The Future of the Globe:The Mahdavi Perspective in Divine Economics Framework
 

"If Heaven were a thing that money could buy Then the rich would live and poor would die" (John M. Legge)

What is future of the global economy? Of course, this is an unanswerable question. Naturally, future is, somehow, unpredictable. So we cannot know stability, sustainability or what so ever the global economy is, over the medium and longer term, Krueger (2005). Hence we have to work with what we know, from our previous experience, accumulated knowledge about how to reduce, though not eliminate, the impact of unexpected and adverse events.

We know that prudent macroeconomic policies-a sound framework aimed at delivering, and maintaining, low inflation and effective fiscal control-offer the best prospect for sustained rapid growth that brings rising living standards and poverty reduction. However sustainable economic growth and poverty reduction are not possible without reducing income inequality and promoting social justice and good governance.

The social injustice, poor governance, income inequality are the contemporary issues that currently the countries are facing. There are different ways, present in the literature, to deal with these issues. A structure of incentives (social, economic, moral) can be utilized to solve these problem.

The present study highlights the above mentioned problems could be solved in an economy with faith-based system. Economic agents cannot be rival if they Faith in God. Similarly the individuals, while utilizing resources, consider the life-after-death, (Hamdani 200---). So in a world of social justice, good governance, equitable opportunities, that is quite possible in faith-based system, sustainable economic growth, happiness, improvement in life standard can happened. So we can say that all these characteristics would be there in the era of social justice after the appearance of the Imam-e-Zaman.

With this background following are the objectives and organization of this paper.

Objectives

o To identify the deficiencies in the current economic theories.
o To briefly highlight the study of the economics of future.
o To identify the areas of study for equitable distribution of resources, opportunities, welfare of the globe and ideal governance.

Organization of the Study This study is an attempt to highlight the importance of economics of future in faith based and Mahdavi perspective. In the introduction its importance and objectives have been discussed. The brief sketch of Economics in different perspectives pertaining conventional, non conventional, Islamic and divine economics have been elaborated. The scope of Islamic economics is wider than conventional economics while divine economics has wider scope than Islamic economics. Most of the drawbacks of conventional economics are solved in divine economics. The economics of future in faith based framework has been presented in the third section

2. Economics in Different Perspectives

Economics has been discussed by a certain economists in different ways. Different points of views are given about interpretation of economics. Major views on economics such as conventional and non conventional; including Islamic economics and divine economics are described below.

2.1 Conventional Economics

The evolution of conventional economics started with the definition by Adam Smith as science of wealth, Marshal defined economics as a science of welfare while Robbins defined economics as a science of scarcity. Later on two broad definitions of economics one associated with JM Keynes & Schumpeter that "economics is a set of tools, a way of approaching practical problems and seeking a solution to them". And the 2nd associated with Hayek & Samuelson that "economics as a source of answers to every human and social problem" this later definition is known as a rational approach.

Many theories of decision making of economic agent have been presented by conventional economists in the economic literature familiar with the rational choices. The latest are the robust econometric models like AIDS, Rotterdam, Stone's estimation, Leontiff, Tran- slog etc. In the real world countless variables interact each other which are kept in the basket of ceteris paribus that causes many deficiencies in the conventional economics such as:

i. Conventional theories are quasi representative of the real world.

ii. Non Walrasian equilibrium exists in these theories regarding general equilibrium of the economy.

iii. These theories do not provide optimal resource allocation to the economic agent for decision making.

Having aforesaid deficiencies in the conventional economic theories, most of the world economies are not running along the steady state path and are facing very serious economic problems like hyper inflation, serious level of unemployment, depression and poverty, exploitation etc. Economists worked on many aspects of human behavior in the different scenario, such as social, religious, political, psychological etc. The eminent works in this regard were made by Barro and Mc Cleary (2003), Azzi and Eherenberg (1975), Iannaconne (1990, 1992, 1998 & 2000), Hamdani (2004) and Shah (2007). Understanding of human being is rather a complex phenomenon which can better be studied in holistic framework, so only conventional economic interpretation of individual seems incomplete reflection of human being [Lucas 1988, Romer 1986, Coleman 1990, and Schmid 2003].

2.2 Non Conventional Economic Approach.

Deficiencies in the conventional economic theories have been noted and attempted to be made up by a number of economists. Deaton (1980) observes "the results found of conventional economic theories do not speak of real world situation". George (1980) formulated a system for capitalism based on biblical morality and concluded that in the present age continuing economic crisis, moral and religious principles must be infused into the economic system. Non conventional economics is viewed in different perspectives such as social, psychological and religious.

Human history shows that religion has remained dominant factor in the social, economic and other activities of human being. Many studies show that different religious profiles may have different life style from each other [Pencavel, 1986; Azzi and Ehrenberg, 1975, Hamdani 2004, Shah 2007]. The conventional economists ignored the religious effect of the behavior of economic agent in the decision making that is why according to some economists, the world economies are not running along the steady state path and are facing very serious economic problems.. Human beings have been deeply involved in or following any of the divine religion in either way.

The history of human beings shows that individuals were getting guidance from divine religion and developed their beliefs in diversified manner. The faith based economics have been discussed by different economists according to religious beliefs and practices The Christians, Jews and followers of other divine religions follow sources of their divine religions. The Muslims draw their guidance from their divine religious sources such as Qura'n etc.

2.3. Islamic Economics

The difference between the conventional and Islamic economics is the behavior of the economic agent in its economic activities on the basis of the concept of two lives: life on earth and life after death (Ahmad, 1980). All divine religions in general and Islam in particular the belief in life after death and the Day of Judgment have significant effect on decision making process of economic agent.

In conventional economics all the economic activities and its benefits are limited to the life on earth while Islamic economics has wider scope in time as well resource allocation process for decision making the life on earth and life after death which is an eternal. "The concept of two lives, in fact is like two phases. The first phase is transitional which begins with the present life on this earth. All of its material conveniences and pleasures will com to an end on an appointed day. From here the second phase starts the life hereafter which is eternal and endless in terms of life and its pleasures and possessions. This concept of two lives is important to understand in order to explore economic teachings of the Qura'n (Ahmad, 1980)".

The people believe that they will be given another life which will be eternal after the death on earth and they are accountable about the deeds made on earth life upon which reward will depend in shape of punishment or Falaah. The deeds during the life on earth are the use of worldly God given resources. This belief gives entirely different perception about planning horizon to the economic agent for the decision making as a consumer, producer or as a businessman. Considering that life on earth is not full life cycle but also includes life after death. "In their wealth there is known right for those who ask for it and those who have need for it". The Holy Qura'n [70:25-25].

"Have you considered, what you till? Is it you yourselves Who make it grow, or is it We who make it grow?" The Holy Qura'n [56:63] The whole of the universe is created and controlled by One God, is the basic core Islamic belief. He created man and appointed him His vicegerent on earth to fulfill certain obligations. The covenant with God governs every aspect of life. The obedience to Allah is required not only in worship, but also in economic activities, even though it is at the cost of any benefits, because these apparent benefits may go against the interest of the society.

The obligations are neither so exhaustive that they leave no role for human intellect to play, nor are they so ambiguous that they leave life at the whim of human perception and desire. Islam promotes a balanced approach to human life. It has left mankind the freedom where it can take decisions on the basis of reasons and on the other hand, Islam has subjected human activities to a set of central principles, which cannot be violated on any grounds of expediency. Realizing limitations of school of thoughts of Islamic economic, a number of economists elaborated faith based economics for a wider scope. Thus they introduced the concept of divine economics.