Towards an Islamic Macro Model of Distribution: A Comparative Approach

Al-Jarhi, Mabid (1985): Towards an Islamic Macro Model of Distribution: A Comparative Approach. Published in: Journal of Research in Islamic Economics , Vol. 2, No. 2 (1985): pp. 3-29.

Abstract

This paper' presents some ideas on the construction of a macro- distribution model of an Islamic economy. It introduces a model based on the concept that in the Islamic (in contrast to Muslim) society, most Muslims are propertied, though to different degrees, because of the application of Zakah. This implies two important propositions. Firs the study of distribution is inseparable from that of redistribution. Second, the distinction in saving behavior between "capitalists" and "laborers" becomes immaterial. The results of the model indicate no predominance of the behavior of any particular class to the determination of either fuctor shares, or profit rate. The results of the model also indicate that an Islamic economy would have higher growth, higher return on capital and more equitable distribution of wealth than a western economy of the Kaldor-Pasinetti type.

• Item Type: MPRA Paper
• Language: English
• Keywords: redistribution, growth, Kaldor-Pasinetti, Zakah, public finance, equity
• Subjects: D - Microeconomics > D3 - Distribution; D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies; P - Economic Systems > P4 - Other Economic Systems

References

1. Ahmad, Auoaf (1982), "A Macro Theory of Distribution in Islamic Economy''. A revised version of this paper is published in Journal of Research in Islamic Economics. (Jeddah) Vol. 2. No.I, Summer 1404/1984, pp.1-20.

2. Al-Jarhi, Mabid Ali (1981), "A Monetary and Financial Structure fur an Interest-Free Economy: Institutions, Mechanism and Policy". Seminar on Monetary and Fiscal Economics of Islam, Islamabad, available in Ahmad, Ziauddin, et al (eds.) Monoy and Banking in Islam, Islamabad, Institute of Policy Studies, 1983. pp. 69-87.

3. Bliss, C.J. (1975), Capital Theory and the Distribution of Income, North Holland Publishing Co., Amsterdam.

4. Bohm-Bawerk, Eugene von (1889), Positive Theory of Capital, (English translation), Macmillan, London, 1891.

5. Bohm-Bawerk, Eugene von (1959), Capital and Interest, South Holland, ill.

6. Brown, M., Sato, K. and Zarembka, P. (eds.) (1976), Essays in Modern Capital Theory, North Holland Publishing Co., Arnst 1976.

7. Bruno, M. (1969), "Fundamental Duality Relations in the Pure Theory of Capital and Growth," Review of Economic Studies, Vol. 36, pp. 39-54.

8. Burmeister, Edwin (1974), "Synthesizing the Neo-Anstrian and Alternative Approaches to Capital Theory A Survey," Journal of Economic literature, 12(2), pp.413-457.

9. Dewey, Donald (1965), Modern Capital Theory, Columbia University Press, New York.

10. Hacche, Graham (1979), The Theory of Economic Growth: An Introduction, Macmillan, London.

11. Hahn, F. H. and Matthews, R.C.O. (1964), "The Theory of Economic Growth: A Survey," Economic Journal, 74 (December), pp. 779-902.

12. Harcourt, G. C. (1972), Some Cambridge Controversies in the Theory of Capital, Cambridge University Press, London.

13. Hayek, F. A. (1941). The Pure Theory of Capital, Routledge and Kegan Paul, London and Healey, 1976.

14. Hicks, John (1973), Capital and 1lme: A Neo-Austrian Theory, Oxford University Press, London.

15. Kaldor, Nicholas (1961), "Capital Accumulation and Economic Growth.'' in the Theory of Capital, ed. F.A Lutz and D.C. Hague, Macmillan, London.

16. Kaldor, Nicholas (1966), "Marginal Productivity and the Macro-Economic Theories of Distribution", Review of Economic Studies, Vol. 33, pp. 304-19.

17. Kaleckl, M. (1933), "A Macrodynamic Theory of Business Cycles", published in Polish, Econometrica, Vol. 3, 1935, pp. 327-44.

18. Kaleckl, M. (1954), ''Distnbutioo of National Income", reprinted in Selected Essays on the Dynamics of the Capitalist Ecanarey, 1933-1970, Cambridge University Press, London. 1971.

19. Kemeny, J. G., Morgenstern, O., and Thompson, G.L. (1956), "A Generaliz.ation of the von Neuman Model of an Expanding Economy", Econometrica, Vol. 24, pp. 115-135.

20. Man, K. (1968), ''Wage Labour and Capital, and Wages, Price and Profit", in K. Marx and F. Engels, Selected Works, Lawrence and Wishart, London.

21. Meade, J. E. (1966), "The Outcome of the Pasinetti Process: A Note", Economic Journal, Vol. 76, pp. 161-6.

22. Morishima, M C. (1971), "Consumption-Investment Frontier, Wage-Profit Frontier and the von Neumann Growth Equilibrium", Zeitschaft Fur Nationalokooomie, Supplement I, pp. 31-35.

23. Neumann, J. von (1945-1946), "A Model of General Equilibrium", Review of Economic Studies, Vol. 13(33), pp. 1-9.

24. Pasinetti, Louigi L. (1962), ''Rate of Profit and Income Distribution in Relation to the Rate of Economic Growth", Rcview of Economic Studies. Vol. 29, pp.267-279.

25. Robinson, Joan (1954), "The Production Function and the Theory of Capital". Review of Economic Studies, Vol. 21, pp. 51-106.

26. Stigler, G. J. (1965), Production and Distribution Theories: The Formative Period, Agathon Press, Inc., New York.

27. Walras, Leon (1926), Elements d'Economie Politique Pure, Lausanne.

28. Wicksell, Knut (1901), Lectures on Political Economy, (English translation). London, 1934.