ABSTRACT
This chapter discusses the policy questions of how to achieve economic growth that is inclusive and that creates jobs. It analyzes the views and role of labor in Marxian, mainstream, and Islamic economics. The chapter argues that the Marxian view of labor undermines the role of the entrepreneur. It discusses mainstream economics is also unable to create an equitable balance between capitalists and the working class, especially in the presence of extractive institutions like interest-based earnings of accumulated wealth and incapacitated wealth redistribution mechanisms. The chapter shows that the factors boost the labor demanded by the firms. In microeconomic decisions in the consumption/leisure choice framework, Islamic institutions positively boost the labor supply. The chapter discusses the impact of Islamic work ethics on dealing with the problems of moral hazard, labor shirking, and rigidity in the labor market due to efficiency wages and insider–outsider relationships.
