the financial world system is summarized and contrasted with the recent conception of “shari’ah-compliance”. Thereby, some specific rulings of shari’ah-compliance in Islamic finance are critically annulled. The principal problem of the inability of shari’ah-compliance in the formalism of rate-setting and debt cancellation is pointed out in analytical ways. The alternative valuation models in the light of the Tawhidi ontological law are formalized. Many important issues are examined in analytical and Tawhidi authentic ways of Islamic law contra to shari’ah-compliance.

The epistemological approach commencing from the Tawhidi ontological law is used as the premise of developing analytical formalism to counter the irrelevant rulings done by the field of shari’ah compliance. Thereby, endogenous moral and ethical foundations are studied in deriving analytical finance models of asset valuation, rate-determination and debt cancellation.

Substantive analytical results are derived for intellection in the area of the primal ontological law of Tawhid that negates many of the rulings framed up in shari’ah-compliance area of Islamic law. These results can guide financial academia, practitioners and policymakers.

The paper can be expanded subsequently to the area of analytical Islamic finance in general by further investigating the Modigliani and Miller theorem on optimal debt-equity structure of corporate finance. An introduction to this study is provided in this paper as a starting point of dealing with the debt problem of shari’ah-compliance.

The paper presents important guidance as input for the rulings of shari’ah-compliance idea held by shari’ah advisory boards and similar institutions presently operating at the financial level.

The paper presents a subtle transformation of the social and financial order in the light of the Tawhidi ontological law quite differently from the way that shari’ah-compliance envisions.

The theoretical and projected applied perspectives in analytical finance presented in this paper provide a methodological worldview for all areas of social finance with ethical consciousness. Such analytical approach is much needed today in the reconstruction of global finance in the scale of ethics and away from the sole focus on capital market efficiency.

The purpose of this study of this methodological abstraction is erected the nature of the well-being function as evaluative criterion. The well-being function (maslaha) evaluates the interrelationships between long-run investment (real sector), the corresponding financial instruments (financial sector) and the embedded socioeconomic variables and ethical values conveyed by extensive complementarities and participation in a systemic approach of unity of knowledge. Among the financing variables to be selected will be the transformation of debt-instruments into equity instruments. All financial instruments are to be transformed into a holistic participatory pooled portfolio.

The paper establishes the point that, the idea of long-run is appropriately that of a juncture of Islamic change during which the objective of well-being (maslaha) is evaluated (estimation leading to simulation) with long-run investment and Islamic financing instruments on the basis of the Islamic methodological worldview. This methodological worldview is premised on the ontological foundation of the episteme of organic unity of knowledge and the resulting world-system. The Qur’an refers to this foundation of knowledge as Tawhid. Tawhid is used in this paper to mean the Primal Ontological Law of Unity of Knowledge.

The most critical long-run investment program focused on is poverty alleviation and its equity-based financing instruments that reduce debt progressively to attain sustainable grassroots development with the ability to own, and the social capability to distribute resources and enable the grassroots. The corresponding interaction, integration and evolutionary dynamics of learning that emanate from the interrelationship of poverty alleviation as the focus of long-run investments and their attenuating financing instruments, along with the implications of inter-causal socioeconomic variables and the embedded episteme of unity of knowledge in the well-being function (maslaha). This paper is thus an abstracto-empirical contribution to the literature of Islamic finance, long-run investment and socioeconomic development with global significance.

The choice of long-run investment for poverty alleviation and the corresponding Islamic financing instruments are summarized by the following Tawhidi epistemic schema (an extractive picture). Upon this epistemic methodological worldview, the entire structure of well-being and sustainability of socioeconomic development lies.

The paper brings out many of the properties that ought to be the truly moral/ethical and thereby the conformable analytical nature of the model of financing and investment in a combination of short-, medium- and long-term mobilization of resources to attain levels of social well-being as the objective criterion. Empirical work is done to bring the objective criterion to an applied level and to critically examine the work in the same field being carried out by many other ones, including authors and institutions. The empirical work done here can be widely extended to the case of estimating of the maslaha function (well-being).

This paper carries an essentially moral and social perspective in its methodological orientation that is derived from the Islamic epistemological foundations of unity of knowledge (Tawhid) and applied to Islamic finance and investment theory with the well-being objective criterion.

This is an original paper that combines methodological abstraction with applied financing and investment perspectives. Such an abstracto-empirical approach has not been done in Islamic research writings.

This paper aims to explain the dynamics of the inner inter-variable functional relations of trade versus oppositely coterminous variables of interest rates as shadow rates of interest. Such an explanation of trade versus riba relations has not been covered in the literature on Islamic economics and finance. Furthermore, the consequences of understanding the trade vs riba rule in relation to the bank-saving function remains absent in the literature. This problem as an important one between trade-interest rate and bank-savings interrelationship is studied. An empirical explanation is given besides the analytical explanation. This paper therefore presents an original and substantive topic to study.

The avoidance of usury and financial interest have equivalent injunction in the Qur’an by the riba rule. To attain and implement the riba-avoidance rule, it is necessary to understand this rule in terms of its adverse relationship; and contrarily by the positively complementary interrelationship between trade, money, finance and the real economy under the impact of the riba rule. In explaining such inter-causal relationships, certain analytical matters stand out as key points. These are studied in the light of the Islamic methodological basis of the ontological law of participatory oneness as monotheistic unity of knowledge and its impact on the understanding of the trade versus riba and bank-savings rule.

First, bank-savings cause withdrawal of resource mobilization and thus rupture the positive complementarities between the purpose and objective of the Shari’ah (maqasid-as-shari’ah) variables. Second, to deeply understand the rule of establishing trade versus the practice of riba (financial interest) and the needed theory of complementary inter-variable relationships to enable the relationship of trade versus riba, it is fundamentally necessary to understand the Qur’anic epistemological premise of Tawhidi unity of knowledge as organic unity and its induction in the generality and details of the problems under study.

Such an explanation of trade versus riba relations with the instrument of bank-savings has not been covered in the literature on Islamic economics and finance. It is therefore an original and substantive issue to study.