An Islamic Approach to the Role of Consumption Behaviors in Emerging and Continuing of Economic Crises

The most important behavior of individuals and households is consumption. As the consumption compromises a considerable part of GDP in most of the countries, any small change in the quantity and quality of it will have a huge impact on the growth and development of the country. In conventional economics, consumption analyses and theories only deal with the market variables such as prices and incomes and the role of non-market variables, and the psychological and cultural ones, are ignored. Non-market variables such as psychic expectations of consumers about the future of the market, precautionary behavior, imitating behavior, consumer’s confidence in the market and caring about relative consumption have substantive impacts on the level of consumption so that they cause consumption either to be increased more than enough in booms and generate bubbles, or to be declined more than enough in recessions and make them longer and more intense. In designing its economic system, Islam has directed and conducted innate incentives and motivations and also posed legal and ethical constrains. In doing so, Islam has tried to manage consumption behaviors so that it not only prevents extensive economic crises but also provides the conditions for advancing the economy. Among the Islamic policies which control the troubling part of the consumption and provide the necessary demand for economic growth are: ethical settlement of the incentives before entering the market, prohibiting prodigal consumption and planning to bring all the people to a Kafaf level of consumption, prohibiting Riba and not recommending to debt-financing the consumption, and finally, introducing divine incentives for working and making money.