Economic System of Islam 4 – Consumption

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Jamal Badawi

Channel: Jamal Badawi

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Name of God the beneficence the Merciful, the creator and Sustainer of the universe, peace and blessings upon the seventh messenger Muhammad forever. I mean, I greet you with a greeting that is common in Islam, assalamu Aleikum, which means peace be unto you. I'm your host Hamlet Rashid. Today we have our fourth program in our series dealing with the economic system of Islam. We'll be discussing the topic of the Islamic approach to consumption. I have joined me on the program as usual. Dr. Jamal Baddeley of St. Mary's University, brother Jamal Assalamualaikum.

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First, I wonder if I could ask you to explain the connection between today's topic and the last three topics that we've been discussing in the series dealing with the economic system of Islam, certainly. And the first three topics what we dealt with was mainly the basic principles upon which a proper Islamic economy or idea the static economy can be established. The first program was mainly broad principles, theoretical foundation, if you will, our conceptual foundations. In the second and third program, we dealt with the some of the fundamental principles also are concepts which shape the nature of Islamic economy, one of which is the attitude towards property right, which is a basic

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thing in any theory, our system of economics, and secondly, was the concept or attitude towards labor, or work.

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However, these principles do not show us in in more in a more specific and concrete way, how does an ideal Islamic economy should operate in order to get into that today's topic would be one helpful step on the way. In other words, you have to find out first, what is the attitude of systemic principles towards the question of consumption, consumption theory?

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What is the attitude towards production? The attitude toward distribution and determination of prices in the marketplace? What is the role of the

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money, question monetary issues, the role of government in the economy? To what extent can the government intervene or help keep the economy moving in the right direction. So, in a way, we're really moving into some more

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concrete way as to how these principles could operate within the context of an economic system.

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Now, in order to perhaps get a good understanding of Islam's approach to the assumption that might be helpful if we were to start off and contrast it with the common notion that a common conception of

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consumption in the West, could you perhaps, give us your understanding of the Western theory of consumption to begin with? Okay, well, in the western economy, as you know, it is based largely in some degree or the other, on the principles of capitalism. And capitalism, in turn, was based on the so called Protestant ethics.

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A good reference for that is Max Weber,

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the Craftsman ethics and the spirit of capitalism published in 1958. This is one source of people a reference where the theory of capitalism and its relationship to Protestant ethics is articulated and explained.

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But in this approach, in capitalism, there are two basic pillars for consumption theory or how an individual consumer decides as to what you know, he or she wishes to buy or obtain.

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The first is called rationalism, which means that an individual by his nature, in his own economic behaviors tries his or her best to be very cautious, careful

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to calculate risks and benefits for the purpose of achieving the ultimate objective, which is economic success.

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That implies then that acquisition of wealth is the criterion is the yardstick to judge whether or not you have an economic success. It is the correct

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Tillion or measure by which you can tell whether the person really has succeeded to use this rationalism and getting what he or she wants. That's one principle.

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The second basic principle or pillars of the capitalist economy is called utilitarianism, which means that things are to be evaluated depending on how useful they are to you.

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And anything, in other words, say like this book is, you know, is beneficial to me is useful to me, so it has some value to me, okay.

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But that also goes beyond commodities, even moral principles are sometimes evaluated on this utilitarian basis. In other words, take honesty,

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under utilitarian theory, honesty is good, so long as it's beneficial to you.

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So if you're an honest merchant, and this honesty helps you to get credit from the bank, to get customers, it's good. So it is useful to you. But if the same moral principle, let's say honesty, seemed to work against your economic interest, and economic success, which is the ultimate goal under the capitalist system, then you may discard it, you know, it's a matter of whether or not it benefits you at a given time. These two basic principles seem to reflect a particular philosophy. And as we indicated in previous programs, you can talk about economics, without relating them to philosophical ideas without relating them to religious convictions. So these ideas, rationalism and

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utilitarianism, seem both to stem from a philosophy of men are human, that the human is basically what economists call an economic man. Or as some people call using the same attitude or approach in anthropology. They call him homo economic.

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There is a person who is basically an economic man

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working mainly in order to acquire more and more wealth, to acquire more and more economic success. And that is the ultimate goal that the individual can hope to attain.

