Exploitation, Profit and the Riba-Interest Reductionism
Mohammad Omar Farooq
affiliation not provided to SSRN
November 3, 2012
International Journal of Islamic and Middle Eastern Finance and Management, Vol. 5, No. 4, 2012
The purpose of this paper is to provide a critical appraisal of the theme of zulm (injustice/exploitation) in light of the Islamic finance literature and the general attitude and approach of the Islamic finance industry and its advocates toward it.
Based on an expanding theoretical and empirical knowledge base about Islamic finance and banking movement, and the emerging understanding about the role of profit and corporate behavior, a critical analysis of the role of riba, interest and profit in widespread injustice and exploitation is presented.
On the basis of the behavior of the Islamic finance industry, it seems that the industry’s current practices are either neutral to the issue of injustice/exploitation or mirrors the tendencies of the conventional finance. Furthermore, when comparing the exploitative role of interest and profit, the latter seems to be more consequential than generally understood and acknowledged.
Islamic economics/finance literature should have more empirical research in identifying and understanding the nature of exploitation in the contemporary world and in how the current practices or tendencies are minimizing or abetting the challenge of exploitation. The larger goal of the Islamic finance and banking movement should be to be in harmony with the maqasid of Islam to minimize zulm (injustice/exploitation).
While the literature of Islamic economics and finance is rather robust, this might be the first work that critically examines the riba-interest reductionism, especially to focus on its implication for attention of the industry being away from exploitation in general and the relationship between profit and exploitation in particular.
Number of Pages in PDF File: 27
Keywords: Islam, Islamic banking and finance, Shariah, Interest-free banking, Exploitation, profit, greed, debt, usmani
JEL Classification: A13, B19, K00, P40Accepted Paper Series
Date posted: January 30, 2012 ; Last revised: November 4, 2012
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