The Islamic finance industry has caught the attention of the faithful of many religions. With an above average growth rate, this niche industry has attracted a number of banks to try to stake a claim in the budding industry. Not all of these banks are dedicated to Islam, however- many simply see it as an opportunity to cash in on consumer preferences of practising Muslims.
Freedom from Guilt for Sale
This has led to some questions, especially among those concerned with adherence to Islamic law- the shariah. Shariah stipulates that no interest can be charged on loans, and some think that this makes Islamic law entirely incompatible with the modern financial system. Others, however, claim to have found loopholes in divine law. Do they think they are going to “pull a fast one” on the Creator of the universe?
Aside from the simple prohibition of interest, Islamic law also contains provisions against debt. Obviously, no one likes being in debt, so it seems as if Islamic law was created to protect us from things that are harmful to us. Of course, sometimes it is necessary to be in debt, but if it can be avoided, it should be. Really, do you need a new car every 4 years? Well, the automotive industry certainly hopes that you do! And as it happens, the same people who own the automotive industry also own the financial and insurance industries.
A House of Cards
All of these industries are so interconnected, if one of them were to collapse, it would lead to spillover effects, as rising unemployment would lead to fewer new purchases. Less purchases would translate to fewer jobs- this is called a “deflationary depression.” It was this kind of depression that contributed to World War 2, which claimed the lives of as many as 100 million people. So it’s quite clear to see why Islamic law prohibits this kind of action.
Islamic finance, however, would lead Muslims to believe that entering into this kind of debt bingeing is a great way to build the economy. It’s kind of reminiscent of a cocaine binge- at first, it’s great, but then you start to realize that that good feeling isn’t real, and that it’s going to disappear and leave a very, very, bad feeling in its place. Unless you can find more cocaine. And the more cocaine you consume, the worse you will feel when you finally are forced by nature to stop.
Same thing with the debt economy. It allows for the manufacture of an unreal feeling of wealth, just as drugs create a fake feeling of happiness.
Needless to say, cocaine binges are also not allowed in Islamic law.
This is an especially severe issue, because if you consider that the participation in the interest based debt economy itself is unlawful under sharia and leads to systemic instability which eventually culminates in war, needless death and destruction, we can see that the Islamic finance industry is actually trying to make it lawful, or “halal.” In Islamic law, this is one of the forms of idolatry, which is an even more grave sin than interest- and interest is considered equivalent to 70 counts of incest!
Wow, I’d hate to be an Islamic banker.