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[Distribution of Wealth in Islam]
The Prohibition of Interest and its Effect on the Distribution of WealthAs the foregoing discussion has made clear, one of the basic differences between the Islâmic system and the Capitalist system with regard to the distribution of wealth is that Capitalism allows interest, while Islâm forbids it. Now, it would be proper to have a cursory glance at another aspect of the problem too - what are the consequences that follow from the interdiction placed upon interest? In fact, the prohibition of interest has very far-reaching, beneficial, and profound effects on the whole system of the production of wealth itself. But this discussion would lead us far beyond the subject of this article. So, for the moment, we shall only summarily indicate the effects which Islâmic injunctions do have on the system of the distribution of wealth. A very simple consequence of the prohibition of interest is that it produces a balance and uniformity in the distribution of wealth. The necessary characteristic of the economy based on interest is that the profit of one of the parties (i.e., Capital) is assured in a fixed form under all circumstances, but, contrarily, the profit of the other party (i.e. Labor) remains uncertain and doubtful. Big commercial enterprises, no matter how profitable they become, can never be considered immune from risk. In fact, while the “risks” of big business have been decreased because the means of production are available in an adequate measure, they have at the same time been increased by certain external factors. The bigger is the enterprise, the greater these risks are. So, under the Capitalist economy, the balance of the distribution of wealth becomes very unsteady. Sometimes the debtor has to bear severe loss, while the creditor goes on minting money. Sometimes, on the other hand, the entrepreneur earns a huge profit, while the man who has provided the capital gets only an insignificant share from it. Contrary to it, since Islâm prohibits interest, it would in
practice allow only two forms of investing capital in the modern world-
“Partnership” (
By prohibiting interest, Islâm has struck at the very root of these evils. Under the Islâmic system, every one who invests his money has a share in the enterprise and its policy, bears the responsibility of profit and loss both, and thus he is no longer allowed to have his own way in business.
A Doubt and its ClarificationIt is necessary to clarify a doubt that may arise here. In discussing the evils of the economy based on interest, we have said that it produces an imbalance in the distribution of wealth, and that one of the two parties in a business enterprise is necessarily affected by it. Some people are quite likely to raise the objection that the man who suffers a loss in a transaction based on interest, suffers it through his own choice - if he deliberately exposes himself to such risk, why should the law of the Shari’ah interfere with his right to do so? Even a little reflection would easily solve this problem. A
slight acquaintance with the Islâmic way of life should be sufficient to bring
out the principle that, according to Islâm, the mutual consent of two parties
does not always justify a certain transaction. If a man is willing to get
murdered by another man, this fact would not absolve the murderer of his crime.
Even in the case of fornication, which the West in its shortsightedness
considers to be a private affair of the individual, mutual consent of the two
parties cannot absolve the criminals. The question of the distribution of wealth
and economic welfare goes much beyond this. We have already explained, with due
quotations from the Holy Qur’ân, that wealth is in principle the property of
Allâh Himself, and that the ownership He has bestowed upon man is, far from
being unconditional and unbridled, subject to certain principles laid down by
Allâh Himself. That is the reason Islâm does not allow the mutual consent of
the parties concerned to be treated as a justification for a transaction which
Islâm regards as intrinsically unjust or which can prove to be detrimental to
the collective welfare of society. This is the raison d’ętre behind
the strong prohibition, in the tradition of the Holy Prophet (
In the early days of Islâm, the objection which people bred in the pre-Islâmic ways generally raised against the prohibition of interest was this:
“Trade is exactly like interest.” (2:275) The Holy Qur’ân refutes this argument in a concise phrase:
“And Allâh has permitted trade, and forbidden interest.” (2:275) It is worth noticing here that, in refuting this objection, Allâh the Exalted has not enunciated any principle or purpose of the prohibition of interest, but has, so to say, simply indicated that since Allâh has declared trade lawful and interest unlawful, one shall have to abide by this commandment, whether one understands its raison d’ętre or not. Instead of elucidating the justifying principles in this place, the Holy Qur’ân has adopted the mode of authority, which cuts off the very root of all objections to the prohibition of interest. In short, the prohibition of interest by Islâm is the wisest solution of the problem which, on the one hand, eliminates many evils of the Capitalist economy, and, on the other, leaves no need for the adoption of the tyrannical and unnatural economic system of Socialism. This is the middle way which alone can save the modern world from the two extremes of license and servitude, and lead it towards a balanced and equitable economic system. The French orientalist Louis Massignon has said something very pertinent on this point: - “In the conflict between Capitalism and Socialism, only that culture can be assured of a secure and bright future which not only prohibits interest but also makes people abide by this prohibition.”[1] [1]
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Last modified 08/12/05 09:25 AM - Iqra - ISSN #1062-2756 |