Deconstructing Riba

DEEP DOWN INSIDE, we all want something for nothing. We love delicious fruits and vegetables, but don’t want to have to grow and pick them ourselves. We want a nice house, but don’t want to have to sweat for it. We want travel, but without the hardship, danger, and vast expenditure of physical energy that accompanied it before the fossil fuel era. We want a comfortable life, without working uncomfortably hard to get it. I know this, because I, too, want something for nothing….”I” meaning my nafs, my congealed mirror-image, my desiring ego. This nafs of mine is not a very nice guy. He wants a free lunch, sex without commitment, a credit card with no limit and no bills to pay. Before I came to Islam my nafs was often savage and unrestrained. Islam has helped me harness the nafs and achieve ever-increasing balance and harmony. (It is a long laborious process, for those of us who came to Islam in adulthood have many bad habits to unlearn.) Islam is a dîn, a life-transaction, aimed at establishing balance, quieting the nafs, opening the heart to inner tranquility, and paving the way to Paradise. The word “dîn” has a connotation of “debt” – the debt our existence incurs to Allah, our creator. We repay that debt through worship, through grateful submission to the Lord of the Worlds. When the stiff-necked nafs submits, it bows down and prostrates itself before its Lord, admitting that it is nothing and its Lord is everything. Whereas the unrestrained nafs of the ungrateful kâfir takes and takes and takes and is never satisfied, the soul in submission is satisfied with little, because its greatest reward is awe and reverence first for Allah and secondly for His creation.

Riba: A Function of the Insatiable Nafs  

The proud, insatiable nafs always wants something for nothing, and one way it tries to get it is through riba. The act of riba, charging interest on loans, is prohibited by the Qur’an. In Sûrat Al-Baqarah, verse 274, Allah describes usurers as “those who devour usury” and cannot arise, except as one arises who was taken down by the touch of Satan. This image highlights the insatiable greed of the usurer, who is like someone whom Satan causes to eat until he falls down. Unfortunately, we live in global capitalist economy that is built on riba, and that economy looks like it is going to devour everything until it falls down. The money that modern nation states create has riba built into it. Today’s currency is called “fiat currency” because it is created arbitrarily, by government fiat. It is not backed by gold or by anything at all. It is created out of nothing and has no value beyond the misplaced faith that people put in it. And faith in the money printed by a government is linked to the idolatrous worship of that government. Every coin or bill has imprinted on it the face of a national idol, while the back of the dollar bill features the illuminati pyramid/eye symbol. Worship of the almighty dollar is America’s national illness and most pervasive idolatry. Governments authorize banks to lend far more money than those banks have in deposit. The banks make their living on the interest they charge on this illusory money that comes out of nowhere. The result is that every dollar created is an interest-bearing debt. Besides the fact that riba is ḥarâm, it is unsustainable except in a high-growth economy. Why? Because if every dollar created is an interest-bearing debt, the borrower who gets it has to pay back both the dollar and interest. His enterprise has to grow, and along with it the entire economy. This riba currency system seems to have worked well in recent decades, because the expansion of currency has matched an ever-expanding economy of perpetual growth. But a perpetual-growth economy, like a perpetual-motion machine, is a fantasy. The era of endless economic growth is nearing its end, because the physical resources it draws on are finite. Recognizing that the Quran prohibits riba, we must ask ourselves: What are the alternatives to riba that we can use as individuals and within Muslim communities? And secondly, how can we help humanity move out of riba-based capitalism and into an economy that will distribute resources fairly in a no-growth environment? As for our options as individuals and small communities, the scholars have different answers. Some say not to worry because “necessity makes prohibited things permissible” and it is necessary to use riba  in one form or another – if only by using government-based riba currency – to exist in today’s economy. Others have tried to justify riba by calling it a commission. An only slightly more plausible evasion of riba is the murâbaḥa, which disguises interest as a guaranteed profit on a commodity bought at one time and sold at another. Genuine Islamic banking involves making the “money-lender” an investor in an enterprise who will share in the profits or losses of the enterprise, with no guarantees that it will be profitable. Mushâraka (partnership) and muḍâraba (sleeping partnership) are therefore fully ḥalâl arrangements even under the strictest interpretations of the ban on riba. One of the evils of riba is that it makes the rich richer and the poor poorer. The more money you have, the more interest you make; and the more interest you make, the more money you have. Your money just keeps growing by itself, without your having to do anything except keep an eye on it. Though this sounds great to the nafs, which drools at the idea of getting something for nothing forever in ever-greater quantities, those “automatic profits” have to come from somewhere – ultimately from resources that otherwise would have been available to others.

The Cure

So what should a Muslim do when she has more money than she can use herself? Going back to the Qur’an [Sûrat Al-Baqarah, 2:276] we learn: “Allah has blighted usury and made almsgiving fruitful.” Instead of trying to make ones hoard increase by itself, Muslims are urged to give it in charity. Lending it in a non-interest bearing loan (which today’s capitalists would consider a form of charity) is another alternative: “And if you (usurers) repent, then you have your principal (without interest).” [Sûrat Al-Baqarah, 2:279]. When lending to those less fortunate than ourselves, we are encouraged to not only refrain from charging interest, but to remit the debt entirely: “And that ye remit the debt as almsgiving would be better for you if you did but know.” [Sûrat Al-Baqarah, 2:280] Offering no-interest loans to our fellow Muslims who are starting an enterprise is an excellent alternative to putting money in a riba investment. Generosity, nobility and a degree of selflessness are classical Islamic virtues that are nourished in a no-riba, Islamically committed environment – while avarice, stinginess, and an ignoble greed that keeps track of every penny of interest on every dollar it is owed are the character defects instilled by the riba-based capitalist economy. When our perpetual-growth capitalist economic bubble pops, we are going to need to build a riba-free economy in which the relatively wealthy practice far more charity than they do now. We will need to pull together to survive, for the capitalist war of all against all will be suicidal when the global economy reaches its growth limits and starts to collapse. Perhaps the post-growth economy will resemble a return to the classical Islamic economies of past centuries, with their magnificent awqâf projects, institutionalized Zakah, and gold and silver coinage. But maintaining a humane world in the face of economic collapse will require more than just ḥalâl institutions. It will require a critical mass of people who have submitted to God and achieved a degree of inner peace. Let us contribute to building that critical mass of real, not just nominal, Muslims, both by spreading Islam through daʿwah, and by working to restrain our own nafs in full submission to Allah.