Is Islam Compatible with Free-Market Capitalism? An Empirical Analysis, 1970–2010

Abstract

Are majority-Muslim countries laggards when it comes to developing liberal economic institutions? Using an Index of Economic Freedom and its component parts, this study finds that Muslim-dominant countries (>50% of the population) are positively associated with free-market capitalism. Protestant dominance is also positively correlated, but the association stems from just two components of the index, mainly “legal security and property rights protection.” Surprisingly, Protestant countries correlate negatively with “small government” and “freedom to trade,” two critical components of free-market capitalism. Muslim dominance shows positive correlations with all areas except for “legal security and property rights.” The results are consistent when assessing similar variables measuring property rights and government ownership of the economy collected by the Varieties of Democracy Project. Capitalistic policies and institutions, it seems, may travel across religions more easily than culturalists claim.

The Determinants of Economic Freedom: A Survey

“…Hillman and Potrafke () find that Protestantism is positively related to the level of economic freedom while Islam is not. de Soysa () however challenges this latter finding by showing the effect of Islam on economic freedom is actually positive if controlling for oil dominance in the economy.…”

Cognitive and quantitative approaches to Islamic studies: Integrating psychological, socioeconomic, and digital‐cultural statistics

“…Such data makes it possible to quantitatively compare Muslim societies with one another, and with various non-Muslim societies, over the premodern and modern periods. These developments have helped spur an emerging statistically-informed literature on Muslim societies and Islam's effects on social life (see Abdelhadi & England, 2019;Adamczyk & Hayes, 2012;Ariff & Safari, 2014;Bahrami-Rad, 2021;Blaydes & Chaney, 2013;Chaney, 2013Chaney, , 2016Chaney, , 2019Chen, 2010;De Soysa, 2019;Esposito & Mogahed, 2007;Fish, 2011;Fish et al, 2010;Gleditsch & Rudolfsen, 2015Goldscheider, 2006;Grim & Hsu, 2011;Institute for Economics & Peace, 2019;Korotayev et al, 2015;Kuran, 2011;Kuru, 2019;McCleary & Barro, 2019, pp. 67-88;Mesoudi et al, 2016;Norris, 2011;Norris & Inglehart, 2012;Paldam, 2009;Pew Research Center 2011, 2017bRubin, 2017;Sevinç, et al, 2018;Shirokanova, 2015;United Nations Development Programme, 2016).…”

Etika Profetik Bagi Pengelola Keuangan Negara

“…Keseimbangan (equilibrium) memiliki fungsi dan peran yang sangat me nentukan kehidupan umat manusia dalam memperoleh kemenangan (Falah) (Soysa, 2019). Falah hanya dapat dicapai jika ter jadi keseimbangan dalam hidup.…”

“…Kehidupan yang seimbang merupakan bagian dari ajaran Tauhid. Islam kerap dise but sebagai umat pertengahan (Ummatan Wasathan) (Soysa, 2019). Adil memiliki tu juan agar tercipta kehidupan yang harmonis dan seimbang, mencakup secara keseluruh an antara lain keseimbangan mental dengan fisik, spiritual dengan material, sosial dengan individu, serta dunia dengan akhirat.…”