Part I | Part II
The prohibition of interest in Islam is a Divine ruling; hence a Muslim seeks to submit to it. Nonetheless, there are two crucial aspects to such submission. Firstly, we believe that all Divine rulings have wisdom, even if we are not cognisant of the wisdom. Secondly, with abstinence of and opposition to interest, as with any act of obedience done with profound reflection and inner awareness, there is huge potential of high spiritual benefit in both this world and the next, by the will of God. Nevertheless, the opposition to interest can also be seen in the context of the Islamic imperative for Muslims to be at the forefront of pushing the agenda for global social justice. A collective observance of the prohibition is a defence against societal and economic corruption, which ultimately can smite the good and bad alike, without differentiation. Sadly, in the face of the defences of interest based on economic theories founded on a false understanding of the reality of humanity and the general acceptance of interest, one will be able to apply to the issue of interest the following words that Leo Tolstoy wrote against current theories of art in his What is Art?
“If a theory justifies the false position which a certain part of society is in, then, however baseless and even obviously false the theory may be, it will get adopted and become the belief of that part of society…However baseless theories of this sort may be, however contradictory they may be to everything mankind knows and recognizes, however obviously immoral they may be, they are accepted on faith, without criticism, and are preached with passionate enthusiasm, sometimes for centuries, until the conditions they justify are done away with or the absurdity of the theories becomes too obvious.”
An Introduction to Interest
Shaykh Muhammad Shafi, in The Issue of Interest, enumerates the many Quranic verses that prohibit riba, such as 2:275-6 and 2:278-9. The latter includes the stern warning: “O you who have believed, fear Allah and give up what remains [due to you] of riba, 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.” Shafi explains how riba is translated into Urdu as sud as though they ‘are one and the same thing in Arabic and Urdu,’ but ‘riba carries a general and wider connotation and the prevailing phenomenon of sud is a kind or type of riba. The prevailing phenomenon of sud refers to lending of a specific amount for a specific period on a specific rate of profit or increase, and no doubt this is riba. But riba is not limited to this and has a much wider connotation. It includes many transactions of sale, purchase, where there is no element of credit.’ This discussion can be directly applied to a similar mistake in English if we only understand riba as interest. In summary, interest is, in the words of Shafi, ‘the compensation or the excess paid for an extension in the tenor of the loan’ as ‘the offer by the borrower that he will pay an extra sum of money if the lender extends the moratorium for repayment.’
In specific response to those who might claim that it is acceptable to merely receive interest from a bank, Shaykh Hussain Hamed has written:
“Bank deposits are considered loans by law and by the consensus of jurists, and “any increment in a loan is riba,” as the Prophet ﷺ states in his hadith. In reality, banks deal freely in people’s deposits; they unilaterally dispose of them by using them in lending to other people for interest. At the same time, banks are committed to pay that money back with interest. These are the characteristics of loans as stated in law, with no regard to how such interest is estimated, what its percentage is, or what the name given to it is. It is no matter whether such extra money given on the capital is called benefit, gain, earning, interest, reward, gift or whatsoever. What matters are the actual results effected by the contract between the bank and the dealers, because contracts are governed by the results they entail. Rulings are generally given to real matters not to hypotheses. Moreover, the claim that banks are just investors by proxy that invest money deposited therein in legal projects has already been refuted by law, Shari`ah [Islamic law] and by experience.”
[The full explanation of the details regarding riba is beyond the scope of this article, but one would be well-advised to view the in-depth explanation in Shaykh Wahbah Zuhayli’s Financial Transactions in Islamic Jurisprudence.]
Imam Qurtubi, in his Tafsir on Qur’an 2:275-9, relates the strongest condemnations of the practice of riba narrated from the hadith and pious early generations, especially in relation to God’s declaration of ‘war’ against the people of riba and how God obliterates riba. He further states that 2:279 indicates that practising riba is a major sin and there is no disagreement upon that. Indeed, he narrates that Ibn Khuwayzimandad stated that the belief that riba is lawful is an act of apostasy. Muhammad Shafi, in his Ma’ariful Qur’an in commentary of 2:279, says, ‘So severe is this warning that any other warning of such severity does not appear anywhere in the Qur’an in relation to any other sin, no matter how great, except kufr (disbelief), of course.’
