Scarcity: East and West

Dr. Asad Zaman

Journal of Islamic Economics, Banking and Finance: JIEBF, Volume - 6, Number - 1,

January - March 2010. p. 87-104 Link to published PDF on journal website. See also
related post: “The Illusion of Scarcity” on Islamic WorldView Blog.

ABSTRACT: According to Western economics, scarcity is the fundamental economic

problem. We must achieve economic growth in order to create prosperity for all. More
than 100 years of exponential growth have only created billions of people who live below
poverty line, while a handful have more than half the planetary wealth. It is not scarcity,
but unjust distribution of wealth which is the central economic problem. The Quran offers
us the correct solution to the problem. Instead of striving for more wealth, the Quran
teaches us to restrict our idle desires, strive to lead simple lifestyles, and to spend on
others less fortunate than us. It also teaches us to be content with what we have, and not
envy those who have more material wealth. We should also have compassion for others,
and not seek to make them envious of our consumption, if we have more. In particular,
‘conspicuous consumption’ is not permitted in Islam. If we return to these simple
formulae of Islam, Islamic societies would enjoy much more satisfaction with much
fewer consumption goods than currently.

Contents
Scarcity: East and West ...................................................................................................... 1
1. Introduction ................................................................................................................. 2
3: Selfishness and Greed, or Cooperation? .................................................................... 2
3.1 Consumer Behavior: Islamic View ....................................................................... 2
3.2 Comparison with Neoclassical Views .................................................................. 3
4. The Needs/Wants Distinction. .................................................................................. 3
4.1 Islamic Views on Needs and Desires ................................................................... 4
4.2 Neoclassical Theory Rejects Needs/Wants Distinction. ....................................... 4
5. Causes of Scarcity ....................................................................................................... 6
5.1 Western views: Malthus and his followers ......................................................... 6
5.2 Islamic View: God is Bountiful ........................................................................... 7
6. Solving the Problem of Scarcity ................................................................................. 9
6.1 Western Solution to Scarcity ................................................................................ 9
6.2 Islam Denies the Validity of the Western Solution ......................................... 10
6.3 Islamic Solution to Scarcity: Needs ................................................................. 11
6.4 Islamic Solution to Scarcity: Limit Wants ......................................................... 13
7. Concluding Remarks ............................................................................................... 14
8. References ................................................................................................................ 15

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1. Introduction

“Scarcity” is at the heart of economic theory. If there is an abundance of all material

wealth, then there would be no need to discuss economic issues. After agreement on this
fundamental issue, Islamic economics and conventional Western economics part ways.
The Western analysis of the causes of scarcity, how to handle the problem, and the
consequences of solving the problem are radically different from Islamic views. The
purpose of this note is to discuss these differences and argue that the Islamic views are
superior, and in accordance with observations.

As discussed in Zaman (2007), a fundamental problem facing the project of Islamization

of Knowledge is the lack of confidence among Muslims due to over a century of defeats
on the battlefield. Ibn-e-Khaldun remarked on the tendencies for the defeated nations to
emulate the victors in all ways. In fact, barbarians have often defeated more civilized
nations historically. In recovering from defeat, one must analyze carefully the causes for
defeat and seek to remove them, rather than uncritically accepting the superiority of the
victor in all dimensions. In the context of economic theory, Zaman (2008, An Islamic
Critique) discusses how flawed Western economc theories conflicting with Islamic views
have generally been accepted by Muslims. In this paper, it is our aim to show that the
Quran and Sunnah offer far greater wisdom on management of economic affairs than is
currently available with the leading experts from the West. In particular, the Quranic
analysis of the fundamental economic problem of scarcity is deeper and more
sophisticated than standard Western analysis. Thus we do not stand in need of borrowing
Western economic theory.

3: Selfishness and Greed, or Cooperation?

Economic textbooks teach us that men behave purely selfishly. Islam teaches us that men
have both the tendency towards evil, and the capability of being good. When we look at
the world, we observe very large amounts of charitable, compassionate and self-
sacrificing behavior, which violates the teachings of economics theory. Because of the
wrong predictions of economic theory, economists are almost always surprised by the
results of the ultimatum game, which show that human being often choose to take a loss
rather than be treated unjustly (Camerer 2003). Thus, empirical evidence strongly favors
Islamic views over those taught in current conventional economic texts.

3.1 Consumer Behavior: Islamic View

The Quran tells us that man has the tendencies towards greed, acquisitiveness, and love
of worldly things:

(Q3:14) Fair in the eyes of men is the love of things they covet: Women and sons; Heaped-
up hoards of gold and silver; horses branded (for blood and excellence); and (wealth of) cattle

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 and well-tilled land. Such are the possessions of this world's life; but in nearness to Allah is
the best of the goals.

