Promoting Economic Freedom in Muslim Majority Countries is the Key to Prosperity

The IEA’s Islamic Foundations of a Free Society, written by a range of Islamic scholars, sheds a great deal of light on questions about Islam’s compatibility with a free society and a free economy.

This book aims to inform those in the West who view Islam with fear and suspicion, while encouraging Muslims to remember and learn from their history of rich and pluralistic Islamic civilisations.

Muslim majority lands were once the most advanced regions on earth in the areas of tolerance, freedom, science and medicine. Today they are shown as laggards in most international indices covering economic freedom, human development and human rights. The economic failure of Muslim countries is not caused by incompatibility between the tenets of Islam and the principles of a free economy, but the deviations from the liberal tradition of early Islam.

Islam not only wants freedom of the individual from theocracy, but also from control by the state. Islam emphasises the role and responsibility of the individual; freedom of faith is a fundamental principle.


  • Understanding and applying Sharia law is at the heart of a very important debate in the Islamic world, with conservative Muslims and jurists on one side and reformists on the other.
  • Conservative jurists tend to view Sharia laws as a fixed set of divine rules that transcend time and space. And despite the fact that they are in favour of upholding Sharia law, they generally oppose the use of violence in the pursuit of this goal while jihadi factions are in favour of using force and violence to establish a Caliphate with rigorous application of Sharia.
  • Reformists on the other hand consider rules to be bound to their time and place and, as such, permanent ordinances and eternal rules are not conceivable. Reformists also believe that Sharia as we know it is not divine.
  • While most reformists think that laws cannot be permanent, they assert that values and moral norms can and, as such, call for an understanding of Sharia from a virtue perspective rather than a legal one.
  • Averroes, the twelfth-century Andalusian jurist and philosopher, is one of the early Islamic figures who aimed to reform the dominant religious understanding of his time. Averroes is a crucial figure in understanding the intellectual battle fought by conservatives and reformists in the Muslim world.
  • Averroes favoured reason favoured reason and philosophy. According to Averroes, truths must be approached by means of rational analysis. Furthermore, Averroes believed that the Quran contained the highest truth while affirming that its words should not be taken literally.
  • Different times and different challenges have given birth to a new generation of Islamic reformists in the twentieth and twenty-first centuries who have been able to use modern social science frameworks to analyse and challenge religious dogmas.
  • Echoing the work of reformists, civil society actors in the Muslim world have also engaged in serious efforts to move from theoretical frameworks of reform to more practical social and economic changes.
  • In addition to purely theological reforms and social changes, promoting economic freedom in Muslim-majority countries is key to encouraging development and improving the lives of hundreds of millions of people.
  • Despite the fact that Islam is rather in favour of entrepreneurial activities, Muslim-majority countries do not generally rank high in international indices of economic freedom and competitiveness.
  • Large, intrusive governments, interventionism, rigid legal frameworks and high taxes have had a negative impact on the economic performance of a number of Muslim countries.
  • Conservative interpretations of Islam and a large centralised state apparatus have adversely affected the way in which Muslims understand economic freedom. But this should not overshadow the work of early Muslim thinkers.
  • Promoting a liberal understanding of Islam does not mean ignoring a rich Islamic tradition of philosophy, thinking and jurisprudence. The spirt of the intellectual Islamic tradition can be celebrated while opening up the field for new ideas.
  • In a letter addressed to the monks of St. Catherine’s Monastery in Mt. Sinai, the Prophet Muhammad granted a Charter of Privileges, including clauses covering aspects of human rights, protection of Christians, freedom of worship and movement, freedom to appoint their own judges and freedom to own and maintain their property and the right to protection in war.
  • It is indeed, such a spirit that needs to be revived and granted permission to flourish in the light of the modern concepts of universal human rights and democracy that are prevalent in many modern states.
  • The problem of the economy in the Middle East is not the incompatibility between the tenets of Islam and the principles of a free economy, but the deviation from the liberal tradition of early Islam. The incoming leadership of the Arab world has been left with the unenviable task of first building the foundation necessary for vibrant, modern and competitive economies. Such revived economies should then rediscover the tradition of free trade throughout the whole Muslim world and beyond.

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