Series of Answers by the Eminent Scholar Ata bin Khalil Abu al-Rashtah, Ameer of Hizb ut-Tahrir
To the followers of his Facebook page "Fiqhi"
To Abu Muhammad al-Sheikh Hamid
Question:
Assalamu Alaikum Wa Rahmatullahi Wa Barakatuhu,
May Allah bless you, our noble Sheikh, and grant you help and victory.
I have some questions regarding the concept of value (qimah). Value is the amount of utility (manfa’ah) in a thing, noting the factor of scarcity (nadrah).
What tools do I rely on as an expert in a specific commodity to determine the benefits present in that commodity?
Is the determination of benefits done by describing the benefits only, or are they evaluated by gold, silver, or effort? If possible, please mention an example.
Do these benefits present in the commodity have a value, and how is it determined?
How do I deal with the "noting the factor of scarcity" in determining value, and what is the relationship with it?
Is the study of value part of the Economic System or Economic Science?
What is the importance of studying the subject of value, and what benefits result from its study?
Finally, may Allah bless you, reward you with goodness, and support you with a near victory. Indeed, He is the Guardian of that and Capable of it. Allahumma Ameen, Ameen.
Answer:
Wa Alaikum Assalam Wa Rahmatullahi Wa Barakatuhu,
1, 2, and 3- Regarding the knowledge of value and the tools relied upon to determine it, they are the utilities for the human being as a human being in terms of fulfilling his basic needs. This also applies to materials that have intrinsic value, such as gold and silver. Values are usually determined by comparison to another commodity and not by the amount of its price (thaman). For example, the value of a loaf of bread exceeds the value of an intoxicant, even if the intoxicant is more expensive in price, and so on.
This can be explained as follows: The real value of a commodity is the amount of utility in it... and it is constant and does not change because its utility exists in the commodity itself. If we want to estimate the value in a transaction, this is called the "actual value"—meaning that which is referred to in litigation—we estimate it by a commodity known to both parties at the time of estimation, or by a currency respected by both parties at the time of estimation that has intrinsic value like gold or silver. So we say: it is equal to such-and-such kilograms of wheat, for example, or equal to such-and-such grams of gold, or such-and-such silver dirhams. This means the estimation of value must be in a material that has utility in itself; thus, value is not estimated by what has no intrinsic utility, such as paper currency, for example... This estimation is done according to a comparison of the utility of the commodity under discussion with the utility of the things we estimated it with at the time of estimation. Whether the real value or the actual value is under discussion, it remains constant and does not change from the time of estimation later on, because it is a value...
4- As for how the "factor of scarcity" mentioned in the definition is handled and its relationship to determining value, we have previously answered this issue and we repeat the text of the answer to you:
(Defining value as the amount of utility in the commodity while noting the factor of scarcity is indeed correct. Not considering the factor of scarcity as part of the estimation is also correct. As for why it was mentioned, here is the explanation:
Observing the factor of scarcity is not a part of the estimation itself, but rather for the purpose of care, concern, and preservation of the value. For example, if you had a loaf of bread and you estimated its value in terms of the utility existing in it—its components, characteristics, uses... and its existence was scarce—you would be careful with it; you might eat a quarter in the morning and another quarter in the evening, and so on the second day. If a crumb fell from you, you would hurry to pick it up... But if this loaf was available to you along with many other loaves, then despite the fact that the intrinsic utility in it is the same—meaning its value is the same—you would not be as careful or concerned with it as your concern for the first one. You might not even pick up a crumb if it fell, and you might eat it and another like it in one day. Therefore, the book added to "noting the factor of scarcity" during the explanation the phrase "at that time." It says at the end of page 33: "Because the value of the commodity is only estimated by the amount of utility in it at the time of estimation, noting the factor of scarcity at that time," i.e., the time accompanying the value when it is estimated. Thus, value is the utility in the thing while noting the factor of scarcity for a reason other than the estimation of the value, but rather for the preservation of that value and caring for it due to the difficulty of obtaining its like if it were lost due to its scarcity. This observation is important to avoid wasting values and instead use them in measure. Furthermore, noting the factor of scarcity is useful in comparing the stability of values and the fluctuation of prices—rising and falling—according to the factor of scarcity. [Dated April 21, 2007])
5- As for whether value is part of the research of the Economic System (An-Nidzam al-Iqtisadi) or Economic Science (Ilm al-Iqtisad), this differs according to the context of the research. If it is from a scientific perspective regarding value and price—meaning the distinction between them—then it is a study in Economic Science. We say: Value is the amount of utility in the commodity itself, whereas Price is the amount paid for the commodity upon purchase regardless of its utility or lack thereof. This is merely a comparison in terms of definition.
However, if the research is from the perspective of transactions, then it is part of the Economic System. For example: if a man borrows a specific commodity whose value is one hundred gold dinars and it is recorded in the contract as such, then upon repayment, he may return the same commodity or return one hundred gold dinars if the item was destroyed... This is because the value is constant and does not change with time and place. But it is not permissible for him to buy a commodity of the same type for him with the hundred, because the price changes and it is not a condition that the hundred will buy the exact same commodity... But if he recorded in the contract a specific commodity whose price is one hundred gold dinars, then upon repayment, he may return the same commodity, and if it is destroyed, he can give him one hundred dinars or buy him a commodity of the same type for one hundred dinars, whether it is identical, better, or of lesser quality. This is because the price is not fixed but changes according to place and time. However, both parties must understand the meaning of "Value" and "Price," otherwise the matter would require arbitration or a judiciary. For your information, value is only estimated by commodities that have utility or currency that carries intrinsic value, and not by paper currency, for example, because values are constant. As for the price, it can be estimated like value and also by paper currency because prices change. Therefore, when estimating by price, it is permissible to mention currency in gold, silver, or paper currency...
6- As for the importance of studying the subject of value, it comes from the difference between the constant value in the utilities present in the commodity for the human being in terms of basic needs and for materials with intrinsic value, and the price whose estimation—in terms of being high or low—does not depend on the utilities present in the commodity. Perhaps by reviewing the topic of recording the dowry (mahr) by value or by price mentioned in The Economic System, and the example mentioned above under number (4), you will realize the importance of studying value. It makes economic research focus on these two matters:
Making economic research focus on values—where value relates to the utilities that satisfy the basic natural needs of man and to materials that carry intrinsic value—this makes the concern directed toward the useful material. In other words, it makes the research focus on what benefits people, so it becomes the primary research, and the research of prices becomes subordinate to it. Thus, one does not strive for a harmful commodity even if it is high in price because it is devoid of value...
Whereas making price research the basis and the research of values subordinate to it leads to a concern for high-priced commodities and considering them of high value even if they are harmful materials like intoxicants and drugs, because they have high prices and generate large income...
Thus, focusing the economic vision on values, with prices being subordinate to these values, spreads goodness and tranquility among people. Whereas focusing the economic vision on prices, with values being subordinate to these prices, makes high-priced goods appear as high-value goods even though they may be harmful to society; consequently, this vision spreads evil and misery among people.
I hope this subject has become clear to you, Allah willing.
Your brother, Ata bin Khalil Abu al-Rashtah
22 Sha'ban 1438 AH Corresponding to 19/05/2017 CE
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