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O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers.
And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal—[thus] you do no wrong, nor are you wronged.212
Jābir ibn ‘Abdillāh reports that the Messenger of Allah صلى الله عليه وسلم cursed the consumer of interest, its payer, its documenter, its two witnesses, and said, “They are all equal [in sin].”213 Past and present, people have downplayed the danger of an interest- bearing transaction, especially when effected by mutual consent. However, the wisdom of the Divine transcends our short-sightedness and deems engaging in interest-based transactions an enormity. Nowadays, we observe firsthand how interest-based systems have destroyed nations beyond repair, with the debacle of the Nigerian and Jamaican economies being just two tragic examples214 of what happens when such an enormous part of a nation’s annual budget is apportioned to debt repayment. The villainous nature of dispensing loans for interest is clear; it appears to be an avenue for quick funds, but it often buries people and countries further in debt. It places the bulk of the risk on the debtor and little risk on the creditor who “invests” by lending. It also disparages productivity and labor, as Aristotle argued,215 since money is what begets money here, not effort or craftsmanship. As a result, the rich steadily get richer while the poor steadily get poorer—to points of unthinkable devastation, which then become catalysts for financial meltdowns and uprisings by the underclass which have historically devoured many nations, as Plato once warned.
Hence, the Prophet Muhammad صلى الله عليه وسلم outlawed profiting in the worldly sense from loans by saying, “Profit is contingent upon liability (the possibility of loss).”216
In addition to lenders being prohibited from charging interest on loans, borrowers are also prohibited from such loans. This prevents borrowers from living beyond their means, which mitigates their being exploited by lenders, and the ecological damage caused by consumerism. When you add to the perils of usury those of excessive speculation (gharar), which the Prophet صلى الله عليه وسلم forbade as well,217 you have all the ingredients of an economic crisis. The 2008 financial meltdown was a relatively recent example of this. For this reason, a global trend is emerging in Europe and elsewhere that recognizes that Islamic financial regulations offer a refreshing alternative and remedy for economic woes.218 Highlighting a primary objective behind these regulations, Allah says about money in the Qur’an, “…so that it will not become a perpetual circulation [solely] among the rich from among you.”219 Another component of this remedy is the lessening of wealth concentration through the Zakat system.
Zakat is one of Islam’s five foundational pillars; an obligatory charity due on significant amounts of capital, whereby 2.5% must be redistributed annually, primarily among the poor but also to other noble causes. Of course, with the Zakat system funneling this wealth directly to those in need, the oft-cited concern of governments being overfed by taxing the rich’s wealth vanishes. Also, unlike governmental taxation, the Zakat system emphasizes one’s personal accountability before God; the One who cannot be deceived the way government auditors often are by creative evaders who move their assets outside of the country.
212 The Qur’an 2:278-279, Saheeh International Translation.
213 Muslim, Ṣaḥīḥ Muslim, 3:1219 #1598.
214 See film documentary: Stefanie Black, “Life and Debt [Motion Picture],” (USA:
New Yorker Films, 2001).
215 Aristotle, R.F. Stalley, and Ernest Barker, Politics: Oxford World’s Classics (Oxford:
Oxford University Press, 2009), bk. 1, chap. 10, p. 29.
216 al-Tirmidhī, Sunan al-Tirmidhī, 2:572 #1285: authenticated by al-Tirmidhī in the comments.
217 Muslim, Ṣaḥīḥ Muslim, 3:1153 #1513.
218 Ismail Ozsoy, “An Islamic Suggestion of Solution to the Financial Crises,” Procedia Economics and Finance 38 (2016): 174-184.
219 The Qur’an 59:7, author’s translation.
Reference: The Final Prophet - Mohammad Elshinawy
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