However, the Quran warns us not to pursue these goals, but instead to turn to Allah. The
Quran teaches us that man has the potential to rise higher than the angels, and also the
potential to be worse than the beasts. As the Quran states: (Q95:4) “We have indeed created
man in the best of forms, Then do We abase him (to be) the lowest of the low.” This means that
human can be greedy, selfish and acquisitive, but they can also be kind, charitable and
generous. The Quran praises those who give to others, even though they are themselves
poor:

(Q39:9) “who love all that come to them in search of refuge, and who harbour in their hearts
no grudge for whatever the others may have been given, but rather give them preference over
themselves, even though poverty be their own lot for, such as from their own covetousness
are saved - it is they, they that shall attain to a happy state!”

3.2 Comparison with Neoclassical Views

Economics textbook agree with the idea of men being motived by the love of
worldly possessions expressed in verse (Q3:14). However, neoclassical textbooks do not
mention the possibility of (Q39:9) – that men may be generous enough to give to others
even while being poor themselves. Money donated to charities forms a significant
component of the GDP in most countries, and charitable behavior is an important element
of the social safety network for the poor. The Quran places great emphasis on spending
for the needy, but there are no chapters on charity in neoclassical textbooks. Because of
their single minded focus on selfishness, some economists have even attempted to
explain altruism as emerging from selfish motives (if we help others, they will help us in
times of our need).

Which of the two visions offers us better understanding of human behavior, both
as a consumer and in other domains? All over the world, children are taught to share, not
to be selfish, and generosity receives praise. Studies of human behavior contradict the
idea of Adam Smith that bakers are motivated solely by profit. People find meaning in
their lives from serving others, professional pride, and many other non-economic
motives. The tunnel vision of neoclassical texts which confines human motivation to
selfish greed does not help us understand economic behavior – rather, it hinders such
understanding. The Quran offers us much deeper insights, which are confirmed by
experimental studies of human behavior in many domains.

4. The Needs/Wants Distinction.

We show that Islam makes a clear distinction between needs and wants, and encourages
fulfillment of needs, but discourages fulfillment of idle desires. Conventional economics
does not make such a distinction. The Islamic view matches observed behavior and is

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essential for sustainable development. This is because the luxurious lifestyles currently
being pursued by the rich are causing tremendous amounts of environmental damage and
can neither be sustained into the future, nor can they be shared with the masses. Thus
Islamic views offer greater wisdom than is contained in current conventional economic
textbooks.

4.1 Islamic Views on Needs and Desires

The Quran encourages us to fulfill our legitimate needs:

Q7:31 O Children of Adam! wear your beautiful apparel at every time and place of prayer:
eat and drink: But waste not by excess, for Allah loveth not the wasters.

However, excess and waste is discouraged. Islam is a religion of moderation, and asks us
to be neither stingy nor profligate. Wealth which is beyond our needs should be spent on
others less fortunate than us:

Q2:219 They ask thee how much they are to spend; Say: "What is beyond your needs." Thus
doth Allah Make clear to you His Signs: In order that ye may consider-

This clearly shows that human needs are limited. On the other hand, wants or desires are
unlimited, as the following Hadeeth indicates:

Al-Bukhari: Volume 8, Book 76, Number 447: Narrated Anas bin Malik: Allah's Apostle
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 (of the grave). And Allah forgives him who repents to Him."

The Quran strongly discourages pursuit of idle desires:

45:23 Hast thou seen him who maketh his desire his god, and Allah sendeth him astray
purposely, and sealeth up his hearing and his heart, and setteth on his sight a covering?
Then who will lead him after Allah (hath condemned him)? Will ye not then heed?

Those who restrain themselves from following their based desires will attain Paradise:

79:40 But unto him who shall have stood in fear of his Sustainer's Presence, and held back
his inner self from base desires, 79:41 paradise will truly be the goal!

To summarize, needs are limited, and we are encouraged to fulfill them. The Prophet
s.a.w. told a man with disheveled hair to display of the wealth which Allah had bestowed
upon him. At the same time, wants are unlimited, and we are told not to pursue them.

4.2 Neoclassical Theory Rejects Needs/Wants Distinction.

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 Complex historical processes starting with the corruption of the Catholic Church,
subsequent emergence of Protestant sects, and their violent fights with each other, led
eventually to the rejection of faith in Europe. In accordance with the Hadeeth that the life
of this world is a prison for believers but heaven for the unbelievers, one of the high
priorities of secular thought has been to build heaven on earth, by pursuing wealth and
desires as much as possible. There is a tension between pursuit of selfish desires and
social harmony, and resolving this was one of the major issues tackled by secular
political philosophy in Europe (see Tawney 1926, for a detailed discussion). While
religious thought condemns selfish behavior, a secular world demanded a philosophy to
justify freedom to pursue self-interest so as to be able to enjoy a heaven on earth (which
would replace the heaven in afterlife promised by religion. The ‘invisible hand’ was the
first such philosophy, which suggested that selfish behavior would lead to socially
optimal outcomes. Subsequent developments have also been motivated by the need and
desire to justify the maximum amount of freedom for all economic agents. As Galbraith
recognized: “The modern conservative is engaged in one of man's oldest exercises in
moral philosophy; that is, the search for a superior moral justification for selfishness.”

