Search results

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 basis of the present financial crisis, which is bound to continue inflicting its venom because of structural problems of society, economy, finance, and institutions, is the insatiable preferences of households and investors that fuel excessiveness in the real estate market. Then there is the contagion that this kind of preference has on the economy and the foreboding uncertain market expectations everywhere. Finally, the excessiveness is allowed to survive and proceed on with unrelenting animal spirit by weak government polices, outmoded understanding of the economic and financial world-system, being unable to simulate the otherwise complex system by a spent-out methodology.

The purpose of this paper is to set out the role of banking in a binary and Islamic economy.

By comparison, the paper shows that the main requirements for such an economy, although superficially similar, differ from the realities of “free market” finance capitalism. The paper goes on to explain how, in a binary and Islamic economy, commercial banks would be the means by which interest‐free loans, coming from the central bank and ummah and directed at various forms of productive capacity, would be introduced.

There is no difficulty in using the banking system to introduce the binary and Islamic economy. However, a paradigm issue is involved.

The central bank‐issued interest‐free loans implemented through the commercial banking system loans serve the ends of both binary and Islamic economics in that they enhance the real economy and forward social and economic justice.

The paper shows how use of these loans is a new concept with a power to change the whole of the economy and society in a beneficial way.

The purpose of this paper is to bring out the topic of ethics and economics in reference to the nature of complementarities that can exist between monetary and fiscal activities. The connector in such complementarities is the unity of knowledge that can be generated in the inter-causal relations between monetary and fiscal activities.

The methodology adopted is of measuring out by quantitative modeling how well there exists complementary relations or otherwise between the Central Bank and commercial bank in order to mathematically explain the role of participatory learning behavior using money, debt, and spending variables.

The argument placed takes the conceptual form of result to show that there would be a prolonged extension of the non-inflationary and technological induction of economic growth in a regime of complementing money and fiscal policies.

The role of the quantity of money in a non-inflationary economic growth is set against the background of the tripartite inter-causal relationships between the Central Bank, the commercial bank, and the real economy. Analytical methods used bring out the role of knowledge in the inter-causal relations termed as circular causation for the attainment of social well-being in response to a stable and advancing economy with the ethicality of unity of knowledge.

The paper aims to offer a new perspective on the strictly microeconomic nature of all of Islamic economics. Writers in this field continue to work in the mainstream tradition without noticing the micro‐interface of the theoretical nature of Islamic economics. This paper aims to address this issue.

The paper provides a comparative study of received literature in the history of economic thought and contrasts the ethical foundations of Islamic economics from the mainstream dichotomy between microeconomic and macroeconomic parts.

There is a cogent microeconomic foundation of Islamic economics for the economy‐wide treatment of ethical economic issues and problems including the policy framework.

This is a theoretical exploration. The empirical part is yet to be expanded upon.

The paper has practical implications for graduate students on policy formulation and economic theorizing, by making them analytically aware on the extensive relevance of microeconomics in the building block of ethical content of economic theory, policy and institutions.

The paper presents original thinking along lines of microeconomic foundations of macroeconomic theory from the social and ethical vantage points of Islamic economics and finance that writers in this field should not ignore. The paper is meant for serious students and academics of economic theory and ethical social policy embedded in the economic treatment.

Davos World Economic Forum (2008a–d) sparked off a number of critical points on global economic remodeling. They bring forth social and economic facts that are to be addressed in a framework quite different from the conventional policy-theoretic reasoning of age-old socioeconomics. The prevalent reasoning continues on the traditional paradigm of growth and sharing, but in an unequal world of power, politics, and self-interest. In the present status quo, resources do not flow between the top and bottom, the industrialized and the developing countries, the rich and the poor, except by means of handouts and relief (Hans Singer and Ansari, 1988).

The paper aims to offer a new perspective casting original light on the foundational socio‐scientific argumentation premised on the application of the epistemology of unity of knowledge across contrasting shades of reasoning, to the problem of religion, science and society. Kantian epistemological reasoning is questioned within this argumentation. The specific case of money, finance and real economy is treated in the context of the epistemology of unity of knowledge contra Kantian problem of heteronomy.

The comparative study of received literature in the history of epistemological thinking is applied to the issue of universality and uniqueness of theory and its application in the learning dynamics between organically complementary relations, called circular causation, to the ethical interdependence between money, finance and the real economy. The goal is to attain social and economic sustainability.

A new epistemological outlook in occidental sciences is needed to repair its intrinsic dualism. Kantian thinking is instrumental in this structural flaw. Unity of divine knowledge as comprehended by functional ontological formalism in the deepest of scientific terms compromises the universal and unique alternative in “everything”. This claim has been formalised.

This is a theoretical exploration.

Important global implications of the need for a new outlook of unity between monetary, financial and real economic variables are presented within the contrasting epistemological argumentations. The direction of such money‐real economy reform in the light of Islamic economics and finance is pointed out.

This is an original conceptual paper, whose content argued out in rigorous scientific language of topological mathematics aims at showing the link between the epistemology of unity of knowledge and the world‐systems. The same is impossible in the Kantian worldview.

This paper aims to study the structural dynamic behaviour of the depositors, banks and investors and the role of banks in the business cycles. The authors test the hypothesis: do banks’ behaviour make oscillations in the economy via interest rate?

The authors dichotomized banking activities into two markets: deposit and loan. The first market forms deposit interest rate, and the second market forms credit interest rate. The authors show that these two types of interest rates have non-synchronized structures, and that is why money sector fluctuation starts. As a result, the fluctuation is transferred to the real economy through saving and investment functions.

The empirical results show that in the USA, the banking system creates fluctuations in money and real economy, as well as through interest rates. Short-term interest rates had complex roots in their characteristic, while medium and long-term interest rates, though they were second-order difference equations, had real characteristic roots. However, short-term interest rates are the source of oscillation and form the business cycles.

The authors tested the hypothesis for USA economy, while it needs to be tested for other economies as well.

The results show that though the source of fluctuations in the real economy comes from short-term interest rates, medium- and long-term interest rates dampen real economy fluctuations and also work as economic stabilisers.

Regarding the applied method, the topic is new.

For long now the economics profession has boasted of Economics as the Queen of the Social Sciences. That was the era when Economics matured under the shade of a classical notion of the physical universe, whose properties it imported into rational choice. Economics emulated the mathematical methods of optimization and equilibrium behavior and overarched these methods between microeconomics and macroeconomics in the areas of economic growth, public choice theory, rational expectations, constitutional economics, and many others. Each of these branches of economics remained entrenched in rational choice behavior exported from the microlevel to institutional and collective norms. In this way, a unique and universal premise of self-interest, individualism and independence, and completeness of rational choice assumptions was extended to the institutional level. Thus, the rational choice behavior of individualism became the principle of methodological individualism of liberal institutionalism.