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Article information:
To cite this document:
Mohammad I. Ansari, (1991),"A Critique of an Interdependent Welfare Function in an
Islamic Society", Humanomics, Vol. 7 Iss 2 pp. 71 - 81
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http://dx.doi.org/10.1108/eb006116
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I. Introduction
The emphasis on the concept of 'economic man' for a long period of
time has led to important outcomes each of which has serious welfare
implications. First, there has been a relentless glorification of the principle of pursuit of self-interest. It is only now that all the negative spillover effects of our wealth creating and consuming activities are being
acknowledged and evaluated. Since most of these costs are costs to
society rather than to a particular individual, these costs do not play any
role in our production or consumption decisions. As a result, quality of
life has not improved as much as the recent rise in per capita real income suggests. Second, for a long time welfare has been treated as a
monotonically increasing function of the amounts of goods and services
consumed. There has been a total disregard for the fact that at a given
point in time an individual can afford only a fraction of the total amount
of goods and services available in the society. This explains at least in
part why even in the most affluent societies people are no happier today
than they were in the past. And third, although the idea of interdependent welfare is not new in economics as evidenced by relative income hypothesis which shows that present consumption and hence welfare is
also a function of one's past consumption and consumption of others
in the society, economic analysis by and large has been carried out on
the assumption of independence. Feelings like envy, jealousy, and
avarice are real and powerful and play an important role in the way
people perceive their welfare. Just because they cannot be conveniently incorporated in simple analytical model is a poor excuse for neglecting them.1
This paper defines, first, an interdependent welfare function and
shows that welfare implications of such a function in modern societies
can be quite perverse. Second, it examines the welfare foundations of
an Islamic society. This is accomplished by developing a simple model.
Such a society is shown to provide an atmosphere in which individual
action is consistent with social objectives. It also provides an effective
mechanism to control and regulate desired level of consumption by controlling and regulating human aspirations. And if all else fails, such a so-
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ciety seems to provide the least cost solution to some of the socio-economic ills which may arise from a large gap between actual and desired
levels of consumption.
(1)
0 < (Y/Y*) < 1
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the costs of such measures have been exorbitant. In the absence of selfdiscipline, such measures always lend themselves to widespread
misuse. Third, too much emphasis on the pursuit of self-interest for
augmenting Y/Y* through increasing Y can lead to a society in which
getting rich by fair or foul means becomes a norm. All property-related
crimes in present day societies can be seen as a quick way of enhancing Y. All the drug-related crimes too seem to fit this explanation. Too
many young people are succumbing to the lure of easy money in drug
paddling. Then there are those who become drug addicts in an attempt
to dampen Y*. Not to mention tens of thousands of those who lose selfesteem and simply become destitutes.
IV. The Welfare Foundations of an Islamic Society:
The fundamental teachings of Islam based on the Qur'an, the Hadith,
and the Sunnah (Prophetic traditions) seem to provide an appropriate
framework for resolving some of the issues raised above. In order to understand this framework, it is necessary to analyze the behaviour of an
individual in an Islamic society with respect to Y, Y*, and Y/Y*.
Let us suppose for simplicity that Y* as defined earlier in the paper
is influenced by levels of past consumption (C), avarice (A), and envy
(E) of an individual. Thus, we can write
Y* = g(C, A, E)
(2)
It means that the higher the level of each one of C, A and E, the higher
will be the desired level of income (Y*) that the individual would ideally
want to have. Therefore, it follows that
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where, f/t > 0 by Figure 1, and at/a Y = 1/Y* >0, since Y* >0. Therefore, W1/ Y > 0.
Y*/C
(6)
From eq(3) we know that Y*/ C > 0. We also know that W1/ t > 0.
The term at/ Y* =
(7)
Therefore, W1/ C <0. Similarly, it can be shown that W1/ A < 0 and
W1/E< 0.
Therefore, all the signs of the derivatives are as expected. First, even
though theoretically, welfare may be neutral in growth, welfare in Islam
is considered a positive function of economic growth. Earning a living
through hard work in Islam has been elevated to an act of worship. Thus,
hard work bestows both wealth and blessings upon the individual. Although agriculture is considered both noble and essential, Islam warns
against confining all efforts to agriculture alone and urges Muslims to
engage in other industries for prosperity and strength of both the individuals and the nation. Thus, Islamic teachings clearly recognize what
in modern economic theory have come to be known as scale economies
and the law of diminishing returns. Similarly, Islam recognizes the importance of human capital and urges Muslims to acquire knowledge and
skill. The Prophet Muhammad said, 'seeking knowledge is a must on
every Muslim'. He also said, 'seek knowledge from cradle to grave'. According to both Bukhari and Muslim (books on Prophetic traditions) the
Prophet Muhammad urged Muslims to seek knowledge even if it means
going to China. One has to examine this Hadith in the context of the 6th
century when horseback riding was the fastest means of transportation
available.
