6. ECONOMIC NOTES

 

On existing Economic Systems

Existing Economic systems can be criticised on the following grounds:-

1. Instability; constant fluctuations from booms to slumps and back again.

2. Constant inflation which destroys the value of savings.

3. Unemployment and the deprivation, misery and wastage of human life and resources.

4. Great differences in wealth. This leads to the waste of resources by the rich and the waste of talents and facilities for self-improvement among the poor.

5. The encouragement of greed and selfishness such that the few accumulate unnecessary luxury goods while depriving others of the necessities of life.

6. The concentration of power in the hands of the few who can manipulate others.

7. The lack of social and environmental responsibility in production. Instead of people being rewarded according to the useful social work they do, the motive behind production is to create personal profit irrespective of whether the product has any beneficial value or what the social or environmental effects may be.

8. The creation of pollution, adulteration, ecological imbalance, accidents and disasters, and the wastage and erosion of resources.

9. The encouragement of deceit and dishonesty, crime and immorality.

10. Stimulation of materialism, sensuality and consumerism through advertisement, propaganda and other methods of mental conditioning. People need few of the things they are persuaded to buy.

11. The enslavement of people by debts to money lenders.

12. Lack of coordination between resources, needs and abilities.

13. Inability to satisfy human needs. They do not take into consideration all human needs, but select only those which are material in nature, or can be measured in terms of money. This has the effect of distorting human behaviour, causing frustrations and malfunctions due to neglect of other areas. In so far as all aspects of life are inter-connected, these distortions will affect the economic system. The idea of what economics consists of is too narrow. The whole of the interactions between man and the environment, between people and between man and himself, need to be taken into consideration if economics is to be understood and controlled. There is a psychological, social and physical side to it.

14. The price of things, and, therefore, their use depends not on the total resources available, but on the scarcity and abundance produced by the industrial systems. Thus the oil, coal and fertilizers etc in the world may be running out, but because their extraction produces abundance at a particular time, the prices are relatively low. This encourages the use of them in a reckless manner. It causes waste. When prices are high it encourages economic use, conservation and application for the more important purposes. But prices may be high not because there is a shortage of materials but because production has not been undertaken. The economic system, therefore, has little connection with realities.

15. The price of the goods reflects the cost of manufacture and profits, but it does not take into consideration:-

 (a) The ecological costs. Pollutants which are a by-product of industry cause damage to the environment. Putting this right costs money. But this is not included in the price of goods.

Consider the following statistics. The manufacture of an average computer (an IBM PC) involves 5335 kWh of electrical energy which is the amount of energy used by an average Indian in nearly two years; 33000 litres of water is polluted equal to the use of water by one inhabitant of Madagascar in 16 years.; 56 million cubic metres of air polluted; 320 kg of waste materials including 20 kg of poisons which equals the garbage produced by an average German in one year ; 3000 kg of carbon dioxide which equals the amount produced by one Indian in 1.5 years or produced by a German with his car and central heating etc in 3 months. The cost of the computer is about £ 600 to £800 , but the cost of the energy, water and air purification and waste disposal is over £2000. The difference is paid for by the community through taxes etc. It would be much more if all the pollution were to be neutralised. (From an article by Andreas Grote in German Computer Magazine, Magazine fur Computertechnik)

(b) Social costs. Industrial organization affects the social structure. For instance, when both parents go out to work the unity of the family suffers. Children tend to be neglected. Delinquency and crime increases. Other ways of caring for them have to be found. The divorce rate increases, there are problems caused because of the increase in illegitimate children and single mothers. The need of the members of the family to find outside relaxation and entertainment increases. The city, the factory and the office creates its own stresses and strains which have to be relieved. There are a great number of industrial accidents, traffic accidents and diseases. People are daily poisoned, made ill, mutilated and killed by drug produced by drug companies and prescribed by doctors, by the way farmers treat their crops and animals and the way foods are manufactured, by pollution from chemical factories, nuclear and bacteriological laboratories, by deliberate experimentation by governments. Every day thousands of people are swindled out of their money by fraudulent enterprises preying on hopes and greed, loan sharks, blackmail and protection rackets. Gambling on large scale is encouraged and even promoted by governments. All this creates greed, the attitude that getting something for nothing and taking advantage of others for one’s own benefit no matter how much distress it may cause them are legitimate forms of behaviour. All this is due to the profit motive which also encourages war to raise the sale of armaments and leads to commercial and even political espionage, intrigues and warfare. Centralisation brings about congestion causing numerous administrative and health problems. Huge costs are involved in organising and maintaining administrative structures, police forces, secret services, social and health services. These costs do not appear in the cost of manufacture, though they have to be paid for indirectly by taxation. These have not been calculated.

(c) Psychological costs. Competition, congestion, controls and restrictions on behaviour, caused by rules and regulation, organization and structures. The monotony created by division of labour and mechanisation, all these take their toll. The freedom to move is severely restricted by the building of cities, roads and fences. The speed of life has increased due to the pressure to increase profits, but the capacity to digest the lessons of experience remains the same. Add to this the increase in the bombardment of information from advertisers, propagandists, books, television, radio, and cinema, then we can see why there is increasing superficiality. The capacity to deal with life decreases. The development of the individual needs time and space. Experiments with rats have shown that if they are kept in confined and congested areas they develop numerous neurotic symptoms. These include seeking isolation, introversion, paranoia, defensiveness, aggression, anti-social and destructive behaviour, suicide, and homosexuality and so on. Everyone of these symptoms can be found in human cities. There are psychological problems due to anxiety and stress, neurosis, psychosis, psychopathy, psychosomatic diseases. There are also organic and infectious diseases caused by the debilitation of the immune system owing to changes in the general way of life; there are allergies or direct poisoning by various products which have psychological accompaniments. Many people, especially the young, have noted these costs, and decided to opt out. None of these costs appear in the price of goods.

(d) Economic costs. There are certain laws which have not been considered.

(i) The greater the number of constructions the greater is the effort required to maintain them, and the less effort available for new constructions. There is, therefore, all other factors being constant, a tendency towards a limit.

(ii) Every construction uses material, effort, space or time which becomes unavailable for other types of construction which may be more valuable.

(iii) Every construction consists of the creation of some kind of order. This involves creating disorder elsewhere. To make a table out of wood, for instance, also involves making saw dust and chippings.

(iv) Every construction has multiple relationships with many things, and, therefore, it is capable of multiple effects, some useful and some harmful. The object, however, is created for only a certain set of purposes. The other effects are ignored. These effects will, however, continue to operate. The greater the number of constructions the more will such unintentional side effects accumulate.

(v) A construction is an interaction between the constructor and the materials. The nature of a construction depends on the nature of the constructor, but also modifies him. There is, therefore, a direct effect on the individual and the society.

 

16. There are a great number of artificial needs. The need for entertainment, of ever increasing bizarreness and extremes, becomes necessary owing to the monotony of mechanical work. Industrialisation itself makes division of labour, mechanisation and centralisation necessary. This means that raw materials and labour has to be transported from distant places to a factory and office, and the manufactured goods have to be transported out. Consider the transport industry. A large part of its production, therefore, is absorbed, not in producing any additional value, but in the transport of workers and materials backwards and forwards between home and factory, merely in order to manufacture the means by which this can be done.

 There are numerous other examples of things whose purpose is self-propagation, and which have been made necessary by their own existence. The Lawyers are made necessary because human relations are defined by lawyers, in the legal terms which only lawyers can understand. Rare works of art whose value lies in their display are hidden away in vaults. They are usually wanted because of their cash value, but the cash value has risen because rich people want them, though works by other painters often have the same aesthetic value and are less expensive. Gold, too, has little use, but acquires value only because people want it. And they want it because it has acquired value. Research is done to increase knowledge, but restricted by secrecy. Agricultural efficiency is increased for profit and its products destroyed to maintain its profits, while people elsewhere are starving. Industry, in order to maintain profitability has to destroy the goods it creates, by ensuring built-in obsolescence, or to create artificial demands for its products, rather than supplying existing ones. Armament companies often arrange destructive wars in order to sell their goods. Enormous sums are spent in creating security systems, locks and vaults, prisons, police forces, lawyers etc in order to guard luxuries. This adds to their cost and is rendered less enjoyable. The increase in wealth in one place or nation is often obtained by increasing poverty and misery in another. All over the world great feats of engineering and triumphs of technology have been established which have proved to be environmental and human disasters. Medicine makes great advances in drugs and surgery, but their side effects poison and disable the patient. The problem seems to be not only the side effects of their treatments, but also that they deal with the effects rather than the causes of disease. Having got rid of these effects, the causes merely produce other symptoms. Solutions to most industrial, political and cultural problems tend to create their own problems. Time, energy and attention must then be given to solving these unnecessary problems. The real purpose of human activity should be to benefit the person, but in the pursuit of the ways and means to do this he often harms himself. In the pursuit of happiness he creates misery. The problem seems to be that means have themselves become the ends and the purpose has been forgotten.

It is not always true that the establishment of an institution or mechanism creates more benefits than the expenditure required to create and maintain it. Progress is, therefore, largely an illusion.

17. Wealth is measured in the quantity of goods or in the amount of money earned. The philosophy of capitalism is to earn as much as possible no matter how it is done. There are many exceedingly rich people who possess much more than they can ever use, and yet are obsessed with expanding their wealth even further. If then the pursuit of this goal produces problems, it is argued, these can be dealt with by purchasing the cure. If you develop heart diseases or ulcers in the process of pursuing money, you will have enough money to buy the medicine. Others, however might think that this is self-negating. Governments, too, have this attitude. It has not occurred to them that this traps them in a vicious circle. They have created a machine which controls them like Frankenstein’s Monster. It is the machine which uses human beings as its fuel. It uses man as he uses cattle.

