Islamic and capitalist economies: Comparison using econophysics models of wealth exchange and redistribution

Islamic and capitalist economies have several differences, the most fundamental being that the Islamic economy is characterized by the prohibition of interest (riba) and speculation (gharar) and the enforcement of Shariah-compliant profit-loss sharing (mudaraba, murabaha, salam, etc.) and wealth redistribution (waqf, sadaqah, and zakat). In this study, I apply new econophysics models of wealth exchange and redistribution to quantitatively compare these characteristics to those of capitalism and evaluate wealth distribution and disparity using a simulation. Specifically, regarding exchange, I propose a loan interest model representing finance capitalism and riba and a joint venture model representing shareholder capitalism and mudaraba; regarding redistribution, I create a transfer model representing inheritance tax and waqf. As exchanges are repeated from an initial uniform distribution of wealth, wealth distribution approaches a power-law distribution more quickly for the loan interest than the joint venture model; and the Gini index, representing disparity, rapidly increases. The joint venture model's Gini index increases more slowly, but eventually, the wealth distribution in both models becomes a delta distribution, and the Gini index gradually approaches 1. Next, when both models are combined with the transfer model to redistribute wealth in every given period, the loan interest model has a larger Gini index than the joint venture model, but both converge to a Gini index of less than 1. These results quantitatively reveal that in the Islamic economy, disparity is restrained by prohibiting riba and promoting reciprocal exchange in mudaraba and redistribution through waqf. Comparing Islamic and capitalist economies provides insights into the benefits of economically embracing the ethical practice of mutual aid and suggests guidelines for an alternative to capitalism.Comment: 17 pages, 7 figure

Wealth Redistribution and Mutual Aid: Comparison using Equivalent/Nonequivalent Exchange Models of Econophysics

Given the wealth inequality worldwide, there is an urgent need to identify the mode of wealth exchange through which it arises. To address the research gap regarding models that combine equivalent exchange and redistribution, this study compares an equivalent market exchange with redistribution based on power centers and a nonequivalent exchange with mutual aid using the Polanyi, Graeber, and Karatani modes of exchange. Two new exchange models based on multi-agent interactions are reconstructed following an econophysics approach for evaluating the Gini index (inequality) and total exchange (economic flow). Exchange simulations indicate that the evaluation parameter of the total exchange divided by the Gini index can be expressed by the same saturated curvilinear approximate equation using the wealth transfer rate and time period of redistribution and the surplus contribution rate of the wealthy and the saving rate. However, considering the coercion of taxes and its associated costs and independence based on the morality of mutual aid, a nonequivalent exchange without return obligation is preferred. This is oriented toward Graeber's baseline communism and Karatani's mode of exchange D, with implications for alternatives to the capitalist economy.Comment: 17 pages, 1 table, 7 figure

An Interactive Fuzzy Satisficing Method for Fuzzy Random Multiobjective 0-1 Programming Problems through Probability Maximization Using Possibility

In this paper, we focus on multiobjective 0-1 programming problems under the situation where stochastic uncertainty and vagueness exist at the same time. We formulate them as fuzzy random multiobjective 0-1 programming problems where coefficients of objective functions are fuzzy random variables. For the formulated problem, we propose an interactive fuzzy satisficing method through probability maximization using of possibility

Wealth disparities and economic flow: Assessment using an asset exchange model with the surplus stock of the wealthy

How can we limit wealth disparities while stimulating economic flows in sustainable societies? To examine the link between these concepts, we propose an econophysics asset exchange model with the surplus stock of the wealthy. The wealthy are one of the two exchange agents and have more assets than the poor. Our simulation model converts the surplus contribution rate of the wealthy to a new variable parameter alongside the saving rate and introduces the total exchange (flow) and rank correlation coefficient (metabolism) as new evaluation indexes, adding to the Gini index (disparities), thereby assessing both wealth distribution and the relationships among the disparities, flow, and metabolism. We show that these result in a gamma-like wealth distribution, and our model reveals a trade-off between limiting disparities and vitalizing the market. To limit disparities and increase flow and metabolism, we also find the need to restrain savings and use the wealthy surplus stock. This relationship is explicitly expressed in the new equation introduced herein. The insights gained by uncovering the root of disparities may present a persuasive case for investments in social security measures or social businesses involving stock redistribution or sharing