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Research C enter for Islamic Economics and Finance
Islamic Economics and Finance Research Group,
Universiti Kebangsaan Malaysia
Universiti Kebangsaan Malaysia,
Bangi 43600, Selangor, Malaysia
Bangi 43600, Selangor, Malaysia
Fax: +603-89215789
Fax: 603-89215789
http://www.ekonis-ukm.my
http://www.ukm.my/ekonis
E-mail: ekonis@ukm.my
E-mail: ekonis@pkrisc.cc.ukm.my
Working Paper in Islamic Economics and Finance No. 1225
The Scarcity Assumption, Economic Problem and the Definition
of Economics: Revisited
Bayu Taufiq Possumah
Institut Islam Hadhari, Universiti Kebangsaan Malaysia, 43000 Bangi, Selangor,
Malaysia
Universiti Muslim Indonesia, Makassar, Indonesia
Tel: +6016-2412950 E-mail: btaufiq@gmail.com
Abdul Ghafar Ismail
School of Economic, Universiti Kebangsaan Malaysia, 43000 Bangi, Selangor,
Malaysia
Tel: +601-36214133 E-mail: agibab62@gmail.com
Abstract
The problem of scarcity resources is one of the most important topics in economics,
even one reason for the emergence of economics itself. Al Qur'an as a source of
economic science in Islam, of course, also talks about the Resources. The study finds
that the concept of economic resources related to scarcity in al Qur'an different from
what is understood by economic mainstream, and that is the foundation for the
Muslim economists to build the consumer behavior theory in Islam.
Keywords: Scarcity; Economic problem; Economic science definition
Introduction
The problems of human economy have actually grown together with human life on
earth, so are efforts to solve. What is consumed, how to produce, and how to
distribute it? These issues remain a major issue for the human struggle throughout his
life, whether or not recorded by history. Initially, the scarcity is important to be
explored due to several reasons, such as economic resources and human economic
choice.1 If we use the same framework, i.e., Starting from the definition of Islamic
1 Scarcity is the concept of finite resources in a world of infinite needs and wants. Economics assumes
people are greedy and always have needs and wants. However, there is only a certain amount of most
2
economics, we would go nowhere. In line with other views, such as Zubair Hasan
(2011), we use the deductive methods in deriving the subjects from the original
sources. Because, the existing studies on scarcity in Islamic economics just quoted the
Quran without trying to analyze it. The significance of this study is basically led
towards: the relevancy of the current definition of economy, utility theory,
distribution theory, market theory, and consumer behavior theory. The aim of this
paper is an attempt to revisit the problem of scarcity theory in economics, then
analyze that theory of Qur‟anic dimension as a resource principle in Islamic
economics. The remaining discussion of this paper is, the paper organized into five
sections. Section two explaining scarcity and economic theory in mainstream
economics. Section three, Economic problem in Qur‟anic view , Section four
analyzing the scarcity, the economic problem and Islamic economic theory, and the
last section is concluded.
Scarcity and Economics Theory
In medieval origin, word of scarcity derived from the Old Northern French escarate,
and was used to mean an insufficient supply of resources. In the fifteenth century the
word took on a more specific meaning as an insufficient of supply of necessities, or
dearth, and at the same time acquired a temporal characteristic implying a period of
insufficiency, or a dearth. This was still the usage by the late eighteenth and early
nineteenth century.2 Thomas Robert Malthus used the word in this sense in An Essay
on The principle of Population of 1978, where he contrasted “years of plenty” to
“years of scarcity”.3
By looking for various conventional economic definitions cited by economist, we can
simply conclude that what they explain about the economy not far from regarding the
relationship between human needs as living things that must maintain its existence,
the resources as objects that can meet those needs and how the manner and process of
fulfilling these needs, even though of course with a different view point. Samuelsen
(1961) for example, defining economy as all activities related to production and
distribution among human. This definition was further extended by Samuelson
(1976), Nordhaus (1991) and Temin (1976) who defines economic science as the
study of human behavior in relation to using scarce productive resources to provide
their wants4.
The same line of definition was offered by McConnell (1969) and Mankiw (2006).
The former offers a definition that the economy is the social science concerned with
the problem of using or administering scarce resources (the means of producing) so as
to attain the greatest or maximum satisfaction of society‟s unlimited wants (the goal
goods. Therefore, people are forced to choose among their needs and wants, because Mother Nature
does not satisfy our needs and wants infinitely. Scarcity encompasses these choices.
2 Nicholas Xenos, 1984, Out of Paradise an Essay on Scarcity, Doctoral Dessertation, Princeton
University, p.18
3 Thomas Robert Malthus, 1960, On Population, ed. Gertrude Himmelfarb, New York:Modern Library,
p.16
4 th
Samuelson, P. A.and P. Temin. 1976. Economics, 10 Ed. New York: McGraw Hill,p.3
3
of producing)5. While the latter, Mankiw (2006) defines economic science as the
study of how people manage limited and scarce resources.6
However, the definition given by Lord Robbins is among those most accepted by
western economics. He said that economics is the science which studies human
behavior as a relationship between ends and scarce means which have alternative
uses.7 This definition has a wide scope and consequently economics has approached a
wide range of issues. Here, the notion of scarcity holds a crucial position, separating
the economic dimension from other dimensions of purposeful human behavior
involving the utilization of means to achieve ends. So, basically the science of
economics is the study of the efforts both as individuals and communities in order to
make a choice use of finite resources to meet the infinite demand for goods and
services. This definition has led Assad Zaman (2009) to conclude that economics are
also referred to as a normative science because science is considered to involve
themselves and solve the problems of human weakness and limitations8.