It is evident, however, that profits can be made from things which have no value and that many of the goods owned by people produce no benefits, and even do harm. Money is made on the stock exchange without providing any service or producing goods. Profit is made by substituting inferior materials or by adulteration. Goods can be manufactured which break down, cannot be repaired, wear out easily, so that demand for replacements is kept up. A man who owns ten suits of clothing, or ten cars, and so on, but can only use one at a time cannot be said to be better off than one having three suits, one car etc.

There is also an inverse relationship between quantity and quality. Increase in quantity is often gained at the expense of quality. In fact, the quantity of inferior goods is often great enough to hide quality products. This has a harmful effect on the culture, education and development of people. Low quality literature, newspapers, music and other art forms, produced by people with little talent and catering for the lower appetites and intelligences, produces influences which are obstructive to development, and even lead to deterioration. It is usually better to have fewer goods of higher quality. These turn out to be more economical in cost, and produce less wastage.

18. The price of things does not always govern usage. The price a person pays is proportional to his total income. The rich can afford to buy more things. They increase the demand, thereby increasing the prices. The poor can afford less. There is, therefore, a transfer of materials from greater to lesser real value. Instead of increasing the satisfaction of needs, it diminishes it. This produces negative economy. Manufacture is transferred from goods which are essential to luxury goods, because the rich create a demand for them. Resources are transferred from the poorer countries to richer countries because they can pay more. This constitutes a waste since the abundance is used less efficiently. It is a common occurrence that large firms buy out smaller ones which provide a cheaper service for the poorer. Having done this they create a much more expensive substitute. Demand does not produce a supply, but rather the supply produces a demand through advertisements and mental conditioning. This cannot be regarded as compatible with human intelligence.

19. The economic systems have been unable to solve the contradictions between individual freedom and the need for control. There are either cycles of boom and slumps which create alternate periods of wastage and suffering, or there are intolerable dictatorships and controls. There are great differences in wealth and poverty which imply and create great differences in opportunities. On the one hand we have excessive self-indulgence, which brings psychological and social problems of arrogance, boredom, disease and recklessness, and on the other hand insufficient development and use of talents. Where attempts have been made to create greater equality this has proved repressive and stagnating.

20. Traditional Economics deal not in real satisfaction or benefits but with desires, demands and opinions which may be completely illusory. What people want may not be what they really need, though wants are also facts. The point to be made here is that if the want does not correspond to need, then the fulfilment of a want will produce no real satisfaction or benefit. Indeed, it may even cause harm. At best a person being frustrated will continually try to satisfy the same need, continually misinterpret it, and fail to satisfy it. Or he will create many more needs which have to be satisfied, and may fail to be satisfied, owing to further misinterpretation. Or at worst it will cause disease, degeneration and destruction.

21. Economics is often identified with Business interest. The need to make a profit, or to earn a living, is not the only concern of the individual. To a greengrocer it is only the price of the cabbage which counts. Its nutritional value is of little concern. If its shape or size or smell will make it more saleable or profitable then these features will be sought and enhanced. But the grocer is also a consumer. There is, therefore, a direct contradiction between one role and another, and between his business interest and his welfare. The individual as well as the nation tends to compartmentalise himself. Each compartment acts independently of the other. This kind of disintegration obstructs perception and control. In particular a separation has occurred between industry, commerce and finance, (the factory, shop and bank; or between work, goods and money).

22. The word property in its proper sense means a characteristic; something which is an integral part of the object, organism or person. That which is called property in the commercial sense is not a characteristic but a convention. It leads to abuses and destructive competition. The Europeans were able to dispossess and rob the Red Indians in America, and the natives of Africa and Australia because the former believed in property and the latter had no notion of it. Since the natives owned nothing, the Europeans did not think they were robbing them of land and its resources. The communists saw that property rights were only a matter of social convention, and replaced individual rights with the collective right to property but this removed individual responsibility. The Islamic view is different from both. In so far as land and its resources are not created by man and man is not created by himself, then behaviour which does not conform to these facts can only lead to disaster.

23. Though it makes some economic sense to centralise industry - machinery can be invented and used, mass production can be undertaken and organization can be rationalised, thereby reducing costs and increasing profits and wages - this also forces health, educational and legal services to be centralised or comparatively impoverished. Either way this decreases their social efficiency since they constitute local needs and require individual attention rather than formal rules and remote control. These services are, therefore, breaking down in all economically advanced nations.

24. Production is well organised but consumerism is not. The consumer is, therefore, at the mercy of the producer. The Economy is run not according to needs but according to what is and can be produced. This depends on the whims or interest of the producers. They are not interested in the quality or real value of things but only in the profit. One of the consequences is that the more valuable things which only the more intelligent can discern and demand, and there are relatively fewer of these, will be too costly to produce, reducing demand still further or will cease to be produced. Deterioration becomes inevitable.

25. Humanity is living on the energy of the sun, not only on that which is radiated onto the earth now, but also stored on earth over millions of years in the form of coal and oil that were once absorbed by plants and animals. This store is gradually running out and at an accelerating speed. We will then have to live only on the solar energy that is falling on earth now. This will either cause much starvation and death – animals are already going extinct – or it will be a stimulus to the development of alternative technologies or to space exploration and possible migration. The earth not only receives solar and other forms of energy from the rest of the cosmos, but it also radiates some it back directly R(d), absorbs and transforms R(t) some and re-radiates it R(r). It is only the balance between what is received and what is radiated that is available for the development of the earth itself.  However, this can be stored as reserves or “obstructing fat”, or the development can be positive or negative, constructive or destructive, and it may or may not be beneficial for man. Global warming and the resulting unpredictability of the weather that is causing much global distress is a result of such surplus energy. It is perfectly possible to improve the proportion of what is absorbed, radiated and re-radiated by more efficient means of absorption and transformation and also to utilise that energy in much more efficient ways. This is not yet fully realised.

 

On Economy and Ecology

Human economic systems should be regarded as being parts of a much more Universal process. Nothing, including human beings exist in isolation. They exist in relation to Allah. That is, in relation with the forces and laws which govern the world, in relation to a community and in relation to their physical environment. There are always three aspects to these relationships:- (a) The individual has an input from the environment. (b) He transforms this within himself. (c) He produces an output which is an input for the environment. These three processes are inter-dependent. The environment transforms this input creating an output of its own, some of which provides the input for the individual.

These exchanges between an organism and the other entities in the environment depend on their natures and modify them. The whole also forms a system which is likewise in exchange with its still greater environment forming a still greater system. And so on. Each system consists of parts which affect and are affected by the whole. These exchanges refer not only to materials but also energy and information. Human beings produce and absorb all kinds of radiations. One consequence of this would be that human beings by their Very nature and behaviour will cause changes in the environment which will then react on them, and vice versa, the environment will cause changes in them which will react on the environment. As this can be good or bad from the human point of view, it can be said that the environment retaliates.

 Human beings produce and affect each other through ideas, emotional reactions as well as actions. They also breath the same air, recycle the same materials, just as foods and impressions are also received and transmitted. All of them could be nourishing, poisonous or catalytic. The individual selects his input and this gives him control. The selectivity is limited by the relative quantity and strength of the various resources. You cannot select what is not there. If something exists in greater quantity or strength than something else than this will affect selection. What is transformed and how the transformation takes place depends on the input, and the output depends on the transformation. Conversely, the output may depend on what the environment allows, i.e.. its selectivity. It may not accept more than a certain amount of output of a certain kind. The excess will accumulate and obstruct further transformation, which in its turn will affect the selection of input. The environment controls the individual by controlling the input and the output it allows. The individual controls the environment by the amount of output and input he selects. But the transformation processes in the individual and the environment are partly independent of each other. Instead of selecting factors A1 and B1 to transform into C1 and D1, for instance, factors A2 and B2 could be selected to transform into C2 and D2. These exchanges are not, therefore, rigid but contain a degree of flexibility or tolerance known as the Mercy of Allah.

That which applies to the individual within an environment also applies to a whole community collectively within its environment, and so on.

 

The health and growth of the organism depends on a certain balance between the input, transformation and output. It applies to materials, energy and information. Obviously growth implies that output is less than input and that it is organised and integrated into the system. But the output could be used  (a) for personal growth (b) for environmental transformations (c) to provide the energy and materials for the transformation process itself.

Some growth may merely create (a) ‘fat’, an obstruction to the transformation process, (b) increase in the size of the factory as it were, (physically, mentally or spiritually), (c) more complex or sophisticated organs allowing much more sophisticated types of transformations.

Needless to say, if effort and materials are used in one direction then there is less available in other directions. You could squander it uselessly. You could use all of it to transform the environment, or you could use some of it to transform yourself.

On Economic Theory

An Economic system depends on (a) how things are done (the techniques, technology etc) (b) on how things are organised and (c) on how things are conceived, calculated and thought of. These three are inter-dependant. Much depends, for instance, on the notion of ownership which is a legal right, and does not refer to a natural condition.

It is necessary to reconstruct the whole of economic theory:-

1. The Principle of Objectivity. The notions of Supply, Demand and Labour, on which the whole structure of Western Economics is based, are defined in monetary terms. Demand does not refer to real needs or benefits, much less to real satisfaction, but to what people are willing to pay. And this depends on the amount of money they have and what they want rather than need or what is useful. This may be an illusion due to misinterpretation of their needs or mistakes about the efficacy of the products deliberately instilled in them by the producers or sellers. It is obvious that wants are fickle and that if real needs are not satisfied they will continue to produce further demands as well as problems of frustration and malfunction which also produce economic burdens. That which is striven for then produces no benefits but constitutes a waste. If it harms the individual then it increases his needs. In both cases we have negative economy.

The same considerations apply to the words,’ supply’ and ‘labour’. Labour which is ineffective because it is wrongly done, for wrong purposes, and in the wrong place has no value. Materials for which there is no use cannot constitute a supply. Supply does not refer to the amount of resources in existence but to the price of the resources available at a particular time because of the mining and manufacturing activity. The producers are not concerned with the benefits the products bring but only with the sale and profits they bring. Thus resources scarce in real terms can be abundantly available for a short time while others abundant in reality may be scarce and have a high price. It is not difficult to see that this brings about malfunctions in Western Economic systems. These concepts of Supply and Demand are connected with their Political system, their idea of Democracy, which requires that morality and values are a personal matter for people, and that their desires and whims should not be questioned, but should be supplied no matter how mistaken, perverted or harmful.

