On the other hand...

On the other hand, economic theorists cannot determine as to whether or not any transactions under free competition have been carried out on a just and equitable basis of meeting the people's socioeconomic needs. They can measure and quantify supply, demand and price trends, as a part of an assessment of the existing free market conditions only. The protagonists of Islamic school of economic thought may not be able to assess the same in the manner of pure economists.

A classical economist, David Ricardo (1772- 1823), for instance, theorised that a worker's wages, offered independently and not under any government prescription, would not generally attain a level of sufficiency (that leaves a surplus above his living wages - Ed.). Any exception in this regard are said to be of a temporary nature, so that these revert to their earlier state of equilibrium at a below sufficiency level.

If and when the normal wage level goes up, one eventual consequence will be excessive supply of labour resulting from earlier marriages of workers in favourable conditions of earning. This, in turn, causes an inadequacy of the positions and wages offered. Thus, according to Ricardo, the tendency of wages is to return always to a lowest possible level.

He implies that low wages increases the mortality rate and eventually reduces the number of workers; so as to raise the wage level before it comes down once again. He calls it the "iron law" of wages. Ricardo's theory of wages is based on the natural and social realities that tend to stabilize wages at a low and insufficient level. He theorized on the basis of what was happening in reality. He did not propose any method to basically improve the situation.

His investigation was confined to the limited scope of classical economics. In contrast, any socioeconomic policy-maker can be expected to conceptualize the phenomenon in the overall regulatory context of meting out socioeconomic justice. Yet another case in point is that of production. Economic theorists examine the factors of production, including the relevant specialization and techniques.

They try to identify the positive and negative influences affecting production, in theoretical terms such as of diminishing returns.