Interest, Riba and The Debate on Equivalence
by By whatever criterion, yardstick or standard we may evaluate the twin concepts of interest and Riba, the equivalence between the two can’t be established. The contemporary efforts on proving their equivalence are apparently rooted in a gross misunderstanding of the Quranic idea of Riba and a lack of adequate comprehension of the present-day concept of “interest”. The equivalence debate is primarily a debate about the definitions of interest and Riba.
A NY community mired in confusion and contradictions can hardly make any progress. This explains the predicament of Muslim Ummah which for centuries at length has been debating the issues of interest and Riba, their equivalence and vice versa without reaching a consensus.
This debate reached a high level mark in the second half of the twentieth century when theologians and proponents of neo-Islamic economics throughout the Muslim world came up with esoteric models and innovative paradigms to register the equivalence of interest and Riba.
Mr. M. Abul Fazl has recently joined the bandwagon of Islamic economists, in his article titled “Interest, Riba and Capitalism” appearing in these columns on January 16, 2011 he presents a more detailed but a more convoluted version of his article of December 12, 2010. The writer deploys the tools of Marxism to underscore the equivalence of interest and Riba without appreciating that the Marxist philosophy has lost much of its appeal and lustre because of its inherent contradictory structure.
On the theoretical plane, Marx over-emphasised the mode of material production (or more broadly economic forces) as the principal determinant of social dynamics of communities. In this regard the views of W.W. Rostow as reflected in his well-known work The Stages of Economic Growth: A Non-Communist Manifesto, have much relevance in the contemporary world.
As Rostow puts it, “ …although the stages-of-growth are an economic way of looking at whole societies, they in no sense imply that the worlds of politics, social organisation, and of culture are a mere superstructure built upon and derived uniquely from the economy. On the contrary, we accept from the beginning the perception on which Marx, in the end, turned his back and which Engles was only willing to acknowledge whole-heartedly as a very old man; namely, that societies are interacting organisms. While it is true that economic change has political and social consequence, economic change is, itself, viewed here as the consequence of political and social as well as narrowly economic forces. And in terms of human motivation, many of the most profound economic changes are viewed as the consequence of non-economic human motives and aspirations. (Introduction P.2) Whereas theory is heavily loaded against economic fundamentals underlying the Marxist doctrine, the verdict of history is equally weighed against the Marxist predictions. This has been established very clearly by Francis Fukuyama in his classic The End of History and the Last Man. Fukuyama’s central hypothesis that liberal democratic traditions and free enterprise capitalism are going to shape mankind’s future has been widely accepted. His deep analysis based on human psychology, philosophy, logic and political economy shows that communism is a transitory stage in the overall march of history.
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