The Shuratic Process was defined earlier with regards to the processual nature of Tawhidi order as this applies to all of the socio-scientific problems and issues. When establishing the micro- macro interface in relation to a theory of Islamic political economy we will invoke the Shuratic Process of ethical policing and the ethical interactions-integration and evolution that continously proceeds on between the Islamic polity and the grand ecological order. A specific subset of this grand ecological order is the market system. In such systems of interactive-integrative and evolutionary relations, the most important objective criterion of the Islamic economy is seen to be a special kind of the total social well-being function. From such a specific well-being function we derive the optimal relations among the Islamic policy variables and the list of microeconomic and macroeconomic state variables. The system is thoroughly knowledge-induced as interactions, integration followed by evolution form the circular causation and continuity model of the entire system. Time dependency of the state and policy variables are introduced only through the primacy of the knowledge variables determining time.

The special type of the social well-being function we are referring to here is a measurable one in the observable socioeconomic variables and the quantifiable Islamic variables. Thus the social well-being function treated here is of the cardinal type -- not in the von-Neummann concept of expected value of the social utility function, rather in the sence of empirical as well as behavioural content of measurablity. The normative form of this cardinal function is combined with its positive forms as belief parameters of the knowledge plane embedded in Shrai'ah is made to interface with their instrumental impact on the state variables.

Let us examine an example explaining the micro-macro interface in the Islamic political economy. The Shura has the important objective to help establish the inviolable property rights at the grassroots level in the Islamic society. The formation of property rights being both a cause and effect of social and productive transformation in the Islamic political economy, activates the principal elements at the micro-level, namely, the Tawhidi Precept including the Prophetic traditions (Risalah=Sunnah) and Islamic solidarity, both of which spearhead the progress of the Islamic community.

Following formation of property rights at the grassroots level, the simultaneity of economic efficiency and distributive equity reinforces social justice (equivalent to economic justice in the Islamic economy). This is a principle that is realized at the macro-economic level. The net result of realizing these principles by degrees of social transformation, implies the attainment of temporal social well-being.

Next let us examine the nature of policy variables in the micro- macro set-up. The mandatory and specific Islamic tax on wealth and savings for amelioration of the needy and related groups in society plus the upkeep of the functionary for this purpose, is a policy variable at the micro-level. But being a form of expenditure on the fiscal side, Zakat also becomes integrated with macroeconomic level. The end goal of Zakat is productive transformation by drawing the needy out of their poverty and securing them their property rights. Hence, as long as Zakat is treated as mere social welfare expenditure, its impact on productive transformation at the grassroots level is reduced. Whereas, when Zakat is mobilized increasingly into productive transformation at the grassroots levels, the micro-level effect of Zakat is realized. Besides, at the macro-level, Zakat continues to play its fiscal role as a productive spending. Hence, income multipliers are realized.

Next consider the institution of Mudarabah or profit- sharing in an Islamic political economy. Now the profit-shares on specific cooperative projects can be treated as micro-level policy variables. At the macro-economic levels the same profit-shares are suitably aggregated by projects and forecasts to be treated as macro policy variable. Now the profit rate as a weighted average of the profit-sharing rates becomes an appropriate policy variable. This can be noted by writing,

aggregate profit rate=Sum(i)Sum(j)[pi.(K(i,j)/Ki], for the ith. project and jth. participants in the ith. project, i=1,2,..,n; j=1,2,..,m. pi denotes the ith. project-specific profit rate; K(i,j) denotes the capital outlay in the ith. project by the jth. participant. Thus, K(i,j)/Ki is the proportion of the jth. participant's capital outlay as a percetnage of the total capital outlay in the ith. project. Sum(j)[K(i,j)/Ki]=1. Thus,

aggregate profit rate = Sum(i)[pi]

By dividing this by n number of projects, we derive the average profit rate. Hence, the weighted average of the profit-sharing rates, pi.(K(i,j)/Ki, i=1,2,..,n, j=1,2,..,m gives the aggregate profit rate from which is derived the average profit rate as a macro-economic policy variable.

