Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
Economics deals with financial activities of human beings. It has its own natural flow based on multidimensional financial activities of people. But this natural flow depends on a number of factors like human behaviour, cultural heritage, national tradition, religious bars or obligations, social and political stability etc. Some control, motivation, manipulation and intervention of the controlling authority are inevitably needed to make an economy welfare-oriented.
Welfare economics looks at the allocation and distribution of resources and how it affects an economy's overall perception of well-being -- thereby creating the highest possible social satisfaction among its members. It also works in contrast to capitalist ideals. In the capitalist economy, maximisation of profit is the main goal of the businessmen. They try to uphold the growth of their profit earnings by any means. Capitalist economy creates a consumer society where people are always self-centred and remain busy fulfilling their desires at any cost. Government intervention regarding economic matters is fully rejected in pure capitalism. Focus is instead put on individual choice, accomplishment and development as well as the pursuit of personal wealth. The theory behind capitalism supports that the society will experience an associated benefit through the pursuit of personal wealth. But such theory is seen as pretty much inhumane and costly.
As a result, we find the steadiest expansion of income gap across the world. According to recent statistics, the globe's richest 1.0 per cent people own half the world's total wealth. This information has been revealed in a new report highlighting the growing gap between the super-rich and everyone else. According to Credit Suisse's Global Wealth Report published recently, the world's richest people have seen their share of the globe's total wealth increase from 42.5 per cent at the height of the 2008 financial crisis to 50.1 per cent in 2017. Similarly, a recent study conducted by Bangladesh's Centre for Policy Dialogue shows that top five per cent of the country's income-earners in 2016 earned 121 times more than the bottom five per cent, in a jump from 31.5 times in 2010, which had quadrupled during the interim period. These findings are clear indication that despite some better performance in certain development indicators, income and asset inequalities continue to exist and may emerge as a big threat to the overall economy.
A socialist economy, on the other hand, fully abolishes the ownership of wealth individually and all means of production are owned by the state or the government, and no individual can hold private property beyond certain limit. Therefore, it is the government that utilises these resources in the interest of social welfare. But the existence of rich, poor, privileged, underprivileged, upper class, lower class etc. in society is a natural phenomenon. The matter here is that the people of each of these status must be logical in behaviour, rational in attitude, respectful to mutual dignity and humane to make life of the poor, underprivileged easy, peaceful and comfortable. Otherwise, human beings can never be defined as the greatest creation of the universe.
The most logical target here should be the equitable distribution of wealth. Wealth and resources are limited and therefore, should not remain under the control of a very few people and also should not go under full control of the state. In both cases, some human complicity, such as injustice, oppression, arrogance and arbitrary attitude play a vital role, which has already been proven.
Some analysts assert that famines are crimes of either commission or omission. They think that human decisions and actions determine whether a crisis deteriorates to the level of a full-blown famine. For many years, experts believed that famines were caused by a shortfall in food availability. Then in 1981, economist Amartya Sen published Poverty and Famines: An Essay on Entitlement and Deprivation, which showed that famines actually occur when food is available, but some groups are unable to access it. Mr Sen has shown that famine takes place not due to shortage of food, but it's due to failure of entitlement. A person suffers from failure of food entitlement when his entitlement set does not contain enough food to enable him to avoid starvation in the absence of non-entitlement transfers, such as charity. Thus famine occurs. Though this view of Mr Sen was based on analysis of the Bengal famine that occurred in the year 1943, he subsequently analysed the contemporary famines of Asia, Africa and generalised his conclusion.
Unlimited consumption and unscrupulous wastage of food and excesses in expenditure for unwarranted arms race, excessive luxury, etc are the worst enemies of today's economy. The costs of reducing mortality rates by two-thirds, improving maternal health as well as combating AIDS, malaria and other major diseases, are estimated to be US$60 billion a year. Meanwhile, $60 billion is approximately the cost of buying and operating two nuclear ballistic missile submarines. The causes of food waste or loss are numerous and occur at the stages of production, processing, retailing and consumption. According to a report presented by the Food and Agriculture Organisation (FAO), roughly one third of the food produced across the world for human consumption every year, which amounts to approximately 1.3 billion tonnes, gets lost or wasted. Food losses and wastes amount to roughly $ 680 billion in industrialised countries and $310 billion in developing countries. By reducing wastages significantly, food safety could be ensured for millions of more people in the world.
Meanwhile, Zakat is an integral part of Islamic economy. Many people consider Zakat simply as charity, which is absolutely a wrong idea. According to the norms of Islam, Zakat is mandatory for every eligible Muslim. This is the fundamental right of the poor or underprivileged. The beneficiaries of Zakat are strictly specified. Lifting up those specified groups can play a leading role in removing hunger, poverty and illiteracy from the world. An estimation shows that if those eligible give Zakat in Bangladesh properly, there might be a fund 30 per cent to 50 per cent bigger than the amount of income tax being realised from the individual income taxpayers in the country.
A study conducted recently by the Islamic Research and Training Institute (IRTI) and Thomson Reuters estimates that Zakat donations could contribute significantly to alleviate poverty in countries like Indonesia, India, Pakistan, Bangladesh, Malaysia, Singapore and Brunei, which together account for 45 per cent of the world's population.
Human nature, behaviour, way of thinking, lifestyle, values, outlook etc. have a huge impact on economic activities and even on economic theories. The principle of economy should not be based on crass materialism. It should, instead, be based on humanity and compassion. Fiscal policy, rules and regulations and, above all, political will favouring welfare-oriented economy can play the most effective role in implementing equitable distribution of wealth in society.
Noore Alam Siddiqui, MBA in Banking & Insurance is a, Faculty of Business Studies, Dhaka University.