Religion speaks of real needs and benefits. The Islamic economic system must apply objective standards. Therefore, instead of talking about demand, supply and labour, we should speak of Real Benefits, Resources and Work. We can speak of positive or negative Satisfaction, Sacrifices and Work. These form an inter-dependent triad. Each will affect and be affected by the other two. Something has an economically positive value if the amount of benefit or real satisfaction obtained is greater than the amount of real sacrifice made. It has an economically negative value if the amount of real satisfaction is less than the amount of real sacrifice. Nothing has any value until some work is done. Things which had no use before can be converted into resources by Work. e.g. space, soil, oil, uranium. Things which produced no benefits can be utilised differently to produce benefits. Things which were desired before due to acquired tastes or obsession but produced no benefits, can be made undesirable, or vice versa. e.g. tobacco and alcohol, the use of soap and computers. All this requires education. Education, therefore, has a real economic value. Production, Distribution and Consumption also form an inter-dependant triad. Education in the West is always on the side of producers, seldom on the side of distributors and never on the side of consumers.

We must distinguish between Real and Apparent Sacrifice and Real and Apparent Satisfaction because there is a difference between the reality of a thing and opinion about it. Opinions are formed by selection and interpretation of experiences, and this interpretation is subject to social conditioning and inner rationalisations. In short, human beings are subject to illusions. But illusions do not produce benefits. We may want food not because we are hungry but because we are greedy, not because we need it but because the aroma of it has induced a desire for it. Education of the people can be undertaken so that they demand what is more valuable rather than what is less valuable. The cost of this education can be set against the increase in benefits so gained

 

The value of work is the satisfaction it creates directly or indirectly. It also involves a sacrifice in the energy, effort, attention and time involved. The satisfaction or benefits he receives could be physical, mental (motor, emotional or intellectual) or it could be spiritual. The goods have no value in themselves. 

The only things given to man are:-

(1) The Environment (a) Land, (b) Sea and (c) Atmosphere (Rivers, mountains, forests, animals, plants, the Biosphere, the weather, the heavens)

(2) Humanity itself which possesses (a) needs and values, (b) perception and ingenuity, the ability to gather information and processing it (c) ability to interact with the environment, manipulate it and work. Work is also of three kinds, namely, thinking, organising and physical labour.

(3) The interaction between the two, allows the extraction of Resources of (a) raw materials (b) energy sources, (c) information. Further action by human beings creates three kinds of economic utilities:- commodities, services and facilities.

 

People may be more willing to work and live in a place which has gardens and is less congested, than in a city slum. The entrepreneur creates facilities when he brings together labour, knowledge and resources in the right place and at the right time and in correct proportions. It may be supposed that as he renders a service, we do not need to distinguish between services and facilities. But in that case we could also say that the person who makes commodities is rendering a service. We make the distinction with respect to the end product. Commodities may be of three kinds ;- (a) Consumables such as food which are used up directly for living, and steady supply is needed. (b) Consumer durables such as clothing which can be used for a long time. But these, too wear out and need to be replaced periodically. (c) Capital goods such as tools and machinery which has no use in itself, but is used to produce or repair other things. There may be several levels here as some capital goods are needed to make other capital goods. They also wear out and have to be replaced. But because of the conservation of materials and energy recycling is possible. Consumables, for instance, create waste which can be used by other organisms to recreate the consumables. Some work is required for this and requires energy. But energy is also recycled since it is converted into other forms which may be re-converted to the first form. This may require information which also needs to be renewed since forgetfulness and corruption also take place. 

Work may be inner (psychological), interactive (social), or external (physical). It could be intellectual, emotional or physical. Physical labour is work, so is organising, administering, managing, planning, thinking, meditating, research, self-examination, self-criticism, self-transcendence. Knowledge, Self-control and Skill are required in each case. Work, from the Islamic point of view has an external, a social and a psychological aspect. He who merely engages in improving his own psychological state will, by modifying himself, produce, by his behaviour and inter-actions, effects on other people and the environment. Conversely all external and social activities will produce psychological consequences. Human beings by their very existence have effects on each other, the environment and themselves. Work refers not to what they do automatically or impulsively, but to what they do deliberately and purposefully. It should be judged by its effectiveness. It may be positive or negative. Its parameters are quantity (amount in time, speed and power), quality (skill and ingenuity) and relation (appropriateness, coordination and inter-relatedness of one thing with another, organization).

 

2. Responsibility. Economics is not a Science although it has a scientific aspect. It is not a fact of nature. Economics may be defined as the ways and means by which resources are manipulated to maximise the satisfaction of wants, desires and needs and minimise sacrifice. Since the former refer to facts and the latter refer to values, Economics can be regarded as a bridge between Science and Ethics, and should take both into consideration. It refers to processing and organising in the same way as food, energy and information is processed within the body. Here it refers to the community and to deliberate action. Western economics, for instance, is based on the notion of ownership and the assumption that people will always try to get as much as they can in exchange for as little as they can. But ownership and property rights are a matter of human law not nature. It is people who fix prices. They do not vary automatically with supply and demand. Other methods such as control of prices and rationing have also been used by States. The reason why Economics is regarded as a science by some people is that it serves their self-interest to do so. It is then possible to neglect moral considerations all together when assessing business and economic activities. It is possible to excuse unethical practice and justify the passing of laws which could not otherwise be tolerated. For instance the Marxist analysis of Capitalism is rejected on the grounds that it is based on a moral interpretation of ‘profit’.

 

 3. Unity. Human needs are not only material in nature, but also social and psychological. The concept of Economics, therefore, covers a much wider field than only a purely materialistic one. There is no dichotomy between the material and the mental or spiritual. People are willing to sacrifice material benefits in order to obtain some social or spiritual advantage. Economics does not only deal with material needs, though the fulfilment of them has material aspects and consequences. There are material needs for food, clothing, housing and various goods, but also social needs, for friends and family, and intellectual needs for knowledge and purpose. There is a desire to travel and broaden experience. There are needs for freedom and independence, security and respect.  It is better by far to think about wants and supply as having all three aspects. A car may be desired not because of its physical use only, but because it is a status symbol, or because it helps in attracting the opposite sex, or because it facilitates family outings, or brings freedom of travel to broaden the mind and enhance experiences. Nor is an item required for one’s spiritual welfare such as the scriptures without its material or social aspects. It helps in keeping the family or community together and it costs money to produce. Economics is not, therefore, a subject independent of other aspects of human life. Life is a unity in which all parts are inter-dependent. Islam, therefore, promotes the unitary view. A separation of the secular from the religious or of economics from ethics and science cannot be accepted.

 

4. Utility. Life is an exchange between the individual and his environment, in three ways, the material, the social and the cosmic. The word, cosmic, is used to denote that man receives light, heat and other forces from the cosmos and also transforms and radiates various forces. There is an economy involved in the use of these. There is an economy in the way materials or energy or information is utilised; there is an economy in which scientific ideas are formulated, in the way we utilise food and in the way we do anything. Human beings measure the amount of sacrifice they make against the satisfaction they expect. This gives rise to a third factor, Utility. This is often but not always measured by money. When people make a purchase they balance the sacrifice they make (i.e.. the price they pay) with the satisfaction they expect. They may take into consideration intellectual, emotional (sentimental) or social satisfaction. It may be a question of prestige, or of making friends, or simply of compassion for others. When they take a job for wages or salaries they may consider not just the money they will receive but also the congeniality of colleagues and the environment, the conditions of work, the morality of what they are doing, and so on. The weather, the geographical situation, the social and political conditions, the religious and ideological factors, all these will affect both satisfaction and sacrifice. One can give away gifts in friendship, or practice abstinence for spiritual benefits. One can commit theft by sacrificing ones spiritual welfare, or earn hostility.

Economics, then, is the name given to the set of methods for increasing utility.

This applies to the individual as well as the community as a whole. If we look at a whole community, then this can be done by increasing the satisfaction, or diminishing the sacrifice of the few, but not if in doing so, we do the reverse to more than the same number and to the same extent. Indeed, the work required for this transfer has negative value. Economic value is achieved when satisfaction is increased for an increasingly greater number of people. It is also possible to increase the total amount of satisfaction by increasing that of the few at the expense of a still smaller number of people, or by reducing satisfaction to a lesser extent. In so far as this can be avoided, this transfer of satisfaction has negative value. If by doing so we increase the amount of uncertainty or resentment in the community, these, too, will have economic consequences.

The Capitalist view of money is based on the idea that the price of things depends on the relationship between supply and demand. The Communist view is that it is the cost of labour. The view advanced here is that it is connected with utility. A bank note or coin has no value in itself. It is merely a symbol for utility. Because of the invention of coins and notes people have been deceived into the illusion that it is a material thing. It is, therefore, possible to use any other symbol to represent it. It costs money and effort to produce these symbols and to circulate them. Economies can be made in this also.

When we speak of money then we are in the realm of the relative not the absolute. The value of money changes. It is like the blood in the economic system. It circulates. The real price of a thing is the ratio between the money price of a thing and the total income. The total income is a measure of the sacrifice a person has made by his work. 10 mu (mu= Money Units) out of an income of 1000 mu, is not the same thing as 10mu out of an income of 100mu or 10000mu. The income and expenditure are related to time. An income is measured by so many money units per unit of time e.g.. 1000mu per year (mupy) is not the same as 1000mu per month (mupm).

