from ordinary debt. It is in fact a case in which capital and labour are sharers. Islām does not prohibit a partnership in which one person supplies the capital and the other labour. But it requires that both capital and labour shall be sharers in profit as well as in loss. The payment of interest at a fixed rate means that capital shall always have a profit, even though the business may be running at a loss. It is true that when the business is profitable, the rate of interest may be much less than the profit earned, but in all such uncertainties the view-point of Islām is that neither side should have undue advantage or be made to suffer undue loss. If the business is run at a profit, let capital have its due share of the profit, but if it is being run at a loss, let capital also share in the loss. It is sometimes urged that the keeping of an account of profit and loss is impracticable, but this is really not the case, as every businessman must keep an account of profit and loss, if only for the purpose of taxation. Similar accounts are also kept by all joint-stock companies, and there is not the least difficulty in keeping them. This method is more advantageous for the general welfare of the community than the method of charging interest on capital, which promotes capitalism and is unjust to labour.

State borrowings

Borrowing by a state or a company for the purpose of executing large-scale projects stand on a different basis. In such cases the shareholders who supply the capital are generally paid a dividend, which is calculated on the basis of profits. But sometimes the shareholders are paid a fixed rate of interest. The question is whether these cases would come under the Quranic prohibition of ribā? The rate of interest is no doubt fixed, but still this interest is paid out of the profits and is generally a part of the profits. Occasionally the profits of the concern may be less than the amount of interest paid, or there may even be a loss, but in such cases there is a reserve fund to fall back upon. It cannot, however, be denied that the payment of a varying dividend is more in accord with the spirit of the teachings of Islām than the payment of a fixed rate of interest.