Debt, Usury and Islam

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Date: 01-Jun-2012
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Khutba Notes on Debt, Riba and Islam




This Khutba is concerning an innate responsibility we have as Muslims. As one of my teachers told me, we as Muslims have a twofold responsibility – that of being Ubaad and that of being Khulafaa – that of being Devotees and Stewards. This is why our Fiqh is generally divided into two main categories – Ibadaat and Muamalaat. The first pertains to our responsibility towards the Creator and the second pertains to our responsibility towards the Creation – with both being a subset of the general responsibility we have towards Allah.




As Muslims we’ve got the first one responsibility generally right, we still do hajj, when Ramadan comes the masaajid fill up again, but the second responsibility is one we’re not doing too well. For despite our religion commanding us to be Stewards on earth, we seem to have forgotten many of the things we have been told to do - which perhaps explains why the Earth is facing a series a crisises.




Many ecological commentators say we will be facing a series of crisises over the next decade, food commodity shortage and rising prices , an energy crisis caused by receding oil supplies (termed Peak Oil), deforestation and overfishing causing mass species extinction, global warming and potential mass flooding have all cumulatively caused more than one commentator to predict that this may be the last century for the human race1.




Although that may sound dramatic, it is worth taking note that the former administrator of the United Nations Development Program, James Gustave Speth, is amongst those who has spoken about the impending environmental doom we are all facing – and he also alludes to what he thinks is the main problem. When a figure as eminent and mainstream as Speth warns, it is time to take heed, according to him the main challenge facing us as humans is to save the earth by providing a viable alternative to the incessant, disproportionate monetary growth fueled by the insatiable demands of a debt driven - interest based economy. He asks what he calls the big question:




How can the operating instructions for the modern world economy be changed so that economic activity both protects and restores the natural world ?


Debt – that is a key word, a word that has come to dominate the world we live in today. The Qu’ran emphasize the collective trust that mankind has been given in being Stewards on earth. Allah says:




It is He Who has made the earth manageable for you, so traverse through its


tracts and enjoy of the Sustenance which He provides: and unto Him is the




So this verse indicates the fact that Allah has placed the earth under our control and that is our duty to manage it in ways that are best. Elsewhere Allah says:


He it is That has made you Stewards/Caretakers upon the Earth. And whoever


disbelieves - upon him will be [the consequence of] his disbelief. And the disbelief


of the disbelievers does not increase them in the sight of their Lord except in


hatred; and the disbelief of the disbelievers.


In the above verse Allah explicitly tells us about our responsibility as Stewards on Earth and follows it by saying whosoever has kufr – upon him is the responsibility of this kufr. The word Kafir’, in Arabic, literally means ‘One who covers up’ – hence its application in the domain of belief is to say, ‘One who covers up an innate truth’ and in other domains it is also used to donate a farmer, for he is one who covers up the seeds with soil. In this context, the Kufr, could be said to directly allude to the responsibility previous mentioned of being Stewards on earth, in that it is an innate responsibility we all have, whether we act upon it or not , accept it or not – our accountability remains. The reality is we are all entrusted with Stewardship – this responsibility can be denied and not acted upon, but it doesn’t mean we aren’t entrusted and it doesn’t mean we aren’t accountable. Elsewhere the Qu’ran says:


It is He Who hath made you Stewards of the Earth: He has raised you in ranks,


some above others: that He may try you in the gifts He has given you: for thy


Lord is quick in punishment: yet He is indeed Oft-forgiving, Most Merciful.




The above verse alludes to the Stewardship we are given in the context of ranks, these are ranks of responsibility, by which we are tried, to see how we perform. Hence our accountability is commensurate to what Allah has given us. The greater social impact we can have, the more we are expected to do with regards to our stewardship. Therein lies the essential point that all leadership in Islam is to be construed in the context of service. Leadership in Islam is an opportunity for Khidma (service) – hence the Arabic saying – “The Leader of a People is the one who serves them.”



