Author's note: A summary of this article was presented at a conference on “The Economic Dimension of Middle Eastern History,” held in honor of Professor Charles Issawi at Princeton University on May 24, 1986. Another abbreviated version was presented at a session on “Economic and Ethical Issues in Islamic Thought,” organized jointly by the American Economic Association and the Association for Comparative Economic Studies, and held in New Orleans on December 28, 1986. I am indebted to Frederic Pryor and Bruce Thompson for their thoughtful comments that led to refinements. At a later stage, I benefited from the constructive criticisms of the editor and three anonymous readers of IJMES.

¹ For a survey of the literature by a leading Islamic economist, see Siddiqi, Muhammad Nejatullah, Muslim Economic Thinking: A Survey of Contemporary Literature (Leicester, 1981).Google Scholar Critiques of the literature include Kuran, Timur, “Behavioral Norms in the Islamic Doctrine of Economics: A Critique,” Journal of Economic Behavior and Organization, 4, 4 (12 1983), 353–79;CrossRefGoogle ScholarIbid., “The Economic System in Contemporary Islamic Thought: Interpretation and Assessment,” International Journal of Middle East Studies, 18, 2 (May 1986), 135–64; Pryor, Frederic L., “The Islamic Economic System,” Journal of Comparative Economics, 9, 2 (06 1985), 197–223.CrossRefGoogle Scholar

² For extensive comparisons, see al-Qardawi, Allama Yusuf, Economic Security in Islam, Siddiqi, Muhammad lqbal, trans. (Lahore, 1981, first Arabic ed. 1966), ch. 2;Google ScholarMannan, Mohammad Abdul, Islamic Economics: Theory and Practice (Lahore, 1970), ch. 3;Google Scholaridem, The Frontiers of Islamic Economics (Delhi, 1984), ch. 5; Naqvi, Syed Nawab Haider, Ethics and Economics. An Islamic Synthesis (Leicester, 1981), ch. 4;Google ScholarAjijola, Alhaji Adeleke Dirisu, The Islamic Concept of Social Justice (Lahore, 1977), esp. Pt. I.Google Scholar

³ A representative work of Maududi, is The Economic Problem of Man and its Islamic Solution (Lahore, 1975).Google Scholar Qutb's most relevant work is Social Justice in Islam, Hardie, J. D., trans. (New York, 1970, first Arabic ed. 1948).Google Scholar

⁴ The most influential of these writings are by Mahmud Taleqani, Mohammed-Baqer Sadr, and Abol-Hasan Bani-Sadr. The crucial chapters of Taleqani's leading works have been translated into English by Campbell, R., under the title Society and Economics in Islam (Berkeley, 1982).Google Scholar For commentaries on the Shi'i literature, and for some further sources, see Bakhash, Shaul, The Reign of the Ayatollahs (New York, 1984), ch. 7;Google ScholarKatouzian, Homa, “Shi'ism and Islamic Economics: Sadr and Bani Sadr,” in Keddie, N. R., ed., Religion and Politics in Iran (New Haven, 1983), pp. 145–65.Google Scholar

⁵ For some explicit statements, see Ajijola, Islamic Concept, pp. 194–98; Afzal-ur-Rahman, , Economic Doctrines (Lahore, 1980), 1, 62–66;Google ScholarChapra, M. Umer, “The Economic System of Islam,” 4 parts, The Islamic Quarterly, 14 (1970), 14–16;Google ScholarHasan, Ahmad, “Social Justice in Islam,” Islamic Studies, 10 (1971), 211;Google ScholarAhmad, Ausaf, “A Macro Model of Distribution in an Islamic Economy,” Journal of Research in Islamic Economics, 2, 1 (1984), 1;Google ScholarKhan, Mohsin S., “Islamic Interest-Free Banking,” International Monetary Fund Staff Papers, 33, 1 (1986), 2.CrossRefGoogle Scholar

⁶ Chapra, “The Economic System,” p. 11.

⁷ Ahmad, Ausaf, “A Macro Model,” p. 1.Google Scholar For a third such statement see Siddiqi, Muhammad Nejatullah, The Economic Enterprise in Islam (Lahore, 1972), p. 38.Google Scholar

⁸ Several detailed surveys are available. Some are listed in note I.