Nearly all modern conventional textbooks use scarcity as the fundamental defining
problem of economics. For instance, the opening paragraph of a microeconomics
textbook by Perloff (2001) states that: “If each of us could get all of the food, clothing
and toys we wanted without working, no one would study economics. Unfortunately,
most of the good things in life are scarce – we can‟t all have as much as we want.”
Thus, Most of the current economic theory is derived from the law of (relative)
scarcity which “states that goods are scarce because there are not enough resources to
produce all the goods that people want to consume” (Samuelson and Nordhaus,
1989).9 Furthermore, scarcity “exists simply because it is human nature for people to
want more than they have” (see Ruffin and Gregory, 1993).10
The dimension of the economic problem is accentuated through Robbin‟s definition
of economics. Robbin defines economics as the science which studies human
behavior as a relationship between giving ends and scarce means which have
alternative uses11 and based on four conditions; the first two are related to ends, one is
posed toward multiplicity and the second towards diversity in importance and priority
order. The second two relates to means, one asserts its limitation, while the second
provides its various uses. Economics is the science of purposeful human action--that
is, our choices. Without scarcity, economics is impossible. If things were not scarce
and people did not have to make choices because everything was freely available,
5 McConnell, C. R. 1969,Economics: Principles, Problems and policies, McGraw-Hill, New York,p.23
6 Heinz Kohler, Scarcity Challenged An Introduction to Economics, 1968 ,Holt, Rinehar and Winston
Inc.USA, p.3,see also Mankiw, G,2006, Principles of Economics 4th ed. South-Western College Pub,
Ohio
7
Roger E. Backhouse & Steve G. Medema, 2007,Defining Economics: Robbins’ Essay In
Theory And Practice, , Unpublised Paper, UK, see also simon James, A Dictionary of
Economic Quotations, compilation
8 www.wikipedia.org/wiki/ilmuekonomi.(1March 2009 ) see also Asad zaman, Normative foundation
Of Scarcity, 2009,IIUI, Islamabad
9 Samuelson, P.A. and Nordhaus, W.D.,(1989), Economics, 13th ed., McGraw-Hill, New York, p.26
10. Ruffin, R.J. and Gregory, P.R. (1993), Principles of Microeconomics, 5th ed., Harper Collins, New
York,p.3, See also Perloff, Jeffrey M. (2008), Microeconomics, 5th Edition, Addison-Wesley, New
York, see Asad zaman, Normative foundation Of Scarcity, 2009,IIUI, Islamabad
11 Lionel Robbins, An Essay on the Nature and Significance of Economic Science , London:
MacMillan, 1932
4
then people would not force to make any tradeoffs among their needs and wants--and
thus, no economy.
Economics assumes people are greedy and always have needs and wants. However,
there is only a certain amount of most goods. Therefore, people are forced to choose
between their needs and wants. An individual must economize. Every decision to
produce or consume something means that people forego producing or consuming
something else. If you want to earn more money, you must work longer and harder,
which means less leisure time. If you want to drive a nice car, you must spend more
money. Spending more for a car may mean less money for the vacation you were
planning. This existence of scarcity problems, makes economists review how people
make decisions about how much they work, what they buy, how much they save, and
how much they will invest. In this approach, the human, who always fear of what to
eat and clothes on tomorrow. In a nutshell, the concept scarcity in mainstream
economic can be summarized as:
Limited Factors of Production (Resources) + (Unlimited Wants) = Scarcity
Scarcity is also causes resources have value, sacrifice is necessary to get it. As The
consequences of an unlimited human desire, while the tool is limited to the fulfillment
of desire, every sacrifice has made, or option that is not taken is considered an
12
opportunity cost. How does human make a choice among the various choices faces
by utilizing the limited resources led to the Consumer Behavior theory? With his two
basic economic principles – the cost-benefit principle and the scarcity principle.
On the other side, human also has a tendency to always get what they want, so any
economic decisions will always be guided by the interest rationalism, individualism,
selfishness, or utilitarianism, to satisfy her desire. This is the basic principle of
consumer behavior theory in the positive economic analysis. And this branch of
knowledge can be conceived in two perspectives: (a) pure positive perspective, (b)
some normal positive perspective.
In pure positive perspective, only those aspects of human behavior are analyzed
which are independent of norms or values; it is assumed that there is no normative or
value based restriction on the behavior. In normal positive perspective, those aspects
of human behavior are analyzed which are governed by some norms or values that a
society imposes on its members, and which may be in the form of written legal
injunctions or in the form of unwritten rules and traditions. We can say that Islamic
economic perspective on consumer behavior include in normal positive perspective.13
Economic Problem in Qur’anic View
Beside providing the foundational theory of resources, in which we can conclude that
Scarcity not the main problem in Economic of a human‟s life, the Qur‟an also
12 Rian C. Amacher & Holley H.Ulbrich, Principle of Macroeconomic,1986,Ohio,South-western
Publishing.co,p.26
13 M. Fahim Khan, 1995,Theory of Consumer Behavior in the Islamic Perspective, Islamic Foundation
Markfield Da‟wah Centre,Leicester UK,p.29
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