In modern mainstream economics, the definition of physical capital stock implies that it includes ‘produced means of production’. Some examples of physical capital stock in contemporary businesses include equipment, tools, machinery, buildings, furniture, infrastructures, installations and production plants.
This paper discusses the theory of interest espoused by Böhm-Bawerk. The author reviews the works of some Muslim economists who think that since time preference is valid in Islam, so is time value of money. In Islamic finance literature, there is largely a consensus that time value of money is not valid, but the time value of commodity is acceptable.
A key maxim of Islamic jurisprudence suggests that in the matter of commercial transactions, everything is deemed permissible unless explicitly stated otherwise. As long as the transacting parties adhere to the principles of Islamic jurisprudence while applying the benchmark to their transaction, it is acceptable to utilize a consensus methodology. In place of risk free rate or base rate of expected return on investment, some thinkers in Islamic finance suggest the possible use of Zakat rate.
Islamic Economics Project 