The real value of the object will also depend upon how much satisfaction it gives during its total life-time. The amount of sacrifice a person is willing to make (i.e.. how much he is willing to pay for it, plus all the other efforts he has to make to obtain it) must be less than or equal to its expected value. The difference gives us the Expected Profit, positive or negative. We may speak of Real Profit when the amount of satisfaction we gain per unit of sacrifice is increased, or when the amount of sacrifice per unit of satisfaction is decreased. We speak of real loss when the opposite takes place. There will be a difference between the Expected Profit and the Real Profit. The difference is reduced in proportion to the knowledge we have. Knowledge, therefore, has economic utility.

Money being a measure of utility should not be tied to any commodity, including gold, If the total earnings of a community is X mu by dint of the work it does, then this is also the amount which that work costs to produce. It is also the price of the same work to buy. The community as a whole has the income to purchase all the work it produces. This sum could be regarded as an Absolute, denoted by M. This could be divided by a number representing the number in the working population, N, multiplied by the average amount of work done by each, W, and the value of the work, V. This would give a unit of money which can be divided into sub-units. M could then be increased or decreased as the population, the amount of work or its value increased or decreased. Or it could be kept constant, and all other units regarded as fractions.

Obviously, not all things are directly measurable in terms of money. But it is possible to evaluate an intellectual, emotional, social or even spiritual thing by the amount of sacrifice a person will make for it. He may, for instance settle for a smaller salary to obtain these benefits, or he may be willing to pay more for things which have such associations.

Wealth cannot refer to anything which has no use, but refers to the amount of usefulness. It does not refer to the quantity of goods as normally understood. This makes no distinction between what is useful, harmful or useless. It is negative wealth when harmful. Even useless wealth can be negative when it obstructs, diverts or deceives. A nation which has ten times as much machinery as it needs cannot be said to be ten times as rich as it would be if it had only one tenth of the machinery.

 

5. Equality. Human beings or their labour should not be regarded as commodities the price of which varies with supply and demand. It is this idea which causes people to be paid according to their usefulness to others. and discarded and deprived of their living or thrown out of work. This makes them into objects. This must also apply to those who use them unless we create an artificial distinction between human beings. This is neither (a) moral nor (b) rational nor (c) ultimately practical. On the contrary supply and demand are determined by human beings. They have the desires and do the work, and each affects the other. Education can change both.

The work done through knowledge and skills can convert the raw materials into other materials. It can also change demands because of the means required and the energy and materials used up in doing so. Completely new materials can be created, e.g.. plastics, ceramics and glass. Materials having no value before acquire value when uses are found for them, and this depends on the ingenuity of people. Spiritual and moral disciplines and education changes or reduces material demands.

 

People, however, differ in needs as well as skills. Since the exact benefits obtained depend on the nature of the individual, it is not possible for some other person to judge them without a considerable amount of knowledge about that person. In general the individual himself has the possibility of making a more accurate judgement than others, though this may not be actualised. Better education which should include moral and economic education will enable people to make better judgements. It is certainly not possible for someone to make a general assessment of needs and benefits about a mass of people whom he does not know. Dictatorship, therefore, produces negative economy. There are, however, certain general needs which all people have in common, such as food, clothing, shelter, rest, health, security and information. This can be assessed. Other needs can be assessed by analogies from introspection e.g. the desire for dignity, freedom of action and freedom from compulsion.

 

The significance of this way of thinking will not be immediately apparent. It should become clearer with further study and thought and with the passage of time. The problem is that there are as yet no techniques available for measuring things in accordance with the notions put forward here. But human ingenuity is not unequal to this task. Present day economic ideas are still relatively primitive. The economic, social and psychological problems of the present age can be seen as the consequence of a simplistic and reductionist way of thinking. Here only basic concepts are given. The elaboration of a complete economic system is left to others.

But the reader may consider the following attempt:-

If a human economic system is to be objective then it must correspond to the realities of existence. This means (a) that it takes into consideration human nature, including its potentialities and limitations. (b) that it can explain social phenomena. (c) that it is not an isolated phenomena but fits into the greater economy of nature. Every object whatever, from the atom to the galaxies, have a structure and nature of their own; exist in, interact with, depend on and adjust to their environment which constitutes a greater system; and interact with other objects within that system.

Human beings (M) live in an environment (E), interact with it and are dependant on it. There is a local one which exists in the world that exists in the solar system that exists in the Universe, which may exist in something beyond that. Each provides an environment for the one before. They also form social organizations (S) (including its structure, modes of distribution and activities). They receive an input from the environment which modifies them, transform it, and produce an output which modifies the environment. This is done through the mediation of their social systems. These three are inter-dependant and together form a whole (A).

Correspondingly, Human beings have capacities (C) (i) for input or reception (I) (ii) certain motives (M) (needs, desires, urges, interests, purposes) and (iii) for action (A) (skills, techniques, ingenuity, analysis, organization, systematisation, research etc.). These three also interact and form a whole. We may speak about a Physical, a Social and a Psychological aspect to this whole. These capacities may develop through effort, experience and education, alter, or deteriorate owing to malfunctions due to habits, ignorance, prejudices, confusion and disease. This may be caused by, or cause, changes in the environment, the social system or the individuals themselves. Thus, a distinction must be made between Benefits (B) and mere desires (D) and Harmful impulses (H). This depends on the Values current in a society, which in turn depend on their ideologies or psychological state. Values should be objective - that is, they must conform to human nature, the welfare of the society and the environment and ultimately to the laws of the whole cosmic process, otherwise maladjustment and suffering will result. No society allows the satisfaction of all desires e.g.. destructive or sadistic ones, specially when they interfere with B. Acquisitions which do not satisfy a real purpose, can either do harm or leave the need intact, as if nothing had happened. This involves useless effort and expenditure of energy which could have been usefully employed.  

The environment provides man with external resources (R) (space, time, materials, forces, energy, information and opportunity). In so far as human beings exist, they also have inner resources or Faculties (F). The Society in so far as it is organised may also be thought of as having resources (O). Resources are used up and need to be replaced. Resources are lost because every construction of order creates greater disorder or entropy. Inner resources come from the environment and these may increase owing to forces coming from a still greater environment, e.g. radiations come from the sun, or be lost to space.  People have to work or labour (L) on resources physically, emotionally or intellectually. This work may differ in quantity, quality or organization. Work depends partly on the nature of R, partly on C and partly on S. Work is an expenditure of inner resources which have to be replenished. The cost, c of things is the sacrifice or work done to produce it. The price, p is the satisfaction obtained. This satisfaction must at least equal the sacrifice to maintain the status quo. The difference between cost and price is the Profit or increment I, which may be positive or negative. A person is willing to make a certain amount of sacrifice or do a certain amount of work to gain a certain minimum amount of satisfaction. This will vary with inner and outer conditions, e.g. whether he is starving or full and whether it is hot or cold. it varies also with social conditions, e.g. whether he is lonely, persecuted, ignored etc. The incentive to work increases in proportion with the profit.

Generally speaking resources are obtained from land, sea and air which is regarded as fixed at any one time and has no initial cost in work. But there may well be costs in maintaining it. We could build upwards or downwards, discover new lands, explore and settle the ice-fields, jungles, deserts and the sea, create satellites and travel into space, thus enlarging land at another time. The extraction of the resources requires some work, and without this such resources have no value. Yet people seek to own control over it. The value, therefore, lies in the expected R, which also requires some work, e.g. research and knowledge of the state of technology. Ownership is also claimed by governments for political reasons. Indeed, animals and birds also mark out their territories. However, note that people might not only wish to settle in places rich in material resources, but in places where they can have company and cooperation or the availability of certain skills and facilities, or where natural beauty exists, or where the sites, such as in city centres, are advantageous for commercial, political or social purposes. We cannot, therefore, speak of resources without human motives. We cannot merely say that one piece of land has greater resources or is more productive than another. It may be so for one purpose but the reverse for another. This may also change periodically. And these are affected by social conditions. We, therefore, dismiss the theory that there is a law of diminishing productivity of land. If something is not good for one crop it may be good for another. If we do not want the second then only does it have less value. Motives give resources value (V). This leads us to the idea that we can speak of positive and negative resources. Negative resources are disadvantages which must be overcome by means of positive resources. The actual state of a place is the difference between the two.

 

L acting on R produces products (P), and these collectively are known as Created Wealth (W). The Natural resources collectively could also be regarded as wealth, the products of nature, Natural Wealth. Quite often it is not possible to separate the two, e.g.. when a Garden has been made. Since much of the environment, e.g. a city, is the result of the collective action of a community, and, indeed, of the efforts made by thinkers and inventors from many different times and places, then we cannot even say that something has been created by the work of a particular person, and his work merely takes place in, and adds to, what he finds in his environment. His own talents arise from education and social culture or the genes of his ancestors. It is from this point of view that we can speak of Wealth in a much more universal sense, and it is given to us by Allah. Wealth could be material, social or psychological. They add to R, S or F. and can be distributed variously between these. A given quantity could add to R S or F without adding to others. It could also transfer W from one to another. They can provide goods, services or conditions. Their purpose is to satisfy M. True wealth we have defined as that which produces B. It does not, therefore, have to be material in nature, but could also refer to congenial social conditions (such as friendship) or psychological ones (including knowledge, ability, integration, happiness and human development). It is only from this point of view that the pursuit of wealth can be considered not merely legitimate but essential and that for all. The criticism that people pursue wealth at the expense of their social and spiritual welfare, that of their environment or that of other people can then no longer be made. B may be regarded as the reward and P may be regarded as wages for the work, and constitutes resources in a restricted sense, collectively known as Income (I). This acquires money value (M) in exchange.

Benefits, however can be obtained directly or indirectly. There are consumables such as food which give direct satisfaction; durables such as cars which can be used by more work to produce satisfaction; capital goods such as machines which are used only to produce other products; education which may be required to produce such machines; environmental or social conditions where certain facilities, possibilities and opportunities exist; services which provide such education. Enterprise, the setting up and running of a business or industry, of course, also requires skill and knowledge, and the use of this requires a reward. Capital, products which are required to make other products can be regarded also as resources. They all have value, but it is clear that we can speak of primary, secondary, tertiary etc values. Capital goods, for instance, acquire value only because of the consumer goods it produces. One would, therefore suppose that it is not Capital which controls work, but work which controls capital. If this is true then to account for the diseconomies we must also suppose that Resources, or those who control them, control work. This depends on our social organization. Land has value only because of the other considerations given above. One arrives at the conclusion that the primary value is the “I” or real self, not to be confused with the ego, an image of self. This is discussed elsewhere. If we have no value, and nothing is worth doing, we commit suicide and fall out of the economic system. 

