Text Box: Text Box: M.A.L.I.Muslim American Logic Institute
Text Box: ENGINEERING OUR ECONOMY (Part 5) By Mubaashir Uqdah In part 4 of this subject, we discussed the meaning of Ribaa (unjust or unearned gains or profits). However, this term Ribaa has become so strongly associated with the concept of charging interest in money matters, that we must look deeper to understand the problem of this particular form of Ribaa. Why must supporters and followers of Imam Warith Deen Mohammed, and Muslims in general, understand the root of the crime of interest from the Islamic perspective? Given the magnitude of the problem of charging interest and the condemnation of it by Allah and His Prophet, Muslims are obligated to avoid it and struggle against it. If we do not understand a problem, we cannot solve that problem. Furthermore, interest has played a pivotal role in catapulting Western nations to global economic dominance. It is playing a critical role in capturing and enslaving the productive forces of nations and its people for the benefit of wealthy imperialists who are paving the way for “somebody’s” world supremacy. Muslims are obligated to oppose this and we are struggling to learn how. The supporters of charging interest say that it is necessary and without it we would not have a dynamic and prosperous economy. They say that the citizens of this country put their money in the banks so that they can gain interest and make their money work for them. Without it, they claim people would keep their money to themselves and banks would not have sufficient amounts of capital (money) to loan to others; businesses, entrepreneurs, for research, etc. They argue that without interest, there would be a severe reduction in available capital and funding for business enterprises and large consumer purchases would be wholly inadequate, stifling the vitality of our economic system and causing it to collapse. For example, if a pharmaceutical company could not get the large investment funding needed for research, they would not have discovered the medicines we benefit from today. Another example that illustrates the problem of not charging interest would be the lack of money to fund consumer loans. The logic is as follows: if citizens do not receive interest on the money they save in banks, then they will not put their money in the bank. If they do not put their money in the bank, the bank will not have any money to loan to those who want to purchase homes, cars, and other items. If consumers can’t purchase these items, then those industries fail, unemployment rises, and the economy suffers. The champions of charging interest say that it is a virtue to be able to receive a return on your money for lending it to a bank or financial institution so they can help others purchase consumer items that improve the quality of their lives. They say that it is virtuous that interest attracts money to financial institutions so that large amounts of capital (money) can amass and be available in the form of loans to help businesses, entrepreneurs, educational and research organizations, etc. They boast that interest is a virtue, because it is greatly responsible for the rapid advance in the standard of living in modern societies and their economic preeminence in the world. There is no doubt that interest has served to function as the champions of it have described. These are the claims that the champions of interest make that have sucked the rest of the world into this Ribaa-based economic model. The case for interest, in today’s world, sounds like common sense. But, if interest is so great, why does Allah forbid it? Why did Prophet Muhammad teach against it? Why was usury almost universally condemned before the modern era? Some argue that the majority of the ancient world argued against interest, because they did not understand its value at the time. Let us try to understand why despite its apparent benefits, why Allah and His Messenger speak against it. Recall from last week’s issue on this subject the hadith about Bilal and the dates. “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). This hadith points to the crux of the interest complaint. It is highly significant to recognize that the Prophet told Bilal to use money for the exchange. Why? Money was originally created as a means of exchanging one item for another. Money did not have any value in and of itself. Money is a medium of exchange, not a product to be purchased or sold for a price. Money is not wealth, it is not production. Money is a symbol, a representation of wealth. It is a tool that can be used to access wealth. But, it is not wealth. If you have a $10.00 bill in your pocket, you have an IOU that can be exchanged for $10.00 dollars worth of real wealth in the form of the products or services that someone has produced. The potato that you grow is wealth. The computer that you produce is wealth. Your labor and skill in the production of some product or service, is wealth. The equipment, raw materials, land and facilities you use to produce your products or services are wealth. But, the dollars that I have in my pocket or credits in my bank account to give you in exchange for your potato, computer, or