In economic, political, and social domains, secular Western thought has been
driven by the idea of giving as much freedom to individuals as possible. Within economic
theory, justification of free markets has been a central concern. The Chicago school and
Austrian economists represent a polar extreme in defending free markets even in the
presence of monopolies, externalities and other market imperfections. The Great
Depression of 1929 led nearly everyone to the clear recognition that free markets can lead
to catastrophic performance and misery for millions, and made socialist and communist
solutions to economic problems appear attractive to many. Keynes rescued the free
market by providing a theory which suggested that free markets would function well as
long as the government ensured full employment by fiscal or monetary policy. A more
detailed discussion of the European historical experience and its impact on formation of
social sciences in general, and economics in particular, has been given in Zaman (2008,
Islamic Economics: A Survey) and in Zaman (2009).

` It is only in light of this history that we can understand why, despite its obvious
importance and relevance to economic issues, no mainstream Western economics
textbook mentions the needs/wants distinction. Taking the difference between needs and
wants into account would highlight the failings of the free market, and frustrate the main
intent of neoclassical theory. Western style free markets are ideally suited to fulfilling
idle desires of the wealthy for luxury, and not well suited to serving the needs of
humanity. According to a recent report entitled “World Hunger: Twelve Myths” prepared
by the California based Institute for Food and Development Policy, there is food in
abundance in the world, so much so that in the developing world, 78% of all
malnourished children aged under five live in countries with food surpluses. The USDA
report, Household Food Security in the United States, 2004, says that 38.2 million
Americans live in households that suffer directly from hunger and food insecurity,
including nearly 14 million children. That figure is up from 31 million Americans in
1999, a five year period over which GNP per capita increased by roughly 10%.

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A situation where the money spent on idle desires by a small number of rich people is
enough to feed all the millions of hungry people on the planet cannot be considered
‘optimal’ by anyone. Nonetheless, economists justify this by invoking Pareto optimality.
They argue that it is impossible to make interpersonal comparison of utility, and hence
we cannot say that the society benefits by taking away the third glass of wine from a rich
person to give milk to a hungry infant. Modern economic textbooks do not differentiate
between needs and wants. They argue that the goal of the economic system is to fulfill all
desires of all consumers (without differentiating needs and wants), and that the free
market accomplishes this goal in an efficient way. Islam teaches us to fulfill needs, but
not to pursue idle desires. Unbridled pursuit of luxurious lifestyles by small numbers of
wealthy has led to increasing inequality, rapid depletion of scarce natural resources, and
environmental damage on a scale to threaten all life on this planet. An uncritical
acceptance of Western theories of social science has been an obstacle to adoption of
deeper insights offered by Islam, which offer far greater potential for Islamic societies, as
discussed in Zaman (2008, Improving Social Science Education).

5. Causes of Scarcity

One Western diagnosis for the reasons for scarcity is that there are too many people. This
was initiated by Malthus, and the idea continues to guide policy to this day. The Quran
explicitly denies this idea, and states that God sends sustenance for all his creation. We
show in this section that misguided Western policies based on the idea of ‘surplus’ people
have caused tremendous damage, as well as degrading and devaluing human beings.
Islamic views accord with the empirical data which shows that food supplies have kept
up with population, despite tremendous increases in population.

5.1 Western views: Malthus and his followers

Malthus was afraid of the possibility that the population would increase faster than the
food supplies, in contradiction to this verse. Malthusian ideas have had, and continue to
have, a tremendously negative impact. In a book tracing the ideas which led to the ‘Final
Solution’ of Hitler, Schrieber (1926) writes that:

Malthus created an atmosphere which not only prevented a real solution to the
social problems, but also promoted the repressive legislation which worsened the
conditions of the poor in England. It was reasoned that better conditions for the poor
would only encourage them to further propagate, putting those who were capable of work
at a disadvantage. Malthusianism then moved forward to achieve its greatest triumph in
1834 with a new law providing for the institution of workhouses for the poor, in which the
sexes were strictly separated to curb the otherwise inevitable over-breeding. This type of
thinking has an inherent devaluation of human life through fear that the ever increasing
population of lower classes will devour the more civilised or "better" people. This kind of
philosophy, of course, urged the calling forth of drastic measures to handle the problem.
The first resurgence took place a hundred and fifty years after his death, resulting in the
birth-control movement, a principle which is based on Malthusianism. Following the

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 Second World War, the idea was again taken up and today receives new momentum in
the "population explosion" campaigns.

Modern followers of Malthus founded the Club of Rome, about which Rolf Witzsche
writes as follows:

The first official presentation of a global depopulation policy occurred 1969 with
the founding of the "Club of Rome" by officials of NATO and the Travistock Institute of
British Intelligence. The club was founded to promote the "no-growth" (genocidal)
Malthusian ideology which later became known as the "post-industrial society"
program. In 1972, three years after its founding, the Club of Rome published its
infamous "Limits to Growth" doctrine which demanded the immediate termination of
industrial development throughout the Third Word.

