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The Evils of the Interest System
The prohibition of interest is a basic principle of Islamic civilization. It guarantees and safeguards the happiness of mankind. In its least offensive sense, interest is a system which enables the unproductive man to share in the fruits of someone else's labor for no reason but that he lent him money. The argument advanced in its favor is that the money lent enabled the producer to produce his fruits and that without it, it would not have been possible for the producer to earn what he did. Even if this advantage were the only consequence of interest, it would not be justified. For, were the money lender capable of usufructing his money for himself, he would not have lent it to someone else. And were that money to remain in its coffer, it would not produce any fruits at all. Rather, it would probably be gradually consumed by its owner. If, therefore, the capitalist allows another man to usufruct his money, hoping thereby to win a share in its fruits, he should certainly be entitled to a share of the fruits should there be such rather than imposing a definite interest charge for his money. If the operation proves successful and economically profitable, the owner of the capital should receive the share agreed upon. If it should turn out to be a failure and a loss, however, then he, too, should share a proportionate part of the burden. On the other hand, to impose a definite interest charge for the use of capital regardless of whether or not the use of such capital has been productive is illegitimate exploitation.
It is futile to object here that capital is entitled to its rent because it is used like any other commodity, be it a piece of land or a mule, and that interest is really the equivalent of rent. The renting of movable and immovable property is vastly different from renting money; the latter may bring about mutual benefit and usufruct as well as pure exploitation and crime. Man does not rent a piece of land, a house, a beast of burden, or any immovable property except in order to use it to his advantage. Otherwise, he is insane, and his commitments are not responsible. It is otherwise with money. Money is for the most part lent for purposes of trade. But trade is always exposed to profit and loss. The renting of immovable or movable property is hardly ever exposed to loss except in rare, indeed exceptional, cases falling outside the realm of normal legislation. Where it does happen that the rent of movable or immovable property exposes the user to loss, the legislator usually intervenes between the landowner and the lessees in order to relieve such injustice and prevent exploitation by the landowner. Such has been the repeated practice of the world everywhere. On the other hand, the impose of a definite interest rate of seven or nine percent, more or less, is not affected by whether the usufruct of the money in question has realized a profit or a loss. Where 'the result of the usufruct is a loss, to demand the interest is surely to commit a crime. It is on this account that hatred and immoral competition arise between men in place of fraternity and love. This source of misery is the primary cause of the repeated crises which the world community has been witnessing in recent times.
The foregoing is perhaps the least offensive description of interest. In other pictures the money lender is better compared to a wild beast rather than to anything human. Consider the case of the man who needs money for a purpose other than production. It is possible that a man may fall in need and seek financial assistance to feed himself and his family for an interval, pending his finding a job or his engaging in some productive activity. To come to the assistance of such a man is one of the first duties of humanity. This is precisely what the holy Qur'an demands. Is not the charging of interest in such cases a heinous crime, an offense deserving the same punishment as murder? And is it not a crime still more sinister to tempt those who are not shrewd in the management of their own affairs in order to get them to borrow money on interest and thereby rob them of the little wealth they possess? To tempt and to trap a man with interest is no less a crime than the lowliest theft. Surely it deserves the same if not greater punishment.