An Economic system which deals with communities can be described by C, R and S. The means of production are conventionally given as Land, Labour and Capital, and this last is identified with money. Control over these is regarded as rent, wages and interest. There is, however, good reason to reject this view. It is supposed that Capital is advanced to pay the wages of workers. It is only when the product is sold that the Capitalist recoups his money. Therefore, the profit he makes or interest he charges can be regarded as the wages of waiting, and represents time. This view, however, leads to false conclusions. When Capital is abundant wages are high. In fact, if Capital is abundant then interest rates should be low. But experience shows that interest rates are high when wages are high and fall as wages fall. Wages are, in fact, paid only in return for the work done by workers, whose products are owned by the Capitalist. What the Capitalist does is to purchase the product of the workers in return for wages. This can be regarded as a straight forward contract. Capital does not refer to money but only to the products which have no direct consumer value, but are used to produce them. Capital goods wear out with use just as other products and must be replaced. The fact that someone purchases a share in a factory and owns it forever is a legal idea. The dividends he gets are not different from the interest charged or rents collected. Interest is an illusion - real only in the same sense as people believe and act according to other illusions and falsehoods. Money, therefore, is falsely seen as a commodity. Capital represents the way the economy is organised, and depends on its laws and practices. We reduce the means of production to R, L and S.

A person working a piece of land creates products which amount to his wages. People obviously go first to what they consider to be the most productive land, A, provided of course they know it. (Note that the word “productive” here has little meaning since it could well be that the 1 acre possessed by one person produces as much of a particular product as 10 other acres possessed by someone else. These two pieces of land would then be regarded as equally productive. But we will ignore this.) Suppose in A the difference between sacrifice (work) and satisfaction (wage) is, when measured in money, 10 mu. The next person, if he has the same tastes, will find the next best productive land, B, if he knows where it is, and by the same amount of work will produce, say, 8 mu. He may, of course have better skills, but we will let that go. He may as well work at A and take 8 mu for the same work. The owner of A might be quite happy to let him do the work if he pays him the difference 10-8 = 2 mu in rent. Thus rent arises from ownership, and this is a mere legal convention. Another illusion. In fact, the second person might have taken over this land. It might be that the first person is glad of the company and civilised and charitable enough to share and has no concept of property. It might be that, rather than fight, the first person moves elsewhere or some compromise is reached. The fact is that each settled where they thought their needs or desires could be fulfilled by a reasonable amount of work. The person at A will not be willing to allow the second person to keep 8 mu for himself, putting him out of work for only 2 mu. He might enjoy the work. There is no sense in owning more land than one can work. It only makes sense if this ownership provides a rent. This rent can only arise at the expense of those who pay it out of their wage. The first person will not hire out his land unless it produces or can produce more than he wants. And it could do so by cooperation with the second person who may have different skills. Suppose he is satisfied with 8 mu. He may hire out sufficient to yield him 2 mu in rent if this reduces his work to the level where it yields a wage of 8-2= 6 mu. He is then no better or worse off in terms of satisfaction. He has 6 mu from work + 2 mu from rent = 8 mu. But he is better off in terms of reduced sacrifice (work). The difference between the two gives the profit and provides him with the incentive to do the hiring. The same is true of the second person who agrees to pay the rent. There must be an incentive, some profit. Therefore, it is the notion of rent which creates differences in land holding.

This appears to be a much more realistic description. It is not mechanistic but involves motives, in this case profit, the desire to improve and grow, though, here only in the physical sense. It may, of course, not be materialistic. He may not want the leisure to work earning more and more money, but to study or meditate or travel freely or spend more time with his family. 

To repeat, people work in order to satisfy some motive. This is the only real wage. We do not need to allow rent or interest. They are not natural laws but conventions enforced by man-made law. We could require purchase rather than rent, or land could be regarded as a trust or as right to use rather than own. We have seen also that there is no real distinction between capital and other products. This is why we have included them in S which stands for any kind of socially agreed convention. In so far as the word “wage” refers to that which is given by an employer or master, then we will dismiss this notion also and replace it with Income. This is because employment and slavery are also enforced social conventions. We can certainly think of situations where no such relationship obtains and where it is entirely unnecessary. But to work in order to satisfy needs is a natural law. Thus, it is these artificial man-made ingredients which cause disruption in the Economic system. In nature no such disruptions exist unless also created by man. 

The classical description also ignores two other factors which would modify the outcome. The first is the fact that as populations grow there is a tendency towards greater organization and cooperation which increases production. The second is that there are technological changes and progress. It is perfectly possible to increase the productivity of a piece of land by establishing a factory, shop or office on it. These require no fertility from the land. On the other hand oil or gold may be found, or some rare species of animal or plant in which interest has suddenly grown. Indeed both organization and technology are stimulated by the population pressure. However, technology is affect by science and that by the whole of an ideology which is affected by psychological, social and environmental factors. It could be that some other parts of this ideology obstruct technological development or give it another form as has happened in several places. Whereas there is some truth in the rent and population expansion theory, the economic system should be regarded as being affected by three factors, population, organization and technology.

 

It was thought by Malthus and others that populations grew in geometrical proportion while the means of sustenance grew only by arithmetical proportions. Therefore, poverty would increase and lead to increased crimes, disease, competition, harder work, greater ignorance, less freedom and more wars. Indeed, the rise and fall of civilisation was attributed to these economic forces. The fact is that neither of these statements are laws. Population growth has been checked in many countries and has a habit of checking itself through war, disease and disasters. Resources are increased by the discovery of new resources, uses for materials which had no use before, artificially created materials, the discovery of new lands or the capability of cultivating and settling on formerly unusable land, exploiting the sea and so on.

Apart from this poverty is caused by failures in organization and distribution. It is a fact that money and resources are wasted. Some people have far more than they need and waste much; Crops are dumped to maintain profit; money accumulates in banks uselessly; houses and land remain empty; pollution and erosion destroys productivity; intensive use outruns methods of renewal and recycling; goods are over or under produced; a great portion is wasted on armaments; obsolescence is built into goods and so on. All this constitutes mismanagement and irresponsibility caused by greed and ignorance.

Both Human capabilities and organization has been left out of the equation.

The classical theory on economic cycles is as follows: In the time of booms prices are rising owing to greater demand. The expectation that this will continue in the future encourages more production (in order to increase profits). This produces more employment and hence more wages and demand and larger stocks of products. Speculators, in order, to make large profits, purchase cheaply, withhold the land, resources or products, in order to sell later when prices are high, and this itself creates scarcity and raises prices. But this process also increases rents and interest rates and the cost of raw materials, thereby increasing costs. The increase in products causes prices to fall, especially when they saturate the market. These three factors begin to reduce profits, which close down businesses, produces unemployment, reducing wages, and, therefore, demand. This reduces profits still further and so on. A downward spiral is created. The speculators, however, must now sell to reduce losses, putting more resources on the market, the price of which is low. Industries begin to rationalise, amalgamate or take over others, and increase efficiency, reducing costs. More surplus money becomes available for investment and interest rates fall. All this lowers cost of production and allows profits to increase. Thus the cycle begins all over again. This process is regarded as a Law of Economics. In other words it cannot be different. But, as we have seen, rents and profits which drive this machine are not natural laws but man-made conventions.

Even then the question is: why do these opposite processes not settle down somewhere in the middle, like the pendulum? Why is the Attractor in this system not a point of equilibrium but a cycle? It is not difficult to see that the whole thing depends on human activities, their speculation, desire for profit and goods, and judgement about the future. As manufacture takes time, the manufacturers must judge what and how much can be sold in the future, and how much he should invest now. It depends on new inventions which could or could not create demand. It depends also how the society is organised - whether it allows speculation, gambling and profiteering, encourages research and invention and distributes products. None of these are laws. The occurrence of a balance, we learn from nature depends on efficient feedback mechanisms. This requires information to return from the point where it produces effects to the point which causes the change. There has to be a two way communication. It is this fact which produces the notion of purpose. Unfortunately science ignores purpose, though it is an integral part of life, and indeed, the Universe. Purpose and cause are related as in the following diagram where we see that purpose comes down from the whole to the part, and refers to the adjustment of any object to its environment, which must adjust to its environment and so on. The question is what does the Universe adjust to?

In economic terms it means that information must flow from producer to consumer and from consumer to producer. This is achieved in an individual who is both. But when the functions are separated in a complex society, this unity is lost. The implication is clear - the society has failed to integrate, to become One. There are no coordinating factors. One way of overcoming this deficiency would be for consumers to take over control of manufacture. Note that the so called primitive tribes do not have this problem - the whole tribe is hunter and consumer.

It seems, therefore, that there is a missing fourth factor in our equations. Something which prevents integration. In fact three interacting and inter-dependant ones can be identified - (a) Obstructions or barriers (B) which refer to class divisions, but not only to these. Even classes are sub-divided and individuals from each other. There are racial, religious, national and cultural divisions and all kinds of barriers which are symbolised by fences and borders. (b) the artificial concepts or notions (N) which we have already considered. They arise from the fact that reality is filtered through our minds and mixed with imagination. (c) There is a Chaotic or Random factor (X) (the laws of which are discussed in another chapter). It refers to things in society, (apart from our ignorance and natural cycles such as the seasons) such as speculation, gambling, lawlessness and uncoordinated activities which undermine the requirement for knowledge, calculation, prediction and control. Here the Laws of probability apply which leads to instability, turbulence and fluctuations around an average point. These probabilities have a range between which they can swing. They act by exaggerating already present tendencies or unstable states. This is like nudging an upright pencil.

