(The author can be contacted at farby@cyber.net.pk)
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 OIC1
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:
1. Abolishing currency value system and maintaining
one-to-one relationship among currencies.
2. Setting equal prices of goods and services in all
Muslim countries.
3. Setting equal wages and salaries in all Muslim countries.
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 countries.
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 means2.
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 determination3.
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.
|