This paper highlights the need to embed Islamic ethics of transparency, fairness, and justice to produce economies that are equitable and that promote balanced growth. While the dominant capitalist system has produced economic growth, it is criticized for failing to resolve the problem of inequality. The paper attempts to explore growth and income inequalities from the perspective of capital that forms a dominant factor in shaping contemporary market-based economies.
The paper suggests ways in which Islamic ethics can be introduced in capital formation to produce equitable economic growth. Other than having an enabling legal system under which Islamic capital can be coded, there is a need to increase the proportion of productive capital and nondebt-based financing. Reducing financialization and expanding inclusive financial services is essential to promote growth and mitigate income inequalities. Increasing the number of capital and investment products paying relatively higher rates of returns that is available to all segments of the population is necessary to improve income and wealth distribution.
