While the Qur’an Ayaat 2:261-274 discussed the ethics of charity and its role in society, Ayaat 275-279 deals with usury or riba. While charity denotes giving, generosity, purification, growth, cooperation and social welfare, usury signifies stinginess, greed and self-aggrandisement.
Charity is giving of one’s wealth without any expectation of recompense, while usury is the exaction of a charge over and above money owed, which is usually paid for out of the sweat and blood of the borrower.
It is perhaps significant that the surah should discuss usury immediately after dealing with a pleasant subject such as charity, in order to highlight the sharp contrast between the two, and their effects on society.
No other issue has been condemned and denounced so strongly in the Qur’an as has usury; nor has any practice come in for stronger warnings, spelling out fearful doom. Infinite is Allah in His wisdom. In the light of widespread human suffering, we can appreciate the reasons behind the Qur’an’s determined onslaught on this evil practice. Today, we are better placed to understand Allah’s wisdom underlying these principles, and the suitability of Islam for the organisation of human society. In today’s world, we have all the signs and evidence we need to explain and confirm the words of the Qur’an. We can see what havoc and what misery a usury-based financial system has brought upon the world.
The Qur’an Ayaat 2:261-274 laid down the basic principles for giving to charity, for the sake of Allah, as an important part of the Islamic social and economic system Allah has chosen for the Muslim community. It serves as a model for the rest of mankind to emulate and enjoy. It is presented as an alternative to a wicked and inhumane system based on usury.
We, thus, have two contrasting socio-economic systems: the Islamic system and the usury-based un-Islamic system. They are based on totally different value systems and worldviews. They can never be reconciled, as each leads in a completely opposite direction to the other and aims to achieve different ends.
The economic system Islam advocates, like its overall view of life, is based on the fundamental concept that Allah is the Creator and undisputed Master of all that exists. Allah has struck a deal with mankind and delegated to man certain duties and responsibilities on earth. The main proviso of Allah’s covenant with man is that man should live and behave according to Allah’s laws.
Another provision of Allah’s covenant with man stipulates that believers must share the benefits of what Allah has provided with those who haven’t. No capable member of society should live off someone else or become a burden on the community. To support this system of social welfare, Islam has set up Zakat as a fixed obligation on the well-off and encouraged voluntary charity without limits.
Allah has also advised man to seek moderation and avoid lavish spending and extravagant living. Muslims are required to invest their money and seek the growth of their wealth, by legitimate means, without exploiting others. Besides, it is not allowed to try to pervert, in any way, the fair and healthy circulation of capital and wealth in society. The Qur’an stresses that wealth “should not be left to circulate only among the rich of you.” (59:7)
An interest-based system assumes a total divorce between the divine will and human life, leading to the conclusion that man is the absolute master of this world, not bound by any responsibility towards Allah or any obligation to respect His commands. It also implies that man is free as to how he accumulates, enjoys and uses wealth, and that in this regard he has no obligation whatsoever towards Allah or, indeed, any liability to others; it would not matter if thousands or millions of people were to suffer in the process.
A usury-based system is founded on the erroneous concept that the accumulation and enjoyment of wealth, regardless of the means, is the ultimate objective of human life, which explains the resulting vicious rush for money-making and prodigality.
Such a system brings nothing but misery and suffering upon individuals, communities, and nations, while it benefits only a few moneylenders. It undermines the moral and psychological fabric of society and creates a detrimental imbalance in the distribution of wealth and economic development, leading, as it is doing at present, to the concentration of power and influence in the hands of a few greedy, and unscrupulous individuals and institutions, at national and international level.
It has been alleged that an interest-based economy is the one responsible for the tremendous achievements and progress of modern Western civilization, and that those calling for the abolition of usury are unrealistic dreamers motivated by moralistic and religious considerations that are capable, if given the chance, of corrupting the whole modern economic system. Another victim of the system of usury is world economy which is forcibly set on the wrong course by international usurers. Thus, it suffers periodic, stage-managed crises to ensure that all its benefits are reaped by such usurers, rather than by humanity as a whole.
