Reading “The Anatomy of Usury: a Critique of the Interest-Based Economic System” by Samir Abid Shaikh is a lot like the tough-love strategy children endure from some parents. They don't necessarily enjoy going through it, but it turns out to be very beneficial nonetheless. The title is an apt one because the author literally dissects all aspects of usury/riba in its historical, literary, cultural, religious, legal and economical manifestations. He slices it down to the bone, and with each layer exposes why riba is predatory, divisive, deceptive and ultimately unjust.
Most of us have a very cursory and elementary understanding of usury, which we know by the term riba. We think it means taking money, or lending money, over and above the main amount borrowed or lent. But riba is not just skin deep, and goes beyond that surface definition. It is invasive, insidious, and Abid Shaikh shows how it effects all aspects of life from rampant consumerism, inflation, debt-traps, unemployment, erosion of a middle class, and expansion of the rich-poor gap, to the establishment of a permanent lower class. It is, however, this lack of understanding of the nuances of riba that allows us to be so unaware of it and ultimately swept up into it. The absence of knowledge of a sin is no excuse for becoming involved in it. Anas Ibn Malik said: The Messenger of Allah (sallallahu alaihi wa sallam) said: “Seeking knowledge is obligatory on every Muslim.” (At-Tirmidhi). Alhamdulillah, we have a deen which is so complete that there's no separation between religious and non-religious aspects of life. Each aspect hinges on and supports the other so that the whole life is strengthened and balanced. Riba does just the opposite: It weakens the financial life and encourages disparity among society.
Abid Shaikh first helps us understand how riba was viewed and practiced in past cultures and societies by briefly examining riba/usury in Indian, Greek, and Roman history. In all three societies it was at the very least denounced and condemned, and at its best detested and criminalized. In Europe, the practice of riba was made popular due to the prowess and expertise of the Jews in the fields of trade and commerce, and of their monopoly of the ears of rulers when it came to matters of finance. It was made commonplace by the dispersal of Jews into Spain, France and Italy, and with the emperor Charlemagne's invitation to them to come settle in Germany in the 9th century, and in the 11th century with the invitation of William I to them to settle in Britain.
Across world literature, writers such as Thomas Lodge, Dante, Ezra Pound and others have included riba in their story lines: as a crime on the same level as sodomy; as a masterly critique and warning against usury; as a poem contending usury as the stealer of personal freedom and the cause of the destruction of western civilization. But among the arts no depiction of riba is more well-known than William Shakespeare's famous play “The Merchant of Venice.” In the story the lender Shylock asks not for monetary interest on his loan to a young, rich Italian, but for a pound of his flesh if the loan is not paid by its deadline. How much more abhorrent can an example be before we see how great a sin it is?
Given that usury has been demonstrated as reprehensible in the world's three major religions, Islam, Judaism and Christianity, it is surprising that people still engage in it. Narrated An-Numan bin Bashir: I heard Allah's Messenger (sallallahu alaihi wa sallam) saying, “Both legal and illegal things are evident but in between them there are doubtful (suspicious) things and most of the people have no knowledge about them. So whoever saves himself from these suspicious things saves his religion and his honor. And whoever indulges in these suspicious things is like a shepherd who grazes (his animals) near the hima (private pasture) of someone else and at any moment he is liable to get in it. (O people!) Beware! Every king has a hima and the hima of Allah on the earth is His illegal (forbidden) things. Beware! There is a piece of flesh in the body if it becomes good (reformed) the whole body becomes good, but if it gets spoiled the whole body gets spoiled and that is the heart.” (Sahih al-Bukhari)
In order to understand riba, Abid Shaikh outlines the physiology of the western banking system, beginning with the barter system, the gift economy, commodity money, tally sticks, gold coins, on up to bank notes and bonds. Then he starts the lesson on Western capitalism with the backgrounds of Adam Smith, called the 'father of capitalism', and his economic successors, Silvio Giselle, John Maynard Haynes, Maurice F.C. Allais and others. Each of these Western economists had some problem with usury, but still tried to proffer ways to work within the existing monetary system in a more equitable, just way whether it was capping interest rates; removal of legal obstacles and special inherited privileges; tolerating interest as a necessary evil that required state intervention; or confining money creation to governments only. Although these alternative economic strategies hoped to lessen the negative impacts of riba through monetary reform, ultimately they would not be successful because the cancer of riba has spread world-wide into every part of the global body.