A certain amount of randomness, however, is essential in order that something new can emerge and development can take place. Evolution depends on it. Without it we have rigidity and stagnation. These, however, are already provided for us by the basic unpredictability of nature. (This is discussed in the chapter on Physics) Beyond a certain point the advantages are overwhelmed by the disadvantages, and we go beyond that point.

It is supposed that there is a free market, so that workers can go from where there are low wages to where they are higher; money can flow from where it is less productive to where it is more productive; and goods can be produced and transported from where the price-cost is smaller to where it is greater. All this should ensure increase in production and the even distribution of wealth. However, human beings depend on perception, knowledge and ability which is restricted, and on resources, and these are owned and controlled by the few. The prices and motion of goods is restricted by States. The worker does not have the freedom to move, also because of residence. The productivity of money is understood not in terms of products but in terms of generating more money. It is independent and can flow in directions other than where products flow Thus there is no Free Market.

It appears that the Economic system must ultimately rest on the realities of the environment and on values, which must be objective and also rest in these realities. On the other hand both depend on how we perceive them, and both perception and values are mediated by the social system, the way human beings relate, communicate and interact. If these are not objective, then the system will be disrupted. There is, therefore, an Absolute state to which all three belong, from which they derive. To this we must conform. This condition is known as Surrender.

Conventionally economic conditions are assessed by means of notions such as income, investments, rents and interest rates etc and the relationship between these terms. A much more comprehensive way of thinking could perhaps be constructed on the following considerations:-

A certain amount of resources R, under certain conditions such as weather C, can sustain a certain population P with a certain level of skill or ability A, given a certain level of technology T and organization O, to a certain standard of living L.

There are three problems connected with this:-

(a) These 7 factors are interdependent, so that each affects the other. The reduction of the population, for instance, while relieving the demand on resources also diminishes the work force and affects the organization. More business can be done in large cities than in villages. Therefore, things can be cheaper due to mass production and still yield greater incomes. There is, therefore, no simple linear relationship between these factors.

(b) These factors are complex. each includes many items. The economy does not only depend on amounts but also on the types and quality of these different factors, their relative abundance and the relationship between the different items. Cars for instance are useless without petrol, but the materials used to make cars may be abundant in one place while petrol is abundant in another. It may be possible to include all such relationship under the term C.

(c) These factors also have a relative meaning. Nothing is a resource which is not wanted and becomes so if it is, nor has a useless skill or organization any economic value. It all depends on human value systems. What human beings strive for is self-fulfilment. Thus the standard of life may not depend on the amount of goods, but on their quality and how they are used.

On Capitalism and Socialism

There are in general two rival economic systems in the world and these are combined in all nations in different proportions. The one like Capitalism lays stress on individual enterprise, and the other, like socialism and communism, emphasises central planning and control. The rivalry between the two systems exists because each of them can be criticised by the other.

 Central planning can be criticised on the following grounds:-

1. Evolution requires that there is maximum diversity so that new systems can arise and the selection and multiplication of the best adapted system can take place. Central planning on the other hand creates uniformity and stagnation.

2. Uniformity and standardisation cannot satisfy the needs of people who are essentially all different.

3. The person who can know best what a person needs or wants is the person himself, not some planner sitting in some office living under quite different conditions. Apart from this, to rely on the judgement of someone else is time consuming. It is less likely that a need will be fulfilled when and where it exists.

4. Central planning stifles individual initiative, creativity and responsibility. It destroys the vigour of the society. It makes everyone dependent.

5. Planning can only be carried out if it is enforced. Dictatorship and tyranny become inevitable.

6. Planning is done by committees. The work of committees is inefficient in comparison with that of individuals. It is time consuming owing to arguments and debates. To overcome this, it is often necessary to give all power to one person or to a group of like minded people. This produces a dictatorship.

7. Nature is vast and complex and no human being or group can possibly possess all the knowledge or sufficient ability to control all aspects of life. There will inevitably be unpredictable effects. Some of these may be disastrous and may completely negate the intentions.

8. Institutions run on a collective basis are inefficient and wasteful owing to the lack of personal incentive and responsibility. Since people tend to do as little work as possible while trying to maximise their gains, this will be done at the expense of others, just as under Capitalism. But here every one is doing it. No individual has to bear the cost of the resources, the energy used or the cost of labour, or has a personal interest in the amount of production. Particularly if there is a difference in ability then equal remuneration is resented and performance tends to drop to the lowest point. Competition on the other hand has a built in tendency to raise performance. The only situation in which collective effort works is when there is enthusiasm for some cause, but such enthusiasm cannot be sustained. Many methods are used to sustain enthusiasm including propaganda, ideological indoctrination, the inculcation of paranoid fears of dangers from enemies and so on. But these lead to ‘sales resistance’, to ‘deafness’ and ‘contempt due to familiarity ’. That which is oft repeated causes unconsciousness, over-satiation or even disgust. That is also why Religions tend to degenerate. The only alternative left is coercion.

9. Since there is no notion of Profit there is no measure of economic efficiency. It is perfectly possible for costs or sacrifices to be greater than benefits.

10. Systems such as Communism base themselves on an ideology. Since these are man made and depend on the state of knowledge at a particular time they are never comprehensive enough. It destroys the ability to see realities and prevents intelligent adaptation. The practicalities of a situation are always sacrificed to it leading to increasing maladjustment.

All these factors have produced pressures in Socialist countries for liberalisation, individual freedom and the re-introduction of incentives and personal initiative. Communism collapsed not so much because of its ideology, but because of political conflicts and mainly because, despite its emphasis on economic factors, it was economically inefficient and lost out to the Capitalist system.

 

Capitalist nations may be regarded as being justified in their opposition to communism and socialism. There is, however, an ulterior motive behind this opposition rather than objective reasoning. The few who have benefited most from Capitalism wish to protect and advance their self-interests and they have the power to do so. They have neglected to consider the defects in Capitalism which, though different, are just as serious.

The Capitalist system is criticised on the following grounds:-

1. Since people are unequal in their talents and circumstances, and even if equal, have different talents and circumstances, then great inequalities of wealth are created. Inequality was created in the past through the domination of some people by the use of arms, robbery and looting. This inequality is then propagated through inheritances. Some are extremely poor and cannot satisfy their basic needs, while others are extremely rich and waste the resources. It creates a class structure, a class of Capitalists who control, and a class of workers who are controlled. It divides people and destroys cooperation. Conflicts arise between them owing to differences in interest. Instead of abolishing Capitalism, however, this problem could also be solved by spreading share ownership through out the population. Communism is not the only solution. However, there remains a conflict of interest, between the person, in so far as he is an employee, and the person in so far as he is a shareholder. The ownership of Shares tends to accumulate eventually in the hands of the few.

2. The purpose of production is to make a profit for the owners or shareholders and not to supply needs. Profit depends on reducing labour costs and increasing prices or the amount of sales. This has several consequences.

(a) Since the wages paid to the workers also constitute the money available to buy the goods, then we have a contradiction.

(b) It is comparatively easy to produce goods because of machinery. The emphasis has to be placed on selling the goods and persuading people to buy them whether or not they need them. Thus demand bears no relationship to needs.. Demand becomes artificial and fluctuates according to the vagaries of fashion.

(c) Demand bears no relationship to the resources available. The pressure on resources increases.

(d) Mechanisation makes the human worker redundant. The machine ceases to be an aid to human beings but becomes a competitor or enemy. It requires the progressive reduction of the human population.

 

3. The community depends on a great many talents. But most of the power and remuneration is reserved for those who have business interests and acumen. It is only the relatively narrow interests of these people which governs the development of the society. In particular fortunes are made on the Stock Exchange without producing anything useful or constructive at all.

4. Those who have money can invest it to gain more at the expense of those who cannot. It transfers wealth from the poorer to the wealthier, thereby causing ever increasing differences in wealth. These differences within a nation can only be reduced by increasing the differences between nations.

5. Competition leads to unnecessary multiplication of work and wastage, especially when, owing to industrial secrecy, it interferes with free information exchange and development.

6. It is possible to profit not only by excelling, but also by repressing others. Effort can be used not only positively but also negatively, by eliminating competition. Competition is also destructive because it brings conflicts. It creates stresses, anxiety and fear which in turn lead to aggression, hatred and greed. It isolates people, creates barriers and defences, and puts them into opposite camps where suspicion flourishes. It negates and interferes with proper cooperation.

7, Economic competition leads to selfishness, formalism and materialism. It leads to greed where people want more than they need. This is because competition creates fear of deprivation and, therefore, the need for security and to accumulate. Profit depends on production and persuasion to buy the products. The advertisers and propagandists, therefore, develop sophisticated techniques to condition the population to consumerism. The advertisement campaigns add to the cost of goods. All other things tend to be judged in terms of money and all other values, morality, aesthetics, truth tend to disappear. A thing is not useful because it serves some purpose but because it makes a monetary profit. A work of art is valued because it is an investment. A statement is true because it is commercially advantageous.

8. It is perfectly possible, and usual, to make profits by swindling, intrigues, conspiracies, gambling, fraud, dishonesty, and the exploitation of ones fellows. Profits can be made by increasing prices, lowering wages, using inferior materials, neglecting safety measures for workers, increasing demand by ensuring that goods do not last, become obsolete, or cannot be repaired, persuading people to buy what they do not need, creating artificial scarcity, creating monopolies and cartels which can fix prices, causing situations such as wars in order to create demand. Numerous methods of unfair competition are used by businessmen. Some larger firms buy out or ruin smaller and cheaper local firms by selling goods even cheaper for a short time, then having obtained a local monopoly increase their prices. It is not, therefore, true that Capitalism always produces increasing economy. It is Governments which must control these malpractices through laws, inspectors and bureaucracies and all this has to be paid for. Corruption is encouraged in proportion to the power given to them. But governments are run by business interests directly or indirectly. Governments use subsidies and import and other taxes to support their own industries against foreign ones. Money is power and it is the rich and large firms who control politicians and governments and their policies in their own interests not that of the nation.