⁹ The narrow interpretation of zakat is outlined by Afzal-ur-Rahman, , Economic Doctrines of Islam (Lahore, 1976), vol. 3, chs. 14–16.Google Scholar Various broad interpretations are put forth by Mannan, Islamic Economics, pp. 284–302; Kahf, Monzer, “Fiscal and Monetary Policies in an Islamic Economy,” in Ariff, M., ed., Monetary and Fiscal Economics of Islam (Jeddah, 1982), pp. 125–37;Google ScholarChoudhury, Masudul Alam, Contributions to Islamic Economic Theory: A Study in Social Economics (New York, 1986), ch. 5. On the disagreements among the reformists, see the commentaries on Kahf's article, in Ariff, ed., Monetary and Fiscal Economics, pp. 138–44.CrossRefGoogle Scholar Certain authors who subscribe to the narrow interpretation do not object to new taxes under other names. See, for example, Faridi, F. R., “Zakāt and Fiscal Policy,” in Ahmad, Khurshid, ed., Studies in Islamic Economics (Leicester, 1980), pp. 119–30.Google Scholar For a critical review of the writings on zakat, see Kuran, “The Economic System,” pp. 143–49.

¹⁰ Mannan, Islamic Economics, p. 182. The most detailed contemporary exposition of inheritance matters is contained in this source, pp. 176–86.

¹¹ Yusuf, S. M., Economic Justice in Islam (Lahore, 1971), p. 61.Google Scholar

¹² Siddiqi, Economic Enterprise, p. 16. See also Mannan, Mohammad Abdul, The Making of an Islamic Economic Society: Islamic Dimensions in Economic Analysis (Cairo, 1984), pp. 300–303.Google Scholar

¹³ See Chapra, “The Economic System,” pp. 9–10; Choudhury, Masudul Alam, An Islamic Social Welfare Function (Indianapolis, 1980), pp. 5–14;Google Scholar Naqvi, Ethics and Economics, p. 64; Siddiqi, Economic Enterprise, pp. 61–73.

¹⁴ For extensive examples, see Abdul-Rauf, Muhammad, “The Islamic Doctrine of Economics and Contemporary Islamic Thought,” in Novak, M., ed., Capitalism and Socialism: A Theological Inquiry (Washington, D.C., 1979), pp. 134–40;Google Scholar Siddiqi, Economic Enterprise, esp. chs. 2 and 3. For a critique of this injunction, see Kuran, “Behavioral Norms.”

¹⁵ See, for example, Chapra, “The Economic System,” p. 9.

¹⁶ On just prices and wages, see Mannan, Islamic Economics, ch. 8; Yusuf, Economic Justice, pp. 77–80.

¹⁷ See Siddiqi, Economic Enterprise, pp. 52–54; Mannan, The Making of an Islamic Economic Society, pp. 256–58.

¹⁸ For a survey of the Islamic position on interest, see Siddiqi, Muhammad Nejatullah, “Islamic Approaches to Money, Banking and Monetary Policy: A Review,” in Ariff, M., ed., Monetary and Fiscal Economics of Islam (Jeddah, 1982), pp. 25–38.Google Scholar Also see Ahmed, Ziauddin, Iqbal, Munawar, and Khan, M. Fahim, eds., Fiscal Policy and Resource Allocation in Islam (Islamabad, 1983), chs. 5–8;Google ScholarChapra, M. Umer, Towards a Just Monetary System: A Discussion of Money, Banking and Monetary Policy in the Light of Islamic Teachings (Leicester, 1985);Google ScholarKhan, Mohsin S. and Mirakhor, Abbas, eds., Theoretical Studies in Islamic Banking and Finance (Houston, 1987).Google Scholar Critical reviews of the writings on interest include Karsten, Ingo, “Islam and Financial Intermediation,” International Monetary Fund Staff Papers, 29, 1 (03 1982), 108–42; Kuran, “The Economic System,” pp. 149–58.CrossRefGoogle Scholar

¹⁹ Yusuf, Economic Justice, p. 90.

