Revisiting Market Failure: A Comparative Study between Conventional and Islamic Economic Perspectives

Abstract

Market failure reflects an imbalance between economic efficiency and social justice. In the context of a global economy marked by inequality, moral crises, and digital disruption, this issue is becoming increasingly complex. This paper reexamines the concept of market failure by comparing conventional and Islamic economic paradigms to find a more holistic and just framework. Using a qualitative approach thru descriptive-analytical literature review, this study explores the theoretical and moral foundations of both economic systems. The findings indicate that conventional economics views market failure as a result of information imperfections and inefficiencies that are addressed thru regulation, while Islamic economics emphasizes ethical and spiritual values such as 'adl, amanah, and tawazun to prevent market distortions. The integration of these values is believed to offer an alternative solution to the challenges of the global market.