The Qu’ran continues:


And the Heavens has He raised high, and He has set up the Balance. In order that ye may not transgress the Balance. So establish weight with Justice and fall not short in the Balance.


The above verses attest to the fact that with the Stewardship man has been entrusted with and his trust to manage the earth, there is a Balance

[1] set up - whereby all of the organisms and the ecosystem at large are all closely integrated to form a single and self-regulating complex system, maintaining the conditions for life on the planet. This Balance exists and at the centre of that is man, with an ability to transgress this Balance, hence the imperative to not transgress the Balance. For to transgress the Balance is to do injustice and belies the command of establishing weight with justice.


This justice that mankind is commanded to uphold pertains to every aspect of our lives, social justice, environmental justice – to the Muslims in particular, this is a poignant reminder of their duty, for to not establish such justice is to do Dhulm ( injustice or oppression) and the outcome of such oppression is Fasaad or Corruption that occurs. We’ve obviously not been doing quite a good job, hence the Qu’ran says:


“Corruption has appeared on the land and in the sea because of what the hands


of humans have wrought. This is in order that we give them a taste of the


consequences of their misdeeds that perhaps they will return (to the path of right






This verse particularly illustrates deep wisdom with regards to the Sunan of Allah, how Allah interacts with His creation. For it indicates that when we forego our responsibility towards stewardship the result is corruption, however the purpose of this appearance of corruption also serves a deeper wisdom – that we return back to Allah. In many ways, this verse describes the human condition, for many of us, the time when we change, when we finally get it, is when a crisis occurs. Crisis, in that regards, serves a purpose, and represents the Hidden grace, in that it guides us to that which is right and in that context is good for us. As the Qu’ran says, “perhaps you dislike a thing and it is good for you.” [2:216], Allah knows and we don’t – but as long as we live in this world, every moment has its commensurate response by which we can turn back to Allah and so the real calamity for the believer is loss of faith and not the externalities and trials that this world has to offer. For as long as one is in this world, it is in keeping with its nature that one be exposed to trials. The trial of money and its incorrect use is paricularly responsible for much of the corruption we see in the world today, the endemic poverty, the way debt is treated may be specifically said to directly affect the mizaan or Balance that exists throughout the world – which in turn has resulted in global Dhulm or fasaad/corruption. This fasaad or corruption has never been as manifest as modern times, anyone observing the world today cannot help but say, dhaharat al Hikma, that ‘wisdom has become manifest’, with regards to what the Qu’ran has to say. Let us then turn to see what Islam has to say about debt and its misuse and let us see what has become manifest today as a clear indication of what Islam was warning against.




The Issue of Debt in Islam




Islam discourages heavy debt as much as possible – indeed it is something that is considered to have a serious and direct effect on a Muslim’s belief or conviction because it can lead to harmful consequences. The Prophet Muhammad (peace be upon him) used to regularly supplicate to the nearest meaning in English by saying “Allah, I seek refuge with You from sin and heavy debt”. When someone remarked, “how often it is that you seek refuge from heavy debt”, he replied, “when a man gets into debt, he speaks and tells lies and he makes a promise and breaks it.


(reported by Bukhari and Muslim).




The Prophet Muhammad (Peace be upon him) also said, “Whoever dies free from three things – arrogance, cheating and debt – will enter Paradise” (reported by Tirmidhi), and “The soul of a believer is held hostage by his debt in his grave until it is paid off” (reported by Tirmidhi). Clearly, from an Islamic point of view, accruing debt is a serious matter and should not be undertaken except in cases of real necessity.




