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Social Welfare System

Economics, Paradigms & Definitions - Comparative Approach

Economics And Paradigms
 
Apparently economics can study the behaviour of man only within a social context. Human societies have their own values, political organization, social structure, aesthetic viewpoints, legal systems, cultural and religious attitudes and beliefs, spiritual aspiration, etc. Therefore, it is natural that people in their economic behaviour are influenced by their surrounding, be it material, social, spiritual, or otherwise.

 
The impact of societies on individuals is not restricted to the behaviour of persons in their ordinary business of attaining the material requisites of well-being, but it affects all humans in all their behaviour. Scientists are not excluded from being so influenced by their societies. Economists, like other social scientists, are more susceptible to this influence than mathematicians for example, because economists attempt to interpret human behaviour.

 
Obviously such interpretations cannot claim immunity from personal ideas and beliefs of the interpreter despite the objective sophistication of his tools. Consequently, the development of the science of economics cannot be looked upon in a vacuum; it rather must always be related to the environment within which it takes place and ideological, spiritual and political outlook of the writer.

 
Hence, we find that economic studies are affected by the social environment of the behavioural phenomenon which is under study as well as by the researcher's cultural background.  Economics is thus developed on the basis of certain models, basic premises, and examples that economics takes as given. These given models and examples are what we call paradigms. A paradigm is, therefore, the principles, ideas, examples, models, traditions and practices that are taken for granted and on whose basis a consistent and coherent scientific research is conducted.

Consequently, we should briefly analyse, study and compare the definitions of the Islamic and western (capitalist and socialist) viewpoints so we can appreciate the emphasis and take this into consideration when analysing poverty, causes and solutions, and realise that no solution for the establishment of a social welfare system can be devoid from the indigeneous values, culture and ideology of the people.

Definition of Economics

 
A- Islamic Viewpoint - Ibn Khaldun's definition
Chapter Five of Ibn Khaldun's Al Muqaddimah or the introduction to the study of history is devoted to the economic problem that he considers an important part of sociology or, to use Ibn Khaldun's phrase, the study of humankind's civilization and human association.

 
Ibn Khaldun invented a new science that deals with what he called al 'imran al bashari. The word al 'imran means progress, prosperity, filling the world with activities, constructing on the earth and populating it, etc. Therefore, al 'imran is more than civilization. As for the word al bashari, it is an adjective of humankind.

 
Consequently, for Ibn Khaldun, al 'imran al bashari includes economic activity as utilized for prosperity of humankind and for the construction and development of the earth. This is perhaps the reason why Ibn Khaldun started Chapter Five by saying that human being, by virtue of his/her own nature, is in need of things to consume and things to save. God created all things on earth for people to use, and empowered them over these things.

 
Therefore, the economic problem resides, according to Ibn Khaldun, in people spending their efforts to attain earnings that they use to satisfy their needs and necessities, for refinements and luxuries, and for acquisition and possession. The use of such earnings is usually done by means of exchange.

 
From the above, we can construct a definition of economics along the line of Ibn Khaldun's thinking as exposed in his Chapter Five as follows:
 

• Economics is the study of human behaviour in obtaining resources and using these resources for the fulfillment of necessities, needs, and refinements as well as for the objective of acquisition.
   
  

The main elements of this definition are: the emphasis on human efforts in developing resources, the inclusion of two kinds of human fulfillment, namely, acquisition and consumption, and the differentiation between necessities, needs and refinements in consumption.
 

In accordance with his definition of the economic problem, Ibn Khaldun distinguishes between procurement for utilization that he calls rizq and procurement for mere acquisition that he calls kasb, although rizq and kasb, both, require human effort to attain.
 

It is noticeable that the focal point in Ibn Khaldun's definition is the human effort which intrinsically relies on the human attitude and ethics toward work and its evaluation. Additionally, one must notice that the distinction between necessities, needs and refinements with regard to the fulfillment of human wants follows the tradition of Muslim writers in their discussion about the objective of Shari'ah.
 
 
B- Western definitions
Adam Smith defines economics as the science of wealth or the study of how nations become rich, being the subject of his own book. It is noteworthy that the emphasis in Smith's book was on the economy of the state, therefore, his definition of economics is in macro-terms, i.e., in terms of the welfare of the whole nation as an aggregate body rather than individuals, although Smith is known to have been thinking of the wealth of nations in terms of individual pursuit of self interest.
 

