Differences between profit and riba

Pages: 3 (615 mots) Publié le: 8 mars 2011
In Islam, work is the production basis of richness. This is what forbid usury. In Islam, each gain should be proportional to the work done. This is the base of the prohibition of interest rate (Ribhbilâ ‘iwad).

Cited in Al-Quran 2-275: “Allah permits trade and forbids riba/interest”

So, not all increase or growth is forbidden in Islam. The differentiation comes from the concept of“equivalent countervalue (‘iwad)”.
Iwad consists of 2 main components:
1. value addition (through work & effort)
2. risks (before and after sale)

What makes profit lawful (halal) in Islam is, thatprofits represent the effort and the risks undertaken by the supplier of capital in an enterprise.

As mentioned before, in Islam, work is the production basis of richness. Hence, profit is seen as areward for entrepreneurial effort:
The entrepreneur combines existing resources to produce a new combination of value added good or service (he transforms inputs in outputs). That gains a higherprice on the market. This is call the process of entrepreneurial innovation, because the entrepreneur is creative and innovative to create this new output.

This is consistent with the principles in theQuran because Allah has created between man diversity of capabilities and “He (Allah) has raised you in ranks, some above others: so that He may try you in the gifts that He has given you.” (6:165).Further, man will earn what he has strived for: “To men is allotted what they earn (work for): And to women what they earn” (4:32).
This is also consistent with tabii law:

A highly organized andinnovative entrepreneur is more likely to earn higher profits than one who lacks such capablities and effort. Hence, profit as the reward for enterprise (entrepreneurial effort) is justified (halal).The entrepreneur can only claim a return for his effort if profit is made. In the case of losses, the entrepreneur bears losses in terms of his effort not being rewarded.

Further, profit is also...
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