However, it should be borne in mind that the debt intended here is unaccounted for debt, debt that is not covered to be paid for – that in turn leads to a liability on others. Should be a debt be accounted for or covered by a separate pledge then in effect it is not a debt that comes into the blameworthy category discussed above. This is evidenced by the fact that the Prophet himself (peace be upon him) bought some foodstuff from a Jewish lender while his armor was motrgaged to the person to account for the debt, upon his leaving this world (peace and blessings be upon him), his armor was still mortgaged as the hadeeth below testify:




As narrated by Aisha (may Allah be pleased with her): Allah's Messenger (peace be upon him) bought some foodstuff (barley) from a Jewish person on credit and mortgaged his iron armor to him. [Sahih Al-Bukhari Hadith 3.453]




As narrated by Aisha (may Allah be pleased with her): Allah's Messenger (peace be upon him) died while his (iron) armor was mortgaged to a Jew for thirty ‘Sa’s’ of barley___Sahih Al-Bukhari Hadith 4.165]




In Islam, debts that are incurred responsibly require prompt and full repayment is important. The Prophet Muhammad (peace upon him) said, “the best among you are those best in paying off debt” (reported by Muslim) and “procrastination (delay) in repaying debts by a wealthy person is injustice” (reported by Bukhari). Another hadith states “Whoever contracts a debt intending to repay it, Allah will repay it on his behalf, and whoever contracts a debt intending to waste it, Allah will bring him to ruin” (reported by Bukhari). This hadith emphasises that those


contracting debt with the intention to repay will be granted the means to do so.




However, at the same time it warns against acquiring debt that one does not have the means or intention to repay.




Thus, Islam discourages a debt based lifestyle, incurring debt to fund luxury, designer labels and extravagance is contrary to core Islamic values that condemn excess and waste. The Qur’an has in very strong words condemned and prohibited extravagance and prodigality:




"Eat and drink, but waste not by excess, for God loves not the prodigals".




"Squander not wastefully, surely the squanderers are the devil's brethren."






So in summary, Islam is against a debt based lifestyle and though tolerant of debt to the basic extent of one’s need it advises the debtor to try his utmost to cover the debt (through a mortgage or a guarantor) and to try and pay back as soon as possible. Whilst it does this, Islam simultaneously enjoins on the Creditor the immense reward of patience and the fact that debt forgiveness and remission is the better way. This immense holistic message with regards to debt is a recipe for treating the ills of the modern age, an age which has increasingly shown the evils and perils of wanton debt.




The Modern Age and Debt




One of the main problems of the modern age, is that money itself, by and large, comes into existence as a debt. To say this again – modern money is by and large debt money. There are very few things that affect our lives to the proportion of this reality and so it requires a bit more explanation.




The vast majority of modern money (over 95% in most cases) of all economies, comes into existence as a debt by Banks lending (in the case of Islamic Banks financing as a debt simulating lending). This money comes into existence by Banks as loans, to provide credit for things we can’t afford ourselves, to provide credit as liquidity for companies – it comes into existence with a computer keystroke, the notes and coins that actually circulate make a very small portion of money in existence – the vast majority of money is digital money in the form of Bank Credit.




In modern economics, modern money and debt are inseparable – to explain how this came about, we need to go back to the story of interest – and how it came to be legalized [For further details on this: please read the Khutba Paper for this Khutba]




In essence, the legalization of interest, primarily in Western Europe in the sixteenth century through the separation of the Church and the State resulted in a natural series of processes culminating in what we see as the whole world being dependant on Banks and Big Business today.




Early Banks were primarily goldsmiths whose original function was a depositary one, to safekeep Gold deposits in return for receipts promising payments and redemption to the bearer of the receipts. With the receipts being payable to the bearer, many people began trading in the receipts themselves. Soon enough, discovering that the proportion of receipts redeemed was far less than those issued, the goldsmiths found that their receipts had in effect become a de-facto currency or money. It would only be natural or a matter of time before one or more goldsmiths thought of printing more receipts than the gold they kept in their vaults to put to their advantage. It would then only be natural for them soon to realize that by simply printing the receipts and spending them on their own consumption – they would be setting themselves up to be found out as in due course all the extra receipts would circulate in the economy and return to their institution for redemption in gold - gold which never existed in


the first instance. Thus it would only be natural for them to realize that a more effective way would be print and lend them out at interest, as this would allow them upon repayment to destroy the receipts as easily as they had been manufactured, while pocketing the interest as a valid socially acceptable profit.




