CHAPTER 7 Contemporary Muslim Economies and Rule Compliance In earlier chapters, we have outlined the Divine Kur’anic Rules and their interpretation and practice by the Prophet Mohammad (sawa). These rules and their practice are the bedrock and scaffolding of an ideal Islamic eco- nomic system (as well as the political and social, as all three are interrelated). These rules go well beyond the institutions recommended by the New Institutional Economics (NIE), as they incorporate a heavy dose of justice and morality and also prohibit interest bearing debt in favor of equity and risk sharing as the foundation of the Islamic system. While Islam embraces the market (with just rules, supervision and enforcement), it is a far cry from any form of capitalist system. While Islam advocates a just distribution of income and wealth, poverty eradication and caring for the disadvan- taged, it is far from any form of socialism. While Islam is a Creator-centered system with many teachings in common with Christianity, it is a far cry from the Christian system. The Islamic system is just that—the Islamic system. It should be assessed on its own—on the basis of the rules (insti- tutions) from Kur’an and their interpretation as practiced by the Prophet (sawa). Western writers have delineated the reasons for why rules and their observance are important. Their reasoning, though similar, is very different from the reasoning in Islam. There are numerous reasons for rules in Islam: establish social order; delineate what individuals should do, as opposed to what they wish to do; reduce uncertainty and promote predictability; enable the appropriate formation of expectations; provide a reference structure against which fairness and justice of individual behaviour can be © The Author(s) 2017 A. Mirakhor and H. Askari, Ideal Islamic Economy, Political Economy of Islam, DOI 10.1057/978-1-137-53727-0_7 211