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Well, now, in the context context of the theory that you've just outlined, how does the consumer decide to what to buy, what commodities to buy, or what services to acquire, okay, and the initial formulation of the capitalist theory in economics,

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they use something called marginal analysis, which was later

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modified a little bit or improved using something called the equality between the marginal rate of substitution, but we won't, we won't get into all this technical thing, indifference curves, all those tend to make me a little bit dizzy,

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especially when you get to indifference curves and the slope of the indifference curve and how the person that to put it in a in a simpler way that hopefully, everyone can follow. Basically, as a consumer, when I decided to buy things,

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I have to consider first of all the limits on my income, or income constraints, as it's called in what's the maximum amount of income that I may have available to me to buy the variety of goods and services available? And when each person would have to think, would it be more beneficial overall, to me to spend all that money buying one item two item, or three, I can how much really can I vary the combination or mix of goods and services in a way to attain the maximum utility? Like, you know, those economics professors use this as a good example in classroom about a combination between apples and oranges?

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You know, that if you have certain amount of money, and it costs so much to buy an apple and so much to buy to buy an orange or banana, then a person would have to find out? How far do I really get maximum satisfaction by getting all oranges? Or apples? Or how many units of orange and Apple within the restriction of constraints, of course, I'll have the total income. So this is basically I'm devoted in a very simple fair, you know, way, basically a marginal analysis to find out what is the maximum utility that can be attained by a particular mix of commodities and services. Now, in contrast to that, how does Islamic approach differ or compare with the common approach? This comment

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posted the assumption? Well, in a very nice work on Economic Studies in point that I think we refer to previously, and from which we can borrow is the book called The Islamic economy in English by Dr. Monza

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and he summarized it in a nice way in a very concise and brief way in terms of fires

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basic differences between Islamic economy and capitalist economy. One relates to the concept of success.

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Secondly, the time scale in the in the consumer behavior or the time horizon when the person makes decisions to buy certain things. Certainly the concept of Well

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firstly, the concept of goods, many people keep talking about goods and services, what is the definition? What's the meaning of goods?

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And Firstly, certain aspects pertaining to the ethics of consumption in Islam. Well, perhaps we could examine some of these differences in a little bit more detail, to begin with, what makes the or or what distinguishes these Islamic concept of success from the conventional economic assumptions. Okay, in the West, as was mentioned earlier, the capitalist approach, of course, is the idea that success is mainly economic success. So the your evaluated your value, your importance, your success is basically measured, in economic success, how much you could acquire of wealth, or you have succeeded to acquire Islam, however, success is there, but it is not exclusively, measured

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in terms of acquisition of one's success in Islam is not merely success in the economic sense, that's too much bias as viewed by Islam.

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The ultimate success if you put it in a more broad format, the ultimate success for the Muslim is to achieve the pleasure of God

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to live away, which is virtuous life, which is harmonious, where there's complete harmony between the material needs of the human more than needs, social needs, all these are integrated together in an integrated whole. So the moral virtues and moral values are part also of evaluating whether or not a person is successful, not just the amount of money.

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What this means, then,

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basically, is that economic success or progress or acquiring wealth is not and should not be regarded by a Muslim. As an end in itself. It's not the ultimate of your success, but rather, a means to an end, an end, which is last year, which is more noble and more important.

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But to make sure, again, that this is not misunderstood. This does not mean or imply in any way that Islam regards wealth as vice in itself, or regard poverty, as virtue. There's nothing virtuous about about poverty at all. But the idea here is to understand and to have the awareness that life has so many facets, one of which, yes, is economics, it is important, but it is part of it, just like saying, men does not live by bread alone. But he cannot live without bread either. So you need really to integrate and consider both material and other needs of him. The idea then is to arrive at some kind of balance in one's life, within the limits of Islamic law or Sharia. And in a way, which

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does not constitute

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any deviation from the basic moral teaching or modern values of Islam and without harming oneself or others.

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Now, one of the differences that you will left on has to do with the timescale of consumption, this is something that may not be that familiar with all of our viewers, could I perhaps ask you to explain what the timescale of consumption means and in the Islamic context, okay, this actually refers to the time horizon, or time dimension that is, whenever you take a decision, you always think, what is the consequence of that? Or what are the consequences of that decision in the next hour in the next day, week? A year, five years. So that's what it refers to what kind of time frame

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influence your decision as a consumer. Now, I indicated earlier that this is also different in the case of Islam than capitalism because of capitalism sterilized during my lifetime or before I reach the age of 40 or 50. How much was I maybe in a successful in acquiring,

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but in the mind of a true Muslim when you think even economically, you think in a much broader

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time horizon or timescale because you think that the any action that you take today will not only affect your well being or welfare in the next week, months or years, but it will affect you forever. One basic, fundamental belief in Islam is the belief in the life hereafter, and paradise and Hellfire and that each person would have to stand alone.