Over the ages, the matter of interest has been treated with abhorrence and condemnation. In the West, this disgust goes back to the Greek philosophers. John Kenneth Galbraith, in A History of Economics: The Past as the Present, notes how Aristotle ‘strongly condemned the taking of interest’ because, in Aristotle’s (384-322 B.C) words, ‘money was intended to be used in exchange, but not to increase at interest.’ Galbraith explains the reasoning for this dislike: ‘interest was an unworthy extraction from the less fortunate arising from possession of the money by the more fortunate.’ He notes that ‘interest continued to be strongly condemned throughout the Middle Ages’ until it was later ‘redefined as a payment for productive capital – when it became compellingly evident that the one who borrowed money made money out of doing so and should, in all justice, share some of the return with the original lender’, and then it was considered ‘reputable.’ At that point, Galbraith states that the ‘religious precept and the accepted ethic were then, not exceptionally, adjusted to this circumstance’, ‘but the taking of interest for personal needs or use continued to have a slightly unwholesome, even suspect, reputation.’
Galbraith notes that ‘early Christian doctrine strongly condemned the exaction of interest; as with the Greeks, it was seen as extortion by the fortunately affluent from the unfortunate, unwise or impoverished who were pressed by needs and obligations beyond their means.’ Moreover, this orthodox condemnation of interest is shown by Galbraith to extend to the leading Christian theologian Thomas Aquinas (1225-1274), as exhibited in his Summa Theologica. However, Galbraith argues that ‘mercantilism involved…a marked break with ethical attitudes and instructions of Aristotle and of Saint Thomas Aquinas and the Middle Ages in general’ due to the influence and dominance of merchants in society, and that the charging of interest ‘lost its evil or dubious connotation’; and with it, in the words of Galbraith, ‘religious faith was accommodated to economic circumstance and need.’ He adds that ‘both Catholic and Protestant church doctrine’ changed their stances, ‘however reluctantly and gradually.’ [Galbraith explains that ‘merchant capitalism’ or ‘mercantilism’ is said to cover ‘three hundred years, from very roughly the middle of the fifteenth century to the middle of the eighteenth, with the end vividly marked by the beginning of the Industrial Revolution, the American Revolution and the publication of Wealth of Nations by Adam Smith [in 1776].’]
Both Shaykh Taqi ‘Uthmani in The Historic Judgment On Interest: Delivered in the Supreme Court of Pakistan and Ahamed Kameel Mydin Meera in The Theft of Nations: Returning to Gold have brought forth a number of passages from the Old and New Testaments that order people not to charge ‘interest,’ such as Exodus 22:25. Now ‘Uthmani presents Qur’an 4:161 as the evidence that the Tribe of Isra’il was prohibited to charge interest. Meera states that all ‘three Abrahamic faiths – Judaism, Christianity and Islam –…strongly condemned the practice of charging interest.’ The latter assertion becomes a somewhat difficult argument to sustain when one takes Judaism and Christianity from within what has become their tradition, as opposed to taking a Qur’anic method towards explaining their faiths.
Firstly, as pointed out by Israel Shahak in Jewish History, Jewish Religion: The Weight of Three Thousand Years, numerous Biblical verses are ‘understood’ in what Shahak calls ‘classical Judaism’ or latter-day ‘Orthodoxy’ in a manner ‘quite distinct’ to the ‘literal meaning’ or understood by a Christian or reader of the Old Testament. Shahak argues that these forms of Judaism are bound more by Talmudic law than the Biblical text. In the case of interest, Shahak argues that Talmudic law only initially banned Jews from charging interest from fellow Jews; but, over time, innovative legal stratagems were devised to even get around this latter prohibition.
