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Text Box: ENGINEERING OUR ECONOMY (Part 4) By Mubaashir Uqdah When discussing the idea of an Islamic economy, we cannot help but talk about the idea of Ribaa (Usury). Allah the Most High condemns Ribaa and our beloved, honorable Prophet Muhammad spoke strongly against it. Allah says in Sura 2, Ayat 275 (Yusuf Ali) “Those who devour usury will not stand except as stand one whom the Evil one by his touch hath driven to madness. That is because they say: ‘Trade is like usury,’ but Allah hath permitted trade and forbiddeth usury. Those who after receiving direction from their Lord, desist, shall be pardoned for the past; their case is for Allah (to judge); but those who repeat (The offence) are companions of the Fire: They will abide therein (for ever).”   Usury is defined in the English dictionary as the lending of money at an exorbitant rate of interest. The majority of Muslim economists believe charging even a small amount of interest is Ribaa. There are a few that believe charging a small, “fair” amount of interest is permissible, because it is not excessive and because the Time Value of Money must be taken into account. While Ribaa is most often associated with charging interest, that is not the essence of its true meaning. Ribaa is an Arabic word which means to increase, to grow, to exceed. It comes from the same root as the word ‘Rabb,’ an attribute of Allah, which means lord, controller, and owner, to evolve, to raise up, nourish and make grow. Interest certainly does make the pocketbook of the lender increase and grow. What is wrong with growing and increasing, especially increasing our wealth? This is what we need, is it not? Yes, we certainly do want to grow our wealth, but we do not want to unjustly increase our wealth. Ribaa is the concept of unjust, unearned, undeserved gain and increase. Any form of unfair, unjust gain or increase is Ribaa, and one of the biggest tools of unjust increase and gain is the charging of interest. Again, Allah says “They say Trade is like Usury, but Allah hath permitted Trade and Forbiddeth Usury.” We must ask ourselves why did the people claim that Trade is the same thing as Usury and why does Allah permit one and not the other? The Arabic word for Trade, in this ayat, is ‘Bai’a,’ which means to sell, make a contract, to make an agreement, make a business deal. It also means to pay homage. The idea is that when two or more people sell or trade with each other, they have an agreement and they pledge allegiance to each other that they will honor (pay homage to) the terms of the agreement or business transaction. Allah permits us to sell and purchase from one another, to make contracts and agreements to trade products and services with each other in our business transactions. He requires that we honor those contracts and that those contracts are fair and just. It is worth noting that this word, Bai’a, also means to pledge allegiance or cooperation to a leader or sovereign ruler (make Bai’a). This tells us that there should be clear terms of agreement and expectation between leaders and followers. There were people that said to the Prophet that Ribaa was the same thing as trade. I imagine that their rationale was that in a trade, two people come to an agreement to buy and sell an item for a specified price and according to specified terms. Similarly, they might argue that two people should be able to create an agreement to borrow and loan money for a specified price and according to specified terms. This argument may sound reasonable, but let us examine some of Prophet Muhammad’s thoughts on the matter. Consider the following hadith, “Narrated Abu Said al-Khudri: Once Bilal brought Barni (i.e., a kind of date) to the Prophet and the Prophet asked him, ‘From where have you brought these?" Bilal replied, ‘I had some inferior type of dates and exchanged two Sas of it for one Sa of Barni dates in order to give it to the Prophet; to eat.’ Thereupon the Prophet said, ‘Beware! Beware! This is definitely Ribaa (usury)! This is definitely Ribaa (usury)! Don't do so, but if you want to buy (a superior kind of dates) sell the inferior dates for money and then buy the superior kind of dates with that money.’" (Bukhari: Book #38, Hadith #506). In this hadith, we see Bilal exchanging two inferior dates for one superior date. The Prophet called this Ribaa. Why? Bilal and the other person agreed to exchange the dates, so what was the problem? The problem is that there is vagueness in determining the value of the exchange of the dates and one of the parties might be unfairly advantaged over the other. For instance, suppose the superior date would sell for $1.00 and the two inferior dates would sell for $.25 cents each. The trade would have cheated one man out of $.50 cents and enriched the other man by $.50 cents. This is exactly why the Prophet told Bilal to sell the inferior dates for money and then to go buy the superior date. In this example, you see that the Prophet is not only concerned that the parties come to a satisfactory agreement with each other, but the agreement itself must be fair towards both parties and the process by which fairness is determined must also be a fair process. Suppose I wanted a Muslim Journal really bad and you sold it to me for $15.00. We both may have agreed satisfactorily to the deal, but does that make it okay? The Prophet would say this is Ribaa, because I was unfairly charged, even though I was happy about getting the paper. The paper should have been sold to me at its real value, $1.75 and then our agreement would have been fair to us both. We purchase our homes and end up paying 3 or 4 times the value of the home in interest. We are happy to have the home, but does that mean the transaction is fair? No it does not. We must avoid taking on the free market mentality that we can charge whatever the market will bear (in other words, whatever some person is willing to pay, even if they are ignorant, an idiot, desperate, etc.). We do not rob people, because they unknowingly, unwillingly, or even willingly agree to be robbed. This