Making decisions is part of daily life. At times we react not reflect – like picking ice cream over chocolate as dessert. But choosing a car of the “X” brand over the “Y” brand requires a thoughtful process.
Spending money involves decision-making. Following facts are in place while making economic decision based on monetary value:
• Always a limited budget relative to personal solvency.
• All decisions come with opportunity costs.1
• Every purchase can be classified as “wants” and “needs” according to the buyer’s economic worldview.
Islamic economics addresses consumer behavior over individual decision-making. Allah mentioned in the Quran that humans have an inclination towards worldly desires.
“It has been made attractive for people to love the desired things; that is, women, children, hoarded heaps of gold and silver, branded horses, cattle and tillage. That is an enjoyment of worldly life; but with Allah lies the beauty of the final resort.” (Quran 3:14)
The Quran affirms human temptation but also reminds that best rewards are for those who attain Taqwa.
“It also belongs to those who were already settled in this abode (of Hijrah) having come to faith before the (arrival of the) Muhajirun (Emigrants). They love those who have migrated to them and do not covet what has been given them; they even prefer them above themselves though poverty be their own lot. And whosoever are preserved from their own greed,
such are the ones that will prosper.” (Quran 59:9)
Allah glorifies who is kind, generous and charitable. The Quran declares humans can be greedy but they can also act selflessly Neoclassical economics teaches us that humans are driven by self-interest only.
Neoclassical economists are in line with the concept mentioned in Surah Al-e-Imran (Quran 3:14) but did not acknowledge the other human behavior mentioned in the Surah Al Hashr (Quran 59:9).
“O children of Adam, take your adornment [i.e., wear your clothing] at every masjid, Eat and drink and do not be extravagant. Surely, He does not like the extravagant.” (Quran 7:31)
Quran encourages to fulfill basic needs but excess and waste is discouraged.
Narrated Anas bin Malik, Allah’s Messenger (saw) said, “If Adam’s son had a valley full of gold, he would like to have two valleys, for nothing fills his mouth except dust. And Allah forgives him who repents to Him.” (Sahih al-Bukhari: Vol. 8, Book 76, Hadith 447)
Human needs are limited but wants are infinite.
“And give the relative his right, and [also] the poor and the traveler, and do not spend wastefully. Indeed, the wasteful are brothers of the devils, ………” [Quran 17:26-27].
It is evident that Allah has permitted humans to enjoy the halal means and also encouraged to uphold ties with relatives, and spend on the poor and needy, but again has forbidden to do excess and be wasteful in their spending.
Apparently Islamic Economics Makes A Clear Distinction Between The Concept Of “Need” And “Want”.
But conventional economics doesn’t explain any such divisions.
Hence, such fundamental principles outline the differences in economic worldview and consumer behavior.
Economic theories are there to solve the problem, so if the differences of “Need” and “Want” are not established, humans will follow the whims of spending more and may lead to debt trap. Excessive spending may bring prosperity and development at personal or National level but only for a short run, such a movement will not be a sustainable economic solution.
Again, the concept of extravagance is relative to the adequacy of the one who is spending not to do with the action itself.
Let’s just take a look on the “priorities in spending” from Statistics of the World Bank Development,1998
| Global Priority | $ Billions |
| Military Spending In The World | 780 |
| Narcotics Drugs In The World | 400 |
| Alcoholic drinks in Europe | 105 |
| Cigarettes in Europe | 50 |
| Business entertainment in Japan | 35 |
| Pet foods in Europe and United States | 17 |
| Basic health and nutrition | 13 |
| Perfumes in Europe and United States | 12 |
| Reproductive health for all women | 12 |
| Ice cream in Europe | 11 |
| Water and sanitation for all | 9 |
| Cosmetic in the United States | 8 |
| Basic education for all | 6 |
A classic portrait of economic decision based on economic worldview. Satisfying the self-interest induces the spending on luxuries and superfluous items over basic necessities on top of the fact that poverty is still the main problem of this world.
Even spending on ice cream is more than spending on water and sanitation for all the people of the world.
Islamic Economics Enlightens Us To Control Our Idle Desires, Aspire Us To Embrace Simple Lifestyles And To Spend On The Needy In Place Of Self-Serving.
The above chart would have been entirely different if the Islamic economic worldview was in place.
It’s high time for Muslims to adopt Islamic economics and finance in their lifestyle. Islamic finance or economics is not confined in “Islamic Banks” or “Sukuk”, the degrees on this stream are not only a pathway for a good career, it certainly defines a worldview to influence all economic decisions of life.
“Opportunity cost is the value of the next-best alternative when a decision is made; it’s what is given up,” – Andrea Caceres-Santamariaw