²⁰ The most detailed statement on insurance is by Siddiqi, Muhammad Nejatullah, Insurance in an Islamic Economy (Leicester, 1985). Other statements include Yusuf, Economic Justice, ch. 6;Google Scholar Mannan, Islamic Economics, ch. 14; Samiullah, Muhammad, “Prohibition of Riba (Interest) and Insurance in the Light of Islam,” Islamic Studies, 21, 2 (Summer 1982), 53–76.Google Scholar For a concise account of the controversies involved, see Siddiqi, Muslim Economic Thinking, pp. 26–28. On the issue of regulation, see Khan, Muhammad Akram, “The Role of the Auditor in an Islamic Economy,” Journal of Research in Islamic Economics, 3, 1 (Summer 1985), 31–42.Google Scholar

²¹ See Afzal-ur-Rahman, , Economic Doctrines of Islam, 2nd ed. (Lahore, 1980), Vol. II, ch. 6;Google Scholar Siddiqi, Economic Enterprise, pp. 54–57; idem, Insurance, pp. 40–41.

²² See Afzal-ur-Rahman, , Economic Doctrines, Vol. 2, pp. 44–45;Google Scholar Siddiqi, Economic Enterprise, pp. 57–60; Ajijola, Islamic Concept, pp. 237–40.

²³ See Chapra, “The Economic System,” p. 149.

²⁴ See Siddiqi, Muslim Economic Thinking, pp. 15–16.

²⁵ They include Yusuf, Economic Justice, pp. 23–27.

²⁶ -ur-Rahman, Afzal, Economic Doctrines, 11, 173.Google Scholar

²⁷ Ibid., ch. to, esp. pp. 175–77.

²⁸ Ibid., pp. 193–207.

²⁹ Ajijola, Islamic Concept, p. 181. Also see Yusuf, Economic Justice, p. 11; Siddiqi, Economic Enterprise, esp. pp. 115–35; Mannan, The Making of an Islamic Economic Society, ch. 11.

³⁰ Among the opponents of the modern corporation is Yusuf, Economic Justice, pp. 34–38. The proponents include Afzal-ur- Rahman, Economic Doctrines, 1, 242–43.

³¹ Chapra, “The Economic System,” p. 16.

³² On the question of substance versus procedure, a very illuminating discussion relating to Islamic thought can be found in Khadduri, Majid, The Islamic Conception of Justice (Baltimore, 1984), ch. 6.Google Scholar For general treatments, see Rawls, John, A Theory of Justice (Cambridge, Mass., 1971), esp. pp. 83–90;Google ScholarBarry, Brian, Political Argument (London, 1965), ch. 6;Google ScholarBrennan, Geoffrey and Buchanan, James M., The Reason of Rules (Cambridge, England, 1985), ch. 7.Google Scholar

³³ World Developmnent Report, 1980 (Washington, D.C., 1980), esp. ch. 4.

³⁴ The scheme is that of Malaysia. See Salleh, Ismail Muhd and Ngah, Rogayah, “Distribution of the Zakāt Burden on Padi Producers in Malaysia,” in Zaman, M. Raqibuz, ed., Some Aspects of the Economics of Zakah (Gary, Ind., 1981), pp. 80–153.Google Scholar

³⁵ Naqvi, Witness, Ethics and Economics, p. 64: “The Islamic ethical principles not only determine individual choice and collective choice, but also provide a principle of integrating the two.”Google Scholar A supremely optimistic argument is put forward by Afzal, -ur-Rahman, Economic Doctrines, 1, 169–73.Google Scholar

³⁶ There is an extensive literature on the benefits conferred by state power. See Buchanan, James M., Tollison, Robert D., and Tullock, Gordon, eds., Toward a Theory of the Rent-Seeking Society (College Station, Tex., 1980). Most of the major contributions published since this collection was issued have appeared in the journal Public Choice.Google Scholar

³⁷ Numerous examples are dispersed throughout Hodgson's, Marshall G. S. trilogy, The Venture of Islam: Conscience and History in a World Civilization (Chicago, 1974).CrossRefGoogle Scholar

³⁸ Strictly speaking, the Sunni Islamic economists believe that official corruption became rampant after the death, in 661 A.D., of the fourth caliph 'Ali. The Shi'is believe that corruption became widespread at an earlier date.