"The Limits to Growth" book, based on this doctrine, turned out to be a

fraudulent document. It was later admitted by one of the club's own directors to have
been based on a fraudulent computer study. Nevertheless, the publication of the book
was hailed as a necessary "shock treatment" of all of the world's governments that
were still committed to the principle of technological progress which stood in the way of
the advance of poverty. Then, on Aug 26, 1974, during the first U.N. sponsored
International Conference on Population in Bucharest Romania, the the Club of Rome's
population reduction program was introduced and formally accepted. 1974 was also the
year when the Club of Rome introduced its "Mankind at the Turning Point" declaration
which said: "The World has Cancer, and the Cancer is Man."

This grinding down towards radical depopulation by policy, created the policy
atmosphere in which Henry Kissinger prepared his most infamous document, the
National Security Study Memorandum 200 (MSSN200), which states that Third World
population growth is a threat to U.S. control of raw materials. The document cites 13
developing nations as recommended depopulation targets for the U.S. government.
Henry Kissinger's policy for selective depopulation by overt means was formally
adopted in 1975. Henry Kissinger warned, however, at this time, that the imperial
reason behind the U.S. population reduction efforts must be strictly concealed.

However, data shows that despite the tremendous increase in population, food supplies
have kept pace. Although there is a large amount of poverty, hunger, and malnutrition in
the world, it is not due to lack of resources. As documented above, tremendously harmful
policy decisions have been made because of wrong assumptions in contradiction to
Quranic advice.

5.2 Islamic View: God is Bountiful

The Quran tells us clearly that we need not fear that population will exceed the food
supplies:

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 17:31 Hence, do not kill your children for fear of poverty, it is We who shall provide
sustenance for them as well as for you.

Many verses testify to the bounty of God.

17:20 All [of them] -these as well as those -do We freely endow with some of thy Sustainer's
gifts, since thy Sustainer's giving is never confined [to one kind of man].

27:73 Now, verily, thy Sustainer is indeed limitless in His bounty unto men - but most of
them are bereft of gratitude.

57:29 And the followers of earlier revelation should know [52] that they have no power
whatever over any of God’s bounty, [53] seeing that all bounty is in God’s hand [alone]: He
grants it unto whomever He wills - for God is limitless in His great bounty.

Islamic scholars have concluded from these, and other verses, that there is no scarcity at
the level of needs, contrary to the views of Malthus and his followers. This is also in
accordance with the data, which shows that the food to population ratio has remained
remarkable stable, despite tremendous increases in population. Men informed by the
Quranic vision would not have made the policy mistakes documented in the previous
section, which continue to adversely affect the world today.

Even more remarkable is the Nobel prize winning analysis of famines by Amartya Sen
(1983). Because it was frequently the case that famines followed crop failures, it was
widely believed that shortage of food supplies led to famines. However, detailed analyses
by Sen showed that this was not the case. The most vulnerable class were the landless
laborers, who could not find jobs when crop failures occurred. It was their inability to
earn a wage, as opposed to shortage of food that led to famines. Sen wrote that the
society did not consider them ‘entitled’ to food, since they could not earn a living. He
documents how, at the time people were dying of hunger, food was being shipped out of
the famine areas – outsiders had money to pay for the food which the hungry people did
not have.

As already discussed earlier, the Quran says that God provides sustenance for all, and
therefore denies the idea that famines occur due to shortages of food:
Q11:6 There is no moving creature on earth but its sustenance dependeth on Allah.
The Quran pinpoints the nature of the problem, and gives the exact solution required:
Islam creates entitlement for the poor, ordaining that:
"In their wealth there is a known right for those who ask for it and those who have need for
it." (Q70:24-25)
The problems of hunger, famine, and deprivation are created because the wealthy do not
acknowledge the right of those who are needy for a share of this wealth. The Quran
narrates the story of the owners of a Garden who sought to avoid sharing the fruits of the
harvest with the poor, and how their Garden was destroyed because of this (Q68:17-27).
Poverty researchers have shown that just 0.7% of the GNP of the richest 22 countries
would be enough to eliminate all hunger in the world. Similarly, very small amounts of
money, readily available from many sources, would be enough to eliminate the worst

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kinds of misery and deprivation from the world. The problem is not the lack of resources;
the famous ‘scarcity’ of economics. The problem is that the Qaroon’s of this world feel
that they have a right to all the wealth they have earned by their own cleverness, and do
not feel the need to share it with anyone.

The right diagnosis is crucial for determining the right remedy. If the economists
diagnosis of ‘scarcity’ is correct, then we must work on increasing the material resources.
This is the direction being pushed by many international institutions and people.
However, given that existing resources are already adequate to remove poverty, as
pointed out by Sachs (2006) and others, the problem lies in a different direction. It is in
the lack of compassion for the poor, and the failure of the wealthy to share with the less
fortunate. The Quran identifies this as the problem, and explains the strategies to be used
for the solution, as we shall see.