But where would the interest come from ?




Exactly where it comes from today, by introducing a debt over and above the money supply, in this case the fictional receipts and the actual Gold, the only interest could be paid, would be at someone else’s expense. Someone would have to lose their money to pay back to the goldsmiths – interest always is a zero sum game in favour of the goldsmith banks – a method of wealth transfer from the real economy to the Banks.




The process of creating fictional money, lending at interest, destroying the loans and subsequently keeping the interest, before starting the process all over again – theoretically was able to continue ‘in perpetuity’, provided of course the Goldsmiths always got the ‘fractional reserves’ of Gold right - this had to be the most successful


business idea ever invented.




To continue the natural nature of the process, it was natural thus that in time, the goldsmiths would become fabulously wealthy and become the major Creditors for the states they were in. In time, in 1694, a collection of leading Banks helped finance a war of succession for the King of England (who did not want to raise his money from taxes due to increasing unpopularity). This was another major turning point in the history of modern banking. It was only then that the creation of genuine paper money in Europe could be said to come about, since its banknotes were in no way bonds. The fact that money was no longer a debt owed to the king but a debt owed by the king, made it very different from what had come before. The consortium of forty London and Edinburgh Merchants lent King William III a £1.2 million loan and in return were allowed to form a corporation with a monopoly on the issuance of banknotes – in effect, promissory notes for money the king now owned them. This became the first independent national central bank  and subsequently became the clearing house for debts owed between smaller banks, with the notes becoming the first major instance of european paper currency. The advent of the first independent Central Bank were the national debt was indebted to Banks, provided a template for the hitherto practise of reserve banking to be legalized under the premise of providing credit expansion to the state.The process of creating fictional money, lending at interest, destroying the loans and subsequently keeping the interest, before starting the process all over again – was now legalized to a relevant ratio, and became very successful in generating credit and helped supply the expansive capital for the colonist and industrial ventures of western Europe. It was natural thus, that albeit with a few technical changes that came to be institutionalized globally – this has come to be known as the modern banking system today.




Today as per most reserve ratios generally set at 10% by international agreement banks are able to generate money through the system in what is known as the money multiplier effect. By simultaneously being depository and literally creating money about to an approved reserve ratio with bank – banks create money in the system. This is all pretty standard and mainstream, so please don’t get alarmed, but firstly it is important to understand – Banks don’t lend depositors money – they create money for lending based on the reserve ratios they have and destroy the money upon repayment. In effect this creation is just an accounting entry, upon lending they create an asset or repayable and upon repayment they destroy the loan but have the interest.




With a 10% reserve ration, if a bank receives £100,000 in cash as a deposit, it has £90,000 worth of money it can lend out, in other words, it can lend out 90% of whatever deposit it has received. But if we trace the process of lending, we will find that at stage – this will create further deposits through the banking system, then if 90% of that money is lent out too, through as infinite number of lending rounds, then the banking system as a whole (rather than the bank which received the initial deposit), will have generated £900,000 in loans. Thus with a 10% reserve Banks can create 9 times additional money than the original deposit.




To further illustrate this, please look at the table below:


  Debt Riba and Islam


The above table illustrates that with an initial deposit of £100,000 the banking system creates £900,000 of additional money. This is all fairly standard economics, in practise today, this pyramid effect is not a static and does not imply a control on the amount of money that a Bank can create, for in most countries, the central bank does not attempt to control the total value of the notes and coins in circulation. In Britain, for example, the Bank of England (BoE) will sell as many notes and coins to the commercial banks as they wish and so if Banks want to increase their lending portfolios they always have the option of increasing their reserves at the BoE.




