Can we establish an interest-free economic system?
Can we establish an interest-free economic system?
The answer can be said, of course, I can. This system was established several hundred years ago, and today if you leave the blind memory of others and resolve to establish this system properly then its establishment will not be difficult at all. Before the advent of Islam, the world financial system was run on the basis of interest just like the modern world. Islam changes this financial system and prohibits usury. Usury was prohibited in early Arabia. Thereafter, wherever Islamic rule was established, interest became forbidden. The entire monetary system operates without interest. For hundreds of years this system of finance has been operating in the world and even today there is no reason to see its lack of vitality.
If we have the power of ijtihad and we are strong in the power of faith and at the same time we can make a firm determination to forbid what Allah has forbidden, then surely we can abolish interest and introduce the Islamic financial system. I have discussed this in detail in my book Sudh. I have shown there that there is no particular complication in this matter. The matter is very clear and unambiguous.
Read more; Islamic state and constitution | Fiqhul Akbar | Hazrat Muhammad (pbuh)
Those who deal and labor with capital and carry on organizational activities and functions have no right to engage in business in the form of capital loans and to earn a fixed rate of profit, regardless of whether they succeed in making a profit or not. The real evil of usury is that a person or institution invests its capital in the form of loans in factories, business establishments, or agricultural farms and collects from them a fixed rate of profit in the morning.
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Within a certain period of time, the person or organization investing the capital does not care about the profit or loss in the business or the amount of profit. He will only earn his fixed rate of profit from year to year or month to month and will be entitled to return the principal. This is what we must eliminate. No one can rationalize it. No reason can be adduced for its validity. On the other hand, the principle that Islam lays down is that if you give a loan, you must pay it in the form of a loan. In this case, you will only have the right to recover the amount paid for your loan. And if you want to make a profit then you have to be a partner in the business and make the deal accordingly. Invest your capital wherever you want in agriculture, industry, or business, on the condition that the profit earned from it will be divided between you and those who run the agriculture, industry, and business at a certain rate. This is the demand of justice and justice, thus prosperity of economic life is possible. Where is the obstacle to the introduction of the second method by eliminating the interest system? At present, the capital raised in the form of loans must be raised on a partnership basis. Profit should be calculated like interest. There is no difficult problem in this matter. The problem is that we do not have the ability to ijtihad. We are used to blind following. We want to continue what comes from the east with our eyes and ears closed. We are not ready to formulate any harmonious, valid and fair economic system based on the principles laid down in Islam by ijtihad. The poor scholar-ulama are denounced as blind followers of Taqleed; Not prone to ijtihad. While they themselves are blindly following (Western thought), they are not zealous in ijtihad either. If our disease had not reached this fatal stage, this problem would have been solved long ago.
Author: Syed Abul A'la Maududi (Principles of Islamic Finance)
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