In the heart of the book the author details the chains of usury starting with the big two, the debt trap and the real estate sector, two main links that keep us tied to the sin of riba. One encourages you to buy without paying (at least not right away), and the other to sell what you do not own, two major prohibitions in Islamic monetary transactions. You buy a suit with your credit card, with every intent to pay it off in full before the bill's due date. Then some crucial expense comes in, for which you have no cash to pay, so you charge that, too, and now interest is accruing on both charges because you couldn't pay for them at the time pf purchase. Maybe you buy a house or car with a loan from the bank. After a while it becomes more than you can handle so you want to sell it. Islamically, you can't sell it because you don't own it. The bank does. Any interest payments you made on it and any profit you might reap from its sale put you in a bad place with your Lord. Prophet Muhammad said: “O people! Fear Allah and seek your livelihood honorably. A man will not die until his destined livelihood is provided even if it is slow in coming. Therefore, fear Allah, and ask honorably, take what is allowed and leave what is forbidden.” (Ibn Majah and Al Hakim)
The debt trap ensnares countries in the same way, enticing or requiring them to borrow, at compound interest, huge sums to shore up their economies and infrastructures. The principal on these debts might have been paid off in full when interest rates were low, but when these rates soared to double digits and compound interest was figured in, debtor countries became enslaved to a debt they could never repay. When the debtor country has no choice but to refinance its loans, it is often required by the creditor country's bank to institute “austerity measures” like selling its public sector companies to the bank, or reducing social services to its citizens, or opening local markets to foreign investors. The debtor country continues to try to operate under a load that can only foster political, civic and economic instability.
Abid Shaikh shows these examples as clear riba, but what about the riba that's not obvious? Suppose you can't tell what else is lurking within the financial system disguised as convenience?: No money down, leveraged sale, deferred payment, pay-day loans. These debt traps are almost always presented to those in society who are least able to afford the debt. They become bogged down in debt, victims of those people and institutions who stand in line for their pound of flesh.
“The Anatomy of Usury” not only clearly details how debt functions on an individual and global scale, but also traces the pathways to usury including the monopoly of wealth, the lop-sided redistribution of it which leads inevitably to more and more disparity between the rich and poor, and inflation and rampant consumerism. Even individuals who are keen to avoid riba transactions will still be touched by its dust. It is, in this current age, unavoidable. Narrated Imam Ahmad: The Prophet (sallallahu alaihi wa sallam) said “A time will come upon people when they will consume usury.” They said to him, “Is that all of the people?” The Prophet (sallallahu alaihi wa sallam) replied, “Whoever does not take from it will be affected by its dust.” (Al-Fath al-Rabany) If you've ever even so much as cashed or deposited a check in a bank or credit union, a speck of usury has blown your way because when that bank holds your money, even for a short time, it gains interest on it, and your account enables it to lend money out, at interest.
Abid Shaikh shows how the dust turned to mud and stuck to almost everybody with first, the 2000 collapse of technology stocks, called the “dot com bubble”, then in 2008 smeared most of the world with the banking/mortgage fiasco. This riba mudslide has now taken us into the U.S. debt crisis. There is a clock in Times Square in New York city that, since its installation in 1989, has tracked the national debt and every American taxpayer's share in it. The debt, according to usdebtclock.org, is currently slightly more than $18 trillion, with a “t”. That debt rises approximately $30,000 per second, and accumulates interest at $16,000 per second. And your share? $154,000 is your speck of dust.
What is not right about this? Everything. This system of usury violates every precept of fairness and right action in Islam. It is not balanced, it is disproportionate. It is not moderate, it encourages excess. It is not fair, nor will it ever be just.
So what else do we have to work with? “Anatomy of Usury” doesn't just critique and then leave the reader to his/her own monetary devices. It gives the example of the Medici Banking system, prevalent in Italy in the 14th century, which operated according to Christian teachings against usury, was backed by the gold currency called “florin”, applied double entry accounting, and hired bank mangers who contributed to the capital and profit of the bank branch, thereby increasing their desire to make that branch successful. Silvio Giselle's “Natural Economic System” sought to level the playing field between money and commodities and services owners by penalizing with fees anyone who hoarded money without spending it in the community. The WIR system established in Switzerland in the 1930s functioned through a bartering system in which members, instead of cash, paid for items through an accounting system that used no interest. As well-intentioned as these systems all were, they were by-and-large local, and therefore not globally adopted. The obvious best alternative is an Islamic banking system built solely on Shari'ah, and in the early 1970s the Islamic Conference Organization sought to do just that. The ICO's main goal was to “disseminate and establish banking principles according to the Shari'ah teachings within the eight member countries, and later to all Islamic countries.” In the decade to follow more than a dozen Islamic banking and investment companies formed and operated successfully in the Persian Gulf region.
Abid Shaikh is himself a former economic adviser at both the Center of Islamic Economics Research in Jeddah, and the Bank of Bilad in Riyadh, as well as the former Secretary General of the International Association of Islamic Banks. SPOILER ALERT: He uses his experience to offer two valid systems that can operate successfully outside of usury, but you'll have to get the book to find out what they are. And you should definitely include a copy of this book in your Islamic book collection whether you are an economics student, a wife intent on guarding her husband's property, a real estate agent or a banking professional. Riba is something that causes injustice, fraud, and imbalance, and “The Anatomy of Usury” helps you understand it, recognize it and avoid it. This book is essential in your struggle against this sin.
For more information: Samir Abid Shaikh, The Anatomy of Usury: a Critique of the Interest Based Economic System, (North Charleston, South Carolina: CreateSpace Independent Publishing Platform, 2013) pp. 312. Available from www.amazon.com.
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