Be and It is: The Economics of Kun Fayakun

"Kun Fayakun" from the movie "Rockstar" has been one of my favourite songs. For a long time, I was not aware that Kun Fayakun is a Qur'anic Verse, and its literal meaning is, "Be, and it is". This alludes to the creation of this world. There was nothing and when God commanded, there was everything. Thus, in the beginning, there was nothing and this world came from nothing; only God has this power. The lyrics go on like this:

Jab kahin pe kuch nahin bhi nahin tha

Wahi tha wahi tha wahi tha wahi tha

How magical it would be to create everything from nothing!

Impossible to create something out of thin air but as I learn more and more about how wealth is created, I cannot but find so many similarities. Civilizations have progressed by generating wealth through human endeavour. An average earning person today has access to more amenities than medieval-age kings and modern nations have uplifted entire populations through generations of wealth. For a long time, I could not understand wealth creation. Intuitively it appeared to be a zero sum game, if someone is getting rich, it must mean someone else is losing out.

But how is wealth created? Let us try to understand it from an example. In a primitive tribe, everyone hunts but using stones and physical prowess. An intelligent man gets an idea and tries to invest his day in sharpening stones. He then ties it on a wooden stick and the next day he realizes it is easier to hunt now. Others see him and want these sticks. This man leaves hunting and starts making these elementary spears, selling them in return for a share in hunted elements. This man now has more food than he could ever had by hunting alone and the productivity of others has also increased, thus contributing to the overall wealth creation.

In the podcast ‘The Seen and the Unseen’, Amit Verma the podcaster often refers to it as the double thank-you moment. The man who makes the spears thanks the person who buys them providing him meat and the buyer thanks the spear maker as he knows he will be more productive. Such voluntary exchanges of human endeavour contribute to the overall wealth.

If we take a modern example, people were unable to get taxis easily and on the other hand often taxi drivers could not get customers. Apps like Uber brought both closer and now while cab owners are getting more clients, people can easily get taxis when they need to. The business model helped unlock wealth that was not being utilized earlier and overall, the productivity of society has increased. Money as a medium is introduced in society to facilitate these transactions and it helps to measure this overall wealth.

Poverty cannot be distributed, only wealth can be and if we want to improve the living conditions of millions, generation of wealth is the only path that can be taken. And it is not difficult. Whenever a person does a day full of productive labour, that means contributing to the overall economy. It may not be so simple because then there are issues of equitable distribution of wealth and how everyone has an equal opportunity, but the process begins when we create value that did not exist previously.

This growth is often exponential as we keep on building on the base that has been developed. Ola and Ubers of the world are possible only because of the internet revolution that came before, and the internet was possible because personal computing was made affordable as a precursor. Every subsequent activity multiplies productivity and generates further wealth. All of us can be wealthy and prosperous though some will always be more than others.

We have entered an exciting phase in India’s growth, and I find wealth creation to be one a sacrosanct ideal. All the unicorns that create billions of dollars, or business leaders that take their enterprises to new heights serve humanity and help in improving upon the lives of our countrymen. This was also one of the reasons why I decided to join the private sector after leaving IAS, as I have listed in my article.

I hope soon we alleviate the suffering of everyone in our country by providing them with enough means. I wish “Kun, FayaKun”!