The Role of State in the Economy

The emergence of various theories on the role of state in the economy, in the contemporary era has necessitated the clarification, specification, and carrying out a comparative study on the place of the state in an Islamic economy. Pointing to the common features of an state in Mercantilist, Physiocrat, Classical, Neoclassical, Keynesian, Welfare state and public choice schools, the paper sheds light on the objectives, functions, terms of reference, and resources of an Islamic state and its distinctions with other (secular) states.The comparison carried out in certain aspects such as the ultimate objective of the state’s activities, the resource ownership, the rational principle suggesting government’s intervention, the relationship between the government policymaking, social security, the elimination of poverty and injustice, production of public goods, production of goods with natural monopoly, redistribution of income, social balance, and the way of decision making all indicate that, an Islamic state may have many things in common with a non Islamic state. However, it is a far cry from the mainstream perspectives. The theory of an Islamic state in the economic arena enjoys a full independence due to differences in objectives, methods, and instruments.