The Definition of Equilibrium in the Perspective of Islamic Economics

Definition of Equilibrium – The theory of consumer behavior in economic studies states that consumers always want the maximum level of satisfaction which is illustrated by an indifference curve. Consumers in a conventional economy assume a utility maximization assumption ( always aiming to obtain satisfaction in their consumption activities ).

Satisfaction is only limited by budget line , because in conventional economics economic motives are based on wants). It is the meeting between the budget line and the indifference curve (desire) that produces maximum satisfaction and is said to be the equilibrium point (Reksoprayitno, 2007: 180).

Abdurrazaq Nawfal once wrote a book entitled al -I’jaz al-Adabiy li al-Qur’an al-Karim . One of the discussions contains four forms of balance and harmony in the number of words in the Qur’an , one of which is the balance between the number of words and their antonyms. For example, the words al-hayah (to live) and al-mawt (to die) both add up to 145 times.

The words al-naf’ (benefits) and al-madharah both have 50. Furthermore, the words al-har (hot) and al-bard (cold) are mentioned four times. Likewise the words as-shalihat (goodness) and as-sayyiat (ugliness) is mentioned 167 times respectively. The words al-kufr (infidel) and al-iman (infinite form) is mentioned eight times (Shihab, 1992: 29 30).

The compatibility of the number of words above to a certain degree is proof of the authenticity of the Qur’an. But more than that, the harmony of the words used in the Qur’an actually provides a valuable lesson for humans that life requires balance. Balance in essence is part of sunnatullah . If the balance is not maintained , what will happen is the destruction of nature and humanity itself .

Referring to the whole concept in the Qur’an , there are three equiliubirium (balance) that humans must do, namely a balance between the life of this world and the hereafter, a balance between physical and spiritual needs , and a balance between individual and social interests.

Definition of Consumer Equilibrium

Conventional economic studies cannot forget the thoughts of Adam Smith in discussing consumer equilibrium . Smith has studied it since it was still a shadowy concept in the context of the division of labor . According to Smith: ” The general industry of the society can never exceed what the capital of the society employs “. This is due to: ” Every individual is continuously exerting himself to find out the most advantegous employment for whatever capital he can command “.

Smith in the next paragraph says: ” But the annual revenue of every society is always equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value “.

Based on the explanation in the Collins Dictionary of Economics , equilibrium is explained as a state of balance with no tendency to change , while the definition is according to the Microsoft Bookshelf Dictionary (2000), namely:

  • A condition in which all acting influences are canceled by others, resulting in a stable, balanced, or unchanging system ;
  • Mental or emotional balance; Poise ;
  • Physics . The state of a body or physical system at rest or in unaccelerated motion in which the resultant of all forces acting on it is zero and the sum of all torques about any axis is zero;
  • Chemistry. The state of a chemical reaction in which its forward and reverse reactions occur at equal rates so that the concentration of the reactants and products does not change with time.

The word equilibrium is actually adopted from the Latin ” aequilībrium ” which starts with aequi which connotes equi , and lībra which means balanced ( balance ), stable, not moving, and or not changing. As according to the Collins Dictionary of Economics equilibrium is understood as a state of balance with no tendency to change .

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The word equilibrium in Indonesian is usually translated as balance or equilibrium and in Arabic it is known as tawazzun. Equilibrium concept (equilibrium ) according to mathematical economics refers to a point of intersection (or point of intersection) of the confluence of two opposing countervailing forces , for example between the demand curve vis-à-vis the supply curve, between the indifference curve vis- à-vis the budget line, between the demand curve marginal cost vis-à-vis the marginal revenue line , etc.

The point of intersection or tangency of the two curves seems to have become a magical point , which dictates the two countervailing forces to compromise to an outcome , which is called a certain equilibrium point . Consumers are parties who use consumption goods and services .

Consumer behavior can be divided into three stages, namely:

  • Consumer preference, which is a first step that explains the reasons for how someone chooses a certain item over other types of goods;
  • Budget line, namely consumer considerations regarding price factors and decisions according to the income they have. Merging consumer preferences with the budget line will determine the steps to be taken by the consumer;
  • Consumer choices, namely the steps taken by consumers after knowing their preferences and income , they choose a combination of goods that can maximize their needs ( Pyndick and Rubinfield, 2002: 62) .