Most businesses use dishonest and immoral methods and encourage immorality in the community. Fraud and corruption in business and government is wide spread. Criminals are able to set up business with impunity and thousands of people are swindled out of large amounts of money every year. Industries are set up which ruin the environment, poison the people or ignore the general welfare. The profit motive encourages the proliferation of crime, immorality, materialism, selfishness and psychopathy. It destroys all higher values. Capitalism depends on the existence of people who are not satisfied with what they have but want ever more. In short it depends on the cultivation of greed, pride and lust as virtues. Capitalism cannot be sustained where people are satisfied with obtaining only what is sufficient for their need. The system ensures that this will be taken away from them by those who want more.

9. Capitalism is expansionist. In general Profits are only made when there is relative scarcity, so that prices are high. This is usually the case when something new has been invented. But high prices encourage others to produce the same thing. Supply increases, leading to a fall of prices, and, therefore, of profits. If profit falls to zero production stops though the products may still be needed. The attempt to keep up Profits leads to several results:-

(a) When expansion cannot take place because innovation has not kept up, or when the goods produced could not be sold, then the profits fall and we have an economic slump which wipes out the profits. The slump neutralises the surplus created by profits and is the inevitable payment for it. Recovery can only start when a balance has been regained. We have unemployment leading to great distress and misery to millions of people, not only because they suffer from deprivation but also demoralisation. All their talents and lives are wasted. The suffering of the people often brings about social and political disorder, revolutions, dictatorships and tyrannies. It creates cyclical changes, slumps and booms, periods of relative prosperity and poverty, which lead to each other as in a pendulum. The economic system is a machine not intelligently controlled by man, but controlling man. Man is a victim of his own product.

(b) Amalgamations into ever larger companies. If the profit per employee falls then if you increase the number of employees you can increase your total profits. There is a tendency towards the formation of Monopolies and the elimination of competition. The great size of existing firms makes it difficult for new firms to arise.

(c) Industry has expanded in three directions, in extensity, intensity and cotensity. They have expanded not only in size but also by invading and controlling ever greater areas of human life, and by increased diversification and ever tighter organization. It exploits more of the worlds resources, thereby creating faster exhaustion of resources, wastage and pollution. Industry, for instance, has taken over work which used to be done within the home such as manufacture of clothing, cooking of foods and organising holidays. Their organizations have become more and more elaborate and they exert greater control on the lives of their workers. Time and motion studies and their application are an example. It buys their minds and conscience as well as their labour. It controls their lives even to the extent, in some places, as to who their friends are, how they behave, work, dress and speak, where they take their holidays and so on. The individual becomes no more than a cog in the machine, increasingly less independent and more helpless.

(d) Profits can also be maintained by employing fewer and fewer workers or paying them relatively less. There is a constant pressure to increase the gap between the poor and rich. This creates Industrial discontent and conflict. The workers form unions which strike to maintain or increase their wages. But this merely raises the price of the goods, and, therefore, also the profits. The workers merely succeed, for a short time, to improve their position at the expense of each other. The overall gap remains the same. There is an inflationary spiral which devalues money and savings.

(e) It causes the need of firms to export and expand abroad, thereby causing international conflicts and wars. Firms and nations have to compete ever more fiercely. Destruction is often required to recreate demand. The World War was caused because Britain protected its industries through the use of import taxes on all foreign goods throughout the British Empire. This worked to the disadvantage of German and Japanese Industries. It created severe Economic Depression there, leading to the rise of retaliatory militarism. However, depression in one country causes depression in others because of the lowering of demand for the exported goods. Thus Britain itself underwent a slump. The development of International Companies also transfers power from Governments to these companies making national governments proportionally impotent.

(f) Since conflicts arise within nations as well as inter-nationally, the intervention of Governments increases. They may try to retain competition by preventing amalgamations into monopolies. But since such amalgamations are forced by economic needs they merely succeed in reducing efficiency and competitive ability. They may try to redistribute the wealth by the use of taxation. This, however, reduces the amount the rich have for investments. They may use import taxes to protect their industries. This militates against international trade on which prosperity depends. They may counteract depression by creating demand and employment in Armaments and maintaining large armies which can be used in the national interest. Peace would then be a disadvantage since it would cause large scale unemployment. But war has become as destructive to victors as it is to the vanquished. Governments are, therefore, forced to take steps to amalgamate nations into super-states. They are reluctant to do this because it means giving up the power of self-determination, the erosion of identity, cultural and ideological differences. These carry a cost in material prosperity. It will be interesting to see which of these alternatives will be chosen. It will probably be material prosperity. If, however, the world becomes a uniform place then the social and psychological problems will continue to increase. And if civilisations decline because of this, as they inevitably do, there will be no possibility of the arising of a different civilisation in another place where the causes of the decline do not exist. 

(g) Profits, however, can also be made by innovation and invention, increase in efficiency, mechanisation and organization. Hence it encourages research and stimulates higher education, but only in certain directions at the expense of other activities and interests. Thus an unbalanced bias is created. There is little doubt that in many respects Capitalism has been the result of an evolutionary process, and that the evolutionary process has been maintained through the Capitalist system. But there has been a negative side to it. The progress has been in the fields of science and technology but not in the field of values. These have remained primitive or even degenerated. There is, therefore, a dangerous gap between human capabilities and their motives. This is threatening to destroy not only human societies but also the ecological balance of the planet.

10. Illusions. The Capitalist governments use statistics to make their calculations. People are, therefore, numbers. Their experiences do not count. If, then 40% of the population is unemployed and suffering from deprivation or some other injustice, then this may still count as a good economic situation because 60% are rich and prosperous. It is a common fact that Governments continue to claim that things are improving while a great portion of the population experiences the reverse.

 11. Continuous expansion cannot be sustained by the limited resources of the planet. Nor can it be sustained because of social and psychological limitations. The conflicts, constraints, and the stresses and strains it creates counteract its benefits. It should, however, be pointed out that the pressure for expansion may well lead man into Outer Space and other planets both for the sake of resources and to accommodate an expanding population. On the other hand within the limits of this planet Capitalism demands a progressive reduction in population. The machine is required to replace human beings in so far as these are more productive and efficient, less expensive and make fewer demands.

12. Capitalism works only if there is Capital and freedom to invest it. This means that there must be rich people who can invest money in new machinery, technology and organization. If the money of the few rich were to be distributed among the people they would be only slightly better off. The majority of the people waste their money, for instance, on alcohol, gambling and other non-essentials and often harmful directions. Immediate pleasure is more important for them than long term benefits. Much more can be done if small amounts are taken away from them and given to the few who can do more with it. It is, therefore, in the interest of Capitalism to take money away from the poorer, give it to the rich and keep the mass of the population in a relatively low mental state. However, the rich also waste resources since each money unit has less value to them. Capitalism, therefore, requires inequality. Equality and freedom are incompatible under Capitalism. Governments which try to bring about greater equality in wealth produce more economic problems. It also propagates this condition. It is not worthwhile investing small sums and it is in the interest of the investors that the people spend their money on the consumer goods they produce. A higher sense of values is not encouraged. The freedom of the individuals to do as they will leaves a chaotic situation which cannot be coordinated and controlled. It always remains unpredictable. But the evolution and progress of man implies and depends on an increasing knowledge and control by man over his own affairs.

13. Since the production of cheap mass produced goods is profitable, quantity often replaces quality, and the mediocre gains overwhelming dominance. Human skills are not valued if machines can do the same work. Thus, the skills and capabilities of the many are discouraged because it is only the few intellectuals, inventors, scientists etc who do all the real work. 

14, Workers organise together to increase their wages. This increases cost of production. In order to make a profit the prices must also rise. This leads to another round of wage claims. Thus, inflation is built into the system. Usury, lending money in return for interest is also bound to create inflation, since the money gained stands for no increase in benefits. If the money lent was a surplus, the new higher sum, the principle plus interest, is also a surplus. This, too, is lent out to obtain even more interest. And so on. Inflation erodes the savings people make for their future. Borrowing also causes the future to be sold to, and controlled by, the past. This is the reverse of that which intelligence dictates. The future is uncertain and wisdom requires one to increase ones control in order to deal with it. Not only is it the case that people are sacrificing their future to instant gratification, but the whole nation becomes incapable of controlling its affairs. Usury is the opposite of charity. It consists of the selfish desire to exploit the needs of others rather than compassion and the desire to help. It, therefore, contradicts the social spirit. The economic system based on Usury becomes self-propagating. A great number of people are trapped in this vicious circle.

15. Labour is regarded as a commodity. Under pure slavery the owner controls and can buy and sell the slave. Capitalist employment differs from this only in so far as it is the worker who has to sell his labour to the Capitalist since the latter owns the means of production. The employee, unlike the slave, can be discarded as any other piece of material. The justification for regarding labour as a commodity is that skills should be subject to the forces of supply and demand if efficient use is to made of them. This argument, however, can be refuted.

(a) In a society which is pyramidically organised the number of positions is always limited and bears no relationship to the forces of supply and demand.

(b) The appointment of people to the various positions is controlled by those who have the power and does not necessarily depend on merit. It also causes a struggle for position which is often most destructive. Since there is only one higher position for many contenders then for every winner there are numerous losers. Promotion depends on the retirement, death or dismissal of a present holder of that position. This is a disincentive.

(c) Human beings are versatile and can develop various skills appropriate for the positions and functions required, but they do not obtain the opportunities to do so. Specialisation is encouraged.

 

16. Rapid, indiscriminate, unintelligent and socially irresponsible industrialisation has created problems of wastage and exhaustion of resources, destruction of ecological balance, and dangers for mankind through adulteration of foods and pollution of land, sea and atmosphere. The Economic imbalance of the world is increasing.

(a) The speed of change due to expansion, has outstripped the human capacity for adaptation. All these create grave social and psychological problems for man.

