64 chapter two
labour the human factor includes management or organisation and
entrepreneurship as mentioned in the Western theory.
The fourth factor is capital. Wealth, which embraces capital when
it is allocated for purposes of economic development, has been empha-
sised in the Qur"àn and the Tradition as shown above, with no need
for repetition. The price of capital has also been discussed above.
Once more, the common area between the price of capital in Western
economics and Islamic economics may be mentioned. While the two
types of economics part significantly on the price of loan capital they
meet on the price of equity capital. In both schools of economics
the price of equity capital is the rate of return on equity, derived
mainly from profit distributed as dividends. The price of loan cap-
ital in the Western theory is interest while in the Islamic theory loan
capital has no price since loan capital, in line with other types of
loans, has to be either converted to equity capital or given free.
The fifth factor of production is society. The reason that society
may be included as a factor of production is twofold. First, society
has an influential role in directing management and entrepreneurs
when they design their production plans, as this input ensures that
they best serve the community, which in its turn helps management
maximize the benefits to their businesses. The international dimen-
sion of society may also be taken into consideration. Second, soci-
ety provides businesses with the skilled human resources necessary
for production. If society is taken into account as a factor of pro-
duction, this will enforce the mutual relationship between business
and the surrounding community in such a way as to create the feel-
ing of need for, then the concern about, society in the process of
production. Without such emphasis on the dependence of the pro-
duction sector to society, the interrelationship between the two, busi-
ness and community, may be neglected.
The above point is connected with objectives of economic devel-
opment. The objectives of economic development in Islam is not to
maximize value of production or profit per se but to enlarge, avoid-
ing the term maximize, the welfare benefits from economic devel-
opment to the individual and society. Western altruist economics and
social economics are much nearer to Islamic economics on this issue
than Western classical economics. This simply emphasises that moral
issues and ethical values should be maintained in deriving the objec-
tives of the function of production or of economic development.