Islamic Economics: A Short History

(Elliott) #1

70 chapter two


structure in the community, which, as happened later in the history
of the Islamic state, might experience phases of affluence. In order
for the framework to be comprehensive and conclusive, it should,
therefore, provide rules to accommodate future changes.
With no need for repetition, it might be worthwhile to remind
ourselves that in all levels of consumption/spending above, the prin-
ciples of “extension”, isràf, as against “wastage”, tabûìr, should be
thoroughly and continuously observed. While the former is accept-
able within tolerable levels, beyond which it is frowned upon, the
latter is always forbidden and at any level.
Linking the principle of moderation with the system of reward/pun-
ishment in the Hereafter, shows that at different levels of consump-
tion there are different levels of reward or punishment. Subject to
income availability, lack of spending on the first level of consump-
tion, necessities, attracts punishment, but the more the consumer
spends the less is the punishment, until he reaches the second level.
The more the consumer spends on the second level, conveniences,
the higher the reward he gets, until he reaches the third level. The
third level, which might include luxurious goods, is the level where
moderate consumption is most demanded which, when reached, gives
the consumer the maximum divine reward. Beyond that level, is the
level of extravagance, which is condemned.
Turning our attention back to the first level of consumption, the
level of necessity, it might be argued that there is no need for the
concept of reward/punishment at this level as the consumer will
have to spend on these wants in order to survive. But when it is
realized that the consumer is not regarded as responsible only for
himself but also for his wife, even if she is rich, and dependents,
including dependent parents, the need for the concept becomes clear.
Relating the above analysis to equation (2) implies that the reward
of the Hereafter is in fact an outcome of two components of rewards:
the reward from religio-social-caring spending, H, and the reward
associated with the pattern of goods and services consumption, T.
Thus equation (2) could be rewritten as:


(maximize) V = U(C, H, T), F (P) (3)

S.t. Y

(where other connotations are as above)
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