September 2008 seems like a long time ago. Few now remember the panic that hit the streets and headlines across the world as several major banking institutions in the US, such as Meryll Lynch, Lehman Brother and AIG, went into failure, threatening to take down the entire global economy. Trillions of dollars were lost, and a recession ensued that we have yet to fully recover from.
While the financial crisis resulted in millions losing their jobs and savings, one serendipitous consequence was that the near-collapse of the neoliberal system laid bare its fundamental flaws. This caused many, including myself, to question the basics of what I was taught in school and through the news about how the economy works. This ‘awakening’ was only the beginning, once you research the inner workings of finance and economic history, the rabbit’s hole keeps getting deeper and deeper.
Money Myths
The word ‘economics’ comes from the Greek ‘oikonomia’ which translates to ‘household management’. For much of history, economics wasn’t treated as the specialized field it is today but more as an extension of social behavior. With the modern view of economics as an exact science like physics and chemistry, some prevailing economic views tend to be seen as Gospel truths.
For example, I always used to view money as just a basic tool of everyday transactions, printed on fancy paper by the Government to circulate in the market. Imagine my surprise when I found out that the vast majority of money in the world is not issued by the Government or printed as paper at all, but is created as digital reserves by private banks.
Imagine my further surprise when I found out that almost all money created by banks is through dispersing loans. When a bank gives a loan to an individual, that money is not taken from a vault and handed to him, it is created on the spot and lent out. So, in a sense, all money that you see is linked to debt. And since these loans invariably are given on interest (riba), any moment we conduct or witness a monetary transaction, we become a party to riba, one of the greatest sins in Islam.
Of course, this is just the tip of the iceberg on this subject. More articles coming soon.
According to the Prophet pbuh (narrated by Ibn Isa, and recorded in Abu-Dawood Hadith #3325) “There will come a time when you will not be able to find a single person in the world who will not be consuming riba. And if anyone claims that he is not consuming riba then surely the dust of riba will reach him.” When one researches the present unjust financial and monetary system which is founded on riba, it is clear that the world has reached the sad state described in the hadith.
On a macro-economic scale, there seems to be very little one person can do to achieve some major reform of this riba-based system. The onus is therefore on the individual to try and create an impact first on himself or herself, then on their family, and finally on their community.
In 2012, my colleagues and I launched the UNRIBA campaign as a response to the condition we are in. The idea was not to only focus on riba as a sin and economic problem, but to also explore what we see as the riba-based lifestyle. Riba (in Arabic which means increase) can be seen quite clearly in the interest and debt which dominates our finances today and has corrupted the money we use. The lifestyle though of rampant materialism, consumerism and debt-dependency which is spawned by such a system also needs to be adequately addressed.
Through lectures, workshops and other activities, we want to explore the basics about money, debt and riba for a public that is woefully ignorant on these issues. But at the same time, we wish to highlight proactive solutions to these larger problems, rooted in our communities and our Islamic traditions. This doesn’t mean trying to create a new form of so-called ‘Islamic banking’ or push for superficial changes. Rather, we encourage the public to relook at the way they live their own lifestyles as a starting point for an escape from riba.
We need all the support we can get to help make this campaign a broader movement someday soon insha Allah.