(b) The increasing discrepancy between the resources and demand increases poverty, injustice, repression, discontent and conflicts.

(c) The industrialized nations continue to expand and impoverish the poorer nations. Since the number of goods that can be sold to poorer nations decreases the poorer they get, there are limits to this kind of expansion. There will also be reduction in the population due to starvation and wars.

(d)There is a movement of the more capable people from the poorer to the richer nations, a brain drain which increases the problems in poor countries.

(e) The problem now arises that either you must also expand or else be exploited by others who are expanding. Other economic systems are, therefore, at a disadvantage.

 

This expansionist pressure leaves only the following alternatives.

(a) The entrepreneurs from the Industrial nations set up enterprises in all underdeveloped nations to serve those nations, rather than exporting their resources.

(b) The continuous reduction of the population. This may be achieved through wars or birth control or even through increasing sterility, homosexuality, neurosis and suicide which appear to be natural balancing mechanisms.

(c) Increasing economic turmoil which also bring about political turmoil.

(d) The introduction, by gradual reform or revolution, of some better economic system.

(e) To continue the expansion into other worlds. While there were newly discovered continents in this world such expansion relieved the pressure in Europe. But no new continents are now available. The Seas can still be explored, but eventually there must be expansion into other planets. This depends on technological progress.

 

The conclusion we have to reach is that whereas Capitalism is expansionist in nature, Socialism is contractionist. Since they are incompatible there is a conflict between them. Both produce problems, and have a tendency to lead to each other. A kind of pendulum effect is produced. Both must eventually collapse or be modified through reform or revolution, not necessarily violent and bloody, according to how flexible the political systems are. In fact each system is progressively incorporating features from the other so that the tendency is towards increasing similarity. Some Capitalist nations have been fortunate enough to have achieved high standards of living because of the abundance of resources compared with their populations, and by exploiting other nations. This reduces the likelihood of revolution by creating a degree of contentment and apathy. People who have much to lose do not easily give it up for doubtful gains. The systems as they are cannot, however, survive, not only because of their own contradictions but also because other nations are beginning to develop and protect their own interests, thereby preventing expansionism. They need to be replaced with a more intelligent system. This requires the development of a new enlightenment. Higher general education, through changes in the general culture and through formal educational institutions, may bring about this transformation.

On Advertisement & Pressure Salesmanship

“Everyone should have the right to fulfil himself, his needs and strivings, physically, mentally and spiritually.” ‘Therefore, everyone should have the right to life.” “Therefore, everyone should have the right to make a living.” “Therefore, everyone should have the right to do this with whatever means he can.” “Therefore, everyone should have the right to enhance his abilities to do this.” “Therefore, whatever enhances these abilities is good.”

All these propositions seem reasonable and acceptable. However, a person does not exist in isolation. Three interdependent things have to be taken into consideration:- (1) Environmental resources, (2) the Community, (3) Talents and abilities. People can compete, cooperate and unite. They may fulfil themselves by trampling on the rights of others to do so or they can help each other and enhance these abilities. It is, therefore, necessary to modify the next set of propositions.

“Therefore, everyone should have the right to use his powers and talents to fulfil himself.” “Therefore, everyone should have the right to use the resources on which these talents can be exercised.” “Therefore, everyone should be given the opportunities to do so.” “Therefore, everyone should have the right to create things which aid this aim.” “Therefore, everyone should have the right to sell his goods, services etc.” “Therefore, everyone should have the right to do all this in any way and with whatever means he can.”

In fact, all communities have rules or laws to modify these rights aimed at reducing behaviour such as conflicts which militate against these aims. strengthening those forms of behaviour and interaction which ensure them, and promoting those which will lead to an increase of fulfilment. This can be done in several inter-dependent ways:-

(1) By ensuring that the means a person uses to make his living will also benefit others (e.g. that the goods, services or facilities they produce and sell benefits the buyers)

(2) By ensuring that the most able have greater power, resources and influence since this will benefit the whole community providing the other two conditions also exist.

(3) By providing facilities by which the three conditions mentioned above are more evenly distributed. Namely through (a) opportunities, power, resources (b) education - knowledge, motivation and ability is increased and transmitted to others.(iii) resources are increased and used more efficiently through exploration, innovation and research.

 

One of the methods used to increase profits is through advertisement and pressure salesmanship. The justification for this is that if sales are increased then mass production becomes possible which reduces costs, makes things cheaper and more affordable by many more people. Hence the amount of junk mail which comes through the post, the great number of salesmen and the use of coercive, conditioning and often dishonest tactics. Though information about available goods is certainly necessary, advertisements do not allow rational decisions to be made. All this wastes resources and adds to the cost, diminishing the advantages. The goods would be cheaper if the advertising costs were removed and there were no offers of giving away something “free” with bought goods - they obviously cost money to produce. In most cases the increase in sales by one firm happens at the expense of another so that there are no over all benefits . The community is persuaded to buy things it does not need and houses are full of useless items which have no use but constitute wasted resources and work. Advertisements work only because they are attractive and cause interest and enthusiasm which involves false claims, claims which have nothing whatever to do with the usefulness of the product. and cause confusion and cynicism. They also obstruct real progress.

To illustrate:- A computer firm which managed to exploit the first development of these machines, cornered the world market and grew rich. This enabled them to mount an intensive advertisement campaign by which their sales increased even more. A new firm with superior computers was set up later, but because it was new and less well known, its volume of sales was low. The cost of production was high and profit margins small, or higher prices made it less attractive. It did not possess the same resources to mount an advertisement campaign. Computers require Software. It was more profitable to produce Software for the more popular computers. Thus, there was more software for the older computer which added to its attraction. However, the new computer made progress because certain tasks could be done much better on it. Then another computer firm came into being with even better technology. But this had exactly the same problems but even more severe. Fortunately, the expanding interest and needs produced a small niche in which it could survive. It could well be that a number of superior technologies are still born and cannot be developed until the whole economic climate changes where such wastefulness and irrationality is banned. This problem, however, is only a part of a more general problem of publicity, publication and social techniques which promote unintelligence.   

On Economic Problems in Muslim Countries

Many Islamic countries, unfortunately, suffer from what appears to be an irreversible spiral downwards. This is due to three inter-connected factors:-

(a) Over-population (b) lack of education with its associated problems, lack of knowledge, skills and leadership which in turn cause destructive rivalries and conflicts (c) the deterioration of the land and resources through floods and droughts, some of which are due to over-exploitation, deforestation and industrial pollution elsewhere.

It is necessary for Governments to set up Development Agencies with the following responsibilities:-

(a) To make a thorough study of the situation with a view to making proposals how the deterioration of the situation can be arrested and reversed.

(b) To set up a training centre for community workers who can be sent out to the districts.

(c) To send out the community workers to various districts in order to organise and advise people how to cooperatively improve their situation.

(d) To raise funds, gather and distribute the resources needed to make such improvements.

(e) It may be necessary to reclaim lands, resettle communities elsewhere and re-train them, specially the young. Birth control will certainly be required. Prevention of births is better than the high mortality rate and the useless misery and suffering.

On World Economics

It is becoming obvious to many people that the Economics of each nation is becoming increasingly dependant on the economics of other countries and that the whole of the world economy is becoming a single system. Money and resources flow regardless of borders, but the redistribution of human beings, and, therefore, labour, education and need does not. This causes the balance to be disrupted. The poorer, more undeveloped countries, not only use their resources more inefficiently owing to lack of education and industry, but their populations are also greater and exert greater pressure on resources. Their relatively primitive political and economic conditions lead to greater unrest and civil disorders and wars which prevents the cultivation of the soil and the development of industries. International tensions are created which requires the expenditure of large proportions of capital on arms and armies. The people of many countries have been impoverished through the exploitation of their resources by the richer countries, and this poverty prevents both health and education and also obstructs industrialization while creating great social problems. These poor people then, in order to make a living, destroy such resources as the forests, thereby causing erosion of the land and changing the global weather system. This, in turn, will ultimately affects the economies of the rich nations.

The poor nations grow poorer because they do not possess the capital by means of which to achieve development while populations grow and resources diminish. The richer countries grow richer because they have the capital for research and development. Many of these undeveloped countries have tried to reverse these trends by borrowing from the richer countries. But they have to pay interest and pay back more than they borrow. To do this they have to export more of their resources. They also have to buy the capital goods from the rich countries. Thus the poor get even poorer and the rich grow even richer. A time comes when they are unable to pay back and this causes a financial crisis in the Banking system of the lender countries as well as Industrial problems because of shrinking markets.

 

The richer nations, therefore, find that in their own interest they will have to undertake charities towards the poorer countries. The money is obtained through general taxation which leaves the industries free to pursue their own traditional policies. But taxation reduces the general income. This extra money becomes unavailable to purchase consumer goods, thereby reducing demand. This clearly affects the Industries after all. The money given in charity is spent very inefficiently and often ends up in the pockets of the few without producing any development what ever.

It is only a few countries such as Malaysia which have managed to reverse this tendency by attracting investment from rich countries. This was done by providing a strong authoritarian government, often criticised by the western observers as being undemocratic, but not by western governments which were able to do business with them. These authoritarian governments were able to do some social and cultural engineering, required foreign investors to set up partnerships with local businesses and train and employ mostly local labour. It was evident to the leaders that economic changes could not be brought about without political as well as ideological changes. However, increasing prosperity, tight organization and better education is beginning to threaten disruption owing to the break down of families, rebellious mentalities and unsatisfied higher spiritual values. It will be interesting to see how this will be dealt with. The emphasis appears to have been on Economics, the other two factors being only a means. This can only work temporarily since the three factors are inter-dependant. 

It seems that the intelligent thing to do would be that those who have the business acumen and enterprise in the rich developed nations should be encouraged by their governments to set up businesses and industries in all the undeveloped nations training and using local labour. The United Nations and even an International Business Organization could undertake to encourage and finance such enterprises.  

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