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Consumer Behavior

Applied to the consumer the main conclusions have been as follows:

  1. Abstinence from prohibited items of consumption (e.g., pork, wine etc.,) hence no market demand and no resources allocated for their production (ignoring for the sake of simplicity, the non-Muslim consumer's demand).
  2. Moderation in consumption resulting in avoidance of waste and fall in the demand for luxury goods. The state is envisaged as ensuring a production mix that prevents resources from being spent on luxury items, which the conditions of a particular society may not allow.
  3. Consumer behavior is oriented toward a welfare function which covers the well being in life after death implying a concern for the welfare of others.
  4. The rationality assumption is retained as modified in accordance with (3) above.
  5. Since the market mechanism serves only those who have purchasing power, consumer needs which are not backed by purchasing power, especially when the needs are basic for survival, necessitate social action. This may take anyone or more of the following forms:
    1. Transfer of purchasing power from the rich to the poor, directly or through the state.
    2. Subsidizing the production of necessities in order to increase their supply and/or bring down their prices.
    3. Price control, rationing and other direct means of need fulfillment.

These conclusions relate to the third component of Islamic economics according to our scheme. Contributions relating to the first component; ends and values, abound in the literature. Analysis of consumer behavior as it is, which corresponds to our second component, does not make any significant departure from conventional analysis. As a matter of fact very little attention has been paid to it till now despite the general feeling that conventional analysis leaves out altruistic behavior and influence of custom and tradition.


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Regarding the transformation of the existing reality into the Islamically desirable order emphasis is placed on education and inculcation of Islamic values in individuals, voluntary action on part of concerned groups and institutions in the society, and state action by way of information, direction, planning and direct intervention. Further details are lacking due to the neglect of the second component: analysis of existing consumer behavior in Muslim societies.

 

Source: Dr. Muhammad Nejatullah Siddiqi, Economics An Islamic Approach. Republished with permission.