Zakah in a Complex World

Abstract

The Covid-19 pandemic hits the world economy. On July 2020, some countries have plunged into recession.  The prescription from the perspective of Islamic economics and finance need to be formulated. The application conventional methodology like survey or any types of regression will not able to examine the dynamic changes on the economy during the occurrence of pandemic and will fail to draw the very long term situation. In this regard, Islamic economics needs to move forward to utilize the advancement of technology. The use of Agent-based Computational Model (ABM) is one of alternative methodology to develop research in the area of Islamic economics and finance. ABM is a computational study which builds the economy as a complex world, thus, the prescription for economic crisis based on Islamic views can be formulated. This research has two objectives, i.e., (a) to review on how ABM has developed research in the area of Islamic economics and finance, (b) to provide an example on how the use of ABM to develop a model on how zakah may minimize level of Gini index under interest based system.  This research finds two main points. First, the number of ABM research in Islamic economics are limited, some of which are still at the development stage of the conceptual framework. Second, the ABM simulation results shows how zakah may minimize level of Gini index. Therefore, this research may be used as one of the references on how to develop and formulate a model in the area of Islamic economic and finance.