6. Solving the Problem of Scarcity

The Western view on how to solve the problem of scarcity is by the accumulation of
wealth. As discussed below, Keynes thought that encouraging selfishness and greed in
the society would lead to rapid accumulation of wealth. With enough wealth, all social,
political, and even moral problem of man would be solved. This has not turned out to be
the case empirically. The Islamic view is that there is no scarcity at the level of needs.
There are enough resources for everybody, but problems arise because the wealthy do not
acknowledge the right of the poor to a share of their wealth. The solution is to encourage
compassion, sharing, and to enjoin the good. Wants are unlimited, and scarcity cannot be
removed by trying to fulfill idle desires – desires increase as wealth increases. Therefore
the Islamic solution to scarcity at the level of desires is to limit desires. Strategies for
doing so are provided in Islamic teachings.

6.1 Western Solution to Scarcity

As belief in religion and afterlife diminished in the West, it was natural for them to turn
to the pursuit of the pleasures of this world. Lack of sufficient material resources was the
biggest obstacle to this pursuit, and ‘scarcity’ became the central problem for man. The
Bible states that “It is easier for a camel to go through the eye of a needle, than for a rich man to
enter the kingdom of God.” Tawney (1926) has described the historical process in which
Europeans went from believing in the Biblical “Love of money is the root of all evil,” to
Shaw’s “Lack of money is the root of all evil.” Quite apart from the fact that sufficient
wealth would enable the fulfillment of all desires, it came to be widely believed that
removal of scarcity would solve all problems, social, political and moral. With enough
wealth, people would be kind and generous, and social conflict and strife would be
eliminated because there would be nothing left to fight for. Nelson (2001) has detailed
how economics became a religion in the West.

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 One of the most clear sighted statements of Western concepts in this direction has
been given by Keynes. He thought it was temporarily necessary to “pretend that fair is
foul, and foul is fair” for “foul is useful, and fair is not.” By pursuing wealth using foul
means of avarice and greed, mankind should free itself from the economic problem, so as
to be free to turn to higher pursuits (cited in Khan 2004):

When the accumulation of wealth is no longer of high social importance, there will be great
changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral
principles which have hag-ridden us for two hundred years, by which we have exalted some of
the most distasteful of human qualities into the position of the highest virtues. We shall be able
to afford to dare to assess the money-motive at its true value. The love of money as a
possession — as distinguished from the love of money as a means to the enjoyments and
realities of life — will be recognised for what it is, a somewhat disgusting morbidity, one of
those semi-criminal, semi-pathological propensities which one hands over with a shudder to
the specialists in mental disease ... But beware! The time for all this is not yet. For at least
another hundred years we must pretend to ourselves and to everyone that fair is foul and foul
is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a
little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.

Note the clear statement that for two hundred years, the West has exalted ‘the most
distasteful of human qualities [love of money] into the position of the highest of virtues.’
Keynes, and his followers, the neoclassical economists, feel that this is necessary to
acquire wealth. Once enough wealth has been accumulated, then man can afford to be
moral.

6.2 Islam Denies the Validity of the Western Solution

The Quran denies that accumulation of wealth will solve the problems of man.

Q23:55-56 Do they think that because We have granted them abundance of wealth and
sons, We would hasten them on in every good? Nay, they do not understand.

Q104:2 [Woe unto him] who amasses wealth and counts it a safeguard, 104:3 thinking
that his wealth will make him live forever!

This also matches the empirical evidence. Lane (2001) and Layard (2005) have shown
that despite tremendous increases in wealth in the West, satisfaction, contentment,
happiness, and the sense of well-being has not increased. This shows clearly how the
pursuit of the riches of this world is an ‘illusion,’ as the Quran tells us.

The Quran also denies the idea, expressed by Keynes and many others, that men will
become generous once they have enough wealth:

(Q9:75-76) And among them are such as vow unto God, "If indeed He grant us [something]
out of His bounty, we shall most certainly spend in charity, and shall most certainly be

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 among the righteous!" But as soon as He has given them [aught] out of His bounty. they
cling to it niggardly, and turn away in their obstinacy [from all that they have vowed]

This has also been the Western experience. Accumulation of wealth and encouragement
of greed has not led to the Utopia dreamed of by Keynes or Samuelson. Instead a society
quite similar to the pre-Islamic Jahiliyya has arisen – see Mothers who Kill their
Children by Meyer et. al. (2001) for just one of the striking parallels. Nelson (2001)
writes that after fifty years of preaching that wealth will solve all problems, Samuelson is
honest enough to recognize that his prophecy has not been fulfilled: “Great affluence has
not brought about the slackening of economic ambition,” and we live in a “ruthless
economy.” Again, the reader is invited to judge for himself whether we should follow
the Quran or the leading Western economists.