Thus it is that Banks have two key powers in today’s economy – they get to decide how much money to create, and they get to decide who to lend this new money to. Most people find this answer quite staggering. Even bankers do, because the creation happens as a result of the system by them going about their lending and not necessarily an active choice to sit down and say, “lets create some money.” They do though, Lord Stamp, a director of the Bank of England at the time, commented in 1937: "The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented." Recently when describing the current financial crisis, Martin Wolf, chief economics editor for the Financial Times, said: “The essence of the contemporary monetary system is creation of money, out of nothing, by private banks’ often foolish lending.”




But the big problem with all this lending and monetary growth is the interest being charged upon it. It is the interest which continually drives the banks to lend, as that is how they profit and it is the interest that subsequently generates today’s endemic scarcity and drives the world-devouring engine of perpetual growth.


[two stories in the khutba paper illustrate how this happens – do read the story of the Eleventh Round]




The problem is that because of interest, at any given time the amount of money owed is greater than the amount of money already existing. To make new money to keep the whole system going, we have to create more “goods and services - the principal way of doing so is to begin selling something that was once free. It is to convert forests into timber, music into product, ideas into intellectual property, social reciprocity into paid services – to monetize anything and everything we have to satisfy the never ending demands of a debt driven system. Abetted by technology, the commodification of formerly nonmonetary goods and services has accelerated over the last few centuries, to the point today where very little is left outside the money realm. The vast commons, whether of land or of culture, has been cordoned off and sold-all to keep pace with the exponential growth of money. This is the deep reason why we convert forests to timber, songs to intellectual property, why herbal folk remedies have given way to pharmaceutical medicines, why child care has become a paid service, why drinking water has been the number-one growth category in beverage sales.




The imperative of perpetual growth implicit in interest-based money drives the relentless conversion of life, world, and spirit into money. Completing the vicious circle, the more of life we convert into money, the more we need money to live. Riba or Usury, not money, is the proverbial root of all evil.




Since nearly all money in the economy is being lent out at interest through one mechanism or another (deposits, loans, etc.), it follows that the only way such interest can be paid back is either (1) that some of these loans must end up in default, or (2) that the supply of money must continually grow to allow people to pay off their interest bearing debts.




In practise what happens is a combination of both, when (2) doesn’t happen fast enough, (1) happens more and when (1) happens there is pressure on our governments to continually grow to prevent the financial system increasingly revealing its in-built characteristic of people and businesses having to default. If the money supply is not growing, then a percentage of wealth-holders corresponding to the prevailing interest rate must go bankrupt. That is how interest sets us in the underlying dynamic of scarcity and competition. The reason why we believe in a scarce world is because with interest –there never really is enough money for everyone to pay off their debts - at any given moment, we collectively owe more money than what exists. The result is that individuals and banks themselves are caught in a game of scarcity as they need to constantly be lending more and more to survive to meet their capital adequacy ratios


and we need to be borrowing more and more to simply pay what we already owe. The imperative to continually grow has enormous repercussions for us all. Among these problems would be endemic inflation, a 'business cycle' whose ups and downs would follow the creation and destruction of bank money, an increasingly imbalanced distribution of wealth, ecological crisis, destruction of local cultures, people and livelihoods. Constant, underlying debt-pressure means there will always be people who are insecure or desperate-people under pressure to survive, ready to cut down the last forest, catch the last fish, sell someone a sneaker, liquidate whatever social, natural, cultural, or spiritual capital is still available. There can never be a time when we reach “enough” because in an interest-based debt system, credit exchanges not just “goods now for goods in the future,” but goods now for more goods in the future. To


service debt or just to live, either you take existing wealth from someone else (hence, competition) or you create “new” wealth by drawing from the commons and turn it into a debt.




Debt – make a note of that word – that is how the system survives – we need to constantly take more and more debt just for survival: if you don’t take a debt and actually live within your means – you’re potentially contributing to a recession. The system requires sufficient people to be taking sufficient debt at any given point of time for it to continue, with the added problem that the level of these debts also has to proportionally rise as more and more money gets generated by the bank’s lending. As a result this ever increasing debt gets reflected in the inflating prices of the dominant assets you and me need.