Some Western economists have recognised that a usurious system is a threat, from the purely economic point of view. Dr. Schacht, a former Governor of the German Central Bank, in a speech given in 1953 in Damascus, said that with an infinite mathematical operation it would be possible to show that the total sum of all liquid money in the world ends up in the hands of a few usurers, because a usurer-lender gains in every deal while the borrower is equally liable to gain or lose. Logically, therefore, money will ultimately end up with the one who always gains. The majority of capital today is under the real control of a few thousand people; while landlords, industrialists, farmers and traders who borrow from banks, as well as workers and ordinary consumers, are no more than labourers working for the benefit of those in possession and control of capital.
While India is one of the fastest growing economies in the world, it is also one of the most unequal countries. Inequality has been rising sharply for the last three decades. The richest have cornered a huge part of the wealth created through crony capitalism. They are getting richer at a much faster pace while the poor are still struggling to earn a minimum wage and access quality education and healthcare services, which continue to suffer from chronic under-investment. These widening gaps and rising inequalities affect women and children the most.
According to OXFAM International, the top 10% of the Indian population holds 77% of the total national wealth. 73% of the wealth generated in 2017 went to the richest 1%, while 67 million Indians who comprise the poorest half of the population saw only a 1% increase in their wealth. There are 119 billionaires in India. Billionaires’ fortunes increased by almost 10 times over a decade and their total wealth is higher than the entire Union budget of India for the fiscal year 2018-19, which was at INR 24422 billion.
That is not all that is wrong with an interest-based economy. Moneylenders try to make maximum gains by lending their money, and therefore favour a squeeze on the money supply to cause a rise in the cost of borrowing. This eventually leads to a slowdown in economy, a rise in unemployment, and a fall in purchasing power of individuals.
In such an economy, every consumer pays part of the price of goods to the moneylenders albeit indirectly. Industrialists and traders take the extra cost of borrowing out of consumers’ pockets by raising the prices of goods and services, thus spreading the burden over the widest possible area. Government borrowing to finance public projects is also met by ever-rising taxes imposed on the earning sections of the population, spreading the cost again over large numbers of people.
When considering the Islamic attitude to usury, we must bear in mind a number of essential facts.
The teachings and ethics of Islam are in total conflict with a usurious economy. All the rulings, issued by the official ‘clergy’ in Muslim countries, and the arguments advanced to show that usury may be accommodated into the Islamic system, are pure humbug aimed at deceiving the public.
The usury system is a curse on all humanity, not only ethically and religiously, but also economically and practically. It is a system that creates unhappiness and restricts the growth of harmony and stability in society, despite its deceptive promise of prosperity.
An interest-based economic system is bound to undermine the moral and ethical character of individuals, their feelings and desire to help each other. It encourages greed, selfishness, lechery and speculation. In the modern world, it has opened the gates for the most sinister and corrupting forms of investment ever known, such as the drug trade, pornography, prostitution, all in pursuit of guaranteed astronomical profits. Borrowed money is not used in the service of humanity but for maximising profit, regardless of the nature of the trade or the methods by which that profit is realised.
Islam is a comprehensive way of life. Its economic system completely discounts the need for usury and organises the social life of the community in such a way as to eliminate usury altogether. At the same time it maintains the balance and progress of economic, social and human development in society.
Most importantly, Muslims must realise that it is a conceptual impossibility that Allah should prohibit something that is vital for the perpetuation and preservation of human life. The reasons for widespread belief in usury-based economic and financial systems can be traced to ignorance and the obnoxious propaganda systematically waged by capitalist and money lending lobbies and institutions. These continue to exert their pervasive influence on governments, international political organisations, and private and public media and information establishments.
The claim that the international economic and financial systems cannot exist or function without usury is simply a myth and a monstrous lie sustained by big business and international vested interests. Usury-free economies have existed and performed very successfully. To revive them today requires determination and a concerted, well-considered international effort, to kindle some hope of future stability, prosperity, happiness and real peace and justice in our world.