6.3 Islamic Solution to Scarcity: Needs

Islam has a two-pronged approach to the problem of scarcity. Since there is no

scarcity at the level of needs, the only thing necessary is to get those who have surplus
wealth to share it with those who are in need. The Quran condemns those who do not
urge the feeding of the poor.
[Q69.34] “Nor did he urge the feeding of the poor.”
This verse tells us that not only must we feed the poor ourselves, we should also urge it
on others. In other words, we are required to campaign against poverty as Muslims. If we
carry out our responsibility, which is part of the general command to this Ummah of
spreading the good and prohibiting the evil, this will solve the problem of scarcity at the
level of needs.

How to carry out this command is also addressed by the Quran, which is full of
exhortations to spend in the way of Allah. A more detailed discussion of both the
encouragement for charitable spending, and the manner in which this is to be done is
given in Kahf (undated). Many books have been written by Muslims and a good
collection of Ahadeeth and Quranic verses related to the subject are given in Fazail-e-
Sadaqat. Some crucial elements of the Islamic strategy for accomplishing this goal are
listed below.

Compassion: The development of feeling for others is stressed in Islam. The Quran
writes about the Prophet s.a.w. that “heavily weighs upon him (the thought) that you
might suffer, full of compassion and mercy towards the believers.” In other verses, the
Prophet is described as being “Mercy for all mankind.” The Quran praises those who feed
others while being themselves hungry: (Q39:9) “who love all that come to them in search of
refuge, and who harbour in their hearts no grudge for whatever the others may have been given, but
rather give them preference over themselves, even though poverty be their own lot: [13] for, such as
from their own covetousness are saved - it is they, they that shall attain to a happy state!” The
second caliph of Islam, Umer Farooq R.A., ate coarse bread, because he felt ashamed to

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eat refined bread when not all of the public could do so. It is the spread of sentiments like
this which can solve the problems facing the world today.
Infaq: Tremendous emphasis is placed on spending money for the sake of Allah. This is
the primary purpose of acquisition of wealth. In the opening lines of the Quran, the
believers are characterized as those who spend on others:
(Q2:2-3) THIS DIVINE WRIT - let there be no doubt about it - is a guidance for all the
God-conscious. Who believe in [the existence of] that which is beyond the reach of human
perception, and are constant in prayer, and spend on others out of what We provide for
them as sustenance.
Those who came to the prophet for advice about what to do with (surplus) money, were
advised to invest it in the Hereafter. Kahf (undated) writes that the word “Infaq” --
spending for charity – is mentioned in the Quran 167 times, many more than the
combined mention of the famous four practical pillars of faith. The number of Ahadeeth
which encourage spending for the sake of Allah is extremely large, and many collections
of such Ahadeeth have been made in book form (for example, Fazail-e-Sadaqat). The
emphasis in these is to change our ways of thinking to value the gains of the Hereafter
over the gains of this world. For example:
2:261 The parable of those who spend their substance in the way of Allah is that of a grain
of corn: it groweth seven ears, and each ear Hath a hundred grains. Allah giveth manifold
increase to whom He pleaseth: And Allah careth for all and He knoweth all things.
In Hadeeth, it is narrated by Ayesha r.a. that a goat was sacrificed, and the meat was
distributed. The Prophet s.a.w. asked about what was left. Ayesha r.a. responded that only
one shoulder of the goat remained. The Prophet s.a.w. said that everything remains
except for this shoulder – that is, that which has been distributed has been permanently
saved for the hereafter, while that which has not been distributed has been lost to the
hereafter.

Avoidance of Waste: Spending more than necessary (Israf) is wasteful of resources, and
also deprives the needy. According to a 1997 study by US Department of Agriculture's
Economic Research Service (ERS) entitled "Estimating and Addressing America's Food
Losses", about 96 billion pounds of food, or more than a quarter of the 356 billion pounds
of edible food available for human consumption in the United States, was lost to human
use by food retailers, consumers, and foodservice establishments in 1995. Roughly 49
million people could have been fed by these resources1. In presence of such statistics,
showing wastage and resulting loss of efficiency, how can claims of “market efficiency”
– that is market structures lead to efficient outcomes -- be taken seriously? Such claims
are made on purely theoretical grounds by economists, without any regard to the
empirical side, or observations of market efficiency. It is clear that Israf, spending more
than what is necessary, leads to massive inefficiency, loss of food that could have gone to
feed the hungry, as well as creating an atmosphere of indifference to the needs of the
poor. Market institutions do nothing to resolve this problem, which is addressed directly

1
Source: “Statistics on poverty & food wastage in America” by Samana Siddiqi, available at
http://www.soundvision.com/info/poor/statistics.asp

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by Islamic teachings. I have not found any material related to Israf in the heterodox
schools of economics either. This supports my claim that Islam offers solutions to
economic problems which are needed by the world, rather than our being in need of
economic ideas from orthodox or heterodox economics.

