The Islamic social capital is characterised by a desire for moral values in production and networking which promotes opportunities for innovative interactions between sets of agents thus forwarding the Islamic ethics. The aim of this paper is to explore the factors that drive alliance formation between labour and capital in both financial and technological forms.
An in‐depth study was made of developmental interventions within the Muslim community life of a village in the Birbhum district of West Bengal province in India.
Evidence shows that the strengthening of informal co‐operative networks through the inputs of technology, financial, and human capital from across different sectors constitutes an essential element in forwarding sustainable development. When the focus of the development intervention is on livelihoods and Islamic welfare accrual from common (waqf) property resources, drawing on informal networks based on Islamic ethics helps to solve problems such as free‐riding and the bottle‐neck of networking.
The study shows that Islamic economic theory not only identifies circumstances in which communitarian institutions can function well, but also uncovers a dark side.