³⁹ For the rationale behind the opposition to indexation, see Zaman, S. M. Hasanuz, “Indexation An Islamic Evaluation,” Journal of Research in Islamic Economics, 2, 2 (Winter 1985), 31–53;Google Scholar Chapra, Towards a Just Monetary System, pp. 39–42. The pro-indexation argument has been put forth by Mannan, The Making of an Islamic Economic Society, ch. 14A. The issue was addressed inconclusively at the second seminar on “Monetary and Fiscal Economics of Islam,” held in Islamabad in 1981. The proceedings of this seminar have been edited by Ahmed, Z., Iqbal, M., and Khan, M. Fahim, under the title Money and Banking in Islam (Jeddah, 1982).Google Scholar

⁴⁰ See Chapra, Umer, “The Prohibition of Ribā in Islam: An Evaluation of Some Objections,” American Journal of Islamic Studies, 1, 2 (08 1984), p. 34.Google Scholar

⁴¹ See Choudhury, Contributions, ch. 6; see also Hasan, Zubair, “Determination of Profit and Loss Sharing Ratios in Interest-Free Business Finance,” Journal of Research in Islamic Economics, 3, 1 (Summer 1985), 13–29.Google Scholar

⁴² See Khan, Mohsin, “Islamic Interest-Free Banking,” pp. 19–20. Khan also takes issue with the suggestion that profit and loss sharing would promote equality, indicating that this is not self-evident.Google Scholar

⁴³ See, for example, Hasan, Ahmad, “Social Justice”; Ajijola, Islamic Concept, esp. pp. 208–24;Google Scholar Naqvi, Ethics and Economics, esp. pp. 147–50.

⁴⁴ Many of those who stress individual ownership are followers of Maududi. They include Chapra, ‘The Economic System”; Yusuf, Economic Justice; and Kahf, Monzer, The Islamic Economy: Analytical Study of the Functioning of the Islamic Economic System (Plainfield, Ind., 1978).Google Scholar

⁴⁵ Chapra, “The Economic System,” p. 245.

⁴⁶ Yusuf, Economic Justice, p. 67 (italics in original).

⁴⁷ Husaini, S. Waqar Ahmed, Islamic Environmental Systems Engineering (London, 1980), p. 135.CrossRefGoogle Scholar

⁴⁸ The disagreements are discussed by Ahmad, Ausaf, “A Macro Model of Distribution,” pp. 3–6.Google Scholar

⁴⁹ Ibid., p. 5.

⁵⁰ See, for instance, Kahf, The Islamic Economy, p. 65.

⁵¹ See Chapra, Umer, “Review of Kahf's The Islamic Economy,” Journal of Research in Islamic Economics, 1, 2 (Winter, 1984), 84.Google Scholar

⁵² See, for example. Afzal-ur-Rahman, Economic Doctrines, I, 145–52. Variable wages are favored by certain writers, including Ali, Syed Aftab, “Risk-Bearing and Profit-Sharing in an Islamic Framework: Some Allocational Considerations,” in Ahmed, Z. et al. , eds., Fiscal Policy, pp. 253–70.Google Scholar

⁵³ See Barzel, Yoram, “Measurement Costs and the Organization of Markets,” Journal of Law and Economics, 25, 1 (04 1982), 27–48.CrossRefGoogle Scholar

⁵⁴ See Udovitch, Abraham L., “Islamic Law and the Social Context of Exchange in the Medieval Middle East,” Historr and Anthropology, 1 (1985), 445–65.CrossRefGoogle Scholar

⁵⁵ Unlawful Gain and Legitimate Profit in Islamic Law (Cambridge, England, 1986).

⁵⁶ Ibid., p. 59.

⁵⁷ Ibid., p. 60.

⁵⁸ Ibid., pp. 1–7.

⁵⁹ See, for instance, Siddiqi, Economic Enterprise, pp. 56–57.

⁶⁰ Naqvi, Syed Nawab Haider, Individual Freedom, Social Welfare and Islamic Economic Order (Islamabad, 1981). p. 23. The same point is made by Chapra, “The Economic System,” pp. 8, 94.Google Scholar

⁶¹ Naqvi. Individual Freedom, p. 30.

⁶² Mannan, Muhammad Abdul, “Allocative Efficiency, Decision and Welfare Criteria in an Interest- Free Islamic Economy: A Comparative Policy Approach,” in Ariff, , ed., Monetary and Fiscal Economics, pp. 43–62.Google Scholar See also his Frontiers, pp. 10–11.

