MPRA Paper, No. 52941, 1–14. Retrieved from http:// mpra.ub.uni-muenchen.de/52941/
Retrieved from http://mpra.ub.uni-muenchen.de/2951
Money income is the primary measure of distributional equity. In Islam, the concept of an income floor is quite basic though the concept of an income ceiling is not equally clear. All property is in the ownership of God. Man,is a trustee of this property. The resources of the earth are meant to provide for the needs of everyone. One is supposed to meet his legitimate requirements and leave therest for others. Self-interest is not the sole motivational force. For factor rewards, the basic principle is: ‘to each his due’. Their rewards have the least chance of being vitiated by exploitation. Pre-determined factor prices would be distasteful to Islam. Rent of land as a fixed quantity can be exploitative. Interest on capital is illegal straightaway. Pre-set wage, in a modern, mass production society, tends to become unfair, before the results of enterprise are made known. Workers may be given a sustenance allowance during periods of production, which should be supplemented in the light of actual results of business. For those who do not enter the work market (like widows, children, old, invalid), Islam has prescribed zakah and infaq. The state also has a role in ensuring an equitable distribution of income: it can abolish interest; legislate for labour-capital participation; provide a legal framework to ensure exploitation-free market operations; and de-limit private property. Analytical. For Muslim economists. Based on primary sources. Documented.
Current models of PLS ﬁnancing assume that the ratio in which proﬁts are shared may be different from the ratio the financier’s capital bears to the total capital of the ﬁrm, which is the ratio in which losses must be shared. This can be better justified as a growth-promoting policy than as an instrument for ensuring distributive justice. In a system where interest and PLS financing co-exist, the aggregate profit-sharing ratio is a function of the overall rate of return on investment, rate of interest, degree of leverage, and risk premium. PLS financing is more profitable to ﬁnanciers in the long run than interest ﬁnancing. Mathematical. For economists only. Based on primary sources. Documented.
This paper attempts to show that positive economics fails to provide satisfactory answers to questions concerning the definition, source and appropriation of profit. Above all, it remains indifferent to issues if the market determined rewards of hired factors, specially wages, are just or if the utilization of profit is always proper. Islamic injunctions tacitly support the presumption that some sort of labour participation scheme, subject to a minimum wage constraint, 22 promises a division of value product that is just to both labour and capital. Finally, a distribution model claimed to be in line with the Islamic norms is then presented.
Briefly reviews the theory of proﬁt in contemporary economics. Argues that since ribci is not allowed and a preferable mode of rent is crop—sharing, therefore a system of proﬁt participation by labour and capital will only be consistent. Attempts a macroeconomic model as well. For economists. Based on primary and secondary sources. Documented.
The present paper attempts to take an overview of the Islamic approach to the problem of distribution. It highlights those in-built safeguards of the system that would seldom permit the distribution to become unjust, and shows that in case the inequalities do tend to arise, adequate powers are available to the state to initiate measures for remedying the situation. The scheme of the paper is divided into four parts. Part One briefly argues that money income is preferable to indi- vidual utilities as the object of redistribution. Part Two elaborates in some detail the doctrine of Amanah which encompasses Islam’s entire action programme right from the indi- vidual to the state. It’s ramifications give an entirely new orientation to one’s attitude concerning material pursuits. Part Three provides a model of income distribution at a macro level. Part Four therefore, shows that Islam empowers the state to introduce a whole range of regulatory measures including the takeover of property if the larger social interest so demands.