Next we consider the institution of abolition of financial interest, Riba. Abolition of Riba is simultaneous to the institution of profit-sharing, as the latter stands for the alternative of interest-based financing of capital into productive outlets instead. Riba affects both the consumer as well as the investor at the micro-level. The ensuing consumption and spending variables are then the corresponding macro-economic variables affected by the same rate of interest. Hence, while in the non- Islamic economy interest rate enters the consumption function (wealth effect) and the investment function (IS-curve), similarly, the abolition of interest and its restitution by the profit-sharing rate and hence the profit rate as policy variables, tie in the micro-economic policy variables (profit-sharing rates) with the macro-economic policy variable (profit rate). Such policy variables are endogenous ones because they are formed through market transactions.

Finally, in order to realize the full impact of the critical policy and instrumental variables on productive transformation, it is necessary that israf, i.e. waste must be avoided. This is true of every kind of expenditure, including Zakat, for Zakat may be withdrawn from the able bodied persons who do not use Zakat for productive change of their own choice. In this sense, Zakat in its international context may be looked upon as grants for bringing about structural transformation. Just as the World Bank would not provide structural adjustment to those countries that do not yield to its policy package to bring about development, so also now an Islamic state may withdraw such grants from the kinds of able- bodied persons that we have mentioned here. Such persons can then put into other forms of projects enabled by Zakat money.The nature of productive transformation is both a microeconomic as well as a macroeconomic matter. Zakat plays crucial role in this both as a specific spending variable at the needy grassroots and becomes productive spending at the macroeconomic level, and both of these take place in the absence of waste, therefore, Israf is an instrumental variable at the micro and macro levels.

Now we have established a list of micro-macro interfaced policy variables, which promote the productive transformation of the socioeconomic variables in an Islamic political economy, such as incomes, employment, training, productivity, spending in consumption, investment and needs, prices and profits, capital mobilization, property rights (income security) etc. Through the instruments, there is a logical interconnection between the microeconomic level and the macroeconomic level. This happens by interlinking various hierarchies of the social order starting from the grassroots level upwards and involving all agencies of the Islamic political economy in this pervasive interrelationships.

There are however multiple possibilities for interactions among and between these socioeconomic and policy variables. The interactions among the policy variables in all forms of mixes and priorities can be exercised to bring about Islamic politico- economic changes. The package however determined in this way, then impact upon the market determined variables and activities. It must be remembered that the market-oriented Shura here guides the instruments towards realizing a vibrant market transformation and to ethicize market dealings. The principal goal of such combinations of policy and instrumental variables influencing the socioeconomic variables is to form entitlement (property rights). This becomes synonymous with the goal of distributive equity for the Islamic political economy. Subsequently, the securing of property rights creates ownership and wealth, both at the grassroots levels and through its indispensable interactions with the upper hierarchies of society, it also generates and secures wealth at all levels of society. The earning of wealth by honest and ethical means is an Islamic prerogative.

When ownership, wealth and property rights are secured in this way at all levels through indispensable interlinkages among these levels, then income multipliers are realized, investment is mobilized, production proceeds in the right direction with appropriate types of institutions of cooperation, human resource development and self-reliance at the grassroots are all generated. Since the proof of the structural change is measured in terms of well-being of human beings, who inhabit the micro-level, whereas the effects of these are channeled up to the macroeconomic level, therefore, an automatic micro-macro interface is established through the interactions among and between the socioeconomic variables, policy variables and goals of the Islamic political economy.

There are many feedbacks in the circular creative process that goes on. For instance, with Z(Zakat) & M(Mudarabah=profit-sharing under economic cooperation), Z relates to entitlement formation at the grassroots, E. With productive transformation, M reinforces E. Finally with ownership and wealth (Y,W) thus formed, E reinforces M and Z in the circular fashion. This is tantamount to saying that economic efficiency and distributive equity are realized together. The growth of M necessitates the decline of interest transactions, R. Besides, with the decline of R, capital (investment, I) is mobilized into productive directions. This inturn reinforces M and Z from the side of I, W and Y in a two-way circularity. The Islamic political economy is essentially a regime of graduated basic needs development menus with a vast range of productive diversities. Basic needs is always associated with avoidance of waste. Now with productive focus being on such dynamic basic needs regimes of development spread across a vast range of sectorially interlinked diversities, therefore, all the instruments must be guided and be sustained by this developmental focus. In this way Israf is circularly interrelated with the other policy/instrumental variables, socioeconomic variables and the goal of structural transformation with ethical standards arising from Shari'ah (Islamic Law).

