Islamic Economics and Consumer Behavior

Salman Ahmed Shaikh

Purpose behind human existence is the basic question which only religion answers. Centuries ago, pioneer philosophers used to study and discuss ‘why we exist’, but after renaissance in Europe and revolt against Church, social philosophers came to the front and raised issues of society and left study of ‘why we exist’.

Then, science developed, material life improved and Economics became just the study of material progress and how we can achieve it.

In 21^st century, we have things that were enjoyed by Kings only in past. But, most of the happiness studies show that in general, a majority of us is not happy. We are not happy as we suffer by comparison. As we compare ourselves with our peers on material possessions, that comparison in any developed capitalistic society shows us huge disparity.

The idea of material progress and well being enabling the people to forget fear and religion and Question of ‘why we exist’, has failed. Ignoring the purpose of existence and trying to replace it with material self pursuit does not and has not solved the fundamental human problem of ‘why we exist’.

Only religion has the answer to ‘why we exist’. The basic premise of Islam is that we have been created by One and Only Allah so that we obey Him and that if we do, we will be rewarded by Him in Heaven. Only religion provides the deterministic and absolute justice which is desired by every human being. Only the place in heaven provides us the incentive to have freedom from limitations of this world, to have no regrets of the past and no concerns for the future. Only the belief in hereafter provides the incentive to do good deeds in all situations and avoid bad deeds in all circumstances as there is good reward for all right things and bad reward for all wrong things. Only Allah has the complete Knowledge and complete authority to make it happen in life hereafter.

Economics says that there is a tradeoff in every resource use as any resource has alternate uses. One may feel that striving for success in life hereafter would require a drastic tradeoff between material pursuits and following Allah’s will. Indeed, if material lust is preferred over Allah’s will, there will be permanent loss in life hereafter, but that does not preclude us from not having the ability to benefit from Allah’s blessings in this world.

Islam does not discourage seeking Allah’s bounty in the world. One prayer in Quran reads as follows:

“…But of mankind there are some who say: “Our Lord! Give us (Your Bounties) in this world!” and for such there will be no portion in the Hereafter. And of them there are some who say: “Our Lord! Give us in this world that which is good and in the Hereafter that which is good, and save us from the torment of the Fire!”

(Al-Baqarah: 200-201)

In Economics terminology, Islam does not ask us to have a corner solution when the two goods in question are ‘worldly benefits’ and ‘investment for life hereafter benefits’. Islam does not require us to completely abstain from blessings of this world, but to have a balanced life and a balanced composition of the two goods mentioned above.

The prescribed composition requires us to abstain from things like Alcohol & other such drugs, wastage in the use of natural resources, earnings from such sources like interest, gambling, fraud, deceit and tendencies like overspending & lavish consumption etc.

Empirical research in social sciences has proven the effects of interest based financial system that has visibly led to economic crises one after the other in recent past and has resulted in huge income disparity and unprecedented level of poverty.

Developments in physical and natural sciences have also proven the negative effects of addictive drugs and how free ride on use of natural resources without legal accountability can lead to overexploitation of common resources and disturbance in the ecological balance. While we take interest in studying the disturbing effects on environment of working under the free market philosophy, we will not be too much off the mark if we delve once more on the unsettled issue of ‘why we exist’ and ‘why this universe, the complex and intertwined ecosystem’ has existed for time unknown without there being a Creator and purpose for it.

Afterlife accountability enables observing ethical values which are not easily enforceable through legal systems made by humans after all. Question of fairness and equity can only be sufficiently dealt with and incorporated into the preferences and behavior with belief in religion. Islam besides having a comprehensive perspective on justice, also recommends ‘Ihsan’ which requires Muslims to bring about fairness and equity with resources they have as blessings of Allah and which they should regard as a trust and act always with spiritual rationality of afterlife accountability.

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