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Scarcity of Resources and IslamicEconomics

Posted on January 24, 2012

2 Votes Salman Ahmed Shaikh

The phrase resources are scarce, but wants are unlimited is regarded as a fundamental economic fact in Neoclassical Economics. If scarcity of resources also includes physical and natural limitations and not just income/resource constraints, this notion of scarcity of resources is in line with Islamic ideology. There are aspirations in us like to live forever, to have no physical constraints, to have no regrets, to have no stress, illness etc. Wants like these can only be achieved in life hereafter. We will not die in Heaven; we will not have physical constraints in Heaven, willalways be young and will have no regrets of the past and no concern for the future in life after death in Heaven. La khaufun alaihim wala hum yahzanoon (Al Baqarah: 38). But, it must be noted that books on introductory economics seldom use unfulfilled or unachievable aspirations in discussing the so called fundamental economic fact. Most of the things listed in support of scarcity are really not scarce at all. If we take data for per capita consumption requirement of food and compare it with available resources or with Production Possibility Frontier (PPF) provided the capitalists give more priority to their availability than to maintaining the hold on markets with rigid prices/restricting output and thereby creating welfare loss there is a remarkable surplus. The problem is with appropriate distribution and utilization of resources. Neoclassical Economics by letting this highly opinionated view become a positive economic fact paints a very dismal picture and encourages a highly dangerous social attitude. For instance, if there are 50 students in a class room and if one student starts to distribute lecture slides in hard copy form to those students in the absence of teacher,

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http://islamiceconomicsproject.wordpress.com/2012/01/24/scarcity-of-resources-and-islamic-economics/[9/10/2013 8:13:41 PM]

Scarcity of Resources and Islamic Economics | Islamic Economics Project

behavior of students will be significantly different when they think that the handouts are not sufficient for the class size from the behavior when they think that the handouts are sufficient in number so that every student could have one. Neoclassical Economics favors no government intervention (i.e. no teacher in class) and make the economic players (i.e. students) believe that the resources (handouts) are scarce. This resultant dangerous social attitude does not seem apparent in real world because in a market economy, the number of players is more and interaction is more indirect and channeled by several intermediaries and if one is exploited by someone, he/she can exploit the other. But, if resources are scarce, there is no end to this social/economic tension and negative spillovers. If we add to it the view by Lionel Robbins that not only this is an economic fact, but economics must remain neutral between ends, Neoclassical Economics appears a very gloomy field of knowledge. But, it must be appreciated that an individual at micro level may face scarcity because of the purpose of human existence explained by Islam. If there will not have been any scarcity of resources at micro level, there should not have been any instruction for Infaaq and there will not have been any difference between life hereafter in heaven and this world. This world is a place for test and this test requires some people to be privileged and some to be deprived. Is it they who would portion out the Mercy of your Lord? It is We Who portion out between them their livelihood in this world, and We raised some of them above others in ranks, so that some may employ others in their work. But the Mercy (Paradise) of your Lord (O Muhammad PBUH) is better than the (wealth of this world) which they amass. (Al Zukhruf: 32) The deprived and privileged are both tested for patience and thankfulness to Allah and how they take care of society and its needs. But, interestas a system of allocation of resources ensures a fixed return for one and variable/uncertain for another. Holy Quran on the other hand tries to inculcate a very different sort of an attitude in a person who has surplus funds. Quran encourages that person to refrain from earning interest on that wealth by loaning it out, and rather give it to charity. Allah will destroy Riba (usury) and will give increase for Sadaqat (deeds of charity, alms, etc.). (Al Baqarah: 276)
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Scarcity of Resources and Islamic Economics | Islamic Economics Project

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This entry was posted in Articles on Islamic Economics and tagged Capitalism, Classical Economics, Fundamental Economic Problem, Islamic Economics, Micro Economics. Bookmark the permalink. Lessons from the US EconomicCrisis Analysis of Ethical Dimension of the GreatRecession

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