The fictitious ‘economic man’ has been universally accepted in the theories of conventional economics. The objective of this man is to maximise benefits. He is expected to calculate the benefits he could reap and the costs he has to incur. He chooses only those actions which will yield the maximum benefits to himself. He does not consider it his responsibility to cater to the need of welfare of others. He is not expected to have any feelings, prejudice, or system of values which would influence his decisions. Yet, in reality, a man has certain behavioural patterns that are governed by some values. However, the economists prefer to pretend that the ‘economic man’ does not behave differently at different times, locations and situations, except if the variables in his utility and cost functions change. He behaves in the manner in which the economists want him to behave.
On the other hand, Islam considers such assumptions invalid, for these reasons: Firstly, man by his very nature changes his behaviour according to his feelings, needs, prejudices, moods, etc; Islam requires man to be consistent and rational, which can be attained by following strictly all Islamic values; his decisions may differ at different times, even if the economic conditions are the same. Secondly, the Tawhidic principle, which governs his behaviour, is the only consistent and amicable principle which can lead to achieving his objective of seeking the pleasure of Allah. Tawhid itself, among others, emphasises “equality, brotherhood, justice and benevolence, truthfulness and honesty, compassion and kindness, priority of the social good over that of the individual, acceptance of the principle of rule of consent and decision through mutual consultation, the sanctity of the family, and that sex relations shall be based on contracts, emphasis on co-operative living and recognition of the right of the society to private wealth”. These principles, although not exhaustive, are quite sufficient to provide a different perspective towards the analysis of man in his economic pursuits.
Thirdly, Islam as a complete way of life seeks to conscientiously unify the schism between ethics and selfish economic behaviour. Under such unification, the following changes may be spelt out: First, the utility-maximising behaviour has to consider the constraint of ethics. Islam explicitly prohibits consumption of goods which are harmful. As such, utility maximisation should be subject not only to budget (feasibility) constraint but also the permissibility constraint. The resultant commodity space will have to be redefined to exclude all goods considered unlawful by Islam. This is also true in the case of goods for production.
“….eat of what is on earth, lawful and good…’ [Al-Baqarah (2):168]
For this reason, the total utility derivable from the apparent ‘contracted’ commodity space should be higher. Secondly, the Quranic injunction:
“….eat and drink but waste not by excess’ [Al-A’raaf (7):31]
This implies that the commodity space for an Islamic society has been contracted to avoid undue waste. Extravagance and waste are frowned upon by Islam, and hence one who strictly adheres to this injunction will derive additional utility.
Third, from the discussion above one can infer that the commodity space of an Islamic man is different from that of an economic man in the sense that the utility is not only derived from his physical consumption of goods, but more importantly, through his adherence to Islamic injunctions. His utility function, the arguments of the function, as well as his calculus change dramatically. As Monzer Kahf suggested, his time horizon extends infinitely.
Fourth, a competitive economy in an Islamic setting will also change tremendously. This is so because of the Islamic ethical formulations concerning resource ownership – that all wealth belongs to Allah and that man, as His servant and vicegerent, holds in trust whatever is on earth. The manner of production will change substantially because of the sense of accountability involved. In addition, “the ‘contents’ of the efficiency locus will change since the commodity mix, coming out of the interaction of consumers and producers, is bound to be different in an Islamic economy”.
Fifth, the economic man can no longer continue to be selfish. He has to take into consideration the consumption and production behaviours of others in society. This is contrary to one of the basic assumptions of the neo-classical utility theory, that utility functions are independent. Such an assumption actually implies that one’s utility is never affected by other people’s consumption, even of the same goods. This assumption is not acceptable in Islam. The concern for others, brotherhood and the like, will definitely affect the utility function of any individual in society. For instance, one actually finds utility or satisfaction by giving the needy a helping hand. Hence, the interdependence of utility functions and production functions must be explicitly taken into account. This means that one must consider the situations of others as Islam treats simultaneously an individual as well as a collective entity.
Sixth, the Tawhidic concept of human freedom is consistent with a substantial role of the state in an Islamic economy. This principle is against the basic philosophy of pure and perfect competition, which is based on the dominance and superiority of the ‘Invisible Hand’.
“It is interesting to note that much of the mystery surrounding Monstesquieu’s Invisible Hand – an invisible force reconciling effortlessly the pursuit of selfish interest with social welfare, which is maximised under competitive equilibrium – largely disappears in an Islamic economy. This is because the unitary (Tawhidic) Islamic philosophy ‘conditions’ individual preferences in such a way that they no longer conflict with public welfare. This conditioning comes about not unknowingly or accidently, but as a result of a conscious regulation of man’s economic activities, specifying not only need but also the means for achieving them”. (The Role of Ethics in Economics and Business by Prof Syed Othman Alhabshi).

—Fahid Darangey is studying for a Masters in Financial Economics at Madras School of Economics, Chennai. Aakif Fairooze has a PhD in Mathematics from Jamia Millia Islamia, New Delhi.

Fahid Fayaz Darangay / Dr Aakif Fairooze