T is unfortunate that confusion and ambiguity about the Quàanic concept of Riba continues to grow and multiply among the scholars and theologians of Muslim Ummah. The article by Dr. Abdul Karim appearing in these columns on November 14 further adds to this ambiguity. However, only an epistemological interpretation of the Quàanic term Riba can help us in resolving this ambiguity in a conclusive manner.
One of the key principles of epistemology suggests that we should regard words as “physical phenomena having spatial and temporal relations; we make use of these relations in our verbal symbolisation of other relations, chiefly to show the sense of the relation, i.e. whether it goes from A to B or from B to A”.
This principle postulates that we focus on the sentences in which they (the specific words) are used. But before considering sentences, it is equally essential that we examine the circumstances which necessitate the use of a particular word. This implies that the “the correct use of relational words i.e. of sentences, involves what may be termed as “perception of form” i.e. it involves a definite reaction to a stimulus which is form”.
The above outlined principle has been elaborately developed by the famous British philosopher, Bertrand Russell in, his numerous writings on epistemology specially his “Human Knowledge: its Scope and Limits” and “An Inquiry into Meaning and Truth”.
The central message of the principle is that unless a given word is seen in the specific circumstances in which it is used, its understanding would remain vague and illusive and sometimes altogether misleading. This is because “each sentence has a certain kind of unity in virtue of which they are capable of properties not possessed by their constituent words.”
This principle could serve as the foundation and the stepping stone for deciphering and analysing the Quàanic word “Riba”. At the etymological level there is unequivocal consensus among jurists and exegesists that the word “Riba” signifies “addition”, “growth” or “excess”.
However to correctly appreciate the meaning of Riba or “excess” itself, it has to be seen in the given context, under the peculiar event or the specific situation in which the word “Riba” is deployed. It is against this background that we focus on interpreting “Riba” as used in the Quàan in different verses, which highlight diversified contexts, conditions and situations leading to its condemnation and elimination.
In 2:275, Allah strongly admonishes “those who devour Riba” and likens them to “those whom Satan has demented by his touch” because Allah has permitted trading and forbidden Riba”.
An epistemological interpretation of this verse by underpinning the relation between “trade” and Riba” could establish that by permitting trade but forbidding Riba, the Almighty is basically warning against all types of “profiteering” which is possible in trade.
In other words, Riba in trading would reflect earning of excessive or abnormal profits.
It is a great paradox, however, that the same verse is interpreted by the traditionalists to provide legitimacy to “profit” as the driving force of an Islamic economy.
What is neglected here is that while Quàan allows profits, it disallows Riba (excess) in profits. This differentiation is crucial for understanding that in this specific context, Riba is to be equated with “excessive” or “exploitative” profits.
However, it is not understandable as by what logic, jurists are able to equate Riba with interest which is cost per unit of transacting capital.
According to 2:276, Allah proclaims his curse on Riba and Riba-related transactions but bestows his blessings and growth on deeds of “Sadaqat” (charity).
Here Riba and “Sadaqat” are placed in juxtaposition as inverse image of each other. Epistemologically speaking, Riba here symbolises all transactions and dealings in which one party exploits the other. However, by no stretch of imagination the word Riba in this verse can be interpreted or translated as interest.
The popular proclivity of jurists to equate Riba with “bank interest” reflects the misconception that interest is “always” exploitative. Contrarily, interest would be exploitative only under special circumstances, an occurrence quite common in primitive societies which did not have any developed financial institutions based on “interest”.
In such societies, the non-existence of institutionalised credit has been the main cause of charging “usurious” rate of interest by the money-lenders and usurers. Analogously, the emergence of the banking system and the modern credit institutions based on interest have led to gradual demise of “usury” which is explicitly condemned in the Quàan.
The strongest warning of a war with Allah and his Apostle is given to dealers in Riba in 2:278 and 2:279. Here the believers are advised: “O believers, have fear of Allah and waive what is still due to you from usury, if your faith be true; or a war shall be declared against you by Allah and his Apostle. If you repent you may retain your principal, wronging none (with an increase) without being wronged (by suffering a loss).”
This verse is universally invoked by the Muslim jurists to justify the abolition of interest which occurs in the form of “excess” payments on the principal amount borrowed. However, the epistemological imperatives demand that the Quàanic prescription of returning the ‘principal’ be viewed in the overall context as it is bound within the command “la tazlemoona wa la tuzlemoon”.
The heuristic insight of this verse suggests that any act that is source of injustice (zulm) is completely inconsonant with the Islamic law and the Quàanic spirit. For that very reason, not paying “interest” to the lenders of capital tantamounts to explicit injustice because all owners of capital are entitled to a reward or remuneration which is “interest”.
Similarly, all borrowers (users of capital assets) must pay “interest” for hiring the services of capital. Therefore, in the epistemological sense, what is prohibited here is not “interest” but “usury” the exploitative rate of interest.
In 3:130, it is proclaimed: “O believers, devour not usury, doubled and multiplied. Have fear of Allah, and you shall prosper”.
This verse elucidates the nature of usury i.e. charging interest while doubling its rate manifold which is an explicit case of exploitation. In his “The Message of the Quàan”, Muhammad Asad explores the different connotations of the word “Riba” and concludes: “Hence, while the Quranic condemnation of the concept and practice of Riba is unequivocal and final, every successive Muslim generation is faced with the challenge of giving new dimensions and a fresh economic meaning to this term which, for want of a better word, may be rendered as usury”.
Of particular relevance is Quàan’s condemnation of those who “lay out for increase through the property of (other) people, as such persons will find no increase with God”, as is claimed in 30:39. An epistemological interpretation of this verse would suggest that all unjustified or illegitimate claims to other’s property through graft, robbery, deceit or bribery etc would come within the purview of Riba, and bank interest is altogether excluded from this category.
The synthesis of the above injunctions of the Quàan would suggest that bank interest being the price or (or rate of return on) capital does not fall within the purview of Riba.
However Riba would cover all types and forms of exploitation such as usury, graft, robbery, bribery, unequal exchange, rent-seeking, monopoly earnings, profiteering and income through corrupt practices. Consequently, we could define a Riba-free society as the one whose members enjoy complete economic and social justice and in which no individual or group is subjected to any type of exploitation.
Islam’s comparative advantage and strength in relation to other religions practiced in the world is precisely due to its persistent emphasis on removing exploitation, corruption and rent-seeking from the social order.
However, if we regard elimination of interest as the guiding principle and the exclusive gospel of economic and social ethos of Islam, we may be propagating a completely unacceptable and unpracticable ‘weltanschauung’.
Humanity is groaning under the heavy and unbearable burden of Riba namely the exploitation of one man at the hands of the other and exploitation of one nation at the hands of the other. The eternal message of Quàan is to eliminate this burden so than the human race can live in freedom.
The author is former Joint Chief Economist, Planning Commission of Pakistan.