In UK, for example, the same neighborhood may have seen price escalation in Property Prices from under 5,000 pounds in the 1960’s to close to 500,000 pounds today! The factors of supply and demand have themselves become distorted by the money supply, price escalation of common assets such as the need to own a home does not so much reflect market demand as to reflect the bank’s need to lend and our subsequent capacity to borrow. Banks need us to be indebted and we in turn compete to see who is worthy of taking on the debt. One doesn’t need to be a quantum physicist or rocket scientist to see that such a system is not sustainable. What for the vast majority is an illusion of ‘owning’ a home on a mortgage (increasingly untrue as


banks become the de-facto owners of the real economy through lien on the properties they finance) and the increasing improbability of anyone actually ever paying back their mortgages has already given rise to the concept of generational mortgages –don’t worry if you can’t pay: your children will.




To whom will a bank lend money? Preferably to someone with "good credit", which quantifies a judgment of one's ability to compete for money and therefore to pay back a loan with interest. In today's system, money does not exist without debt, debt does not exist without interest, and interest drives us to earn more and more money.




It’s all a bit like Musical Chairs:




In fact it is Musical Chairs as Citigroup‘s former chief executive, Charles O. Prince confessed - As long as the music is playing, you’ve got to get up and dance,” he told The Financial Times, adding, “We’re still dancing”, he added.




There is a word that comes to mind when thinking of such a system: insanity.




Those who consume interest cannot stand except as one who stands being touched by a Devilish touch into insanity.


We live in a world where the debt pressure felt upon all of us, the pressure to borrow and the subsequent pressure to pay back has produced an epidemic that can only be described as insanity.


The insanity and state of anxiety the Qu’ran alludes to as being symptomatic of a system built on interest has come to pass, in our current age - the evidence lies in front of us, as more and more people succumb to the ‘touch’, the logic of interest alongside being the logic of the insane, resonates with the logic of another – that of the addict.


Interest assumes that always and forever, we will find some way to feed an endlessly growing inbuilt need to consume. With any addiction, the longer it is maintained, the greater the depletion of life, and the more extreme the measures required to perpetuate it. Just as the addict cashes in life insurance policies, borrows money from friends, and eventually converts every physical resource and social resource into money, so also does interest seek out every possible source of unexploited social, natural, cultural, and spiritual capital to sell as a debt – all just to keep the system going at a greater and greater cost. Interest generates an unstoppable force that assails us from all directions, always seeking a way in – demanding more and more of us in turn.


Wealth Concentration


A by product of the system is that wealth becomes continually more and more concentrated with those who already have it – namely Banks and Big Business, who themselves are caught in the game of continual competition and the imperative to continually grow lest they be taken over by their competitors. In that context, the systemic booms and busts are built into the system as a way of rebooting and ensuring a further concentration of capital in the hands of the few at the expense of the many.


We’ve already reached the extent of insanity when it comes to how wealth is distributed.


The richest 225 people in the world own more wealth than the poorest 2.5 Billion. At one time the top three richest individuals in the world owned more wealth than the combined GDPs of the 48 poorest countries in the world !


According to a recent study, fewer than seven hundred billionaires have a combined net worth of more than $ 2 trillion. While at the same time, an estimated 2.8 billion people survive on less than $2 a day, with 1.2 billion living on less than $1. In America, purportedly the world’s richest nation state, fewer than 7,500 individuals collectively control “almost three-quarters of the nation’s industrial (nonfinancial) assets, almost two-thirds of all its banking assets and more than three-quarters of all insurance assets”.


In 2005, World Bank chief economist Nicholas Stern estimated that on average each European cow receives $ 2.50 a day in government livestock and dairy subsides while 75% of African people live on less than $ 2 dollars a day. In fact, according to the World Bank, 95 percent of all people in developing countries which means 80 percent of all human beings, are living on less than $10 a day.