Adam Smith is credited with carrying economics into the scientific arena by emphasizing its objective in finding and discovering relationships that can be generalized.
 

Smith's major and most important contribution is his emphasis on the invisible hand that forms the backbone of the laissez-faire argument. It simply means that if every person pursues his own self interests, the interests of the group will be automatically secured, i.e., everybody becomes better off and the nation also becomes richer at the same time.
 

This macro outlook of economics continued until the late nineteen century when the emphasis of economic writings started to shift toward individuals, their wants and their behaviour.
 

Alfred Marshal redefined economics as the study of people in the ordinary business of life, which examines that part of individual and social action most concerned with the attainment and use of the material requisites of well-being. This definition emphasizes the behaviour of individuals in procuring and using income, it also emphasizes the welfare objective of such behaviour.
 

It is obvious that Marshal's definition restricts the scope of economics to the material behaviour of individuals and groups. Emphasis on individual well-being pulled the science of economics toward a concentration on the micro studies, such as optimization of the firm as a producing unit and maximization of the utility of individuals.
 

However, the most widespread definition among economists today may be that of Robbins.  Robbins put forward his definition in an essay on the nature and significance of economic science in 1932, and since then, many economists have reiterated his definition in different ways.
 

Robbins defines economics as the science that studies human behaviour as a relationship between ends and scarce means that have alternative uses.

 
The focal points of Robbins' definition are two: scarcity of resources and infinity of wants. Scarcity of resources means that there are fewer resources than what is needed to fulfill human wants, otherwise there would be no need to exert efforts in procuring them. These scarce resources can be used for satisfying  human wants unlimited, growing and dynamic, (in a sense that they change over time).
 

All this implies that there must be an allocation process, a process that selects that among the infinite number of wants is going to be satisfied and by what means or what sort of resources.
 

This is, to many economists in the Western hemisphere, the core of the economic problem that can be summarized by the famous three questions: for whom to produce? How to produce? And what to produce? This is the problem of allocation of resources, i.e., selecting whose wants are to be satisfied, choosing the production method that determines what resources are to be used and in what proportion and combination, and deciding what kind of wants are to be fulfilled through the selection of what is going to be produced.
 

It becomes apparent that Robbins' definition shifts the emphasis from the well-being of individuals to the mechanism of resource allocation and gives a scientific blessing to the rigidity, and to a certain extent cruelty, of Western economic analysis that prevailed before the welfare revolution that came because of the miseries of the Great Depression of 1929 and the second World War.
 
 
C- Comparison of the Western and the Khaldunian definitions
Inspite of the vast time span between them, it is worthwhile to compare the above four definitions of economics and to note their similarities and differences.  Therefore, it is interesting to notice that the core of all these four definitions is the study of human behaviour. This is implicit with Smith and explicit with the other three. Only Ibn Khaldun looks at human behaviour from the angle of human effort in seeking rizq that God made attainable to mankind.
 

Consequently, Robin's problem of the allocation of scarce resources becomes for Ibn Khaldun a problem of people's attitude toward work. One result of Ibn Khaldun's emphasis on the efforts for procurement of rizq is his consideration of domestic service as a futile, unnatural and unproductive way of earning that contradicts the intrinsic value of self-confidence and self-dependence [Al Muqaddimah, p.384].
 

Moreover, while Marshal and Ibn Khaldun share a common emphasis on individual welfare, the latter distinguishes between needs and necessities on one hand, and refinements and luxury spending on the other. Additionally, welfare, for Ibn Khaldun, includes procurement for acquisition and bequeathing, while this kind of procurement is not necessarily, nor at least explicitly, included in the definition of Marshal.
 

On the other hand, while Robbins emphasizes the scarcity of resources and the problem of distribution that is included in resource allocation, we find Ibn Khaldun looking at exchange from a legalistic point of view, which is very common among Muslim writers, i.e., matters related to payment for the goods one wants out of one's earnings. Consequently, the value or price theory, which underlines the allocation of scarce resources in Robbins' definition, does not flow naturally from the definition of Ibn Khaldun.
 

Finally, Smith's emphasis on macroeconomics that shaped Western writings on economics for more than a hundred years is also missing in Ibn Khaldun's definition.

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