Wasathiyah Islam and Inclusive Economic Development: The Role Of Social Capital and Literacy

Abstract

This study examines how the values of Islamic wasathiyah (moderation) can be positioned as an epistemological and practical foundation for inclusive economic development. While prior studies have separately examined religious moderation, social capital, and financial literacy in relation to economic inclusion, limited scholarly attention has been given to integrating these three dimensions within a single conceptual framework grounded in Islamic values—a gap this study seeks to address. Persistent gaps in economic access, low financial inclusion among marginalized groups, and rising socio-religious polarization further underscore the need for such an integrative framework. To address this gap, the study proposes the MML Model (Moderation–Social Capital–Literacy) as an original conceptual contribution synthesized from the literature, built upon three interrelated pillars: moderation (tawazun, i'tidal, and tasamuh), social capital (trust, networks, and norms of reciprocity), and literacy, particularly Islamic financial and digital literacy. This research employs a qualitative approach through descriptive-analytical library research, examining academic literature, policy documents, and prior empirical studies on wasathiyah, social capital, and Islamic economic inclusion. The findings indicate that Islamic wasathiyah provides a value foundation balancing the spiritual and material dimensions of life, thereby encouraging fairer distribution of resources; social capital functions as a bridge connecting individuals and communities to formal economic opportunities, particularly for micro-enterprises and mosque-based or majelis taklim communities; while financial and digital literacy serve as prerequisites enabling economic participation to move beyond normative discourse into concrete practice, such as the utilization of Islamic microfinance institutions and digital platforms. The novelty of this study lies in demonstrating how these three elements reinforce one another within the integrative MML Model, offering a strategic framework that has not been explicitly articulated in previous literature for Islamic educational institutions, majelis taklim, and Islamic financial institutions in designing inclusive and sustainable economic empowerment programs for the ummah. The study recommends strengthening religious moderation curricula that incorporate economic literacy content, as well as cross-institutional synergy to expand access to social capital for vulnerable groups.