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> use money in a moral way to extract value over time, by taking appropriate risk in a manner that is not exploitative I've been reading on islamic banking rec

by ilammy 5y ago

> use money in a moral way to extract value over time, by taking appropriate risk in a manner that is not exploitative I've been reading on islamic banking recently, and I have to say that it appears one can arrive at a consistent philosophy and working economics with usury being prohibited. The world won't grind to a halt because capital is no longer entitled to gains by the virtue of purely existing, as opposed to being used productively. (Observe PoS vs PoW parallels, in the theme of this submission.) You can lend money and earn a profit without interest, and you can pay for getting a credit without it being immoral. The trick is that both parties share both the gains and the risk, not just the lender being responsible for all the risk.

azth 5y ago
It's great you're reading up on it. I would however, exercise caution as to what falls under "Islamic banking". From spending quite a bit of time reading up on it, many present day "Islamic banking offerings" aren't Islamic. They're simply ways to dance around the issue. What I'm saying isn't something controversial, I've talked to people, including a well known scholar who confirmed that to me. When there is a lot of money involved, things can go bad, and corporations with the most money and potential to profit can end up getting their way. Like seriously, a usurious bank like HSBC can offer a traditional mortgage product and an "Islamic financing" product side by side? Give me a break. Note however, that this does not affect Islam one bit. True and honest scholars will always call out such actions, and they have been. That being said, yes, at the core, true Islamic finance is about true and proper risk sharing, and reward sharing. Want to open a business? Get someone, or a group of people to fund you. They put in the money and you put in the risk. If it succeeds, you both share the rewards, if it doesn't, you lost the time and effort, and they lost the money. This is a very straight forward example. Under Islamic law, lending money is only to be done as a purely charitable act, as the lender cannot benefit from the loan - either monetarily or in a non-tangential manner even. The general ruling is as follows: any loan that brings a benefit to the lender is Riba (can be loosely translated as usury). Riba involves more than the usury or interest that are done today by banks, it also includes things like buying gold on credit (Riba), or exchanging silver for silver of non equal amounts (also Riba).

by ilammy 5y ago

azth 5y ago

It's great you're reading up on it. I would however, exercise caution as to what falls under "Islamic banking". From spending quite a bit of time reading up on it, many present day "Islamic banking offerings" aren't Islamic. They're simply ways to dance around the issue. What I'm saying isn't something controversial, I've talked to people, including a well known scholar who confirmed that to me. When there is a lot of money involved, things can go bad, and corporations with the most money and potential to profit can end up getting their way. Like seriously, a usurious bank like HSBC can offer a traditional mortgage product and an "Islamic financing" product side by side? Give me a break. Note however, that this does not affect Islam one bit. True and honest scholars will always call out such actions, and they have been. That being said, yes, at the core, true Islamic finance is about true and proper risk sharing, and reward sharing. Want to open a business? Get someone, or a group of people to fund you. They put in the money and you put in the risk. If it succeeds, you both share the rewards, if it doesn't, you lost the time and effort, and they lost the money. This is a very straight forward example. Under Islamic law, lending money is only to be done as a purely charitable act, as the lender cannot benefit from the loan - either monetarily or in a non-tangential manner even. The general ruling is as follows: any loan that brings a benefit to the lender is Riba (can be loosely translated as usury). Riba involves more than the usury or interest that are done today by banks, it also includes things like buying gold on credit (Riba), or exchanging silver for silver of non equal amounts (also Riba).