The Future of Economics. M. Umer Chapra
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even though used by a number of economists,3 is itself a controversial term and may be defined in a number of ways. It may be defined in a purely material sense, totally ignoring its spiritual content, or in a way that also takes into account the spiritual aspect. Depending on which definition of well-being one adopts, there may arise the need for an entirely different configuration of goods and services to be produced by society with the scarce resources at its disposal. This may lead to different mechanisms for allocation and distribution.
If well-being were defined in a purely material and hedonist sense, then it would be perfectly rational for economics to give prominence to the serving of self-interest and the maximization of wealth, bodily pleasures, and sensual gratifications. Since pleasures and sensual gratifications depend primarily on individual tastes and preferences, value judgements may have to be kept out so as to allow individuals total freedom to decide for themselves what they wish. In this way, all goods and services that provide such pleasures and gratifications to individuals in accordance with their own tastes and preferences may become acceptable. Impartial market forces may then be considered sufficient to bring about such an allocation and distribution of resources. Redistribution4 of the wealth produced may be important, but only to the extent to which it does not interfere with the freedom of the individual to pursue his or her self-interest. The government’s role may also have to be kept at a minimum, except insofar as it is necessary to enable the individual and the market to perform effectively.
However, if well-being were defined in such a way that rises above the materialist and hedonist sense and incorporates humanitarian and spiritual goals, then economics may not be able to avoid a discussion of what these goals are and how they may be realized. These goals may include not only economic well-being but also human brotherhood and socio-economic justice, sanctity of life, property and individual honour, mental peace and happiness, and family as well as social harmony. One of the tests for the realization of these goals may be the extent to which social equality, the need-fulfilment of all, full employment, the equitable distribution of income and wealth, and economic stability have been attained without a heavy debt-servicing burden, high rates of inflation, undue depletion of non-renewable resources, or damage to the ecosystem in such a way that endangers life on earth. Another test may be the realization of family and social solidarity, which is reflected in the mutual care of members of the society for each other, particularly children, the aged, the sick, and the vulnerable, and the absence, or at least minimization, of broken families, unwed mothers, juvenile delinquency, crime and social unrest.
Once economics gets into a discussion of human well-being in this comprehensive sense, then the task of economics may become wider and more complex. It may not be able to confine itself just to economic variables. It may have to take into account all those factors, including moral, psychological, social, political, demographic and historical ones, that determine well-being in such an all-inclusive sense. It may also have to answer a number of questions that may not need answering if its goal were only to help maximize wealth and consumption. One such question may concern whether the serving of self-interest is sufficient as a motivating force to realize comprehensive well-being or is it also necessary to have some other motivating force? Could such well-being be realized more effectively if all the agents operating in the market observed certain rules of behaviour and had certain desirable qualities? If so, then it may be necessary to impose certain constraints on individual behaviour. The individual may not then remain totally free to do what he pleases in accordance with his tastes and preferences. The question that then arises is about who will determine these constraints and how can it be ensured that the individual’s freedom is not unduly restricted. This because individual freedom is also essential for human well-being and it cannot be compromised except to a certain agreed extent.
In addition, there are a number of institutions in human society that influence individual and social outcomes. The market is only one of them. Others include the family, society and the state. The family is perhaps the most important of these because it provides the human input for the market, the society and the state. It is the primary breeding place and training ground for all individuals. It is here that a substantial part of individual tastes and preferences, personalities, and behavioural patterns are formed. The family’s health and solidarity are hence of crucial importance. If the family disintegrates, is it possible to provide the future generation with the kind of upbringing that it needs? If the quality of upbringing declines, then it may not be possible for a society to sustain its development and supremacy for long in economic, technological and military fields. Since economics is also concerned with the rise and fall of a society, is it realistic to ignore the integrity and stability of the family?
If the market, the family, the society and the state all have a role to play in human well-being, then the question is how to make them play their roles in a manner that complements yet does not hinder the effective performance of their role by others.While the market may operate efficiently if every individual tries to serve his or her self-interest, is it also possible for families, society, and the state to operate effectively and harmoniously if everyone were to behave in the same self-interested manner?
These are not new questions. They have been addressed by social philosophers for centuries. The majority seem to hold the view that the serving of self-interest is only one of the motivating forces in human society and that the maximization of wealth and consumption is only one of the goals. The spiritual and humanitarian goals stated above are of equal, if not greater, importance. Some of these goals may in fact conflict with each other and a compromise may need to be struck. But is it possible for a society to arrive at such a compromise if it sets maximization of wealth and consumption as its primary goal and its members are not willing to sacrifice their self-interest for realizing society’s humanitarian goals?
Sacrifice is of great importance in the case of the family and society. Experience shows that the more the parents are attached to each other and adopt an attitude of mutual sacrifice and cooperation, the greater harmony and stability there is likely to be in the family. The upbringing of children also requires a substantial degree of mutual cooperation and the sacrifice of parental self-interest. Similarly, social harmony may also require members to cooperate with each other, to sacrifice for the common good and to take care of the poor and the vulnerable. Even in the case of the market and the state, sacrifice may be unavoidable. In spite of competition, which helps safeguard social interest, it may be possible for operators in the market to make unjustified gains by cheating and obstructing competition in a manner that may be difficult to detect. Similarly, while democracy, public accountability, and a free press do help in protecting the public interest, it may still be possible for government officials to use their authority for personal benefit at the expense of the taxpayer.
Therefore, there has to be some motivating force that prevents individuals from wrongdoing even when it is possible for them to get away unscathed. Coercive government power has proved to be an effective motivating force. However, if this power were the only force in human society to prevent wrongdoing, the costs of enforcement may be very high. Is it possible to supplement competition, public accountability and coercive government power by some other motivating force that might induce members of society to abide willingly by agreed values or rules of behaviour, and to fulfil their contracts and social obligations faithfully even when this involves a sacrifice of self-interest?
This brings us to the question of why should any person sacrifice his or her self-interest for serving social interest either in the market place, the family, the society, or the government? If economics concentrates only on self-interest and has no place for a motivating force other than self-interest, then it may not be equipped to answer this question. If maximizing wealth and consumption is the only goal in the life of an individual, then there is no need to make any sacrifice for others. Serving self-interest is the best policy. Consequently, the family may then suffer, the quality of the future generation may decline, and even the performance of the market and the government may ultimately be adversely affected. The problem, therefore, is how to motivate individuals to fulfil their contracts and other commitments honestly and not to undermine competition or to resort to unfair means of earning even when it is possible for them to get away with it. This is the question which religions have tried to address by providing behavioural rules in the form of the moral obligations of individuals towards other human beings, animals and the environment, and by trying