Abstract
The rule of Islam is simple: if you advance a loan, you are entitled to receive your capital only and nothing more. If you wish to secure profit you should enter into a partnership and become a shareholder. Prohibitions against interest are not peculiar to Islam. If we were to trace back through history, a number of examples of such prohibitions can be found in the early Greek, Roman and Rabinnical thought. As a consequence of the decline of the influence of the Catholic Church and the Jewish aphorism that the taking of interest from gentiles is a commendable practice, laws were subsequently drafted for legalizing interest transactions. As a result, industrial, financial and commercial power become concentrated in the hands of giant Western corporations and a worldwide dominance of capitalist imperialism followed. This practice has created widespread acceptance of the practice of charging interest (usury) and has dominated Western law and ethics for over a millennium. But, the Western or capitalist economic system has proven a failure in its quest for economic justice, which serves to benefit all in society, both the rich and the poor. In particular, capitalism is currently causing a terrifying scenario of making the rich richer and the poor poorer due to interest charges. The fundamental motivation for the paper is to examine whether an alternative banking or economic system could contribute in alleviating the global financial crisis we face. This alternative banking model is to rest on social justice. It is necessary to reassert that this banking system is based on the avoidance of all forms of financial exploitation and on having as its principal object the combined purpose of the creation of wealth and the alleviation of poverty.
Highlights
Objectives of This ResearchThe research attempts to get to the core of the meaning of riba from religious and economic perspectives
He reasons that there cannot be any economic or Shari’ah justification for confining riba to usury and excluding interest from its jurisdiction. He asserts that as far as economic analysis is concerned there is no technical difference between interest and usury. He further avers that when we look upon the phenomenon from the demand side of economic analysis or the supply side, the rationale develop in economic theory for interest and usury are the same
When we look at the money system that way and when we begin to think about how it should be redesigned to carry out its functions fairly and efficiently as part of an enabling and conserving economy, the arguments for an interest-free monetary system for the 21st century seems to be very strong (Note 72)
Summary
The research attempts to get to the core of the meaning of riba from religious and economic perspectives. It strives to attain a wider consensus on the meaning of riba among scholars and policymakers. The research discusses the pertinent issues of riba that many blame for the global financial turmoil. It postulates an alternative to a capitalist or riba-based economy. The study purports to achieve a point where people can have the choice of a life without riba
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