The Necessity for Interdisciplinary Studies and the New Prospects for Law and Economics in Islam (Case study of Coase Theorem, Transaction Costs)

The publication of “The Problem of Social Cost” by Ronald Coase in the 1960s shaped a turning point in the interdisciplinary studies between economics and other related disciplines. The pre-coasian economic theories –which mostly belonged to neo-classical school - place no importance on the legal and historical institutions. Coase along with other property rights economists showed that when transaction costs are positive, allocative efficiency is not independent from legal rules and so the legal institutions have a determining role in achieving efficiency. This framework remembers us that when transaction costs are positive, interdisciplinary studies are unavoidable. The rise of “Law and Economics” movement in the academic literature was the natural consequence of the Coase Theorem. In this paper, we shall introduce these new perspectives and their implications for interdisciplinary research about law, economics, and history in Islam. We will see that Coase theorem and the very conception of transaction costs can play an important role in developing Islamic interdisciplinary research on economics and open new research perspectives.