📘 Riba and the Problem with Interest
Riba—often translated as usury or interest—is strictly prohibited in Islamic finance due to its exploitative nature and its distortion of economic justice. Tarek El Diwany’s 'The Problem with Interest' offers a powerful critique of interest-based systems.
⚖️ Core Concepts
- Unjust Gain Without Risk: Riba allows lenders to profit without sharing in the risk of enterprise, violating the principle of fairness.
- Debt-Based Money Creation: Modern banking systems create money through interest-bearing debt, leading to inflation, instability, and wealth concentration.
- Social and Moral Harm: Interest fuels cycles of poverty, inequality, and environmental degradation by incentivising short-term profit over long-term stewardship.
- Distortion of Real Economy: Riba divorces finance from real economic activity, encouraging speculation and undermining productive trade.
🧭 Ethical and Spiritual Dimensions
- Violation of Divine Law: Riba is condemned in the Qur’an as a grave sin, contrasting with trade, which is permitted and encouraged.
- Erosion of Brotherhood: It undermines mutual support and solidarity, replacing cooperation with exploitation.
- False Neutrality of Finance: El Diwany challenges the idea that finance is value-neutral, showing how interest embeds moral and systemic biases.
🌍 Practical Implications
- Need for Risk-Sharing Models: Islamic finance promotes equity-based contracts (like mudarabah and musharakah) that align incentives and distribute risk.
- Rethinking Economic Growth: A Riba-free system encourages sustainable development rooted in real assets and ethical trade.
- Challenge to Global Norms: The critique of interest questions the foundations of modern capitalism and calls for a reimagining of economic justice LLP.
#RibaFreeFuture #EthicalFinance #FinancialJustice #ReturnToSoundMoney