6.4 Islamic Solution to Scarcity: Limit Wants

The second prong of the Islamic approach is the treatment of wants or desires.
Islam acknowledges the limitless nature of wants, as the Hadeeth from Bokhari cited
earlier shows. Islamic teaching shows that accumulation of wealth or material resources
will not result in elimination of this ‘scarcity,’ because wants will expand as the wealth
increases. Thus the reason for ‘scarcity’ is not lack of wealth or material resources (as per
Western conception) but rather the limitless nature of desire. Thus, no amount of
expansion of GNP will eliminate this scarcity. This Islamic point of view receives strong
empirical support from recent research. Lane (2001) and Layard (2005) have shown that
substantial increases in wealth have not led to corresponding increases in satisfaction,
contentment, wellbeing or happiness of human beings. This is a clear sense in which the
pursuit of worldly possessions is an illusion (Q3:185, Q57:20). Conventional
economists, policy makers and planners study policies to increase the rate of growth of
GNP per capita, and spend tremendous amounts of energy to achieve goals which have
no perceptible impact on human welfare.

The Quranic solution to scarcity at the level of ‘wants’ is to ask people to lead
simple lifestyles, be content with what they have, not to envy others who have more.
The Quran berates those who have taken their desires for their God (45:23), and states
that paradise is for those who fear God and restrict their desires (79:41-42). Allah teaches
us not to envy luxurious lifestyles of those who do not believe in the day of Judgement,
since all they have is the life of this world, which is pitifully small and limited compared
to the next.

4:32 Hence, do not covet the bounties which God has bestowed more abundantly on some of
you than on others. Men shall have a benefit from what they earn, and women shall have a
benefit from what they earn. Ask, therefore, God [to give you] out of His bounty: behold,
God has indeed full knowledge of everything.

9:59 And yet, [it would be but for their own good] if they were to content themselves with
what God has given them and [caused] His Apostle [to give them], and would say, "God is
enough for us! God will give us [whatever He wills] out of His bounty, and [will cause] His
Apostle [to give us, too]: verily, unto God alone do we turn with hope!"

The Prophet s.a.w. told us that real wealth is the wealth of the heart (i.e. contentment).

Prohibition of Envy: Islam prohibits us to envy others, and teaches us strategies to

prevent it.

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 (Q4:32) And in no wise covet those things in which Allah Hath estowed His gifts More
freely on some of you than on others: To men is allotted what they earn, and to women what
they earn: But ask Allah of His bounty. For Allah hath full knowledge of all things.
The Prophet told us to look at people less fortunate than us in wordly affairs, so that we
would feel thankful for what we have. Making others envy us, via conspicuous
consumption, is also prohibited in Islam. From Veblen (1899) to Lane (2001) and Layard
(2005), many have identified this as an important source of waste and unhappiness in
capitalist economies. Western advertisements for luxury products encourage consumers
to be the envy of their neighbors, and be the first to own some new product. In complete
contrast, the Prophet taught us to keep a share for the neighbor in the fruit that we bought
– if we could not afford to do so, then we should bury the peel of the fruit, so that the
neighbor’s children would not see and feel regret.Our Prophet s.a.w. taught that “Do not
let the smoke from your house bother your neighbor” – that is, if your neighbor can smell
your cooking, you should share your food with him. The rich should conceal their riches
to prevent envy – the exact opposite of conspicuous consumption. At the same time, the
poor are encouraged to not envy the rich, but to be content with their lot. True richness is
that of the heart with a generous disposition. Implementing in our hearts this degree of
concern for other would enable a small amount of material goods to go a long way
towards fulfilling social needs.

Avoidance of Tabzeer (Q17:26,27): While Israf is spending more than what is needed,
Tabzeer is to spend on what is entirely unnecessary, illegal or Haram. If consumers were
to spend only on their needs, there would be a substantial fall in demand for consumer
goods, and substantial increase in savings. This would lead to substantial funds being
available for investment and welfare projects and corresponding increases in growth and
welfare of the poor. However, capitalist societies have mechanisms to prevent this
reallocation of resources to useful purposes. Marketing is used to create feeling of need in
consumers for entirely unnecessary products (like “Pet Stones,” expensive “Barbie Dolls”
and other fad items). Conspicuous consumption, first analyzed by Veblen, is to buy
things so as to be the envy of the neighbors, or to establish status, both of which are
Haram in Islam. These lead to massively wasteful and inefficient market outcomes,
which are not recognized as such by conventional economists because of their
assumption that Consumer demand is the final judge of what is useful or not. As
Muslims, we can not accept this assumption, which legitimizes consumption of the
Haram as well.

7. Concluding Remarks

The Quran describes the human tendencies for greed and acquisitiveness with
disapproval: (Q89:20 And ye love wealth with inordinate love!) It also describes the
consequences of this greed graphically:
30:41 Corruption doth appear on land and sea because of (the evil) which men's hands have
earned, that He may make them taste a part of that which they have done, in order that
they may return.

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To me it seems that this verse hints at the environmental damage which would be caused
by unconstrained greed and attempt to wrest wealth out of the earth via exploitation.