There are four known principles to assess the reasons consumers choose an item, namely:

1. Completeness ( Completeness ) _

This principle says that each individual can always determine the state he likes when he is faced with two situations. For example, if consumers are faced with two products A and B, the choices that occur are A is preferred over B , B is preferred over A, A and B are both preferred, or A and B are both disliked. This preference ignores the cost factor to get it.

2. Transitivity _( Transitivity )

This principle explains consumer consistency in deciding or determining alternative choices for several products. For example, a consumer says that item A is preferred over item B, item B is preferred over item C, of ​​course the consumer will say that item A is preferred over item C.

3. Continuity ( Continuity )

This principle explains that if a consumer says that item A is preferable to item B, any situation that is close to item A is preferable to item B. This shows the consistency of the consumer in choosing an item that he will later consume.

4. T he More is the Better ( More is Better )

This principle explains that if a consumer consumes more goods, the consumer’s satisfaction will increase. This can be explained through an increasing indifference curve that will provide better satisfaction, so that consumers will continue to increase their consumption in order to achieve maximum satisfaction , even though they are experiencing a budget constraint . ) (Karim, 2007: 64 – 65) .

Consumer Equilibrium in Islamic Perspective (Surah Al-Furqan Verse 67)

The unity approach approach initiated by Anas Zarqa’ seems relevant enough to understand Surah Al-Furqan verse 67 from an economic perspective. According to the study of the Ulumul Qur’an , this verse is included in the group of makkiyah verses . Etymologically, al-Furqan comes from Arabic, which means a distinction taken from the beginning of this letter. The word al-Furqan here refers to the book of the Qur’an itself. It is named so because the Qur’an is the difference between right and wrong, between right and wrong.

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The main contents of this letter are talking about faith, laws, stories , and topics about natural events as proof of the oneness of Allah SWT. After the previous verses talk about the relationship between Allah SWT and creatures and how to be an ideal servant, then the human nature of property and ethics that should be held by a Muslim are described.

This verse is also an indication that there is no prohibition for a Muslim to have wealth. One should be able to control wealth, not wealth that controls people. In full, Surah Al-Furqan verse 67 reads as follows.

” And those who spend (wealth), they are not excessive, and not (also) stingy, and are (spending) in the middle between these ” (QS Al-Furqan: 67).

Judging from the paragraph above, there are important keywords to be used as a basis for building a theory of consumer equilibrium , including:

1. Infection

According to ath-Thabathabai, the word infak terminologically means “to issue wealth and spend it to meet the needs of oneself and others” (Ath-Thabathabai, tt: 239). Unlike what we often understand, the term infaq is always associated with a kind of contribution or donation. This term in the Qur’an is still very common. Spending for good, donations, or something that is for oneself, even consumptive desires and needs, are all included in the term infaq.

2. Israel

The word infak is the noun form of asrafa-yusrifu which means al- khuruj ‘an al-had (out of bounds). Israf in relation to infak is interpreted as an attitude of going beyond what is supposed to be in using wealth (Ath-Thabathabai, tt: 239). The word israf in the Qur’an is mentioned 23 times in different contexts, such as excessive actions related to food and drink, excessive self-esteem, charity, and war and power.

3. Qatr

The word qatr is the noun form of qatara-yaqturu which means “to be too frugal in spending wealth (Ath-Thabathabai, tt: 239). This word is the opposite of the word israf which can also mean giving less than what can be given according to the circumstances of the giver and recipient (Shihab, 2002: 533). This word is also equivalent to the word bukhl or bakhil in Indonesian. More broadly, these two words can mean withholding from obtaining or removing from what is reasonable and sufficient.

4. Qawam

This word in the verse tarkib is tanshish in the sentence “if they spend their wealth not excessively and not stingy”. The meaning of the word is ifrath wa tafrith (prohibition of transgression ), namely excessive and miserly. This attitude is called tawassuth ( middle) or ‘adl (fair) (Ath- Thabathabai, tt: 239).

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This is an explanation of the meaning and meaning of equilibrium that you need to understand.