Behavioural Norms and Institutional Structure of Iqtiṣād

Abstract

Iqtiṣād, the Islamic vision of an ideal economy rests on the Qur’anic foundations of solid belief system, correct knowledge, and rules-based behaviour. Its institutional framework is based on a unique set of principles governing property rights, and contracts, which derive directly from the Islamic worldview. The institution of markets is also built on the three pillars of property rights, contracts, and trust. The organic relationships between these institutions depend on compliance with behaviour norms at each level, and on incentive systems that promote trust, information transparency, and risk-sharing. The behavioural norms and institutional rules, which are designed to resonate in the entire fabric of society and economic life, are asserted in the Qur’an and demonstrated by the Noble Prophet with a level of clarity and consistency that renders recourse to alternative paradigms necessarily associated with a loss of authenticity. The rules for the creation, exchange, and transfer of property rights are immutable, but the institutional structure is flexible to accommodate the shifting economic dynamics over time and space.