Scarcity in Islam

From a secular point of view, factors of production that are land, capital, labor and entrepreneur are to be treated as relatively scare. It arises when the limited factors of production were insufficient to cater the unlimited wants of people. The factors of production can be alternated in producing goods and services in the economy, thus putting them altogether at certain and variable prices. Then, it creates a situation of ‘better off’ in the economy and the price itself reflects the relative scarcity of factors of production. In a nutshell, it can be summarized as:

Limited Factors of Production + (Unlimited Wants) = Relative ScarcityBasically, all the ‘economic agents’ namely households, firms and governments face the relative scarcity at their respective angles. The households as the provider of factors of production face the income constraints thus possible to fulfill their unlimited wants of goods and services in the economy. For the firms, they are facing a lack of factors of production thus impossible to produce all demanded goods and services in the economy.

Finally, the government also faces the scarcity in term of its revenues’ constraints to finance all the expenditures realized by the agencies and statutory bodies for the sake of people’s welfare in the country.When it comes to Islam, it analyzes the concept of scarcity from a different perspective where there is no concept of ‘relative scarcity’ in the economy as believed by the secularism. To Islam, ALLAH SWT has created ‘abundant and sufficient’ resources for the usage of all people and His other creations inclusive of animals and plants. Thus, there is no ‘a big deal’ to recognize the factors of production being relatively scarce. There are few verses in the Holy Qur’an relating to this issue. In Surah al-Ahzab for example, ALLAH SWT mentioned that:

“For us God sufficed, and He is the best organizer” (al-Ahzab : 48)Further, in another Surah of Ibrahim He asserted as:“It is Allah who has created the heavens and the earth and sends down rain from the skies, ad with it brings out fruits wherewith to feed you; it is He who has made the ships subject to you, that they may sail through the sea by His command; and the rivers (also) has He made subject to you” (Surah Ibrahim : 32)

As a result, the scarcity issues only arise due to the ‘availability’ which caused by limited knowledge and capability of men to search the location of created resources, to derive the method to extract and to formulate its usage for benefits of the people.The limited knowledge of men occurred because ALLAH SWT releases knowledge to them bit by bit and up to certain limitations. The men would not know everything about themselves and other creations. Only He knows at utmost. Due to this, ALLAH SWT said in Surah al-Baqarah :“…He said: “I know what you know not” (Surah al-Baqarah :30)From the above assertion, there is no scarcity in term of quantity in Islamic economy. Summarily, it can be written as:

Sufficient Resources Created by God + (Human’s constraints to acquire, to locate and to use of the resources + Unlimited Wants)=Scarcity in Availability

All the three economic agents that are households, firms and state face the availability scarcity in land, capital , labor and entrepreneur towards the limited knowledge and physical constraints and their unlimited wants and needs. Not because of the factors of production are limited in nature.