karma comes from the sanskrit word karman and means action.
dharma is a word that does not translate exactly into English for it has a scope of meaning which is wider than just one word. Dharma is righteousness as a way of life, doing the right thing, right action.
The Hindu scriptures say dharmam moolam jagat which means dharma is the basis of the universe. Dharma is the foundation stone of all living things. All things follow their allocated dharma, except mankind.
Mankind has a mind, a faculty called intellect, and a conscience. Man can choose to do the right thing, or mankind can choose to be selfish and follow his or her desires. The proper conduct of mankind is dharmic, that is to say, to do the right thing in all actions, at all times. So karma, (action) has to follow dharma (right action) or the consequences of the action have to be faced. Good actions produce good results; bad action produces bad results. Deleterious actions produce damage to the human body itself. So you can see, there are many different types of action, and true humanness means doing dharma in all things.
There are four goals of life in Hinduism:
- artha - obtaining a proper and useful level of wealth
- kama - fulfilling desires
- dharma - following right conduce
- moksha - freedom from the cycle of birth and rebirth.
If one engages in dharma, then one earns wealth and fulfills desires in a correct manner and fashion, thus earning moksha (liberation). The four goals of life have to be in balance.