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Second, Islam recognizes the role of Y* in welfare because no matter how fast Y grows, it may not have any positive welfare effect if Y* is
left uncontrolled. Thus, Islam puts a strong emphasis on an effort to control Y* largely by self-discipline. Islam teaches people to stay away from
feelings like avarice, envy and jealousy. Both extravagance and niggardliness are undesirable qualities in human behaviour. Although after
marriage, the Prophet (pbuh) became one of the richest men in Makkah, his lifestyle resembled that of an ordinary man both in what he ate
and what he wore. On one occasion the Prophet (pbuh) was seen wearing a robe made of expensive fabric given to him as a gift by a foreign
dignitary. The robe was mended with patches of ordinary cloth. This was
his way of showing how to dampen one's Y*.
Thus, Islam shows ways to improve Y through hard work and
through acquiring knowledge and skill on the one hand, and regulate
Y* through self-discipline, on the other. Furthermore, Islam teaches how
to improve the ratio Y/Y* through collective efforts of all in society. Islam
has an efficient social apparatus to ensure equity and social justice. The
institution of Zakat (mandatory wealth tax) is used for achieving this objective. It is incumbent upon every Muslim with means to contribute a
portion of his income to be used for distribution among those with little
means. Individually, it is a duty of every Muslim to ensure that none of
his neighbours goes to bed with an empty stomach.6 The prophet is
known to have shared his camel with his servant while in travel. Then
there is provision of Sadaqah (voluntary alms) to further strengthen
equity and social justice. While giving charity in Islam is regarded as
trade without a loss, all able-bodied individuals are forbidden from accepting charity.
However, Islam is a practical religion and as such it recognizes the
circumstances in which some members of the society may be tempted
to improve their welfare by unacceptable means. For instance, theft may
be committed as a short cut to improving Y and hence Y/Y*. The social
implications of such activities hardly need any elaboration. Islam makes
every effort to create equity and social justice to minimise the need for
such crimes. But if a theft is committed, then it prescribes a rather harsh
punishment of cutting hands. But if a theft is committed out of necessity
it is not punishable. Moreover, the act must be proven to have been
committed beyond the shadow of doubt, if not lesser punishment is
prescribed. One should also keep in mind the social implications of a
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Footnotes
* My thanks to Professor Masud A. Choudhury of Uuniversity College
of Cape Breton who took the time to read the first draft of this paper and
made several useful suggestions. I am also grateful to Abid Saeed
Sheikh of Muslim Association of New Brunswick, Canada, for his help
in clarifying some of the finer points in Islam. Finally, my thanks to Professor Jack Knetsch of Simon Fraser University whose course gave me
the exposure to some of the theoretical elements of this paper. The
author alone is responsible for any remaining errors.
1. Summarizing the issue Frank says, 'The evidence states unequivocally that context matters for human satisfaction. Although importance
of context has been known for a long time, economists have generally
resisted attempts to introduce contextual features explicitly into analysis. One reason is our insistent preference for simple models of behavior. Dealing with context increases complexity, to be sure. But if
simplicity is what we seek, why not adopt a model that asserts that
everyone consumes, say, one apple per day? The obvious answer is
that simplicity is not our only goal. We are generally prepared to accept
greater complexity whenever its burden is clearly justified in terms of increased explanatory power. The addition of simple contextual elements
to standard economic models clearly meets this test" (1989, p. 85).
2. Some of the earlier discussions on this topic were largely in Psychology (Dembo 1931, Hoppe 1930). A good exposition of this idea and its
importance in decision making is found in Siegel (1957). In recent years
the discussion on adaptive aspirations has been in the area of choice
under uncertainty (March 1988, Mezias 1988, and Hilton 1988).
3. Writing about the concept of relative income, Pigou quotes Mill "Men
do not desire to be rich but to be richer than other men. The avaricious
or covetous man would find little or no satisfaction in the possession of
any amount of wealth, if he were the poorest amongst all his neighbours
or fellow-countrymen" (1932, p. 89).
4. Dealing with the subject, Abramovitz writes, "Now a quarter century
later, two things are abundantly clear. First, by all the usual measures,
the growth that was sought was, in fact, achieved - indeed achieved in
unexpected, unprecedented, and overflowing degree. It appears in
broad measures of real national product per head, and it appears in the
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narrowest measures of consumption per head. In the developed countries, at least, the growth was widely shared by all income classes. So
we have had it, and had it in great measure. But, second, the expected
sense of heightened satisfaction, reflecting an appreciation of social
gains and of bettered individual lives, is much less clear. Instead, the
talk is all of 'disenchantment' with growth" (1979, p. 5).
5. Referring to this unstable relationship, Abramovitz writes, "This view
has a further and somewhat disturbing implication. It says that the level
of satisfaction depends not - or at least not only - on the level of income
but on its growth rate. Other things being equal, we should have to grow
faster in order to be happier, and we should have to keep on growing
just to stay in the same place" (1979, p. 11).
6. One can find similar teachings of altruism in other religions as well.
For instance, the Bible teaches, "You shall love your neighbour as yourself (Leviticus 19: 18).
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