Allah SWT admonishes against waste in the Holy Quran: "O children of Adam! Wear your beautiful apparel at every time and place of prayer: eat and drink: but waste not by excess, for Allah loves not the wasters." (Qur'an 7:31) Allah SWT advises us to be moderate in our spending in the Holy Quran: "Those who, when they spend, are not extravagant and not niggardly, but hold a just balance between those extremes....." (25: 67)
Centuries later economists have figured out that the economy is all about demand and supply; and what is demand but a projection of our wants and desires through spending. Without delving into the theory of marginal utility we can postulate that our wants are driven by the satisfaction we receive from consumption. How does it work? As population increases, there are more mouths to feed. The demand for bread being driven by the satisfaction of living!
The wants of prehistoric man necessitated the invention of the barter system and today it is modern man's wants which form the basis of allocating resources, determining prices and driving international trade. Fundamentally, markets are considered to be efficient due to the nexus between demand and supply.
It was because of this principle that Malthus propagated his doomsday scenario which broadly envisaged that as population grew geometrically scarce food will result in chaos. While technological innovations in agriculture proved him wrong the question is how long technology can delay his predictions. With world population crossing 7 billion there are analysts who believe that future wars will be for food and water. Ironically we still seemingly struggle with this insight since in spite of vigorous drum-beating by the analysts we continue to drag our feet on upstream construction of dams by our neighbours.
While speculation may have contributed to rising commodity prices, as the famous saying goes, where there is smoke there is fire! The speculators will continue to rake in profits fuelled through creating perceptions of commodity shortfall. Until additional deposits our discovered and mined commercially, rising world demand will ensure that commodity prices will continue to rise on a year on year basis. Policies pursued in the belief that commodity prices will ease up in the future are bound to fail. If we thought sugar prices were atrocious this year, they will be considered criminal in future. The vagaries of the market will ensure that the poor continue to struggle for their simplest pleasure, sating their sweet tooth.
International trade owes its existence to our wants. If wheat is scarce in a country the populace can either choose to pay more, or in the worst case scenario starve, or can import it from a country where wheat is surplus, at cheaper prices. However a country will only export wheat to us if they in return need something from us. This basic exchange in fact, spurred Ricardo to articulate his theory of comparative advantage, which broadly recommends that countries should focus on producing goods where they have a comparative advantage, efficient utilisation of resource, and import everything else.
The question for us is, whether we should grow our own wheat or import it from elsewhere? Notwithstanding the illusion of self-sufficiency, precious water and land resources can be utilised for more lucrative crops. It may be a surprise for most to learn that Egypt blessed with fertile land around the Nile, imports its wheat.
It is however pertinent to note that countries which export to us don't need our rupee. The only place they can spend it is in Pakistan or they can use it to pay for imports from our country. In case we have nothing to export to them it will give rise to a trade imbalance. This effectively means that we either curtail our wants today, or we will by necessity have to export more in future to extinguish our trade debts. Let there be no doubt, trade can only be balanced by trade.
In the interim we can buy dollar which is the international currency to pay for our trade imbalance and keep praying for a more prosperous future. Unfortunately, since no one needs the rupee, we have to pay more and more to get dollars, continuously depreciating our currency. Trapped in a vicious circle where we can only pay for our imports by acquiring USD through an ever-depreciating rupee, which no one wants, we knock on IMF doors.
With no respite in sight due to absence of exportable surplus, IMF amongst other things advises us that we are left with only one option, Foreign Direct Investment (FDI). In essence we end up selling up our assets to satisfy our debts culminating out of our wants! The above scenario is analogous to common folklore where the poor farmer mortgages his small parcel of land to get funding for his daughter's wedding. Notwithstanding the happy endings in our Punjabi cinema, in the real world the farmer eventually gets thrown out of his land and his only source of sustenance vests with the feudal lord thereafter.
By now the reader should also find the scenario eerily familiar with what is happening in Pakistan. Without elaborating upon additional adverse impacts of a declining rupee, hyper-inflation for one, it can be concluded that we are selling off our assets to satisfy our debts. What eventually happens once we have sold of everything is beyond the realm of logical prediction and I decline to conjecture thereon.
And all this because we wanted more!Let us for a second revert to the top of this article to again read the verses of the Holy Quran. Has not Allah SWT advised us to curtail our wants? If we were only importing the necessities of life, wheat as in the given example, it would not be extravagant. Unfortunately this is not the case. In fact Muslims have been advised to spend, but in moderation, which in essence is the key factor for economic growth and stability.
There is even a local dictum probably coined pursuant to the tenets of Islam, which suggests that Chadar deikh ker paoon philanay chayee. The current global crisis lends further credence to the principle since the subprime disaster traces its origin in excessive spending through borrowings. Western economic principle that unbridled consumerism will drive economic growth has been proven wrong.
Is it not then time that we control our "luxurious wants" at least? Do we really need to drink ten cups of tea everyday with three spoons of sugar every time? Or have we decided that our comfort takes precedence over our national and personal pride.
I fully support trade; after all it was the chosen profession of our beloved Prophet PBUH. I am however vehemently against trading the future of Pakistan. Unfortunately, I realise that on an individual basis each of us would want others to curtail their wants first. Accordingly our government will need to pick up the gauntlet.
Maybe it is time that we looked at our national wants more carefully on a macro basis. There is a need to monitor imports and discourage luxurious wants through a carefully designed taxation framework. We can't always have more; the time has come to curtail our wants!