Secondly, as highlighted by Taqi ‘Uthmani in his What is Christianity?, one has to understand the wide scope for legal reform within Christianity in light of Paul’s renunciation of the Law of the Torah in favour of just faith in Jesus, which conflicted with the earliest conveyors of Jesus’ disciples and is pivotal because Paul is, as stated by ‘Uthmani is the latter work, really the ‘founder of present day Christianity’ – if one takes a Biblical method then one is forced to become ‘bewildered’ like Michael Baigent and Richard Leigh in The Dead Sea Scroll Deception in trying to accurately determine the details of the life of Jesus (upon him be peace). Hence this foundational spirit of freedom exhibited by Paul has led Christians to freely amend laws and attitudes over time, for even if they reject some of Paul’s positions, they can still use his methodology and apply it as they see fit. Tom Holland, in a recent documentary on Paul for Channel Four in the UK, entitled ‘The Bible: A History’ and aired on 28 February 2010, felt it was apt to end his programme with, ‘That all you need is love’ – after arguing in favour of the thesis that the central method of Paul’s invitation of faith to non-Jews, like Greeks and Romans, was to emphasise that they could dispense with the Law, and just suffice with loving Jesus (upon him be peace). Thus Holland mentions that the roots of changing the Law can be seen in Paul himself; furthermore, even if Paul and the Church adhered to current ‘morals,’ they could be ever changed on the basis of ‘love.’
The acceptance of interest is now almost universal, and it is intrinsically linked to the modern banking system; and the latter is crucial for what we see as development in the West. For example, look at the industrial development of Britain and the crucial role played by the establishment of the Bank of England. Dan Snow’s BBC series entitled ‘Empire of the Seas: How the Navy Forged the Modern World’ – in an account that is essentially supported by Galbraith in Money: Whence it Came, Where it Went and Tarek El Diwany in The Problem with Interest, but Snow makes broader connections – shows that Britain’s affluence is due to the facility of interest-based loans administered through the establishment of the Bank of England in 1694, in order to raise funds for the King to develop the navy for military engagement with the French. In this scenario, the newly-formed Bank agreed to pay 8% on loans of £25 from the people; then the massive wealth raised by the keen accepters of this offer was loaned to the King by the Bank. This method was far more popular than raising taxes, but it also was the beginning of the national debt. Nevertheless, the financial revolution was to spur on the industrial revolution, as the influx of newly-available money led to industrial innovations and bolstered agricultural produce that were created to feed and aid the navy. Snow talks of these matters coupling with the belligerent and war-mongering pursuit of booty by the English, and a strategy of ‘relentless aggression,’ which also included the conquering of lands by force for the opening up of wealth and the utilisation of the slave trade (especially in the Caribbean). Consequently, Britain achieved ‘global supremacy’ when defeating the French in 1759. Thus it is difficult for us English to view interest and banking in a cold impartial light when it is so deeply embedded in the economic comfort that we so enjoy now; and anything murky, especially widespread bloodshed, is slightly disconcerting to the image of purity we so seek to construct about ourselves.
Wisdom and Cause in the Sacred Law
In The Lawful and the Prohibited in Islam, Shaykh Yusuf Qaradawi argues that God, al-Rahman al-Rahim (The All-Merciful, The Compassionate), prohibits and permits for ‘people’s well-being,’ for He is not ‘arbitrary’ in regard to legislation. He adds:
“Accordingly, He has neither permitted anything except what is pure nor has He prohibited anything except what is impure…If something is entirely harmful it is haram [forbidden], and if it is entirely beneficial it is halal [lawful]; if the harm of it outweighs its benefit it is haram, while if its benefit outweighs its harm it is halal. This principle is explained in the Qur’an in relation to wine and gambling: ‘They ask thee concerning wine and gambling. Say (O Prophet): In them are great sin and some benefit for human beings, but the sin is greater than the benefit…’ (2:219). By the same logic, if it is asked, what is halal in Islam? The answer is, the good things. Good things are those which moderate people acknowledge to be wholesome and which are approved by human beings in general without relation to the habits of a particular group. Allah Ta’ala [God the Exalted] says: ‘They ask thee what is lawful to them (as food). Say: Whatever is good is lawful to you…’ (5:4). He also says: ‘Today whatever is good is made lawful to you…’ (5:5).
