ABSTRACT
One of the dominant principles of Islamic finance is the prohibition of 'riba' or interest and 'gharar' or uncertainty. Islam is a religion born in the Arabian Desert, where trade constituted the most important, "perhaps even the sole economic activity, favors merchants, property rights, free trade and market economy". This chapter discusses the heterodox view underlying the concept of interest and uncertainty. It sheds an analytical light on the relevance of heterodox and Islamic views in this particular context. In doing so, an emphasis is placed on the role of functionless investors in the economy and how their activities invite welfare-reducing impacts on society. Islam recognizes the role of the market and the freedom of individuals in business and trade while restraining the freedom to engage in business and financial transactions on the basis of a number of prohibitions, ethics and norms.