is why Muslim vendors should not sell their products at one price throughout the year and at holiday celebrations or special events increase their prices, because they know they have a captive market that will have to purchase from them. This is Ribaa, unjustly increasing yourself. Here is another Hadith, “Abu Sa'id al-Khudri reported Allah's Messenger as saying: Gold is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, salt by salt, like by like, payment being made hand to hand. He who made an addition to it, or asked for an addition, in fact dealt in usury. The receiver and the giver are equally guilty” (Muslim: Book #010, Hadith #3854). Here we see the Prophet enjoining people to exchange like items for like items. This is enjoined to help people ensure that one party is not getting an unfair advantage over another. This is the same concern for fairness and justice expressed in the Hadith previously discussed. The Prophet also says to make the payment hand to hand. This means that you make the payment when you receive the merchandise so that you can inspect what you are buying before you pay for it. The concept is that you don’t pay for something before you know what you are getting, because it leaves room for disagreement and deception. We have all had the experience of paying for something and when we received it were disappointed or felt cheated. Perhaps, we were cheated. Now, does this mean that in order to follow the Prophet we cannot catalog shop or purchase products over the Internet? Hmmm, these things did not exist during the time of the Prophet, did they? The Prophet did not drive cars either, but we do. Therefore, Ijtihad (reasoning) must be employed. Suffice it to say that, in my opinion, the combination of digital technology and contract purchases helps protect us in these matters. However, we should be wary and cautious of transactions where we are not given a clear idea and agreement of what to expect and what our refund options are. In this Hadith, the Prophet also stipulated not to add an extra fee or add unearned income to the transaction. Why? Because it is an unfair way to increase your own wealth and to take extra (steal) from your brother or sister. This hadith also alludes to the idea that charging interest on top of the value of a transaction is unjustly increasing one’s wealth. The Prophet also says that the receiver of the extra money and giver of the extra money are both guilty of Ribaa. It is easy to understand why the receiver of unjust profits would be guilty, but why would the one who paid the extra money be guilty? Again, some reasoning is required. Matters are judged by intentions; therefore, if you are unaware that you are being cheated, you are not guilty. However, sometimes we know that we are being cheated, but we willingly allow ourselves to be cheated to get what we want or because we are afraid to stop the theft. In this case, the giver of the extra is guilty of Ribaa because, he has willingly allowed someone to steal something from him that Allah has loaned to him. Now, do not become unbalanced if you suddenly realize that you are consuming Ribaa and being consumed by Ribaa. We must work to free ourselves of it, while recognizing that this day was prophesied. I cite this prophesy at the end of this article. To conclude this part of the discussion on Ribaa, the following hadith demonstrate that Ribaa encompasses all forms of unfairly increasing one’s self or position. “Narrated 'Aisha: When the Verses of Surat-al-Baqara regarding usury were revealed, Allah's Apostle recited them before the people and then he prohibited the trade of alcoholic liquors” (Bukhari: Book #60, Hadith #64). “Narrated Sa'id ibn Zayd: The Prophet said: The most prevalent kind of usury is going to lengths in talking unjustly against a Muslim's honor” (Abudawud: Book #41, Hadith #4858). The first hadith shows that profiting from people when they are not in a sound state of mind (such as under the influence of alcohol, games of chance, charged emotions, etc.) is Ribaa. The second hadith shows that increasing one’s own status, position, or influence by unjustly speaking ill of another is also Ribaa. In Sura 4, Ayat 161, Allah says, “and they took Ribaa, though they were forbidden; and they devoured men's substance wrongfully—We have prepared for those among them who reject faith a grievous punishment.” As we have shown, Ribaa encompasses many forms of unjust increase. Now, that we have discussed its meaning, in the next part of this discussion on Engineering Our Economy, we can engage one of its most popular, prevalent and violent forms: the charging of interest. “Narrated AbuHurayrah: The Prophet said: ‘A time is certainly coming to mankind when only the receiver of usury will remain, and if he does not receive it, some of its vapor will reach him. Ibn Isa said: Some of its dust will reach him’ (Abudawud: Book #22, Hadith #3325).” We are living in the day that the Prophet was speaking of. We are all receiving usury or “smelling” it, if by no other means than being a part of the modern capitalist economic system. Interest has played a pivotal role in catapulting the Western nations to global economic dominance. It is also playing the role of capturing and enslaving the productive forces of nations and its people for the benefit of the wealthy imperialists that are paving the way for “somebody’s” world supremacy. When we glimpse the role of Ribaa in the form of interest in its macro context, we will see the evil nature of its power and we can more fully appreciate why Allah and His Prophet condemn it and why the Muslims have a remarkable challenge ahead of us. The supporters of Imam Mohammed and the Muslims around the world are in a life and death struggle to find a way to establish an economic order and practice that is powerful, dynamic, and resilient enough to compete with the most powerful economic model in the history of man: the capitalist model. Yet, it must do so without the magnetic key and super engine of interest. Continue Part 5

M.A.L.I. Magazine:

Applying Teachings of Imam W.D. Mohammed

By Mubaashir Uqdah