The Shuratic process that characterizes the hub of interactions in the Islamic political economy and establishing the micro-macro interface, can be seen in its institutional form concerning the goal of productive transformation. The institutional form is a grand string of Shuras (consultation bodies) spanning across community levels, the educational level, legal authorities, researchers and educationalists, practitioners and policy makers, planners and databases in government departments and the private sector. It is the collectively interactive decision making of all the representative agents that finally determines the direction of learning on the tenets of Shari'ah concerning various issues at hand, and brings about a consensus of action. The circular nature of the interactions as shown above, make the knowledge process also circulate by cause and effect among all the variables, policies, instruments, institutions and socioeconomic variables. Besides, the evolution of the Islamic political economy along its dynamic basic needs development path with a vast spectrum of diversities, expands the circular causation and continuity process of knowledge formation. Through such pervasive interactions, consensus or integration is generated. The certainty and social well-being established by such a growing knowledge formation process causes a dynamic evolution of the knowledge formation along the paths of diversities and dynamic basic needs trajectories.

We are now ready to show by using a cardinal type of the social well-being, the derived equations from it that establish the micro- macro interface. The general form of the cardinal social well-being function is given by, W=W(x,p,C,E,W,I;M,Z,i,Is), where, x denotes national income; p denotes price level; C denotes consumption spending; E denotes employment; W denotes wages; I denotes investment spending. These are taken as the socioeconomic variables, although more could have been included. The policy or instrumental variables are M (Mudarabah=profit-sharing proxied by profit rate as mentioned earlier); Z (Zakat); i interest rate, Is Israf. The concept of social well-being replaces that of the social welfare function because of the strictly complementary nature of the variables and the extensive interactions generated between and among all the variables shown. The micro-macro nature of the social well-being function is carried through by the nature of the interrelationships among the variables as mentioned earlier.

The relations that will be satisfied between policy variables and state variables are:

zi is a function of all variables appearing in W except zi; zi denotes any of the variables including the policy/instrumental variables. i denotes the numbered variables among all given for W. Each of these relations is defensible on interactive grounds. Briefly such a general picture on interrelationships can be represented as follows. This of course does mean a negation of other more detailed and complex forms of policy-state variables; but those other ones remain details of the reduced form of policy variables given here: (Z,M,i,Is) -> micro-macro interface 

Equilibrium in the Micro-Macro Interfaced System.

There are two dynamically moving equilibrium systems in the sense of simulation in the micro-macro interfaced order. First is the simulative equilibrium relations occurring at the micro-level. Here it is the definition of the appropriate numeraire for the multimarket (sectors) equations that links up the micro with the macro. Elsewhere, such a numeraire was shown to be the ethical numeraire that could be measured and valued in terms of a selection of basic needs baskets. Sometime the need for stability and exchangeability of the numeraire may suggest the selection of a currency numeraire. In the gold standard, the numeraire was gold. Money is thus replaced by gold or currency in circulation in order to avoid the inflationary and speculative nature of transactions wherein some get advantage over others by supplying more or less of the paper money. For stability alone, the value of land was also suggested as a numeraire. In every one of these cases, the currency base of money becomes a micro (currency) and a macro (money) and ethical considerations of stability, equity, value and exchangeability of basic needs basket underlies the choice.

