The concept of Riba:
In the Holy Qur`an we read:
O you who believe! Be mindful of God and give up what remains of al-riba
if you are believers. If you do not do so, then receive a declaration of war
from God and his Messenger. But if you repent, you shall have your capital sums
(ru`us al-amwal). You do not deal unjustly and you are not
dealt with unjustly (2:278-279)
Here riba means -- in simple terms -- a physical
increment in a loan contract. For example a loan contract in which 100 gram
gold is loaned for two years for 110 gram gold. This additional 10 gram gold is
an increment to the original 100 gram gold. This increment is physical in
nature and uses the total return concept so that if the borrower return back 10
gram gold in the first year it will not be the riba unless the remaining 100
gram gold is returned in the second year.
Riba is injustice, inequality, increment:
The concept of riba is against the concept of
justice, equality, and morality. The Islamic philosophy of justice, equality
and morality prohibit both in the process of exchange (Riba al Fadl) as well as
in the process of loan making (Riba al Nasea) any increment/riba in bi-partisan
contracts.
Riba in exchange/ Riba al Fadl
Riba in exchange is very important concept in
order to evaluate the stance of Islam on the nature of monetary objects. Barter exchange is completely acceptable in
Islam that is selling/exchanging one good with that of other goods different in
nature such as one party selling silver coins with that of gold coins or
selling wheat for oranges. However, exchange of similar goods such as selling
wheat of inferior quality with that of superior quality or selling silver coins
of one origin with that of another origin are susceptible to riba.
The concept of trade in Islam is based on the
concept of equality between two objects as perceived by two economic agents’ i.e.
buyer and seller. Although two objects in exchange are dissimilar, different in
nature, however equality is established by way of trading between the two
economic agents despite that the exchange may not be equal from the perspective
of any other individual or equality between the trade is scientifically or
legally or morally cannot be justified. So trading is about the difference of opinions
regarding the price of one good in terms of the other goods and when the opinions
of buyer and seller meet trading occurs at that proportion.
From 'Ubada ibn al-Samit :
The Prophet, , said:
"Gold for gold, silver for silver, wheat for wheat,
barley for barley, dates for dates, and salt for salt - like for like, equal
for equal, and hand-to-hand; if the commodities differ, then you may sell as
you wish, provided that the exchange is hand-to-hand." (Muslim, Kitab al-Musaqat, Bab al-sarfi wa bay'i
al-dhahabi bi al-waraqi naqdan; also in Tirmidhi)
Exerpts Taken from Usmani
2002
The abstract objects without any discription:
The concept of riba al fadl generates a negation
to the concept of differentiated objects based on marks, shaping, stamping,
embossing, engraving, printing, or naming conventions. This clearly negates the
concept of money as prevalent in orthodox economic systems. One cannot sell
silver coins having 10 gram silver content with that of other silver coins
having 11 gram silver content. The exchange of similar objects like silver
coins should be done on equal footing rather than on market conventions. This
finding is extremely important in deriving the theory of money from the theory
of riba.
The concept of money is considered to be related
to the standard of value. However no standard have been found to be advocated
during early islam. Only the standard of weight or measure has been devised. In
all practical senses, the dirhams were no more than the silver coins of certain
weights. So dirhams were not standard of value but rather dirhams were related
to the concept of weight or measure. So riba al fadl clearly negates the
concept of differenciated objects based on the prints, shaping, embossing,
engraving etc. the application of riba were not on the names of dirhams rather
on its content. However, ironically scholar consider the riba to be operative
on names and thereby refuting the riba al fadal.
Objects created by printing names on gold,
silver, copper or on an alloy or on paper were disregarded in islam. There were
tendencies to misrepresent the coinage by various means including mixing of
silver or gold with inferior quality metals, weighing of coins rather than
counting them, declaring silver coins dirhams as gold coins dinars etc. the
gold coins of roman empire i.e. dinars were bought and sold at more than their
gold contents because of their roman stamps on them. Islam forbade this
practice and allowed the exchange of roman coins using their actual gold
contents.
Conclusion
One can conclude that islamic money is time-invariant, discribable money as opposed to abstract money without any discription.
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