Analysis of Efficiency and Justice in Conventional and Islamic Economics(consumption-based exchange economy)

One of the basic issues in microeconomic theory is the general equilibrium and how it is achieved, which is presented by Pareto-efficient condition and two fundamental theorems of welfare economics in the conventional economy. The critique of Pareto condition is that access to efficient conditions is not necessarily accompanied by justice, and the existence of economic efficiency does not guarantee fair conditions. On the other hand, in Islamic science and, consequently, Islamic economics, justice has always been emphasized in all fields. Therefore, in terms of Islamic economics, achieving economic efficiency without regard to justice is useless. In this research, the economic characteristics of the Muslim human being are explained and his preferences are modeled mathematically. Based on the model, a rich person gains disutility from the inequality gap between himself and the poor, and donate to the poor in various forms (charity, Khoms, Zakat, etc.). In this model, it has been shown that it is possible to achieve a Pareto condition along with justice without the intervention of any dictator. Also, the optimal amount of financial payments that maximizes social utility is computed. Therefore, it is possible to reach Pareto-efficiency condition with justice by considering the concepts and principles of Islamic economics and the fact that the Muslim person, in addition to his self-utility, pay attention to the interests and utilities of other people.