Economics and Business

Towards A New Paradigm for Economics

J.KAU: Islamic Econ., Vol. 18, No. 2, pp. 49-59 (2005 A.D/1426 A.H)

Director General, International Institute of Islamic Economics
International Islamic University, Islamabad, Pakistan

ABSTRACT.

Current economic theory is mainly concerned with the factors which affect the wealth of nations. Issues of income distribution and elimination of poverty and deprivation is secondary. The present paper invites discussion on a new paradigm: hunger and homelessness to make the subject of economics really serve the humankind.

  1. Focus of Conventional Economics is Wealth and not Poverty

Current Economic theory is firmly set in the mold structured by Adam Smith 1904). His concern was to look into factors which affect the wealth (and hence power, prosperity) of nations considered as a whole. Issues of income distribution are secondary, since wealth belongs to the nation regardless of how it is distributed among individuals. Since then, economists have been primarily interested in wealth and power, and not so much in removing poverty, hunger and economic misery. Malthus (1798) provided a convenient sop for consciences, showing that poverty arose as a consequence of natural laws (all proven wrong empirically later) and the only cure was to reduce the birth rate of the poor. Tawney (1926) has looked at the process by which morality got divorced from economics in much greater detail; because of this, questions of fairness, equity, justice no longer form part of current economic discourse.

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