The above assumption is not really warranted by our present state of knowledge and experience. Confirmation of this abstract forecast is a far cry at present. However, to my mind, careful non-ideological analysis does not warrant the optimism of Islamic economists in this regard. The reason is as follows: A sleeping partnership involves full liability without any security for the sleeping partner who supplies capital merely on the trust he places on the bona fides and competence of the managing partner. This, indeed, is .the Islamic ideal (as also the ideal situation in general), but the distance between the ideal and the real is obvious. In case the partner be tempted for some reason or other to cheat or indulge in some sharp practices at the expense of the sleeping partner (such instances being too common in the human family to be ignored by any law-giver) the sleeping partner will ever remain at the mercy of the managing partner. It is precisely at this point that the economic function of interest appears in a sharp focus. No other economic mechanism appears to serve the same purpose as effectively as interest                

It is true that if Islamic banks exercise proper vigilance both before and after investment this will act as a strong check upon the misuse of funds by managing partners. In any case human nature being what it is, the degree of security of investment, per force would depend upon the accuracy of the producer's balance sheet. Moreover auditing work would multiply enormously and thereby create scope for concealment and corruption. Now since international trade is unavoidable due to the inter-dependence of the human family as a whole interest bearing transactions between different counties, would continue. This would create anomalies and complications at different levels. Thus there does not appear to be any justification for permitting unearned profits through Islamic partnerships but prohibiting interest per se. In fact, the slogan of profit/loss participation by Islamic banks in place of floating interest-bearing loans to the entrepreneurs is nothing but substituting the theologically acceptable term 'profit' in place of the theologically repugnant term 'interest' without any really meaningful change in economic theory or practice. However, the scheme of advancing interest-free distress or consumption loans at almost zero interest for specified purposes (qarz-e-hasana)) is a definitely meaningful reform initiated by Islamic economists.

The Language of Modern Economics: Modern economists have defined interest in various ways putting forward several theories of interest. These theories are, at bottom, attempts to assimilate or reduce interest to some other concept such as profit, rent, price, cost, increment, reward and so on. As a student of philosophy it appears to me, that no theory which is purely reductive could ever provide a complete analysis of the nature and function of interest in every possible context. It seems that, in the context of industry, interest approximates ‘a factor of the cost of production; in the context of consumption loans, interest approximates ‘price or rent of borrowed money’; in the context of state bonds, interest approximates ‘reward for  deferring enjoyment of one’s purchasing power; in the context of distress loans, interest approximates ‘callous extortion or exploitation’.  No single conception of the 'essence' of interest would thus suffice in all cases. Likewise, no ethical or economic appraisal of interest, in a blanket manner, would be valid. To arrive at a proper evaluation one must take into account the context and the exact function of interest in the type of situation under review. The concept of 'increment' which interest logically implies is, ethically, an indeterminate concept. We shall now briefly review some of the different conceptions of interest without attempting any reductive definition.

One conception of interest is that it is the price a borrower is required to pay for satisfying a need he is unable to satisfy from out of his own available money. The excess payment he makes to the lender, over and above the principal amount, is the price of the borrowed money. Another conception is that the excess is the rent for the use of money belonging to the lender. Yet a third conception is that interest is the lender’s claim to be compensated for depriving himself of the actual or possible enjoyment of his own wealth which he places at the borrower's disposal  In the context of trade and industry, interest is a relatively small fixed charge upon the theoretically larger profit of enterprise. It may be viewed as guaranteed unearned profit whose justification is that the supplier of capital (one of the necessary conditions of production) is entitled to a small but assured return, for lending capital to the producer who expects to get much larger returns through profits.

The other factors of production (apart from capital) are land, technical skill or know-how, management, labour, and last but not least, leadership and organizational capacity of the entrepreneur. Now each factor of production is severally and jointly essential for the success of the enterprise and thus deserves just consideration. However, entrepreneurial leadership and the supply of capital do occupy a unique position or status in the sense that they jointly create the ‘productive space’ for the inception and future growth of the enterprise. Without such space having been antecedently provided by the capitalist or the ‘captain of industry’, the social organism comprising management and labour, would not have come into being at all.  It is, therefore, understandable that the founders and directors of the productive enterprise claim a higher status and a larger share in profits of the enterprise, while the management and labour receive fixed salaries for specified jobs.  Between the capitalist and the industrialist, if the former supplies money capital, the latter supplies the ‘ideational/volitional capital’--the creative idea, and organizational initiative. The two together create the base for the subsequent productive role of labour and management. Once the organism is born and the infant plant becomes an adult organism, the role of the management and the workers also acquire a key role in raising the productivity and quality of the enterprise. But at the initial stages the capitalist and the entrepreneur do play the crucial role of conceiving and producing a new social organism as such.