Economic miracles of Quran

Economic miracles of Koran; by Prof. Abdi Ali Jama

Like other sciences, Economics is inundated with corroborations that attest the miraculous nature of Koran. Koran urges us to spend wealth and money whereas it forbids hoarding it; Koran reiterates the word spend …..spend……but never  says keep….keep…… Economics does the same especially at macro level.  Allah created incomes that we receive in return for resources we make available to production process. as a self-fulfilling cycle, we are forced to spend the incomes we earn  partly on consumption goods and the rest on investment goods. Every and each single penny must get spent either in consumption or investment. If significant amount of national income went unspent for a reason or another, a recession will develop which results unemployment and slow economic growth.

If the nation adopts free market economy system, where there is no government intervention, total income must equal to total expenditure; in other words aggregate demand equals aggregate  supply.  However, it occurs sometimes that total expenditure may fall short of total income.  In such cases government is recommended to fill the gap and spend more, so that bust and unemployment would be avoided. In this regard, classical economists (opponents of government intervention) believed that economy should be left intact, because they argue that the economy has inherent power to recover from such distortions on its own.

However, Keynesians (proponents of government intervention) contended that it would be too late if we wait for so long; therefore  government intervention is necessary before the situation gets worse. In this context, the Great Depression of 1930’s is a classic example when recession persisted for a decade. In my view, both of them are right. In this context, Economics is like Medicine. For instance, we , as  human being,  are armored with immune system that combats against any diseases that might attack us. Yet, we, sometimes, fall sick. This does not necessarily mean we have no innate immune system. If the condition is not that serious, we better not take medications and leave the case to be dealt with by  immune system; but if ailment is grave,  medical intervention would probably be necessary. The same way, corrective mechanism is built- in the economy in case it runs into stagnation. But if consequences would deemed to be far reaching and destructive, government intervention would be equally probably necessary.

On the other hand, at micro level, we are exhorted by Koran and traditions to give alms to poor people. According to utility theory, when something –commodity or money—is relatively more abundant to you, the last units of it is increasingly becoming useless for you. But, ironically, the same units are of high value for not-haves. The wisdom behind it is obvious; when affluent people give marginal units to deprived , the total utility of the society  increases and hence the level of wellbeing. 

From macro perspective, personal charity activities that millions of individuals are transferring part of their incomes to poorer people would add up and hence upgrade the average level of standard of living for the whole society in general.

In nut shell, Koran discourages accumulating fortunes with out expending it. There is a long verse in suratul-al tawba that warns against the evil act of piling up wealth without putting it into useful use.  In addition to that, we are told to disburse money in helping the destitute and dead- broke people. Economics in theory and practice adopts the same notion which manifests once more how Faith and Economics get on well with one another.

Prof: Abdi Ali Jama

Hargeisa

Abdirrahman99@hotmail.com