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Before God, to give account of his or her life on Earth, that nobody can take responsibility for my action or your action, everybody would have to give his account directly to God. And this has an important motivational force because any action or decision you take, you can say, all right, what is my benefit next year, you also think, what is the consequence of that action on my part, even in the life hereafter, in addition to this life, this is one thing. Another angle or viewpoints that you can look at it also is that Islam emphasizes in its teaching, and you find that throughout the Quran, the common bond between humanity and that any particular generation or group of people are

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not the only people who are living on this planet, are not the only people who can claim that they have achieved something on this earth. But a human should be humble and realize that

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he or she is only one part of a caravan of creation caravan of human beings, who live

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hundreds and 1000s of years before and those who are going to live also in the future. This also affect the time scale of your decision. Even as a consumer, you might not see the connection immediately. But we'll see how it connects. It means that when you decide, for example, to harness the various resources in the universe, or natural resources,

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you're not only thinking about the selfish needs of one generation, because your religious teaching,

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teach you that you should also be considerate to future generations, which means that you have no right to squanders and abuse, natural resources, saying that all right, for our generation, that doesn't matter, because by the time this resources are exhausted, or damaged, or the environment is damaged, it would take another couple of 100 years, so I don't care, Myself and my children will not suffer, no. And Islamic says How about other human beings? How about other descendants in the future. So the time horizon also is much larger than the benefits or immediate economic dollars and cents in terms of one particular generation or group of people. In other words, it's a question of

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maximization, if you want to use the maximization, but not maximization in the strictest sense, but maximization of overall well being of the person in this life, and in the hereafter of this generation, as well as a future generation. Now hyperopia, to towards wealth goods. Well, the question of, of wealth, we can just make cross reference at this point to the second program in this series, which dealt with the property right. But I think it's useful to make cross reference here and indicate that basically, and the matter of wealth, Islam see is an important need to integrate the various facets of human life, material and spiritual. And that as indicated before, poverty is

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not regarded as a virtue in itself at all. In fact,

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the second case after Prophet Muhammad peace be upon him, was quoted once as saying that if poverty was a man, I would have killed him.

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The Prophet himself used in his supplications and prayers, and says, allama now documented kufri, or Allah, or God, I seek refuge in You from disbelief, disbelief and poverty. So you consider poverty as something as even as bad as disbelief because when people are, of course, stabbed and in bad shape, they are driven into acts which they would otherwise not do, if they were not really in great need. So there is no virtual poverty. So, wealth itself is not regarded in Islam as something which is negative, provided that it is acquired, legitimately utilized legitimately and all other duties and obligations on this wealth has also been fulfilled. I remember in more than one program in the

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past, we quoted one key verse in the Quran in chapter 28, verse 77, what are the female takala who

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will attend Santa Siva kameena dunya Watson come at us in a lovely weather.

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Very nice summary of the attitude towards life and what it says that seek and what God has provided you the hereafter. In other words, also for for the hereafter.

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But do not forget your shared in this life. So there is nothing wrong also enjoying this life and be good as God has been good to you, and do not cause mischief on earth because God doesn't like those who make mischief on Earth. So this summarizes that once is good, provided of course, that it has this kind of limitation or restriction as far as it

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Question of goods? That's an interesting question. Because in the strict economic sense,

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any item is called good if it has a utility or benefit to someone somewhere. Now, I'm not talking about the legal sense if the item could be illegal, but economically, it has a value example, you could say that this pin

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has a utility, it is an economic good, because it is useful for someone to write fine.

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But how about

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opium,

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heroin

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damaging alcoholic drinks, and they all are. All right. In the strict economic sense, aside from the legality, of course, you could say that heroin is illegal.

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But economically speaking, in the western sense, in the capitalist economy, that heroin has a utility because somebody somewhere, feel that it is useful to him, it might be damaging, but he gets some benefits, he gets high out of that. So that's a benefit. And economically speaking, it's regarded as good.

