This is article is a response to Mr. Akif Safi’s column,
titled ‘The Discovery of Economy’, appearing in The Renaissance, May 2001. The
major part of the column consists of the writer’s concern over present social,
ethical and material state of affairs of Muslims, and his wishes for the OIC
world be a better place to live in like the West; and there are a few words on
the subject suggested by the title. In those few words, the writer outlines a
new economy for the OIC world with the following features:
currency value system and maintaining one-to-one relationship among currencies.
equal prices of goods and services in all Muslim countries.
3. Setting equal wages and salaries in all Muslim
4. Giving every one the same standard of living as that of
Europe and America.
5. Free provision of some public goods and services.
6. Free movements of goods, services and labour among OIC
I will give some brief comments on these proposals.
1. Until a Utopia is formed of a politically one unit of
OIC world, the currencies cannot be par valued by any means.
Value of each currency, in terms of other currencies, is determined on the basis
of its own demand and supply conditions in the foreign exchange market. Demand
and supply, in turn, determined by the level of export and imports; while
exports and imports depend on a plethora of domestic and global economic
factors. Economic factors of Muslim countries are very diversified (unlike Euro
area) and market conditions in these countries are not similar. Therefore, it is
not possible to equalize all currencies. In fact, it is not a necessary
condition for the economic development of Muslim countries.
2. Equal prices of goods and services in all countries is
not less than a child’s yen. Price of one particular good may vary in different
cities of the same country; even two markets of the same city have not equal
prices of the same good; then how can they be equalized across the whole OIC
world. Actually, it is important to understand the mechanism of price
3. Same comments as above (No. 2) apply to the proposal of
uniform wages and salaries. Uniform wages and salaries are not only impossible
but also unnatural. However, one can still argue that a person, having same
skill and working the same work-hours, gets less remuneration in Pakistan than
in Saudi Arabia, which seems contrary to justice. But if analyzed in terms of
real wages (i.e. nominal wages deflated by price level), then this difference
will become marginal if not diminished. Whatever difference remains is due to
the differences in conditions prevailing in the labour markets of two countries.
4. The government though should ensure the provision of
basic necessities of life to every inhabitant, but there is no case of keeping
the same standard of life for every body – neither in Islam nor in economic
paradigms. You can wish and argue that the average living standard of Muslims
should be upgraded to that of Europe and America; but for this purpose Muslims
have to work hard like Americans and Europeans. Unfortunately, we Muslims have a
very disappointing attitude towards work in general and research and analysis in
particular. We have given up research even in our own religious affairs, set
aside science and technology. Good wishes can never be materialized, if not
supported by actions.
5. Since every
service, whether private or public, has some cost of production, so there is
simply no question of free provision of these services. However, some social
safety nets can be devised such that people get these services free when they
use according to their needs but pay at some other time according to their
ability to pay. Such types of systems exist even today in most Muslim countries,
but they are not working efficiently due to corruption at grass root levels.
6. In fact, this is the only proposal which seems sensible
to some extent. It is easier to have a free trade zone of OIC countries than to
have one country, one language, and one currency for the whole OIC world. If the
objective is to enhance economic well being of the people of Muslim countries
then a free trade zone can contribute significantly towards this end. In short,
there is no need to wait for all Muslims countries getting together, giving up
their regional and political identities and/or making one OIC economy.