Ethics in Islamic economics: microfoundations for an ethical endogeneity

Abstract

PurposeThis paper aims to explore ethics in Islamic economics by establishing the micro-foundations of Islamic economics. This is done by conceptualizing the behavioural assumptions of the individual in an Islamic framework. It also argues that ethical positions that attached endogenously in individual behaviour would have implications in the macro-socio realm influencing society, institution and organization in an Islamic economic system.Design/methodology/approachThe study is qualitative-based research. It explores the literature on ethics in Islamic economics to understand and analyse the concept of individual behaviour in the Islamic perspective that will be the micro-foundations of Islamic economic analysis.FindingsIt is found that the ethical commitment of individuals (as envisaged in the micro-foundations of Islamic economics) would bring socio-macro implications in the practical realm. The micro-foundations of Islamic economics would function as the basis of the economic explanation of the aggregate relationship of individual, state and society. It also serves as the basis in explaining socio-macro dynamics influencing individuals, society, as well as organizations and institutions.Research limitations/implicationsThe paper limits its analysis of developing the concept of ethical endogeneity in Islamic man behaviour to be the micro-foundations of Islamic economics and its macro-implications.Originality/valueThis study attempts to show that ethics should not only be inseparable in an economic framework but also an endogenous dimension in individual behaviour. The micro-foundations of Islamic economics are developed based on Islamic values on the characteristics and behaviour of an individual that would not only describe the true nature of man but also support his well-being.