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Now, the Islamic view is quite different. And that's actually the proper term for goods that we find in the Quran. There's two related terms. I tell you, that and others.

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The word in Arabic, which appears in the Quran, describing commodities,

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can be translated to give meaning such as wholesome things, pure things, clean things, but not useful in the sense of any kind of usefulness.

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As another term also is used to refer to something or connotes gifts from God, something that is bestowed on humanity by God,

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provisions that God has given to humanity. Of course, you're entitled to ask what what what does that all relate to the question of definition of what is an economic good isn't one of the best relate because in Islamic concepts,

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an item which is harmful, like heroin, for example, cannot be regarded as an economic Good evening.

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And as such, its production, distribution, and consumption are all prohibited in Islam, it is not regarded as an economic good events that falls within the category of permissible things. So there's a little different emphasis there on how you identify something as useful.

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Now, to conclude today's program, I wonder, is there any ethical guideline to consumption, in view of our discussion today,

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a number of things that provide a basic guideline for the individual in his or her economic pursuit. First of all, one should realize that

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God created all the humans,

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and he is also the only and sole Creator of all the resources, natural resources and other resources in this universe. Now, the fact that maybe some people, individuals, or groups, by virtue of certain historical legacies, or whatever other reasons, are able to control a larger portion of those resources, does not justify that they have no obligation and they are not supposed to share these boundaries of Allah, notice of God with other human beings.

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And that stems actually from the basic notion that was covered in different contexts. The question of khilafah, or the trusteeship of mankind on earth that we serve here as the trustees of God, we are servants of God, all of us. The fact that you are richer than myself or you acquire more resources or wealth,

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does not say that this is illegitimate if you've got it through legitimate means, but does not imply that all you have to care about is yourself.

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The other thing also is the with respect to the consumption or use of this goods, that you can consume things, the basic rule or the foundation really in Islam is that things are permissible, unless otherwise specified as illegitimate, okay. Which means that enjoyment in itself is permissible. You don't have to say right, is this permissible? If it's not prohibited, it is automatically regarded as permissible. In fact, the Quran puts it in a very nice way, not only to show us that it is permissible, but it shows that we have no right to make things which you could consume or use, which God has permitted you. You have no right to make it forbidden for no good

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reason. In chapter seven, verse 32, in the Quran, it says man Habermas. You

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A lot of Roger nobody What are you betting winners, say who buy who's sorry, has anyone forbidden the adornment and good provision and good wholesome things that God has created for his servants and also this good provision. So there's the there is no hang up on consumption of wood. However, we find that the Quran also provides to come to your question, some ethical boundaries, or ethical guidelines as to how you go about consuming those goods and or services.

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two basic extremes have to be avoided, once a person should not be too stingy.

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If God has blessed him or her with provisions, one should not just keep hoarding once and not benefiting himself from that or making his family also benefit from it. That's one thing. But on the other hand, the other extreme also is condemned in Islam. The fact that you own wealth, that you have legitimately acquired wealth does not mean that you're not ethically and morally required not to be too extravagant, not to be too wasteful. And the use of that, of course, the definition of waste is a matter of course, that depends on the circumstances of the time and the kind of

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customs or norms in a given society. But I think most people can appreciate when you say, being too extravagant and very wasteful in the use of resources or wealth available to you. And both of these extremes have been mentioned in the Quran, in more than one place, but in one place, for example, in chapter 17, verse 29, it puts it really nicely taste. Well, I touch on the kamalu lesson

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and bust a taco dimmadome a muscle, don't keep your hand too close to your neck, again, a symbol of being too stingy. I'm not extended all the way symbol again of being too wasteful and too extravagant, and expenditure.

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So this is one thing that everything also pertains to some of the basic rules in Islamic law

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as one aspect of the ethics of consumption, that your utilization of wealth should not be in such a way so as to harm yourself or harm other people. So these are some of the boundaries that somehow determine how the person should move, or go about enjoying the various bounties of God on earth without falling into any of the prohibited actions that is not regarded as wholesome. From the standpoint of what I think we will conclude our program for today. We've pretty much exhausted our time. We want to invite you all back next week when we'll continue our discussion of the economic system of Islam. We'll be discussing production and distribution. We want to thank you for watching

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our program Assalamu alaikum, peace be unto you