Can We Achieve Social Justice With Riba?

16 September, 2017
Q As-salamu 'alaykum. Isn't it a fruitless venture, the attempt at social justice without first pondering over what kind of economic structure one is living in? While the systems of Riba (usury) prevail in the world and there are Central Banks, that loan money instead of being treasuries which store money and the money being concocted as if from thin air, how can we expect real social justice where the poor are having a clean and pure chance to excel? As money is made of paper and slowly being phased into the electronic realm, so money can be added to the money supply at a whim; what kind of effect does an increase in the money supply have on the purchasing power of the masses, that too the money is loaned at interest? Sunnah money is gold and silver, why? These are scarce items and so the purchasing power of the masses is protected, you can't print gold and silver or type them into the computer to increase the supply, can you?

Answer

Wa `alaykum as-salamu wa rahmatullahi wa barakatuh.

In the Name of Allah, Most Gracious, Most Merciful.

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.


In this fatwa:

1-  Riba (usury) is a form of injustice that goes against the spirit of social justice.

2- Social justice can be achieved by many ways, and interest is never one of them.


In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:

These issues need a lot of discussion and cannot be fairly covered in a few words. Let us consider the following points:

Suppport AboutIslam.net

1- Riba is injustice, because it takes a part of the property of another person while what the lender owns does not increase.

2- Ribais not the tool of creating social justice between the poor and the rich. We see many societies that have relatively high levels of social justice (no absolute poverty), and yet it is based on Riba. Some of them (e.g., Singapore and Hong Kong) are centers of Riba.

Riba does affect the economic justice, as it allows a person to take unjustly the fruit of efforts of another.

3- Tools of social justice are essentially to offer work opportunities at fair wages. This requires development plans based on and aimed at improving productivity of the masses and creating an educational system that is technology-oriented.

We see in Egypt that those who are equipped with this kind of education are getting better income and better opportunities.

Imagine if everyone is educated this way and is supported with finance in an appropriate way: mass finance based on real contribution to asset building (this is what Islamic finance does: provision of machines, goods, venture capital on sale, lease, and sharing bases).

4- Paper money is an invention of humans that must not be underestimated. It is in fact great, and it helped the economy, And so are central banks. They do not have to be based on interest. They can be based on sharing, sale, and lease. There is nothing glorious about gold and silver as money. Why having it when you can have money without cost?

Misuse of money by a corrupt government is always possible, even if we use gold. It happened in the past in Egypt itself, as we are told by Al-Maqrizi. We need a good and transparent government, not gold money.

5- Phasing out interest from the financial market should be gradual and must be our target, but do not rush to it too fast.

6- We need to enforce Zakah and Awqafin our social system.

Almighty Allah knows best.

About Prof. Dr. Monzer Kahf
Dr. Monzer Kahf is a professor and consultant/trainer on Islamic banking, finance, Zakah, Awqaf, Islamic Inheritance, Islamic estate planning, Islamic family law, and other aspects of Islamic economics, finance, Islamic transactions (Mu'amalat). Dr. Monzer Kahf is currently Professor of Islamic Finance & Economics at the Faculty of Economics and Management, Istanbul Sabahattin Zaim University, Turkey