A Note on Islamic Economics

1. A Note on Islamic Economics whom, of what?‖ (p. 1337). In this context, a recent multidisciplinary study asks ―Are We Consuming Too Much?‖ by Kenneth Arrow, et. al., in the Journal of Economic Perspective, Vol. 18, No. 3, summer 2004 (pp. 147-172) and reports on interesting results and insights. See M.B. As Sadr Our Philosophy , translated by Sham S. C. Inati, Muhammadi Trust, London, 1987. See also Joseph E. Stiglitz Whither Socialism? The MIT Press, 1996, on the shortcomings of the neoclassical economics, particularly the Fundamental Theorems of welfare economics and on the fact that these theorems were shared by socialism, which Stiglitz believes was a major reason for its downfall. On welfare economics see Allan M. Fieldman Welfare Economics in the World of Economics (pp. 713-714). On the Islamic views on ontology and epistemology, see various papers on History of Islamic Philosophy , edited by Seyyed Hossein Nasr and Oliver Leaman, published by Routledge, London, 1996, reprinted in 1997 and 1999. See also John E. Harasanyi ―Value Judgments‖ in the World of Economics (pp. 702-705). As Harasanyi says: ―Arrow‘s social choice and individual values showed how to express alternative value judgments in the form of precisely stated formal axioms, how to investigate their logical implications in a rigorous manner, and how to examine their mutual consistency or inconsistency‖ (p. 704). 19 On the New Institutional Economics, see the collection of papers edited by Richard Langlois, Economics as a Process: Essays in the New Institutional Economics, The University of Chicago Press, 1986. On institutions see Douglass C. North‘s Nobel Lecture published in The American Economic Review as ―Economic Performance Through Time,‖ Vol. 84, June 1994 (p. 359-368). Also see ―Institutions and Governance of Economic Reform‖ by Oliver E. Williamson in Proceedings of the World Bank Annual Conference on Development Economics, 1994 (pp. 171-197); and ―Comment‖ by Robert D. Putnam as well as the paper by Jon Elser ―The Impact of Constitutions on Economic Performance‖ (pp. 209-226), as well as ―Comment‖ by Adam Przeworski in the same Proceedings. A recent paper by Hall and Jones ―Why Do Some Countries Produce So Much More Output Per Worker Than Others?‖ in Quarterly Journal of Economics, Vol. 114, No. 1, February 1999, (pp. 83-116) reports that countries with a better institutional environment have a much higher level of productivity. The paper explains that there is enough exogenous variation in structural policies and institutions to identify a causal link from institutional quality to productivity. What are the features of good institutions? The answer depends on the perceptions about the protection of property rights, absence of corruption in the public sector, and respect for the rule of law. These perceptions reflect institutions themselves as well as structural policies, including an independent and effective judiciary, quality of bureaucracy, constitutional features that guarantee basic political and civic rights, checks and balances on the executive. In this regard, an important paper is ―Unbundling Institutions‖ by Acemoglu and Johnson, NBER Working Paper No. 9934, 2003, which shows that two sets of institutions, property rights institutions and contractual institutions, are crucial. The former are 39