A Conceptual Distinction Between Money and Capital in Islamic Economics

Abstract

Money is an object that plays an important role in the economy. Money is a medium used to facilitate economic transactions in human life. Without money, it will be difficult for humans to carry out daily transaction activities. So that the role of money in an economy can be likened to blood flow in the body, without which economic activities can be severely hampered and even stopped. In Islamic economics, money has the main function as a medium of exchange and a unit of calculation. Although in practice it is still allowed to use money as a store of value and deferred payment standards, as long as money is considered only a medium of exchange, not a commodity to be traded. Islamic economics differs from conventional economics in looking at the terms money and capital. In conventional economic view, the terms money and capital are often used interchangeably. Because in the conventional economy, money is synonymous with capital. Meanwhile, in economics, Islam makes a clear distinction between money and capital.