While the wrong Western diagnosis that lack of wealth is the source of ‘scarcity’
leads them to pursue the wrong remedies, the Quran offers us the correct solution to the
problem. Instead of striving for more wealth, the Quran teaches us to restrict our idle
desires, strive to lead simple lifestyles, and to spend on others less fortunate than us. It
also teaches us to be content with what we have, and not envy those who have more
material wealth. We should also have compassion for others, and not seek to make them
envious of our consumption, if we have more. In particular, ‘conspicuous consumption’
is not permitted in Islam. If we return to these simple formulae of Islam, Islamic societies
would enjoy much more satisfaction with much fewer consumption goods than currently.
As in the days of the Prophet s.a.w. where the level of contentment of the primitive
Islamic community was much higher than that of Roman and Persian communities with
much higher standards of living.

These teachings of Islam are the key to economic progress, in the sense that if we
follow them, it will not only increase welfare and satisfaction, but also lead to rapid
economic growth. These do not have parallels in Western economics. I have only
outlined some arguments, which relate to a small and specific domain. Islamic teachings
relating to economic affairs are much more vast and cover a substantially larger set of
issues. It is sad that Muslims have neglected their heritage, and have envied that of
others. It is not fitting for one who has been given knowledge of the Quran to envy those
who do not have this; it is likely to arouse the anger and ire of Allah, who says
3:196 LET IT NOT deceive thee that those who are bent on denying the truth seem to be
able to do as they please on earth: 197 it is [but] a brief enjoyment, with hell thereafter as
their goal - and how vile a resting-place! –

In accordance with the Quranic teaching of “O believers, why do you say that
which you do not do,” (61:2) the main issue of Islamic economics is to bring the teaching
of Islam into our lives and into the lives of our fellow Muslims. When we start practicing
these teachings by leading simple life styles and caring for our fellow human beings, an
Islamic economic system will come into existence. Muslim societies are distant from the
practice of Islam (as witnessed by levels of Zakat collection, for example), and so our
priorities must be to restore the practice, which will lead to the desired theory. This
means particularly that Muslim economists must strive to put Islamic teachings of Islam
in their own lives and demonstrate Islamic economics by being living models. May Allah
give us the capacity to understand and obey his commands and plant our feet firmly on
the path of Guidance.

8. References

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Colin F. Camerer, Behavioral Game Theory: Experiments in Strategic Interaction,
Princeton University Press, 2003.
Christoph Jensen, “From Malthus to Eugenics to Racial Hygiene to Ethnic Cleansing”
(see also R. Steiner Oct. 7th 1916: ‘Goethe and the Crisis of the 19th Century’)
http://www.transintelligence.org/articles/From%20Malthus.htm

Monzer Kahf, “Infaq in the Islamic Economic System,” Undated. Available from
monzer.kahf.com accessed 30 June 2007.

Ali Khan, “Self Interest, Self Deception, and the Ethics of Commerce,” paper presented
at Islamic Development Bank (IDB), Roundtable on Islamic Economics: Current State of
Knowledge and Development of the Discipline, Jeddah May 26-27, 2004.
Robert E. Lane, Loss of Happiness in Market Economies, Yale University Press, 2001.
Richard Layard, Happiness: Lessons from a New Science, Penguin Press, 2005
John O. Ledyard, “Public Goods: A Survey of Experimental Research,” in Kagel and
Roth (eds. 1995).
Seyyed Vali Reza Nasr, “Islamization of Knowledge: A Critical Overview,” Islamic
Studies, Autumn 1991, p. 387-400.
Robert H. Nelson, Economics as Religion: from Samuleson to Chicago and Beyond,
Pennsylvania State University Press, 2001.
Jeffrey Sachs, The End of Poverty: Economic Possibilities for Our Times,Penguin, 2006
Amartya Sen, Poverty and Famine: An Essay on Entitlement and Deprivation,Oxford
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Julian Lincoln Simon, The Ultimate Resource 2, Princeton University Press, 1998.

Bernhard Schreiber, The Men Behind Hitler, translated by H. R. Martindale, 1960.

[http://onlinebooks.library.upenn.edu/webbin/book/lookupid?key=olbp27908]

R. H. Tawney, Religion and the Rise of Capitalism, New York: Harcourt, Brace &
World, Inc., 1926.
Rolf Witzsche, “Aids and The History of Depopulation Policies,” Cygni
Communications, Canada, 1995. http://peace.rolf-witzsche.com/witzsche/aids1.html
http://aidschristianscience.rolf-witzsche.com/aids_christian_science_2.html

Asad Zaman, “Islamic Economics: A Survey of the Literature,” Religion and

Development Research Programme, Working Paper 22, Univ. of Birmingham, 2008.

Asad Zaman, “Improving Social Science Education in Pakistan,” Lahore Journal of

Policy Studies Vol. 2 No. 1, June 2008.

Asad Zaman, “An Islamic Critique of Neoclassical Economics,” draft June 2008,
submitted to Islamic Studies.

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Asad Zaman, “ Developing An Islamic Worldview: An Essential Component of An
Islamic Education,” Lahore Journal of Policy Studies, Vol 1, No. 1, p95-108, 2007

Asad Zaman, “Origins of Western Social Science” Journal of Islamic Economics,

Banking and Finance, vol 5, number 2, 2009.

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