Question

1.Discuss the relevance of the “scarcity concept” in Islamic economics.  Describe your answer in the form of an essay ( 20 mark )

2.What are the significance of rule-compliance in Islamic economics? Explain with appropriate examples.Describe your answer in the form of an essay ( 20 mark )

3.How is the notion of scarcity in Islam different from that in conventional economics?Describe your answer in the form of an essay ( 20 mark )

Answer 1

1. It is difficult to identify Islamic economists who do or do not approve the notion of scarcity as valid for the discipline. Many appear non-committal or take it for granted. Some are found on shifty grounds. But there are scholars who have voiced resource scarcity as inadmissible from Islamic perspective. Monzer Kahf feels that economic problem is not of scarcity but is caused by human laziness and neglect. However, the point missing in the above argument is that the divine provision of stocks, however inexhaustible, is not a sufficient condition for the availability of resources to human beings in desired measure at any time or space. Existence of resources is necessary but it is their availability to mankind that lends content and meaning to the notion of scarcity as the basis of economics. The availability of resources to human beings depends on the state of their knowledge and expands as they strive to discover more and more about their uses, location, methods of extraction, and cost effectiveness through continued learning research and action.

The holy Qur‟an not only talks of God‟s bountiful resources but also informs us that he alone is the source of knowledge. Divine wisdom releases it to those who seek; not all at once, but bit by bit so that people are not carried away by pride and arrogance. The proposition in Khan that scarcity of resources is merely a man-made phenomenon resulting from their wasteful use and mal-distribution is erroneous. These factors only aggravate scarcity, they do not cause it. In fact, scarcity of resources in terms of their availability as explained above is conceivably a part of divine scheme to spur human beings into action for searching their living in the land of God and at the same time be tested in how they do it. Life for that reason is a trial in this world. The history of human civilization is the history of the march of human conquest of nature. In essence, it is the history of pushing outward relentlessly the frontiers of scarcity through unceasing research, inventions and innovations in science, technology and social management.

Knowledge is the weapon of mankind in the fight for making resources available from the store of nature and the potential expansion of knowledge certainly knows no limits. The race of all races on Earth has indeed been between the growth of knowledge and resource availability for producing material requisites of well-being in the face of ever increasing population. Malthus and Ricardo - the pessimists - were obsessed with the fear of an impending hell unless human beings adopted measures to keep their number in check.Their protagonists like Seligman saw in the birth of a child not only a mouth demanding food but also a pair of hands capable of adding to its output. The optimists were elated by the hope of a coming paradise. The elation emanated from the sight of industrial revolution already flying high on the wings of scientific inventions and innovations.

2. Three fundamental concepts support the rules-based religion that is Islam. First is walayahh, the unconditional, dynamic, active, ever-present love of the Supreme Creator for His creation, which is manifested through the act of creation and the provision of sustenance for all humans. This involves providing sufficient resources to sustain life and divine rules to sustain and flourish on this earth. Humans reciprocate His love by extending their love to other humans and to the rest of creation. Second is the concept of karamah, human dignity. The Quran considers humans to be the crowning achievement of His creation for whose personal and collective development everything else has been created. Indeed, humans are the purpose of creation. The third concept is the meethaq, the covenant in which all humans were called before their Supreme Creator and asked to testify that they recognize in Him the One and Only Creator and Sustainer of the entire creation.The Islamic financial system is expanding quickly, and those looking to increase their relevance in a changing economic landscape must get up to speed. Introduction to Islamic Economics provides a comprehensive overview of underlying economic system offering a deeper understanding of the feature of the system.

3. Falah is a both-worldly concept. In this world it represents three things: survival, freedom from want, power and honour. The Qur'an uses the term falah or its derivates at 40 places. A perusal of these verses leads us to determine the conditions of falah at the spiritual, economic, cultural and political levels. The second key concept in the definition is `resources of earth'. Islamic economics studies human behaviour towards resources of earth and investigates those modes of utilisation which may lead to falah. The resources of earth are meant to provide livelihood to the creatures of God. The overall spirit of the Shari'ah is that either one may use the resources one has come to possess or may release them for others. Furthermore, the Qur'an informs us that God has created sufficient resources for His creatures . Therefore, scarcity may be either due to lack of proper utilisation of natural endowments or an imbalanced distribution. Islamic economics studies resources from the point of view of `adequacy' rather than scarcity. It starts from the premise that the resources of earth are `adequate' to achieve falah. Therefore, if some `scarcity' is being encountered man must be doing something wrong, and ways and means should be found to restore the natural state of adequacy. This may be by broadening the productive base, improving technical know-how, re-distribution of resources or curtailment of misuse of resources, or of excessive and frivolous wants. Scarcity of resources is a man-made situation and Islamic economics studies it in order to rectify it.

The method of Islamic economics presumes a primary and binding role for the ideological content. The basic premises are defined by the Shari'ah. The economists develop their analysis by employing reason and real life data to the divinely ordained content. Islamic economics cannot be conceived outside this basic framework. Islamic economics takes into account the economic behaviour of man in the overall human context. It does not restrict itself to the `market' variables. It integrates the findings of other social sciences into its subject-matter. In sum, the approach of Islamic economics is inter disciplinary. Secondly, a very high content of Islamic economics is normative. Muslim economists have the obligation to discharge the Qur'anic duty of enjoining the proper and forbidding the improper. Therefore, Islamic economics studies and suggests ways and means to achieve falah. It watches digressions from the Shari'ah in the human behaviour and devises policies to attain a higher level of conformity.