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Introduction to Islamic Economics: Theory and Application by Abbas Mirakhor, Zamir Iqbal, Hossein Askari

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Chapter 1Economic Systems

  1. The differences between economic systems and the role that government plays.
  2. How the ideal Islamic system differs from the Western market capitalist system.
  3. The role of markets and how they differ in Islam and in the market capitalist system.
  4. What institutions are and why they matter for economic prosperity.
  5. Governments have an important role no matter the system.

Over the years, a number of different economic ideologies and systems have been proposed and promoted. As with most other things in life, economic doctrines and systems have a limited shelf life and evolve with time. While in 2014 the mixed capitalist market system of the Western world, especially that in the United States, may appear preeminent, it received a number of shocks at its very foundation. The financial crisis of 2007–2008 with its extensive fallout and the rapid rise of China as an economic power have raised new and fundamental questions about the long-term direction and viability of the laissez-faire mixed capitalist system practiced in the United States and other Western nations.

After World War I, economists generally realized that neoclassical economics was not well equipped to address the reasons underlying unemployment, business cycles, and their mitigation and amelioration. During the Great Depression, John Maynard Keynes's General Theory of Employment, Interest, and Money provided some answers.1 As a result, Irving Fisher and Alfred Marshall's neoclassical ...

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