“The Muslim is not required to know exactly what is unclean or harmful in what Allah has prohibited; it may be hidden from him but be apparent to someone else, or its harm may not have been discovered during his lifetime but may be understood at a later period. What is required of a Muslim is simply to say, ‘We have heard and we shall obey’ [Qur’an, 2:285]. Do we not observe that Allah prohibited the eating of pork without the Muslims being aware of the reason for its prohibition apart from the fact that the pig is a filthy animal? Centuries passed, and then scientific research discovered the presence of parasites and deadly bacteria in its flesh. Yet even if scientific research had discovered nothing in pork, or if it had discovered much more than this, the Muslim would still continue to believe it to be unclean.”
Furthermore, by way of emphasising the above from Qaradawi, Muhammad Shafi says in commentary of Qur’an 2:275 in Ma’ariful Qur’an:
“When He declares something to be halal, and something else to be haram, you should immediately realize that there must be some loss or harm or evil in that which has been declared haram, even if one does or does not see through it. This is because the actual reality of this whole system, and the benefit and harm that lies therein, can only be encompassed by the same ‘Alim (the Knower) and Khabir (the Aware) from Whose reach of knowledge the minutest particle of the world cannot escape. The individuals or groups in this world can identify their expedient gains and their losses, but they cannot claim to have encompassed the entire range of benefits and harms affecting the whole wide world. There are things that appear to be beneficial for a certain person or group but, when looked at in the perspective of the whole nation or country, the same things prove to be harmful.”
Shaykh Ibn ‘Ashur, in his Treatise on Maqasid al-Shari’ah, argues in a manner that really does not require commentary, for it succinctly sums up the whole affair:
“From a comprehensive thematic analysis of the textual sources of the Shari’ah pertaining to the objectives of legislation, we can draw the following conclusions. Both its general rules and specific proofs indicate that the all-purpose principle (maqsad ‘amm) of Islamic legislation is to preserve the social order of the community and insure its healthy progress by promoting the well-being and righteousness (salah) of that which prevails in it, namely, the human species. The well-being and virtue of human beings consist of the soundness of their intellect, the righteousness of their deeds as well as the goodness of the things of the world where they live that are put at their disposal…If He had not intended the orderly running of the world, He would not have ordained punitive laws to deter people from perpetrating corruption nor permitted them to enjoy the beautiful and good things of life…Human beings have a natural propensity for perfection. However, their actual achievement of perfection develops only gradually in tandem with their spiritual purification and moral uplifting.”
A righteous soul, believing that their Lord is All-Wise in His rulings, might easily confuse wisdom and cause; and therefore permit or deem unlawful on the basis of wisdom, whilst contradicting the ruling established by the necessary cause or causes, hence reaching an incorrect conclusion due to failing to observe a sound jurisprudential method. This is outlined by Taqi ‘Uthmani in the Historic Judgment in his differentiation between ‘illa and hikma. He establishes that ‘illa in this issue of interest is:
“The basic feature of a transaction without which the relevant law cannot be applied, whereas Hikmat is the wisdom and the philosophy taken into account by the legislator while framing the law or the benefit intended to be drawn by its enforcement. The principle is that the application of a law depends on the Illat and not on the Hikmat…To cite another example, the Holy Qur’an has prohibited liquor. The Illat of its prohibition is intoxication but the Hikmat of this prohibition has been mentioned by the Holy Qur’an in the following words: ‘The Satan definitely intends to inculcate enmity and hatred between you by means of liquor and gambling, and wants to prevent you from remembering Allah. So would you not desist?’ (5:91)…It is in the same way that after mentioning the transaction of Riba, the Holy Qur’an has mentioned the Zulm [inequity] as a Hikmat or a philosophy of the prohibition, but it does not mean that prohibition will not be applicable if the element of Zulm appears to be missing in a particular case. The Illat (basic feature) on which the prohibition is based is the excess claimed over and above the principal in a transaction of loan…Another point worth mentioning here is that the Illat of a law is always something determinable by hard and fast definition which leaves no room for a dispute as to whether the Illat is or is not available. Any relative term which is ambiguous in nature [like Zulm] cannot be held to be the Illat of a particular law because its existence being susceptible to doubts and disputes…”
To be continued in the second part.