A COMPARISON BETWEEN CONVENTIONAL AND ISLAMIC ECONOMICS ON SIMPLE EQUILIBRIUM MODEL AND THEIR IMPACT ON POTENTIAL SUSTAINABLE ECONOMY

SIREGAR, SYAHRITUAH and Yulianto, Akhid (2011) A COMPARISON BETWEEN CONVENTIONAL AND ISLAMIC ECONOMICS ON SIMPLE EQUILIBRIUM MODEL AND THEIR IMPACT ON POTENTIAL SUSTAINABLE ECONOMY. Jurnal Charta Publika, 2 (3). pp. 82-88. ISSN 1366263031

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Abstract

The actual issue raised globally nowadays is about finding out solution for sustainable development. Various efforts have been formulated and implemented in dealing with environmental degradations. However, most of all existing approaches are more technical oriented. At the same time, we need a long-term solution that can harmonize inevitable resources exploitation for fulfilling human needs with environmental supporting capacity. Conventional economics proposes market mechanism as the solution. It is because prices convey a lot of information not only in demand side but also in supply side. Price level, as it believes, is to bring into an efficient level of scale. In facts, an efficient allocation for today does not meet with future The results of the analysis conclude that resource allocation in conventional economics is mainly determined in market mechanism while in Islamic concepts it works in various ways of allocation. Accordingly, the two concepts have differences; firstly, through conventional perspective there would be excessive resource exploitations. In accordance with Pareto Optimum, the efficient level would not be in a fewer level so that future generations are better off. Islamic perspective argues on consumption and resource utilization ethic that could maintain scale size preserved for future generations‟ needs. There is a specific mechanism in Islamic society and government‟s responsibility to ensure people‟s basic need fulfillment. Secondly, the concern in a just distribution relieves it from the trap of growth fetish. Capital concentration is believed to create growth system in which the poor if they remain patient will soon be relieved from their misery. In popular terms we know very well about what so called “trickle down effect” and “spread effect” that is hardly proven. Islamic value of money would create a just monetary system by clearly defining function of money as flow concept not asset concept. It ensures that capital will flow into productive sectors that will benefit larger number of people. At last, Islamic concept propose specific role of government in controlling some certain resources, i.e. the energy, water, and other strategic resources. It of course is a mean of controlling resource use for sustainable scale and just distribution. Keywords: resource allocation, sustainable scale, just distribution, market mechanism

Item Type: Article
Subjects: H Social Sciences > HC Economic History and Conditions
Divisions: Fakultas Ekonomi > Akuntansi
Depositing User: Mr Arief Mirathan
Date Deposited: 08 Sep 2013 17:29
Last Modified: 08 Sep 2013 17:29
URI: http://eprints.unlam.ac.id/id/eprint/78

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