What are the Goals of the Economic Community?
First: Productive or Technical Efficiency
We assume that the community produces only two commodities – armory and food – in order to clarify the concept of productive efficiency.
At one point, it uses all its resources to produce weapons (A), and then again to produce food and express it (E).
It’s just a hypothetical case to illustrate the point. It’s impossible for the community to dispense weapons or food, since they need both.
As a result, the community won’t pick A or E, instead they’ll pick points between them, such as B, C, or D.
There’s a percentage of the weapon and a percentage of the food for each option.
Obviously, there are limits for the community that can’t be crossed in the short term, and any increase in one of the two commodities will have a negative effect on the other.
Because the community can’t increase the factors of production in the short term, if it wanted to increase the production of the weapon, it would automatically decrease the production of food.
A point inside the curve, such as point (F), doesn’t represent productivity efficiency, since it means there are broken resources that aren’t being used to meet the needs of the community, instead, it means that the community owns resources but doesn’t use them.
Any point outside the curve of production capabilities, like (H), reflects society’s aspirations,
However, with the resources currently available to society, it can’t be realized in the short term, but it may be possible in the future if new resources are found, or if new technologies are adopted.
It’s the goal of the economic community to maximize output by maximizing the use of available resources.
Second: Allocative Efficiency
Allocation efficiency is the second goal of the economic community, and it is intended to achieve production that is in keeping with the real needs of society.
Making a lot of equipment and needing wheat does not teach us anything. The production possibilities curve and the preferences curve (preferences) are used by economists,
The intersection of the two curves indicates the amount of production that is available to the community and also reflects societal preferences.
We’re talking about capitalism’s way of satisfying the needs, where it’s all up to the forces of supply and demand in the market,
Supply and demand aren’t reflecting the real needs of society because they only meet the needs supported by financial ability.
Wheat, for instance, is a necessity they have, but they don’t have the money to make it a demand.
Therefore wheat won’t be made, while perfume will be made even though they’re not essential, but they’re backed by money.
In order to solve this problem, the Islamic economic system divided production into essential, necessary, and luxury.
When picking a production, the producer has to take this arrangement into account. However, on the poor’s side,
Islamic economics has an integrated distribution system called Zakat, which provides poor people with money so they can have the purchasing power to make a purchase that is effective
Third: Distributive Justice
The basis upon which income and wealth are divided equitably between members of society and economists say that the smaller the gap between shares from the social divide, the more equitable the system.
So, it’s how revenues and costs are split up and distributed among the members, each according to their role. For example,When some workers work more hours and get the same financial return as others, they’ll feel that distributive justice doesn’t
If some workers work more hours and get the same pay, the rest of the group will feel that distributive justice doesn’t exist.
To see if there is distributive justice, we look at the expected behavior of individuals in the group they are a part of,
When the prizes and returns are distributed according to the rules set by the group, then social justice has been done.
A capitalist economy divides income based on ownership of the factors of production, such as capital, labor, and land.
Putting that together, the capital is worth the profit, the wage is worth the wages, the land is worth the rent of the land, and the organization is worth the partition.
Those who are unable to work, the disabled, or the unemployed by force weren’t considered in the consideration of ownership and work,
Here we note the uniqueness of the Islamic economic system because it has a system for redistribution called Zakat that is a cornerstone of its legislative system.
Zakat is a pillar of Islam. You can’t ignore this mechanism of redistribution.
By zakat, we transfer money from the rich “surplus units” to the poor “deficit units”, based on real need.
For an Islamic economic system, this is a fundamental feature, because Zakat is a basic building block that can’t be abandoned in any way, and it’s a major goal of the economic community.
Fourth: Economic Stability
A plan like this is designed to keep prices stable, avoid fluctuations in exchange rates, interest rates, and export prices, and keep employment levels steady.
As a goal of the economic community, economic stability is crucial to preserving the economic value of money, which in turn affects the security of long-term economic transactions.
Inflation, for example, means the value of the monetary unit decreases, which means the wealth of the individual decreases too, and it also affects their income. Fixed individuals like monthly salaries,
Contracts that extend over time, like forward sales and installment sales, will all disappear.
The economy will be negatively affected as capital will be directed to short-term investments and financial speculation, which will increase economic instability. There won’t be any direct investments.
Fifth: Economic Growth
In the economic community, we strive for economic growth, which is a goal for all human communities, because we want to improve our living conditions.
Likewise, there is a natural increase in population that requires an increase in output to keep up with the increase, and this can be done by developing the economic resources of society.
Growth means an increase in national product per capita over time, and we explain it like this:
-Using the world real to take inflation out.
-Continuous was used to exclude any economic boom that didn’t reflect the rise of the economic system.
Per capita instead of national product since the national product might increase due to population growth without affecting the individual’s share.
As we observe reality, we see that developed countries often achieve a lot of the goals of the economic community.
What do you think about how well your country did with these goals?
source: theboomoney
