Open AccessRiba, Usury and Keynes
Author(s) -
Yasushi Suzuki
Publication year - 2019
Publication title -
islam and civilisational renewal
Language(s) - English
Resource type - Journals
eISSN - 2041-8728
pISSN - 2041-871X
DOI - 10.52282/icr.v10i2.62
Subject(s) - usury , context (archaeology) , order (exchange) , economics , government (linguistics) , database transaction , profit (economics) , capital (architecture) , finance , public economics , islam , microeconomics , geography , computer science , linguistics , philosophy , archaeology , programming language
This paper proposes TWO benchmarks to ascertain whether a particular financial transaction is acceptable or not in the context of Islamic finance: the ‘shari’ah-compliant’ benchmark and the shari’ah-based 'raf' al-haraj' (the Removal of Hardship) benchmark. As a cardinal objective (maqasid) of the shariah, the principle of 'raf' al-haraj' prohibits ‘usurious’ trade. Simultaneously, this paper suggests the necessity of having ‘a wise government’, or at least a strong government, in order to sustain the elimination of riba (‘usurious’ profit)—by means of creating and maintaining the marginal efficiency of capital (MEC) à la Keynes at an optimal level. As an alternative to riba, the Muslim community has to pursue an economy where a certain level of MEC is created and maintained for investors and investees. At the moment, these points are understated in existing debates on riba.