⁶³ Chapra, Towards a Just Monetary System, pp. 38–39.

⁶⁴ On intuitionism, see Rawls, A Theory of Justice, pp. 34–45.

⁶⁵ Mannan, Frontiers, p. 11.

⁶⁶ Ibid. The quote is from p. xii, although the same point is also made on p. 1 and, following the remarks on intuitionism, on p. 11.

⁶⁷ See Simon, Herbert A., Reason in Human Affairs (Stanford, Calif., 1983);Google Scholar and Polanyi, Michael, The Tacit Dimension (Gloucester, Mass., 1983, first ed. 1966).Google Scholar

⁶⁸ The argument that the role of judges and social thinkers is to bring order over doctrine is developed by Dworkin, Ronald, Law's Empire (Cambridge, Mass., 1986).Google Scholar

⁶⁹ See Afzal-ur-Rahman, Economic Doctrines, III, 217.

⁷⁰ See Wilson, Rodney, Islamic Business: Theory and Practice, revised ed. (London, 1985), p. 17.Google Scholar

⁷¹ See Husaini, Islamic Environmental Systems, esp. pp. 79–81; Mannan, Islamic Economics, pp. 23–26.

⁷² See Rahman, Fazlur, Islam, 2nd ed. (Chicago, 1979), pp. 71–79.Google Scholar

⁷³ On the biases that inevitably enter analogical reasoning, see Holland, John H., Holyoak, Keith J., Nisbett, Richard E., and Thagard, Paul, Induction: Processes of Inference, Learning, and Discovery (Cambridge, Mass., 1986), ch. 10.Google Scholar

⁷⁴ See Husaini, Islamic Environmental Systems, p. 81 and ch. 5; Mannan, Islamic Economics, pp. 21–23.

⁷⁵ Ibid., p. 22.

⁷⁶ The principal reason for doubting the saying's authenticity is that it emerged several generations after the Prophet's death, at a time when many Muslims were becoming acutely aware of the fact that their institutions were not based on scripture alone. See Hurgronje, C. Snouck, “The ‘Foundations’ of Islamic Law,” in Bousquet, G.-H. and Schacht, J., eds., Œuvres Choisies–Selected Works (Leiden, 1975), p. 275.Google Scholar

⁷⁷ See Chapra, “The Economic System,” esp. pp. 143–45; Afzal-ur-Rahman, Economic Doctrines, Vol. 1, sects. 2–5 passim; Choudhury, Islamic Social Welfare, ch. I.

⁷⁸ See Brennan and Buchanan, The Reason of Rules; Ullmann-Margalit, Edna, The Emergence of Norms (Oxford, 1977).Google Scholar

⁷⁹ There is an extensive literature on the evolution of people's perceptions, to which researchers in several disciplines have contributed. For two broad statements, both by anthropologists, see White, Leslie, The Concept of Cultural Systems: A Key to Understanding Tribes and Nations (New York, 1975);Google ScholarDouglas, Mary, How Institutions Think (Syracuse, N.Y., 1986).Google Scholar The dynamics involved have been explored by Kuran, Timur, “Preference Falsification, Policy Continuity and Collective Conservatism,” Economic Journal, 97, 387 (09 1987), 642–65.CrossRefGoogle Scholar

⁸⁰ See Hourani, George F., “The Basis of Authority of Consensus in Sunnite Islam,” Studia Islamica, 21 (1964), 13–60;CrossRefGoogle ScholarHallaq, Wael B., “On the Authoritativeness of Sunni Consensus,” International Journal of Middle East Studies, 18, 4 (1986), 427–54.CrossRefGoogle Scholar

⁸¹ Esposito, John L., “Law in Islam,” in Haddad, Y. Yazbeck, Haines, B., and Findly, E., eds., The Islamic Impact (Syracuse, N.Y., 1984), pp. 71–75.Google Scholar

⁸² See Lewis, Bernard, Race and Color in Islam (New York, 1971).Google Scholar

⁸³ See Afzal-ur-Rahman, Economic Doctrines, III, 237–38; and Choudhury, Contributions, p. 56.

⁸⁴ See Kennedy, Duncan and Klare, Karl E., “A Bibliography of Critical Legal Studies,” Yale Law Journal, 94, 2 (12 1984), 461–90.Google Scholar