A fifth of the world’s people living in the highest income countries had 86 percent of world GDP, whereas the bottom fifth received only 1 percent; and half of the world’s population lives on less than $2 a day. Think about that, the next time you think you're not that well off - close to half of the world's population survives on less than 200 AED a month – clearly there is a pattern to all of this.




Effect on Global Trade


The Prophet( peace be upon him) is reported to have said:


There will come a time when no person will remain alive except that he consumes riba. And even if he does not consume it, he will covered by its dust.”


The dust of Riba or its effect have come to apply to each and every one of our socio-economic institutions – this is huge topic in itself and would be of immense benefit for someone to document, but in essence the formula  of  Debt = Corporate Opportunity drives the dynamic of increasing polarization of wealth and resources in the hands of an ever receding number of big corporations and financial institutions. [see: discussion of this in Khutba Paper].


As we said, the logic of interest is that of an addict and with any addiction, the longer it is maintained, the greater the depletion of life, and the more extreme the measures required to perpetuate it. Just as the addict cashes in life insurance policies, borrows money from friends, and eventually converts every physical resource and social resource into money, so also does interest seek out every possible source of unexploited social, natural, cultural, and spiritual capital to sell as a debt – all just to keep the system going at a greater and greater cost. Interest generates an unstoppable force that assails us from all directions, always seeking a way in – demanding more and more of us in turn.


But just as with any addict, someday the crisis assumes a proportion that cannot be managed by another fix; someday we reach the point when the constant conversion of everything into capital and debt reaches a point when we just can’t go on – the collapse becomes inevitable. Like an alcoholic whose resources of goodwill, money, pawnable assets, friends, and credibility are almost exhausted, our way of life too is on the verge of collapse. But just when the addict reaches the point of crisis – with nowhere else to turn - is when the window of hope opens.


As the Devilish touch of interest envelopes more and more in its embrace, there is hope. As we continue to scramble applying new and not so new fixes to further prop up this interest based system at ever greater and greater cost to alleviate the very problems caused by it – hope emerges in initiatives that challenge the structural dynamics of interest. “Bailout” packages raised from public money given to the very banks that have caused the crisis have run their course, in their place is an emerging mass popular movement determined to claim back their freedom for themselves. Ecological awareness, localism, green design, community currencies, ecology-based economics and genuine Islamic finance as opposed to the corporate and commercial bank driven version currently in place are moments of clarity arising as the addict collapses under the weight of his addiction.


As the crisis becomes clearer and clearer, Islamic Finance is itself realizing that it need to undergo a reformation from within – it needs to realign itself from allowing muslims to be a part of interest based capitalism to allowing muslims to be a part of the solutions for the problems created by interest based capitalism. This reformation will primarily come from practitioners who expect that the word ‘Islamic’ entail a holistic analysis (by which they mean an analysis of structures, means and ends, direction etc.) and not a reductionist one (as is currently happening, evidenced by a myopic focus on transactions at the expense of organizational and industry dynamics). The devilish touch has afflicted too many and the course of collective insanity has run for too long for us not to see that it is time to see things as they really are. It is time to wake up – time to rise beyond interest and the institutions and social settings it has brought about – time to propose a new mechanism for the supply of money, to create a supportive financial environment that decreases our reliance on debt and increases our sense of community – time to save the world before its too late.


And on that we rely on Allah, for all success is through Him.


[Note: There will be additional Khutba research papers on various topics relating to this Khutba and Riba, focussing on practical solutions, the role of Islamic Finance: from past to present and a further real world analysis of the effects of Riba, please enter your email adress to be updated as and when we upload and please keep us in your duas please.]


[1] See: Gaia hypothesis – a remarkable hypothesis that postulates the exact same thing, conceived by

James Lovelock in the 1970’s, it is now studied and endoresed in the disciplines of mainstream

geophysiology and Earth system science.




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