Articles on Islamic Economics

Scarcity of Resources and Islamic Economics

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, then this notion of scarcity of resources is in line with Islamic ideology. We have certain aspirations like to live forever, to have no physical constraints, to have no regrets and to have no stress and illness, for instance. Wants like these can only be achieved in life hereafter. We will not die in Heaven; we will not have physical constraints in Heaven, we will always be young and we will have no regrets of the past and no concern for the future in life after death in Heaven. Qur’an describes it as ‘La khaufun alaihim wala hum yahzanoon’ (Al Baqarah: 38).

But, it must be noted that books on introductory economics seldom use naturally un-achievable aspirations in discussing the so called fundamental economic fact. Most of the essential things are really not scarce at all. Food per capita has actually increased since the 1970s as per Food and Agricultural Organization (FAO) data.

Neoclassical economics presents scarcity of resources as a positive economic fact. Then, it paints a very dismal picture of economics 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 the students in absence of the teacher, the behavior of students will be significantly different when they think that the handouts are not sufficient for the class size as compared to the behavior in a scenario when they think that the handouts are sufficient for all the students in the class.

Neoclassical economics favors no government intervention (i.e. no teacher in class) and makes 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, there are large number of players and their mutual interaction is impersonal and more indirect and it is channeled by several intermediaries and institutions.

If we add to it the view by Lionel Robbins that not only scarcity of resources is an economic fact, but economics must remain neutral between ends, then neoclassical economics presents 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 the micro level, then there should not have been any instruction for charitable giving, i.e. ‘Infaaq’. This world is a place for test and this test requires difference in endowments. Qur’an says:

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)

Thus, the poor and the rich are tested for patience and thankfulness to Allah and how they act with their free will when faced with moral issues in life.

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