labor are not wealth. My wealth are the assets I own; the products, services, skills or knowledge that I have available to sell to someone. They give me dollars (paper) that symbolically represent the value of the wealth that I have sold to them, but those dollars are not wealth. What is the significance of this? My money represents my wealth. Your money represents your wealth. If I ask you to loan me some money for a big project that I cannot finance myself, I am in effect, asking you to give me some of your wealth to help me succeed at this project. Let us examine this. If you freely give me the money, that is charity. In this case, you have given me your wealth to help me in my endeavor. When Allah blesses you with wealth and you share that wealth with your brother or sister, you are fulfilling the prophet’s message to want for your brother what you want for yourself. If you become partners with me, we either create wealth or lose wealth together. Agreement to combine our wealth with the intent to increase the wealth for both of us is an excellent deed. This is indicative of the spirit that we win together and we lose together. Allah encourages this spirit. He says “To each is a goal to which Allah turns him; then strive together towards all that is good.” Well, working together to increase our material substance is striving together towards good. Now, if you become a lender and charge me 15% interest, I must pay you your wealth (principal) back, plus a portion of my wealth (the 15% interest you charged me), whether or not I successfully create more wealth. (Please note that the example is given for illustrative purposes only, it may not be technically accurate.) On face value, this seems innocent enough. But, let us follow the logic through. You made a 15% profit via interest on your loan to me. Suppose you now take the 15% of the wealth I gave you and lend it to Raheem at 15%. When Raheem pays you back, he gives you back the principal (15% I gave you) and 15% from his wealth (the interest). Suppose you take the wealth you received in interest from me and Raheem and loan it to 4 other people at 15%. When you are repaid, you will have received wealth from 6 people without lifting a finger to produce any new or real wealth. The result of this process is that you have taken the money of others, loaned it out as if it were yours, and charged interest to make money for yourself. While their money represents real wealth earned from their productivity, your money represents artificially manufactured unearned wealth from charging interest on the symbolic pieces of paper or coins that represent the wealth of those people whose money you loaned. Remember, money was created as a medium of exchange. It symbolically represents actual wealth. So, if I produce $10.00 of wealth, I can sell it and receive a $10.00 bill. I can now go to the market and buy $10.00 of rice and sugar. On the other hand, you didn’t produce any wealth. You didn’t grow anything, you didn’t build anything. Yet, by charging interest, you received $10.00 in paper money, which you can go to the market and purchase $10.00 of real wealth; rice and sugar. You have actually gained access to real wealth out of thin air, without the hard work and without any risk to your own personal wealth. The banks are the brokers and managers of Ribaa houses. What they have done is created a meeting house where we can all deposit the money that represents our wealth and they manage loaning our wealth to each other. For this service, they charge all of us a piece of our wealth in the form of interest. In effect, they are pooling the resources of the many into the pockets of a few. These few get far richer than any of the many and they use the money that we have given to them to purchase and own all of the vital industries (television, newspapers, radio, etc.) that control our lives. They take our wealth and use it to entrap and enslave us. They take the money they have siphoned from us to gain control over the American economy and to finance their own global agenda. The current relationship between many poor African nations and the International Monetary Fund (IMF) and the World Bank illustrate the problem on a global level. We are all familiar with the problem of African nations borrowing money from these institutions to build up their economies only to have the productivity of their now-improved economies usurped by interest payments to these banks for the loans they borrowed. The rich get richer and the poor remain poor, because they have to give their wealth to the rich to pay the interest on the loans. In fact, some argue that the only reason they try and develop these countries is so that they can be more productive servants of the rich. The next and perhaps final installment of the Engineering our Economy article will discuss why Islamic Economics can challenge the Western idea of Capitalist economics, the economic efforts and example of Imam W. Deen Mohammed and how our efforts to apply Islamic economic principles can lead to our economic rise in a relatively short period of time. Continue Part 6

M.A.L.I. Magazine:

Applying Teachings of Imam W.D. Mohammed

By Mubaashir Uqdah