By Samir Hussain
Riba al-Qardh is when a lender stipulates a profit on the loan they give out. As a condition for receiving the loan, the borrower must return more than the amount they borrowed. In Islam this is a well-known major sin. In contemporary finance this is the ‘interest’ that often appears in loan contracts and is not just normal, but what the entire banking industry has been running on since Renaissance Europe.
What happens when Riba al-Qardh becomes systemic and widespread, and lending becomes a means of profit? Banks will have an incentive to give out loans, even big ones to commercial enterprises, and as long as they are accruing enough compound interest from loans, they will have the money to absorb the shock from those unable to pay back their loans.
Coupled with the concept of fractional reserves, legal tender, and eventually consumerism, what this has created is a source of unlimited capital I.e. financial resources. As long as banks are generating enough money from interest (and they do, banks generate insane amounts of profit), they have enough money to keep giving out loans. Massive corporations also emerge because of this, as those with the means to risk taking out bigger loans will keep growing and eventually destroy the competitiveness of small businesses.
As a whole, corporations and industry will always have a source of money at their disposal to spend on extracting resources & producing goods. Even if a company fails, there is enough capital available in the market for another company to take over doing the same activity.
But the earth’s resources are not unlimited. Even with an unlimited supply of money, there is only a finite amount of resource extraction and production that is sustainable enough to ensure that the Earth’s resources are not depleted or overused to the point where the sustainability of the environment is disrupted. The systemic disease of riba has destroyed the Earth because it has generated the means for human beings to endlessly exploit it. No amount of financial or environmental regulation can stop this, as the combined forces of human greed and love for the dunya together with riba will always find a way around them. As Albert Einstein quipped, “compound interest is the most powerful force in the universe”.
So the next time someone tries to justify what they think is a private sin, like paying interest on a credit card loan or mortgage, they should remember that the short term ‘gains’ of riba are not worth it. You may not see the immediate effects, but Allah outlawed these things for a reason. Not only does riba destroy the heart and soul of the individual, but it’s harm extends outwards into society and then the entire Earth itself.
Seeing freak weather events like floods, forest fires burning all over the world and temperatures rising due to climate change has made this realization more important than ever. As Muslims we can’t afford to ignore climate change. But did it start when we (not just Muslims but all human beings) started ignoring Riba? Allah knows best.
Samir Hussain, an evolutionary biologist and cosmologist, wrote via samir@fahm.education