The second equilibrium is at the macroeconomic level, and is given by the simulative relations among the related variables as determined by the derived equations from W. For example, the relationship between price level, p (macro) and unemployment rate (u) in W via the use of the policy/instrumental variables, is not of the nature of trade-off (Phillips or Friedman). This because complementarity pervasively determines the interactive-integrative and evolutionary nature of the simulations across various state- policy/instrumental variable relations. Other similar relations can be similarly thought out. But in the end, there is no independence between the micro and macro levels of variables and functions in the micro-macro interface. The equilibrium that attains at the micro-level is automatically linked with the equilibrium that attains at the macro-level and vice-versa. The two evolve together. The implication of the ethical numeraire binding together the micro and the macro is clear: Nothing in the Islamic political economy is determined, mobilized, targetted in the absence of the ethical and moral values laid down by the epistemological roots of the Qur'an and Sunnah and as these are humanly evolved by extensive discursions across interactions by the ever evolving realm of Shari'ah on the basis of the immutable epistemology.

It may finally be briefly examined what it means for say, Z to be interrelated with the other socioeconomic and policy variables. Zakat is measured in value; M in profit rate as a weighted average of profit-sharing rates; i in interest rate; Is in wasteful consumption (thereby also production). Clearly, Z is then measured in terms of income potential (x), employment (E), property rights (basic needs i.e. appropriate C) resource mobilization (I), consumption (since Z is residual after consumption as governed by avoidance of Israf), price stability (basic needs i.e. c, x). On each of these a total mix of the policy variables play a definite role as explained earlier. Thus it is the endogenous nature of the policy variables that enable them to be measured and controlled in terms of the market-oriented variables. Therefore, it is not foreign to think of endogenous variables to be interrelated.

What is the exogenous variable in the entire micro-macro interfaced system? What is the role of the monetarist and fiscalist forms of independence of monetary and fiscal policies, income policies, etc in Islamic political economy? To answer these questions one recognizes that the only exogenous reality of the entire system is the law-giving epistemological completeness. This is Tawhid (Unity Precept of God). When understood as the complete Stock of Knowledge, it becomes the provider of the world view of unification under which the entire complementary nature of the micro-macro interface revolves. The interactive-integrative- evolutionary form of the circular causation and continuity model of unified reality in this system is the result of the primal concept of Unity and its translation into the principle of unification in political economy as in every other branches of life and thought.

Next on the matter of policy independence noted in received macroeconomics, we see that money is not of the same nature in Islamic political economy. It is a quantity of currency in circulation and demand that services a given basket of goods actually or expectedly exchanged in the market. Money is then a microeconomic item that also does macroeconomic functions, that is affects output, investment and employment. There is no independent decision on the part of the Islamic central bank to create and contact exogenous money supply. The fiscal measure of Zakat is motivated by ethical decisions at the individual and household level, but is effect is felt on the total spending that the nation does and thus brings about multiplier impacts of such fiscal impacts. Here too, taxes become residual and not major resources of governments to authorize fiscal expenditures while running deficit. The bait al-mal (public treasury of an Islamic state) is thus a collector and disburser of public funds. It may also hold a power of moral persuasion. But it has no power to legislate on fiscal matters. The al-Hisbah (social control of market functions) is empowered to guide the markets through moral persuasion, Shari'ah controls. Hence the al-Hisbah takes upon itself micro-functions to promote macroeconomic stability. In this paper, the very simulatively learning nature of the micro-macro interface of Islamic political economy implies that no perfect state of the Islamic transformation is assumed. Hence, some level of imperfection in the policy functions is to be assumed, subject to its reduction during the process of learning and exchange of knowledge of Shari'ah on the human issues.

We now conclude this paper by the following observations: The theory of Islamic political economy is one of micro-macro interface. This meant the determination of the ethical Shuratic variables (policy and state variables) and their polity-market (ecological in broad sense) at the microeconomic level in the first place. This is then simultaneously followed by aggregations (not necessarily linear forms because of the pervasiveness of knowledge variables) to the macroeconomic level. The critical objective function before the Shura was shown to be the social well-being function, substantively defined. The Shuras themselves, through pervasive interactions, integration followed by evolution according to the knowledge-based circular causation and continuity model of unified reality, were formed by strings of Shuras. The simulative nature of the social well-being attainment was a set of micro-macro interfaced relations. The concept of dynamic general equilibrium in this micro-macro sense was then defined. In this way the intrinsic nature of the Shuratic Process was shown to be the cause and effect of the knowledge-inducing process of micro-macro interface in the Islamic political economy.