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Islam Talks About Riba – Interest – Usury

Posted by yourpakistan on June 21, 2010


Mainly there are two Economic theories in practice in the world at present, namely;

1) Capitalism

2) Socialism.

1)   In most of the countries, including nearly all Islamic states of the world, the economic system is based on capitalism. The basic principle is private ownership and is called free economy i.e. Laissez Faire. Whatever an individual earns is sole owner of it, spends or saves and the savings become capital for earning interest or profit by investing this surplus.

2)  Socialism as opposed to capitalism rests on the theory of collective effort. All earnings and incomes belong to the society, which in turns looks after the needs of the citizens. The principle is get from according to ability and give according to needs. USSR till recently, China and North Korea and some S American countries have this system of various degrees. In this system a worker has no initiative or incentive left to improve his or the society lot. He just becomes a cog in the big machine.

All the Muslim countries are confused because on one hand the narrow micro definition of Interest (Riba) tortures them religiously of taking interest (eating Haram) and on the other, lure of un-imaginable amount of interest money coming into their coffers has to be justified one way the other. Here the so called Sharia and Fiqah laws come to their rescues.

All these efforts and schemes of Islamic Banking operating in Islamic countries are in disguise to make Interest, usury a haram into halal product. In a sense these schemes try to remove the guilt of haram earning from the conscious of Muslims. I would say old wine in new bottles or papering the cracks in the wall. The other noteworthy thing is that even European countries are devising interest free investment schemes to attract billions of petro dollars into their banks. They in turn give to World Bank, IMF, Asian Development Bank who then gives to 3rd World in AID with stringent conditions. A vicious circle indeed!    There is much drumming up of Interest free banking but why there is no Islamic Insurance company. The short term or long term speculation of commodities buying and selling (hoarding to sell at exorbitant prices in time of scarcity also is haram) but all Muslims, good or bad all turn their eyes the other way.

Mudarbha –Profit sharing and Musharka – Equity sharing all fall into haram category according to Quranic ideology.

You want to start a business and I lend you £100. After a year you pay me £110 including £10 as interest. This extra £10 as interest is haram. I give you £100 as a sleeping partner. After a year of your sweated labour I share half of your profit ( profit may be 100%) without any guilt. And according to the man-made shariah it is halal. What a diabolical thing, is it not.

Quranic Economic System:

Quran considers man composed of two things 1) Physical and 2) Spiritual

Like all animals Man is also an animal. His needs are exactly as like other animals, i.e. Eating, drinking, sleeping, procreation, preservation of Self and death.

But man is endowed with another Divine Energy called Spiritual life (Rooh) which other animals have not. This is also called FREE WILL. Other animals have no free will. A lion has to eat meat by killing. He will not eat grass even though he is dying of hunger. A hen chick will not rush to water after hatching but a duck chick will. Here man’s intellect tells him that after satisfying his hunger he has to save for his next meal whereas any other animal after filling its belly will not care to snatch, hoard for his next meal.

According to Quranic philosophy man’s physical body develops by taking like any other animal but his Spirit (Rooh), Self develops, matures by giving to others.

This is done by Anfaq Fi Sabeel-illah.  Before a fully Islamic system is in force during its transitory period,Quran asks Muslims to give sadaqats, Infaaq, helping the needy relatives, the poor, destitute, wayfarers.  Gradually a stage comes when Muslims are asked to surrender to the State what is surplus to their needs. They will be rewarded in return Paradise (9:111)

When there will be no surplus left with the individuals, earning interest etc will be out of question. At that stage taking interest will be construed as war against the Islamic state. ( Rasool & Allah)

Quran wants to establish a just Islamic society based on immutable permanent values enshrined in the holy Quran in stages. It educates its adherents (Muslims) believing in its ideology gradually taking them away from the un- Islamic way of life to Ad-deen al-Islam..

Stage 1. Individual Appeal. People are exhorted to help the poor, the needy and helping the state in emergency, war, famine etc. See for details Quranic verses 2:215 69:34-35;  76:8-10; 89:17-20; 90:11-16 .It asks to forsake any due from the borrower “2:280, 2:282; 18:32-44; 68:17-33. Property, inheritance rules were meant to avoid wealth concentrated in few hands; 2:180; 5:106 etc

Stage 2: In the 2nd stage Rasool ( central Govt ) is commanded to collect sadaqaat himself ( 9: 60, 9:103).  Also Allah says give credit to Him (57:18; 73:20),  2:195, 47:38  64:15-17 in return paradise; a life of bliss.

Quran provides a directive that deals with the issue of wealth absolutely and permanently. It states in 2:219 that all that is surplus to your needs should be spent for the benefit of others. Give priority to others 59:9

The Quran says that Eeta-e-Zakaat (provision of sustenance for whole mankind) will be done only by those who believe in the Hereafter 27:P3; 31;4 but who do not believe in Hereafter cannot provide Zakkat (41:7)

Just as with other system, this system cannot be established with today’s traditional Islam ( a by product of Abbasid of hereditary monarchy) which is itself based on capitalism.

To get an overall picture of Islam withy above quoted verses see also 91:7, 76:3; 29:64; 59:964:1618:1002:272; 6:151,

Remember: for example wherever Allah Almighty says He does this for you, provides you and your children 6:151, 11:6 17:31 it means that a Muslim state takes this responsibility on behalf of Allah to establish a Quranic economic system to provide all basic necessities of life and equal opportunities for growth and development to all its citizens irrespective of caste, religion, race, colour even to animals.

I have been short in explanation unlike the writer Mohammed Arif of Malaya who perhaps wrote the 17 pages article for his PhD. Maqbool Farhat

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